More than 100,000 people have been temporarily laid off in Norway because of the coronavirus crisis. Many more will likely follow. Here's what “permittering” means during these highly unusual times.

At the time of writing, an unprecedented number of people have been temporarily laid off in Norway because of the coronavirus crisis. Emergency legislation has allowed businesses to dismiss their staff with just two days’ notice. As the krone plummets to a record low, we ask what will be the long-term repercussions for economy?

What is “permittering”?

In Norway, employees can be ‘permittert’ from their job, meaning they are ‘temporarily laid off’. The employer is then temporarily exempt from pay obligations. However, the employment relationship remains, and it is assumed that the work stoppage is only temporary.

Read more: Coronavirus in Norway: The Latest News

Generally, ‘permittering’ is used when companies are going through financial difficulties. If it is likely the layoff will be permanent, the company is obliged to terminate the contract. Workers’ rights are passionately protected in Norway and the burden for proving the necessity of any dismissal has always laid firmly at the employer’s door.

Over the past few decades, Norwegian employees have had excellent job security and enjoyed some of the best social benefits in Europe. Usually the rules are that when a company has to temporarily lay off staff, it must give the employee a minimum of two weeks’ notice and provide detailed rationale for Welfare and Labour Administration (NAV). The company is then obliged to pay full salary for the first 15 days after the employee has stopped work.

After this, the state takes over. From this point, the individual will receive 62.4% of their regular salary directly from the government (up to a salary cap of NOK 600,000) for a maximum of 26 weeks. There are of course many details and exceptions, which are covered in detail (in Norwegian) .

But the coronavirus is unprecedented – what was defined as ‘likely’ or ‘necessary’ in yesterday’s world, is less clear in today’s fluid times.

Layoffs during the coronavirus crisis

The big news here is that the Norwegian government rushed through emergency legislation in order to allow companies to only offer two days’ notice before their period of ‘permittering’ begins, and two days' payment.

Read more: Coronavirus: Hurtigruten Suspends Coastal Service For One Month

Many workers in the travel and hospitality industries, which have been particularly hard hit by the Norwegian regulations on social distancing, have effectively lost their jobs overnight. At the time of writing the number of those temporarily laid off because of the coronavirus was well over 100,000.

In the last week 185,000 people have applied for financial support from NAV, including approximately 90% of SAS and Norwegian Airlines staff. It is the highest level of unemployment since the Great Depression. Leading financial newspaper Dagens Næringliv has billed it .

One positive is that the hospitality industry has led the successful petition for laid off employees to get 100% of their salary for the first 20 working days in the wake of the crisis, instead of the standard 62.4%. This applies to all sectors, not just hospitality.

All things considered, it is a very accommodating parachute payment, which has been cobbled together to make the process easier for the hotels, restaurants, clubs, bars theatres etc. who have had to suddenly close their operations and are at particular risk from the ongoing crisis.

Having the status of unemployed also brings other social benefits to provide some welcome relief. For example, child benefit increases from the moment of registration. This demonstrates that some of the “safety net” social measures put in place over the years are effective when they are needed most.

It’s impossible to cover everything here as the rules are so complex, but you can get a good overview of the other benefits at . Just bear in mind that right now they are busier than ever before, so it may take some time to get queries answered.

The pros and cons of the emergency measures

The coronavirus is a worldwide crisis and the best way to deal with the economic fallout is, at this stage, a hypothesis at best. Countries are having to create emergency legislation, building upon the realities of their political systems. Norway is taking advantage of 10 trillion kroner emergency fund which the state has ferreted away for a rainy day. The latest figures from Finance Minister Jan Tore Sanner suggest that crisis management has cost the government NOK 280 billion so far.

Read more:��Comparing Coronavirus Response in Norway & the UK

It is a favourable start-point, but 1.5 million jobs already said to be “affected” by the crisis (equalling ¾ of the private sector workforce). The support is functioning and morale is high, the concern is that if the situation lingers the rising debt will cause businesses to close, and thus the temporary lay-offs will become permanent.

