Labor, Welfare and Coping with the Crisis: Comparing Domestic Adjustment in the Nordic and Korea

The aim of this paper is to raise a number of questions on the impacts and responses of the crisis in a comparative perspective with focus on the Nordic experience and ROK. It asks the following questions: Where have the Nordic approach versus the Korean models delivered strong results, and what are the weaknesses? What are the human costs and collateral damage in the context of new types of regulation of labor markets and social welfare in the broadest sense and what are the differences and similarities between the models in general specifically with regard to crisis management? The approach guiding the analysis is based on a critical political economy perspective which utilizes a comparative and eclectic methodology.
The first part of the paper briefly describes the causes and impacts of the US induced financial crisis cum “Great Depression”. The second part discusses the status of the various models of contemporary capitalism – the discredited Anglo-Saxon finance-driven model versus the export-driven production model of growth, with weak safety nets, adopted by East Asian countries in contrast to the export-oriented Nordic social welfare model. The third section documents the impact of the crisis on the economies, and discusses core examples of state intervention in the socio-economic sectors such as labor markets and social welfare in the Nordic as well as Korean contexts. The final section discusses some tentative conclusions about the resilience of the Nordic and ROK models and their potential for recovery.