The Contrast Between Nordic Model and Small State Model

Topic: Trading
Words: 935 Pages: 3

Executive Summary

The Nordic model and the Conservative Small State Models of labor employment relations are used in different countries. The Nordic model is characterized by strong trade unions, good welfare provisions, universal social rights, and strong labor market policies. However, the Nordic Model has disadvantages such as a rigid labor market, high inflation, and high tax rates. Nevertheless, the Conservative Small State Model is characterized by a lack of job security, flexibility, production and employment rates, and weak trade unions characterized by low membership. The Nordic Model and the Conservative Small State Models have efficient individual characters. The desirable features can be combined to make one desirable policy that can be used globally, as discussed in the following paper.


Countries that use the Nordic model include Finland, Norway, Denmark, and Sweden, while nations using the Conservative Small State model are Belgium, Luxemburg, and the Netherlands. Trade unions in Nordic countries are influential and have worked to ensure employees’ job satisfaction. The strong trade unions make the markets in these Nordic areas rigid, which is undesirable. The public sector in Nordic countries is inflated, making tax rates high. In Conservative Small State countries, employees’ flexibility and security in temporary employment are minimal. As stated, both the Nordic Model and the Conservative Small State Model are lacking in one way or another. That is why it is necessary to review the two models and combine their best features to get a desirable policy.

Policy Alternatives

The first difference between the Nordic model and the Conservative Small State Model is employee treatment. The Nordic model encourages the effective distribution of resources, fair treatment at the workplace, and most importantly, there is fair employment for all people, including women (Nygren et al., 2018). However, in Conservative Small State countries, this is not the same as security and flexibility of the labor markets are low. Security of employees varies in the Netherlands and Belgium depending on their mode of employment.

In the Netherlands, regular employees are well protected from dismissal, unlike temporary employees. For permanent workers, dismissal is done after a notice has been issued or monetary compensation is given. However, there is no job security for temporary employees whose employers meet statutory requirements. Policies to protect temporary employees are better in the Netherlands than in Belgium but are still weak (Huws et al., 2016). The flexicurity of the labor markets in Conservative Small State countries is low. However, many people find themselves taking up temporary employment because it is more flexible than regular employment. Conservative Small State Countries should adopt policies that increase job security, regardless of employment, and allow flexibility to cater to all people.

The second difference is in the employment rates and remuneration. The Nordic model advocates for total employment for all people. Additionally, there are excellent compensation rates for everyone, depending on the work level (Andersen et al., 2014). The high rates of employment have affected inflation as the cost of products is high. For instance, Belgium’s employment rate and production depend on the world market.

Since there are production shocks, Belgium has adopted temporary unemployment schemes, working in shifts, and flexible working hours. Conservative Small State Countries’ decisions of employment and production depending on the world market trends are good as they ensure a good state of economies. The Nordic model ought to make adjustments regarding production and employment rates in response to world trends.

Third, the models differ in the presence and operability of trade unions. Countries using the Nordic model such as Sweden, Iceland, Denmark, Norway, and Finland all have prevalent unions among the working population. The unions fight for people’s rights and ensure that there is employee satisfaction. However, trade unions have been given too much power in their operations. For example, they can coerce companies into signing union contracts.

There is a divergence in the flexicurity in the Conservative small state countries. The Netherlands was not an industrial nation, while Belgium has always been an industrial nation. Trade unions in the Netherlands and Belgium have a low membership. As expected, the employees have low bargaining power in these countries. Dutch contracts with Belgium and the Netherlands as it has many trade unions. However, in regards to operability, Belgium’s trade unions have a strong labor market presence. Dutch trade unions are weak in operability as it only has councils representing them. Conservative Small State Countries ought to develop better working systems with trade unions as they are essential to ensure employees’ job satisfaction. The Nordic countries, too, can regulate the mandate given to the trade unions.


Both the Nordic model and the Conservative Small State Models have similarities, advantages, and disadvantages. The models advocate for trade unions, but they are more robust in the Nordic countries than in the Conservative Small State countries. The power of the trade unions in Nordic countries should be regulated, while Conservative small state countries should encourage the creation of associations. In the Nordic countries, employment and remuneration rates are high (Andersen, Dølvik & Ibsen, 2014). However, in Belgium and the Netherlands, employment rates, remuneration, and production depend on the changing world economies. Conservative Small State countries encourage part-time employment and flexible working hours.

No model is perfect between the two, but if put into practice, the recommendations made above can make a desirable policy that would be operable in all countries globally. The effective rule would have the following features: Flexibility of working conditions, security for both regular and temporary employees, employment and production regulated by trends in the world market, and most importantly, operable trade unions for the representation of employees.


Andersen, S. K., Dølvik, J. E., & Ibsen, C. L. (2014). Nordic labour market models in open markets. Brussels: ETUI.

Huws, U., Spencer, N., & Joyce, S. (2016). Crowd work in Europe: Preliminary results from a survey in the UK, Sweden, Germany, Austria and the Netherlands. University of Hertfordshire.

Nygren, K. G., Martinsson, L., & Mulinari, D. (2018). Gender equality and beyond: At the crossroads of neoliberalism, anti-gender movements,“European” values, and normative reiterations in the Nordic model. Social Inclusion, 6(4), 1-7. Web.

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