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OECD ECONOMIC SURVEY OF NORWAY 2019
Sustaining wellbeing and employmentAlvaro Pereira, OECD Director, Oslo, Monday 9 December 2019
OECD
OECD Economics
http://www.oecd.org/economy/norway-economic-snapshot/
Living standards remain high
2
GDP per capita, U.S. dollars, purchasing-power parity basis
0
10
20
30
40
50
60
70
80
GDP growth is robust
3
Real mainland GDP
00.5
11.5
22.5
3
2013 2014 2015 2016 2017 2018 2019
Y-o-Y % change
Growth will ease in the coming quarters
4
Mainland GDP growth will be around 1.7% by 2021
(Annual growth rates, unless specified) 2018 2019 2020 2021 Mainland GDP 2.2 2.5 2.0 1.7 Private consumption 1.9 1.8 1.9 1.9 Government consumption 1.4 2.2 1.9 1.8 Gross fixed capital formation 2.8 4.3 3.3 2.1 Exports of goods and services -0.2 1.6 2.6 3.1 Imports of goods and services 1.9 5.45 1. 2.0 Unemployment rate (% of labour force) 3.8 3.4 3.2 3.2 Consumer price index 2.7 2.3 2.0 2.2
House prices continue to rise
5
Nominal house price index, 2010 = 100, seasonally adjusted
80100120140160180200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Oslo Norway
Commercial real estate prices are rising steeply
6
Estimated real selling prices per square meter for prime office space in Oslo, index 1998=100
Non-oil deficits can no longer increase rapidly
7
Non-oil deficits and projection of 3 percent of the value of the oil fund
0
2
4
6
8
10
12
2000 2010 2020 2030 2040
% of trend mainland GDP
Structural non-oil deficit 3 percent path
MAINTAINING HIGH EMPLOYMENT
8
Labour force participation has been falling
9
76
77
78
79
80
81
82
83
84
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Norway Average of top 5 OECD countries
Labour force participation rate, 15-64 years%
Sickness absence from work is high
10
Sickness absences of full-time dependent employees, average number of days per year, 2018
0
5
10
15
20
25
GRC
TUR
HUN
LTU
USA ITA
LVA ISL
IRL
CAN
EST
GBR
SVK
CHE
POL
DNK
LUX
OECD NL
DCZ
EAU
TES
PSW
ESV
NFR
ABE
LDE
UPR
TFI
NNO
R
Days
A substantial share of the population is on disability benefit
11
0
2
4
6
8
10
12
14AU
TNZ
LPR
TES
PCH
ECA
NDE
UPO
LIS
RAU
SLU
XSW
EDN
KUS
ALV
AGB
RFI
NCZ
EIR
LSV
KBE
LHU
N ISL
NLD
SVN
EST
NOR
%Disability benefits recipients, % of population aged 20-64, 2017 or latest
The population is ageing
12
Share of 55-64 year-olds in the population aged 20-64
10
12
14
16
18
20
22
24
1990 1995 2000 2005 2010 2015 2020 2025 2030
%
Norway OECD
Investment in skills and education is needed
13
Scores in the OECD’s PISA tests of the knowledge and skills among 15-year-olds
410
430
450
470
490
510
530
550
2000 2003 2006 2009 2012 2015 2018
A2. Mathematics
410
430
450
470
490
510
530
550
2000 2003 2006 2009 2012 2015 2018
A1. Reading
410
430
450
470
490
510
530
550
2000 2003 2006 2009 2012 2015 2018
A3. Sciences
Norway OECD Top 3 OECD Bottom 3 OECD
IMPROVING BUSINESS CONDITIONS
14
Businesses face high labour costs
15
0
10
20
30
40
50
60
POL ESP GBR ITA EA19 FIN DEU FRA SWE DNK NOR
Employers' social contributions and other labour costs paid by employer Wages and salaries (total)
Hourly labour costs, 2018, EUR
TACKLING CLIMATE CHANGE
16
Norway is facing a sizeable emission-reduction challenge
17
0
10
20
30
40
50
60
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
MtCO2-equivalent
Historical emissions, excl forestry
Projections under current implemented policies (decline 0.4 MtCO2 per year)
Trajectory to 2030 unconditional target: minus 40% (decline 1.6 MtCO2 per year)
Trajectory to 2030 conditional target: carbon neutrality (decline 2.3 MtCO2 per year)Paris agreement : 2030unconditional target is for 40% reduction below 1990 level by 2030
Greenhouse gas emissions
18
• Continued vigilance is needed given the heightened uncertainty from global developments and domestic risks stemming from property markets.
• Managing narrower fiscal space requires better value for money in public spending.
