'Welfare system not sustainable'

Bookmark and Share

The national association representing Norway’s local and regional authorities is calling for a serious review of the country’s famous but fragile social welfare system. “The system we have is not sustainable,” claims its leader, Sigrun Vågeng, but the government rejected her call for a state welfare commission to tackle the challenges.

Vågeng told newspaper Aftenposten on Tuesday that Norway has around 10 years to fix its current system, before demands on it may surpass its capacity to meet them.

Vågeng leads Kommunenes Sentralforbund (KS), the Norwegian Association of Local and Regional Authorities), which is the employers’ association and interest group for municipalities, counties and local public enterprises in Norway. Since local authorities are charged with distributing much of the social welfare services available in Norway, KS has a keen interest in how the system works.

Vågeng thinks the state needs to set up what she calls a “welfare commission” because the current system faces severe challenges, or even collapse.

“At the time when we really are going to need more welfare services (not least because of demands from aging baby-boomers), the oil income will start to fall,” she told Aftenposten , adding that “no one really knows” what the welfare system will be able to afford by, for example, 2020.Norwegians are often characterized as wealthy, spoiled and kravstore (full of demands). An entire generation has grown up in a country once poor but now fueled by new-found oil revenues. Expectations that “the state will provide” have grown along with oil revenues and, to some degree, tax levels.

Taxes remain relatively high in Norway, but not high enough to offset any major decline in the oil revenue that has funded higher welfare benefits. Vågeng thinks Norwegians thus face some tough choices in the years ahead.

“We can cut services, we can increase taxes, we can break the rules that limit use of oil revenues,” she said. “These are three rather dramatic alternatives. A commission needs to look at the consequences of all this.”

KS sent a letter to the Labour-led coalition government and all of Norway’s political parties, urging a comprehensive review of whether the Norwegian welfare state can survive. She hoped Prime Minister Jens Stoltenberg would appoint a commission representing a wide range of interests, rather like the state pension commission set up to tackle its future demands.

Her request was summarily rejected. Within hours of receiving KS’ proposal, the cabinet minister in charge of local governments turned it down “because a commission isn’t the answer to the welfare problems” said Liv Signe Navarsete, who also heads the rural-oriented Center Party.

Navarsete claimed several reforms are already underway that she thinks “will give more welfare for the money.” Also the opposition Conservative Party thinks it’s more important to act than study the problems.

“But to think the reforms will solve the problems, is unrealistic,” said the leader for the Conservatives, Erna Solberg.