The Nordic Model

Sorry guys I did not mean an actual nordic model.

Key points


1. Strong property rights, contract enforcement, and overall ease of doing business.

2. Low barriers to free trade.

3. Little product market regulation. Nordic countries rank very high in product market freedom according to OECD rankings.

4. Little financial market regulation. Denmark and Finland have the lowest regulation burden in EU-15 according to OECD rankings.

5. All Nordics have been pioneers in privatization alongside competitive public services. For instance, Sweden privatized education with education vouchers in 1992.

6. Pension systems are privatized. Systems have higher pension funding rates than in most European countries. They still have deficits, however.

7. Sweden has decentralized wage coordination, while Finland is ranked the least flexible. As in other European countries, the powerful labour unions tend to block attempts at reform . Reforms and favourable economic development seem to have reduced unemployment, which has traditionally been higher.

8. Denmark's Social Democrats managed to push through reforms in 1994 and 1996. Denmark's flexible market differs radically from other Nordics (see Flexicurity). According to World Bank data, Denmark has almost no labour market regulation, and ranks first in Europe in labor freedom.

9. Sweden at 56.6% of GDP, Denmark at 51.7%, and Finland at 48.6% reflects very high public spending, compared to 46.9% in Germany, 39.3% in Canada, and 33.5% in Ireland.

10. A key reason for public spending is the very large number of public employees. They often have jobs-for-life and make up around a third of the workforce (more than 38% in Denmark). The public sector's low productivity growth has been compensated by Europe's pioneering privatization and outsourcing programs. Public spending in social transfers such as unemployment benefits and early-retired programs is high. In 2001, the wage-based unemployment benefits were around 90% of wage in Denmark and 80% in Sweden, compared to 75% in Holland and 60% in Germany. Unemployed were also able to receive benefits several years before reductions, compared to quick benefit reduction in other countries. Public spending in areas such as education or health is not far from the OECD median.

11. Overall tax burden are among the world's highest; 51.1% of GDP in Sweden, and 43.3% in Finland, compared to 34.7% in Germany, 33.5% in Canada, and 30.5% in Ireland. Median employee's tax wedge is between 57%-65%. Value-added tax rates are over 20% and corporate tax rates around the OECD median at around 26%. Property taxes are low or non-existent. The tax burden is particularly heavy on service sectors. Karlson, Johansson & Johnsson estimates that the percentage of the buyer’s income entering the service vendor’s wallet (inverted tax wedge) is around 15% in Nordic countries, compared to 10% in Belgium, 15% in Germany, 25% in France, 30% in Ireland and 50% in the United States. Some taxation is avoided by self-service and in the black market.

Those are the 11 keys to the Nordic model.

There are three major pillars of the modern Nordic welfare state: social security, health care and free education.





I would like to ask all people who currently live in the nordics, lived in the nordics, or are very familiar with the Nordics; what is the system like and does it actually work?

[edit on 3/22/10 by Misoir]

I 100% guarantee this post would get dozens of replies if I posted a pic of a nordic model.

I live in Norway, and its basicly the same system.

Its not perfect, but Im content with it.

I can take my education for free, I dont have to pay for visiting a doctor\hospital.

The taxrate is high, but so are the wages. As uneducated I make 23 to 33 USD pr hour, depending on the time of day. And I have a job with a average pay.

Please ask if you wonder about anything.