Nordic labour market policies in transition

West European Politics

Volumn 23, Issue 3, 2000, Pages 115-138

  Jochem, Sven ^a  

^a UNIVERSITY OF BREMEN   (Germany)

Author keywords

[No Author keywords available]

Indexed keywords

EMPLOYMENT GENERATION; LABOR MARKET; LABOR POLICY; UNEMPLOYMENT;

SCANDINAVIA;

EID: 0033890759     PISSN: 01402382     EISSN: None     Source Type: Journal    
DOI: 10.1080/01402380008425386     Document Type: Article

References (65)

1. 'Nordic countries' or 'Scandinavia' includes Denmark, Finland, Norway and Sweden. Because of size, unique economic conditions and data unavailability, Iceland is excluded from this analysis.
2. Torben Iversen and Anne Wren, 'Equality, Employment, and Budgetary Restraint. The Trilemma of the Service Economy', World Politics 50 (July 1998), pp.507-46.
3. Torben Iversen, 'The Choices for Scandinavian Social Democracy in Comparative Perspective', Oxford Review of Economic Policy 14/1 (1998), p.72.
4. Between 1988 and 1994, the employment rate dropped in Finland by 13.4 percentage points, in Sweden by 10.8, in Denmark by 5.6, and in Norway by 4.9, whereas in the other OECD countries employment dropped in this period on average by only 1.2 percentage points.
5. If we assume that labour force participation since 1990, the peak, had been constant, the hypothetical unemployment rate in 1998 would have risen further by approximately four percentage points. Hence, labour supply developments are crucial if one tries to explain the Swedish unemployment rate, which is not considered by Iversen. See Torben Iversen, 'Wage Bargaining, Hard Money and Economic Performance: Theory and Evidence for Organized Market Economies', British Journal of Political Science 28 (January 1998), p.49.
6. For a more detailed analysis on this subject, see Sven Jochem, Die skandinavischen Wege in die Arbeitslosigkeit. Kontinutität und Wandel der nordischen Beschäftigungspolitik im internationalen Vergleich (Opladen: Leske + Budrich 1998).
7. Cf. Manfred G. Schmidt, "The Politics of Labour Market Policy', in Francis G. Castles, Franz Lehner and Manfred G. Schmidt (eds.), Managing Mixed Economies (Berlin: de Gruyter 1987), pp.4-53;
8. Fritz W. Scharpf Sozialdemokratische Krisenpolitik in Europa (Frankfurt and New York: Campus 1987).
9. J0rgcn Elmeskov, 'Nordic Unemployment in a European Perspective', Swedish Economic Policy Review 1 (1994), p.65;
10. Göran Therborn, 'Patterns and Meanings of Unemployment', Scandinavian Journal of Social Welfare 4 (1995), p.125.
11. Cf. Lars Calmfors, 'Lessons from the Macroeconomic Experience of Sweden', European Journal of Political Economy 9 (1993), pp.25-72;
12. Ton Notermans, 'The Abdication from National Policy Autonomy: Why the Macroeconomic Policy Regime has become so unfavourable to Labour', Politics & Society 21 (1993), pp.133-67.
13. Cf. Duane Swank, 'Social Democratic Welfare States in a Global Economy: Scandinavia in Comparative Perspective', in Robert Geyer, Christine Ingebritsen and Jonathon W. Moses (eds.), Globalization, Europeanization, and the End of Scandinavian Social Democracy? (London: Macmillan 2000), pp.85-138.
14. Of course, the development in the Netherlands is no example for an overall expansion of employment, rather the distribution of employment has changed, as the rate of part-time employment was expanded significantly in recent years and this may explain a great deal of the 'Dutch miracle', beyond the emphasis on moderate wage growth after 1982.
15. The correlation between the consumer price index and the change of employment rates is for Denmark between 1984 and 1994: r = .54, for Finland: r = .55. In contrast, there is only a moderate correlation in Norway: r = .34 and Sweden: r = .39.
16. Cf. Sixten Korkman, 'Exchange Rate Policy and Employment in Small Open Economies', in Jukka Pekkarinen, Matti Pohjola and Bob Rowlhorn (eds.). Social Corporatism: A Superior Economic System ? (Oxford: Clarendon Press 1992), pp.280-97.
17. From a comparative perspective, cf. Markus Freitag, Politik und Währung. Ein internationaler Vergleich (Bern: Haupt 1999).
18. Cf. Lars Mjoset, 'Nordic Economic Policies in the 1980s and 1990s', Paper presented to the Tenth International Conference of Europeanists, Chicago, 14-16 March 1996, p.23.
19. Cf., for example, Michael Wallerstein and Miriam Golden, 'Wage Setting in the Nordic Countries, 1950 to 1992', Comparative Political Studies 30/4 (1997), pp.669-731;
20. Evelyne Huber and John D. Stephens, 'Internationalization and the Social Democratic Model. Crisis and Future Prospects', Comparative Political Studies 31/3 (1998), pp.353-97;
21. Iversen, 'The Choices for Scandinavian Social Democracy in Comparative Perspective', pp.62-6.
