The turnstiles are left open on Oslo’s impeccable network of subways and trams. Perhaps it is because Norwegians can be trusted to pay the high fares, or perhaps because the city is rich enough anyway.
I crossed this week from one country on the northern edge of Europe to another. The UK is panicking about its lack of a Brexit plan; Norway is planning for the decline of its oil and gas industry but lacks panic.
Anita Krohn Traaseth is a child of oil: she was born in 1971, the year that it started to be pumped from the Ekofisk field in the North Sea. “Look at my generation. We do not know what a national crisis is. We were raised with oil and wealth,” says the chief executive of Innovation Norway, a development body. She gestures like a drug addict putting a needle into a vein.
It is a problem of affluence, but a problem all the same. This week is Oslo Innovation Week, a gathering of technology start-ups, venture capitalists and Norwegian companies such as Statoil, the state-owned oil and gas company. The theme is omstilling, the name for Norway’s nascent shift to living without the energy industry that has brought it wealth and welfare for 45 years.
Why hurry, some wonder. Its 5.2m citizens are among the world’s comfiest, with gross domestic product per head of $75,000. Its oil-funded sovereign wealth fund, set up in 1990 to help it avoid “Dutch disease” — the syndrome of resource wealth driving up national currencies and weakening other sectors — is worth $880bn. Its oil and gas reserves should last for another half-century.
The trouble is that Norway is too comfortable. It takes a crisis to get most people to change their ways radically or for an economy to adjust the way that it works. Whatever you think of Brexit, it is one of those crises. At the moment, Norway has more official think-tanks and innovation incubators than entrepreneurship and disruption.
It has had a bit of a shock in the past two years. The electronic ticker on the side of one Oslo bank shows only the price of Brent crude, the best guide to the country’s financial health. Its fall since 2014 has hurt Norway’s trade balance and made the government tap the sovereign wealth fund’s capital by $27.7bn, or $5,330 per citizen, to fill its budget hole this fiscal year.
Another sign of stress is the recommendation this week by a committee of experts that the sovereign wealth fund should invest more in equities, taking higher financial risks to raise its expected rate of return. The global fall in bond yields means that Norway’s energy wealth will not earn as much as its people once expected.
The oil fund is exemplary in many ways: by taking the wealth largely out of the hands of the government and directing it into overseas investment, Norway has avoided the worst of Dutch disease. But it adds to the sense of the country having a cushion against change: the fund’s very existence extends its deadline to reshape the economy.
The citizens are also cushioned. The government devotes the equivalent of 20 per cent of “mainland” GDP — the output of the non-energy economy — to social benefits, and Norwegians work 80 per cent of average hours in OECD countries, the equivalent of one less day a week. The energy sector is highly paid and productive but productivity growth elsewhere has lagged behind.
Norway has the potential to adapt. It has less of a human resources challenge than the UK: its people are well educated and offshore exploration requires engineers with skills that are useful in technology and software. The most coveted attainment for an 18-year-old is not to become a banker but to study engineering at the Norwegian University of Science and Technology.
But this potential has to be exploited and Norway remains hesitant about change. There were plenty of young people touting start-ups at Innovation Week but many work part-time for big companies and experiment with entrepreneurship in their spare hours. They do not need to take the plunge.
Norway is a consensus-driven society that feels comfortable only with reform that has been carefully discussed and agreed. Many large companies, including Statoil and Norsk Hydro, are owned or controlled by the state and Norwegians do not want them to be undermined. They like the idea of creativity but fear disruption.
Still, there were signs of progress at Innovation Week. One was a gathering of farmers, fabric companies and designers dedicated to reviving the wool industry. Unlike Sweden and Denmark, oil-rich Norway failed to climb the value chain into fashion when production moved offshore to countries with cheaper labour in the 1970s.
There I met Elisabeth Stray Pedersen, a 29-year-old fashion designer who last year bought a factory opened in 1953 by the designer Unn Soiland Dale. She wants to revive its Lillunn brand and sell more of its Norwegian wool blankets and coats abroad. “People have lost jobs in the energy industry and it sends a signal to young people that we need to do something different,” she says.
Ms Stray Pedersen has her own fashion brand, which she calls Lillunn’s “rebellious younger daughter”. Norway needs more of those.
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Norway is on course for Keynes’ 15-hour workweek / From Ira Sohn
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