We probably notice that there is a never ending debate of socialism and capitalism, at least until this article is being written. Both concepts are arguably the two most popular and distinct economic systems about how a country manages its economic resources. Among the ongoing debates, a not-so-newconcept emerged, attracting the attention of various economists and politicians. Specifically, after World War II, the Nordic nations, such as Denmark, Finland, Iceland, Norway, and Sweden, are experiencing tremendous economic growth and social development.
Since then, the Nordic model became increasingly popular. Even American democratic senator, Bernie Sanders, and some other politicians are in favor of the United States adopting the social and healthcare systems of the Nordic nations. However, what makes the Nordic model very attractive? In my generational cohort, Finland is known as a country that does not give homework to its students, yet has an excellent educational achievement. In popular statistics, Nordic countries such as Finland and Norway consistently rank first in world happiness indexes for years. The Nordics are often characterized by their high living standards, low inequality, and numerous employment opportunities.
Indonesia has a conceptually (and ironically) similar economic system with the Nordics, which is known as the Pancasila Economics. The notion was initially introduced by Emil Salim in one of his articles in 1967. However, the one who designed the Pancasila economic system was Mohammad Hatta, the founding father and the first vice president of Indonesia.
The Pancasila economics is a one-of-a-kind system that seeks to draw on Indonesia’s social values while incorporating modern economic theory, in contrast to the other economic models imposed by foreign countries during the time of war 1Tjakrawerdaja, W. (2023, May). Pancasila economics and cooperatives: The path to digital economic democracy in Indonesia. Platform Cooperativism Consortium. https://platform.coop/blog/pancasila-economics-and-cooperatives-the-path-to-economic- democracy-in-indonesia/. Indonesia’s growth and development, however, is still far from what the Nordics have achieved. The country is not doing any better in terms of inequality, with the gap between the richest and the poorest keep increasing over time.
Exploring Comparative-Historical Pathways
Indonesia’s political and economic development has altered over the course of the country’s post-colonial history and its independence in 1945. Specifically, it was significantly impacted by the shift from authoritarianism to democracy. Before that, the “Berkeley Mafia” were appointed to ministerial and senior advisory positions in Suharto’s cabinet in 1968. They had enacted and to promote free-market capitalism in Indonesia, reversing the economic paradigm in the Soekarno administration. Due to the widespread corruption that existed in the nation during this time under the New Order regime, the economic system that was known as “crony capitalism.”. In early 1998, the Indonesian government created various social safety net (SSN) programs to assist the poor and newly poor in coping with the effects of the impending economic crisis, including providing food security, job development, as well as education, health, and community empowerment.
Indonesia became a constitutional democracy in 1998 after Suharto’s New Order dictatorship fell and the Asian Financial Crisis. The Reformation period represented the start of a new phase, which was intended to be the beginning of a democracy with open and liberal politics in which significant autonomy would be handed to regions away from the center, or in a short term: decentralization. Now, Indonesia is one of Southeast Asia’s largest economies and is regarded as a newly industrialized country. The mentioned SSN is still being implemented. However, the SSN programs were meant to be only temporary, not replacing the long-run programs on poverty alleviation 2Ananta, A., & Siregar, R. (1999). Social safety net policies in indonesia: Objectives and shortcomings. ASEAN Economic Bulletin, 16(3), 344–359. https://doi.org/10.2307/25773597. Until now, Indonesia intends to create a welfare country, although it lacks the capacity to do so in comparison to other countries with welfare constitutions, such as Norway and Japan. 3Dimyati, K., Nashir, H., Elviandri, E., Absori, A., Wardiono, K., & Budiono, A. (2021). Indonesia as a legal welfare state: A prophetic-transcendental basis. Heliyon, 7(8), e07865. https://doi.org/10.1016/j.heliyon.2021.e07865
On the other hand, Each Nordic welfare state has a long history and a distinct policy path. They are the product of political wrangling, improvements, implementation, and redesigns. In other words, rather than intelligent design, they are the consequence of political development processes. International politics and nationalism, mainly the first cold war, also created the conditions for the later independence of Norway in 1905, Finland in 1917, and Iceland in 1944, bringing about change to the Nordic countries during the 19th century and steering political systems towards democracy. In the 20th century, the Age of Social Democracy in Norway and Sweden signaled a turning point in the development of democracy in Nordic nations. Specifically in the first half, when the fragility of the region’s parliamentary democracy was put to the test. 4Hilson, M. (2019). Popular movements and the fragility of the Nordic democracies during the first half of the twentieth century. Journal of Modern European History / Zeitschrift Für Moderne Europäische Geschichte / Revue d’histoire Européenne Contemporaine, 17(4), 469–485. https://doi.org/10.2307/26832844
The social structures, histories, and ways of life of the Nordic nations are quite similar. Although they have a lengthy history of political alliances and other close relationships, they do not currently constitute a single organization 5Zeidan, A. (2022, November 16). Nordic countries. Encyclopedia Britannica. https://www.britannica.com/place/Nordic-countries. Nowadays, The Nordic welfare states have a broad commitment to social cohesiveness, a universal character of welfare assistance to protect individuality by providing support for weaker members of society, and a focus on enhancing public participation in social decision-making. Thus, the development of the welfare state in the Nordics started years before Indonesia did and the trajectories are a lot more stable.
