Rethinking Social Security: Can Labour learn from Nordic policies?

By Jo Ingold / @joingold

Looking to other countries for policy ideas allows us to shed light on similar societal issues in a different context . The Nordic countries are often held up as pinnacles of good universalist and social democratic policies and here I set out three areas where Labour could look to these countries for ideas, particularly from Denmark.

Firstly, we should shift the terms of the ‘welfare’ debate that the Conservatives have set. The founding father of UK public administration Richard Titmuss argued that welfare is the opposite of ‘illfare’.

But increasingly we’re moving towards an Americanised, residualised idea of ‘welfare’ as a meagre, mean-spirited version of social protection that doesn’t even provide adequate poverty relief.

Instead, Labour should explicitly talk about ‘social security’ and put forward a vision of a social security system that people feel benefits them and gives them a stake. Critically, this involves reviving the contributory principle that was the basis of Beveridge’s welfare state and is still crucial to social security in the Nordic countries.

This cornerstone was significantly undermined by Conservative reforms in the 1980s, resulting in more means-tested benefits. And New Labour didn’t address this. Although this would involve an overhaul of our current system, we could take incremental steps towards this to ensure that the contributions people pay into the system count towards the social security they receive, rather than making virtually no difference, as now.

Astonishingly, at a time when we have largely moved away from the male breadwinner model, we still have a household-based model of social security, which the Government’s single working age benefit Universal Credit will still retain, though notably with individualised conditionality for benefit. Denmark has recently made changes to unemployment benefit in order to incentivise short-term work, which is also something we could look at.

Secondly, we can learn from the Danish approach to ‘active labour market policies’, or what is often called ‘welfare to work’ in the UK. Currently, this employment support is largely contracted out, with Jobcentre Plus dealing mostly with the short-term unemployed and those who have been through the Government’s two-year ‘Work Programme’ but have not found work. UK welfare to work policy is largely ‘work first’, focused on the quickest way into work.

The current set-up has two main failings. Firstly, it provides inadequate support for those furthest from the labour market or with multiple and complex needs. Secondly, many still cycle between social security and low-paid, precarious work. Since the introduction of activation in the 1990s, Denmark has experimented with approaches that have privileged training and those that are more ‘work first’, as in the UK. Most recently the direction of travel is of ‘meaningful activation’ focused on assisting people into sustained employment and employing interventions and support as required by individuals. Danish activation has moved away from a conditionality regime that requires the unemployed to apply for a certain number of jobs per week, following a backlash from employers who were inundated with applications.

Although like the UK, the Danish approach is largely focused on the supply of labour, there is also some regard for the demand-side, i.e. a focus on the jobs that are available in local areas and on employer requirements. Danish activation policies are also underpinned by precise regulations to try to ensure that when the unemployed move into work they don’t displace or substitute for other workers in the process. This is important, otherwise you’re just reshuffling the jobs queue. That Danish employment policy is ‘municipalised’, with policies designed and delivered at the local authority level, allows them to be tailored to the requirements of local populations and local labour market contexts. This kind of devolution of employment policies has a huge amount of potential for the UK. Also key to this are ‘enabling’ services at the municipal level (such as social care and childcare) that are critical to supporting people into work and which are being undermined by current short-sighted austerity policies.

Finally, and as a highly related matter, we can learn from the principles underpinning the Nordic vision for childcare.

Childcare has been (and continues to be) crucial in helping parents (particularly women) take up paid employment. Currently, UK labour market policy assumes that parents can go into work and that childcare will automatically follow. Labour’s universal entitlement for 3 and 4 year olds was a fundamental change. But beyond this minimum childcare is very costly and beset with supply problems , meaning that a patchwork of formal and informal care is increasingly the norm for parents.

By contrast, the Danish childcare system ensures that every child has a place in childcare regardless of their parents’ income or whether they’re in work, study or training, with fees on a sliding scale according to income. This means that parents are not prevented from taking a job because they can’t find or afford childcare. It also ensures that when parents change jobs or have to change their shift patterns their children have continuity and stability of care. Yes, the extent of public subsidy in Denmark is high and it is expensive. But this shouldn’t prevent us from taking inspiration from the simple idea that childcare is about the well-being of the child and that childcare precedes labour market participation – not the other way around.

There is always much to learn from other countries’ policies and we need to be realistic about what is possible in the UK context. However, this should not stop us from being bold and ambitious about a Labour vision for social policy.

The Beveridgean post-war welfare state was built on specific foundations, such as the male breadwinner model and secure jobs for life.

This context has changed, the world of work has changed and continues to face significant changes into the 21st century. It’s time to re-think social security, employment support and other critical social support such as childcare to enhance people’s well-being across the life course. For this we may even need a different, new and refreshing language and terms that set our vision apart. We should embrace this challenge with open arms and not be afraid to breathe fresh life into this debate.

Jo Ingold is a lecturer at Leeds University Business School and writes here in a personal capacity.

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