The Nordic model comprises the economic and social policies as well as typical cultural practices common to the Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden). This includes a comprehensive welfare state and multi-level collective bargaining based on the economic foundations of social corporatism, with a high percentage of the workforce unionized and a sizable percentage of the population employed by the public sector (roughly 30% of the work force in areas such as healthcare, education, and government). Although it was developed in the 1930s under the leadership of social democrats, the Nordic model began to gain attention after World War II.
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The three Scandinavian countries are constitutional monarchies, while Finland and Iceland have been republics since the 20th century. As of 2021, the Nordic countries are described as being highly democratic and all have a unicameral form of governance and use proportional representation in their electoral systems. Although there are significant differences among the Nordic countries, they all have some common traits. These include support for a universalist welfare state aimed specifically at enhancing individual autonomy and promoting social mobility, a corporatist system involving a tripartite arrangement where representatives of labour and employers negotiate wages, and labour market policy is mediated by the government, and a commitment to private ownership within a market-based mixed economy, with Norway being a partial exception due to a large number of state-owned enterprises and state ownership in publicly listed firms. As of 2020, all of the Nordic countries rank highly on the inequality-adjusted HDI and the Global Peace Index as well as being ranked in the top 10 on the World Happiness Report.
The distinctive defining characteristic of the Nordic model is a neo-corporatist collective bargaining system. Since the dissolution of the Soviet Union and the end of the Cold War, the traditional model has been in decline in some areas, including increased deregulation and the expanding privatization of public services, as part of a move towards free-market capitalism and the private sector within the neoliberal paradigm; this has been described as the Great Capitalist Restoration of the 1980s and 1990s, which started in Sweden. More recently, a 2019 analysis points to a shift away from neoliberalism and a repoliticization of the Nordic model, including increased cooperation between the Nordic countries.