The Nordic countries are often considered as having the same type of welfare of states with only small differences between them. There are many similarities. The Nordic countries are characterized by small income differences, ambitious welfare policy programmes and strong labour market organisations. But if we compare the four countries more closely, we will also find some important differences. Some of these differences concern the conditions for young people and the school-to-work transition.
Youth unemployment levels differ between the countries, especially for teenagers. According to Eurostat the unemployment rates in Sweden and Finland are much higher than in Denmark and Norway. In March 2012 the youth unemployment rates for Finland and Sweden touched and even exceeded 20 percent. In Denmark the unemployment of young people has risen as a result of the financial crisis. The unemployment rate is therefore higher than before at around 15 percent. In Norway, which has not been affected by the crisis in the same way, the unemployment rate for the age group 15-24 has stayed well below 10 percent. But these differences should not come as a surprise. Denmark and Norway have large apprentice-systems leading to many pupils in the statistics being classified as employed. In Sweden and Finland, with dominating school-based vocational and training systems, few pupils are classified as employed but more often as outside the labour force or unemployed (if they are looking for a job).
If we want to get a more reliable picture we should highlight the group not in education, employment or training, sometimes referred to as NEET. Here we chose to study those between 20 and 24 years of age. This is an age when most young people have finished their upper secondary education.
Employment levels are generally high in the Nordic Countries compared to EU27. In 2011 the employment rate for those aged 20-24 years was below 50 percent in EU27. All Nordic countries in the same year had employment rates well above 60 percent. But even if the levels are high in all four countries, there are important differences between them. Finland and Sweden have much lower employment rates than Denmark and Norway. In the first two countries employment rates were close to 60 percent and in the latter two close to 70 percent.
How could this be explained? There are of course many different explanations. The recent financial crisis is, however, not one of them. All countries with the exception of Norway have been hit by the crisis, but the differences in employment rates are a long-term phenomenon and they were visible long before the present economic crisis.
Another explanation may be that the shares of people continuing into higher education differs. But this does not seem to be the explanation as a higher percentage of the age group is in education in Denmark and Norway than in Finland and Sweden.
We should therefore look at the group defined as NEET. The share in NEETs is higher in EU27 compared to the Nordic countries. In 2010 18 percent belonged to this category in EU27, 13 percent in Finland, 11 percent in Sweden, 8 percent in Norway and 7 percent in Denmark. In the period 2005-2010 the percentage of young people aged between 20 and 24 being outside employment and education was higher in Finland and Sweden than in Denmark and Norway. This difference, however, was lower in 2010 than in earlier years.
How could those differences between EU27 and the Nordic countries and between the Nordic countries be explained? The Nordic countries make more interventions through both the educational system and the employment service to reduce the number of young people without registered occupation than most other countries in Europe. There are two important institutional differences between the Nordic countries explaining the lower levels of inactivity in Denmark and Norway. Both these differences are related to the educational system.
Firstly, in Denmark and Norway the system of vocational education is organised according to the apprenticeship model. This means that the distance between school and working life is small. Finland and Sweden both have some elements of an apprenticeship model, but school-based vocational education dominates. Vocational education in Finland and Sweden is more pre-training and not completed professional education as in Denmark and Norway. This may explain why more young people experience difficulties in the transition from school to work in Finland and Sweden than in Denmark and Norway.
Secondly, all Nordic countries offer special measures for unemployed youths. Denmark and Norway have developed complementing measures also outside the regular employment policy facilitating the transition to education or work for inactive young people. Both countries have active follow up-systems, based on the municipal level in Denmark and the regional level in Norway. The purpose of a follow up-system is to contact and offer measures for young people lacking completed education at primary and/or secondary levels. These interventions do not stop at the age of 20. In Denmark this system is related to a ‘youth package’ that comprises measures for social support, health service and welfare. Welfare is never offered without conditions.
To summarise: the apprenticeship-system and the follow up-system in Denmark and Norway are important in explaining a higher employment rate and lower percentage of inactivity in ages between 20 and 24 than in Finland and Sweden.