High unemployment costs Norway billions

NAV South Western NorwayNAV,logo.Photo: Norway Today Media

Over time a high level of unemployment  costs society large sums. An economics professor has estimated the costs to be up to 35 billion kroner per year.

Professor Torberg Falck at NTNU says there are many ways to calculate the cost of the increase in unemployment , but says the biggest cost is in the value creation that gets lost, the  newspaper VG writes.
– The cost to society as a result of high unemployment are the resources that go unused. We lose the  value that would have been created, by people who want to work, but not being allowed to do so, he explains.
He estimates that there are around 50,000 more unemployed than what would be necessary for a normal adjustment. On average, the cost of one Norwegian FTE, is   700,000 kroner in salaries and social charges, payroll, pension costs and the like. If you multiply the two figures, you end up with an overall cost of 35 billion kroner.
– Part of the cost is paid by the state. The individuals  also pay  a large amount of the costs, in that their  income is lower than it otherwise would have been, says Falck.
Ole Christian Lien Nav says another important costs, is the cost of the payment of unemployment benefits. The total amount paid in unemployment benefits has increased by 38 percent over the past two years. It is expected that 16 billion kroner will be paid in unemployment benefits to unemployed this year,  Lien says.


Source: NTB scanpix / Norway Today