Reduced unemployment can show a ‘Billion Effect’

NAVNAV.Photo: Norway Today Media

If Nav’s prognosis of 4,000 fewer unemployed this year is correct, it will provide the public with a 1.3 billion increase for spending.

The Ministry of Finance has calculated the effect of people transitioning from unemployment to work.

The figures have been submitted to parliament, writes the newspaper VG. For the public, after people get jobs it provides a double benefit; firstly by cutting spending on unemployment benefits and secondly by increases in tax revenues.

If 1,000 people go from unemployment to work, the ministry has calculated that it means 227 million less in unemployment benefits and 95 million more in paid tax.

If Nav’s estimate of 4,000 fewer unemployed is correct, the two effects working together will be close to 1.3 billion.

‘I think Prime Minister Erna Solberg, and Minister of Finance Siv Jensen’s pulses are calmer now, after last week’s downgraded unemployment projections for the next two years from NAV’, says chief economist Terje Power in NyAnalyse.

However, he warns against believing in rapid change.

‘It will take a long time for the labor market to recover. We constantly see downsizing, but fortunately there are also many thousands of new startup jobs.

 

Source: NTB scanpix / Norway Today

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