In the short-term, small business owners have been given a more flexible approach to managing workers’ rights, which gives them a lifeline to survive. Several restaurant owners in Trondheim have expressed their gratitude at this legislation, claiming they would have been bankrupt before the end of the crisis otherwise. The changes to the law allow them to tighten their belts, go into hibernation mode and rest assured that everyone in their industry is “in it together”.

The state has stepped up and put its hands in to its, admittedly deep, pockets. Laid-off employees are reimbursed more than usual (and that's from a starting point way above most European countries) which has generated public support for the policies.

Norwegians’ relationships with the state

The cultural togetherness of Norway has parallels with China’s authoritarian regime, in that the homogeneity allows the state to pass draconian measures which would not be so readily accepted by most European neighbours. Norwegians have, by and large, accepted these measures with a smile, confident in their government’s ability to steer them through these waters and get them back to work.

However, Norwegian workers are ceding a lot of authority to the state. Large companies are suddenly able to fire their staff without notice or the obligation to pay for the severance. There has been a snowball effect with a wide-range of industries jumping on the bandwagon, cancelling events, reducing services and changing plans for months in advance, causing major repercussions.

An economic crisis

The result is ghastly. What started as measures to contain a health emergency are now tools being utilized to mitigate an economic disaster. Norway is generally a conformist country and as such people have by-and-large toed the party line.

They have answered the call for social distancing. The streets are empty, all events are cancelled, parents are home-schooling their kids, people have stopped touching each other or socializing, Facebook filters urge people to #staythefuckathome, businesses have embraced home offices and everyone’s screen-time is up.

Read more: Quarantined King of Norway Addresses Nation

The running joke is that Norwegians, who are typically reserved and value their personal space, have been preparing themselves for such a crisis all their lives! However, I am noticing more demurring voices as reality starts to bite. The longer this crisis goes on, the louder those they are likely to be.

The latest news is of the rapid weakening of the Norwegian krone. While this is good for businesses that export, it means prices for everyday goods are likely to soar in a country that imports much of its food. Another positive of a weakening currency—that the country is cheaper for tourists for visit—is not applicable right now.

The bottom line

The Norwegian policy seems generous but is it unwittingly bottoming out the market? Employers have received a get-out-of-jail-free card and most have cashed it in. This, in conjunction with strict instructions for people to stay at home, means the economy has come to a shuddering halt. The fallout could see generational shift in the way we travel and shop. This may come to haunt the travel and hospitality industries for years to come.

What will happen to those who have been temporarily laid off? In order to access the generous 100% job seeker’s money, they have had to sign on as unemployed. This means accepting all the standard criteria of a job-seeker, which of course NAV have not had time to change.

Such is the scale of the crisis, it is unlikely NAV will hold jobseekers to these criteria, but they have to declare they are willing to, for example; a) take a job (including part time) in a different area of the country; b) in a different industry and c) at a lower pay, or risk losing my benefits.

In theory, if job-seekers disagree with these criteria, they would have to provide lengthy explanations why not, and would probably see a delay in receiving the money. It kind of makes a mockery of the idea of the ‘permittering’ being temporary.

These might be seen as ‘luxury problems’, in the context of what is happening elsewhere in the world. One thing is for sure; the social democracy model is going to be put to the test in the coming months, and the legacy of Norway’s actions will be the subject matter of many a future history class.

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Norway and the UK are near neighbours and important trading partners. But their approaches to tackling the coronavirus outbreak have been starkly different. One British expat living in Norway takes a closer look.

Regardless of your perception of Norway’s handling of the coronavirus crisis, businesses’ hands have more or less been forced by the general consensus and we are increasingly seeing a homogeneous response across the continent. But things look quite different in the UK.

The coronavirus response in Norway

In Norway, some business owners have responded angrily to the country's emergency measures. Today, for example, the local diocese decided to postpone all spring confirmations, meaning hundreds of businesses will lose out on revenue which has been on the books for twelve months or more.

Cancelling these events in May seems trigger-happy at this stage, but the bout of layoffs in the hospitality industry, in particular, means uncertainty pervades.

Right now there is a sense of ‘dugnad’ in Norway – a tradition whereby everyone chips in and contributes, fulfilling their communal obligations to society. It’s social democracy in action; every spring your will see all neighbours coming out to tidy up their streets together, parents will sacrifice evenings to man kiosk and do stock counts for their kids’ sport teams, and people will generally ‘do their bit’, for fear of being considered a social outlier.

