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Bergen is not a place to go looking for supercars
racing around
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Hugged by mountains and
perched on a stunning coastline of fjords, Bergen, Norway's second-largest
city, has picture-postcard views.
As the centre of Norway's booming oil and gas industries,
it is also a very wealthy place.
Yet there are few displays of ostentatious spending -
there are no supercars with tinted windows, no designer handbag shops, and no
queues of people outside exclusive nightclubs.
For while other countries have struck oil and then
binged on the revenues, by contrast Norway is continuing to invest its oil and
gas money in a giant sovereign wealth fund.
The fund, worth about $800bn (£483bn), owns 1% of the
entire world's stocks, and is big enough to make every citizen a millionaire in
the country's currency, the kroner. In effect, it is a giant savings account.
And most Norwegians are seemingly very content with
this - according to a 2012 study by
New York's Columbia University Norway is one of the world's happiest countries.
"We had to invest a lot of money before we could
spend anything," says Prof Alexander Cappelen, from the Norway School of
Economics, explaining why the country has apparently avoided the pitfalls of
vast wealth.
"In other countries the oil is much easier to
extract, so they got the money straight away.
"We were put in the right mindset by knowing it
was a long-term plan."
Trusting the government
So, no spending bonanza for Norway. In fact there is a
closely followed guideline that only 4% of the surplus from the fund is spent
or invested in public projects.
"Actually we are spending less than 4% currently
- we are saving," says Prof Cappelen.
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Norway's economy has been transformed by its oil boom
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There are several reasons, he says, why Norway is
happy to save its wealth and shrug off the temptations of a luxury life.
"For this kind of system to work, you need to
have an enormous level of trust," says Prof Cappelen. "Trust that the
money isn't going to be mismanaged - that it's not going to be spent in a way
you don't like.
"As
a result of social democracy and egalitarian policies it is a homogenous
society and has built up an enormous level of trust.  |
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Norway is in a fortunate position, says Finance
Minister Siv Jensen
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"We trust the government. We believe our tax
money will be spent wisely. once you start trusting that others are
contributing their share then you are happy to contribute yours."
So is Norway rich because of Norwegians high level of
trust, or are its citizens trusting because they are rich?
"I think it is both," says Prof Cappelen.
"High levels of trust make economic growth easier."
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Norway is already planning for when its oil and gas
reserves run out
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But this oil boom is tailing off. So what's next?
"Norway's economy is in a very fortunate
situation. We are talking about a gradual shift over the next few years,"
says Norway's Finance Minister, Siv Jensen.
"We have had a slower growth in productivity over
the past few years, and for this government we have to look at a competitive
tax level and reducing red tape to attract investment.
"But it is true we have a higher cost level than
any comparable country."
'We respect hard work'
Those
costs can be quite shocking for a visitor. In cafe overlooking Bergen's fish
market, while sipping a cappuccino costing almost US$10, Tone Hartvedt from
Business Region Bergen explains that costs are simply comparable to wages. |
| It isn't cheap for Norway to get at all its offshore oil and gas deposits |
"It may sound surprising, but for us it is not
too expensive," says Ms Hartvedt. "We tend to have summer and winter
holiday houses or cabins, and we can afford life here. It is comfortable."
This is surprising to the uninitiated visitor - after
a trip to the local supermarket revealed that the cheapest pasta, bread, cheese
and chopped tomatoes would come to around $50.
But, says Ms Hartvedt: "We pay our workers a wage
that means they have a good quality of life. That is not so much the case in
places like London.
"Here we respect hard work, but we don't believe
that the highest paid worker in a company should earn vastly more than the
lowest paid.
"This does mean that some very talented people
leave for other countries where they will be paid more."
So, do people in Norway regard themselves as rich?
"No, we don't think of things like that, it's for the future," she
says.
Economic challenges
On an island half an hour from Bergen, is Coast Center
Base (CCB), a huge support centre for the oil and gas industry. There's a rig,
fire engine red and vast, sitting in the harbour being checked over.
"I remember the days when there were plenty of
farmers and fish farmers in Norway. Life has changed for the average
Norwegian," says CCB's chief executive, Kurt Andreassen.
"This
base was started up in 1974, and there has been a tremendous change in those
decades. The welfare is now very high. It is quite different to 40 years ago,
many people are educated - things have changed."
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Norway's shoppers are not often able to take advantage
of a good bargain
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As for when the oil does eventually run out,
"Norway will survive, but it will be a challenge for all of us," he
says.
"Our challenge will be to utilise our expertise
and use it in other areas."
It's a point of view echoed by Dag Rune Olsen, rector
of Bergen University: "I worry we do not invest to a sufficient extent in
other ways to generate income in the next decades.
"We are very well aware that the oil and gas
resources are limited, and at least for Norwegian oil it will cost us more year
by year to extract the oil," he says.
"It is evident we need to find other sources of
income, and now we have the ability to invest - it is crucial that we do."
'We will get jobs'
Perhaps this awareness that it won't last forever goes
some way to explain the second-hand Volvos circling Bergen's winding streets,
rather than the Porsches or Bentleys of wealthy parts of London.
Prudence and pragmatism rather than posing seems to be
the attitude.
While there is an inkling of concern for what will
become of Bergen, and Norway, when the oil runs out - most Norwegians remain
confident about their prospects.
"We are in Norway, we are not worried about these
things," reply students at the Norway School of Economics, slightly
uncomfortably, when asked if they are concerned about jobs.
"We
will work hard and we will get jobs."
By
Sarah Treanor
Business
reporter, BBC News, Bergen
Culled From BBC.com