1. How sustainable is the Swedish model?
Joakim Palme
Uppsala University

2. What is it?
Why interesting?
Why worry?
What could be done?
What can we learn?

3. The Nordic Model History of exceptionalism:
Interchangeably defined in terms of: - the design of social policy institutions: big state - how people’s living conditions appear: equality - the decision making process: rational

4. Shaping the Nordic Model
The emergence of a universal approach
1930s: depression and population crisis
Postwar social citizenship
Earnings-related social insurance
Modern family policy - dual-earner model
What about ageing societies?

5. Regimes Welfare regime: encompassing Family policy regime: dual-earner
Production regime: collective bargaining
Education regime: universal, life-long
Migration regime: open

6. Nordic Schumpeterian approach
During great transformations there are always winners and losers.
Old forms of security are replaced by new ones.
We can speak about a constructive destruction (Schumpeter).
Swedish experience of making winners of the potential losers in structural transformation
Support to glabalization contingent on the social and policy fabric of society

7. Achievements of the Nordic model
Low life-cycle poverty
High employment
Strong support for social security
Good incentives and cost control!
High social trust
Economic growth and investment climate
But no miracle:
straightforward policy design
remaining pockets of poverty
and (at risk of )poverty increases

8. Economic sustainablity

9. The challenge of global financial crisis
Well-rehersed to handle a financial crisis
Positive public sentiments to trade and globalization remain
Public finances in balance, nominal cost limits give budget control
Policy drift rather than retrechment in social protection
Free to choose!

10. Life-cycle deficit in four EU countries
Selected countries

11. Goals/functions of social policy
Redistribution
Insurance
Services
Investment
Institutional, functional complementarities
Economic and social sustainability

12. Social investments
Are about investing in an equal distribution of human capital in order to promote a good economic life-cycle for all and reduce the pre-redistribution inequality

13. Capability formation: A life course perspective
Publicly funded child-care invests in cognitive and social skills essential for life chances of children
Quality of compulsory education – PISA studies of core competencies: reading, mathematics, science
Skill needs in advanced industrial societies have changed – polarization among youth is a reality and a threat
The ”learning economy” requires a constant renewing of capabilities in firms and competences of workers

14. Political sustainability
Post-neoliberalism

15. Retrenchment, neoliberalism and beyond
Pierson, path dependency and continuity
Recalibration and recasting: different view on both the driving forces behind the changes and their consequences
Reforms to promote the underlying goals but also avoid producing unintended consequences
Hall in contrast to a ‘punctuated equilibrium’, regime changing processes could be much more stepwise and complex
‘Beyond continuity’ with ‘liberalisation’ as the leitmotif: small changes may trigger transformations of exiting regimes.

16. Pension reform, with layering element
Social insurance at drift
Social services: layering and drift
ALMP: drift and layering

17. End of universalism? Inclusion Financing Provision Benefits
Open to all or for some groups only?
Public or private?
By state, corporatist (or non-profit) organizations or markets?
Existence of complementary markets?
Adequacy, equal quality?

18. Income ceilings for benefit purposes in unemployment and sickness insurance 1985 och 2010 A S

19. ‘The Enlightened Path’ or ’The Third Way’ for ALMP

20. Policy instruments and trajectories
Education of children and youth
Active Labour Market Policy
Adult education
Labour market regulation
Macroeconomic policy

21. Earned Income Tax Credit
Jobbskatteavdrag:
Five rounds since 2007 lowered income taxes for employees across the wage distribution
For 2014, the total costs of the EITC amounts to approximately 95 billion SEK (€ 10.7 billion) = 3.5 times the size of the ALMP budget
Simulations have estimated that the EITC has increased the number of working hours by between 1.5 and 2.5 percent. Estimations could not be confirmed in an empirical evaluation by the Institute for Labour Market Policy Evaluation (IFAU)

22. Policy outcomes Employment and work intensity Wage development
Poverty reduction
Poverty rates

23. Social sustainability
Comparisons and trends

24. Policy dilemmas? Targeting vs. univeralism?
Transfers vs. benefits in kind?
Social insurance vs. safety nets?
Social protection vs. social investment vs. social innovation?
Investment vs. consumption?

25. Social policy opportunities
Education and human capital formation as social policy
Labour market policy and regulation as social policy
Migration policy as social policy
Fiscal policy as social policy
Searching for the institutional complementarities

26. What can we learn? No blue-print Institutional complementarites
Mobilization and coalition building
Modernization – politics of enlightenment
Social cohesion built on social capital and social inclusion, in turn enhanced by social investment and dependent on social rights
No such thing as a free lunch…

27. Conclusions Difficult to make predictions, especially about the future
Free to choose! But model at crossroads