Labour cost affects combativeness

Labour cost brain technologyNorway is still at the forefront of technology, but labour cost is a detergent. Photo: Pixabay.com

Labour cost affects knowledge combativeness of Norway

The high cost of labour reduces Norway’s ability to compete in knowledge-intensive fields. According to The Geography of Europe’s Brain Business Jobs, the latest report from the European Centre for Policy Reform and Entrepreneurship (ECEPR), supported by NC Advisory AB, advisor to the Nordic Capital funds, Oslo is a hotbed for ‘brain businesses’ – companies that compete through their brainpower and expertise.   

 

  • In Oslo, close to 13% of the working age population is employed in highly knowledge-intensive firms. This is near twice the national average
  • The high cost of labour reduces Norway’s ability to compete for knowledge workers.
  • Regional differences in Norway are significant. Knowledge-jobs need to develop also outside the capital region.

The new study, which is aimed at businesses and investors making a strategic choice about where to locate or invest, shows that 12.6% of the working-age population of Oslo is employed in highly knowledge-intensive companies. This is more than Amsterdam, Brussels, Vienna and Berlin.

On average across Europe, 5% of the working age population is employed in knowledge-intensive jobs.

Dr Nima Sanandaji, President of the ECEPR, says that the overall trend is that Central- and Eastern European countries are catching up to Northern and Western Europe.

“We already see that countries such as Estonia, Czech Republic, Hungary, Slovenia and Latvia have all surpassed France in brain business jobs concentration.”

Weaknesses and strengths

In terms of industry sectors, Norway has particular strengths in publishing, film/TV/music and R&D. The country is however not performing as well in head offices & management, high-tech manufacturing and advertising & market research.

In Norway, brain business jobs are highly focused on the Oslo region. Other strong performers are Trøndelag (6.3%) and Agder og Rogaland (5.4%). The lowest share of Brain Business Jobs are found in Hedmark og Oppland (2.8%) and Nord-Norge (2.9%). The geography of Norway explains the regional disparities.

Dr Sanandaji explains:

“In a time when Europe is rapidly moving towards a knowledge-intensive economy, it is important for regions to develop brain business jobs. These jobs are the driver for future economic well-being, and need to evolve not only in the capital region but throughout the country.”

 Cost of living a major obstacle

Europe is increasingly a skilled-based economy, with growth happening where the brains are. A new generation of IT-specialists, engineers and other knowledge workers are emerging from the universities of Central and Eastern European countries. While some of these talents do move to places such as Oslo, Zurich and Bern, many settles in the capital regions of their home countries.

The key to the success of knowledge-intensive industries is to attract talent. Regions with a very high cost of living face a disadvantage. Here firms must pay high wages for programmers, engineers and the like. This is a major obstacle to Norway’s rise as a knowledge economy.

Dr Sanandaji concludes:

“The study finds that knowledge regions with lower costs of living and correspondingly lower wages have a competitive advantage. Bringing down the cost of living is key for long-term performance since it affects the cost of business for hiring a skilled programmer or engineer. Increasingly, we will see that individuals rather than moving to Oslo and Zurich will stay in places such as Bratislava, Budapest or even Bucharest and sell their services on the international market. Much like China became the manufacturing hub of the world, the capital regions of the Central and Eastern European nations are becoming the new brain business centres”.

 

© ECEPR / #Norway Today

 

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