Nordic model

The Nordic model comprises the economic and social policies, as well as typical cultural practices, common to the Nordic countries (Denmark, Iceland, Finland, Norway, and Sweden). This includes a comprehensive welfare state and multi-level collective bargaining, with a high percentage of the workforce unionised, while being based on the economic foundations of free market capitalism. The Nordic model began to earn attention after World War II. The Scandinavian countries were all monarchies, with Finland and Iceland becoming republics in the 20th century. Currently, the Nordic countries have been described as being highly democratic. Although there are significant differences among the Nordic countries, they all have some common traits. These include support for a universalist welfare state aimed specifically at enhancing individual autonomy and promoting social mobility; a corporatist system involving a tripartite arrangement where representatives of labour and employers negotiate wages and labour market policy mediated by the government; and a commitment to private ownership (with some caveats), a mixed economy and free trade. Each of the Nordic countries has its own economic and social models, sometimes with large differences from its neighbours. As of 2018, all of the Nordic countries rank highly on the Inequality-adjusted HDI and the Global Peace Index. In 2019, all five of the Nordic countries ranked in the top 10 on the World Happiness Report. 'Embracing globalization and sharing risks' characterises the Nordic model as follows: The Nordic countries share active labour market policies as part of a corporatist economic model intended to reduce conflict between labour and the interests of capital. The corporatist system is most extensive in Sweden and Norway, where employer federations and labour representatives bargain at the national level mediated by the government. Labour market interventions are aimed at providing job retraining and relocation. The Nordic labour market is flexible, with laws making it easy for employers to hire and shed workers or introduce labour-saving technology. To mitigate the negative effect on workers, the government labour market policies are designed to provide generous social welfare, job retraining and relocation to limit any conflicts between capital and labour that might arise from this process. The Nordic model is underpinned by a free market capitalist economic system that features high degrees of private ownership with the exception of Norway, which includes a large number of state-owned enterprises and state ownership in publicly listed firms. The Nordic model is described as a system of competitive capitalism combined with a large percentage of the population employed by the public sector (roughly 30% of the work force). In 2013, The Economist described its countries as 'stout free-traders who resist the temptation to intervene even to protect iconic companies' while also looking for ways to temper capitalism's harsher effects, and declared that the Nordic countries 'are probably the best-governed in the world'. Some economists have referred to the Nordic economic model as a form of 'cuddly' capitalism, with low levels of inequality, generous welfare states and reduced concentration of top incomes and contrast it with the more 'cut-throat' capitalism of the United States, which has high levels of inequality and a larger concentration of top incomes.