The Norwegian Labour Market 2001

Contents

I NTRODUCTION
1.0 The economy and the employment situation; status and prospects
1.1 The Norwegian economy in perspective
1.2 Trends and developments in the Norwegian economy
1.3 Trends and developments in the Norwegian labour market
2.0 The overall employment strategy
3.0 The implementation of employment policy
3.1 Improving Employability
3.1.1 Active labour market policies
3.1.2 Promoting a labour market open to all
3.1.3 Effects of active labour market programmes
3.1.4 Raising the Quality of Human Capital
3.2 Developing entrepreneurship
3.2.1 Making it easier to start up and run businesses
3.2.2 New opportunities for employment in the knowledge-based society and in services
3.2.3 Local action for employment
3.3 Encouraging adaptability of businesses and their employees
3.3.1 Co-operation with the social partners
3.3.2 Modernising work organisation
3.3.3 Support adaptability in enterprises
3.4.1 Gender mainstreaming approach
3.4.2 Tackling gender gaps
3.4.3 Reconciling work and family life

4 Annex
4.1 Facts about Norway
4.2 Tables and figures

INTRODUCTION

Full employment is the main goal of the Norwegian Government. In 2000, we had an unemployment rate of 3.4 per cent and a labour force participation rate of 73.4 per cent (age group 16-74 years). However, certain trends in the labour market give grounds for concern. This includes the large number of people leaving the labour force to receive disability pensions or make use of early retirement schemes, a high level of absence from work due to illness, a high unemployment rate for immigrant groups and the need for a skilled and competent workforce. This report will present the main challenges to the Norwegian labour market today as well as the means employed by the Government to address these.

Under the terms of the European Economic Area (EEA) Agreement, Norway has become part of the internal market. According to this agreement, EU legislation covering the internal market also applies to Norway. The agreement has thus created equal competitive conditions for enterprises in EU countries and Norway, and provides for the free movement of goods, services, capital and persons. Norway is thus part of an integrated European labour market covering areas such as free movement of workers, mutual recognition of diplomas, social security, health and safety at work, labour law and equal treatment of women and men. The European Employment Strategy is not part of the EEA Agreement as the agreement was finalised well before the Luxembourg process was established.

However, in this context, we find it appropriate to recall the preamble of the EEA Agreement where the contracting parties note "the importance of the development of the social dimension, including equal treatment of men and women, [….] and wishing to ensure economic and social progress and to promote conditions for full employment, an improved standard of living and improved working conditions within the European Economic Area;"

Being integrated in the internal market under the EEA Agreement and with employment as a priority area for the Government, we welcome the strong focus on employment policies in the European Union. It is the intention of the Norwegian Government to actively follow the employment policy of the EU, and to participate in the exchange of ideas and practises on employment policies to the benefit of all parties. The social partners from Norway take part in this work through their European organisations in the social and sector dialogues.

This report is the result of a joint effort of Norwegian ministries in close consultation with the social partners.

Jørgen Kosmo
Minister of Labour and Government Andministration

1.0 The economy and the employment situation; status and prospects

1.1 The Norwegian economy in perspective

Norwegian manufacturing has traditionally been based on exploiting natural resources. Natural conditions such as access to hydro-electric power, abundant forest and fisheries resources and petroleum deposits are reflected in the country's industry structure. Power-intensive manufacturing sectors such as metal production, industrial chemicals and wood processing account for a significant share of Norway's export-oriented industry. Shipbuilding and offshore platform construction are other major sectors while other engineering industries, such as the manufacture of electrical and electronic goods, have taken on increasing importance in recent years. Fish farming is a relatively new export industry, which has boomed during the last 15-20 years. In 2000, exports from the fish farming sector accounted for 4 per cent of total merchandise export.

The growth of the petroleum sector following the discovery of oil on the Norwegian continental shelf at the end of the 1960s has had a major impact on the Norway’s gross domestic product (GDP). Since oil production started in the early 1970s and up to today, its scope has increased substantially. Norway is now the seventh largest oil-producing country in the world and was the world's third largest oil exporter in 2000. The volume of production increased by 7 per cent from 1999 to 2000, while the value of oil and gas production increased by 78.6 per cent, reaching NOK 340 billion. The export value of oil and gas was a good NOK 322 billion last year.

Norway has nevertheless a diversified industry structure. About two-thirds of the economy consists of service sector industries, which include hospitals, schooling, housing, banking and insurance, transport and communications and public administration. Petroleum-related activities, including crude oil and gas production, made up 23 per cent, while manufacturing accounted for about 9 per cent of GDP in 2000.

During the last three decades employment in the service sector has increased from 62 per cent of total employment to 73.4 per cent (figures from 1999). The service sector has increased at the expense of the primary sector and the manufacturing sector, cf. Figure 1.1. The public sector accounts for about 40 per cent of service employment.

Figure 1:

As a small country, Norway has derived substantial advantages from international trade. Its economy is open, with per capita foreign trade that is one of the highest in the world. Exports of goods and services accounted for 46 per cent of GDP in 2000, while imports accounted for 31 per cent. Exports of oil and gas constituted almost half of total exports. Approximately 3/4 of Norwegian exports go to EU countries, while a good 2/3 of imports come from these countries. Exports to the USA are at the same level as those to Asia, but imports from Asia are significantly higher than those from the USA. The Nordic countries, the UK and Germany are Norway's most important trading partners. The UK and Germany are major markets for Norwegian oil and gas.

1.2 Trends and developments in the Norwegian economy

Considerable periods of the 1990s were characterised by strong growth in the Norwegian economy. The third and most pronounced cyclical upswing since World War II began in 1993, while the peak was passed towards the end of 1998. From the second half of 1993 until the end of 1998 Norway recorded buoyant economic growth. Growth in mainland GDP (excluding the petroleum and shipping sector) averaged about 3.5 per cent these years.

In 1999 and 2000, growth in mainland GDP has been more modest, 0.8 and 1.8 per cent respectively.

Consumer price inflation was moderate at 2.3 per cent in 1998 and 1999, but higher oil prices contributed to a pick-up in 2000. Consumer price inflation was 3.1 per cent in 2000 and is estimated at 2 ^3 per cent in 2001. Wage inflation surged to 6.2 per cent in 1998, which was considerably higher than among Norway’s trading partners. Annual wage growth fell to 4.9 per cent in 1999, and is estimated at 4 ^1 per cent in 2000 and 4 per cent in 2001. The phasing in of four additional holidays over the years 2001 and 2002 implies that the rise in labour costs will be ^3 percentage points higher than annual wage growth in both these years.

After some volatility in financial markets in 1998 and 1999, developments have since been more stable. The krone has stayed around 8.2 against the euro the last couple of years, and depreciated slightly in trade-weighted terms. The central bank raised its key deposit rate by 1^2 percentage points in 2000 to 7 per cent. The interest rate differential against the euro is about 2.5 percentage points for three-month money market rates, and about 1.2 percentage points against the German ten-year government bond rate.

The macroeconomic estimates for 2001 indicate moderate growth in the Norwegian mainland economy. In the 2001 National Budget (published in October 2000) mainland GDP is projected to grow by 1.8 per cent in 2001, the same as in 2000. Unemployment is expected to remain low at 3 1/3 per cent in 2001.

The current tight labour market indicates that the growth capacity of the mainland economy is limited. Developments in the labour supply will be of decisive importance to the growth capacity of the economy in the period ahead. A weaker-than-projected growth in labour supply will add further pressures on price and cost developments. This is the main risk to the economic outlook.

1.3 Trends and developments in the Norwegian labour market

The Norwegian economy performed well through the 1990s, and the labour market reflects this performance. In 2000, Norway had an unemployment rate of 3.4 per cent and a labour force participation rate of 73.4 per cent in the age group 16-74. The registered unemployment rate according to the Public Employment Service was 2.7 per cent. The labour force participation rate in Norway is among the highest in the OECD area, and especially the labour force participation rate among women and elderly workers is high in Norway compared with most other countries.

Figure 1.2

One of the major challenges to the Norwegian labour market today is the shortage of labour in several sectors of the economy. Especially the health sector, construction and some industrial branches are facing problems recruiting qualified personnel.

