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Norway - National Level

Short overview of the labour market

 

As with the labour market information (LMI) for 2020, the first quarter of 2021 is strongly influenced by the extraordinary situation the world is in. A situation that brings strong constraints in terms of opportunities for work mobility, it is especially challenging for shift workers who commute between their place of work and home country, as well as for industries and workers that are subject to the demands of seasonal fluctuations and for the seasonal workers who normally cover employers’ skills requirements.

However, there are signs of improvement, and there are indications of a demand for jobs. Several industry leaders of businesses in the capital goods sector (often referred to as supplier industries, for example machinery and equipment, building of ships and oil platforms, along with repair and installation of machinery) reported in the Business Tendency Survey that production was restricted by the shortage of skilled labour from abroad as a consequence of the strict infection-control restrictions on entry into Norway in the first quarter.

Businesses in the intermediate goods sector (goods used in the manufacturing of other goods) are generally far less labour-intensive, and production within this product category has therefore suffered to a far lesser degree from the entry restrictions.

The Business Tendency Survey shows moderate growth in overall industrial production compared with the fourth quarter of 2020. New orders and the total stock of orders are also increasing marginally. The general assessment of the second quarter of 2021 is positive among the majority of industry leaders.

 

However, both unemployment figures and recruitment patterns are still different from what we would see in a normal situation. Entire sectors have been shut down for long periods and the challenges with regard to entry into Norway have also affected some sectors. The unemployment figures have also varied greatly since March 2020, and the picture is not yet close to anything that could be described as stable. The current picture is also changing very fast, and new forecasts for the future are being prepared regularly.

Gradually, as more of the population are vaccinated, hopes are growing for an opening up of society and an improvement in the labour market. However, there is also great uncertainty with regard to the period after opening up. There are indications of a risk that many businesses could go bankrupt in the period following opening up if it turns out that the government support provided during the pandemic has contributed to keeping companies afloat artificially. In the period since March 2020 a number of companies have deferred payment of both fixed expenses and normal current expenses.

 

Another factor which remains unclear is whether new ways of working, which many people experienced for the first time during the pandemic, will have a lasting impact. It remains to be seen whether there will still be an increased proportion of workers working remotely and/or in a hybrid way after the pandemic.

 

We recommend that you check the links in the report for the most official and up-to-date information possible. Due to the rapid changes, characterised among other things by the introduction of separate rules for leave during the coronavirus period, it is of little value to refer to figures other than national ones. Regional figures can change very quickly and thus are of limited value as a source of information when they are not updated on a regular basis; this time, therefore, this first section of information which relates to Norway is also longer than usual.

 

The regional reform that came into force in 2020 has meant that counties that are included in the reporting template have since ceased to exist.

The statistical breakdown by the Norwegian Labour and Welfare Administration (NAV) presented in July 2020 remains the best summary of the situation for the 12 months from the beginning of March 2020, updated below to the situation in April 2021.

 

  1. Lay-offs skyrocketed
    In time, as many industries closed down in whole or in part, there was a sharp increase in redundancy notices. At the peak, 276 400 employees were laid off in Norway (in week 17 of 2020). There was a dramatic increase in applications for unemployment benefits, and processing them within a reasonable time was a challenge for the national labour market authorities. In addition to ordinary applications for unemployment benefit due to redundancies, the country also faced large contingents of other people laid off, such as students who do not register with the NAV because they are not entitled to unemployment benefits.
     
  2. Highest unemployment ever
    Norway went from having 106 200 jobseekers registered with the NAV to 432 700 jobseekers during Easter week 2020, which corresponds to 15.4 per cent of the labour force. The number has since fallen, but the extreme growth in unemployment gave us our highest unemployment since the 1930s. In April 2021 the changes are striking as the NAV reported a 4.3 % share of the labour force as fully unemployed. The share of partially unemployed was 2.5 % and the share on initiatives under the auspices of the NAV amounted to 0.6 %.
     
  3. Explosion in applications for unemployment benefits
    In the period after March 2020, labour market authorities across Europe found themselves in a situation where they had to reallocate resources to the areas where the increase in the number of cases was greatest. The NAV’s processing times are returning to normal, but they are not completely back to where they would be expected to be in normal times.
     
