Ageing and welfare reform in the Nordic Countries, 1990-2010 ...

equivalent to a mandatory system by having the state foot the bill– and subsequently by makingbenefits more generous in terms of compensation and duration. 20After 2000, this development was reversed in Denmark and Sweden by increasing members’contributions. Much of this was carried through indirectly and tacitly, via reducing or abandoningtax deductions. In Sweden, members’ contributions also became dependent on unemployment risk,and benefits became far less generous. In both countries, benefits became increasingly conditionalon work & mobility requirements. In Sweden 2007-08, it became impossible to reqalify for benefitsthrough activation, and the compensation rate was reduced and related to duration of benefits 21which was reduced to 300 days, with possibility of 300 more days on a reduced benefit. On thisbackground, it is hardly an exaggeration to speak of a re-commodification and a privatization ofsocial risk. “Systemic retrenchment” was also involved as unions were weakened.In Denmark the “flexicurity” system was jeopardized by an unexpected redution of duration ofbenefits to only two years in 2010. As a response, wage earners claimed more employmentprotection in collective agreements. Considering retrenchment elsewhere, duration of two years isnot exceptionally bad. But duration was the main “security” component of Danish “flexicurity” –the so-called golden triangle of liberal employment protection, generous security for theunemployed, and activation to bring people back to work (Madsen, 2002). This institutionalcomplementarity was nearly abandoned over night. So far, it is difficult to guess about effects (DetØkonomiske Råd 2009a; Nørgaard 2009), but the Danish and Swedish reforms do representsignificant instances of re-commodification, and if the economic recession continues as expected, itwill have a significant social impact in both countries.Tax reformsFinally, most countries have sought to reduce taxes on labour in order to stimulate labour marketparticipation. Whether it works it remains contested. From the 1990s, a concern for globalcompetitiveness pulled in the same direction – mainly aimed at reducing corporate taxes but alsotaxes on labour. As far as taxes on labour is concerned, empirical analyses have never been able tovalidate tax flight (Velfærdskommissionen, 2005; Pedersen, Røed & Schröder, 2003).Whereas the labour supply argument addresses marginal taxes, migration incentives are aboutaverage taxes, and about the sum of all taxes – or rather: about the sum of all taxes plus”necessary” social expenditures. Considering that mobility across borders is found mainly amongthe young – who will have children sooner or later – the important question is how economicincentives look for this target group. With large subsidies for high-quality child care, the Nordiccountries appear highly competitive in this respect: Few people in the relevant taget group wouldhave economic incentives to emigrate from the Nordic region.As regards taxation of wages, Nordic countries are not high tax countries anymore. This holds both20 According to Roed (1999) members financed only some 20 per cent of the costs in Denmark, and about 5 per cent inSweden and Finland at that time.21 People with children under 18 maintain 70 per cent for addditional 30 weeks.16