In the decade to come, one of the major challenges facing the Norwegian labour market is demographic change with a declining growth of the labour force and an ageing of the workforce. From a yearly average inflow of 21 000 person to the labour force in the 1990s, it is likely that the labour force will show a yearly increase of about 10 000 persons over the coming decade. At the same time, the demand for manpower within the health sector will increase as a consequence of the ageing of the population and adopted plans for strengthening the care of the elderly and persons with mental disabilities 1The Holden Commission, NOU 2000:21 A strategy for employment and production growth, chapter 6: Future demand for manpower in the health sector in municipalities are is estimated to increase by 61 000 full-time equivalents form from 1998 to 2010.. The ageing of the population is illustrated in Figure 1.3 below which shows the projected change in the population in 2005 compared with 2000. The inflow of younger persons to the labour force is negative while the number of persons in age groups above 50 years increases in the coming five-year period.

Figure 1.3

The inflow to disability pension schemes, early retirement arrangements and absence due to sickness has increased through the second half of the 1990s. At the end of 2000, 30 000 persons (1.3 per cent of the labour force) were on early retirement schemes, and 280 000 persons (12.1 per cent of the labour force) were on disability benefit. In a situation where the labour market is tight and the labour force is growing at a slower rate than previously, it is important to keep people in employment as well as maintaining the flexibility of the labour market in order to avoid structural problems.

Recent developments in the labour market

From 1993 to 1999, employment increased by a total of almost 250 000 persons. At the same time, the unemployment rate has been reduced by 3 percentage points. Labour force participation rates increased from 69.2 per cent in 1990 to 73.4 per cent in 2000 2The labour force participation rate is defined here as (employed persons + unemployed persons / population in the age group 16-74). In 2000, the labour force participation rate was 78 per cent for men and 69 per cent for women. Whereas there was a 10 per cent growth in the labour force participation rate for women in the period from 1990 to 2000, the comparable growth for men was 2.5 per cent. Over the past two years, growth in the labour force participation rate has levelled off.

Figure 1.4

Even though the situation in the labour market has been favourable in recent years, some groups still face problems in the labour market. Immigrants from outside the OECD area have an unemployment rate that is about three times higher than other groups in the Norwegian labour market. Unemployment among youths is also slightly higher than the average, but their periods of unemployment are on average of shorter duration. Long-term unemployment is higher among people above 60 years than for the rest of the labour force. This can partly be explained by favourable conditions for persons above the age of 64 under the unemployment benefit system.

In 2000, 26 per cent of all employed were part-time employed. While 40 per cent of employed women worked part-time, only 7 per cent of employed men did so. The percentage of women in full-time employment has increased over the last 10 years. Part-time employment is more common in the service sector than elsewhere in the economy. Some part-time employed would like to increase their working hours, but only about 10 per cent of persons working part-time are underemployed 3An underemployed is defined as a part-time employed person who is seeking more employment.. The number of persons underemployed over long periods is small. The potential for increased labour market participation among part-time employed is therefore limited.

There is a considerable mobility on the Norwegian labour market both through creation and disclosure of workplaces (job-flows) and through employed persons finding new employment (worker flows) 4Around one quarter of all employed find new employment every year. Social and economic studies no. 104. : Job and worker flows in Norway and OECD. Statistics Norway 2000.. However, the mobility relative to the number of jobs is slightly lower in Norway compared with many other OECD countries. The level of mobility is not seen as a problem for the Norwegian labour market. However, the mobility from rural to urban areas is seen as a challenge to regional policy.

2.0 The overall employment strategy

In the late 1980s and early 1990s, the Norwegian economy was characterised by sluggish economic growth, deteriorating competitiveness, with companies losing market shares, and a strong increase in the unemployment rate. The level of unemployment rose from 2.1 per cent in 1985 to 5.9 per cent in 1992.

Figure 2.1

In the autumn of 1991 the Government appointed an Employment Commission with the aim of reaching an overall consensus on guidelines for employment policies between the social partners and the main political parties. The Commission submitted its recommendations in the summer of 1992. The Commission was broadly represented, including government representatives, representatives of the political parties, the Norwegian Confederation of Trade Unions (LO), and the Confederation of Business and Industry (NHO). Both the Government and the social partners adopted the main recommendation of this Commission – the so-called Solidarity Alternative.

The main elements in the Solidarity Alternative Framework can be summed up in the following four points:

• A platform for co-operation between the Government and the social partners on co-ordinated wage formulation in order to contain inflation.

• Fiscal policy used actively to stabilise activity in the economy.

• Monetary policy geared towards a stable exchange rate against European currencies. Low and stable inflation is a precondition for exchange rate stability.

• An active labour market policy aimed at facilitating structural adjustments, reducing adjustment costs and maintaining the unemployeds’ contact with the labour market. This requires a well-developed information system to match vacancies and the unemployed, and comprehensive programmes to give them possibilities for employment, targeted education, training and temporary jobs.

The main challenges to economic policy were to improve the competitive position of the Norwegian exposed sector and to reduce unemployment without weakening the government budget balance.

Incomes policy was a key element of economic policy in the 1990s. Efforts to combine strong employment growth with moderate price and cost inflation were successful for a long period during the cyclical upturn. However, due to strong employment growth, a substantial drop in unemployment and a shortage of labour in certain sectors of the economy in the last part of the 1990s, income policy was facing new challenges. In 1998, the growth in labour costs in the Norwegian manufacturing sector was twice the level of Norway’s main trading partners. Against this background, the Government along with the social partners took an initiative in December 1998 to enhance co-operation in the area of incomes policy. As part of this strategy the Government appointed two commissions. One commission was appointed to prepare the income settlements in 1999 and 2000 (the Arntsen Commission). The other commission was given a broader mandate and was among other things to assess incomes policy and how it could contribute to economic growth in a longer term perspective (the Commission for Employment and Economic Growth). In both commissions the social partners and the authorities were represented. The Arntsen Commission agreed that wage growth in 1999 should be around 4^2 per cent, and that wage growth in 2000 should be no higher than the level among our trading partners. The results of the wage settlement in 1999 were to a large extent in line with the recommendations presented by the Arntsen Commission. Wage growth in 2000 is, however, estimated to be above the target set by the Arntsen Commission.

In June 2000, the Commission for Employment and Economic Growth (the Holden Commission) presented its report. The commission supported the policy framework for fiscal, monetary and incomes policy established in the Solidarity Alternative. The aim of incomes policy should be to maintain real wage growth in line with productivity growth in the economy as a whole to keep structural unemployment low. It confirmed the need to keep nominal wage growth at the level of Norway's trading partners. The commission agreed that the best way of achieving this is through a co-ordination of wage formation. At the same time, the commission acknowledged certain weaknesses of the current wage bargaining system. It stressed that highly centralised wage negotiations can hamper the room for manoeuvre of individual enterprises. In this context, it recommended more room for negotiations at the local (enterprise) level within the centralised framework. A broad analysis of how today's wage negotiation arrangements function will be followed up by the Commission for Collective Bargaining Systems (the Stabel Commission) which will also discuss the possible need for changes.

The Government’s economic policy still builds on the Solidarity Alternative and is based on the following key elements:

• Fiscal policy shall contribute to stable economic growth, avoiding excessive cyclical fluctuations. In a situation where the economy is near full capacity utilisation and the labour market is tight, public expenditure and revenues must be kept at a level that is consistent with a growth in aggregate demand that does not trigger rising price and cost inflation. Furthermore, fiscal policy must be sustainable in a longer-term perspective. Over the next ten years, the Fiscal Budget will most likely show sizeable surpluses on account of high petroleum revenues, which partly are to be transferred to the Government Petroleum Fund. However, the Norwegian economy is faced with considerable challenges as a result of growing expenditures on pensions and health services due to the ageing of the population. These expenditures are estimated to rise from the current 7 per cent of GDP to 15 per cent of GDP in 2030.

The main features of fiscal policy in 2001 are:

• A neutral fiscal policy stance, measured by the change in the non-oil, cyclically adjusted budget surplus net of interest payments. Real underlying growth in Fiscal Budget expenditure from 2000 to 2001 is about 2^2 per cent.
• The non-oil Fiscal Budget deficit is estimated at NOK 12 billion in 2001, while the total budget surplus (including the Petroleum Fund) is estimated at NOK 192 billion. The general government budget surplus (net lending) is estimated at NOK 176 billion, or 12.5 per cent of GDP.
• Comprehensive long-term estimates indicate that the generational accounts are approximately in balance. These calculations look at total general government revenues and expenditures and take into account demographic developments and obligations that are built into the existing social security system.

