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102. Finland and Denmark - Are They Ideal States - How They Reached There...!!

Updated: May 24, 2021

What are the Happiest Countries in the World ?

Sweden, Norway, Finland, and Denmark (collectively the Nordic countries) have a combination of high living standards and low income disparity that has captured the world’s attention. At a time when the growing gap between the rich and poor has become a political hot button in developed nations, the region known as Scandinavia has been cited by many scholars as a role model for economic opportunity and equality.

The Nordic Model

The Nordic model is a term coined to capture the unique combination of free market capitalism and social benefits that have given rise to a society that enjoys a host of top-quality services, including free education and free healthcare, as well as generous, guaranteed pension payments for retirees. These benefits are funded by taxpayers and administered by the government for the benefit of all citizens. The citizens have a high degree of trust in their government and a history of working together to reach compromises and address societal challenges through democratic processes. Their policymakers have chosen a mixed economic system that reduces the gap between the rich and the poor through redistributive taxation and a robust public sector while preserving the benefits of capitalism. The model is underpinned by a capitalist economy that encourages creative destruction. While the laws make it is easy for companies to shed workers and implement transformative business models, employees are supported by generous social welfare programs.1 The result is a system that treats all citizens equally and encourages workforce participation. Gender equality is a hallmark trait of the culture that not only results in a high degree of workplace participation by women but also a high level of parental engagement by men.5 History Helps

What makes the Nordic model work? A combination of shared history and societal development is credited with much of its success. Unlike areas that developed around the formation of large corporate-owned farms, the history of Scandinavia is largely one of family-driven agriculture. The result is a nation of small entrepreneurial enterprises directed by citizens facing the same set of challenges. Solutions that benefit one member of the society are likely to benefit all members. This collective mentality results in a citizenry that trusts its government because the government is led by citizens seeking to create programs that benefit everyone. Accordingly, the citizens willingly chose to pay higher taxes in exchange for benefits that they and their family members will get to enjoy. The result is publicly funded services, such as healthcare and education that are of such high quality that private enterprise has no reason to offer these services or room to improve them. This mindset remained intact as capitalist enterprises developed. Challenges of the Nordic Model include an aging population and an increase in immigrants.


The Nordic model faces some notable pressures to its sustainability. Two of the largest concerns are an aging population and an influx of immigrants. In terms of an aging population, a large base of young taxpayers and a smaller population of older residents receiving services is the ideal scenario. As the population balance shifts the other way, benefit reductions are a likely outcome. Fortunately for their citizens, the Nordic nations have willingly chosen a path of greater equality for all citizens and have demonstrated an ability to work through their political differences for the greater good of all. In terms of immigration, Scandinavia attracts a notable influx of newcomers seeking to enjoy generous public benefits. These new arrivals often come from nations that do not have a long, shared history of making decisions on behalf of the common good. While native Scandinavians tend to have a high degree of participation in the workforce as part of their collective decision to support the amenities their society offers, immigrants do not always share this vision. These new arrivals present a significant burden to the system and could, ultimately, result in its demise. Other Concerns

Two other concerns include native citizens taking advantage of the generous benefits system and the impact of poor global economic conditions. Again, the culture of cooperation and a shared interest in a strong social safety net has enabled these countries to adjust their benefit programs and continue to deliver a wide range of services even in the aftermath of the Great Recession. A Model for Other Nations and " Third Way "

The Nordic model has attracted a significant amount of attention from other nations. Many people wonder if it provides a template for smaller countries where citizens are more homogeneous in terms of their opinions and experiences yet live in poverty or repression as a result of Marxist government policies. Others believe that this provides a template for reforming the unchecked capitalism that has created notable income inequality and dramatic differences between the quality of life between the rich and the poor in prosperous nations. Sitting between the controlled economy of Marxist regimes and unchecked capitalism at the other end of the spectrum, the Nordic model is sometimes referred to as “the third way.” Politics and Controversy

The Nordic model has created quite a bit of controversy outside of Scandinavia. Many people in countries operating under what is often referred to as “the American model” of capitalistic enterprise see the Nordic model as an attractive alternative to the winner-take-all brand of capitalism that has resulted in poverty, a lack of affordable quality health care and education, a deteriorating social safety net, a lack of retirement security, massive scandals in the financial markets, and tremendous income disparity. These critics of the American model point out that public services, such as education and government-run programs in America, are of poor quality, and that the rich have access to far better resources than the poor and that implementation of the Nordic model could solve these issues. Critics

Opponents of the Nordic model criticize the high taxes, high degree of government intervention, and relatively low gross domestic product and productivity, noting that these all limit economic growth. They point out that the Nordic Model redistributes assets, limits the amount of money available for personal spending and consumption and encourages reliance on government-subsidized programs. The Bottom Line

The unwillingness of Marxists governments to make changes is likely to mean that philosophical discussions about the implementation of the Nordic model will remain just that: discussions. The inability of developed nations to move beyond vitriolic political rhetoric coupled with their lack of shared culture due to geographically and ethnically diverse populations that lack shared experiences will similarly serve as barriers to implementation of the Nordic model in those countries. In any event, while outsiders argue vigorously in favor of social democracy or against so-called welfare states, the Scandinavians themselves make no effort at all to induce or coerce other nations into adopting the Nordic model. Rather, they seem content to work through their problems together in a collective manner that consistently results in placing them at the pinnacle of global surveys of the happiest people in the world.

