Norway's influential fiscal policy advisers recommend cutting at least 42.4 billion kroner from state spending, targeting sick pay and electricity subsidies. The proposals from the Advisory Council for Fiscal Policy Analysis, summarized using the AI tool ChatGPT and quality-assured by journalists, suggest the funds could yield greater societal benefit if spent elsewhere.
“We believe there are 40 billion in expenditures that have much greater social benefit when used on other things,” said council chair Ragnar Torvik, a professor at NTNU, in a statement. The council’s annual report delivers several recommendations for reducing government expenditure.
The Core Proposal: A Sick Pay Co-Payment
A central recommendation is introducing a patient co-payment for sick pay benefits. The council suggests individuals receive only 90 percent of their salary after the employer-covered period of 16 days. State sick pay expenses total 75 billion kroner in this year’s budget. A ten percent cut would save an estimated 7.5 billion kroner.
Currently, employees receive full salary compensation for up to one year. The cost is shared between employers, who pay the first 16 days, and the state, which covers the remainder. The council argues making absenteeism more expensive would likely lead to lower sick leave rates, generating additional savings.
Strengthening the Gatekeeper and Employer Incentives
The report advises strengthening the role of the general practitioner as a 'gatekeeper,' making it more difficult to obtain a full sick note. It also recommends improving financial incentives for both employees and employers to reduce absenteeism.
For employers, this involves covering a larger share of long-term absence costs. The goal is to give companies better incentives to invest in preventive measures and workplace accommodations. The council notes Norway stands out with low labor market participation in the 40–59 age group compared to similar countries, and the trend is moving in the wrong direction.
Electricity Support in the Crosshairs
Alongside sick pay reforms, the council has recommended scaling back the expensive electricity support scheme. While specific saving figures for this measure were not detailed in the provided text, it forms part of the broader 40-billion-kroner package of proposed cuts. The scheme was introduced during the recent energy crisis to shield households and businesses from soaring power prices.
Political Pushback and a Defense of Welfare
The proposals have met immediate political resistance. Finance Minister Jens Stoltenberg flatly rejected cuts to the sick pay scheme. “This government will not cut the sick pay scheme. Here, considerations of social justice and security are decisive,” he emphasized in a statement. This clear dismissal indicates the political challenges facing such significant welfare reforms, even when recommended by expert bodies.
A Broader Trend of Rising Absence
The council's recommendations come against a backdrop of persistently high sick leave. Although absenteeism has decreased somewhat in the past year, it was around 16 percent higher in the third quarter than in the same period in 2019. Just over half of this increase is due to absence related to mental health conditions, according to the council's analysis. This trend affects both short-term and long-term sick leave.
The report suggests the current system lacks sufficient mechanisms to encourage a swift return to work. By proposing financial disincentives for employees and stronger cost burdens for employers, the council aims to align economic signals with the policy goal of higher workforce participation. The debate touches on core aspects of the Norwegian welfare state, balancing social security with economic efficiency.
The AI-Assisted Analysis
A notable technical aspect of this report is its methodology. The council utilized OpenAI's ChatGPT to help summarize and draft sections of its comprehensive analysis. This reflects a growing trend within Norwegian and Nordic public administration to experiment with AI tools for processing complex information. The summaries were subsequently quality-assured by journalists to ensure factual accuracy and clarity, representing a hybrid human-AI approach to policy communication.
The Road Ahead for Fiscal Policy
The advisory council's report is not binding but carries significant weight in public discourse and long-term budget planning. It frames a fundamental debate about resource allocation in a wealthy nation: should the state continue universal support schemes, or redirect funds to areas with potentially higher returns for society? With the Finance Minister's swift rejection of key cuts, major immediate changes appear unlikely. However, the council's analysis of high sick leave and its cost to the treasury is likely to fuel ongoing discussions about the sustainability and design of Norway's expansive welfare programs.
The proposed 40 billion kroner in savings represents a substantial sum, equivalent to significant new investments in infrastructure, education, or green technology. The council's core argument is that this money currently locked in existing subsidies could be a powerful engine for addressing other national priorities. As Norway continues its digital transformation and supports its burgeoning tech hubs, fiscal choices made today will directly shape the resources available for future innovation. The stark disagreement between independent experts and sitting ministers highlights the enduring tension between economic advice and political reality.