Download Nordic Welfare Society.

Hilkka Pietilä, M.Sc.
Helsinki University
Affiliated with the Institute of Development Studies
e-mail: [email protected]
(Revised in 2007)
NORDIC WELFARE SOCIETY –
A HOLISTIC WOMEN-FRIENDLY DEVELOPMENT STRATEGY
FOR ERADICATING POVERTY AND BUILDING UP
AN EQUAL AND JUST HUMAN SOCIETY
Finland as a Case Study
Content
Page
Summary
1. What do we mean by welfare?
2
2. Emergence of public welfare over time and in politics
3
3. Pioneering women – social development from below
4
4. Finland was poor – in need of welfare
5
5. Welfare society in the Finnish way - a case study:
6
- Allowances and services
6
- The third parent in the family
7
- The image of the State?
8
- Where did the money come from – in the past and present? 8
- Investments in welfare did enhance the economy
10
6. Building welfare society was a way of becoming wealthy
11
7. The backlash has broken through
13
8. We need a New Social Contract
13
References
15
This paper is updated from the article published
in UNDP Journal “Cooperation South”, 2/2001
It is available in six language.
2
THE NORDIC WELFARE SOCIETY
Welfare in Finland built by the people and the State.
Summary
The common belief seems to be that first the country has to become rich, and then it can
provide good social conditions i.e. welfare for its people. The advancement of the Nordic
countries into welfare societies tells a different story. While studying the story of Finland I
found out
- that building welfare society was our strategy to eliminate poverty in the country;
- that welfare society did finance itself while economic growth and social development
mutually supported each other all along;
- why neither capitalism nor socialism became the prevailing system in any of these
countries but the Nordic form of welfare society instead, where these political
ideologies have balanced each other.
Historical presumption is that these countries would not have become as well-off, equitable
societies as they are today without bringing forth healthy and capable people, and they had
not been able to provide health, education and an abundant set of social services without
adequate economic growth, i.e. one requires the other.
Furthermore the Nordic countries are among those rare countries in Europe, which have not
been colonized neither colonizers. Thus they have not been enriched neither exploited by
colonialism. In this article we will study more closely, how a country can eliminate poverty
and strengthen its economy by building a welfare society.
1. What do we mean by welfare?
The prevailing notions and understandings about what welfare implies seem to differ a great
deal from country to country. They range from the totalitarian way of provisioning once
practised in the socialist countries of Eastern Europe to the public charity called welfare in the
United States. Even within Europe, the welfare state is implemented in a different form in
each country.
Anneli Anttonen, welfare researcher in Finland (1994), makes a clear distinction between the
concepts of social service state and social security state. The Nordic welfare system is
composed of both allowances and services which are regarded as public utilities and social
rights belonging to everyone, not as disgraceful mercy to the few as in the US and some other
countries. In this kind of a system people have triple citizenship: economic and social
citizenship in addition to the political one.
From the women’s point of view it is particularly important that the social benefits and
services are individual, belonging to everyone without distinction as to sex, marital status,
labour relationships, income level, race or nationality. Thus women enjoy their social
entitlements, for instance pensions, irrespective whether they are married and employed or
not. Also the taxation is separate, each one paying taxes according to his or her own income
irrespective of the income of the partner.
3
“All of these concepts (social service state, caring society, women-friendly society, etc) try to
make visible the female world in the western welfare states. They do not deal so much with
money transfers but with women’s remunerated work and women as carers. Furthermore,
instead of analysing labour-capital compromises, these concepts have opened up a way to
analyse sexual contracts and compromises“, says Anneli Anttonen.
“Social and other services are needed to make women full and autonomous citizens. However, women’s path from private to public, from daughters and wives to workers and full
citizens has gone through the welfare state. In countries where there does not exist any
established social service state, women’s role has remained more traditional.“ “Services in
kind have been as important as money transfers in equality plans and programmes.“(ibid.)
Raija Julkunen (1992), another Finnish welfare researcher, also sees this as a particular
expression of the society's gender perspective: "A society's gender system tells about the way
in which gender is organised in social structures, cultural meanings and personal identities.
The national differences are embodied in economic and cultural structures, as well as in the
national welfare model and employment pattern."
