(Må sjekkes mot fremførelse.)

Distinguished guests, ladies and gentlemen,

Allow me to begin by saying how pleased I was to be asked to give a short presentation of the Nordic model of society.

In fact, preparing this presentation made me consider so many of the similarities shared by Canada and Norway:
Both countries are blessed with an abundance of natural resources.
Both countries have a relatively small population spread out over a vast country.
And both countries tend to organize their societies in a relatively similar way: high taxation, education and health care handled by the state, to mention just a couple.
This list of shared experiences makes it particularly interesting to speak to such a distinguished audience on this topic. 

The Nordic model of society does not in details refer to a single model with specific components or rules. Each Nordic country has its own economic and social models, sometimes with major differences. Still, compared to many other countries, they are very much alike.

Nevertheless, a basic definition ought to be possible. My personal preference is the definition that determines the Nordic model as consisting of three different components. 

First, an economic model. Briefly, this means that the Nordic countries are characterized by a mixed economy, predominated by the private sector, but with an extensive role of government and the public sector.

Second, a labour market model. The development of the tripartite cooperation between unions, employers and the state has greatly influenced political life in all the Nordic countries. By and large, this has historical reasons.

And third, a welfare model. In the Nordic countries, the government plays a far greater role in financing and organizing welfare benefits than in most other countries. The system is universal, covering every citizen and financed by taxes. 

Let me for a while draw your attention to a small insect, namely the bumblebee. If you look closely at a bumble bee, you will notice how very large its body is compared to its wings. This is something that has puzzled biologists for centuries. How on earth can this insect fly? The laws of physics seem perfectly clear: the bumble bee’s anatomy should make this feat impossible. Its body is simply too heavy and its wings are too small.

One of my main points is this: In a way, Norway, like our Nordic neighbours, could be compared to a bumble bee. In the same way as biologists are puzzled by our black and yellow striped friend, so many economists are puzzled by the fact that the Nordic countries manage to «fly». We «fly» despite the laws of economics.

Let me give you a few examples:

• Norway has one of the highest rates of taxation in the world.
• Norway has an extensive public sector.
• a comprehensive social insurance scheme.

And finally, Norway has strong unions, and relatively minor wage differences.

Traditional economic thought has always viewed these features as being factors that threaten economic growth in a society.

Yet the lessons from Norway put these economic theories to a different test, as there definitely are many strengths to our society. So how can it be that Norway - in spite of its «heaviness» – has a successful economy? Have economists got it wrong or is it simply a question of luck?

Norway – like Canada – is blessed with major deposits of hydrocarbons and hydropower from our lakes and waterfalls. Today, Norway is ranked as the fifth largest oil exporter and the third largest gas exporter in the world. There is no doubt petroleum activities have contributed significantly to economic growth in my country, and to the financing of the Norwegian welfare state.

Above all, the petroleum resources gave us a very good starting point when the financial crisis hit. Our public finances allowed us to introduce a wide range of measures in order to mitigate the effects of the financial crisis and the global recession.

However, it would be too easy to conclude that the strength of the Norwegian economy is purely and simply based on our natural resources. Our strong economic performance also reflects other factors. In short, there are also other elements to «the Norwegian puzzle».

Let me briefly mention some of the crucial factors that are most often considered when accounting for the Nordic model.

First, gender equality
Second, tripartite cooperation between unions, employers and the government
Third, labor market policies
And fourth, openness to trade

When foreigners suggest to me that it is the oil that has made Norway rich, I usually tell them that this is not the whole truth. The management of our human capital is by far the most important contributor to our national prosperity. Foreigners should not covet our natural resources, I tell them; they should covet our women! Allow me to elaborate.

In the early 1970s, Norway was ranked below average by the OECD with regard to female participation in the workforce. At the time, the OECD also pointed out that the Norwegian economy required a massive expansion of the workforce in order to finance its growing welfare state. Of course, the low participation of Norwegian women in working life was considered a paradox in this respect.

We decided to act. In 2011 66.6 per cent of the female population in Norway was in full or part time work. Girls now outnumber boys at our universities and colleges. It is a common assumption that this increase didn´t happen by itself. It came as a result of policy changes aimed at providing women with more equal opportunities.

The debate about what kind of flexible arrangements are needed to make it easier for people to combine family and working life is still running. One example of this is the compulsory father´s quota of twelve weeks’ parental leave after the birth of a child. These weeks are exclusively reserved for the father. If he chooses not to take this leave, the quota is deducted from the total period of parental leave allocated to the parents.