22. Cf. Christoffer Green-Pedersen, 'The Danish Welfare Slate under Bourgeois Reign. The Dilemma of Popular Entrenchment and Economic Constraints', Scandinavian Political Studies 22/3 (1999), pp.243-60;
23. Jörgen Goul Andersen, 'Welfare Crisis and Beyond: Danish Welfare Policies in the 1980s and 1990s', in Stein Kuhnle (ed.), Sun-ival of the European Welfare State (London: Routledge 2000), pp.63-87.
24. Wage growth data ('compensation per employee') here and in the following parts are taken from OECD Economic Outlook (Paris: OECD Spring 1999)
25. Jespcr Due et al. The Sun-ival of the Danish Model. A Historical Sociological Analysis of the Danish System of Collective Bargaining (Copenhagen: Jurist og 0konomforbundets Forlag 1994).
26. Cf. Timo Tyrväinen, Wage Determination, Taxes, and Employment. Evidence from Finland (Helsinki: Bank of Finland 1995), p.l70.
27. In the literature, the Finnish recession is explained mainly by the breakdown of trade with the former USSR, as it dropped from 15 to 5 per cent in 1990. However, is should be noted that a very huge drain in investment capital was additionally caused by the retreat of Swedish investors in 1991. Cf. OECD Reviews of Foreign Direct Investment Finland (OECD Paris 1995), p.22.
28. In fact, Finland is, after Ireland, one of the most expansive economies in the late 1990s. Moderate wage growth helped to maintain the cost competitiveness which was improved by the enforced depreciation of the national currency in 1991-93; cf. OECD: Economic Sun-eys Finland (OECD: Paris 1999), pp.30-32.
29. Cf. for Norway the contributions in Erik D01vik and Arild H. Steen, Making SolidarityWork? The Nonvegian Labour Market Model in Transition (Oslo: Scandinavian University Press 1997).
30. Cf. Nils Elvander, 'Incomes Policies in the Nordic Countries', International Labour Review 129(1990), p.9.
31. Cf. NOU En nasjonal strategifor (ikt sysselselting i 1990-arene (Oslo: NOU 1992), p.26.
32. Cf. Jonas Pontusson, 'At the End of the Third Road: Swedish Social Democracy in Crisis', Politics & Society 20 (1992), pp.305-32.
33. For the newest developments, cf. Jonas Pontusson and Peter Swenson, 'Labor Markets, Production Strategies, and Wage Bargaining Institutions. The Swedish Employer Offensive in Comparative Perspective', Comparative Political Studies 29 (1996), pp.223-50.
34. For a rather optimistic view of the recent developments in Sweden, cf. Victor A. Pestoff, 'The Disappearance of Social Partnership in Sweden during the 1990s & its Sudden Reappearance in late 1998', Paper presented at the 1999 ECPR Joint Session in the Workshop on 'Concertation and Public Policy', Mannheim, Germany, 29-31 March 1999.
35. Göran Therborn, 'Does Corporatism Really Matter? The Economic Crisis and Issues of Political Theory', Journal of Public Policy 1 (1987), pp.259-84;
36. Walter Korpi, 'Political and Economic Explanations for Unemployment: A Cross-National and Long-Term Analysis', British Journal of Political Science 21 (1991), pp.315-48.
37. In Figure 2 the independent and dependent variables are average values for two periods. The first shall cover the period before the employment crisis (1984-88), the second the time period of the employment crisis (1989-94). Hence the dependent variable is lagged. One could question if such a great lag confirms reality. Besides the argument that there is no rule for how long such a lag should be, it is argued that in reality investment decisions do entrench on a large time span, and it is investment, which is the link between cost calculations of employers and employment creation. As it can be seen, the correlation is highly dependent on critical cases as New Zealand, Australia and Ireland. If one accepts that in these countries specific circumstances enabled employment growth despite high wage growth, the correlation for the remaining 15 OECD countries would be: r = -.86, R2 = .73.
38. In the 1980s, wage growth and growth of the unit labour costs were highly correlated (r = .97, N = 18). How ever, in the 1990s correlation is lower (r = .79, N = 18). A further analysis revealed, that in some countries (Germany, for example) the rise in unit labour costs was much more pronounced than the rise in wages. In contrast, in some other countries (Norway, and, to a lesser extent, Denmark and Finland, for example) the unit labour costs were decoupled from wage growth, indicating that in these countries a reduction of the social security contributions dampened the cost rising effects of the welfare state on unit labour costs.
39. The correlation for 17 OECD countries, that is, without Ireland, is: r = -.64, R2 = .41.