"In an international comparison, the Nordic countries appear exemplary in respect to social
welfare and gender equality," says Julkunen.
"The usual indicators of gender gaps or the participation of women in the labour force,
education and political institutions place them in the vanguard of developed nations;
in some statistics Finland is the most equal society. In the Nordic societies women
have, to an exceptional degree, been integrated into the male society. Women’s and
men's status as citizens has become more similar than perhaps in any other country in
the world."
Julkunen has pointed out that the issue is also the concept of the State. In the Nordic countries
the State is a mechanism for the redistribution of wealth, rights and utilities. If the State did
not perform these duties there would not be any other conceivable mechanism for it. The
market will never operate for the elimination of disparities and for equalisation and justice in
the society, they operate just in the opposite direction. Therefore the maintenance of the
welfare society is very difficult without regulation of the market.
The welfare state as it has evolved in the Nordic countries, is originally based on the
long historical and cultural heritage of these countries and has been developed for
about a century. The founding principles of the Nordic Model are democracy, social
justice and equality together with collective responsibility for the well-being of the
people living in these countries. Since these principles are deeply rooted in our social
matrix, the term Welfare Society describes the systems more appropriately than the
term ‘welfare state’.
2. Emergence of public welfare over time and in politics
“Socialism failed - it is obvious that the only ideology that works is capitalism”. This was the
conclusion of many in the beginning of the 1990s. However, in fact, socialism was not an
alternative but a reaction to the ills of industrial capitalism. Thus socialism and capitalism,
rather than being alternatives, are connected like Siamese twins. They are two ways of being
Western, as professor Johan Galtung pointed out in late 1970s. (Galtung, 1978)
Therefore it could as well be that the "real" socialism failed in socialist countries because it
was implemented as a social and political ideology of its own - not as the counterforce to
4
capitalism. It may well be, that in the Nordic countries socialism has functioned according to
its theory; it has mitigated the odds of capitalism. Capitalism has been strong enough to
produce wealth for these nations and socialism - leftist parties and trade unions - has been
strong enough to control capitalism and give the democratic legitimation to the Governments
to redistribute the wealth for common good.
The workers’ movement has been relatively strong in the Nordic countries since the
beginning of the twentieth century. But the most important "third party" throughout the
process was the Finnish women working within each political party ever since they were
granted full political rights in 1906, as the first country in the world. The promotion of
equality, welfare and democracy and attempts to eliminate disparities and poverty were the
obvious interests of women, irrespective of which parties they were affiliated with.
All this mutually regulating and balancing interplay of socialist and capitalist forces
together with the strong democratic ethos provide an explanation as to why neither
socialism nor capitalism but a Nordic model of welfare society became the prevailing
system in the Nordic countries.
3. Pioneering women - social development from below
Women were – in fact – the ones who started the work for raising the quality of life in Finnish
families decades before the public policies for welfare development ever started.
About a hundred years ago the majority of Finnish homes were still living in poverty and a lot
of misery prevailed. In the late 19th century an energetic and very patriotic group of welleducated, middle-class women in Helsinki felt a duty and vocation to initiate a movement for
“civilization to homes” in Finland. The issue was to train women to help themselves, to work
for the economic and cultural advancement of life in families in the wide Finnish countryside
where most of the people lived that time.
These women established in 1899 the Martha organization, the altruistic and patriotic aim of
which was to start the education and training of housewives all around the country. The
strategy was very simple, to mobilize educated women - often teachers and home economists
- to volunteer as kind of “missionaries” to travel around the country, visit homes and women,
teach and train them, organize meetings, seminars and courses with them on practical and
citizenship skills.
The women shared practical and useful knowledge, for example, on the importance of
cleanliness and hygiene, nutritious food, fresh air and good care for the health of children and
others. Skills were imparted for child care, better cooking and housekeeping, handicrafts,
raising chicken, cattle and pigs, establishing kitchen gardens and growing vegetables and
fruits, promoting the utilization of berries, mushrooms and wildlife from the forests and fish
from the thousands of lakes.
This “Martha method” was very effective for improving health and well-being of children and
families in the country. It did not require big public investments into huge welfare institutions
for which there would have been no economic resources that time either. Along with
increasing skills and knowledge of rural women, also their status in the families and
communities and their self-confidence and respect was rising.
