A welfare state falls somewhere between the planned economy and the free-market. Yet, not all welfare states are the same. We distinguish three models: The Scandinavian model, The Anglo-Saxon model and The Rhineland model.
The Scandinavian model is mainly used in the Scandinavian countries such as Sweden, Finland and Denmark. In this model, there is a combination of a flexible labour market and a strong security system. A flexible labour market allows easy dismissal of employees but on the other hand, ensures that people can find another job without much trouble. If this fails, and people still cannot find a job in a long period of time, the people are given training courses. This ensures that only a small percentage is unemployed for any length of time. The negative side of The Scandinavian model is that the countries have a heavy collective tax burden. This is due to the high costs and efforts in the field of child care and education.
The Anglo-Saxon model is a model especially used in England and the United States. The government in such countries give their priority to a good entrepreneurial climate. This means that wages are determined by market forces and a flexible labour market gives impulses to the employment with many problems for those who drop out. On the other hand, the government plays a modest role in healthcare and education. Healthcare and education are considered to be facilities that people should pay for themselves. This also causes a society where there is a clear division between the poor, people within the mid-class and the elite. The benefits in The Anglo-Saxon model are just in short term. Next to that, you need to meet many conditions to be eligible for the benefits.
Lastly, the Rhineland model. The Rhineland model is a combination of the two models mentioned above; Anglo-Saxon model and the Scandinavian model. The free market is strictly contained by well a developed collective sector. Social security is very important in the Rhineland model. Next to that, employees are well protected against the risk of dismissal or illness. On the other hand, in the Rhineland model, education and child care aren’t regulated well.
In the following article: https://www.nytimes.com/2014/12/18/upshot/nordic-nations-show-that-big-safety-net-can-allow-for-leap-in-employment-rate-.html?_r=1
the researchers are mainly talking about countries with high rates of participation in the labour force. In the first paragraph, they say the following: ”Some of the highest employment rates in the advanced world are in places with the highest taxes and most generous welfare systems, namely Scandinavian countries. The United States and many other nations with relatively low taxes and a smaller social safety net actually have substantially lower rates of employment.”
In my opionion, the best model is the Scandinavian model. The Scandinavian countries (Sweden, Finland, Norway, etc.) are consistently rated the best places to live – and they are, perhaps, the most Socialist countries out there right now. For instance, Sweden takes about 51% of the average citizen’s income, yet Swedish citizens are arguably more content and happy with their lives than we are. I think a low unemployment rate will not only be beneficial for the economy but also for the society itself. If only a low percentage of a country is unemployment, everyone works and everyone knows from each other that they work for their bread. Next to that the idea that people are given courses in case they cannot find any work, is amazing. Currently, in the Netherlands the demand for architects is very low, so what happens if you get a degree in architecture and cannot find a job? The demand for engineers, especially ICT engineers is very high! If someone cannot find a job, he can get e.g. a course in computer science and learn how to program. Once the person has the basic programming skills, he will be able to find a job easily.