After years of affluence, Scandinavians lower sights

By , Staff correspondent of The Christian Science Monitor

In northern Europe, the average man is among the wealthiest of average men in the world. But his expectations are declining. And this is considered here to be a first, long-awaited sign:

The Scandinavian "model" welfare states may begin working their way back to solvency -- to "pay our way in the world," as Swedish Trade Minister Staffan Burenstam Linder puts it.

The signs are in this year's wage settlements. After last year's two-week strike/lockout that many Americans called the end of the Swedish labor paradise, this year's two-year packages are considered -- both in Denmark and Sweden -- evidence of a popular willingness to sacrifice.

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"Voters have been told for years that things are getting bad, but they retained their optimism," a conservative Danish opinion pollster comments. Not until last year did expectations for living standards drop sharply. They took a further dip in this year's survey.

A factory worker in Gislavad, Sweden, sums up his expectations neatly: higher rents, less money, and trimmed public services. In both countries real incomes dropped by around 3 percent in 1980.

The point is to make Scandinavian goods cheaper, both at home and abroad.This in turn should help keep down what the welfare states have to borrow abroad each year.

This austerity is the short answer to long, political problems.

The questions the Scandinavians are butting their heads against are basic ones: how far state welfare can go when a market economy supports it and how market forces can work in societies where risk has been tamed.

Analyst with a financial stake in these questions are skeptical on whether the big, heavily centralized Nordic governments can muster the wherewithal to answer them. But consensus begins, most feel, with the wage agreements.

In Norway, offshore oil wealth has stood the whole matter on its head. Here the nation can afford a more thorough-going welfare state, but balks at the idea of becoming a Kuwait-style oil economy.

Norwegian wage negotiations don't come until spring. But the Labor government is staking its future on low wage increases in an effort not to depend on oil.

"We have to paint a darker picture of our economy than we believe in our hearts is true [to keep wage expectations down]," says Norwegian Premier Gro Harlem Brundtland. She foresees no basis in industrial production for an increase in Norwegian living standards in the next few years.

It will take a moderate wage settlement this spring to show that Norwegian workers follow her reasoning and resist the temptation to become "blue-eyed sheikhs."

In Denmark and Sweden, the problems have been building for years.

Denmark has cheerfully accumulated a back-breaking national debt; just servicing it took about 2.6 percent of the Danes' total production last year.

Sweden, in the opinion of some Swedish bankers and economists, is about four years behind the Danes and headed in the same direction.

In both cases, the basic problem is that since the oil crisis clobbered private industry in the mid-1970s, industry hasn't been able to support the ballooning public sector.

So instead, the Nordic countries have been borrowing abroad to allow their impressive standard of living to keep rising.

If the tendency in northern Europe is away from social democracy, it hasn't yet gained much momentum.

Even a conservative Swedish banker longs wistfully for a socialist government and its union clout to turn the state finances around. In 1976 a nonsocialist coalition beat out the Social Democrats for the first time in 44 years. This fall the socialists may be back.

Finland is different.

On the eastern edge of Scandinavia, it has a precarious distinction. The Finns have quietly led the world over the past two years in growth of national productivity.

The nation has doggedly pulled itself away from poor-relation status and has moved toward Scandinavian standards in personal income and quality of life.

But with high costs and an out-of-the-way location, Finland's competitive edge is often a thin one. If the two-year national incomes package had not been accepted by the union confederation, some foresaw the chance of strikes and even a government shake-up this spring.

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