Did Norway manage to protect its most vulnerable when prices increased?
"All Norwegian households lost economic security within two years," says researcher.
Norway and the UK had different ways of handling the initial price shocks. Researcher Christian Poppe has tried to find out what worked best.(Photo: Marte Dæhlen)
Over a three-year period, Norwegians experienced a steep decline in economic security.
Today, only half of the population considers themselves economically secure, according to a study that came out earlier this year.
"All Norwegian households lost economic security between 2021 and 2023," says Christian Poppe. He is a researcher at OsloMet's research institute Consumption Research Norway (SIFO).
The UK was also hit hard. Food and electricity became even more expensive there than in Norway.
Norwegian and British researchers have now compared financial insecurity among Norwegian and British families during the cost-of-living crisis.
Annonse
"We found the opposite of what we expected," Poppe says about the results, which were recently published in a book about consumption and social inequality.
What is a cost-of-living crisis?
It started with petrol and diesel in the summer of 2021. In the autumn, electricity prices spiked, followed by rising food prices.
Housing also became more expensive, both due to high rental prices and high mortgage rates.
This is what is commonly referred to as a cost-of-living crisis and happens when essential goods and services suddenly become significantly more expensive.
So how well are we actually protected against such 'expense shocks'?
Poppe and his colleagues' theory was that the Norwegian welfare state would offer better protection to vulnerable groups than the British system.
Universal support vs targeted support
That assumption didn't fully hold up.
"Economic security has declined in both countries. But
the in Norway has been greater, even though Norway has not yet reached the level of
the UK," says Poppe.
And it has hit the worst-off the hardest.
So why didn’t Norway do a better job protecting this group during the price surge? Isn't that the whole purpose of a welfare state?
Poppe believes the differences in the measures taken in Norway and the UK may provide some answers.
Maximum welfare for all
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Norway operates under a social democratic model.
We have generous support schemes that are universal. This means
that everyone receives support, not just those who need it most.
The goal is to ensure as much welfare as possible for everyone.
In the UK, they have a more liberal model, says Poppe.
They have fewer and less generous universal schemes, but more means-tested schemes – specifically aimed at those who need them the most.
The goal is to ensure a minimum standard of living.
Not as expected
"We found the opposite of what we expected," says Poppe
Even though economic security declined in both countries, it did not drop as sharply in the UK. This comes from survey results conducted in both countries.
"The UK managed, to some extent, to halt the decline in security and even managed to increase economic security somewhat among groups that were initially vulnerable," Poppe tells Science Norway.
However, economic security among the British middle class declined.
In Norway, it was almost the opposite.
"It's only now that the security among those who were previously the weakest has stabilised," he says.
But it is still at a lower level than in 2021.
In general, all groups, both in Norway and the UK, have lower economic security today than before the cost-of-living crisis began, according to the survey.
Norway with long-term measures
Why did the UK manage to limit the drop in economic security among the disadvantaged when prices on goods rose the most?
The reasons for this may lie in the specific measures that were implemented, according to Poppe.
He explains that Norway focused more on long-term, universal measures - those that align with the social democratic model.
For example, the government increased what is called the basic amount in the National Insurance Scheme. This means that people received more in pensions, disability benefits, work assessment allowance, and unemployment benefits.
The advantage of such measures is that they are permanent. The downside is that they usually take a bit more time to implement.
The UK focused on short-term measures
The UK responded with more short-term, targeted emergency measures. These were often means-tested and aimed specifically at low-income groups, pensioners, people with disabilities, and the poor.
Electricity support is one such emergency measure.
Both the UK and Norway introduced electricity support. The difference is that in Norway, everyone received electricity support – regardless of income. In the UK, electricity support was partly means-tested and targeted at vulnerable groups.
Poppe notes that in Norway, students, housing benefit recipients, and single parents eventually received a bit more support as well.
Costly schemes
"The advantage of emergency measures is that they meet needs quite quickly. The downside is that they're only temporary solutions," explains Poppe.
When such measures are suddenly removed, it can become very difficult for people.
In Norway, the government decided to extend electricity support through the end of 2025.
Withdrew electricity support
"The key difference is that Norway, in line with its social democratic tradition, responded to the cost crisis with universal support funded through the national budget. The UK, on the other hand, relied on targeted, temporary emergency measures that were largely means-tested," says Poppe.
He believes both Norway and the UK have something to learn.
For Norway, that means being more willing to deploy short-term, targeted measures for the most vulnerable during future crises – in addition to the universal measures.
For the UK, it's the opposite: They need to be willing to develop more generous, universal, and long-term solutions – alongside targeted emergency support.
"The ideal welfare state is one that can strike the right balance between strong universal policies and temporary support during periods of economic strain," says Poppe.
Still, Poppe points out that welfare levels in England are critically low.
"And overall, the Norwegian welfare state provides significantly more support to its population than the British system," he says.