Social Security Programs in Finland

What is Kela ?

With you throughout life – Supporting you through times of change

Kela, the Social Insurance Institution of Finland - provides social security coverage for Finnish residents and many Finns living abroad through the different stages of their lives. Among the social security benefits offered by Kela are family benefits, health insurance, rehabilitation, basic unemployment security, basic social assistance, housing benefits, financial aid for students, disability benefits and basic pensions.

Kela is committed to providing excellent customer service. Every year, our customers make approximately 2 million visits to our customer service locations and contact us 1.6 million times by phone. We also offer customer service through social media.

The processing and determination of benefit claims has been decentralised to the insurance districts. Some decisions are taken in dedicated units or centres.

Kela operates under the supervision of Parliament. The administration and operations of Kela are supervised by 12 Trustees appointed by Parliament and 8 auditors chosen by the Trustees. Kela’s operations are governed and developed by the Board of Directors, which has 10 members. Kela’s mission statement:

Kela secures the income and promotes the health of the population and supports the capacity of individual citizens to care for themselves.

Kela's values:

Respect for the individual, expertise, cooperation, renewal.

Residence-based Social Security

Once anyone has qualified for coverage under the social security system, you may apply in the same way as Finns for following benefits such as:

  • Family allowance

  • Student financial aid

  • Maternity allowance

  • Sickness allowance

  • Cash benefits for parents

  • Reimbursement of medical expenses

  • Unemployment benefit / allowance (non-earnings related)

  • Labour market subsidy

  • Child care subsidies

  • Old-age retirement pension

Employment-based Social Security in Finland

Social security based on employment includes earnings-related unemployment allowance, retirement and old-age pensions, accident insurance and security against disability and illnesses. Private insurance companies and the Finnish Centre for Pensions deal with matters related to employment-based social security.

Earnings-related Unemployment Allowance

Unemployment funds operated by trade unions pay an unemployment allowance for their unemployed members. Entrepreneurs can also belong to an unemployment fund. The amount of the allowance is determined by your salary/income before unemployment and is usually higher than the unemployment allowance provided by Kela. You can receive an earnings-related allowance for about two years. The requirements are that you have been a member of the unemployment fund for a specified period before the termination of employment, and that you have paid your membership fees. Because of this, you should immediately find out which unemployment fund you can join after finding a job

Why Finland And Denmark Are Happier Than The U.S.

Social Security and Welfare Benefits in Denmark

Demark provides a high level of social security and much of the system is funded by taxes and, to a lesser extent, social security contributions.

The Danish welfare system includes the following benefits:

  • Health insurance

  • Child allowance

  • Maternity benefit

  • Holiday pay

  • Disability benefits

  • Sickness benefits

Anyone who intends to stay in Denmark for more than three months, or for more than six months if they are EU or Nordic citizens, needs to register at the Civil Registration Office, where they receive a CPR number. It is a legal requirement for all residents of the country to have this number. Registration takes place at the Citizen Service office in the municipality (kommune) of residence. This number is required in order to benefit from healthcare and social security benefits in Denmark.

Social security contributions are deducted from salaries at a rate of eight percent.

Health Insurance

Local authorities are responsible for issuing the national health insurance card (sygesikringskort), which is also called the health card or the yellow card. This card also functions as an identity card and is needed to participate in the health care system. The card states the holder's name, address and personal identification number (CPR), as well as the name and address of the holder's general practitioner (GP). The card also has a telephone number which should be called in order to make an appointment to visit a doctor.

The following documents are needed when applying for a national health insurance card:

  • Residency and work permits

  • Passport

  • Legal proof of an address in Denmark, for example, a rental contract

After an application has been made, it can take up to six weeks to receive a national health insurance card by post.


  • The Nordic Model involves the standards followed in Sweden, Norway, Finland, and Denmark.

  • These nations are known for high living standards and low income disparity.

  • The Nordic Model includes social benefits such as free education, free healthcare, and guaranteed pension payments.

You May be aware of the perks of living in a Nordic country: free and equal access to social services, regardless of income or economic need. That privilege does come at a cost – a marginal tax rate that takes about half a resident’s income – but you won’t hear most citizens arguing. They’re funding the public sector and enjoying a relatively generous social safety net that covers a broad array of services.

On top of that, they’re reaping the benefits of a well-functioning, competitive economy. This is the case among all the Nordic countries – an extensive, mainly tax-financed welfare system that exists hand-in-hand with a well-functioning economy – and it’s such an alluring curiosity to outsiders that it’s come to be known as the Nordic paradox.

Nordic Countries have evolved and presented a beautiful Template for an Ideal State, in Which, They Measure the Progress in terms of Happiness Index instead of in GDP Terms.

Its Well Run Social Welfare System and One and All Should Emulate their Model of Social Security in the Rest of the World.

MM Rao


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