Page 13 - AEI Insights 2019 - Vol. 5, Issue 1

Furuoka et al, 2019

responsibilities. The Nordic model of female labour supply which emphasises on work-life
balance is highly successful, with Norway having the highest rate of female labour force
participation among OECD countries (Kinoshita and Guo, 2015). Recent statistics show that
about 83 percent of mothers with young children are employed (Kinoshita and Guo, 2015).
This is attributed to comprehensive parental provisions and subsidised child day-care for
working parents.
Nordic countries are often known as ‘welfare states’ and generally provide ample social
security to their workers (Furuoka, 2017b). For example, Finland extends generous public
support to families through high levels of maternity and parental leave allowances, long periods
of payment and excellent day-care service provisions (Kinoshita and Guo, 2015). Additionally,
strong gender equality in Nordic countries provides equal opportunity and labour market access
to women (OECD, 2018). The utilisation of female workers, especially in view of their rising
education level in the long term, can contribute to a country’s economic growth. Non-standard
work forms provide more alternative to workers, enabling them to remain employed while
enjoying greater personal autonomy, increased earning potential, flexibility, and more control
over work-life balance (Walker, 2011). This can potentially reduce unemployment problems.
Furuoka (2017b) suggests that this explains why some European countries, such as Nordic
welfare states, may not have problems of high unemployment.

Figure 2 presents the unemployment rates of Nordic countries from 1980 to 2015. Despite some
occasional differences among them, there is still a common pattern in the unemployment
dynamics of these countries, especially since the mid-2000s. In the 1980s, the unemployment
rates in Nordic countries, with the exception of Denmark, were low, at four percent or less.
Although the mid-1990s saw a rise in these figures, instances of high unemployment were
relatively short-lived compared to other European countries such as Germany, France, Spain
and Italy. Norway, in particular, has maintained an unemployment rate of approximately four
percent since the late 1990s, while the rates for Denmark and Sweden have been stabilising at
less than eight percent over the past ten years. In other words, these countries seem to have
smaller unemployment issues than other European economies. It should be noted that Norway
is one of the wealthiest countries in the region and the country provides well-established social
security for its workers. In spite of its provision of generous social security protection, Norway
does not face the problem of unemployment hysteresis. In other words, existence of strong
employment protection could result in a high unemployment problem in the Nordic countries
due to the lack of sufficient flexibility to counter-balance the negative effects of business cycle.
However, it is likely that existence of flexible working and non-standard employment practices
would provide a good cushion to absorb be negative impact of business cycle. It would mean
that the Nordic countries are exceptional European countries which would not suffer from the
higher unemployment rates.

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