Empowering Workers: How Strong Labor Unions Secure Welfare
The lengthy process of Indonesian decolonization included worker agitation and the quick expansion of labor unions in the early 1950s, but hopes for a good movement were crushed by the implementation of military law and the dissolution of parliamentary democracy 6Ingleson, J. (2022). Workers and Democracy: The indonesian labor movement, 1949–1957. The Asia-Pacific Journal: Japan Focus. https://apjjf.org/2022/18/Ingleson.html. Until these days, labor forces in Indonesia are numerous but not politically powerful. This happens because employees are connected to numerous political organizations and parties 7Firmansyah, M. J. (2023, May 1). Pakar Ungkap Alasan Buruh Tidak Jadi Kekuatan Politik Besar di Indonesia. TEMPO.CO. https://nasional.tempo.co/read/1720505/pakar-ungkap-alasan-buruh-tidak-jadi-kekuatan- politik-besar-di-indonesia. As a result, the workers’ voices are no longer unanimous.
To put it simply, labor unions in Indonesia aren’t that strong. They have a weak bargaining power and it shows in the recent disputes of UU Ciptaker. Every year, the two primary issues voiced in labor demonstrations are outsourced workers and poor salaries. The concerns have been raised through the years. However, the demands of the workers were never met as expected. There has also been a de-unionization phenomenon in Indonesia, in which members of the union keep decreasing over time. This phenomenon is happening in most countries, but Indonesia’s case is a little bit different. De-unionization in Indonesia happened before its peak and it is mainly caused by the deterioration of the Union’s reputation in public 8Silaban. (2017, April 30). Reputasi Gerakan Buruh. Kompas.Com. https://nasional.kompas.com/read/2017/04/30/09401901/reputasi.gerakan.buruh.
While labor unions in Indonesia confront significant obstacles, such as promoting the right to organize and engage in collective bargaining, also conflict of interests, labor unions in the Nordic countries have been successful in securing for their members excellent earnings, substantial benefits, and stable employment. The Trade Union Confederations of Denmark, Norway, and Sweden were at the center of the labor movement in each of those nations, and they were effective in putting many of their policies into practice, minimizing class distinctions, and integrating workers into the country 9Logue, J. (2019). Trade unions in the Nordic countries. https://nordics.info/show/artikel/trade-unions-in-the-nordic-region.
The Nordic countries have the world’s highest union density, with a far higher percentage of employees covered by collective bargaining agreements (80-90% in the Nordic countries). Trade union density is over 70% in Denmark, Finland, and Sweden, whereas it is 84% in Iceland and 67% in Denmark. The Nordic labor market model is distinguished by a high level of cooperation between employers and unions, with salaries and trade unionism playing significant roles.
Responsible unions that don’t demand greater salaries than the market and productivity development can support are a distinctive feature of the Nordic labor market. Strong unions (those with a large membership and a history of communication with employer organizations) have demonstrated a higher level of social responsibility by launching fewer strikes and other aggressive measures than smaller unions 10Melin, C., & Enarsson, A.-T. (2020, February 10). Why trade unions at work do work. Social Europe (SE). https://www.socialeurope.eu/why-trade-unions-at-work-do-work. Thus, the distinction of labor unions in Indonesia and in the Nordics are very obvious, especially in terms of cohesion and strength. Labor unions in the Nordics are relatively more disciplined and stronger than Indonesia’s.
Egalitarian Culture and Guarantee of Gender Equality
The Indonesian Constitution expressly guarantees gender equality, and it has been further advanced by the ratification of international agreements. However, gender stereotypes and biases continue. Both institutional and informal institutions, as well as ingrained and restricted gender norms, determine the roles that women must play. In many cases, these norms significantly restrict women’s ability to exercise their rights and opportunities in a variety of areas, including education, health, and finance. While Indonesia has made tremendous progress in addressing gender inequality, the gender gap in the country remains significant 11Dwitami, A. (2021). Improving gender equality in Indonesia: The importance of addressing gender norms. The Abdul Latif Jameel Poverty Action Lab (J-PAL). https://www.povertyactionlab.org/blog/12-20-21/improving-gender-equality-indonesia-i mportance-addressing-gender-norms.
The 2021 SDG report observed an increase in the ratio of female to male labor force participation. However, there is another elephant in the room. The report’s statistic ignores the fact that, while women’s labor-force participation grew, unpaid domestic care did not decrease 12Bexley, A., & Bessell, S. (2022). Indonesia’s gender equality report card. Policy Forum. https://www.policyforum.net/indonesias-gender-equality-report-card/. The same study also shows that more women than males were engaged in both paid and unpaid employment, with women performing the higher share of unpaid household work and care. With its long-standing rigid gender norms and conservatism, Indonesia can be considered as a gender conservative nation 13Bexley, A., & Bessell, S. (2022). Indonesia’s gender equality report card. Policy Forum. https://www.policyforum.net/indonesias-gender-equality-report-card/.
