In the Scandinavian countries, they have rigid labor laws just as you mentioned in Norway. This sadly keeps structural unemployment rate high.
This is patently false. Norway has among the lowest unemployment rates in the world. With the COVID19 crisis thing may end up looking different but in a regular year, Norway has low unemployment.
And you cannot just look at unemployment, you also have to look at employment rate of which all Nordic countries are high. Employment rate is the number of adults in working age employed.
E.g. the US which has a so called “flexible” labour marked, which is just a euphemism for poor working protections and rights, has employment rate of 71.4. That is below every Nordic country. Norway has 75.3, which is fairly significantly higher.
The unemployment rate would be much higher but it is disguised by having a large public sector. If trimmed down, it would show the true size of the unemployed and under-employed.
Ah… this is a beloved right-wing talking point. There are so many wrong assumptions and conclusions baked into this simple statement, it is hard to know where to begin.
Your assumption is that people in the public sector don’t do anything. They just sit around picking their noses while people in the private sector do all the work.
People who make these kinds of statements like to conjure up an image of an enormous faceless bureaucracy just pushing papers around all day, producing nothing of value.
Contrary to popular perception Nordic bureaucracies are actually quite small and efficient. Certainly a lot more streamlined than the complex mess in supposedly efficient and capitalist US.
The primary reason Nordic countries have much larger public sector than say the US, isn’t because we push more paper around but because our public sector carries out significantly more tasks which are of value to citizens:
- Most of the health care sector is public.
- Most education (with exception of Sweden) is public.
- Nordic countries have extensive professional child care services, because most parents tend to work. There are few stay at home moms.
This is the primary reason the public sector is large. “Trimming” it would not cause unemployment. Quite the contrary. All the services the public sector now provides would have had to be provided by the private sector somehow.
Various conservatives have tried to e.g. point to Sweden as some sort of success because they have reduced number of public sector employees a lot. How did they do that? By outsourcing public sector functions to the private sector. Yes, bloody brilliant. They reduced their public sector employment statistics by letting people in the private sector do the exact same job at a higher cost.
At the end of the day it doesn’t matter if you pay $100 in taxes for a service vs $100 out of pocket. Yet somehow if the exact same service is done by the government, people treat it as if it less efficient or more expensive. It is utterly bizarre.
Reality is that private sector bureaucracies, are for the most part worse when dealing with tasks the public sector has proven itself good at. E.g. anthropologist David Graeber examines this in the book “Bullshit jobs.” He find that in the US e.g. bureaucracies tend to grow faster in private education than in public education.
We see it in comparison between countries. US health care bureaucracies are far bigger than that of countries with socialized health care. The US has the largest bureaucratic overhead of any western nation in health care.
Value Creation is Also Done in the Public Sector
It is a fundamental misconception that the public sector does not produce anything of value. If I take a teacher and switch him or her to the private sector to do the exact same job it is not like that teacher suddenly goes from being somebody draining society of resources to somebody producing and adding value to society.
Public sector employees produce valuable goods and services that citizens want.
Not Everything the Private Sector Does Produce Value
What is more valuable a public sector teacher teaching your children useful skills for the future, or a private sector Casino letting you gamble? Or how about the tobacco company making cigarettes to give you cancer? Or how about the ad agency making ads for you to drink more alcohol?
The fact that a company makes money doesn’t mean it actually generates anything of value. In fact many private sector companies destroy value. A Casino e.g. doesn’t generate anything of value. It makes a whole bunch of people poorer to make a few richer while taking a big cut itself. It is a parasite. A Casino does not provide food to eat, a house to live in, better streets, transport, education, clothing or anything useful. It is a drain.
A lot of the financial sector is the same. They “make” tons of money but often nothing of value. All they do is shift money around and take a fat cut for doing so. Yes in some cases a financial sector does create value in that it channels resources towards useful investments. But too much of the time all it does is to inflate a useless asset.
I am just mentioning these sort of example to try to change peoples very black and white view of the public and private sector. The thinking that value is created in the private sector and wasted in the public sector is a fundamental misunderstanding of economics. A self serving myth for right wing political ideology.