• Monetary policy is aimed at maintaining a stable krone exchange rate against European currencies. However, balanced economic growth, with low price and cost inflation, is a precondition for achieving exchange rate stability over time. Monetary policy instruments are oriented, together with the other instruments of economic policy, towards fulfilling this precondition. With this aim, Norges Bank assesses the use of instruments both in light of developments in the foreign exchange market and the situation in the Norwegian economy.
• Incomes Policy. The social partners have the responsibility for wage negotiations . Co-operation between the Government and the social partners shall contribute to moderate price and cost inflation. More on the co-operation with the social partners is to be found in chapter 3.3
• Employment Policy. In the current situation, with labour shortages in many sectors of the economy, employment policy will be oriented with a view to ensuring the supply of suitably skilled labour by keeping unemployment low and counteracting the tendency of people leaving the labour force before the official retirement age. Employment policy will be dealt with in chapter 3.1 of this report.

1 The implementation of employment policy

The Norwegian labour market policy focuses on the need to increase the labour force and the necessity to maintain and develop the qualifications of the labour force. Labour market polices in Norway are implemented by the Public Employment Service (PES). The Public Employment Service (in Norway named "Aetat") is supervised by the Directorate of Labour and comes under the jurisdiction of the Ministry of Labour and Government Administration. Currently efforts are being made to improve the efficiency of the PES through the implementation of improved computer support systems and organisational changes. The objective of the reorganisation is to improve reporting systems and transfer more resources to the local offices of the PES in order to make the organisation even more user-focused. The PES offers the following services:

• Information on vacancies and job-seekers. The PES registers all publicly announced vacancies and disseminates information through local employment offices, the Internet, Text-TV and a phone service.
• Placement service adapted to the needs of employers and employees.
• Implementation of ordinary labour market programmes to raise the competencies and skills of the unemployed to maintain their employability and enable them to fill vacant jobs.
• Specialised labour market programmes directed towards the disabled with physical, mental or sociological handicaps to increase their possibilities to obtaining or keeping a job.
• Administration of daily cash benefits under the unemployment benefit system and payments to persons under vocational rehabilitation.

Companies adjust their demand for labour according to variations in market demand for the company’s products or services. This is also called numerical flexibility, and can be achieved in different ways, such as through temporary employment, use of sub-contractors, hiring of labour or overtime work. Use of sub-contractors, overtime and temporary employees are the most widely used types of numerical flexibility. Temporary employees are increasingly being used for covering absence of the ordinary staff, for instance because of sickness. The last couple of years the PES has actively tried to use the demand for temporary labour as an opportunity for the unemployed to enter the labour market.

In July 2000, the public monopoly on job placement was abolished and private employment agencies were given the right to carry out placement and private recruitment services. Furthermore, temporary work agencies are now allowed to hire out all staff categories to all sectors. Before, hiring out was only for secretarial, canteen and warehouse work. However, agencies can only hire out in cases where temporary job contracts are allowed (i.e. only to replace regular staff absent because of illness, leave or holidays, and in case of seasonal labour demand peaks) or if agreed by union representatives. At the same time, the PES has been granted permission to introduce fee-based employment services. The new regulations concerning conditions for hiring in workers are laid down in Act No 4 of 4 February 1977 relating to worker protection and working environment (Working Environment Act).

The new payment services provided by the Norwegian Aetat Business Services

Following the changes in the legislation on placement and recruitment services, the PES was granted the right to provide similar services as private agencies. These services are promoted under the label "Aetat business services". The business services include hiring out of labour, assistance for covering employers’ needs for temporary labour, assistance in the recruitment of new staff process and the provision of specific competency building programmes.

The business services shall be a supplement to the core services of the PES. The focus of the PES shall continue to be on providing services to unemployed and vocationally disabled job seekers. The business services shall contribute to promoting the objectives of the PES. The core services of the PES shall continue to be supplied free of charge to employers, including private temporary work agencies and private job placement firms. Job-seekers shall not be charged for any services provided by the PES.

The establishment of business services provided by the PES will be organised in accordance with national and EEA regulations on competition policy in order to ensure fair competition with other participants. To raise transparency and prevent any competitive disadvantage for private agencies, the business services of the Aetat will be organised in a separate unit within the PES with a distinct divide between the ordinary activities of the PES and the services provided by the unit for business services.

The business services of the PES will be a supplement to the core services of the PES and to similar services provided by private operators in the market. The business services of the PES only account for a small share of the total market for services offered by agencies for placement and hiring out of labour.

Recruitment from other countries

The Public Employment Service in Norway has been very active in providing assistance to employers who want to recruit staff members from other European countries. Assistance has been provided particularly with regard to recruiting medical doctors, dentists, nurses and engineers. The EURES network, the European network for co-operation on placement services, is actively supporting Norwegian employers who want to recruit from EEA countries. In order to fill vacant positions for certain vocations, recruitment activities are now also being extended beyond the EEA area. Work is also being carried out to revise the legislation on work and residence permits, in order to simplify the regulations, speed up the process of granting work permits and better adapt the legislation to the need for labour in some sectors of the Norwegian economy. For more information on the terms of residence and work permits in Norway, please consult the Internet pages of the Norwegian Directorate of Immigration (UDI) at: http://www.udi.no/zengelsk/index.html

3.1 Improving Employability

The labour market situation remains in a strong position, with high employment rates both for men and women. The unemployment rate is forecast to be stable. The major challenges for 2001 are:

• Reduce labour shortages and increase the employability of the labour force.

• Contribute to an efficient matching of job-seekers and vacant positions.
• Making redundant employees from industries in decline available to other parts of the labour market.

Norway is responding to labour market challenges with a focus on the need to increase the labour force and to maintain and develop their qualifications. Active labour market programmes are used to qualify unemployed persons for the labour market and avoid social exclusion. Increased attention is directed towards the high inflow of persons to disability pension and early retirement schemes.

3.1.1 Active labour market policies

An active labour market policy aims at facilitating structural adjustments, reducing adjustment costs and maintaining the unemployeds’ contact with the labour market. This requires a well-developed information system to match vacancies and job-seekers. The Internet is gaining increasing importance as a channel for information and job matching. For unemployed persons in need of further support, the Public Employment Service (PES) offers comprehensive programmes, targeted education, training and temporary jobs in order to increase their employability. The labour market programmes must try to bridge the gap between the need for skills and qualifications and the competence of the unemployed, both in terms of education and work.

3.1.2 Promoting a labour market open to all

Tackling youth unemployment

Norway has given all youths below the age of 20 a guarantee of an offer of upper secondary education. According to the Labour Market Survey in 2000, 173 000 youths in the age group 16-19 specified education as their main activity (82 per cent of the total). 32 000 (15 per cent) were in employment, either full-time or part-time, and 7 000 (3 per cent) had some other main activity. Those who do not start an upper secondary education and who cannot find a job are offered places in labour market programmes. The labour market authorities and the education authorities at county level co-operate extensively in the development of measures directed towards youths, as well as the planning and implementation of these measures. More on the efforts directed towards youths is found in chapter 3.1.4 Raising the Quality of Human Capital.

Long-term unemployment

In Norway, persons unemployed for more than six months are defined as long-term unemployed. The number of registered long-term unemployed was 15 205 in 2000. This accounts for 24.3 per cent of the unemployed, and 0.6 per cent of the labour force.

For the long-term unemployed, the Public Employment Service (PES) provides special follow-up such as regular contact, guidance and information on employment and educational programmes and, when relevant, assists the unemployed in drawing up an individual plan of action. People who are long-term unemployed are given priority access to programmes. The PES provides special assistance in the area of job placement and training places for those whose unemployment benefit entitlement has expired, i.e. after 3 years of unemployment. If slots in programmes are not available, they may receive financial support comparable to their earlier unemployment benefit. On average, about 300 persons belong to this group.