At that time also the rising national consciousness and dawning political independence were
aims of the Martha work. It was enhancing the political awakening of women and preparing
5
them for political participation. After the constitutional reform in 1906 and in preparation for
the first elections, where women had both the right to vote and run for political mandate in
Finland, the training women for using their political rights was very much called for.
The result was that in the first modern parliamentary elections in 1907, 19 women were
elected into the parliament of 200 members. Many of these women were spontaneous
supporters of all efforts for the improvement of social conditions of women, children and
families in the society. Thus the Martha organization started to receive state support to cover
part of the expenses of their work soon after 1907.
Gradually the voluntary ‘missionaries’ were substituted for professional extension workers,
although their salaries remained very low, sometimes the only compensation they received
was their travel and other expenses. However, the social ethos, motivation and vocation
within the Martha movement were so strong that even the professionals were ready to work
on very modest terms.
The efficiency and beneficial impact of home economics extension work was very obvious in
Finland in those early decades. It “stood in for missing social policies” in the 1920s and
1930s (Heinonen, 1998) and helped to build the early foundations for the welfare society. The
results were seen, for instance, in the birth rates rapidly lowering, infant mortality declining
and average life expectations increasing. Home economics was included in the curricula of
public schools in 1941 and has remained there ever since.
The social progress in Finland in the early 1900s proves that national well-being can be built
in a popular way without huge public investments. Empowering women, strengthening their
abilities, knowledge and competence to help themselves is the way of proceeding towards
eradication of poverty. It is social policy from below, building self-reliant and sustainable
well-being for the whole nation.
This proved again an old saying, “If you educate a man, you educate a single person. If you
educate women, you educate the whole nation”.
4. Finland was poor – in need of welfare
In the 1940s and 1950s Finland was by no means a wealthy country. We had just survived
two devastating wars in 1939 - 44, lost about 15% of our territory, and the whole Northern
Finland had been burned down. Almost half a million people from the lost territory removed
and were resettled in the rest of the country (about 13 % of the population of 3.6 million). The
reconstruction of the country was an enormous effort. Furthermore, for political reasons, we
refused to receive the Marshall Aid, then the US scheme for reconstruction of Europe
(Jutikkala & Pirinen, 1973).
However, the issue in Finland was very much underdevelopment and poverty, not only the
consequences of the war. The most descriptive information about the misery and poverty still
prevailing in the peripheries of Finland at that time can be found in the reports of the officials
of the United Nations Children’s Fund, UNICEF, which provided aid for Finnish children in
the years after the war (Osman, 1991).
It was in those circumstances that the first steps towards the welfare society were taken.
Although the values and principles behind the social welfare have long historical and cultural
roots in this part of the world, the systematic political process towards it was emerging during
and after the second world war. We were very lucky, that the theoretical foundations and
6
systematic plans for our national development were drafted in late 1950s and early 1960s by
two professors of social policy Heikki Waris and Pekka Kuusi and not any economists (Kuusi,
1961).
For Waris and Kuusi it was explicit
that a consistent social policy is needed to assure and speed up the economic growth
and to equalize the distribution of the gains and benefits of it. The improvement of
people’s lives was seen as a means for sustaining economic growth and for the
common good of the whole nation. It was realized that these aims are interdependent
and mutually enhancing, sustainable economic growth was not possible without
healthy and capable people and the advancement of the life and well-being of people
was not possible without growth.
5. Welfare society in the Finnish way - a case study:
This paper is an effort to outline the characteristics and policies of the Finnish welfare society
as a case study. The Finnish case fits well into the picture presented by a Swedish welfare
researcher, Assar Lindbeck, who sees the Nordic welfare society as the most effective way to
create social security and equality, and in fact organizing care. He considers the fact that
people are taken care “from the womb to the tomb” as one of the triumphs of Western
civilization.
— Allowances and services
As stated above the Nordic welfare system is composed of both allowances and services as
individual rights and entitlements to all residents living permanently in these countries.
