This month we concentrate on Norway…

According to the oracle that we know as Wikipedia, Norway ranks as the third wealthiest country in the world in monetary value, with the largest capital reserve per capita of any nation. It is apparently the world’s fifth largest oil exporter and the petroleum industry accounts for around a quarter of its GDP. Wikipedia also states that those much-loved bankers deem the Norwegian Krone to be one of the most solid currencies in the world. Norway has held a similar stance to the UK with regards to sitting on the Euro zone fence; but with its plethora of rich resources and manufacturing industries, they are probably in a better position than we are when it comes to trading with the Euro.

Its subsidised higher education, universal health care and comprehensive social security system are unrivalled. It was ranked highest of all countries in human development from 2001 to 2007, and then again in 2009. It was also rated the most peaceful country in the world, in a 2007 survey by Global Peace Index.

So the question is: “Why are we all not flocking to Norway”?

The answer: because it is so expensive!

Unless you are on a Norwegian salary (see section on Reduced wage growth and inflation) it is certainly a difficult place to live. The prices are eye-popping. Even the well-off Danish on day-trips gasp. Norwegians, meanwhile, pour over the Swedish border every weekend just to pick up groceries. And when they fill up their (heavily-taxed) cars, the price they pay at the pump is amongst the highest in Europe. Rather like whisky in Scotland, there's no discount on petrol just because they make it there. But don't be fooled by the sky-high prices; even after taking them into account, Norwegian incomes still top the table on a "purchasing power parity" basis. Though food and drink (especially wine) is at times gob-smackingly expensive, other goods are on a par with Britain. Housing in Oslo (despite recent rises) is cheaper than London.

But visitors are still left scratching around for signs that they're really in one of the richest places on earth. Where are the Ferraris and Porsches? Why, in a country almost smug about its superior welfare standards, are there an uncomfortably large number of beggars and rough sleepers around the central station?

According to the Economist, the answer lies in a remarkable decision taken many years ago to ring-fence the flood of oil revenues from the North Sea. Every dollar earned is swept straight into what was once called the State Petroleum Fund but is now called the Government Pension Fund. The truth is that Norwegians are simply not spending their oil windfall, but putting it aside for the future. What's more, none of the money is allowed to be invested in Norway.

The fund has ballooned in size and recently became the world's biggest pension fund.

What does this mean to you though?

Well there is major potential for the contracting market, especially in the Oil and Gas industry as it engages 17% of the working population and there is still a shortage of expertise in technology. It is expected that well service companies will have problems in finding qualified personnel in the coming years. There is also a high demand for well service engineers, graduate engineers (deviation drilling, electrical logging), geophysicists and geologists.

Investment in oil extraction and pipeline transport increased by 2.9% from the fourth quarter of 2009 to the first quarter of 2010.

This increase can be largely attributed to high drilling activity, and particularly production drilling, which increased appreciably. The high drilling activity is largely attributable to the fact that several new fields commenced operations in 2010.

It is important to note that the manufacturing industry has also shown a higher growth rate than any other Scandinavian country over the last few years. There is a great demand for vocationally trained personnel in shipbuilding: welders (electrode, pipe wires), industrial plumbers, sheet metal workers, mechanics specialised in hydraulics, electricians and fitters.

In addition to the above-mentioned professions, an increasing lack of qualified personnel is expected in a number of fields. There is a gap in the supply of engineers (in particular in computer technology, technical design, electrical technology and mechanical engineering), car mechanics, bio- engineers, and pharmacists

Simply put; companies need to recruit from abroad.

What with the large demand for highly skilled personnel and the inflated rates that can be charged, Norway is certainly an area that should be on everybody’s hit list.

For contractors, there are a few benefits as well…

Norway is a wonderful place to live and work.

There is a great outdoor life (skiing, climbing, kayaking hiking, etc, etc) long summer evenings; very high standard of living; very low crime rate; friendly locals; good work life balance; everyone speaks English; great health care system; women doing as well as men in the work place; 11 months of fully paid holiday every time you have a child; good education system.

For those who are only going to Norway on a short-term basis and have family that will remain in their home country, there are major benefits with regards to what you can claim as tax allowances under the “Commuting Allowance Scheme.”

The majority of our contractors retain about 75% of their income through our Norwegian solution. This is with paying Norwegian tax from day 1!! If you factor in your UK accountant’s fees, this works out to be comparable to operating in Norway through your own limited company. Furthermore, there is no hassle with reconciling any tax due. We take care of everything in Norway.

For those that are interested in some statistics concerning Norway, please see the below:

Advertised vacancies in 2009 – 260 301 in total.

Work permits – 38 985 work permits granted to citizens of the new EU member states, down more than 50 per cent from 2008. This is mainly due to the switch to the new registration scheme in October 2009.

Recruitment from abroad – 20 000 employers have been in contact with and/or received assistance from Nav EURES in 2009.

40 000 job seekers have been in contact with and/or received assistance from Nav EURES in 2009.

Reduced wage growth and inflation

The downturn in the economy has contributed to a major reduction in wage growth. Wage growth in 2009 was 4.5 per cent; down from 6.3 per cent in 2008. The wage growth in both 2010 and 2011 is expected to be 3.4 per cent, before rising slightly in 2012 and 2013. A marked increase in energy prices this year has contributed to the overall inflation increasing slightly from 2009 to 2010. Nevertheless, a positive real wage growth took place in 2010. Increased productivity and reduced growth in the energy prices are expected to contribute to lower price growth in the next two years, as well as an increase in the real wage growth.

For further information and statistics on wages in Norway, please visit http://www.ssb.no/lonn_en/ 

If you require any further information about our solutions in Norway, please contact us on sales@itecs.nl or 0031 10 205 1660. From 16th May 2012, our number will change to 0031 10 302 1130.