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How Norway’s weak krone could affect your wages this year

The effects of Norway's struggling krone have been felt across everyday life in the country. Ahead of wage negotiations between unions and employers, the future strength of the currency could impact salary rises. 

Published: 8 March 2024 11:57 CET
Updated: 20 March 2024 12:15 CET
Pictured are people during a meeting presentation.
Norway's weak krone could yet affect how much your wages increase next year. Pictured are people during a meeting presentation. Photo by Rodeo Project Management Software on Unsplash

Norway’s krone has plummeted against other major currencies in recent years, impacting everything from inflation to interest rates as a result. 

For some sectors of Norwegian industry, the weaker krone has actually been good news. This is because Norwegian exports have become cheaper and, therefore, more attractive. 

Norwegian exports becoming more attractive has resulted in a healthier balance sheet for many companies in Norway. 

In the coming weeks, unions will lock into negotiations with employer organisations to negotiate this year’s collective bargaining agreement. 

Pay and rights in Norway are governed by collective agreements (tariffavtaler), which typically have a duration of two years.

READ MORE: What is a Norwegian collective bargaining agreement?

Every alternate year, employers and unions engage in renegotiations of the entire collective agreement, known as the main settlement (hovedoppgjøret).

This year’s talks are centred on a main settlement. Ahead of talks, unions have said they want to secure a real wage increase this year. This is where wages rise more than inflation. 

Unions have already said there is a willingness to strike among members if favourable terms aren’t secured. 

The Confederation of Norwegian Enterprise (NHO) is one of the largest parties representing employers at the negotiating table. 

One of its three principles heading into negotiations is to secure businesses and jobs. For this to happen, any wage rises must ensure that Norwegian industry remains competitive.

A fluctuating krone would threaten Norwegian competitiveness if wage increases are too high. 

“In order to secure businesses and jobs, wage developments must safeguard the industry’s competitiveness. The krone exchange rate has been shown to vary a lot, and the wage supplements that are given now must also be able to withstand if the krone were to strengthen,” the NHO’s negotiation principles read. 

It has also pushed for flexibility in negotiating a reasonable portion of the wage increase at a local level to protect businesses and industries that are struggling. 

“There is still a lot of tension in the team. Many companies are doing well, while others are struggling. It underlines the importance of a good balance between central and local negotiations that provide opportunities for adaptations to the individual company’s financial situation,” CEO of the NHO, Ole Erik Almlid, said in a press release. 

How likely is it that the Norwegian krone strengthens significantly? 

The Local recently spoke to Dane Cekov, a currency strategist at Nordea. The currency expert told The Local that there were signs that the krone was starting to stabilise. 

“For now, it would seem that the krone exchange rate against the euro and US dollar appears to be stabilising. Still, a lot can happen this year… Since the New Year, it has been pretty much stable, from 11.2 kroner against the euro to trading for roughly 11.4 in the last few months,” Cekov said.

“So yes, I think, if nothing crazy happens this year, it should trade around here for a while. But overall, we expect it to end up closer to 11 than 12 kroner against the euro at the end of the year,” Cekov said.

However, external factors, like inflation in the US could lead to a further fluctuation for the Norwegian krone. 

READ MORE: What’s next for Norway’s weak krone?

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MONEY

EXPLAINED: How wealthy is the ‘average’ Norwegian? 

Norway is known for its high wages and stable economy. New figures have revealed the wealth of the average resident in the Nordic country. 

Published: 23 April 2024 15:50 CEST
EXPLAINED: How wealthy is the 'average' Norwegian? 

High salaries go hand in hand with the high cost of living in conversations about Norway.

However, other factors, such as high homeownership rates, indicate that there is plenty of disposable income for locals to save and invest in their futures. 

Previous studies have also suggested that Norwegians are the seventh wealthiest nationals in the world. 

Norway’s national data agency, Statistics Norway, has compiled its own set of figures indicating that the average Norwegian household has a net wealth of around 3.8 million kroner. 

Net wealth accounts for everything a person owns, including property, stocks, or cash, minus any debts or liabilities. 

The vast majority of this wealth was derived from the estimated value of property. This alone gives the average Norwegian an estimated wealth of 3.74 million kroner. 

READ ALSO: How much does an apartment in Norway cost?

The value of second homes was included, which skewed things as only around 10 percent of households owned a secondary residence. 

The average price of a home in Norway was 4.5 million kroner in March of this year, and house prices have increased substantially in recent years. 

Savings, cash, stocks and other capital accounted for 1.72 million kroner, giving Norwegians an average wealth of 5.46 million kroner. Average debts of 1.68 million kroner gave Norwegians an average net wealth of 3.8 million kroner.  

The figures from Statistics Norway were obtained using figures from tax returns for 2022, which were submitted in 2023.  

Those aged between 67 and 79 years old were the wealthiest generation in Norway on average. This is partly because they have more capital than most other groups and more expensive property. 

However, the most significant factor is the lower levels of debt. They had half the debt of the next richest group, those aged between 55 and 69. 

Younger age groups weren’t as wealthier as they had much higher debts and lower capital. 

Still, Norway’s wealthiest individuals significantly boosted the average. When using the median, the average Norwegian household had a net wealth of just under 2 million kroner. 

When the median was applied to capital, the figure was 339,300 kroner compared to the average of 1.76 million kroner. 

The large difference in capital was attributed to Norway’s wealthiest individuals significantly pulling up the average. 

“This is mainly due to large fortunes in shares and securities, where a few own very much. Shares and other securities and share savings accounts are assets with a median value equal to zero, which indicates that these are not important asset items for most households,” the report said. 

Money kept in the bank was still important for most residents of Norway, though. The median value of bank deposits in Norway was 215,000 kroner, compared to the average of 600,000. 

The gulf between the average value of property owned and the median was roughly 500,000, with the median being 3.25 million kroner. 

Furthermore, Norway’s median debt level was around 860,000 kroner compared to the average of 1.67 million kroner. Around 85 percent of Norwegian households were in some form of debt. 

Significant differences also exist between Norway’s wealthiest and poorest residents. Residents belonging to the country’s poorest ten percent had an average net wealth of almost minus 1 million kroner. 

Meanwhile, Norway’s wealthiest ten percent had a net wealth of 19 million kroner. The top 50 percent also owned considerably more than the bottom 50 percent. 

“Despite the former comprising 1.27 million households, while the latter comprises approximately 25,000 households, the bottom 50 percent own only 4 percent of the total net worth, while the top 1 percent owned as much as 22.3 percent in 2022,” the report read. 

There was also significant variation in wealth depending on household type. For example, a single mother or father with a child aged between 6 and 17 had a net wealth of 2.24 million kroner, compared to a couple with children of the same age with an average net wealth of 5.12 million kroner. 

Typically, households with more than one person had more money as more than one wage earner likely lived at the address. 

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