The Nordic Labour Markets – Still on the High-Road to Egalitarian Capitalism?

The Nordic Industrial Relations-systems have traditionally been highlighted as a successful “highroad” in the labour market and as an alternative to the liberal and conservative welfare states and industrial relations regimes. A labour market regime based on strong unions that led to a more egalitarian capitalism than seen elsewhere, but still combined with a strong overall macro-economic performance. The Nordic countries had the lowest level of inequality among the OECD countries, and while inequality is still at comparatively low levels it has been growing since the onset of the economical crisis in 2008.

While labour market institutions and industrial relations face intensified pressure for liberalisation and lower wages and working conditions to stay competitive in the global economy, the Nordic countries still adhere to a more regulated industrial relations setting. Unions have a strong position in the labour market and most workers are covered collective agreements and have decent wages and working conditions. However recent research have pointed to some cracks in the model e.g. intra-European migrant workers with below average wages and working conditions in certain sectors, declining union membership rates, and reduced social welfare – all developments that are particularly salient in a flexicurity model relying primarily on collective agreements.

This paper describes these cracks and gaps and addresses the questions of how and to what extent the Danish labour market face intensified pressure due to global/international economic integration, but also due to increasing integration and fragmentation of national production systems as well as political processes such as the European integration. While the overall features of the model seem intact, some recent tendencies point down a more neo-liberal road, with growing inequality and a more dualised labour market. Thus the paper discusses the potential trajectories for the Danish labour market model, which by nature is important for the broader social model including the welfare state. The Danish discussion is used to discuss related perspectives for the other Nordic Industrial Relations-systems.

The paper points to the continued existence of strong Nordic IR model with lower levels of inequality, and the paper will discus to what extent the model seems to be recalibrating rather than waning under the increased liberalization pressure and the intensified international competition. This development is dependent on political choices and political struggles in particular the continued presence of a strong and all-encompassing union movement.