Scandinavia's lovely and unaffordable model

A year ago, France took command of the Union and Nicolas Sarkozy was heading toward a stand-out presidency. Socialists deplored his policies, most especially the dearth of any defence of the European social model.Now, a year later, the recession has hit hard and social security is the talk of the town again. In addition to fighting climate change, the Swedish presidency has put the struggle against the global economic crisis at the top of its agenda. It aims to make growth and jobs core priorities of the new Lisbon Strategy, which should be adopted under Spain’s presidency in 2010.

In this context, one cannot help wondering whether the Swedish social model might not help the EU 27 out of the morass. Could it be an antidote to the crisis? Another fine opportunity for Sweden to shine…and consign the calamitous Czech presidency to oblivion as expeditiously as possible? Over the past 20 years, what is more generally called the “Scandinavian model” has to a greater or lesser extent inspired social policy in several other countries, including Belgium, France and Germany, which, however, have not succeeded in recreating a Swedish “paradise”. To wit: the employment rate in Sweden was 73% before the crisis, i.e. higher than the 70% target set at Lisbon in 2000. 71.5% of Swedish women are gainfully employed, as against only every other Belgian woman. So is the Swedish system a panacea? “It’s too early to judge how far this model will weather the crisis,” notes Ernst Erik Ehnmark, rapporteur to the European Economic and Social Committee. The Swedish auto industry (Volvo, Scania), for one, has not eluded the current economic upheavals.

Mission impossible

More fundamentally, it would be quite simply impossible to graft the Scandinavian social model onto other Member States, deems Felix Roth, a researcher at Brussels think tank CEPS, “because that system requires big social spending, which many countries associate with poorer economic performance.” To their way of thinking, money invested in the social system deprives the educational sector of resources needed to train skilled workers, those who will not remain unemployed. So there is no point in talking about it to Great Britain, where the market takes precedence over the welfare State. Or to most new Member States, which cannot afford the system anyway.

And yet, far from being handouts heaven, Sweden’s force resides in having created a virtuous circle in which work yields wealth, which, reinvested in training, generates jobs. Economist Pierre Reman (UCL) reports that 80% of the workforce is unionised, reflecting a labour policy based on cooperation between management and unions, and above all an active social State that “activates” the unemployed whenever they are needed. Adapting is the name of the game. This “flexisecurity” (a term coined by and often associated with Denmark) has its price: viz. steep taxes. In other words, establishing a similar system would apparently be impossible in Belgium – or anywhere else, for that matter, where budgetary constraints are tight.

So what can we expect from Sweden’s six-month term? “That it will add a dash of social security to a Lisbon strategy currently geared toward climate issues,” sighs Ernst Ehnmark. Gery Coomans, an expert adviser to the Commission, does not believe the time has come for the Scandinavian model either. “In times of crisis, to contemplate implementing such a policy is wishful thinking. This is a time of national protectionist reflexes.” But to quote Roosevelt and Obama: “Don’t waste the crisis.” And so far that is precisely what Europe has been doing.