  4. High payouts for workers
    Between mid-March 2020 and 1 July alone, the NAV paid NOK 20.1 billion to employees due to unemployment, comprising NOK 7.3 billion in wage compensation for those laid off and NOK 12.8 billion in unemployment benefits and advances on unemployment benefits. In addition, in the same period the NAV paid NOK 604 million to self-employed workers and freelancers.
    In comparison, the NAV paid NOK 9.1 billion in unemployment benefits in the whole of 2019. Payments in 2020 due to unemployment were thus already over twice the amount paid during the whole of 2019 after 15 weeks of the COVID-19 crisis.
     
  5. Large flows in and out of the unemployment queue
    Easter 2021 saw a marked decrease in the number of jobseekers in Norway. There were 3 200 fewer jobseekers after Easter than before Easter. In mid-April there were 208 500 people registered as fully unemployed, partially unemployed and jobseekers on NAV schemes. The decline in the number of jobseekers since before Easter was mainly due to a decline in the number of partially unemployed, while the number of fully unemployed increased in the same period. The number of fully unemployed rose most in retail and sales work as well as tourism and transport, which are also the occupational groups where the number of partially unemployed saw the biggest decline in the same period. The number of people laid off rose by 800 in the same period.

 

Population: 5 391 369 as at February 2021.

 

70.3 % of the Norwegian population was in the labour force (aged 15-74) as at 28 January 2021.

 

It is important to mention that there are two measures of unemployment in Norway. The NAV’s unemployment figures show the number of people registered as jobseekers with the NAV. Statistics Norway’s Workforce Survey (LFS) is a sample survey that maps the workforce, employment and unemployment. People without work who are not entitled to unemployment benefits or to participate in labour market measures may lack incentives to register as jobseekers with the NAV, whilst they may respond to the LFS that they are unemployed and actively seeking work. This is one of the reasons for the discrepancy between the number of people registered as unemployed with the NAV and the LFS figures. In other words, if you want a picture of how many people are potentially competing for vacancies, the LFS figures can give the best picture.  At the time of writing, Statistics Norway has not updated figures as a basis for comparison with the NAV’s figures (refers to information above about the introduction of a new questionnaire for the LFS.)

 

Developments in the Norwegian economy

In a short time, the outlook for the Norwegian economy has changed completely. In Statistics Norway’s short-term report from December 2019, it was concluded that the Norwegian economy would be in a near-cyclical situation in the years to come. The coronavirus pandemic has meant that in the first quarter of 2020 the Norwegian economy ended up in a recession that is likely to last for several years to come. A very expansive fiscal policy, lower interest rates, a record weak krone exchange rate and falling real wages are expected to help to dampen the effects on the labour market, according to Statistics Norway.

 

Statistics Norway estimated that, compared with Norway’s trading partners, the recovery would probably take place more quickly in Norway as a result of its greater room for manoeuvre in financial and monetary policy and the fact that the krone had weakened against most currencies. However, these earlier calculations were based on the most intrusive infection control measures being gradually eased during the second quarter of 2020, which again was expected to be slightly earlier than for many of Norway’s trading partners. In reality, Norway has had both a second and a third wave of the coronavirus and the infection control measures had to be continued for significantly longer than expected and even had to be tightened further in the second half of 2020 (in the capital Oslo in particular).

 

In the light of this, Statistics Norway is of the opinion that the recession will probably be both deeper and longer than indicated in the assessments from the first quarter of 2020. Since March 2020 there have also been at times major regional differences in measures, followed by periods where nationwide measures not based on variations in infection rates have been applied. The situation in mid-April 2021 is that nationwide measures are being eased, but in the capital Oslo the very strict measures will be continued for at least a few more weeks.

 

If you are planning to travel to Norway or travel within the country it is very important that you familiarise yourself with the measures that apply at all times, both with regard to quarantine hotels following entry into the country and with regard to regional differences such as, for example, the mandatory use of PPE in, for example, shops, and on public transport.

 

A regional reform has been implemented in Norway which means that the geographical division used in the LMI (NUTS codes) has changed and does not match the existing reporting template. So, in addition to the fact that rapid changes mean that data at a more detailed level than national is of little value, the regional reform is also a factor in there being no information provided at regional level in this version of the LMI.

Furthermore, as of 2021, Statistics Norway has introduced a new questionnaire for the LFS. The introduction of the new questionnaire creates a break in the statistics and a delay in the publication of the monthly LFS figures. There are no plans to publish preliminary seasonally-adjusted or break-adjusted monthly LFS figures before the publication of the LFS, which will be in May 2021.

 

Text last edited on: 05/2021