Arne O. Holm says Why Do Businesses in the North Insist the Earth is Flat?
No, North Norwegian business and industry. The earth is not flat. (Illustration: Claus Lunau/Science Photo Library)
Commentary: Economic theory indicates that the price of goods increases when there is a shortage. Not so in Northern Norway. There, the earth is still flat in some industries.
No, I am not talking about salmon prices. In that market, supply, and demand work according to the laws of economic gravity. High salmon prices lead to rocketing profits on the bottom line as long as demand in the international market is higher than production can supply.
Margins are so solid that some producers can afford to allow 25 percent of their fish to die instead of being served on dinner tables. It is called production waste and is clearly part of life. For the owners, not the fish.
The fight against gravity
The fight against gravity starts when it comes to the human resources.
Almost every industry in the High North complains about shortage of skilled workers; be it in tourism, the public sector, the fish industry, construction business, transport sector… There is a shortage of workers all over, in particular in industries requiring a certain set of skills.
And an increasing number of industries do just that. Automatization quickly replaces unskilled workers while the demand for skilled workers and academics increases. It does not necessarily mean fewer jobs; it just means that workers are moved to new and more productive assignments in the production chain.
It is called production waste and is clearly part of life. For the owners, not the fish.
Even in strictly service industries, such as trade, those at the till are replaced by self-service checkouts. When customer contact is reduced to confirming your age after scanning a six-pack of beer, security guards will soon be the only customer service people available in Norwegian grocery shops. Instead, specially educated professional workers will make sure you leave the shop with four frozen pizzas when you really just came in for one.
Constant shortage
As long as population figures continue declining in the High North, there will be a constant and increasing lack of available workers.
North Norwegian companies first and foremost compete with companies located further south in the country. And this is where local business tries to fight gravity.
It led to a rush. Everyone craved Coke.
Rather than increasing salaries, the average is 10 to 20 percent lower than for similar industries in south central Norway. The explanation why is not found in the companies’ accounts. For a long time, North Norwegian companies have had the same or even better profitability than that of similar companies in south central Norway.
Business alone cannot fix the population deficit in the High North. But it can help mitigate.
Today, the situation resembles that of the local grocer in Lofoten who stopped selling Coke in his shop.
Because it led to a rush. Everyone craved it.
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This commentary was originally published in Norwegian and has been translated by HNN's Elisabeth Bergquist.