Friday, 3 August 2012

The spending spree continues: Norway's bloated public administration expands by 9,000 staff

E24. no, a Norwegian online newspaper, reports that the number of staff working in public administration in Norway increased by 9,000 during the last year. This means that 39 bureaucrats were added every single working day during the last year. Remember that Norway is a small country with a population of only about 5 million. The figures were based on figures released by Statistics Norway (here's the article in Norwegian).

If we assume an average salary of NOK 453,600 p.a. (the lower end average salary in the public sector, excluding overtime) and that 50% of the increase was part-time employees this expansion in public sector staffing leads to an additional costs of NOK 3.062 billion (USD 507.761 million), every year, and that is not counting national insurance contributions, office expenses and miscellaneous expenses attached to the cost of employment. Further, assuming this added headcount continues in perpetuity and a nominal discount rate of 2.38% (the current yield on the 10 year Norwegian government bond), the present value of this added headcount is NOK 108.191 billion (USD 17.942 billion). The growth in Norwegian public spending continues despite an already bloated public administration and despite a revised budgeted "structural, non-oil deficit" (the central government fiscal deficit which excludes income from oil and gas) expected to be around NOK 111.7 billion for 2012 (the biggest central government deficit ever). All financed by one of the highest overall tax burdens in the world and the country's huge oil fortune.

The Norwegian state continues to expand at the expense of the private sector, taxpayers (especially those in the private sector) while at the same time reducing the country's potential wealth substantially. It is inefficient use of the country's financial resources and it needs to stop, and it needs to stop now. Norwegian government spending is completely out of control and voters (especially again those working in the private sector) and the opposition parties need to end this expansion and mismanagement of the country and its financial resources and make sure the current socialist government lead by prime minister Stoltenberg is not re-elected to yet another term next year. See articles in the A Financial Analysis of Norway series for further insights.

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