This report examines the performance of the Public Employment Service (PES) and the effectiveness
of activation strategies in Norway. It covers the role of the key actors in labour market policies, the
placement function of the PES, the structure of benefits for the working-age population out of work and the
related incentives and disincentives for taking up work, and provides an overview of the different active
labour market programmes.
Over the past few years, labour market conditions in Norway have been better than in most
OECD countries, reflecting strong economic and productivity growth. The global financial and economic
crisis and the significant decline in oil and gas prices observed since the second half of 2008 are affecting
the short-term economic prospect, with some deterioration in labour market conditions.
Despite its relatively strong labour market performance, the main challenge for Norway is to mobilise
underutilised labour, as nearly a fifth of the working-age population is out of work and receiving
health-related benefits. In contrast, the take-up of unemployment benefits has been limited despite their
generosity – both in terms of duration and net replacement rates – by strict eligibility criteria and the
implementation of mobility and other mutual obligation requirements in Norway.
The Norwegian Government has put forward several major policy reforms to contain benefit dependency
and to prevent people from leaving the labour market too early or on a long-term or permanent basis. In 2006, a
new institution – NAV – was launched, merging the State PES and the National Insurance Administration,
and bringing them together in front-line offices with municipal services providing coordinated services for
all clients.
Several other changes to activation strategies are also underway. The new NAV employment services
are systematising their early intervention and follow-up strategies for all jobseekers. Greater incentives have
also been built into labour market programmes in particularly for social assistance clients.
In spite of these important reforms, there remain a number of challenges to counteract sickness
absence. It is now widely recognised that long-term sick leave is the initial step to disability benefit in
many OECD countries. Early intervention in the form of case-by-case monitoring of sickness absence in
Norway – which requires collaboration between employees, employers and NAV – has so far not been
successful in delivering the desired outcomes.
Finally, vocationally disabled people represent the largest group of participants in labour market
programmes. Half of them engage in lengthy retraining in mainstream education and training courses. But
further efforts have to be made to tailor active programmes to the needs of this group as well as other
jobseekers such as older workers and immigrants.
