EMCC European Monitoring Centre on Change

Norway: ERM comparative analytical report on Public support instruments to support self-employment and job creation in one-person and micro enterprises

  • Observatory: EMCC
  • Topic:
  • Published on: 12 January 2012



About
Country:
Norway
Author:
Kristine Nergaard
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

With the exception of the introduction of a nation-wide start-up grant for persons as well as companies in the start-up phase, the counter-cyclical instruments introduced by the Norwegian Government in 2009 did not target self-employment/micro enterprises in special. The instruments relevant for small businesses that existed before 2008/2009 have been kept, although with increased funding for some measures in 2009 and 2010.

QUESTIONNAIRE

Part 1: Overall policy context

This section aims at giving a brief overview of the general development and status quo of the policy discussion and thereof resulting instruments, measures or initiatives in the field of fostering self-employment and job creation in one-person and micro enterprises (less than 10 employees). Focus is mainly on the developments during the last decade that is before the global recession. In addition we are asking for your indication of change of policy focus since the recession.

1. General policy approach in the area of self-employment, one-person and micro enterprises at the national level

GENERAL NOTE TO THE CAR:

Policy focus/debate in Norway is in most cases not distinguishing between self-employment, first and additional employees. Self-employed persons might have employees (for instance a dentist or lawyer with an assistant), and owners of small companies might be self-employed or they may be employees in the company. For the purpose of this discussion, we are not distinguishing between the 3 groups (self-employed, first employee, additional employees), since this does not make sense in the Norwegian context.


1.1. Has there been a policy focus/debate on the specific challenges facing entrepreneurship as tool for job creation before the global recession? If so, since when and for how long?

Table 1: Presence of policy focus/debate on entrepreneurship as facilitation for job creation before the crisis
 

Yes, continuously since the 1980s, although a shift in the 2000s (focusing more on innovation) xx? (Please indicate year)

Yes, on and off in the last 10 years

(Please indicate ‘X’ where it applies)

Yes, has been in focus, but since xx it is no longer part of the policy focus (Please indicate year)

No, it has never had policy focus before the recession

(Please indicate ‘X’ where it applies)

Self-employment

X

     
Hiring the first employee

(X)

     
Hiring additional employees/creating additional jobs in micro enterprises

(X)

     


1.2. What is the main focus in policy documents or strategies in relation to public or social partner based support instruments for fostering self-employment or job creation in one-person and micro enterprises? (Please indicate ‘X’, multiple answers possible)

Table 2: Main focus in the policy documents or strategies
 

Entrepreneurship (Business development in general)

Job creation (Employment)

Growth (Competitiveness)

Others (please specify)

Self-employment

X

(X)

 

Innovation

Hiring the first employee

(X)

(X)

   
Hiring additional employees/creating additional jobs in micro enterprises

(X)

(X)

   

1.3. Please elaborate on the answer given above (with a focus on those developments aimed at employment creation and growth) and indicate if the financial recession has caused a change of focus:

Table 3: The policy content and significance of the financial recession
Self-employment
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Persons who want to start their own business can apply for grants for establisher and also take part in networks etc. (explicitly promoting self-employment)

Change due to the financial recession

Please tick:

Yes: X

No:

If ‘Yes’, please elaborate:

The original scheme was mainly concentrated to projects outside the central cities/the districts. In 2009, more funding was set aside, and a nation-wide start-up grade was introduced (applicable also to persons in the central city areas).

Hiring the first employee
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

See above, a new established company might be a one-person business or have one of several employees, organised as self-employment or a as any type of company (limited company or others)

Change due to the financial recession

Please tick:

Yes:

No: X

If ‘Yes’, please elaborate:

Hiring additional employees/creating additional jobs in micro enterprises
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

See above, a new establishment might be a one-person business or have one of several employees

Change due to the financial recession

Please tick:

Yes: □

No: X

If ‘Yes’, please elaborate:

2. Disincentives for self-employment and job creation

The following two questions will investigate whether there has been a change in the political agenda which has forced new political initiatives that may result in disincentives for job creation and business development (e.g. considerations regarding public budget).


2.1 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises before the financial recession? (Please briefly describe the major developments/initiatives (max. 300 words)

No such measures.


2.2 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises as a result of the financial recession? (Please describe – max. 300 words)

No such measures.

