An expected slowdown in oil investments over the next few years will lead to a sharp rise in unemployment in Norway, predict both analysts and state statistics bureau SSB. Nordea Markets thinks another 20,000 persons will lose their jobs by the end of next year, while SSB thinks higher unemployment will also lead to weaker wage growth.
SSB (Statistics Norway) predicted on Thursday that Norway’s unemployment rate will rise to 3.9 percent in 2015. That’s still low by standards elsewhere in Europe and the US, for example, but much higher than the record low levels of the past several years.
Slower economic growth
In its fresh prognoses for the Norwegian economy, SSB also predicts slower growth within Norway’s mainland economy (activity excluding offshore oil and gas), with gross national product (GNP) growing by 1.9 percent this year. That’s 0.2 percent weaker than SSB’s prediction in its last report, according to website dn.no.
Growth is expected to pick up in 2016 and 2017, rising to 2.4 percent, according to SSB. Analysts at Nordea Markets, meanwhile, predict even weaker growth this year and next.
“We are pessimists,” claimed Nordea Markets chief analyst Erik Bruce when he presented prognoses for the Norwegian economy on Wednesday. “We think the picture will be weaker in the future and that we will get very low growth in GNP.”
Lower demand and cost-cutting
He and his colleagues at Nordea only predict growth of 1.5 percent in the mainland economy this year and 1.2 percent next year. That’s just half the growth rates in 2011 and 2012, and it means lower employment growth and rising unemployment. Nordea thinks Norway’s unemployment will rise to 4.2 percent, or a total of 120,000 people out of work, by the end of next year.
The main reason is a predicted 10 percent decline in oil investments, only 1.8 percent growth in private consumption and flat exports of oil and gas. “Unemployment rates will rise well over what we say during the finance crisis,” Bruce said. Norway continued to fare well during the finance crisis thanks largely to the oil industry activity. That’s now expected to slow dramatically as oil companies grapple with cost cuts and demand declines.
Labour negotiations underway
The prospect of lower wages and, at the very least, lower wage growth in Norway has also come up several times during the past week as Norway’s labour and employer organizations formally launched annual negotiations. High pay levels in Norway are now said to severely threaten competitiveness, while labour migrants arriving in the country coupled with outsourcing by Norwegian companies are also putting pressure on local salaries.
“There’s no doubt that our members are under considerable pressure because of ongoing internationalization,” Vegard Einan of labour organization Parat, which represents many airline employees in Norway. “Higher competition across borders means more competition for pay.”
Einan said the new dynamics don’t only affect airline pilots and cabin personnel, as seen during recent conflicts over Norwegian Air’s new intercontinental service. “This also applies to economists, accountants, bank workers and travel agency employees,” Einan said. “In reality, no one is immune.”
newsinenglish.no/Nina Berglund