40. 2 = .60, N = 21). Cf. Nico A. Siegel and Sven Jochem, 'Der Sozialstaat als Beschäftigungsbremse? Deutschlands steiniger Weg im die Dienstleistungsgesellschaft', in Roland Czada and Hellmut Wollmann (eds.). Von der Bonner zur Berliner Republik, Leviathan Sonderheft 19 (Opladen: Westdeutscher Verlag 1999), pp.539-66.
41. These and the following data are taken from Nordic Social Statistical Committee (NOSOSCO), Social Protection in the Nordic Countries 1997 (Copenhagen: NOSOSCO 1999), p.l59.
42. Richard B. Freeman emphasises that social security contributions in Norway are from a comparative perspective and despite the encompassing welfare state are very low, and 'that the proportion of compensation due to the supplementary cost of hiring an employee does not differ much from that in the USA'. Richard B. Freeman, 'Are Norway's Solidaristic and Welfare State Policies Viable in the Modern Global Economy?', in Dolvik and Steen, Making Solidarity Work? p.35.
43. Cf. Karen M. Anderson, 'The Politics of Retrenchment in a Social Democratic Welfare State. Reform of Swedish Pensions and Unemployment Insurance' (unpublished paper, 1999).
44. Regarding the dynamics of the specific services cf. Fritz W. Scharpf, 'The Viability of Advanced Welfare States in the International Economy: Vulnerabilities and Options' (Max Planck Institute for the Study of Societies Working Paper 99/9, Köln 1999); Siegel and Jochem, 'Der Sozialstaat als Beschäftigungsbremse?'.
45. Cf. OECD, Economie Sun-ey Nonvay (Paris: OECD), p. 121.
46. Cf. OECD, Economie Suney Denmark (Paris: OECD), p.88.
47. Gösta Esping-Andersen, 'After the Golden Age? Welfare State Dilemmas in a Global Economy', in Gösta Esping-Andersen (ed.), Welfare Slates in Transition. National Adaptations in Global Economies (London: Sage 1996), p. 14.
48. For the following section cf. NOSOSKO, Fönida utträde fron arbetslivet 1987-1996 (Copenhagn: NOSOSKO 1999);
49. Jochem, Die skandinavischen Wege in die Arbeitslosigkeit.
50. Cf. Gösta Esping-Andersen, The Three Worlds of Welfare Capitalism (Princeton: Princeton University Press 1990), pp.150-53;
51. Gaby von Rhein-Kress, Die politische Steuerung des Arbeitskräfteangebots (Opladen: Westdeutscher Verlag 1996), pp.55-69.
52. In Norway the labour market parties developed a comprehensive system of occupational early retirement schemes since 1988, gradually reducing the obstacles to retire early for those over 62 years.
53. OECD, Economic Survey Norway (Paris: OECD 1997), p.77.
54. In Denmark, the decline of female participation may be explained by the introduction of several sabbatical schemes in 1993, which were used mainly by women. However, after 1995 lower benefits have reduced the demand significantly. Cf. J0m Loftager and Per KongshpJ Madsen, 'Denmark', in Hugh Compston (ed.), The Neu' Politics of Unemployment. Radical Policy Initiatives in Western Europe (London: Routledge 1997), pp. 123-36;
55. OECD, Economic Sun-ey Denmark (Paris: OECD 1999), pp.28-31.
56. Cf. Friederike Maier, 'Institutional Regimes of Part-Time Working', in Günther Schmid (ed.), Labor Market Institutions in Europe. A Socio-Economie Evaluation of Performance (Armon, New York and London: ME Sharpe 1994), pp.151-182;
57. Jochem, Die skandinavischen Wege in die Arbeitslosigkeit, pp.176-85.
58. Cf. for an overview, OECD The OECD Jobs Study. Evidence and Explanations Part II (Paris: OECD 1994), pp. 171 -92;
59. OECD Benefit Systems and Work Incentives (Paris: OECD 1998).
60. Calmfors, 'Lessons from the Macroeconomic Experience of Sweden', p.54.
61. Cf. Lars Calmfors, 'Active Labour Market Policy and Unemployment - A Framework for the Analysis ofCurcial Design Features' (OECD Labour Market and Social Policy Occasional Paper No. 15, Paris: OECD 1994);
62. Anders Forslund and Alan B. Krueger, 'En utvardering av den aktiva svenska arbetsmarknadspolitiken', in Richard B. Freeman, Britta Swedenborg and Robert Topel (eds.), Välfärdsstaat i omvandling -Amerikaniskt perspektiv pâ den svenska modellen (Stockholm: SNS Förlag 1995), pp.139-52.
63. Cf. Klaus Armingeon, 'Politische Reaktionen auf steigende Arbeitslosigkeit', in Andreas Busch and Thomas Plumper (eds.), Nationaler Staat und internationale Wirtschaft. Anmerkungen zum Thema Globalisierung (Baden-Baden: Nomos 1999), pp.169-96.
64. It should be noted that the mix of the instruments changed somewhat from country to country. Recently, Sweden invented a new 'Adult Education Initiative' ('kunskapslyftef), which reduced open unemployment further since 1997. Cf. OECD, Economic Sun-ey Sweden (Paris: OECD), pp.69-80
65. This term is borrowed from Jürgen Neyer and Martin Seeleib-Kaiser, 'Bringing the Economy Back In: Economic Globalization and the Re-Commodification of the Workforce' (ZeS-Arbeitspapicr No. 16/95, Bremen: Zentrum für Sozialpolitik).