4 Reasons Why Nordic Countries Have Low Poverty Rates
The Organization for Economic Cooperation and Development (OECD) defines the poverty rate as the ratio of the number of people in a given age group whose income drops below the poverty line, which is taken as half the median household income of the total population. Nordic countries have some of the lowest poverty rates in the world due to a number of factors.
Top Reasons for Low Poverty Rates in Nordic Countries
- Low Unemployment Rates. In Sweden, the unemployment rate has averaged 5.87 percent between 1980 and 2015. In November 2015, Sweden’s unemployment rate declined to 6.2 percent from 6.7 percent in October, the lowest reading since August 2008, according to Trading Economics. Notably, the number of unemployed fell by 55,000 compared to the previous year.
- The standard of poverty changes over time as countries become richer. As poverty researcher Peter Townsend notes, “Individuals, families and groups can be said to be in poverty when they lack the resources to obtain the type of diet, participate in the activities and have the living conditions and the amenities which are customary, or at least widely encouraged or approved in the societies to which they belong.”
- Transparency. Nordic countries, such as Sweden pride themselves on their honesty and transparency of their governments. In Sweden, everyone has access to all official records. Sweden’s trust for public institutions was at 55 percent compared to Russia’s 25 percent, according to The Economist.
- Individual autonomy. Nordic countries have let go of the old social-democratic consensus and presented new ideas from across the political spectrum. They continue to invest in human capital and protect people from the disruptions that are part of the capitalist system, according to The Economist.
According to the OECD, the 2012 poverty rates for Sweden, Denmark, Norway and Finland stood at 9 percent, 5.4 percent, 8.1 percent and 6.5 percent respectively. At the other end of the spectrum, Mexico had the highest poverty rate at 18.9 percent.
The “Nordic Model” presents a starting point for other countries to develop methods to attack poverty as they work towards sustainable development.
– Jordan Connell
Sources: The Economist, The Organization for Economic Cooperation, Trading Economics, Vox