The response to the coronavirus has been billed the “biggest dugnad in Norwegian history”. People are expected to toe the line. The government has even threatened to bring in the home guard to forcibly evict people from their cabins, and sending them back to their homes, to suffer in silence like the rest of us.

The coronavirus response in the UK

Meanwhile in the UK Boris Johnson ‘advises’ that . When the Norwegian government said stop going to bars and restaurants, the public obeyed and the market literally dried up overnight. When Boris Johnson said the same, even his own father . Herein lies the difference.

Read more: Coronavirus in Norway: The Latest News

From this side of the water, what we are witnessing in the UK is of great interest to everyone in Norway. Images of throngs of people squeezed into Cheltenham to watch the Gold Cup last week, merry, dressed to the nines, with their hands plastered all over the faces in joy/commiseration at the latest race, have been shared in Norwegian media.

This was just days after the all large gatherings were banned here, and after the Premier League closed down, it should be said, adding to the confusion. The British antics were met with bafflement and bemusement here:��“Don’t the British care about the situation? Are they stupid? Haha, check out the British, they don’t give a shit!”

But even more interesting has been the British government’s reluctance to ban events and enforce closures in the UK. This means that employers have no rights or insurance options, despite dwindling customer bases.

The British gamble

It’s a fascinating conundrum. If you follow the Norway model, which most European countries have in one way or another, then you bottom out the market and uniformly destroy industry, with an eye to getting on top of the crisis and rebuilding as one.

Read more: The British Ambassador to Norway

It slightly favours the large, strong companies (name a policy which doesn’t), while simultaneously offering life support to the minnows.

But it takes a massive gamble – there is no guarantee when the crisis will end nor what the long-term effects will be on hospitality generally? The British method keeps the businesses open for as long as possible, combined with a more pragmatic approach to the way in which the virus may spread.

It seems as though that approach may well come to bite them in the arse, but I wonder how much of the British decision was dictated by a realistic understanding that there simply were not Norwegian/German/Belgian/Danish etc. levels of social funds to manage enforced closure?

In the UK, you can claim statutory redundancy pay if you’re eligible and you’ve been temporarily laid off (without pay or less than half a week’s pay) for more than four weeks in a row (or more than six non-consecutive weeks in a 13 week period). Redundancy pay is quite complicated and is the obligation of the employer. If all hospitality in the UK was forced to close, then there would be recession-level bankruptcy across the market.

Read more: Home Quarantine & Home Isolation in Norway

If the state offered a change in the regulations to accommodate the unprecedented nature of the crisis, involving parachute payments à la Norway, then it would be the state which would be bankrupt. Britain is also a more litigious society, which could lead to fear for a catastrophic legal fallout.

In both Britain and Norway, the public are ceding unprecedented levels of authority to the state. Is this an opportunity or a dilution of rights? Whatever the differences between the two states, there will be the possibility for social reform after the storm.

After healthcare, comes the economic fallout

At this moment, the global focus is rightly on the health care aspect: how to support the infrastructure so that sick people can be treated, how to ‘flatten the curve’ so that services are not overwhelmed. I have a feeling that in the not-too-distant future this will shift to the long-term financial effect of the policies which countries enforced.

Within one week over 85.000 people—including me—have been temporarily laid off in Norway as a result of the crisis. I feel confident about the future and well supported by the state. If I were to use this moment to speak about the child support I receive and the instant boost I got upon dismissal, I think people’s eyes would start watering in the UK.

The British government has just pledged £330bn in loans to help businesses get back on their feet, which is approximately 30 times what Norway has promised (for a population a twelfth of the size). It is hard to say how much money will need to be pumped into the redundancy packages, £1bn perhaps? £10bn?

One wonders whether all this money might have been better spent on emergency medical care, testing and focusing on the at risk in our societies, rather than bottoming out an industry which is which responsible for well over 10% of global GDP.

But perhaps that’s a conversation for another day. One thing is for sure, hindsight is going to have its day in court when all this is done and dusted.

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