ON THE “SCANDINAVIAN MODEL”

The Debate around the Future of the Welfare State has been Fruitless for Years

By Harald Neuber

[This article published in the German-English cyber journal Telepolis, 12/29/2005 is translated from the German on the World Wide Web,  http://www.telepolis.de/r4/artikel/21/21443/1.html. Daniel Dettling, author and social expert at the German think tank Berlinpolis is interviewed.]


Reorganization of the welfare state is on the agenda again. This was the goal of both coalition partners in the election campaign. One “austerity package” after another has been proposed since the beginning of the 1990s. A long-term perspective for the German social system is not always apparent.

The voices of those demanding a fundamental reorganization of the social model grow stronger. In several private and governmental studies, the Scandinavian model is seen as the most successful on the European plane [cf. “Longing for the North", translation available on www.portland.indymedia.org.]. What distinguishes the northern approach from social policy in the core states of the European Union and Great Britain? Telepolis spoke with Daniel Dettling, author and social expert at the German think tank Berlinpolis.

THE GERMAN WELFARE STATE FOREGOES THE SOLIDARITY OF INDEPENDENT PERSONS, OFFICIALS AND PENSIONERS

In comparisons of the different European social systems, the Scandinavian model fares very well. Why isn’t it accepted comprehensively in the European Union?

DANIEL DETTLING: There is a financial and a cultural reason. Financing a changover4 to a tax-financed social model would involve high costs, especially transition costs. Culturally, not all societies in Europe are ready to dedicate high tax rates for social projects. The top tax rates in Northern countries are far more than 50 percent.

TELEPOLIS: Is it just to finance social security entirely by taxes?

DANIEL DETTLING: What is just? A large majority feels that fair treatment is just. The four central challenges to the welfare state are avoidance of elementary poverty, access to education and work, compatibility of occupation and family and a child-friendly policy. These challenges concern all the citizens of a community and not only employees paying into social security.

TELEPOLIS: What about Germany?

DANIEL DETTLING: The German welfare state largely renounces on the solidarity of independent persons, officials and pensioners. That is the opposite of social justice.

TELEPOLIS: How is the participation of the business camp in the Scandinavian states regulated?

DANIEL DETTLING: Unions are organized more strongly there. A dependable relation of trust exists between unions, politics and businesspersons. The Danish model of retraining is an interesting example. In Denmark, there is a fund from which additional apprenticeships are paid in crisis. All enterprises that train receive reimbursement through the fund for training days and days when youths are not working productively in the enterprise. When apprenticeships are lacking, the fund steps into the breach and finances additional traineeships. In addition, far-reaching economic challenges are accepted, for example financing foreign residences of trainees that are increasingly important in a Europe that is growing closer.

TELEPOLIS: In your comparative study, the Anglo Saxon model has also improved. With minimum fringe benefits and a growing social gulf, the Anglo Saxon design is diametrically opposite to the Scandinavian model. How can this improvement be explained?

DANIEL DETTLING: The British government under Tony Blair invested massively in education and health care, the two elementary conditions of a dynamic labor market policy. The “early excellence initiative,” a policy advancing children from socially weak families, has gained Europe-wide attention. The integration of foreigners in the labor market is organized better in England because it is a more open and deregulated market.

TELEPOLIS: If success in Great Britain is based on more employment without considering the kind of working conditions, is this success sustainable?

DANIEL DETTLING: The success obviously depends on growth. The themes of life-long learning and regular health care are increasingly important in Great Britain. The sustainability of the British model is decided in these two themes.

THE NORTHERN COUNTRIES ARE AMONG THE MOST COMPETITIVE WORLDWIDE

TELEPOLIS: The so-called continental model exists in Germany; its origin goes back to Bismarck’s ideas. Because this system is financed by contributions of the working population, it skids ever deeper in crisis through the demographic development and increasing unemployment. Will the North really escape this crisis?

DANIEL DETTLING: Yes, the Northern model is more demography-resistant because it is tax-financed and simultaneously friendlier to employment because social services are also financed through taxes. An excellent public infrastructure exists in the areas of education and compatibility of occupation and family. For years the Northern countries have been among the most competitive worldwide.

TELEPOLIS: The Scandinavian countries turn out well in social security and family- and education policy. How do these points reinforce each other?

DANIEL DETTLING: The Northern model is inconceivable without a functioning family- and education policy. Both are guarantors of success. The gainful employment of men and women is recognized here as the norm and is supported by both genders. The high gainful participation of women protects them from poverty in the case of children and thus prevents the vicious circle of social transmission under which Great Britain, the US, Germany, France and other EU countries suffer. An investment policy oriented in equal chances largely prevents child- and education poverty in the Scandinavian countries. Thus the nature of investments is crucial, not so much the amount of the spending.

In Germany, family benefits are paid out directly. In the northern countries, there is investment in care, good quality institutions and high benefits in temporary unemployment. The motto “Education for Everyone” is in effect. An unsegmented school system up to the 9th or 10th grade and considerable education investments raise the education content in the lower education levels. Thus exclusion is reduced to raise the aggregate economic productivity and the tax revenues necessary to finance the social welfare.

TELEPOLIS: What has to change in Germany?

DANIEL DETTLING: Germany needs a stronger investment social policy in which all groups participate – not only the socially insured. What is central is the change from the social security state into a social investment state. The prerequisite is a change in mentality in people’s heads. The welfare state is a condition of a successful economy, not a consequence of a strong economy with whose profits a society can first “afford” social services. No modern economy is possible without children and education.

The situation is similar to a car. The brake is the prerequisite for driving faster and more dynamically on the road. No one sits in a Porsche without brakes. The brake is necessary for a functioning car. The German welfare state squeaks at all corners. It needs better oil, a re-configured financing. The increased sales tax could be a beginning of a new social model.

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