3. Representation of/lobbying for self-employed and micro enterprises


Are self-employed and micro enterprises in your national context explicitly or implicitly (e.g. entrepreneurs or SMEs in general) represented by the following types of organisations (e.g. for lobbying, defending their interest etc.)?

Table 4: Representation of self-employed and micro enterprises
 

Self-employed

Micro enterprises

Employers’ organisations

Yes, implicitly: Self-employed without employees will normally not be members of EOs, but certain groups of crafts (hairdressers, goldsmiths etc.) might be affiliated though their craft associations that are affiliated to NHO.

Yes, explicitly NHO and HSH

Employees’ organisation

Yes, explicitly. The trade unions for doctors, dentists, lawyers, physiotherapists etc. will have self-employed members

Not employers, although self-employed members such as doctors, dentist and lawyers might have employees such as secretaries etc. (Employees in small enterprises are targeted as members by all trade unions)

Not-for-profit organisations

Depends on the definition of representation. Artists will often be self-employed, and members of interest organisations such as the Norwegian Visual Artists Association, Grafill- Norwegian Organisation for Visual Communication and many others.

In principle artists might employ assistants etc. But the representation based on this type of non-profit organisations will be concentrated on issues such as copyrights, contracts, the system of public grants etc.- not on being a micro-enterprise.

Others

Interest organisations for farmers and other groups in the primary sector (Norway has mainly independent farmers/family run farms with external employment only in the summer season/on part-time basis)

Farmers and other self-employed persons in the primary sector might have employees, and the organisations will provide some information on obligations as employer etc. (often in collaboration with the relevant employer organisation).

There is also an organisation for small companies – Bedriftsforbundet. This organisation will provide legal and other advice, as well as being a lobby organisation. However, this organisation is not part in collective negotiations.

Part 2: Identification and description of relevant recent support instruments

The following section asks for the identification of public or social partner based support instruments initiated during or after the recent economic crisis (that is, 2008 onwards). These measures might have, but must not necessarily have been triggered by the recession. Measures may also have been initiated earlier, but changed in order to adapt to the recession or other recent developments. Rather than a comprehensive list of all instruments available at national, regional or local level, the most important, most innovative, most interesting and most effective tools are to be described. Thereof, a selection of up to three ‘Good Practices’ to be described in more detail is to be made.

1. Selection of region(s) when total coverage of the entire regional and local level is too comprehensive

When providing the brief overview and the three ‘Good Practices’ in this section of the questionnaire, measures and instruments at national level have to be included. We would in addition ask you to include regional and local level initiatives where relevant. Nonetheless, a complete coverage of regional and local levels may not be possible for all countries (e.g. because of a high degree of decentralisation resulting in a wide range of respective measures characterised by considerably heterogeneity). At the same time, it can be assumed that for instruments targeting at supporting self-employment and the creation of employment in one-person and micro enterprises the local administrative level is of considerable importance. If so, such measures will be designed to fit to the local characteristics and needs, resulting in a wide variety of different approaches. In this case, one or few local areas or regions may be selected to be covered in this report. Details on the selection are given in table 5.

As far as we are aware of, the changes of the start-up grant is the only new measure (2008 or later) targeting self-employed or small businesses in particular. A number of other measures have been introduced (increased public spending on public infrastructure, measures to improve the functioning of the credit/finance institutions as well as adjustments of the temporary layoff scheme). Even if these might be relevant for small companies, they do not seem relevant for this study/CAR.

Table 5: Administrative level/region(s) covered for the following research (max. 50 words per region)

Administrative level relevant for the rest of the questionnaire

National level

If a specific regional/local are is selected, please provide the following information

Name of region

 
Motivation for selecting this region

Facts about the region e.g.

- Geographic location

- No. of inhabitants

- Business structure (sector, size)

- Labour market

- Specific characteristics if applicable

 

2. Brief overview of recent instruments to foster self-employment or job creation in one-person and micro enterprises


2.1. Please provide a brief description (max. 800 words) of public or social partner based instruments recently initiated (2008 onwards) to support self-employment and job creation in one-person or micro enterprises.

Measures covered by the European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities are to be omitted to avoid duplication (see Part 3 of this questionnaire).

