The Royal Ministry of Foreign Affairs,
Oslo Press Division

Norway Daily No. 112/00

Date: 16 June 2000

FURIOUS SVEAAS RAGES AT ORKLA (Aftenposten)

The corporate assembly at Orkla is said to have used Christen Sveaas’s short-termism as grounds for not electing the company’s third largest shareholder to the Orkla board. "The argument of short-termism is ridiculous when I have said that I would like to be a member of the board," says Mr. Sveaas to Aftenposten. Before the board election at Orkla, Mr. Sveaas had been contacted by the chairman of the nominating committee, who informed Mr. Sveaas that he was nominated as a new board member. But neither the chairman of the board nor anyone else at Orkla has contacted Sveaas since he became the third largest shareholder in the company.

ORKLA SHAREHOLDERS POWERLESS (Dagens Næringsliv)

The major shareholders at Orkla feel stripped of power since the nominating committee’s recommendation was ignored by the corporate assembly on Wednesday. Several of them wanted to elect Christen Sveaas as the shareholders’ representative. The National Insurance Fund is the largest shareholder in Orkla, with 8.7 per cent of the shares. The Storebrand insurance company holds 5.2 per cent, making it the fourth largest shareholder. They recommended that Christen Sveaas, Orkla’s third largest shareholder, be elected to the board.

INTEREST HIKE NOT WORKING AS INTENDED (Dagbladet)

Central Bank Governor Svein Gjedrem has tried to reduce inflation by raising interest rates twice this year. But this harsh medicine may be completely ineffective. The result may be that inflation rises, says senior researcher ådne Cappelen at Statistics Norway. Mr. Cappelen’s many surprising conclusions are discussed thoroughly in a new analysis by Statistics Norway. Here it says in no uncertain terms, "It should be noted that consumer prices rise when interest rates rise. This is because the rents rise. Companies, too, have increased expenses when interest rates rise..." The conclusion can be seen as a sharp indirect criticism of the Central Bank Governor’s firm belief that the Norwegian economy now needs higher interest rates in order to cut inflation.

GJEDREM GETS OUTSIDE HELP (Dagsavisen)

International conditions contribute to stabilizing the Norwegian krone’s exchange rate. According to senior economist Tor Steig of the Confederation of Norwegian Business and Industry, this gives Norges Bank scope to use interest rates as a means of reducing inflation. The interest hike Norges Bank introduced in March has been interpreted as an attack on the wage settlement. In Mr. Steig’s view, raising interest rates was intended to give a signal to politicians that they had to tighten up the revised national budget. "The job of regulating inflation is the responsibility of fiscal policy. It is in this area that the distribution of labour between the public and private sectors takes place," he says. This is why Mr. Steig does not expect another interest hike until November, when most of next year’s fiscal budget will have been clarified.

LABOUR PARTY HAS A PROBLEM EXPLAINING ITSELF (Aftenposten)

Labour Party secretary Solveig Torsvik believes voters take it for granted that Labour will keep Norway’s economy on an even keel, but she admits that this is not an issue that can help the party win a general election. "There is no guarantee that we will have 40 per cent support," she acknowledges. She believes that the party has a firm basis of between 18 and 25 per cent of voters. "Voters trust the Labour Party implicitly when it comes to keeping the country’s economy in order. But we have not managed to clarify our policies internally within the party or to the voters," she says.

AVERAGE RETIREMENT AGE 56 YEARS (Dagbladet)

The average retirement age for municipal employees is now 56 years, which is 11 years earlier than the normal age of retirement. The reason for this is an explosion in the number of people receiving a disability pension. One out of ten Norwegians of employment age was receiving a disability pension at the end of March this year. In the municipal sector the situation is even worse. And according to John Haslestad at the National Insurance Administration, this trend will continue. He says that the number of people receiving disability pensions is expected to climb until 2010. "Pressure to be efficient and the lack of flexibility of government employers are the main reasons for the enormous increase in disability pensions," says Roar Engen at the Norwegian Municipal Pension Fund.

WORTH NOTING

• The crisis in the Norwegian offshore industry is over. During the next few months new contracts worth almost NOK 20 billion will be distributed among Norwegian shipyards, and more than a thousand shipyard employees who had been laid off will go back to work. ( Dagens Næringsliv)
• The German frigate supplier Blohm + Voss now sees an opportunity to initiate negotiations on frigates with the Norwegian Navy as a result of the postponement of the contract signing with Bazan and all the uncertainty surrounding the entire process. Rear Admiral Jan Jæger does not rule out the possibility of negotiating with Blohm + Voss. ( Dagens Næringsliv)
• There will be no merger between the Confederation of Vocational Unions and the Federation of Norwegian Professional Associations. The two organizations have been working on a merger for the past two years, but now the Federation is giving up and is recommending that the executive committee’s meeting put a stop to this process without trying to achieve a merger. ( Klassekampen)
• Last year, for the first time, fewer than four of 1000 live-born babies had died before reaching the age of one year. This is the lowest infant mortality rate ever registered in Norway. In comparison, 11.6 of 1000 live-born babies between 1971 and 1975 died before reaching their first birthday. ( Nationen)

TODAY'S COMMENT from Dagsavisen:

Central Bank Governor Svein Gjedrem has fulfilled his own prophecy and raised interest rates by 0.5 percentage points. The result is that he the wrath of the Norwegian Confederation of Trade Unions is once again directed at him. The Confederation claims, "The interest hike is an overreaction," and this statement is supported in several quarters. A new, independent group of experts who are responsible for monitoring Norges Bank believe that Mr. Gjedrem has gone overboard in order to scare us into spending less. At the same time this group, which includes a former State Secretary at the Ministry of Finance, has ascertained that Mr. Gjedrem has, in practice, shifted monetary policy from the issue of exchange rates to that of inflation. If this is true, it conflicts with what the Government claims is the basis of its economic policy. The solidarity alternative is based on a three-part division, in which fiscal policy is to function as a means of regulating the economy. In return, the workers’ and employers’ organizations are supposed to ensure moderate wage settlements and Norges Bank is to ensure stable exchange rates. Prime Minister Jens Stoltenberg and Minister of Finance Karl Eirik Schjøtt-Pedersen can no longer sit on the sidelines in this debate on exchange rate policy. The politicians must now clarify to the Confederation and other confused observers what goals they are pursuing with regard to monetary policy. If the Government wants to depart from today’s model, it can only do so after a political debate. The alternative is that the Government steps in and tells Norges Bank and Svein Gjedrem in no uncertain terms which criteria should govern monetary policy.