Active ageing

In the decade to come, one of the major challenges for the Norwegian labour market will be the change in demography, with a declining growth of the labour force and an ageing of the population. This has also been described in chapter 1.3. The demand for manpower in the health sector will increase along with the ageing of the population and adopted plans for increased welfare. Following extended rights and, to a certain extent, also changes in behavioural patterns, the inflow to various pension schemes has been considerable over the past years. In 2000, the inflow to disability pensions was about 30 000 persons and 11 000 persons chose early retirement. It is therefore important to reduce the transition of persons from the labour force to pension schemes, and to develop positive measures to avoid ageing workers from withdrawing from the labour force.

Figure 3.1

The social partners have agreed on a "national action plan for senior policies within working life", which has been developed by the independent Centre for Senior Planning (Senter for Senior Planlegging) in close co-operation with the social partners. The action plan consists among others of the following measures:

• Establishment of a national resource centre on senior policies.
• Mobilising relevant organisations.
• Education, training and spreading of knowledge on senior policies.
• Supporting enterprises in need of guidance, establishing projects within enterprises, piloting of different models and measures.

The Government has allocated NOK 5 million to the action plan for 2001. A more specific plan has to be elaborated by the Centre for Senior Planning in co-operation with the social partners, the Directorate of Labour, the Directorate of Work Environment and the Directorate of Social Insurance.

It has been decided to implement a Competence Reform for adults in Norway. The reform is designed and implemented in close co-operation between the Government and the social partners. One of the objectives of the reform is that the educational system must be designed in such a way that adults can be given the same opportunities to acquire new skills as young people. This should contribute to counteracting the tendency of early retirement. More on this reform is to be found in chapter 3.1.4 "Raising the Quality of Human Capital".

Disabled persons

Disabled persons are a resource for the labour market. It is also of great value for the disabled persons to have the opportunity to use their talents in productive activity. It is thus important that efforts are made to clarify what type of assistance they need to increase their employability.

When a person can no longer perform his or her job due to a disability, the PES will assist in finding a more suitable job or the disabled person will embark on a rehabilitation programme. Comprehensive and targeted efforts are essential in order to succeed with a rehabilitation process. The favourable job market must be exploited to the advantage of the vocationally disabled. However, some disabled persons are referred back to the health and social services for further treatment or to the National Insurance Scheme to obtain a disability pension. As a general rule, rehabilitation shall be considered before a disability pension is granted.

All disabled persons embarking on a rehabilitation programme shall have an individual action plan developed in co-operation with the PES. The whole range of services developed by the PES, from information, guidance and placement assistance to schemes specifically designed for disabled job seekers, will be used to help the vocationally disabled return to the labour market.

The number of places in rehabilitation programmes increased during the 1990s. A continued objective is that a minimum three-fourths of registered disabled persons shall participate in active programmes in 2001. It is also an aim for 2001 that nearly half (48 per cent) of those registered as disabled shall have completed a rehabilitation process and shall either be ready to take up a job, have a job, or have started education. In order to assess the situation for vocationally disabled persons and their need for training, places in ordinary education and working life are being given priority. About half of the places are in ordinary education.

In order to increase the focus on efforts aimed at disabled persons, the Government has developed an action plan for disabled persons in working life for the period 1998-2001. An overall guideline is to organise working life in a way that prevents handicaps from becoming an occupational disability. The second main direction is to assist the disabled in entering working life. The efforts of the PES will mainly be concentrated on the latter. The PES, the social partners and NGOs (non-governmental organisations) are meeting regularly to discuss programmes and other measures for the vocationally disabled.

In December 2000, the Norwegian Government submitted a bill to the

Storting (the Norwegian Parliament) with a proposal for an extension of the anti-discrimination regulation in the Working Environment Act (§ 55A). The main proposal here is a prohibition of discrimination based on disability in the labour marked.

In April 1999 the Norwegian Government established a Royal Commission to propose reforms in the sickness benefit and disability pension schemes (The so-called "Sandmann Commission"). The commission submitted its report on 15 September 2000, and its recommendations are currently under consideration by the relevant parties.

Immigrants

In general, immigrants have more problems finding a job than persons born in Norway. In 1999, immigrants to Norway had a registered unemployment rate of 6.8 per cent, compared with a registered unemployment rate of 2.7 per cent for the population as a whole. However, there are large variations in unemployment rates between the different immigrant groups. Immigrants from Africa had in 1999 the highest unemployment rate of 13.3 per cent. Renewed efforts to improve their labour market situation are therefore called for. The PES will primarily focus on placement assistance and encourage them to participate in job-seeking activities. However, individual plans of action will also be used, particularly for immigrants who are long-term unemployed. While accounting for about 15 per cent of the total number of registered unemployed, immigrants filled about 30 per cent of the slots in active labour market programmes in 2000.

The PES has developed courses and training that are specially designed for immigrants. In co-operation with the educational authorities in the municipalities, the PES will assist in qualifying immigrants for the job market as early as possible after their settlement. Co-operation between the PES and the social partners will be continued in order to find more jobs and training places for immigrants. Furthermore, as a follow-up to an action plan for recruiting persons with an immigrant background for jobs in the public sector, the PES will seek co-operation and establish agreements on placement with public employers.

Among some groups of first-generation immigrants, illiteracy is widespread and this group faces particular problems. Literacy programmes are undertaken alongside Norwegian language courses and general labour market training. One innovative project in this field, the "Quo Vadis?", was granted co-funding under the EU Equal Opportunities Programme.

1.1 Effects of active labour market programmes

Statistics Norway has annually in the period 1996-1999 studied the effect of labour market measures for the vocationally disabled as well as for ordinary job-seekers. Details of these studies are to be found in the Annex.

For ordinary job-seekers the net increase in the likelihood of getting a job is studied by comparing labour market status at a point in time with their situation 6 months earlier. Those who have participated in active labour market programmes (ALMPs) are compared with non-participants. The net effect of the measures is found by controlling for a broad range of variables. Of the possible outcomes defined, only "in employment" is considered a successful outcome. This means for example that being in education is not considered as a successful outcome. This should be taken into account when interpreting the results.

Figures from the period 1996-1999 show that participation in labour market measures increases the job likelihood by between 11 and 15 percentage points compared with the control group. The predicted net effects vary substantially between the different labour market measures. It appears that programmes where participation in ordinary working life is an included element have proven to be the most efficient.

The latest study shows that the predicted increase in job likelihood from taking part in ALMPs is a moderate 2-3 percentage points for the under-20 years group. The over-60 years group has a 17 percentage point increase. This is an indication that labour market measures are more efficient for older job seekers, than for those under 20 years of age. The net effect of participating is higher for the long-term unemployed than for job-seekers with a shorter history of unemployment. The predicted likelihood of being employed 6 months after the measure increases by about 18 percentage points when the long-term unemployed participate in labour market measures (from 16-17 per cent for non-participants to 34-35 per cent for participants).

Statistics Norway has also made studies of the effect of labour market measures for the vocationally disabled. Since those who are registered as vocationally disabled by definition either take part in a labour market measure or are considered unfit for participation, it was not possible to establish a control group. For this reason, Statistics Norway did not measure the net effect, but mapped the labour market status of people registered as vocationally disabled and participating in a labour market measure 6 months earlier. The sample included some groups of vocationally disabled where the percentage of returns to the labour market is expected to be very low.

The study showed that, overall 39 per cent of the participants were either employed or self-employed 6 months later. 13 per cent of the participants were on disability pension.

There is a large degree of variation of outcomes with respect to the various measures. This is to be expected since the population of participants has different characteristics from measure to measure. It is not possible to isolate variations in the net effect of the measures from variations in the other variables such as the participants’ age and diagnosis.

1.2 Raising the Quality of Human Capital

Efforts aimed at young people

The 1994 educational reform (Reform 94) gave young people aged 16 - 19 a statutory right to three years of upper secondary education. The key principles and objectives for national policy concerning education and vocational training at the upper secondary level are:

• Education is a public responsibility, which is free of charge. The costs are covered by public budgets.

• Every young person completing compulsory education is entitled to three years of upper secondary education, leading either to a university entrance qualification, to a craft or journeyman’s certificate or to some other form of vocational qualification.

• The education and training provided shall be of high quality, broadly based and provide for a range of options independent of geographical location and social conditions.

All pupils have the right to be admitted to one of their three preferred basic courses of choice. The county governments in Norway have an obligation to provide upper secondary education to all pupils between 16 and 19 years.

