The EEA and WTO agreements resulted in stronger competition and increased flows of goods and services, labour and capital. As a result of the 1992 tax reform, the welfare state could be funded with reduced impact on wealth creation. The framework conditions for the electricity market, telecom market, aviation and broadcasting were changed. Trade was liberalised. State-owned companies were listed on the stock exchange and new forms of managing public agencies were developed. Industrial policy no longer kept unprofitable enterprises afloat. And last but not least, in Norway as in other countries, normbased or rule-based monetary and fiscal policy was introduced. The shift gave a boost to the economy, but in recent years it has been accompanied by a change in the distribution of income between labour and capital. This is probably a result of structural changes in the global economy. A rising share of the global production of goods and services is moving across the Pacific. Cheap Asian labour has changed industry structures and trading patterns in many Western countries, including Norway. New producer countries are fuelling competition, but are also creating new markets and producing cheap consumer goods. There has been a sustained rise in employment and wealth creation in the West. China, India and other emerging economies have doubled the supply of labour on the global market. 5 This has helped paved the way for strong growth, but has also curbed wages in many occupations in a number of industrialised countries. Norwegian households have enjoyed lower prices and a broader range of goods.
It has been easy to find employment. Norwegian owners and shareholders have also fared very well. Although the share of value added accruing to wage earners has decreased since the beginning of the 1990s, real wage growth has been high. On average, today’s wage earners earn real wages that are 50 per cent higher than in 1990. This corresponds to annual growth of over 2 per cent. At the same time, employment has risen. Business and labour market conditions have been unusually favourable in recent years. Should export prices fall, productivity growth slacken and foreign workers return to their home country, the wage share and unemployment will increase and business sector profits will fall. Even in the absence of these developments, low unemployment and high profits may be difficult to sustain. Developments will depend on how far businesses – in their search for qualified labour – will bid up wages. The economic policy reforms of the 1980s and 1990s set the stage for invention and innovation and the development of a market for equity capital and loans in Norway. This has resulted in restructuring in the business sector, increased productivity, real wage growth and a high level of job creation, but also very high earnings for successful businesspeople and entrepreneurs. We will probably have to learn to live with our entrepreneurs and capital owners, and they must live with the society that has provided them with favourable business conditions. In Norway, there is a relatively even distribution of income, as illustrated in the chart.