After reaping the benefits of a super-strong economy and enormous wealth creation for the past decade, Norwegians now face rising uncertainty as jobs disappear following the sharp fall in oil prices. The job losses have begun affecting workers outside the oil and offshore sector as well, as the ripple effects of the decline in Norway’s dominant industry spread.
A new survey by the independent research foundation Fafo, presented in newspaper Dagsavisen on Friday, shows that fully 16 percent of Norwegian employees now fear being furloughed or fired in the near future. Even more fear they’ll lose their jobs during the next three years, according to the survey conducted for Fafo by research firm Respons analyse. Those hired on a temporary basis fear job losses the most.
“These are quite high numbers, and they reflect uncertainty in the job market,” FAFO research chief Sissel Trygstad told Dagsavisen. She said she’s surprised over how many people are now afraid they’ll lose their jobs, after years of record low unemployment rates and strong demand for engineers and other highly educated and skilled workers. Now they’re among those losing their jobs, or graduating with engineering and advanced degrees and meeting a job market that’s suddenly become tough to enter.
Cuts extend from food to furniture
The uncertainty has spread into the public sector as well as the private, where layoffs are also occurring in businesses outside the oil industry. Companies like food producer Denja in Larvik, Western Bulk Shipping in Oslo and furniture maker Helland Møbler in Stordal are among those cutting staff or, as is the case with Denja and Helland, shutting down production plants entirely. “It’s terrible for the people losing their jobs,” 57-year-old Henning Jensen, a mechanic who represents employees at the Orkla-owned producer of sandwich spreads, told newspaper Dagens Næringsliv (DN) last week. Orkla decided to transfer Denja’s operations to a larger facility in Elverum, and only seven of 35 employees will be transferred as well.
In many cases, the numbers of job losses may seem small by international standards, but collectively they’re adding up to a point where another 31,000 Norwegians were officially registered as out of work at the end of the June. That’s a lot in a country of 5 million where less than 100,000 have been officially unemployed in recent years. DN reported that in Stordal, more than 400 jobs have disappeared in the area’s long-established furniture industry, mostly because many companies have moved production abroad to cut costs. Helland Møbler had 90 employees in Stordal in the 1990s. Now the remains of its production are being moved to Estonia, leaving another 20 people out of work.
At the same time, more than 500 employees of grocery store chains ICA and Coop are likely to lose their jobs when Coop takes over the majority of ICA’s stores after ICA decided to pull out of the Norwegian market. “Everyone hopes it won’t be them,” Geir Inge Stokke, acting chief executive of Coop, told DN earlier this month.
Painful new reality
The pending job losses in the grocery store sector may be seen as coincidental to the downturn in the oil industry, but there’s no question the downturn itself is hurting businesses that have catered to well-paid oil- and oil-supply industry employees on expense accounts. Restaurants, hotels and taxi drivers have been feeling the pain for months, especially in and around Norway’s oil capital of Stavanger, and the ranks of others affected by the oil price dive may be far larger than the statistics imply. That’s because the numbers of people turning up at NAV offices in Norway to apply for unemployment benefits is believed to be lower than the numbers of people actually out of work. Many of those losing their jobs are highly educated, have been highly paid and can live off their own resources, at least until their severance pay runs out. Pride or the sheer disbelief of seeing careers disrupted may keep laid-off engineers or executives from seeking help.
Meanwhile, more companies directly affected by the fall in oil prices were announcing staff cuts nearly every day this past week: 160 at Wärtsila on Thursday, for example, and as many as 200 at Rolls Royce Marine. Havyard Group cut around 100 jobs last week. “The boom we have had since 2005 has now transformed into a market with little demand and extreme price pressure,” Havyard’s CEO, Geir Johan Bakke, told DN. That’s the same problem facing most of Norway’s oil service and supply companies, with state statistics bureau SSB confirming that orderbooks among industrial firms in Norway shrunk by 11.4 percent in the second quarter, compared to the same period last year. “It’s dead everywhere, there’s nowhere to hide,” lamented Sølve Høyrem of Westshore Shipbrokers in Kristiansand, which specializes in supply ships that serve offshore installations. He told DN that the market is terrible, just as the share value of Norwegian offshore firms fell again on Thursday.
At Norway’s biggest company Statoil, which has been cutting jobs for the past two years, the dismal situation has some bright spots. As oil prices dipped below USD 50 a barrel this week, Statoil is benefiting from the suddenly lower prices also being offered by suppliers bidding for work on its huge new Johan Sverdrup oil field development project. As DN reported on Friday, cheaper contracts mean lower investment costs, and potential for higher profits later on.