The Norwegian welfare state on the threshold of a new century.

Abstract

A primary function of the welfare state is to protect citizens against social risks. Within the Norwegian (and Scandinavian) ones, this protection has in general been provided in the form of universal social rights to relatively generous benefits. During the last hundred years an increasing number of risks (old age, sickness, unemployment, disabilities etc.) have been recognized as matters of public responsibility. Risks that have not been granted this recognition have been subsumed under residual Social Assistance Acts, i.e. by a means – tested, far less generous social security system. The foundation of welfare policy has been full employment, and when a number of welfare states were stricken by unemployment problems in the 1970s many feared that this basis was crumbling. In 1981 the OECD published a report that should become influential, The Welfare State in Crisis (1). According to the OECD’s analyses of demographic and economic challenges, too generous welfare programmes and too strict regulations of markets had caused oversized, bureaucratic, inefficient, and costly welfare states (2). This diagnosis of the relationship between economic and welfare policies has been repeated over more than 20 years. However, on the threshold of a new century we can ascertain that the financial foundation of the Norwegian welfare state has not been crumbling away. The question remains, though, whether the architecture of this state is in a process of reconstruction. For, even if the OECD’s diagnosis was rather broad and vague regarding concrete symptoms of crises in various welfare states, the fact remains that these experienced more or less serious endogenous and exogenous challenges in the 1980s and early 1990s. The economic recession that hit the Nordic countries during the 1990s did not hit Norway as it has been described in Sweden (2) and Finland (4). The oil economy ensured a steady income for the state and generous welfare benefits could be maintained. But nevertheless, efforts were undertaken to modernize the welfare state, partly as a response to criticism from the OECD, and partly from a more general shifting political ideology.