In Finland everyone individually is entitled for instance to
- a minimum income as basic unemployment benefit;
- child support allowances for all children until 17 years of age;
- paid parental leave for 44 weeks and thereafter unpaid child-care leave until the
child becomes 3 years, with a guaranteed resumption of the job;
- minimum salary in labour market (since 1985);
Everyone also has the right to
- free education up to university level;
- free school meals to all pupils in public comprehensive schools (since 1943);
- highly subsidised public health services and hospitals;
- free maternity and child health care for all mothers (since 1944);
- day care services for all children under school age, (completed in 1996);
- various forms of highly subsidised care for the aged;
- statutory employee pension in proportion to earlier income level;
- general national pension.
This is by no means an exhaustive list, but it only gives an idea about the major rights and
benefits available for everyone. In addition to these there are quite a number of allowances,
benefits, forms of support and reductions of various kinds in this field.
In fact, from the point of view of people, the Nordic welfare system is a life-long social
insurance, an insurance to guarantee for people that whatever may happen to them, their
children would not lose their opportunity to education, their family will not be left at the
mercy of relatives or charity organizations, no-one will be abandoned in case of illnesses,
accidents, unemployment or bankruptcy, and everyone will have some old age security
7
irrespective of their own entrepreneurship or employment.
Thus the welfare society provides a reliable safety net in case of any collapse in life.
Therefore open poverty and misery has practically disappeared here. This aspect has not often
been thought of, although people automatically use their entitlements, whenever they need to.
Due to neoliberal policies people are now increasingly "abandoned" upon their own
entrepreneurship and competitiveness, therefore the safety nets have become even
increasingly important.
— The third parent in the family
As already indicated above with regard to the rights and services, one of the basic points of
departure and original goals of the founders of the Finnish social policy was to equalise the
living standards and the purchasing power between those who raise children and those who
do not, i.e between single adults or couples without children and those having children.
Highly progressive taxation as such is a means to make people with higher salaries and no
dependants to share the costs of family and child care expenses and other public services
needed for families with children.
In practice, the individual social entitlements - regardless of one’s marital status or
employment relationship - and the access to the above-mentioned services are the most
important means for women both to achieve economic independence through participation in
working life and to have a family and children without too much extra burden. In practice, the
child and family allowances and child care services mean that the state shares with parents
both the expenses and workload of having children. Therefore, the state is in a way like a
third parent in every family.
The most important single factor enabling women to control their own lives is the liberal
legislation concerning reproductive health and family planning services. A new Abortion Act
took effect in Finland in 1970, and it eased the conditions for legal abortion and simplified
the procedure. Alongside the new legislation also the dissemination of the family planning
information and education, and the availability of the contraceptives were significantly
improved through maternity and sexual health clinics as well as through schools for the
teenage boys and girls. The effect was that illegal abortions vanished entirely, teenage
pregnancies have become very rare and the abortion rate in general has gradually declined to
one of the lowest in the world.
All these services and facilities create a setting, where women do have the choice and
opportunity to enjoy their social, economic and political human rights equally in life. Thus
women also do have a choice whether to have children or not, at what stage of life to have
them, and even to have as many children as they please.
From the viewpoint of the State and national economy, these kinds of social policies
do also bring women into the labour force to contribute to the statistical economic growth of
the country.
With all this feminization of the society it is sometimes spoken also about 'state feminism'
and 'femocrats', meaning feminist bureaucrats in public service. The femocrats respond
positively from above to the initiatives and aspirations of women's movement and
organisations from below, and then some progress takes place gradually.
8
— The image of the State?
However, in advancing equality and alleviating disparities in the Nordic countries, the welfare
principles go much further than that what was described above. For decades the equality
between people living in different regions of the country and working in various professions
has also been promoted by particular macro-policy measures. Among others we can mention
e.g.
-- effective regional policies regulating the domestic development was one of the main
means for keeping the whole country inhabited and providing people all over the
country with as equal opportunities for livelihood as possible;
-- good public transport system as roads, railways, subsidised tickets in trains, buses and
air traffic, which also decreased the needs of private cars;
-- decentralisation of free universities today to ten cities around the country;
-- public comprehensive schools, upper secondary schools and vocational training of
equal quality available in the whole country;
-- an efficient and comprehensive adult education systems network;
-- excellent public libraries all over the country;
-- highly subsidised theatre, music and arts made available in all cities.