A county vocational training committee is responsible for finding places for apprentices and is required to have close contact with enterprises. The committee also plays a role in matching enterprises and apprentices. It is, however, up to the enterprise to decide whether it wants an apprentice and which of the available persons it wants.

Each county government has a statutory obligation to establish a follow-up service for those who are neither in education nor in employment. The follow-up service ensures that young people who do not take advantage of their right to upper secondary education or who have lost their right to upper secondary education receive a job offer or a place in a labour market programme. The follow-up service is based on co-operation between government bodies and educational institutions, including the PES and the social and health services.

Before Reform 94 was introduced, many pupils did not satisfy the requirements to obtain a certificate. They left upper secondary education without documentation of the actual skills acquired. Reform 94 therefore introduced a statutory right to obtain documentation in the form of a certificate of competence which is awarded as documentation that a pupil or apprentice has completed a course, but has not met the conditions for the award of a diploma or a trade or journeyman’s certificate. This means that pupils may aim at completing only parts of upper secondary education to obtain documented skills. From 2000 a similar possibility has been introduced for the apprenticeship period. Furthermore, labour market programmes have now been developed to provide formal qualifications adapted to this system. It should be noted that labour market courses (theoretically based) are not available to those who are under 19 years of age as youths in this age group are instead directed to ordinary education.

The social partners have always had a significant influence on vocational training in Norway, particularly with regard to apprenticeship measures. The social partners make an important contribution to the formulation and implementation of vocational training. The responsibilities and involvement of the social partners are regulated in the general agreements on wages and working conditions. Furthermore, the Ministry of Education co-operates with the social partners on decisions concerning occupations and types of training that should be part of the public training and certification system.

ICT and the Internet are central elements aiming at a better and more flexible school. The Government’s priorities are concentrated on areas such as strengthening teachers’ competence in the pedagogical use of ICT in teaching, infrastructure and equipment, development of teaching materials, and international co-operation. The "ICT in Norwegian Education. Plan for 2000-2003" discusses the challenges, targets and measures for ICT in education. The plan provides a general description of the current situation of the most important priorities relating to ICT in education and outlines the most important challenges, main priorities and the targets set for implementing the plan. Furthermore, it discusses the roles and responsibilities of the various participants involved as well as the financial parameters. The plan also contains comparative statistics from a survey, "The Second Information Technology in Education Study (SITES)" which was carried out in twenty-six countries between autumn 1998 and spring 1999. The plan is available in English on the Internet at the following website: http://www.odin.dep.no/kuf/engelsk/index-b-n-a.html

Strategies and main priorities relating to higher education

The aims for national policy on higher education, reiterated in the budget for 2001, are as follows:

· to ensure that applicants to higher education institutions are given equal treatment (in terms of access to education), and contribute to using the capacities and abilities of the population in such a way that consideration is given both to the interests of the individuals, and to the country's need for a highly educated workforce.

· to ensure high quality in higher education and research by promoting conditions at the universities and colleges that are favourable to the development and transmission of new knowledge.

· to use the resources of the sector more effectively by redistributing capacity within different courses and fields in relation to changes in demands.

A commission report on higher education submitted in spring 2000, "Freedom with Responsibility", stressed that changes in the higher education sector should be based on student preferences and the demand in society and the labour market. Furthermore, the commission’s recommendations of changing the degree structure (i.e. shortening the nominal duration of studies) and considering the length of study programmes (i.e. placing more emphasis on the need for shorter vocational programmes in colleges), will be significant for labour supply.

Though the education level in Norway has generally increased during the 1990s, there is still insufficient recruitment to the health and social services sector and general teacher education, the ICT-sector, as well as in medicine and study programmes for paramedical professions, such as nursing.

As to decentralised study programmes, the Ministry of Education will strengthen the development of flexible study programmes in order to meet the demand from students and society in general. The Norwegian Agency for Flexible Learning in Higher Education (SOFF) is an advisory agency for the Ministry. The agency’s main task is to promote the development of flexible learning and distance education based on pedagogical use of information and communication technologies (ICT) in Norwegian higher education.

Lifelong learning

Due to the speed at which changes take place in society and in working life, and the fact that the labour force is gradually ageing, there is a need for a continuous updating of knowledge. There are not enough newly trained young people available to meet the need for relevant knowledge and skills. Competence development initiatives must therefore be aimed intensively at adults. The workplace level is an important arena for learning. To meet the need for a competent workforce and to meet the demands from employees, there has to be a stronger focus on the workplace level as an arena for renewing skills and competence building. This is also an important element for employers and their employees as described in chapter 3.3.3.

Norway has a high level of education. Still, there are many adults who lack basic education. Persons with the least education are also those who participate the least in competence development at the workplace.

Even though considerable sums are invested in competence development in working life by both the private and public sector, many companies have no competence plans. However, there are major variations between industries and trades. It is particularly important to focus on competence development in small and medium-sized companies – especially in the regions.

As to the public education system, it must also adjust to make it fit to adopt a central role in the process of raising the level of competence among the adult population.

On the basis of the foregoing considerations, the Government has launched a Competence Reform including all adults, those who are in the workforce as well as those who, for various reasons, are not. The reform is based on a broad understanding of competence, in which theoretical and practical knowledge, creativity, initiative, the development of self-confidence and social skills all work together.

As far as possible, adult and continuing education should be driven by demand; the education should be flexible, accessible and adapted to the needs of both individuals and enterprises. Both as regards content and organisation, adult education must be based on the formal and/or non-formal learning each individual already possesses.

Co-operation between enterprises and providers of education must be improved - with a view to allowing employees to take part in competence development without removing them from their jobs more than necessary.

The Competence Reform presupposes a high degree of interaction between many parties: Public authorities, organisations, private and public institutions and enterprises.

The reform has a long-term perspective. The implementation of the reform will take place gradually on the basis of a framework of economic and organisational requirements.

The most important measures of the reform are:

• Education for adults at primary and secondary school level

The Norwegian Parliament has decided that adults in need of primary and lower secondary education shall have an individual right to such education. This right will be implemented from August 2002. The Parliament has also decided that adults shall have an individual right to upper secondary education. The Act was adopted in August 2000, while its provisions came into effect on 1 January 2001.

• Documentation of non-formal learning

The Government has initiated a project aimed at the establishment of a system for documentation and recognition of adults’ non-formal learning related to upper secondary education. The social partners, counties and public and private providers of education are participating in this project.

The documentation of non-formal learning has an important function in giving skills and competence acquired through work experience greater recognition in working life, in the educational system and in other arenas of society.

The Norwegian Parliament has agreed to a statutory amendment which allows applicants over the age of 25 without upper secondary education to commence specified studies at a university or college on the basis of non-formal learning. The institutions will themselves determine whether applicants are sufficiently qualified to attend the courses in question. The evaluation of non-formal learning may lead to admittance to university studies in general, shortening of a course or exemption from examinations or tests.

• Right to study leave

The Norwegian Parliament has decided that from 1 January 2001, persons who have been employed for at least three years, and who have been with the same employer for the last two years, have a right to full-time or part-time leave of absence for up to three years in order to participate in organised education and training. However, a request for study leave does not have to be granted if it will be a hindrance to the proper management of the enterprise in question.

• Funding of subsistence

At the outset, compensation for subsistence expenses during study leave is a matter to be agreed upon between the employer and employee. Nevertheless, public financing of subsistence for adults participating in an educational programme is available through established funding schemes managed by the State Educational Loan Fund. From the autumn of 2000 these schemes have been better adapted to continuing education for adults. However, a Government-appointed committee is making a more thorough study of the issue of support for subsistence during study leave. This committee shall propose models for funding applying to working life in general. In 1999 an amendment to the Taxation Act provided for tax exemption for education paid by employers.

• The Competence Building Programme

For an account of this programme, cf. 3.3.3 Support adaptability in enterprises.

• Motivation and information

An information plan for the Competence Reform is in the process of being drawn up.

A three-year project, "Motivation, guidance and information" has been started in order to produce new, non-traditional methods for reaching out to those groups that have the least enthusiasm for taking up education.

In co-operation with the social partners, the Norwegian Council of Universities and State Colleges has developed a Network for Lifelong Learning which is a database for information on continuing education and training at university and college level. This database was opened in June 2000.