Table 6: List of recent instruments

Title

Landsdekkende etablererstipend/Nation-wide start up grants

Aim/objective

To encourage innovation and the establishment of new companies

Description of support

Support for persons or companies that want to start up new businesses. Originally a system aimed at job development outside the city-centres (including special grants for new types of activity springing out from the agricultural sector). Criteria for distributing grants were set at regional level in Innovation Norway. In 2009 funding was increased and a general nation-wide scheme was introduced.

Target group

Individuals and companies planning to start up (new) businesses

Initiator and other actors involved

The Ministry of Trade and Industry (NHD) for financing and Innovation Norway (running the scheme)

Duration (please also indicate whether the measures has been initiated due to the recession)

The nation wide start-up grant was introduced in 2009, and funds were allocated for 2010 as well as 2011 (although substantially reduced funding in 2011). The introduction of this type of start-up grant was driven by the recession.


2.2. In-depth description of ‘Good Practices’

Please choose up to three examples from the above list that can be considered as ‘Good Practice’ (e.g. because of their effectiveness, innovative character or beneficial cooperation among different stakeholders) and describe them in detail.

Table 7: Description of ‘Good Practice’ examples of recent support instruments

Name of the programme/instrument

Landsdekkende etablererstipend/Nation-wide ‘Start-up grants’

NB: Another type of start-up grants has been available earlier

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

X

(X)

(X)

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

 

(X)

X

Rationale/motivation for the instrument

(please describe)

To encourage entrepreneurship and innovation by making it easier to start a new company. The nation-wide scheme (from 2009) also targets entrepreneurs in central areas of the country, whereas the instrument previously applied to start-ups in less central areas, incl. innovative activity within the agricultural sector (e.g. farm tourism or ‘farmers market products’). The nation-wide start-up grants shall give priority to schemes with nation-wide and international potential.

Purpose and aims for the instrument (please describe)

The purpose of the funding/grant is to enable potential starters to make the necessary preparations and market research activities in order to establish a company/new activity.

Initiator
Please ‘X’      
Other stakeholders actively involved in implementation (please name them and describe their roles)

The scheme is run by Innovation Norway, the Government’s main instrument for innovation and development of Norwegian enterprises and industry. Two ministries are involved, The Ministry of Trade and Industry (NHD) and The Norwegian Ministry of Local Government and Regional Development (KRD). The first one finances the nation-wide scheme of start-up grants mainly discussed here.

Target groups        
Please describe the target groups (sector, age, level of education, gender)

The instrument targets persons who want to start a company as well as companies in the start-up phase (mainly 1st or 2nd year, exceptions can be made in extraordinary situations. Women are encouraged to apply (40% of the projects should be by women, this objective was not met in 2009).

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

The budget for nation-wide start up grants was NOK 150/€19.14 million in 2009, reduced to NOK 50/€6.38 million in 2010 and 20/€2.55 million in 2011. The scheme is financed over the State Budget (through extraordinary funding in 2009 as part of the Government’s measures to meet the international crises).

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Activities that might be funded are market analysis, clarifying patents/rights, designing the product, establishing a web-site etc. The grant can cover work contribution from the gründer/gründer company (wages), as well as the involvement of others (lawyers, market analysts etc.). The projects should be innovative, and have national or international market potential.

The nation-wide scheme has an upper limit for support of €200,000/NOK 1.75 million (2009) which is much higher than the upper limit for the traditional start-up grant (NOK 200,000/€25,500 or NOK 400,000/ €51,000 in extraordinary situations).

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

In 2009, 223 projects were granted support from the funds set aside by NHD. Of the beneficiaries, 47 were women. (17% of the funds). The Menon evaluation report (see below) estimates that the main sectors are business services (incl. ICT) and manufacturing. Of the 223 grants, 30 were given to persons – the rest to companies (with the exception of 2 ‘other’). A little less than 50% of the grants were given to new companies (i.e. not established when given funding), the majority of the rest to young companies (0-2 years). Compared to the traditional start-up grants, the new nation-wide scheme distributed more money to established companies compared to start-ups.

In 2010, 92 projects were granted funding from the funds set aside by NHD. Of the beneficiaries, 33 % were women and 15% young gründers (less than 35 years). Sectors: ICT 25%, health 18% and Energy 13% (Classification different from the one used by Menon).

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

From 2011 some changes in the system of start-up grants have been made. The different types of start-up grants (nation-wide and traditional start-up grants) are merged into one instrument: ‘etableringsstøtte’ (financial support for establishment). The ambition today is that more grants should be awarded to companies (i.e. companies in an establishment phase), and fewer grants for individuals. The funding for nation-wide start-up grants (earmarked funding) have been reduced from NOK 150/€19.14 million in 2009 to NOK 20/€ 2.55 million in 2011).

