Cookie Consent by Free Privacy Policy Generator
17.2 C
Friday, June 21, 2024

Unemployment hits new post-war high

Norway’s state welfare agency NAV was clobbered again on Monday with 20,400 more applications for unemployment benefits. They’ve now soared to a stunning 243,000 since a state shutdown began to corral the Corona virus, with one economist estimating that the unemployment rate is now probably over 11 percent. NAV put it at 10.4 percent on Tuesday.

NAV’s office in Oslo’s Frogner district has had to restrict opening hours during the Corona crisis but is “doing its best” to process the thousands of applications for unemployment benefits that are pouring in. PHOTO: Møst

That’s a solid post-war record, notes a glum Øystein Dørum, chief economist for Norway’s national employers NHO. After adding in unemployment statistics from before the Corona virus broke out in Norway, the total number of currently unemployed workers has “probably reached around 320,000,” according to Dørum. NAV’s numbers on Tuesday put it at 291,000, but that applies only to people entirely out of work and actually registered with NAV.

“These are frightening numbers that unfortunately will probably get worse,” Dørum told reporters this week. Newspaper Aftenposten reported that given an estimated 1.6 million salaried workers in Norway, Dørum calculates around 15 percent of them have already lost their jobs, or around one out of seven. In addition come all the sole proprietors who’ve had to shut down operations or have seen business vanish in the past two weeks.

Even though the daily numbers of unemployment applications pouring into NAV have declined in the past week, Dørum fears they’ll pick up again. Fully four out of five members of NHO have warned they’ll likely need to lay off more workers in the weeks and months ahead.

“The development in the labour market in Norway the past two week is without parallel,” NAV stated in a press release Tuesday afternoon, and blamed it on the measures imposed to limit the spread of the Corona virus. NAV confirmed its 10.4 percent figures as the highest unemployment rate in Norway since World War II.

‘Historic challenge’
NAV itself, meanwhile, faces what newspaper Dagens Næringsliv (DN) called “an historic challenge” as it struggles to keep up with the onslaught. NAV offices have had to close to the public or severely limit the numbers of people allowed inside because of Corona contamination fears. They’ve called in reinforcements from other divisions with the large agency that handles everything from pension- to sick leave payments along with many other forms of public assistance.

Labour Minister Torbjørn Røe Isaksen told DN last week that the government may need to use its new expanded powers to also transfer state workers from other departments and agencies to help NAV out. The pressure on NAV is enormous, with labour organizations representing NAV employees calling for them to be included among those labelled as performing jobs critical to society and thereby making them eligible for special advantages themselves. That can include getting their children into the few day care centers and schools open to care for the offspring of parents who simply must work and can’t work efficiently from home.

‘NAV must be protected’
“NAV employees must be protected and taken good care of,” declared Mette Nord, leader of the large trade union federation Fagforbundet. Even DN editorialized that NAV suddenly finds itself on the front line of the Corona crisis and should get all the support it needs. “That’s in everyone’s best interests,” DN wrote. NAV’s already embattled leader Sigrun Vågeng has said NAV workers “are doing everything they can” to process applications quickly and dole out the money needed to other laid-off workers.

Even before Dørum declared that Norway’s unemployment rates were now approaching those logged during the Great Depression of the 1930, government officials had begun “firing the canons” in their effort to battle the ill effects of the Corona virus. After the central bank announced its second interest rate cut last week, Prime Minister Erna Solberg and Finance Minister Jan Tore Sanner announced more crisis measures that now are expected to cost as much as NOK 280 billion (USD 25 billion):

*** They’ve decided to use an extra NOK 111 billion from Norway’s huge sovereign wealth fund known as the Oil Fund after agreeing to cover up to 80 percent of laid workers’ unemployment benefits.

*** The government will also establish loan and guarantee programs for businesses hit hardest by the anti-Corona measures that have shut them down, up to as much as NOK 100 billion.

*** Payments can also be deferred on a long list of taxes and fees imposed by the state, part of a move to help companies preserve cash and boost liquidity.

*** The government also announced more assistance for deeply troubled airlines in Norway, aimed at preserving the country’s aviation infrastructure. Norwegian Air in particular needs help, but it remains unclear whether it will qualify for the emergency aid offered.

Dividend disagreement
The government and the Parliament agreed on the compromise aid plan last Thursday, with the Parliament sweetening some aspects of government initiatives. They did not agree, however, on whether crisis aid to hard-hit businesses would come on the condition that the businesses cut dividends to their owners and bonuses to executives.

Several MPs from parties including the Reds and Socialist Left made it clear that state funds should not be used to enrich wealthy business owners and investors like Kjell Inge Røkke, who controls the Aker concern. Newspaper VG was the first to report last week that Aker chief executive Øyvind Eriksen had lobbied for crisis relief through NHO. Aker, however, had just reported “a very good year” for the industrial concern that was so profitable that the board proposed paying out NOK 1.7 billion in dividends to its shareholders, with Røkke ranking as the largest. He stood to pocket NOK 1 billion himself, according to newspaper DN.

An Aker spokesman claimed the holding company would not apply for any state aid, but there was speculation some of its subsidiaries in the oil- and oil service sectors might. A board member representing employees, Atle Tranøy, told DN that Aker’s dividend may be “re-evaluated.” Several other Norwegian firms have since declared they will not be paying out dividends as planned because of the Corona crisis and its impact on business and employees. They include, according to business news service E24, the Gjensidige insurance firm, salmon producer Salmar and shipping firm Stolt-Nielsen, while several other Norwegian companies intend to reduce their dividends.

Crisis aid worth the price
Finance Minister Sanner has defended the enormous price of bailing out laid-off employees and possibly some businesses as well. Norway has had an extremely strong economy for years and is thus viewed as equipped to handle the Corona crisis. The NOK 280 billion estimated price tag isn’t too high, Sanner told DN, and rather a good investment in the future.

It includes not only the direct payouts involved but also the cost of deferred taxes and fees, the risk of loan guarantees, large reductions in tax revenues and the costs of battling the spread of the Corona virus itself. Not only the public health system but also municipalities and counties around the country “will get the money they need” to preserve public health and the economy, Sanner said.

“I believe these measures are absolutely necessary,” Sanner told DN over the weekend. “The consequences we see in Norway aren’t only a result of strong measures in Norway but also a result of how this crisis is global.” More measures are likely to come, he added.

“Job number one is to take care of life and health,” Sanner said. “Then we’ll also contribute liquidity so solid businesses (and their employees) can survive.” Berglund



For more news on Arctic developments.



If you like what we’re doing, please consider a donation. It’s easy using PayPal, or our Norway bank account. READ MORE