COPENHAGEN ( AFP ) ― The Nordic model , known for high taxes and its cradle - to - grave welfare system , is getting a radical makeover as nations find themselves cash - strapped . During the post - war period , the Scandinavian economies became famous for a “ softer ” version of capitalism that placed more importance on social equality than other western nations , such as Britain and the United States , did . But globalization , economic necessity and an ideological shift to the right has led to a scaling back of the public sector . In Sweden , visitors are sometimes surprised to learn about year - long waiting times for cancer patients , rioting in low - income suburbs and train derailments amid lagging infrastructure investment . “ The generosity of the system has declined , ” said Jonas Hinnfors , a professor of political science at the University of Gothenburg . “ Much of this already started changing in the 1980 s and especially in the 1990 s , ” he added . In the wake of a banking crisis in the early nineties , Stockholm scrapped housing subsidies , reformed the pension system and slashed the healthcare budget . A voucher - based system that allows for - profit schools to compete with state schools was introduced , and has drawn attention from right - wing politicians elsewhere , including Britain ’ s Conservative Party . In 2006 , conservative Prime Minister Fredrik Reinfeldt ’ s government accelerated the pace of reform , tightening the criteria for unemployment benefits and sick pay while lowering taxes . Income tax in Sweden is now lower than in France , Belgium and Denmark , and public spending as a share of GDP has declined from a record 71 . 0 percent in 1993 to 53 . 3 percent last year . Once the darling of progressives , Sweden has become a model for free - market - leaning thinkers including British weekly The Economist , which last year hailed the scaled - down Nordic model as “ the next supermodel . ” “ They offer a blueprint of how to reform the public sector , making the state far more efficient , ” it wrote . This month , the Wall Street Journal praised tax cuts and entitlement reforms in Sweden and Denmark that “ are now discomfiting their big - government admirers overseas . ” Although polls show strong support among Swedes for the income tax cuts of the past few years , the leftist opposition looks set to win this year ’ s general election . The Social Democrats , in power for much of last century , have been boosted by a string of scandals in private elderly care homes involving degrading treatment of their residents , and by plummeting school results in international rankings . However , it ’ s unclear how they will finance an improvement of public services , having already pledged to keep the popular income tax cuts . Danish prime minister jeered If Sweden is the Nordic country to have gone the furthest in shrinking its welfare state , Denmark has moved the fastest . When her Social Democratic government took power in 2011 , there was little to suggest Prime Minister Helle Thorning - Schmidt would make any dramatic changes to the country ’ s cherished welfare state ― funded by the world ’ s highest tax burden . After a centre - right government had raised the retirement age and reduced the unemployment benefits period from four to two years , “ Gucci Helle ” ― as she is known among her detractors ― went on to cut corporate taxes to 22 percent from 25 percent . Other reforms have included requiring young people on benefits to undertake training , and withdrawing student aid to those taking too long to finish their studies . It has left her deeply unpopular in some quarters . At last year ’ s May Day speeches she was met by jeers as audience members sprayed her with a water pistol , threw tomatoes at her , and even flashed their buttocks . For some of Thorning - Schmidt ’ s allies ― notably the leftist Red Green Alliance ― the reforms have been too much to stomach , and in November her minority government had to seek support from the main opposition parties to pass this year ’ s budget . Denmark has been spurred into action by a persistently sluggish economy since a housing bubble imploded in 2007 , leading to anemic household spending . But among Danes there is also a sense that the welfare state was ballooning out of control . In 2011 , a TV report aiming to show what life was like for the poor in Denmark visited the home of a single mother on benefits , whose disposable income turned out to be 15 , 728 kroner ( $ 2 , 860 ) per month . “ Poor Carina , ” as she was later nicknamed , sparked a national debate on the level of unemployment benefits , with one pollster crediting her with fuelling a rise in the number of people who felt benefits were too high . The next Nordic country to reform its welfare state is likely to be Finland , battered by a downturn in the two pillars of its economy : the forest industry and information technology . Helsinki responded to the crisis by announcing in August a slew of measures to put more Finns to work . Under the controversial plan , the retirement age is to go up , time spent at university will go down , and incentives to enter the job market will be boosted for the unemployed and young mothers . Only Norway looks unlikely to reform entitlements anytime soon , bolstered by its oil wealth . The country is home to the world ’ s largest sovereign wealth fund . Worth some 5 , 116 billion kroner ( $ 830 billion ) , each of the country ’ s 5 , 096 , 000 inhabitants is ― at least on paper ― a millionaire . New centre - right Prime Minister Erna Solberg has pledged to preserve the welfare state .