What workers in Norway should expect from the job market in 2023?
The job market in Norway is about to become tighter. Experts and analysis have warned that 2023 is unlikely to be a bumper year for employees.
Norway is facing uncertain economic times. While the Norwegian economy continues to be characterised by low unemployment at the moment, several surveys and analyses in recent weeks warned that the country's job market would likely start cooling off in the next six months.
A recent poll carried out by the Confederation of Norwegian Enterprise (NHO) among member companies shows that 28 percent of businesses plan to reduce the number of employees during the next six months.
In the last quarter of 2022, the number of vacancies has fallen markedly in industry, tourism, construction, transport, and business services, the economic overview from the NHO shows. The organisation believes that job growth in Norway will flatten out moving forward.
Unemployment figures expected to rise slowly
Unemployment in Norway has been low since April 2022, after falling from the corona-peak of 5.5 percent in August 2020.
According to Statistics Norway (SSB), unemployment has not been this low in the country since the boom in the runup of the financial crisis in 2008.
Unemployment was close to 3.4 percent in August, September, and October, the SSB pointed out in December, referring to the Labour Force Survey (LFS).
However, according to the NHO, there are several signs that employment activity in Norway will slow down after the sharp post-pandemic increase.
"The rise in employment in private business is not expected to continue at the same pace going forward," the NHO's report stated.
While one in seven companies, 15 percent, say they plan to increase employment, almost twice as many will likely cut jobs, according to the survey.
"We have a mild setback in store," chief economist Øystein Dørum at the NHO told the press on Tuesday.
He pointed out that the price shock and supply chain bottlenecks related to the coronavirus pandemic and the war in Ukraine are retreating.
However, at the same time, energy prices will remain high going forward, according to Dørum.
The SSB's Thomas von Brasch also thinks the Norwegian labour market will become tighter in the years ahead.
"With weaker growth prospects internationally and lower demand in many industries, the pressure in the labour market will eventually ease.
"We estimate that unemployment will rise to 3.7 percent in 2023 and then gradually increase in the years ahead to just over 4 percent in 2025," von Brasch pointed out in a recent SSB press release.
Real wages in Norway set to decrease
At the same time, the SSB noted that wage growth in Norway looks set to amount to 3.9 percent this year.
With inflation expected to end up at 5.8 per cent, employees in Norway will likely face an overall real wage decrease of 1.9 percent. Furthermore, a small real wage decrease (of 0.2 percent) is also expected next year.
However, as inflation gradually falls, real wage growth in Norway is expected to pick up to around 2 percent annually in 2024 and 2025, according to the SSB.
"As we approach 2024, we estimate that unemployment will have increased somewhat, inflation will have declined, and productivity will have picked up.
"In such a scenario, Norges Bank (Norway's central bank) will most likely reduce the interest rate, probably down to 2 percent in 2024," von Brasch concluded in the report.