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Disability and employment: sustainability of ‘the Nordic model’

Espen Dahl
DOI: http://dx.doi.org/10.1093/eurpub/ckq056 370-371 First published online: 21 July 2010

There is a need to integrate comparative welfare state studies with public health and health inequality research. Up to now, these two research disciplines have been apart and separated by institutional and disciplinary boarders within and between countries. This is now about to change.1 This is an important step forward as it entails the potential to shed new light on one of the hottest issues related to the future of the welfare state: employment problems and worklessness, especially among disadvantaged groups. In many countries, the fear of dwindling labour force participation is a cause of great political concern since it threatens the economic fundament of the welfare state, especially in the Nordic countries. This is a serious threat to all modern economic systems, but in particular to the Nordic model. The defining features of the Nordic model are: generous and universal welfare benefits; and free or cheap social and health services. In order to pay for such comprehensive public welfare provision, it relies on relatively high tax rates and a broad tax base—i.e. high employment; the Nordic model is hardly sustainable without a high rate of labour market participation. Over the past 15 years the Nordic countries have performed quite well, and contrary to common economic thinking, they have been able to achieve both economic growth and equality. Labour statistics from the OECD covering the past 15 years or so and up to the financial crisis, show that the Nordic countries have succeeded in creating relatively high employment, particularly among groups otherwise marginalized in the labour market, i.e. women and elderly.

As research on ‘social determinants of health’ has eloquently demonstrated, inequality in people’s living conditions has a strong influence on health. The WHO Commission on social determinants of health phrases this view like this: ‘These inequities in health, avoidable health inequalities, arise because of the circumstances in which people grow, live, work and age, and the systems put in place to deal with illness’ … ‘The conditions in which people live and die are, in turn, shaped by political, social and economic forces’.2 It follows from this perspective that welfare policies that have a positive impact on people’s living conditions throughout their life course, e.g. childhood conditions, housing, human and social resources, and work environment, will also improve the health of individuals, reduce health inequalities, and hence boost the health of nations. Social policy that provides people with welfare resources to cope with and control their lives, and which enables people to participate in the labour market and to be respected members of the society, will thereby improve people’s health and wellbeing, directly and indirectly. There is little doubt that the Nordic countries perform very well on income inequality: despite an increase in the Gini coefficient over the past decades, it is still smaller than in most other countries. Small income inequalities are likely to be translated into a more equal distribution of most kinds of living conditions and hence health. However, comparative research on public health and health inequalities across welfare regimes does not unequivocally confirm the hypothesis that Nordic egalitarian countries have narrower health inequalities than less egalitarian ones3,4, at least not in relative terms.1

Looking beyond these controversies, it is evident that research on the social consequences (i.e. the sickness dimension as opposed to disease and illness) of health inequalities is rather meagre, especially in terms of labour market participation. There is a mutual relationship—an interaction—between social welfare, individual and public health and the structure of the labour market. An important question to be addressed is whether welfare arrangements and welfare regimes influence labour market attachment among citizens with lower socio-economic positions who suffer from health problems. It is generally recognized that health is precondition for social participation. In EU’s programme to combat social exclusion, ill-health is identified as one of the crucial factors causing marginalization and social exclusion. Research, also from the egalitarian Nordic countries, shows that ill-health is a barrier against participation in the labour market, a barrier that is higher for people with lower socio-economic status. A consequence of non-employment is most often decreased level of living and wellbeing. The reduction in work capacity, and labour force participation, that ill-health often entails, is therefore one of the major obstacles for social inclusion, for eradicating poverty and for promoting social equality. However, less attention is paid to the fact that such adverse social consequences of ill-health are socially stratified and may vary across countries.

Recent comparative research suggests that people with low education and poor health struggle with low employment rates also in the Nordic welfare states. However, the participation rates among the disadvantaged, i.e. lower occupational classes and lower educated people, appear to be significantly higher than in the UK for example.5,6,7 This prompts the question whether the institutions of the Nordic regime are conducive to high levels of labour force activity not only among the general population, but also among more disadvantaged groups. One might even ask whether there are positive employment effects of big government, labour protection legislation, active labour market policies, universal rights to income maintenance, relatively generous benefits and provision of medical and vocational rehabilitation? The scanty research findings so far suggest that the answer is affirmative.

This evidence suggests that the Nordic welfare regime might be sustainable also in the longer run as long as it is able to provide ‘full employment’ and high employment among disadvantaged groups. Up to the financial crisis, Nordic countries did quite well in this respect in comparison with other nations; countries belonging to the Nordic regime were effective as well as egalitarian. Thus, the alleged trade-off between these two virtues appear to be somewhat exaggerated. It might be that Nordic social institutions create small income inequalities as well as high employment and economic growth by including also disadvantaged groups in the work force. This broadens the tax base and allows the state to pursue egalitarian goals through comprehensive welfare policies. Welfare policies may be seen as a social investment insofar as it improves living conditions, health and work opportunities for most population groups, including the disadvantaged, whereas an inclusive society is a precondition for economic activity, prosperity, equality and the viability of a universal, generous and service-heavy welfare state.

Conflicts of interest: None declared.