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

The Menon report concludes that the nation-wide start-up grant probably did not have a strong counter-cyclical effect. The short-term effects on employment are uncertain since many of the beneficiary companies are innovative (and need time to establish themselves), although a long-term effect might be seen.

However, the scheme seemed to meet an underlying (structural) demand for funding from a certain type of companies in the establishing phase. Many of these would not be given priority in the traditional arrestment (start-up grants with a strong focus on non-central districts). The companies that got funding from the nation-wide scheme were innovative companies in need of capital (capital intensive, higher risk).

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

According to Innovation Norway (annual report 2010) the employment effect of the 2010 grants is estimated to 1,914 jobs. No such figures are given in the 2009 annual report.

Innovation Norway: Annual Report 2010

Please provide link to evaluation documents if possible

The report by Oxford Research discusses the feedback from companies that have been receiving funding from Innovation Norway, incl. start-up grants (per 2009). The report by Menon discusses the different measures introduced by the Government in 2009.

Report by Menon on Innovation Norway and the Finance Crises

Report by Oxford Research - 2009

Part 3: Annex: Update on recent self-employment study

The recent European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities provides insight into support instruments for self-employment. To avoid duplication of this information, we ask you as National Correspondent to omit these measures already covered in your research (Part 2 of this questionnaire), and only update or add any additional details or measures that exceed the information already provided in this report.

Table 8: Additional information on specific instruments to the EEO national report on self-employment:

Title of the instrument

Nation-wide start-up grants

Additional information

In addition to the general measures this report discusses the nation-wide start-up grants scheme (see above). The main change is reduced funding, from NOK 150/€19.14 million in 2009 till NOK 20/€2.55 million in 2011.

Table 9: Please add any other comments to the EEO national report on self-employment:

Table 10: Please indicate ‘X’ if you have no additional information to the EEO national report on self-employment:

Please indicate ‘X’ if you have no additional information to provide

 

Commentary

With the exception of the nation-wide start-up grant, the instruments introduced by the Norwegian Government in 2009 did not target self-employment/micro enterprises in special. A number of general measures will be relevant for SMEs, but probably less so for the smallest enterprises (0-1-2 employees).

Over time the relevant authorities (mainly The Ministry of Trade and Industry) have been giving priority to measures to reduce ‘red tape’ as well as introducing several on-line services/green-lines with the purpose to make it easier to establish and run a small business. Included here is the Altinn Service where companies easily can submit information required by the different public authorities and the Bedin Service where gründers and others will find all types of information on regulations, financial support instruments etc. In the Bedin Service, the users can chose between ‘starting up a company’ or ‘running a company’, that is the service offers information in general as well as on the start-up process. Altinn is a common web portal for public reporting (About Altinn)

Another type of instrument regarded as important for SMEs is the provision of infra-structure (premises) for small businesses. SIVA has established/supported a number of so-called ‘business gardens’ where a substantial number of different companies are located together – sharing infrastructure. SIVA is also running the so-called ‘incubators’ mainly aimed at more high-tech/competence intensive companies in a start-up phase.

A third initiative is the well-developed system of grants and support instruments targeted at potential gründers of smaller businesses outside the central areas of Norway. The aim is to encourage people to start their own business and create their own workplace since these parts of Norway need a more differentiated labour marked. Here support is granted to projects such as side-activities to traditional farming etc. These instruments are seen as important for the development of the different regions of Norway (regional development), and priorities are set by the regional offices of Innovation Norway together with regional and local government authorities.

All these activities are important for the development of self-employment and small businesses, but the policies and priorities have not been changed substantially by the crises.

The unemployment rate is relatively low in Norway (3.4% in May 2011, compared to 3.1% in May 2009 and 3.6 in May 2010, LFS figures). The implication is that Norway has not seen the need to change the job-creation measures as such, but did in 2009 invest substantial extra funds in contra-cyclical measures such as investment in/maintenance of public infrastructure as well as increase funding for existing instruments such start-up grants, loans/guarantees for businesses in need of capital as well as increased support for research and development programmes.

Kristine Nergaard, Fafo



Useful? Interesting? Tell us what you think. Hide comments

Add new comment