These features indicate that the ideals of welfare and equality penetrate the entire social and
political matrix in the Nordic model, thus this model is much more than a system for social
security and support for individual people. Interestingly enough, women form the vast
majority of those who utilise the learning and cultural facilities around the country, they fill
the evening schools and theatres. Men are primarily interested in sports and games!
No wonder that the image of the State here is generally positive in the minds of the people,
contrary to many other parts of the world where the State can be taken as an antagonist or
even an enemy of people. This is also partly due to the fact, that the Nordic states are so small
as far as the number of people is concerned. In these small states people have been able – up
to recent years - to feel authentically that their will is reflected in the decisions of the
representative political organs. This has been particularly accentuated by the effective local
government system, the municipalities having significant power to decide how to implement
the policies at the community level.
— Where did the money come from – in the past and present?
A particular consensus, an unwritten social contract between capital and labour emerged in
Finland in the early years of 1960s. The Employers Union and the Centre Organization of the
Trade Unions agreed that they will attempt annually to reach a general agreement in collective
bargaining on wages and terms of employment. When renewed for definite time frames –
some times for two or three years - this agreement has constituted a binding framework for
the settlement of employment relations by both contracting parties.
Both parties, the employers and employees felt that they will gain, if there will be peace in
labour market and thus the economy will grow steadily. In a way they legitimated each others
aims and agreed annually how the cake is shared. This consensus was warmly blessed by the
government, because it implied that also the tax revenue grew steadily and government was
able to proceed in building welfare. In fact this system became the machinery which has been
operating fairly smoothly for decades and assured the constant economic growth. The
consensus was mostly reached also in the parliament for necessary legislation for further
social advancement.
9
A major source of financing the welfare system is the highly progressive taxation on salaries
and wages. The progressive taxation has been also the most important means of effective
equalisation of income distribution between people. The progression earlier may have
increased the taxes even up to 50 - 60% of salaries and wages depending on the level of total,
personal income, but in recent years the progression has been lightened significantly.
Another significant source is the social security contributions, which the employers have been
legally obliged and agreed to pay to the Social Insurance Institution and pension funds. It is
based on the payrolls and has increased the total labour costs by up to 60-70 % at their height
in late 1980s.
For the decades there were several other measures for protecting and financing the welfare
society. Before the liberalisation of international economy, very extensive and strong
regulatory measures were normal practices and an important source of public revenue in the
national economies of most countries. In the Nordic countries regulation was crucially
important part of the economic and development policies from the 1940s to 1980s. .
In Finland the regular measures for governing the economy was
- the regulation of currency rates and transactions, devaluations and revaluations used
as the ultimate means of adjusting the terms of trade according to the needs of the
export industry.
- the regulation of export/import trade through licence systems, legal protection for
Finnish products and domestic industry, regulation of prices and purchasing power at
the domestic market; protection and subsidies for agriculture, etc.
- high purchase and import taxes on alcohol, tobacco, petrol, cars and other luxury
products, which brought significant part of state revenue and regulated the amount of
import of such products.
These were the major measures and policies for governing the economic development in the
country and extracting resources from the constantly growing economy for the gradually
increasing public expenses such as social security benefits, expanding and improving
education, health care, child care, old age support systems and cultural services, transport and
other public services.
In the beginning of 1990s the global liberalisation trends started to influence the economic
policies in all countries. The borders were opened up for free trade and free movement of
labour and capital. The regulatory measures were gradually dismantled and even forbidden.
The establishment of the World Trade Organization, WTO, in 1995 implied a new strong
international agency coming into picture. The demands of the structural adjustment and
deregulation were enforced by governments in international agreements. At the same time –
1995 – Finland became a member of the European Union and in 1999 entered also the
European integrated market and common currency within the European Economic and
Monetary Union, EMU.
The state had to reform drastically the system of collecting revenues for public expenses and
financing the welfare society. One of the most important sources of the state revenue still is
the income and capital tax and the social security contributions by employers. But the
pressures from outside and the globalized market for reducing the public expenses and
lowering the taxation are constantly growing.
The government has instituted a new value-added tax, VAT, which implies 17-22% tax on all
10
consumption of goods and services. It replaces a lot of revenues earlier acquired from various
forms of regulation. The taxes on income and capital and the value-added tax on consumption
produce today about 75 % of the revenue of Finnish government. The rest of the revenue
comes from the employers’ social security contributions, and from the taxes on alcohol,
tobacco, imported cars, etc.
