Wealthy Nordic Countries Dealing With Shock Of Sudden Huge Job Losses

The Nordic region – comprising Denmark, Norway, Sweden, Finland, and Iceland – has long been lauded as a paragon of peace, prosperity, equality and stability. However, in the wake of the coronavirus pandemic, the area has suddenly been jolted by hundreds of thousands of job losses.

Bloomberg estimated that in this corner of the globe of some 27 million people, nearly 630,000 people have been temporarily laid off in the past few weeks and another 105,000 have been fired outright.

Of those figures, Norway has recorded 279,000 temporary layoffs and 29,000 other jobs lost; while Finland incurred 281,000 layoffs and 4,900 redundancies. Denmark, Sweden and Iceland have recorded fewer job reductions.

Some very large and well known companies have enacted huge job cuts -- truckmaker AB Volvo (VLVLY) placed its entire 20,000 workforce in Sweden on a short-term, temporary lay off; airlines SAS, Finnair and Norwegian Air have all put nearly all of their workers on leave; Scandic Hotels Group AB laid off 50% of its permanent workforce; and Swedish fashion retailer Hennes and Mauritz (better known as H&M) have laid off thousands.

It’s “easy to imagine that the high numbers we are seeing will increase dramatically if the economy doesn’t get restarted within a relatively short time,” said Helge Pedersen, chief economist at Nordea Bank in Copenhagen.

Such a sudden explosion of job cuts might be unprecedented in the region’s recent history.

Ole Erik Almlid, chief executive of the Confederation of Norwegian Enterprise, described the turn of events as “a tsunami” that has slammed the country’s businesses. “And it’s getting worse,” he added.

Similarly, Knut Hallberg, senior economist at Swedbank, said the economic malaise across the entire region is “severe.”

Of course, the shock of joblessness will be cushioned by generous welfare benefits, including unemployment insurance payments, universal health care and free education.

For example, Denmark will cover 75% of wages paid to some private sector employees who lost their jobs through June 9 up to a maximum of 23,000 Danish kroner ($3,377) per month.

“If there’s a big drop in activity, and production is halted, we understand the need to send home employees. But we ask you: Don’t fire them,” said Danish Prime Minister Mette Frederiksen.

However, Hallberg at Swedbank warned that young college graduates just entering the workforce may face daunting challenges.

“If [the crisis] lasts only a couple of months or a couple of quarters, it’s not a problem,” he said. “But three to four years of unemployment after school could destroy career potential and lead to lower income for life.”

Indeed, Norway – at 12.7% -- now has its highest unemployment rate since World War II.

“The development in the Norwegian labor market over the past [few] weeks has no historical precedent,” said Sigrun Vageng, the head of the Norwegian Labour and Welfare Administration, Norway’s state welfare agency, or NAV.

NAV also said its offices have been overwhelmed by tens of thousands of newly unemployed workers seeking benefits.

“There’s enormous demand,” said Elisabeth Steen of NTL Nav, a NAV employees’ labor organization. On a normal day they process about 100 applications – now it’s untold thousands.

“It’s very difficult to respond to everyone calling in to us now,” said Cathrine Stavnes, a county director of NAV in Nordland, a county in northern Norway. “There are also a lot of people visiting our offices. Practice varies from office to office whether they’re keeping the doors open, but we want as much contact as possible to occur only online. The pressure is very high right now, and we have lines of people waiting for service. We’re asking the public to be patient with us.”

By sector, some 25% of Norwegians in the tourism and transport industries are now unemployed, while the figure is 20% for those in retail and sales.

Teachers have the lowest level of unemployment, at only 2.5%.