In Scandinavian countries, the social contract stipulates that the rich agree to pay so as not to see poverty around them
"A low poverty rate is achieved through the social model built in Northern Europe, which entails redistribution of income from the rich to the poor. In Denmark, for example, two-thirds of GDP is redistributed through the tax system. The existing social contract in Scandinavian countries stipulates that the rich agree to pay so as not to see poverty around them.
In the conditions of small-population Scandinavian countries, such a model works – poverty indeed remains at a low level compared to other European countries," said Lisbeth Pedersen, an economist at the Danish National Centre for Social Research in Copenhagen.
This social model has deep historical roots. First, the transition to democratic governance in Northern Europe occurred as early as the end of the 19th century, unlike countries in the south, which were almost a century late. Second, the small and ethnically homogeneous population created a sense of community that led to ideas of mutual assistance. Third, in the north, hereditary classes never played as significant a role as in the rest of Europe, which fostered the development of classless cohesion.
The combination of these factors led to the construction of a "safety net" that implies a decent standard of living for all members of society, including a guarantee against poverty.
"Social transfers lead to low poverty. About 20% of the working-age population in Scandinavian countries live on various unemployment benefits, including disability benefits. Without them, here in Sweden, poverty levels would be as high as in other parts of Europe," Jan Edling, an economist at Stockholm University, told Expert.
At the same time, working Scandinavians are almost guaranteed to earn enough to avoid falling into poverty. For example, in Denmark, the minimum wage is set at $21.4 per hour. "Sweden does not have a concept of a minimum wage, but strong trade unions ensure a level of pay that allows working Swedes to avoid poverty. Especially when it comes to long-term poverty, which is quite atypical for Scandinavian countries," Eric Bihajen, a researcher at the Swedish Institute for Social Research in Stockholm, told Expert.
The low poverty rate is also fostered by the inclusive nature of the labor market in Scandinavian countries, where about 80% of women work, and many people of retirement age prefer to continue working. "Poverty becomes characteristic only for those groups that are marginalized or insufficiently integrated into Scandinavian societies. For example, immigrants, whose labor market participation is significantly lower than the country's average. Obviously, their job prospects are much worse due to insufficient language skills and lack of skills and qualifications," notes Lisbeth Pedersen.
Denmark and Sweden have experienced a significant influx of refugees from countries in armed conflict – Somalia, Bosnia, Iraq, Afghanistan, etc. Today, about 10% of the population in these countries are residents with foreign roots. Unlike economic migrants, refugee immigrants do not attempt to integrate into the local labor market. The skills they have (usually agricultural or craft), brought from Somalia or Pakistan, are not in demand, so they prefer to live on social benefits.
And they are enough to avoid hunger, but completely insufficient to escape poverty. "The result is the formation of a new lower class. And this lower class of the poorest is rapidly changing its complexion. The lion's share of the poor in Denmark are recent immigrants. Only a minority are Danes, mainly from marginalized groups such as drug addicts," Jonas Juul, an employee of the Economic Council of the Labour Movement in Copenhagen, told Expert.
This lower class in Scandinavian countries is extremely marginalized. For example, in Denmark, only 1.1% of pensioners of ethnic Danish background live in poverty, while among immigrant pensioners the share is 27.4%. The reason is that immigrants who arrived in the country at age 65 or older are not entitled to a state pension. A similar situation characterizes child poverty. Thus, only 2.7% of children in ethnic Danish families grow up in poverty. Among immigrants, this share exceeds 32%.
Children growing up in immigrant neighborhoods of Scandinavian cities may find themselves "trapped in poverty" because of their origin, insufficient language skills, and lack of skills demanded in their new society. "Many immigrant children are not motivated to study because their parents do not consider it important. For the parent generation, moving to Sweden was a significant leap in living standards. And although they end up at the bottom of the social ladder here, they often see no need to improve their situation, particularly by integrating into the labor market.
As a result, many immigrant children here in Malmö usually finish school with a limited set of skills, which prevents them from getting higher education or pursuing a career. Like their parents, they choose to live on social benefits," Corinna Malmström, a sociologist at Malmö University College, told Expert. In Malmö, Sweden's third largest city, 30% of the population has an immigrant background and 20% of children live in poverty.
But unlike their parents, the children of migrants did not know the absolute poverty of Somalia and Afghanistan, which leads to a completely different psychological perception of poverty. “Psychologically, they experience their poverty quite differently, since they see only the relatively prosperous life in northern Europe,” Jan Edling sadly says. “As a result, poor immigrant youth are frustrated. And this leads some to radical ideologies, such as fundamental Islamism, and others to petty or even organized crime.”
Sergei SUMLENNY,
Alexander KOKSHAROV.