• Plan of action for the Competence Reform

A plan of action for the Competence Reform, 2000–2003, has been formulated in co-operation with the social partners and various providers of education. The plan will be reviewed annually.

2 Developing entrepreneurship

In Norway, about 75 per cent of all employees in the private sector are employed in small and medium-sized companies. While many bigger companies are downsizing, employment has grown in smaller enterprises over the last 20 years. 5Source: O.R. Spilling: SME 2000 – Facts about SMEs in Norway

A slowdown is expected in the petroleum sector the next decades, and the decline in petroleum-related investment is expected to have a negative impact on mainland growth. This means that industries exposed to international competition will have to increase their share of GDP. In fact, a significant part of future value added will have to come from enterprises that do not yet exist.

Increased competitiveness and a more entrepreneurial society are obviously necessary to secure a basis for the further growth and welfare of Norwegian society. In the 1990s, between 24 000 and 30 000 new enterprises were created each year. This corresponds to 9-11 per cent of the total number of Norwegian enterprises. 6Source: O.R. Spilling: SME 2000 – Facts about SMEs in Norway. The number of enterprises that were deregistered during that period was, however, about the same as for newly registered enterprises.

2.1 Making it easier to start up and run businesses

It is vital to make it more attractive to become an entrepreneur, and to bring about an improvement in attitude and motivation. In addition, steps should be taken to make it easier to set up a business and entrepreneurial skills must be improved through education and training. The fostering of entrepreneurship has become a key political priority for the Government and the Ministry of Trade and Industry has established a Forum of Entrepreneurs to contribute to this process.

In 1998, the Norwegian Government launched an Action Plan for Small Businesses, with the aim of facilitating start-ups and improving the framework conditions for enterprises.

Some of the main priorities in this plan are presented in the following sections.

Education for an entrepreneurial society, and training

The Government has launched a national effort to enhance entrepreneurship, and in 1997 the Ministry of Education presented its plan for "Entrepreneurship in Education and Training". The purpose of this plan is to make entrepreneurship an explicit educational objective and to motivate and inspire educational institutions to plan and implement entrepreneurship education. According to the Core Curriculum, education should qualify people for productive participation in the labour force, and provide the necessary basis for any later moves to other occupations. A more explicit focus on promoting entrepreneurship in the educational system will contribute to settlement, employment and business development in local communities and regions, and encourage students to set up and manage their own enterprises.

Access to risk capital finance for SMEs

In Norway, as elsewhere, it is difficult for many small enterprises to gain access to sufficient capital in the early stages, particularly for projects involving new technology and knowledge-based businesses. However, according to data from the European Venture Capital Association (EVCA), seed and start-up capital investments in Norway, in relation to the total amount of venture capital, increased from 6.9 per cent in 1996 to 13.3 per cent in 1999.

Since 1998, six seed capital funds, with a total capital of EUR 98 million, have been established with the aim of providing "patient capital" and competence to projects involving high risk at an early stage. These funds are being financed from public and private sources on a 50/50 basis.

The Norwegian Industrial and Regional Development Fund (SND) manages a wide range of financial schemes to support SMEs. These include loans, grants and equity capital. 78 per cent of the loans and 86 per cent of the grants from SND goes to enterprises with less than 50 employees. The main financial institution specialising in equity capital for SMEs is SND Invest (wholly owned by SND). Since its creation in 1993, SND Invest has invested EUR 270 million in 260 enterprises. Their policy is one of active ownership, including the contribution of management competence on the board of directors.

Access to research and innovation by SMEs

In 1999, the Norwegian Government presented a white paper on research, which underlined the high priority that is being given to enhancing and stimulating research activities. OECD statistics show that Norwegian investment in research, measured as a proportion of GDP, lies significantly below the average in the OECD area. In 1999, Norway spent 1.75 per cent of its GDP on R&D, while the average for OECD countries was 2.23 per cent. This is largely due to the comparatively low investment in R&D in the private sector. Publicly funded R&D, on the other hand, is at the same level as the OECD average.

In March 2000, a Government committee submitted a report on tax incentives and other measures to stimulate research in Norwegian enterprises. The Government has now proposed the establishment of a new public grant arrangement to support enterprises’ purchase of R&Dservices from universities, colleges and research institutes. The arrangement will be launched in July 2001.

Innovation seems to be lower in Norwegian industry than in the EEA as a whole: in 1995-1997 new or adapted products introduced in the market represented 20 per cent of total turnover in manufacturing industry, lower than the corresponding average in the EEA 7Source: Eurostat.. In 1996, 30 per cent of Norwegian SMEs were found to be innovating, a relatively low share by European standards. The corresponding share for large enterprises was 65 per cent, representing a significant gap between larger and smaller enterprises. The share of innovating SMEs that participated in innovation co-operation with other enterprises, universities or research institutes was as high as 51 per cent. In the same year, SMEs spent 2.3 per cent of their total turnover on innovation.

In 1999, a public fund for research and development (Statens forskningsfond) was established, with the purpose of strengthening research in the following selected fields: maritime sector, ICT, medicine and health, and energy and the environment. Capital will be raised through the sale of state-owned shares, and the Research Council of Norway will manage the fund.

Improve visibility of support services

Public support to businesses in Norway primarily aims at stimulating innovation and growth among SMEs, and there are several support schemes that provide financial assistance to SMEs. Hence, there are no free business consulting services for Norwegian SMEs, with the exception of the business information services provided by the Euro Info Centre network. The only other exceptions are the telephone-based Narviktelefonen: (+(47) 800 33 840) and Internet-based BEDIN: (http://www.bedin.no) services, which provide businesses with relevant information from public institutions and authorities.

The main public institution for financing and delivering support services to SMEs is the Norwegian Industrial and Regional Development Fund (SND). Public support for enterprises is channelled mainly through SND as regards business development and through the Research Council of Norway for R&D projects. These two institutions have signed a co-operation agreement, with the purpose of providing information about, and financial support for, R&D investments, using the 18 regional offices of SND. A similar agreement has been signed between SND and the Trade Council of Norway. The aim is to create a "one-stop shop" network, with information about the support available for R&D and business development and internationalisation.

Reducing the administrative burden on companies

The administration burden of legislation in the areas of tax, labour protection and environmental protection was estimated in a business survey initiated by the OECD in 1998. Comparative analysis indicates that Norway scored above average among the countries that participated. The Ministry of Trade and Industry has decided to conduct a similar survey at a national level in 2002 to create an indicator of changes in the administrative burden over time.

One of the objectives of the Action Plan for Small Businesses is to reduce red tape. The strategy for improving conditions for small enterprises includes several measures:

• making regulations more transparent and comprehensive for enterprises, and easier to comply with.
• developing a guide for the public administration which will help them to understand better the consequences of new legislation for business, and to take into account the needs of enterprises when drafting such legislation (a pilot project with business test panels has been carried out in 2000).
• ensuring that information from enterprises to the public administration is reported only once (a national registry for this purpose was established in 1997 - see below)
• enabling the public administration to receive the required information from enterprises electronically.

The Government is placing strong emphasis on the development of a more efficient and better functioning public administration and has established a programme for "Renewal of the public sector". The programme is government-wide and includes requirements for direct action on simplification in many areas.

One of the most useful measures for streamlining the public administration of enterprises is the Central Co-ordination Register for Legal Entities. To facilitate the compilation of information by public agencies, a special register was established in November 1997 – (The Register of the Reporting Obligations of Enterprises) . The Register maintains an overview of all the reporting obligations incumbent upon enterprises in Norway, and aims to find ways of simplifying their paperwork. By identifying possibilities for co-ordination, the Register acts as a pathfinder for the re-use of business reporting data within the public administration. Electronic information exchange between public agencies is encouraged and required. This should help lighten the load on public authorities and enterprises alike. For more information, contact "Bronnoysundregisteret", tel: +(47) 7500 7746, or consult the Internet: http://www.brreg.no/english/or_brochure.html

2.2 New opportunities for employment in the knowledge-based society and in services

The service sector is growing rapidly. Over the last decades we have seen a steady decline in the primary and secondary sector. The tertiary (service) sector accounted for more than 70 per cent of total employment in 2000 (c.f. figure 1.1). The key importance of business services lies in their dynamic links and contributions to the competitiveness of Norwegian enterprises, because of their growing integration into industrial production.

