Jan Ludvig Andreassen believes we can expect major changes in working life in the future as a result of the corona crisis and upcoming crises.
Friday was exactly one year since Erna Solberg and the government shut down Norway to stagnate the rapidly growing corona pandemic.
Chief economist Jan Ludvig Andreassen in the Eika Group believes we must look at the economy in a different way in the light of the corona crisis.
– There are three ways to look at the economy in a macro perspective. One way is empirical models, the other way is how people in the foreign exchange market come up with their stories. They point out that there is some unrest in the United States, or that things are going worse in Europe. Therefore, investors buy dollars rather than euros, etc.
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Unpredictable
– But the corona pandemic has shown us that the future is very uncertain. A third approach that I think gets wind in the sails is that the short-term future is much more random and unpredictable. People take it a little too lightly that no one could predict either the financial crisis or the corona crisis, says the chief economist to Nettavisen Økonomi.
Economists must therefore return to their models and somehow take on a large element of coincidences in the economy.
– There are such unforeseen events, there has always been a danger of pandemic, and there is a danger that this coronavirus will mutate in an unpleasant way. During the Spanish flu a hundred years ago, mutated varieties came in increasingly deadly forms. We must take more account of accidental economic setbacks, Andreassen warns.
Some of the economic crises throughout world history are stories of economic cycles going in waves, excessive stockpiling, excessive debt growth, etc. These are more announced crises.
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From clear skies
– But the corona crisis is a “lightning from clear sky crisis”, which was also the financial crisis just over ten years ago. We had September 11, and you have the climate risk.
– I think we will be much more uncertain about the future than we were before and start thinking like people thought several hundred years ago. It was important to get the crop into the barn on time, the chief economist symbolizes.
Andreassen believes that the increased uncertainty will affect both companies ‘and households’ investments. Having a secure job is becoming much more important than it was before, and people with secure jobs are becoming more careful about what they require in wage supplements.
Risk surcharge
– Those who do not have a secure job to go to, will have better pay and higher risk premiums. I think the nursing profession will be very popular, while it is worse if you work as a stage technician or sommelier at a gourmet restaurant, says Andreassen, with reference to some of those who are now laid off and are without a job.
His main message is that we must recognize that the world is much more uncertain than before for companies, households and macroeconomists. We have to adapt to a technology that thunders away and does not require as many employees.
– Old PCs must be replaced, everyone must prepare for the digital shift. There will be less cash than before, people shop more online. These trends are only gaining momentum, and many jobs are being lost.
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Too few
– What is really increasing is public health nurses. We see in all countries that there are too few nurses, the aging wave brings with it large deficits, of health personnel. There is no less need for a nurse than Statistics Norway assumed last autumn.
Andreassen is aware that public health care will take much of the growth in working life in the future, and they have low productivity growth. At the same time, we will phase out the industry with by far the highest value creation per employee, the oil and gas industry. Here, 2,000-3,000 jobs fall out every year.
– And then there will be an even larger public sector that must be financed?
– The health and care sector is struggling, and the government has in the perspective message said that it will be a problem if the public sector becomes too large. But how do we prevent the sector from getting bigger? In 2050, half of us will work there, Andreassen answers.
Zero interest
The outspoken chief economist has also long said that interest rates will not rise again. But if we are to believe most experts, interest rates are in Norway 1 percentage point higher by the end of 2022.
Andreassen is not one of them. He also does not see the need to raise interest rates in view of the strong rise in house prices.
– Economic growth going forward will be lower, inflation will be lower. In a low-growth scenario, the interest rate should be close to zero. The only thing you achieve by raising the interest rate by 1 percentage point by the end of 2022 is to send up the krone exchange rate.
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Recoil
– What is the point of risking a rebound on the krone if you raise the mortgage rate after tax by a maximum of 0.8 percentage points? Taxes and regional policy are much more suitable for curbing house prices. It is not well thought out to raise interest rates related to the housing market, warns Andreassen.
So through his macro eyes, we are now facing a long period of low wage and price growth and persistently low interest rates.
– Yes, that’s my long – term story. Covid-19 has only crystallized the long-term trends to an even greater extent than before.
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