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Saturday, April 20, 2024

Finance crisis starts hitting Norway

Growth has slowed at many Norwegian companies and Prime Minister Jens Stoltenberg of the Labour Party is asking for “moderate” wage demands next spring from the labour unions that form his party’s biggest source of support. Signs are rapidly emerging that the debt crisis in Europe is hitting Norway’s otherwise strong economy.

Prime Minister Jens Stoltenberg has long warned that the finance and debt crises can hit Norway, and signs are emerging that they are. PHOTO: Statsministerenskontor

“It’s dangerous to think that we are avoiding this crisis,” Stoltenberg told members of Fellesforbundet (The Norwegian United Federation of Trade Unions) as they met for a national meeting on Tuesday. “No one should think for a minute that this won’t hit us. We are a small, open economy and half of what we produce goes abroad.”

Stoltenberg has been warning for months against complacency in Norway, and his fears that crisis abroad can hurt Norwegian exports. On Wednesday, newspaper Aftenposten reported that the number of companies showing strong growth in Norway has been cut in half since the finance crisis first hit in 2008.

That’s cause for worry, according to the accounting firm behind the report showing that the number of profitable companies with revenue growth of at least 20 percent and active hiring has fallen to 2,200 from 4,600 in 2008. “We should have had more growth companies, or at least as many as in 2007 and 2008,” Erik Mamelund of accounting firm Ernst & Young told Aftenposten.

It worries others as well, including Torger Reve, a professor at the business college BI in Oslo, and Tor Steig, chief economist for NHO, Norway’s employers’ association. “We must take this seriously,” Reve told Aftenposten. “We have thought we were unaffected by the crisis but we’re not.” Steig warned that Norway can’t simply rely on growth in its oil and gas industry, and noted that it’s become tougher for Norwegian businesses to compete internationally against companies in lower cost countries like China and India.

‘Solidarity’ works both ways
Stoltenberg and his finance minister, Sigbjørn Johnsen, have never thought Norway was immune from the finance and debt crises despite the country’s vast oil wealth, low unemployment and budget surplus. Stoltenberg thus called on Fellesforbundet to show “solidarity” by demanding only moderate pay raises next year. Fellesforbundet represents workers in the iron and metal industry, shipbuilding, construction trades and a wide range of other areas including the hotel and restaurant industry. It has more than 150,000 members and is the largest union federation in the private sector.

Union leaders called Stoltenberg’s call “sensible,” but cautioned that solidarity works both ways. Workers won’t be willing to settle for modest pay raises if company owners and high-ranking executives reward themselves with large bonuses and big raises, as has been the case in recent years.

Many of Norway’s wealthiest business owners, however, already have logged huge losses because of the finance and debt crises, at least on paper. Tumbling stock markets and prices for everything from solar cells to salmon have cut the value of major firms like REC, Marine Harvest, Aker Solutions and shipping group Frontline. That’s left their major owners like shipping tycoon John Fredriksen, industrialists Jens Ulltveit-Moe and Kjell Inge Røkke businessman Stein Erik Hagen with sharply reduced fortunes.

Views and News from Norway/Nina Berglund
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