Innovation will to an increasing extent be driven by knowledge. The development of ICT enhances new ways of organising businesses and working life. Industry must accept these challenges and grasp the opportunities presented by the new technology. However, the authorities must contribute to this by establishing good framework conditions.

In order to safeguard industry's competitiveness, it is important to increase the national commitment to innovation, upgrading skills and R&D. Furthermore, it is important to support the establishment of communities where knowledge clusters and new businesses are developed.

eNorway Action Plan

In June 2000, the Government launched eNorway (http://www.enorge.dep.no). A second, updated edition was launched in December 2000. eNorway describes the Norwegian policy for the development of a knowledge-based society in all areas of society. It is also an operative plan that describes what has to be done and when the actions are to be implemented. The plan is divided into five main areas: individual, lifelong learning, industry, workforce, and the public sector.

It is necessary to strengthen the dialogue concerning an efficient, user-adapted education system that is taking place between research institutions, the education sector and industry. Such co-operation will help to identify the need for new skills and ensure flexible educational choices. Learning and skills are the keys for seizing the growth opportunities and challenges. The Government will be implementing a skills development programme focussing on the workplace as a learning arena.

With the aim of providing favourable framework conditions for business activity, the Norwegian Government has appointed a committee with the task of analysing the framework conditions of Norwegian enterprises, and establishing a system for benchmarking business opportunities for Norwegian enterprises.

In order to ensure that all groups have the same right to update their knowledge in line with new requirements, it is necessary to stimulate adult education to secure the upgrading of skills. To this end, a Competence Reform was adopted in the Norwegian Parliament in 1999. The skill reform will contribute to providing industries with the requirements that are necessary in the rapidly changing working environment. The skills reform is therefore an important tool for making employees as suited as possible to cope with these developments.

2.3 Local action for employment

Seen in an international context, unemployment rates in Norway are low. The most of the unemployment is short-term, and the regional differences are relatively small. Most of the municipalities with high unemployment rates, i.e. 5 per cent or higher, have a small population and many of them are located in the region of northern Norway. Local action for employment in Norway has generally concerned specific municipalities or regions that have had difficulties adjusting to restructuring processes or experienced closures of corner-stone enterprises.

Run under the auspices of the Industry and Energy Division of the Research Council of Norway, the programme for bridging the gap between industry and research - BRO - is aimed at promoting interaction between various R&D centres and industry to ensure business development at a regional and local level. The programme's primary target group is companies with little R&D activity - especially SMEs.

The BRO-programme’s current portfolio covers several different sub-programmes that deal with various aspects of technology transfer. The portfolio consists of the following programmes:

• "FORNY" - commercialisation of results of R&D conceived at universities and R&D institutions. In 1999, the programme generated 23 start-ups and resulted in 22 licences for existing enterprises;
• "TEFT" - technology transfer from research institutes to SMEs, by funding technology projects to attract SMEs and building partnerships by using "technology attachés"; "SME Competence" - recruitment of highly-skilled staff to SMEs through one-year placement schemes;
• "REGINN" - fostering regional innovation systems to increase the innovative capabilities of enterprises and to strengthen the focus on innovation and industrial development among R&D institutes, universities and regional and local authorities.

One of the objectives of the BRO-programme is to encourage more companies to engage in systematic development efforts. Another objective is to develop a knowledge sector (universities, colleges, institutes and research parks) that offers the expertise, quality and capacity to handle the need’s of Norwegian business and industry today and tomorrow. The programme shall also foster collaboration with other public sector instruments, especially those under the auspices of the Norwegian State Industrial and Regional Development Fund (SND) and the advisory and supervisory system (TI and VINN). In connection with the implementation of the new regional collaboration between SND and the Research Council (SME Innovation) there should be a number of opportunities for taking advantage of the synergies that emerge from the various programmes. It is also an important objective to achieve closer ties between the sub-programmes and other user-driven research programmes under the auspices of the Research Council, such as R&D programmes for manufacturing industry and national information network programmes. For more information, contact: RCN, tel: +(47) 2203 7000, Internet: http://www.forskningsradet.no

3 Encouraging adaptability of businesses and their employees

3.1 Co-operation with the social partners

In Norway there are long traditions for tripartite co-operation, both in the fields of policymaking and in developing regulations to achieve a balanced working life and the protection of worker’s rights and safety.

The determination of wages and other employment conditions is the responsibility of the labour market organisations, although tripartite arrangements concerning e.g. incomes policy have long traditions. Norway’s experience with these tripartite arrangements is generally favourable. The primary ambition of tripartite co-operation in Norway is usually to reach a common understanding of the actual facts of the general economic situation, developments in wages and prices, etc. It is believed that this facilitates later wage negotiations and creates a responsible attitude among the parties.

The so-called Contact Committee (Kontaktutvalget) is the most important body of incomes policy co-operation. Here the Government and the main labour market organisations exchange views on the current economic situation and bring up issues they consider important to discuss. A special contact group (Kontaktordningen) has been set up between the Government and other labour market organisations with the same purpose.

The Technical Reporting Committee on the Income Settlement serves the purpose of providing unbiased information on economic developments to all parties. It also seeks to reduce disagreements stemming from different perceptions of the current or future economic situation. An independent expert chairs the committee. This position is currently held by the director of Statistics Norway (SSB). The Technical Reporting Committee on the Income Settlement includes representatives of the social partners as well as members from two ministries.

Co-operation with the social partners on specific issues relating to the labour market also takes place in connection with the establishment of public commissions. In this report we have referred to several commissions established by the Government and where the social partners have been represented.

To improve the dialogue with the social partners on a national level, the Norwegian Government initiated in August 2000 a national social dialogue where all the main organisations of employers and workers were invited to participate. As Norway is closely linked to developments in the EU in the field of labour law and health and safety at work, this new dialogue is a forum where the national social partners and the ministries meet for the exchange of information and discussions on issues on the EU agenda.

The main trade unions and employers’ organisations in Norway are members of European organisations e.g. ETUC, UNICE, CEEP and EuroCommerce. Through these organisations the Norwegian social partners participate in the EU’s Social Dialogue. The Norwegian Confederation of Trade Unions (LO) and The Confederation of Norwegian Business and Industry (NHO) have, as members of their respective organisations ETUC and UNICE, taken an active part in the negotiations within the Cross-Industry Dialogue.

Participants in the Sector Dialogue are representative organisations at European level for the sectors/branches in question. 8Commission decision 98/500 of 20 May 1998 on the Sector Dialogue. The Commission is obliged to establish committees for negotiations at sectoral level according to procedures and conditions laid down in the decision, if the representative parties so request. Norwegian social partners take part in the committees through their European organisations.

A number of agreements have been reached at the sectoral level and apply within the scope of the agreement without becoming EU legislation. Agreements have been concluded in the fields of agriculture, textiles, and in several service sectors. Framework agreements have been reached, for instance on vocational training and against social dumping.

3.2 Modernising work organisation

Existing work patterns are challenged by the emergence of new businesses and changing family patterns. The basic framework of working time arrangements and other terms of employment are regulated through national law. However, in implementing the legal requirements, the social partners play a significant role through collective agreements.

A tripartite commission with a mandate to prepare for a discussion on the need for changes in labour laws submitted its report in December 1999. The Commission ("Colbjørnsen Commission") analysed the situation based on new challenges in working life with regard to working conditions and work organisation, working hours, and terms of hiring and firing. The report has been widely circulated for comment to organisations and institutions involved. At present, the issue of amending labour laws is under broad discussion. Important considerations are the current and future lack of qualified employees in several sectors and the increasing number of people with partial or permanent disability preventing them to function in the labour marked on ordinary terms. At the same time new businesses (especially in the ICT sector) demand more flexible working conditions or framework regulations. The process of amending labour laws will be initiated in 2001. This will be carried out in broad co-operation with the social partners.