Let me jump to another crucial feature of the Nordic model. In Norway much social regulation is not legislated, like in other countries, but is defined in collective agreements.  This is a consequence of our tripartite system. The tripartite system refers to all forms of consultation, negotiation or simply exchange of information on issues of common interest between unions, employers and the state.  It has led to a number of social reforms and has played a vital role in shaping the Norwegian welfare state. Let me give you a few examples:

The introduction of a Work Protection and Working Environment Act.
Regulated maximum working hours for all workers.
Sickness benefit guaranteeing 100 per cent compensation during sick leave.
Among the many positive consequences of tripartite cooperation is the way it seems to prevent long-lasting political conflicts. Some years ago there was a growing consensus in Norway that our pension system posed a challenge to the welfare state and the Nordic model. Calculations showed that the number of citizens over the official retirement age would increase rapidly in the years to come. Average pensions compared to average wages were expected to rise as well. Furthermore, the option to take early retirement was unevenly distributed in our public pension system.

The process of reforming this system started as early as 2001, and in spring 2009 the Parliament passed a comprehensive reform. Both the unions and the employers’ organizations were closely involved in preparing the reform. They worked in close cooperation with the Government to find acceptable solutions for the parties involved. In this case, social dialogue between the parties made our pension system more stable and fair. It should be added that the reform was supported by most of the opposition parties.

Highly centralized wage bargaining is another crucial factor to bear in mind when trying to explain how tripartite cooperation works. Since 1945, Norway has developed a strong tradition for coordinated tripartite bargaining - I would say stronger than in most other countries. As a result Norway has a relatively compressed wage structure. Recent increases in wage inequalities between top-earners and the rest of the working population have caused an ongoing debate. There seem, however, to be a fairly broad consensus in our society on the benefits on small wage differences.

The way our labour market is organized is undoubtedly another key feature of the Nordic model. Compared with what is regarded as normal in many other countries, huge public efforts are focused on reducing the burden of unemployment on the individual. A person who becomes unemployed in Norway receives unemployment benefit from the state, education and job counseling. Jobseekers are given assistance in finding a new job and are also offered the opportunity to take courses designed to increase their chances of finding work. We are convinced that an active labour market policy combined with a social safety net reduces the length of time people are out of work.

When a large company fails in Norway, it has traditionally been the role of the state to take responsibility for safeguarding the individual and re-establishing the community. We aim to improve people´s employment opportunities, not to shelter particular types of jobs or industries. I believe our active labour market policy is something that makes us less vulnerable to globalization and changes in industrial structures. The simple explanation is this: as long as you are protected by a comprehensive welfare state, it is easier to adapt to challenges.

Another factor which may also explain the strong performance of the Nordic model is our dependence on trade. Thanks to an abundance of natural wealth – coupled with high competence and a global demand for our resources – Norway now has a solid trade surplus. This has not always been the case. A hundred years ago, Norway was among Europe’s poorest countries.

Like Canada, we Norwegians do a great deal of trade with our close neighbours to the south. In the same way that the United States is by far Canada´s largest trading partner, the EU is our most important trading partner. We have hardly any tariffs on industrial products and liberal access to foreign suppliers. This openness underpins our own economy, while at the same time benefitting our trade partners as well. Today, one of the Norwegian government’s key priorities is to ensure that the business environment remains conducive to innovation, investment and growth.

It seems that Norway, like the other Nordic countries, has found a good balance between a market economy and state regulation.

However, there is no doubt that the Nordic model poses some questions. How far should governments go in providing for the welfare of their citizens? What happens to individual initiative and personal responsibility when governments provide generous welfare benefits?

Let me give you a current example. At present, there is rising concern about Norway's ability to maintain our high standard of living once our oil resources have been tapped out. The sustainability of our economic model therefore depends on our ability to retain a large and educated work force. It is also crucial to keep on adapting to changing circumstances and new needs. We can´t allow our petroleum wealth to become a cushion against change. Additionally, we must keep in mind that Norway has high labour costs, not only compared to such emerging economies as China and India, but also to countries in southern and eastern Europe. This means that we need to be on the continuous look-out for other competitive advantages.

Ladies and gentlemen,
I’d like, if I may, to end with a few closing remarks.

It would be foolish for me to assert that the model we have is flawless; that we have been able to eliminate all disadvantages. That being said, I am fully convinced that the Nordic model will be sustainable in the future. Some have accused it of hindering economic growth. Yet there is no demonstrable mismatch between economic growth and tax levels or the size of the public sector. In fact, we observe a renewed interest in the Nordic model these days as the global recession has forced many nations to rethink the shape of societies.

However much conventional economic thought still struggles to explain how it is possible, the Nordic bumble bee is actually able to fly. And it is flying well.

This lunch provides the opportunity to make further connections and contacts between representatives from our two countries, and I hope you will make the most of the occasion. Please feel free to ask questions or add comments, and I will do my very best to answer the questions as well I can.

Thank you!