Worst is yet to come – or will the Norwegian companies succeed in 2021?

2020 hasn’t been the best year for Norwegian companies. Although many industries in the world successfully coped with the impact of the pandemic, not all the companies managed to survive. Going digital was a leading challenge for every single company in the world. Some countries effectively recovered from the crisis, but it seems like some Nordic countries are still struggling to adapt to current conditions. Despite the fact that the technologies are rapidly evolving in the entire Scandinavian region, Norwegian companies still face great challenges, and predictions about their future are not really positive.

The business activity in the country hasn’t been favorable for the last few months. In order to slow down the speed of the virus, many companies are still shut down or working remotely which negatively affects the economy of the country. Problems of the Norges Bank, the central bank of Norway is the main reason why local companies are quite anxious about the future. And it’s not that just a few people are pessimistic about the future of the Norwegian financial sector. In fact, 300 business leaders were interviewed about the future of their finances, and most of them are not hopeful about future developments.

According to the last Regional Network report, the increased number of coronavirus cases damaged business activity and most of the companies believe that this reduced activity will remain the same in the next six months. However, they haven’t said anything about future developments as nobody’s sure if the situation will change for good or if the virus continues to harm the entire financial sector. As the leaders of the Norwegian companies say, everything depends on the infection rates and how it will be controlled in society.

Results of going remote

During the lockdowns, most of the Norwegian companies were forced to shut down their offices and start working remotely. While plenty of businesses in the world found out that working remotely is actually easier than going to the office every day, Norwegian businessmen reviewed the negative effects of remote work. Specifically, in the interviews, they mentioned that the tendency of going digital may lead to higher levels of unemployment as they don’t need so many employees as before. But decreased business activity is not the case with all Norwegian industries.

In fact, the performance of the online gambling industry in Norway actually improved in the last few months. After the shutdown of land-based casinos, more and more players are registering on the Norwegian online casinos and as a result, they are encouraged to improve the service and meet their customers’ needs. New casinos on the Norwegian gambling market are one of the few companies that were positively affected by the pandemic. Many companies already reported an increased number of customers and are hopeful about their performance in 2021. However, the same can’t be said about land-based casinos. Although physical gambling has always been a popular activity for Norwegian people, as it’s strictly regulated by the government, now players tend to switch to online services as it’s more convenient and nobody knows whether they will return to land-based casinos when they finally continue to resume working, or not.

Will unemployment rise in Norway?

Physical gambling companies in Norway are not the only ones that struggle at the current moment. Recently, the oil supplier industry and the municipal and hospital sector experienced major declines in employment. Although there was a small rise in the employment rate last week, experts believe that it’s just temporary and unemployment levels will continue to increase. The reason is simple to understand – now as they went remote, companies need fewer employees than before and people who lost jobs in Norway have no further opportunities to find jobs.

However, these companies probably don’t have a real reason to worry about unemployment because Norway is widely known for its high unemployment rate and in general, high standards of living. As you can see, the statistics show that the current unemployment rate is lower in Norway compared to most other countries. Usually, the country has a high labor force participation rate which is why it’s too early to worry about this small change.

Another thing that the leaders of the companies pointed out in the report is that the construction of private commercial buildings has almost stopped in the country. This means that they are unable to expand their businesses. These new buildings are needed to establish new branches but for now, the process is delayed which is why they are pessimistic. Not expanding business means that they will no longer be able to employ more people. However, still, it doesn’t mean that just the fact that new buildings of these companies won’t be constructed, doesn’t mean that the unemployment rate will increase. They won’t be able to establish new buildings, but those that are already in the process will be completed and the companies will have the opportunity to open new branches in the first or second quarter of 2021.

Danske Bank is surprised by the pessimistic predictions

A new report shows that most of the leading Norwegian companies are very pessimistic about the future and believe that their performance will worsen in the following year. As the chief economist  Frank Cullum of Danske Bank, the central bank of Denmark points out, he is really surprised by the concerns of the Norwegian business community. He believes that Norwegian companies shouldn’t be so pessimistic for 2021 because not many things have changed since the previous survey back in August.

In fact, looking at the current situation, he believes that some details show higher optimism in all sectors which is why Norwegian companies shouldn’t be so concerned about future performance. Only one expectation is a service of households which was really badly affected by the new restrictions related to the infection. To sum up the result of the interviews, the companies expect a wage increase of 1.9% this year and 2.4% for the next year averagely. Considering the worldwide crisis and the fact that most of the leading companies are currently struggling, these predictions are actually hopeful. Therefore, as the CEO believes, Norwegian companies still have great chances to succeed in 2021.

, IPS, Wire


Mubeen Khan