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Contents
Chapter 1: Maintaining prosperity while dealing with overheating and labour supply constraints
The Norwegian mainland economy has expanded at a surprisingly strong pace since the 2007 Economic Survey, generating substantial real income gains, robust consumption growth and near full employment for its citizens. Favourable developments in world demand for key Norwegian exports and declining prices for many of its imports have played their part in this success. Macroeconomic policy has been tightened progressively, mostly through a long series of interest rate increases up to spring 2008 but also through a degree of fiscal restraint in 2007, and the economy seems to have started to slow in early 2008. Pressure on the labour market shows in rising wage inflation and increasing inflows of foreign labour while, paradoxically, there is only slow progress in dealing with aspects of labour and welfare policy that seem to restrict the supply of labour. Despite strong demand for labour, the compulsory education system performs rather poorly compared with many of Norway’s partners.
Chapter 2: Macroeconomic policies for a soft landing
Norwegian policymakers face challenging times. The economy is operating with great pressure on production capacity, the labour market is tight and there are signs of overheating – which would all argue for a restrictive macroeconomic policy stance. On the other hand, the financial sector is not immune to the global financial turmoil, the housing market shows signs of a downturn, households are increasingly indebted and there are significant downside risks. The authorities responsible for fiscal and monetary policy should therefore remain vigilant and adjust their stance if the outlook changes significantly. Their forward–looking policy framework – flexible inflation targeting and the fiscal rule jointly with the creation of an overseas fund – has proved robust to shocks in the past and should continue to serve them well. Fiscal policy also needs to continue to preserve the long–term sustainability of public finances.
Chapter 3: The labour market: supply constraints and immigration
The labour market has become very tight as high real incomes and investment in the North Sea have stimulated demand for labour. Increasing real wage growth, some increase in participation and a continuing increase in immigration flows have been the results. Although very low unemployment and high capacity utilisation suggest the economy needs additional labour, further efforts to remove some well–known disincentives to domestic labour supply in welfare and pension policies are needed. The strong surge in labour immigration since 2004 is a new phenomenon in Norway. It seems to have had largely beneficial consequences, although if it continued for long at recent rates it would have a considerable impact on population growth and the response of the labour market in a possible future downturn remains to be seen.
Chapter 4: Making the best of Norwegian schools
Traditionally, the Norwegian compulsory education system has focused strongly on the linked goals of equal opportunities to learn, comprehensive and inclusive education. While some of these objectives have been met successfully, a number of educational outcomes, notably measures of pupil performance at the end of compulsory schooling, are unsatisfactory. Given the significant resources devoted to education, Norway’s modest performance on certain measures suggests that resources are used inefficiently. There are many possible routes to improve efficiency. This chapter focuses on teaching quality, school autonomy, accountability and the level and composition of spending. Consistent policy actions should be taken in these areas, taking into account the multi–level structure of governance of the Norwegian education system.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of Norway 2008 is available from:
Additional information
For further information please contact the Norway Desk at the OECD Economics Department at ecosurvey@oecd.org. The OECD Secretariat's report was prepared by Paul O’Brien and Romina Boarini under the supervision of Patrick Lenain. Research assistance was provided by Ane-Kathrine Christensen, Elke Lüdemann and Thai-Thanh Dang.
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