Not very Finnish: Austerity exposes strains in Nordic welfare model

If one fist bump could endanger Finland’s increasingly stressed tradition of consensus politics, Prime Minister Juha Sipila and a Cabinet colleague may just have achieved this dubious distinction.

In a nod to popular culture, a smiling Sipila and his finance minister Alexander Stubb punched each other’s fist to celebrate a breakthrough in negotiating one of Finland’s toughest austerity deals in decades with trade unions.

“Members were very upset. They thought that they were mocking workers, saying something like: ‘now we can drive them into the ground’,” said PAM union leader Ann Selin, who represents 232,000 workers.

Unions were outraged at politicians who appeared out of touch, underlying the fragility of the Nordic model under which parties of the centre-right and centre-left, organised labour and business strive to reach consensus deals without conflict.

The danger is that the preliminary accord may still collapse as the Finnish consensus is tested by rising debt, unemployment and economic stagnation. NOT VERY FINNISH At stake is the consensus that has grown across the high-cost Nordic welfare states out of the realisation that small, export-dependent economies can ill-afford polarisation and policy stagnation. Nowhere is that consensus under such risk as in Finland, called “the sick man of Europe” by Stubb and now facing the same dilemma as many other euro zone economies of how to promote growth while also pursuing fiscal austerity.