Labour markets

Trade unions play a more important role in Nordic politics and economics than they do in most other countries. This is largely a result of their organisational success, which has made them key actors in policymaking as well as in collective bargaining.

Solidaristic wage policy refers to the practice, noticeably carried out in Sweden during the 1950s, of limiting wages in the most profitable sectors and increasing wages in less profitable sectors. It was carried out in order to achieve more equal wages on a national basis. It also had the consequence of heightening economic competitiveness through transferring capital from lower value-added companies and sectors to higher ones.

National labour markets in the Nordic countries reflect trade union and Social Democratic principles of full employment and solidarity, while conforming to the conditions of capitalist market economies. They combine high levels of labour force participation with excellent systems of unemployment compensation. Throughout the region there is now a heavy emphasis on active labour market policies frequently referred to as 'flexicurity'. Wage differentials are low. Since 1954, the Nordic countries have had a common labour market in which citizens of any Scandinavian country can work freely within the region. Today, all the Nordic countries participate in the common labour market of the EU and European Economic Area.