— Investments in welfare did enhance the economy
It has been stated that in the Nordic social systems the money rotates differently than in the
other European systems. This is seen very clearly in Finland.
The public welfare services and institutions create a huge public sector of work which
employs hundreds of thousands of people – mainly women - in caring for, educating, serving,
and transporting other people. These jobs are necessary to be maintained even when jobs in
other fields of work are mechanised and automatized. These jobs can neither be transferred
abroad, because they concern people, who are in Finland. The better this sector is developed,
the more jobs it provides.
People in social sector have meaningful jobs, earn their livelihood and use their incomes for
their housing, clothing, food, services etc. This way the money invested in the social
institutions keeps rotating, creates jobs, demand and consumption and thus also maintains the
public jobs, and gives revenues to the state through the taxes paid by these people.
In fulfilling their tasks the big social institutions - like schools, hospitals, day care and health
centres, etc. - also create a lot of demand for goods and products which they consume in their
functions. For instance, we can think of the free school meals every weekday for about
700,000 pupils in basic and secondary education, and subsidized catering for about 400,000
students in universities and vocational training institutions, as well as the premises, facilities
and personnel of day care and pre-school centres for children below the school age.
There are also a few hundred thousands of people working in the administration of the social
system. As long as the highly needed services are maintained as a public system, the state can
guarantee their availability and functioning. They can be developed according to the national
needs and their availability and equal quality be assured.
In Finland the public system has produced very economically the services needed by the
whole society and particularly by those who could not afford to buy them from the market. As
a whole, the public sector constitutes a huge buffer zone in the national economy, both as
provider of jobs and services and as creator of demand and purchasing power.
During the decades of systematic policies and work for welfare and equality, Finland became
one of the wealthiest countries in the world with a highly equal distribution of wealth. The
long-term assessments published during the years have indicated that the income disparities
declined not only between people but also geographically between the regions of the country.
The differences in income levels of people did not vary very much between centres and
peripheries.
The present trends of the liberalization of trade, free movement of capital and labour and
privatisation of public services turns the process around. The privatization implies that
services will gradually become more and more dependent on demand. It also leads to decline
of services in the sparsely populated areas, where people are less wealthy and more needy.
Even the quality of private services vary according to their price, those who can pay more get
11
better services. These transformations result in increasing disparities between people and
regions.
6. Building welfare society was a way of becoming wealthy.
As we have seen above, the Finnish system had an early focus on free basic education for all
and various measures for improving health of people on a nation-wide scale. This was a way
of enhancing the availability of educated, healthy labour for expanding industry and
production. The measures for levelling incomes (progressive taxation, social transactions like
child and family allowances, etc.) did equalize effectively the purchasing power in the society
and maximize the consumption capacity to the advantage of the economic growth.
Through the provision of day care, school meals, old age and medical care in the appropriate
institutions, the welfare society liberated women into the labour force. Thus all of the capable
human capacity was made available for the production system. Women themselves have
willingly used the opportunities to make their own living and acquire economic
independence. With their earnings they for their part increased the purchasing capacity of the
society, thus contributing both to production and consumption.
The redistribution of economic benefits and advancement of justice and equality has
facilitated the consensual bargaining between capital and labour and led to very particular,
unwritten social contract as described above. This guaranteed peaceful development of
economy and market. In the skilfully regulated circumstances the efficiency and productivity
of industry improved constantly, thus providing increasing profits to the entrepreneurs.
Furthermore, due to the consensus between the social partners, the government has been able
to bring forward the legislation necessary for financing the welfare system. Through all these
measures and policies the benefits of the economic growth was redistributed in kind and in
money to the members of the society in relatively equal measures.
In Figure 1 on page 12 of this paper the interplay between economic growth and development
of welfare system is described. If we read the picture from the bottom to the top we can see
how these two processes interlace and mutually support each other during the time and years
of the social progress, while the economic growth grew up on the left and the welfare society
emerged on the right.
