Norway’s state oil company Statoil was the target of some angry editorials and complaints this week, after newspaper Dagens Næringsliv (DN) reported just how lucrative it’s been for Statoil’s workers to voluntarily give up their jobs. Employee buyouts have cost an estimated NOK 4 billion over the past three years, with the state and taxpayers picking up most of the bill.
“It’s been highly lucrative to be employed in Statoil,” editorialized newspaper Dagsavisen on Wednesday. “It’s just as lucrative to get fired.”
One of Statoil’s veteran executives went so far as to call his severance deal from Statoil “a dream come true.” Rune Bjørnson, a former chief of Statoil’s gas operations who worked at the company since 1985, was able to leave last year with an early retirement package at the age of just 58. He, like many others, was able to secure 66 percent of his pay until he reaches ordinary retirement age of 67, to be reduced only if he begins in another full-time job. For the time being he’s been enjoying life in Spain while he decides what to do next.
In addition to spending billions on generous early retirement offers, Statoil also has spent around NOK 1.5 billion on so-called sluttpakker, or severance packages for younger workers that Statoil basically paid to voluntarily quit. The employee buyouts included various incentives tied to seniority and position that generally included at least a year’s full pay or more.
DN reported that Statoil itself has only picked up a portion of the costs itself, passing on part of it to partners in its oil fields but mostly to the state. DN calculated that 78 percent of the costs of Statoil’s employee buyouts can be written off the taxes it otherwise it would pay to the state. Since the state also owns 67 percent of Statoil’s stock, it’s also affected by Statoil’s own bottom line, which went from years of record profits to a loss last year.
‘Waste of money’
Other oil industry officials working in private industry have also slammed Statoil’s severance deals this week. “Too much money has been spent on these packages,” Ståle Kyllingstad, one of Norway’s most high-profile oil industry entrepreneurs, told DN. “It’s waste set into the system. Waste of Statoil’s and the state’s money.”
Atle Tranøy represents workers at the Aker group of companies where staff-cutting has been widespread and traumatic for many who have received “small change” in comparison to the severance and early retirement deals offered by Statoil. “I really shouldn’t say anything because it would hardly be decent enough for publication,” Tranøy told DN, but after collecting himself he called Statoil’s employee buyouts “misuse of society’s resources that Statoil is supposed to manage, not on behalf of itself or to support its own needs, but to take care of the nation’s best interets. That’s why we have a majority-owned state oil company.
“The people who really have been hurt the most during the oil industry downturn (after oil prices collapsed three years ago) are those in the oil service and supply industry who felt the screws tighten as their employers had to meet Statoil’s demands for cost cuts,” Tranøy continued. He also noted, as did others, that privately owned oil companies couldn’t or wouldn’t offer such generous employee buyouts as Statoil did, and he stressed that Statoil’s early retirement deals defied state policy that calls for Norwegians to work longer, even beyond standard retirement age of 67. That’s because the ageing population is already putting a huge burden on pension plans, both in the public and private sectors.
Kyllingstad noted that’s oil industry workers have been treated differently, with Statoil workers getting the best treatment of all.
Statoil spokesman Bård Glad Pedersen, a former politician for the Conservative Party who has served as state secretary in the foreign ministry, defended what he called the “temporary” use of so much money for employee buyouts.
“We have, in the course of the three-year period (when the buyouts were offered), reduced total staffing by 20 percent and been through a major restructuring,” Pedersen told DN. “We believe it has been correct to use voluntary programs during the staff-reduction process.” That process, he added, has contributed towards reducing annual costs by USD 3.2 billion dollars compared to 2014 levels.
Pedersen said that Statoil won’t be using such sums on severance packages in the future, since its cost-cutting “Step” program is now over. The company has moved on to a program of “continually improving efficiency.”
Analysts have praised Statoil’s cost-cutting and how it has forced cost cuts in an industry where costs had soared during the industry’s boom years. Statoil’s top executives have also seen their own compensation decline in line with smaller bonuses. Asked how he could defend that the state will need to absorb much of the cost of its employee buyouts, Pedersen said it was “necessary to carry out the restructuring we have been through.” He repeated that it was “correct” to use a program that encouraged employees to leave the company voluntarily.
Newspaper Dagsavisen, which normally editorializes in favour of workers’ rights, good pay and benefits, wasn’t convinced. “Highly competent workers who have been expensive to train have disappeared,” Dagsavisen wrote. “This goes against the state’s own calls for workers to stay in their jobs longer. It’s good to take care of your workers, but Statoil isn’t just any company and now it seems they’ve had their own rules. This implies a work culture that has been expensive for Statoil, and therefore for Norway.”
Bjørnson, the former gas chief now taking time off in Spain, claimed that “it’s not true that we have all said we won’t work any more. I don’t think it will just be golf for me.” Asked whether he thinks Statoil’s generous employee buyouts will generate envy among other workers who’ve been made redundant in recent years, he said he “understood that many think (Statoil’s) program was good. I think so myself. But I also have worked hard for many years.”