• Policy needs to better facilitate and motivate employment as to strengthen inclusiveness and economic potential.
KEY MESSAGES
More Information…
19
http://www.oecd.org/economy/norway-economic-snapshot/
OECD
OECD Economics
Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
EXTRA SLIDES
21
Well-being is high
22
Norway’s ranking amongst OECD countries
Jobs and earnings
Housing
Work-life balance
Health status
Education and skills
Social network
Civic engagement
Environmental quality
Personal security
Subjective well-being
Norway: 9
Norway: 2
Norway: 14
Norway: 8
Norway: 15
Norway: 8
Norway: 15
Norway: 2
Norway
Norway: 3
Greece
Israel
Mexico
Lithuania
Mexico
Korea
Chile
Turkey
Mexico
Portugal
Iceland
United States
Switzerland
Switzerland
Finland
Iceland
Australia
Iceland
Denmark
Bottom OECD performer Top OECD performer
Inequality remains low
23
Norway ranking amongst OECD countries
Gini (disposable income)
Gini (gross income)
P90/P50 disposable income decile ratio
P50/P10 disposable income decile ratio
Poverty rate before taxes and transfers
Poverty rate after taxes and transfers
Norway: 7
Norway: 7
Norway: 2
Norway: 5Norway: 14
Norway: 6
Mexico
Chile
Chile
Korea
France
United States
Slovak Republic
Slovak Republic
Slovak Republic
Czech Republic
Switzerland
Iceland
Bottom OECD performer Top OECD performer
Recommendations for macroeconomic stability and fiscal management
24
• Keep the policy rate on hold, while remaining vigilant to changing circumstances.
• Renew macroprudential mortgage regulations when they expire, consider removing time limitations.
• Reduce tax concessions on homeownership.
• Apply the fiscal rule conservatively over the longer term, keeping structural deficits below the 3% path in the near term.
• Strengthen value for money in public spending.
Recommendations for sick leave compensation and disability benefits
25
• Strengthen incentives to contain sick-leave absences.
• Intensify management efforts to address sick leave.
• In disability benefits, strengthen treatment and rehabilitation requirements and apply eligibility rules in general more strictly.
• Make early intervention a stronger theme of reform.
• Tighten medical assessment.
Recommendations for early retirement and pensions
26
• Align special pension provisions for certain occupational groups such as nurses, national defence and the police with the mainstream pension system.
• Index age-dimensions of the pension system to life expectancy, such as the retirement-age range of 62 to 75 years.
• Diminish the financial attractiveness of early retirement via disability benefits by putting the compensation for life-expectancy adjustment in pensions on hold.
A high share of youth do not complete upper secondary education
27
Percentage of 25-34 year-olds without upper secondary education, 2017 or latest
0
5
10
15
20
25
30
35
40
45
50
55
MEX
TUR
ESP
PRT
ITA
ISL
NOR
DNK
LVA
SWE
BEL
CHL
OECD GR
CEU
22 EST
NZL
NLD
FRA
LUX
HUN
DEU
GBR
AUS
AUT
FIN
IRL
LTU
ISR
USA
CHE
SVK
CAN
SVN
POL
CZE
KOR
Men Women
Recommendations to improve education and skills
28
• Press ahead with primary- and secondary-school curriculum reforms.
• Reduce apprentice remuneration to make it more attractive for employers to offer additional places.
• Link part of the employer subsidy to course completion by apprentices.
• Strengthen higher-education students’ incentives for timely course completion.
• Ensure that higher education institutions provide comprehensive study guidance and support services.
Expenditure on R&D has risen
29
Gross expenditure on R&D, percentage of GDP
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2010 2011 2012 2013 2014 2015 2016 2017
NOR USA EU15 OECD
There is room to improve regulation
30
OECD Product Market Regulation (PMR) indicatorScale 0-6 from least to most restrictive
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Overall Indicator Public Ownership Involvement inBusiness
Operations
Simplification andEvaluation ofRegulations
Admin. Burden onStart-ups
Barriers in Service& Network sectors
Barriers to Tradeand Investment
Norway Average of top 5 best performing OECD countries OECD
Recommendations for maintaining a successful business sector
31
• Strengthen business dynamics through better routes to recovery for businesses in difficulty, including lighter penalties for failed entrepreneurs.
• Continue to tackle weak points in business efficiency, including by paring back the extensive support for the agricultural sector.
Recommendations to combat climate change
32
• Pursue cost efficiency across sectors and borders in fulfilling Norway's Paris 2030-goal within the EU climate framework.
• Intensify green-house-gas reduction measures in particular in transport and agriculture. Review and reform road pricing and vehicle taxation, giving weight to social, fiscal and environmental considerations.