This figure is hoped to demonstrate how
economic growth, increasing wealth and gradual construction of a broad welfare
system are parallel processes which proceed in mutual interaction and enhance each
other. The productivity and efficiency cannot be increased in the industry and business
without healthy, educated and well-trained people. And without sustainable wealth
the comprehensive welfare society cannot be maintained.
The historical experiences in Finland also prove that a society cannot leap into sustainable
wealth and well-being. An advanced welfare society can only be achieved through a process
from below, democratically together with the people. Both the economy and people need to
grow and the growth and maturation of a nation takes time through generations – and it takes
patience, persistence and assiduity as well as respect, love and understanding of people.
12
Figure 1.
Graph Hilkka Pietilä
INTERACTION OF ECONOMY AND WELFARE
THE ROLE OF THE STATE
PROGRESSIVE TAXATION ON INCOMES, SOCIAL OBLIGATIONS OF THE
EMPLOYERS, VALUE-ADDED TAX ON ALL CONSUMPTION OF GOODS AND
SERVICES, TAXES ON IMPORTED LUXURIES, ETC.
REDISTRIBUTION OF WEALTH:
EQUAL ACCESS TO SOCIAL SERVICES AND PUBLIC SUPPORT
Constant growth of
economy and
profits
Equal redistribution of
wealth
Peace in labour
market
Consensus between
capital and labour
Everybody into the
labour force
Day-care, old-age and
health-care – Women
in employment
More consumption
and growth
Equalized incomes and
buying power; social
security, public jobs
Healthy and welltrained labour
Education, training and
health for people
REQUIREMENTS OF
THE ECONOMY
WELFARE SOCIETY
PROVIDES
THE INVESTMENTS IN EDUCATION AND TRAINING, HEALTH AND OTHER
SERVICES ARE INVESTMENTS IN WELL-BEING AND NATIONAL WEALTH.
ADVANCED STATE PROVIDES BASIC SERVICES AND SOCIAL SECURITY TO
ALL. IT AIMS AT EQUALITY OF WOMEN AND MEN AND ALL CITIZENS.
-----------------------------------------------------------------------------------------------------------------
13
7. The backlash has broken through
This picture of a highly developed welfare and service society described above was very
much the reality in Finland until the early 1990s. In recent years, all of this has been at stake.
The economic globalization process in Europe takes place under the auspices of the European
Union. The liberalisation of capital transactions in the late 1980s and beginning of 1990s
meant that private companies gained new leverage and Finland had to open its economy to
international competition.
In order to qualify for EU membership in the beginning of 1990s the Government started the
austerity measures in advance. The recession and the requirements of the European Economic
and Monetary Union EMU served as appropriate excuses to start dismantling of the welfare
state. The EMU requirements served as a disguise for interests of business companies. After
the liberation of monetary transactions and trade the pressure of the globalisation has been felt
profoundly in the whole economy.
In the beginning of 1995 Finland became a member of the European Union. Since then the
national government and parliamentary system have been intimidated while major part of
decision-making takes place outside Finland in the EU headquarters. The government is in
the trap; if it does not lower the taxation the industry is transferring their functions out of the
country and on the other hand people in Finland are creating increasing political pressure to
maintain the social benefits and public services in Finland.
The liberalization of economy has strengthened the power of the market mechanisms which
do not recognize any democracy. The deregulation has given full freedom to the operations
of business companies. There is also strong pressures that business principles like
competitiveness and cost-effectiveness should be applied even in hospitals, schools and
universities, where these principles are disastrous.
In this situation also the power relationships between corporate employers and trade unions
have changed dramatically. The globalized corporations derive strength from their
international capital base and expansion of their operations, but the workers and trade unions
are in the unemployment trap and remain in defensive position. The former equal consensual
arrangements are eroding.
Women have seen this development as a backlash against equality and democracy. The
austerity measures still continue, even though the economy is making records. The rules of
EMU and agreements within the WTO require lowering taxation and reducing public
expences. This leads to privatization of public services and dismantling of public institutions.
The cuts in public spending are hitting especially the interests of women, both the social
services they need and the jobs they have in the public service institutions.
8. We need a New Social Contract
It is important to realize that from the economic point of view continuous, endless growth and
consumption are not possible and from the social point of view endless growth of welfare is
not necessary. In a society, where demographic development is balanced, it is possible to see
where and when the needs of social support and services are satisfied.
