Aging of nation, lower oil revenues and expanding public sector – all that can stifle growth of the Norwegian economy, argues Professor Jørn Rattsø, the leader of Productivity Commission, according to Dagbladet.
In the course of the past two years professor in economics Rattsø examined how the state, municipalities and businesses in the long run can act smarter in large and small. On Thursday Productivity Commission came with a new report. Its message sounds gloomy:
If the productivity continues to grow slowly, the income eventually will reach zero, and the burden of taxpayers may rise to well above 50 percent. Productivity growth must get faster in order to avoid this, summarises Aftenposten.
– We haven’t noticed
In the years 1996-2005, the productivity growth of Norwegian industry per employee was 3% annually. In the period from 2006 to 2014 it increased by only 0.8% annually.
– We have had ten years of historically slow growth of productivity, but people have not noticed it. High oil prices and use of oil money have brought the high incomes and masked the slow productivity growth, says Rattsø to Aftenposten.
The Commission’s figures show that the household tax can rise from the current level of 37% to around 65% in 2060, if nothing is done.
New industries needed
In an article in Dagens Næringsliv Rattsø writes that oil will continue to be a part of the Norwegian economy, but that new revenue must be created in new industries.
– We must embrace digitization, automation, robotics and sharing economy. The growth must be based on knowledge that can utilize international technology development, he writes.
Rattsø also points out that the education system needs to be changed and believes that universities has to a great extent focused on educating for public sector rather than focusing on science and technology students.
– We have no world-class universities. Basically we score low on innovation and entrepreneurship.