3.3 Support adaptability in enterprises

In co-operation with the social partners, the Government has initiated a Competence Building Programme aimed at the development of continuing education and training to make use of the potential in the workplace as an arena for learning. This is an element of the Competence Reform described in chapter 3.1.4. The programme involves joint projects between enterprises and providers of education for systematic competence building. Project funding can be applied for by individual enterprises, municipalities, networks of enterprises, industry organisations, etc. NOK 50 million was allocated in 2000 to the Competence Building Programme. This amount will be increased to NOK 100 million in 2001.

3.4 Strengthening equal opportunities policies for women and men

3.5 Gender mainstreaming approach

The Gender Equality Act entered into force in 1979 and covers all aspects of life. Only internal affairs in religious communities are excepted. As regards employment, the Act prohibits differential treatment of men and women concerning recruitment, promotion, and notice of dismissal or temporary lay-off. Differential treatment may be allowed with a view to promoting gender equality. Women and men, when employed by the same employer shall have equal pay for work of equal value.

The Gender Equality Act obliges public authorities to promote gender equality in all fields of operation. Traditional gender equality policy and specific measures for positive action were complemented in the mid-1980s by a more comprehensive approach, later known as gender mainstreaming. Specific action programmes in the central administration in the period 1986-1994 promoted mainstreaming. The aim was to widen the scope and impact of traditional gender equality policy. The final evaluation of the programmes concluded that the best results were attained in policy areas that were already familiar with gender equality policy, such as education and labour market policy. Gender mainstreaming was underpinned by economic analysis that stressed that women represent an under-utilised potential for labour supply. The welfare state and the service sector depend on a high rate of employment among women. Women are outperforming men as regards education, but are under-represented in management positions, in particular at the higher levels. Traditional educational choices among both women and men are paralleled by a strong segregation by gender in the labour market, horizontally and vertically. Gender segregation functions as a barrier to flexibility and mobility across sectors and occupations, and limits the full use of individual talent and resources.

The Government’s policy on gender mainstreaming is being co-ordinated by the Ministry of Children and Family Affairs. According to the mainstreaming principle, the incorporation of gender issues in labour market policy is the responsibility of the Ministry of Labour and Government Administration.

3.6 Tackling gender gaps

A labour market survey shows that in 1999 women accounted for 46.5 per cent of the employed. However, whereas 45 per cent of the employed women worked part-time, this was the case for 10 per cent of employed men. In management positions and in academic positions, we find the lowest number of part-time employed women, but their share of part-time employment is also higher here than for men. When looking at the distribution in occupational groups, the labour market is also to a large degree divided between men and women. 66 per cent of women are employed in the public sector compared with 34 per cent for men. Whereas female representation is strong in occupational groups such as retailing and services, teaching and various positions in the health sector, men have a dominant representation in occupational groups such as engineering, various manual occupations (building and construction) and in the primary sector. There is also a gender gap with regard to earnings 9Figures from 1997 and 1998. In manufacturing, women’s average earnings as a percentage of men’s are 90.7 per cent for workers and 77.7 per cent for salaried employees. The gap is largest in banking, insurance and commercial services where women’s earnings are approximately 75 per cent of men’s earnings. In the public sector the corresponding figure is approximately 90 per cent. However, this wage gap can to a large degree be explained by variations in the positions held by men and women. Figures from the Technical Reporting Committee on the Income Settlement show that adjusted for the positions held by men and women, the gender gap in earnings is relatively small. One example of this is that women have a relatively smaller representation in management positions than men, both in the private and public sector. If women’s representation in management positions had reflected their labour market participation, 43 per cent of these positions would have been held by women compared with today’s 25 per cent.

The Gender Equality Act is in the process of revision, with a view to reinforcing the Act as a tool for promoting equality. The Act will be brought in accordance with Council Directive 97/80 on the burden of proof in cases of discrimination based on gender. The proposal for revision also contains a provision against sexual harassment, in accordance with the European Commission’s proposal for a revision of the 1976 Equal Treatment Directive.

Earmarking of high-level positions for women in academic fields where they are under-represented has recently been applied in academia. This measure has been contested. Having been found to be in accordance with the Norwegian Gender Equality Act, it was brought before the European Surveillance Authority to be reviewed against relevant EU regulations which according to the EEA Agreement, are binding for Norway. The case is still pending.

Active training, including mentoring programmes, has been implemented to increase the number of women in management. Other measures undertaken to tackle gender gaps include the establishment of micro-credit schemes and network activities to encourage female entrepreneurship. Women are less involved than men in the use and development of new technologies. Active measures, including quotas in further education, have proven successful to increase the number of women in this field.

The social partners have through collective agreements taken initiatives to bridge the gender gap. Important provisions of the agreements include the evaluation of men and women according to the same principles and the requirement that the gender perspective shall be taken into account in hiring new staff, in promotions and in relation to lifelong learning. The social partners have also in many of their agreements included provisions to ensure equal pay for work of equal value.

3.7 Reconciling work and family life

Reconciliation of work and family life has been a political priority since the mid-1990s and is a part of the reason for the high employment rate of Norwegian women, including the mothers of small children. Parental leave has been gradually expanded up to the present level of one year with 80 per cent pay, including a 4-week quota for the father, and with possibilities for another two years of unpaid leave. Childcare arrangements have been developed, but still fall short of the need. An important precondition for the development of policies favouring the reconciliation of work and family life has been the relatively high representation of women in democratically elected bodies and in Government since the mid-1980s.

As of 1 July 2000 the Parliament has adopted an amendment to the National Insurance Act, introducing independent rights for fathers to parental benefits. Up to 1 July 2000, the father’s rights had been derived from the right of the mother. The father was only entitled to parental benefits provided that both he and the mother had been in paid employment for 6 out of the last 10 months. The amendments benefit fathers when the mother herself is not entitled to benefits. However, the father’s right is conditional upon the mother entring into paid employment or education after the birth.

The social partners have also made important contributions to the process of the reconciliation of work and family life, and collective agreements contain provisions to promote these aspects. At workplace level, flexible working arrangements have led to positive developments in terms of reconciling work and family life. These flexible working arrangements are often combined with IT equipment and/or mobile communication systems. A number of employers have made childcare available to their staff, others provide for housecleaning or other facilities to ease the burden of working parents. While still in an introductory phase or restricted to certain sectors and companies, these initiatives demonstrate a new approach to a serious challenge in today’s working life.

4 Annex

4.1 Facts about Norway

The Country

Norway is one of the five Nordic nations, which lie within the northern stretches of the European continent. It is bordered to the east by Sweden, Finland and Russia; to the west by the Norwegian Sea and the Atlantic Ocean; to the north by the Barents Sea, and to the south by the North Sea. In total area, Norway measures 386,958 square kilometres. The country is long and narrow, with more than 30 per cent of the land covered by forests, many rivers and lakes. Nearly half of the country is mountainous. Oslo is Norway´s capital with a population of about half a million people.

The People

There are close to 4.5 million Norwegians, most of whom live in urban areas. The Sami are the indigenous people of Norway. There are about 30,000 Sami in Norway. In Norway, foreign citizens accounted for 4.0 per cent of the total population in 2000.

The Government

Norway is a constitutional monarchy that adopted its own constitution on 17 May 1814. The present monarch, King Harald V, came to the throne after the death of his father Olav V in 1991. The Norwegian Parliament, the Storting, consists of 165 representatives who are elected for four-year terms. After the general election of 1997, its composition is as follows: Labour Party (65); Progress Party (25); Christian Democrats (25); Conservatives (23); Centre Party (11); Liberals (6); Socialist Left Party (9); Non-Partisan Coastal Party (1). A new general election will be held in autumn 2001.

Climate

Stretching from 71°11'09'' N.Lat. in the north to 57°57'31'' in the south, the climate is milder than most people expect at those degrees of latitude. This is mainly because of the Gulf Stream, which brings warm seawater to Norway's coast. In Oslo the average daytime temperature (Celsius) ranges from –3.7 C in January to 18.2 C in July.

Information on Norway

More information on Norway can be found on the Internet on, among others, these web sites: www.dep.no/odin/global/language-no/index-b-n-a.html

www.norge.no/english/

www.tourist.no

4.2 Tables and figures

Table 4.1. Statistics Norway – Annual Audit of Labour Market Measures. 1996-1999. Per cent.

Table 4.2. Labour market status in November 1998 of vocationally disabled who ended their participation in labour market programmes during the first 6 months of 1998. Per cent.

Figure 4.1

Figure 4.2