More Norwegians than usual are hoping for brighter days after the winter solstice this year because of a new, unfamiliar situation: relative poverty. Inflation, higher interest rates, much higher fuel and energy costs and a sharp decline in purchasing power are causing problems that even Norway’s strong social welfare state hasn’t solved.
After years of prosperity fueled largely by the country’s oil, gas and seafood industries, fully 40 percent of all Norwegians report they’re now less able to afford gifts and traditional Christmas celebrations this year. A recent survey conducted by research firm Norstat for newspaper Dagsavisen revealed that those with large mortgages and children at home are worse off. Single Norwegians without children also report tighter household budgets and fewer holiday celebrations.
In some cases, those now feeling the pinch over-extended themselves by taking on large home loans in the expectation that real estate prices would keep climbing. Instead it’s become much more difficult to sell homes, leaving some with loans on two properties and rates climbing. Rental rates, meanwhile, have risen by an average of 12 percent nationwide, and even higher in cities like Oslo. Households with incomes of as much as NOK 800,000 (USD 80,000) are left with little disposable income after paying the monthly rent.
Unemployment remains low but few are seeing any increase in household purchasing power at a time when prices for food and electricity rates have skyrocketed. The lines at local food distribution centers have increased markedly during the past year, with nearly 800 people showing up on Fridays to receive free, weekly bags of grocery items from a food bank in Oslo’s Grønland neighbourhood. Many of them are Ukrainian refugees with children who can’t make ends meet on their monthly allotments from the state. Newspaper Klassekampen reported on Friday how several Ukrainians who met in the food lines ended up forming a choir that now sings to entertain others in the local church, where they can escape the bitter winter cold outside while waiting their turn for food donations.
At the same time there are more sightings of homeless people in Oslo and other Norwegian cities, with some now seen pushing grocery carts stuffed with their belongings in plastic bags, looking for a place to spend the night. With temperatures plunging last week, that’s an even worse prospect than usual.
“Will you be sleeping outdoors tonight? Would you like a thermal suit?” asked a volunteer for the humanitarian organization Kveldsvakten in Bergen, after spotting a man wearing only a thin jacket and jogging pants in a group of homeless people gathered behind a downtown church. Some were drug addicts, others from poor families.
“Ja takk (yes, thanks),” responded the man. He told Dagsavisen that he had some relatives and friends “but it’s too embarrassing” to ask them to take him in. “I’d rather sleep outside,” he said, adding that the offer of the one-piece thermal suit similar to what outdoor construction- or highway crews wear, was “a stroke of genius” and greatly appreciated.
“Higher prices hit hardest on those who already were worse off from before, and have small margins between income and expenses,” Inger Lise Skog Hansen of the research foundation Fafo told Dagsavisen. Many of those standing in food lines have jobs, she noted, but they’re not earning enough to meet higher expenses.
The Norwegian Red Cross started planning early to help what staffers called “record numbers” of children and youth who faced dismal Christmas celebrations at home this year. “We saw a large increase in needs last year, and the situation has gone from bad to worse this year,” stated the Red Cross’ secretary general Anne Bergh in a press release earlier this month. “Many families are struggling to make ends meet. We see a disturbing increase in the numbers of those who can’t afford what most of us take for granted, like julemat (special Christmas food), warm clothing or firewood.”
Norway’s left-center minority government has had a hard time addressing the sudden needs, even among members of the middle-class. Prime Minister Jonas Gahr Støre of the Labour Party told newspaper VG earlier this autumn that doling out more social welfare benefits “could fire up the problem” even more, and add to inflation. “Then we’d end up farther from our goals to bring prices and interest rates down and purchasing power up.”
The government did allocate an extra NOK 2 million in its revised budget to food banks around the country, but critics called that far from enough. “It’s taken a long time before they (they government) discovered the seriousness of how Norway has a poverty problem in these expensive times,” Christian Poppe of the research institute SIFO told Dagsavisen. “I think Støre’s government is too late in recognizing the problem for those on welfare.” He also thinks the government’s refusal to raise benefits contributed to Labour’s poor showing in this fall’s local elections.
Others point to a widening gap between the wealthy and the poor in Norway, reviving calls for reinstatement of inheritance tax to redistribute some wealth. Norwegian banks have also become more unpopular than ever, as they quickly raise interest rates after the central bank does, and then rake in record profits. Banking executives (especially those at Norway’s largest bank DNB, in which the state holds a major stake) have also been criticized over their multi-million-kroner salaries at a time when others are struggling.
“Something is absolutely wrong when folks have to stand in line for food in the world’s richest country,” said Tobias Drevland Lund, a Member of Parliament for the left-wing Reds Party. He called the food lines “a sign of sickness within the welfare state.” Labour Minister Tonje Brenna, who’s in charge of state welfare agency NAV, said that anyone needing help should still apply for benefits but benefit amounts won’t be rising. Instead, she’s more interested in getting those needing help into the labour force even though many already are.
It’s challenging for refugees, though, to find work since most Norwegian employers insist on language fluency, and that takes time. Brenna said the government aims to improve its introductory programs for new arrivals in Norway and find ways of better using the competence and work experience new arrivals have from their homelands. That may not help young Norwegians with low-paying jobs who can’t break into the expensive housing market, though.
Meanwhile, there have been indications of less gift-giving this Christmas. A survey conducted by research firm Opinion for the Salvation Army in Norway found that it will be “a different Christmas” for many families with small children this year, with 29 percent opting against travel to family or friends during the holidays, 27 percent saying they’ll attend fewer social gatherings because of the costs involved and 13 percent admitting they’ve needed to ask family and friends for financial assistance. Gifts were also a low priority.