Norwegians opt for welfare state security amid crisis

16th September 2009, Comments 0 comments

The steady handling of the economic downturn by Labour Prime Minister Jens Stoltenberg’s government provided the security that Norwegians typically looked for, say experts.

Oslo – Norway's Labour Prime Minister Jens Stoltenberg vowed Tuesday to improve the country's cherished welfare state and defend jobs, a day after his government secured a narrow re-election victory.

"Now we have to act to protect jobs and renew and improve the welfare state," Stoltenberg told reporters.

On Monday, his left-wing coalition with junior partners the Socialist Left and Centrists held on to a slim majority in parliament, picking up 86 of the 169 seats.

That gives it a two-seat majority in the Storting, or parliament, after voters resisted the temptation presented by the right-wing opposition's promises of tax cuts and privatisations.

The opposition won 83 seats, including 41 for the populist Progress Party, which cemented its position as the second-biggest party in Norway.

"The government will continue its economic policy of the past four years, a responsible economic policy but also one where we are ready to use money to secure jobs," Stoltenberg said.

Norway, the world's fifth-biggest exporter of oil and third-biggest of gas, appears to have emerged relatively unscathed from the global economic crisis.

After experiencing a brief recession, the economy registered growth in the second quarter and boasts the lowest unemployment rate in Europe at 3.0 percent.

According to political observers, it was the security offered by Stoltenberg's steady handling of the economic downturn and defence of the welfare system that edged the government to victory at a time of global crisis.

"Norwegians have a tendency to choose security over freedom," said Frank Aarebrot, a political scientist at the University of Bergen in western Norway.

"This character trait becomes more pronounced in a time of economic crisis," he added.

Arne Strand, a political columnist in the left-leaning Dagsavisen newspaper, agreed.

"The impressive manner in which the government has handled the financial crisis probably contributed to the victory of the 'red-green' coalition," he wrote.

"In uncertain economic times for the country, there are many of those who are unwilling to indulge in experiments that follow a new political line," he added.

This year the government plans to use NOK 30 billion (EUR 3.5 billion, CHF 5.3 billion) of supplementary oil revenues to stimulate the economy, in addition to the NOK 100 billion of oil money already earmarked for use in the budget.

The costly measure is made possible by Norway's massive state pension fund.

Since 1996, successive governments have placed nearly all of the state's oil revenues in the so-called "oil fund" in order to finance the generous social welfare state the day the wells run dry.

At the end of June, it was worth EUR 277 billion, making it one of the biggest sovereign wealth funds in the world.

Since the creation of the fund, no government in Norway has -- until now -- succeeded in winning re-election because of what one political analyst has dubbed the "oil wealth curse".

Many Norwegians are frustrated over what they perceive as a dilapidated welfare state despite some of the highest taxes in the world, and complain that they have not reaped enough of the benefits of the oil wealth.

Hearing those calls, the populist Progress Party had during the campaign vowed to abolish a rule limiting the government's use of the oil fund to four percent in normal times to balance its budget.

The pledge, along with an ultra-restrictive stance on immigration, won the hearts of 22.9 percent of voters and the party gained three more seats in parliament compared with its election results four years ago.

AFP / Expatica

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