For example when there are facilities in schools for all children in school age or in day-care
centres for all children under school age the need of space in these institutions is satisfied although the quality of services can always be improved.
14
When the material and social needs are satisfied the society has reached bliss. Then only the
necessary institutions and the harmony with the natural environment should be maintained.
Culturally and personally growth can continue throughout our lives and each one of us can
reach the level of humanity allotted to her or him as an individual human being.
In year 2000 the UN organized for the celebration of new millennium the General Assembly
Summit, where the participation of the heads and leaders of states hit all earlier records. This
Millennium Summit adopted unanimously the Millennium Declaration which set the goals for
global development in forthcoming years until the 2015. The first of the goals is that the
number of people living in the extreme poverty and hunger should be halved in the world by
2015 (Resolution A/RES/55/2, 8 September 2000).
However, it is tragic that still in the intergovernmental conferences and discussions the
poverty is approached as if it were a single separate malaise which could be eradicated
without interfering in the world economic system, the policies of global corporations and the
strong economic blocks of the states. This approach is false and hypocritical.
Poverty is a pernicious plague as long as the international community will not tackle the
world economic structures and the policies of the rich and strong industrial countries and
trade blocks. Eradicating poverty and creating welfare is not a business - it is a human
necessity. If the welfare of people is ignored, if caring, nurturing and education fail, if
reproduction fails, everything else will collapse, too.
We need policies for regulating the global trade and commerce for the advantage of equity
and justice in the economic relationships at all levels. We need policies and measures for
making the rich countries and global corporations accountable to the international community
and people around the world and taking their duty and responsibility for the future of
humanity.
We do need a new kind of Social Contract - of a global nature - between the Capital and
People, a contract which will ensure that fair share of the gigantic profits of the corporations
be allotted for the common good, for the welfare of people. Therefore we also need to
redefine and renew the methods for the redistribution of wealth to the people in a way which
reflects the true human needs and aims at global social justice and sustainable utilization of
natural resources.
15
References:
Anttonen, Anneli. 1994. “Welfare pluralism or woman-friendly welfare politics?” in Anneli
Anttonen (ed.) Women and the Welfare State: Politics, Professions and Practices.
Department of Social Policy, University of Jyväskylä, working papers No. 87/1994.
Galtung, Johan. 1978. “Two Ways of Being Western: Some Similarities Between
Liberalism and Marxism.” A mimeo quoted by Björn Hettne in Current Issues in
Development Theory“. Sarec Report, R 5:1978
Heinonen, Visa. 1998. Talonpoikainen etiikka ja kulutuksen henki. Kotitalousneuvon-nasta
kuluttajapolitiikkaan 1900-luvun Suomessa.(Peasant Ethic and the Spirit of
Consumption. From Household Advising to Consumer Policy in the 20th Century
Finland.) Bibliotheca Historica 33. Helsinki
Julkunen, Raija. 1992. The Nordic Countries - Women-Friendly Societies?” Presentation in
the Conference “The CSCE-process supporting women in their efforts to develop a
just society“. Helsinki 4-5.6.1992.
Jutikkala, Eino & Pirinen, Kauko. 1973. Finlands historia. Natur och Kultur, Stockholm.
Kuusi, Pekka. 1961. 60-luvun sosiaalipolitiikka (The Social Policies in the 1960s.) WSOY,
Helsinki 1961.
Osman, Hannele. 1991. Kun UNICEF auttoi Suomea 1947-1951 (When UNICEF helped
Finland in 1947-1951). Suomen UNICEF-yhdistys ry.
Pietilä, Hilkka. 1995. “Women’s participation in policy- and decision-making - DOES IT
MAKE A DIFFERENCE?” Paper presented at the INSTRAW Panel on “The
Economic and Political Empowerment of Women“ in NGO Forum, The Fourth World
Conference on Women, Beijing, 1995.
Pietilä, Hilkka. 2007.”The Progress of Women in Finland - their Commitments and
Entitlements in the Past and Present”. Prepared for the presentation in Hamamatsu
City, 02.03.2007.
United Nations. 1995. Human Development Report, 1995. The United Nations/UNDP/Oxford
University Press, 1995