The Nordic countries and their populations appear to have egalitarian social systems and cultural norms. Gender equality concerns, the status of women in society, and the structure and content of social policy are linked. Because of the prominent role that women played in the reform movement, early social policy legislation may have mirrored the concerns of women. Among the characteristics that set the Nordic countries apart from other affluent nations at the time were individual benefit rights, the early adoption of transfers to single mothers, and child allowances provided to the mother. With their welfare systems, legislative frameworks, and commitment to women’s rights, the five Nordic nations are frequently cited as some of the most gender-equal nations in the world.
Importantly, both men and women, as well as elderly employees, have historically experienced relatively high employment rates in the Nordic countries. These countries concur on the importance of family-friendly laws that support women’s employment and work to close the gender pay gap (Wood, 2018). More than any other region, the Nordic nations have taken steps to give women equal opportunities. In all Nordic nations, equal pay for equal work is both a statutory right and a fundamental tenet of gender-equality policy. This policy guarantees that men and women are paid equally for equivalent labor, thereby reducing the gender pay gap and advancing gender equality.
Parallel Concept, Divergent Results
The Nordics and Indonesia have an ironically similar concept of economic system, in which is the combination between the two popular ones, capitalism and socialism. Yet, the outcome of both regions are quite distinct. There are several possible explanations of this outcome.
First, the Nordics started years before Indonesia did and the trajectories are a lot more stable. While the Nordics were stabilizing their economy, Indonesia was fighting for its independence.
Second, the labor union in the Nordic nations works for themselves so there is less conflict of interests compared to one in Indonesia, thus making it stronger.
Third, gender equality in the Nordics is more progressive than in Indonesia and contributes much to its socio-economic conditions.
Editor: Muhamamd Ramadhani, Haizka Aleine Kalya, Muhammad Zaky Nur Fajar
Foto: Ilse Orsel
|↵1||Tjakrawerdaja, W. (2023, May). Pancasila economics and cooperatives: The path to digital economic democracy in Indonesia. Platform Cooperativism Consortium. https://platform.coop/blog/pancasila-economics-and-cooperatives-the-path-to-economic- democracy-in-indonesia/|
|↵2||Ananta, A., & Siregar, R. (1999). Social safety net policies in indonesia: Objectives and shortcomings. ASEAN Economic Bulletin, 16(3), 344–359. https://doi.org/10.2307/25773597|
|↵3||Dimyati, K., Nashir, H., Elviandri, E., Absori, A., Wardiono, K., & Budiono, A. (2021). Indonesia as a legal welfare state: A prophetic-transcendental basis. Heliyon, 7(8), e07865. https://doi.org/10.1016/j.heliyon.2021.e07865|
|↵4||Hilson, M. (2019). Popular movements and the fragility of the Nordic democracies during the first half of the twentieth century. Journal of Modern European History / Zeitschrift Für Moderne Europäische Geschichte / Revue d’histoire Européenne Contemporaine, 17(4), 469–485. https://doi.org/10.2307/26832844|
|↵5||Zeidan, A. (2022, November 16). Nordic countries. Encyclopedia Britannica. https://www.britannica.com/place/Nordic-countries|
|↵6||Ingleson, J. (2022). Workers and Democracy: The indonesian labor movement, 1949–1957. The Asia-Pacific Journal: Japan Focus. https://apjjf.org/2022/18/Ingleson.html|
|↵7||Firmansyah, M. J. (2023, May 1). Pakar Ungkap Alasan Buruh Tidak Jadi Kekuatan Politik Besar di Indonesia. TEMPO.CO. https://nasional.tempo.co/read/1720505/pakar-ungkap-alasan-buruh-tidak-jadi-kekuatan- politik-besar-di-indonesia|
|↵8||Silaban. (2017, April 30). Reputasi Gerakan Buruh. Kompas.Com. https://nasional.kompas.com/read/2017/04/30/09401901/reputasi.gerakan.buruh|
|↵9||Logue, J. (2019). Trade unions in the Nordic countries. https://nordics.info/show/artikel/trade-unions-in-the-nordic-region|
|↵10||Melin, C., & Enarsson, A.-T. (2020, February 10). Why trade unions at work do work. Social Europe (SE). https://www.socialeurope.eu/why-trade-unions-at-work-do-work|
|↵11||Dwitami, A. (2021). Improving gender equality in Indonesia: The importance of addressing gender norms. The Abdul Latif Jameel Poverty Action Lab (J-PAL). https://www.povertyactionlab.org/blog/12-20-21/improving-gender-equality-indonesia-i mportance-addressing-gender-norms|
|↵12, ↵13||Bexley, A., & Bessell, S. (2022). Indonesia’s gender equality report card. Policy Forum. https://www.policyforum.net/indonesias-gender-equality-report-card/|