Norway faces high rates of sickness absenteeism, posing risks to labor market, financial stability
(MENAFN) Norway is witnessing its highest sickness absence rates in over 15 years, which could potentially challenge the stability of its labor market and financial health. According to a report, Statistics Norway revealed that the seasonally adjusted sickness absence rate increased to 7.1 percent in the second quarter, marking the highest level since 2009, a period previously affected by a swine flu outbreak. This recent rise surpasses even the peak rates recorded during the COVID-19 pandemic and spans all sectors of the economy. The increase in illness-related absences comes at a crucial time for Norway, whose social welfare system, funded by high taxes, relies heavily on robust workforce participation to maintain sustainability.
While Norway's public services are currently underpinned by its massive USD1.7 trillion sovereign wealth fund, there are growing concerns about future budgetary pressures. These concerns are partly due to an anticipated decline in revenues from oil and gas, key sectors that have historically been substantial contributors to the nation's wealth. A report highlights that expenditures related to illness and disability already represent approximately 22 percent of Norway’s public spending, equivalent to about 8 percent of its GDP, excluding contributions from the oil and shipping sectors. This spending level is notably high, being twice the amount allocated by Denmark, the second-largest spender in this category, according to data from the Organization for Economic Co-operation and Development (OECD).
To address these challenges, Norway's Labour-led government plans to propose reforms to its welfare system later this month. Despite the planned changes, the government has suggested that benefit levels, which have been described by international organizations as "exceptional," are unlikely to face significant cuts. The government’s approach aims to balance the need for economic sustainability with the continued provision of generous social benefits, amid a backdrop of increasing fiscal constraints and a shifting economic landscape.
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