Norway, a possible victim of its own wealth

Revenues from the oil industry, similar to those made by the countries in the Middle East, as well as the generous state welfare model are slowly but surely affecting the Norwegian economy, threatening the biggest success story in Western Europe, according to a Reuters study.

On the surface, Norway is a country that is envied by the entire world, experiencing a solid growth, a nominal GDP of over 100,000 US dollars and a reserve of 700 billion dollars, the equivalent of 140,000 dollars for each of its citizens.

But this wealth seems to be affecting the economy, as the Norwegians seem to be focusing more on more on family and spending their leisure time, and working less and less. Immigration fails to reduce the gap of workforce which are highly qualified, which can lead to the stagnation of productivity, which leads to the stagnation of productivity, the accelerated increase of salaries and the reduction of the competitiveness of the local companies, due to the high prices which they charge. "Oil is a metaphor for winning the lottery. Wealth has crept into society, but people aren't noticing this because the transition has been gradual", says Ivar Froeness, a teacher of sociology at the University of Oslo.

An increasing number of Norwegians are leaving the capital on Thursday afternoon, instead of Friday afternoon, by extending their weekends, he says. "We may be taking it for granted that we have a home, a chalet in the mountains and a beach house", the university said.

Wage expenses have increased 63% compared to 2000, almost six times more than in Germany or Sweden, whereas the rate of employment, adjusted with the part-time work programs, is 61%, more than in the other Nordic countries, and even below Greece, according to data from the Central bank of Norway. In spite of this, unemployment is only 3%, as an increasing number of people prefer part-time jobs.

The government recently warned that if the number of work hours doesn't increase 10% in the coming years, the state will need to go into the savings. The Central Bank also warned that the welfare model is encouraging the population to leave the work market. "The number of work hours has fallen by 270 hours a year, starting with 1974", according to Jostein Hansen, the head of employment policies of the Norwegian Policies of the Hospitality Industry, who thinks that Norwegians should follow the example of Icelanders and work 100 hours more every year.

• The oil industry, affected by the high costs

The oil sector, the main engine of the Norwegian economy, could become a victim of its own success. "Aker Solutions", the national leader in oil services, intends to hire 4,000 engineers this year, but only one third of them will be Norwegians. The company is forced to operate engineering centers in Kuala Lumpur, the capital of Malaysia, London and Mumbai, in order to obtain enough qualified employees.

A study paid by the government in Oslo states that by 2016, Norway is expected to have a deficit of 6,000 engineers, as the investments in the oil sector reach new records, as the companies exploit reserves which were considered to have been exhausted. Some companies operatings costs have increased so much that they are unable to compete on the local market. One such example is the maker of oil equipment "Kvaerner", which lost a contract offered by the state-owned oil company "Statoil" to South-Korean company "Daewoo Shipbuilding & Marine Engineering", because it asked for a far too high priced. The General Manager of the company, Jan Arve Haugan, considers that the high cost of the Norwegian market represents a challenge for "Kvaerner". "The high quality can not offset the price difference compared to our competitors, which is sometimes as high as 7-15%", he said.

The airline "Norwegian Air Shuttle" has threatened to move its fleet to Thailand and run it using Asian employees, because it can't afford the high costs of the northern markets.

Norway isn't the only country which has such problems. Australia is faced with a similar problem, due to the growth brought about by its mining sector. But on average, Australians work 19% more than Norwegians do, according to the estimates of the Organization for Cooperation and Development in Europe (OCDE), and the oil sector in Norway generates 1/5th of the country's GDP, three times more than the mining sector in Australia, and 25% of the revenues of the state budget.

Businesspeople support the increase in the number of work hours, and the cutting of benefits, especially the number of days off. Even though the political parties agree to these proposals, the topic isn't exactly a top item on their agenda, as parliamentary elections are scheduled to take place in September.