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Sunday, June 16, 2024

Unemployment jumps on oil job losses

Norway’s unemployment rate has been low for years, but it’s now rising and not least because of the jobs that are disappearing in the oil and gas sector. A study of the labour market released this week indicates that 4.1 percent of the labour force is now without work, much higher than the levels reported earlier.

State statistics bureau SSB reported Thursday that the labour market survey known as AKU (Arbeidskraftundersøkelse) showed that 112,000 Norwegians were unemployed in February, amounting to 4.1 percent of the workforce. The numbers are expected to grow in the coming months, as companies in the oil and offshore sector continue to cut costs.

Stepping on the brakes
“We have seen the brakes being applied in other numbers tied to the oil sector, and have been surprised that this worsening hasn’t shown up in unemployment statistics earlier,” Kjersti Haugland, senor economist at DNB Markets, told Dagens Næringsliv (DN). “Now it is.”

Part of the explanation can be that many of those losing their jobs in the oil sector receive severance packages and haven’t applied for any unemployment benefits yet. Others may be reluctant to do so, industry officials have suggested, as a matter of pride or personal savings and resources that haven’t made it necessary. Many oil industry professionals, especially engineers, have also quickly found work in other sectors or expect they will.

The figures released by SSB on Thursday showed an increase of at least 10,000 people without work compared to February of last year. Haugland expects the numbers will rise. She cautioned that statistics from state welfare agency NAV, which administers unemployment benefits, are those mostly used in connection with jobless rates, but the AKU numbers “are in line with what we can expect.”

More bad news
They were released just as state oil company Statoil was releasing its worst results in years, and also as reports emerged that another 180 jobs are being cut by Dolphin Drilling, a subsidiary of Fred Olsen Energy. DN reported that one of Dolphin’s offshore rigs was losing its contract next month with no new charter lined up. That means 160 people working on the rig and 20 on land will lose their jobs: “We must unfortunately cut back,” Dolphin CEO Joakim Kleppe told website

DNB Markets thinks the ripple effects from job losses in the oil sector will be greater than previously thought. Unemployment wasn’t expected to surpass 4 percent yet and government officials have repeatedly claimed that Norway doesn’t face any economic crisis, rather just a slowdown because of the dive in oil prices that has led to less activity in the oil business.

Economists at Sparebanken 1 Markets wrote in an analysis released Thursday that a rise in unemployment was not unexpected, but it was a surprise that overall employment “fell so much.” They noted that it was the second quarter in a row with a marked decline, giving reason to believe that the unemployment rate for 2015 will end up as higher than predicted by the country’s central bank, Norges Bank, and may lead to another cut in interest rates in June. Berglund



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