Immigration and the Nordic Welfare State Model

The New York Times recently published a story documenting the increasing anti-immigrant sentiment brewing in Sweden. Symptomatic of this trend was Sweden’s far-right party winning seats in Parliament last fall – an unprecedented outcome in a country hitherto renowned for its tolerance. The fiscal strain immigrants generally place on welfare systems is well known; however, what makes this situation even more precarious for generous welfare states like Sweden is that immigration threatens to undermine the fierce spirit of egalitarianism that underpins the Nordic welfare system.
Anti-immigration sentiment is not the sole preserve of Nordic countries; vitriolic backlashes against immigrants can be found all across continental Europe. Indeed, this appears to be the case regardless of how generous a country’s welfare system is. What does matter, however, is the increasing fiscal strain that immigrants tend to impose on generous welfare systems like Sweden’s. Indeed, given the antagonistic relationship between the two, perhaps it’s no surprise that libertarian economist Jeffrey Miron feels that “we should liberalize immigration because it will restrain the welfare state”.
This fiscal burden is compounded by the different labor market structures that Nordic countries have. Unlike the United States, where educational institutions emphasize general skills over more specialized skills, the Nordic countries have extensive vocational training programs which impart industry-specific skills (welding, for example) to students. In Sweden, slightly more than half of all students follow vocational programs, while in Norway, around half of each graduating lower secondary school cohort opts for a vocational education.
As Harvard political scientist Torben Iversen states, since many jobs in these Nordic countries require specific skills only attainable from these vocational institutions, immigrants with general or no skills have difficulty finding jobs. This constitutes a one-two punch that threatens to knock out generous welfare regimes – not only are these immigrants unable to pay taxes and contribute to the economy, by being unemployed and drawing welfare benefits they add to the country’s fiscal burden. To use the parlance of political scientists, there is thus an “institutional incompatibility” between the specificity of skills which accompanies Nordic welfare states and immigration.
Two solutions are possible: cut back heavily on immigration, or reform the welfare system. A combination of both seems like a possible response to this problem. Given that there seems to be a lower limit on how low immigration can be reduced, more attention will have to be paid to welfare reform. In particular, Nordic countries could implement a multi-tiered welfare system to replace the existing universal model. This would mean reduced benefits for non-citizens, including long-term residents. This scenario, however, seems highly unlikely. Gosta Esping-Andersen, a Danish sociologist, describes the Nordic welfare state’s goal as one of “decommodification”, and one which breeds a strong sense of egalitarianism that transcends class boundaries. By bringing the welfare state closer to the means-tested model of the United States and the United Kingdom, welfare reform thus threatens to undermine the egalitarianism that is the hallmark and pride of the Nordic welfare state.
The generous and all-encompassing Nordic welfare model has worked well in the past, especially from the 1950s to the mid-1970s. But to the extent that Nordic countries want to continue accepting immigrants, they will have to reform their welfare system to reduce large fiscal strain. This will prompt many questions about the principle of universalism that underpins the Nordic welfare system. From Norway to Finland, the intense soul-searching will have to continue.
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