Collective bargaining arrangements should be made more flexible to provide a framework in which, establishing  8  BIS Review 60/2006  the necessary guarantees for workers, wage and working conditions are adapted more readily to the needs of an efficient and competitive functioning of firms and industries. It is also crucial to promote permanent hiring, to correct the duality persisting in the labour market, since the ratio of temporary to total employees has continued to increase in 2005 and in 2006 to date. The agreement on labour market reform recently signed by the social agents and the government is a very timid step in this direction; although it seeks to discourage temporary hiring (with results that are difficult to assess in advance), it leaves some of the core problems underlying the restrictive use of permanent hiring largely unchanged. In particular, although a more transparent system of rebates has been introduced for this type of hiring, the dismissal costs linked thereto have not been changed. In this connection, mention may be made of the extension to 2007 of the period in which employers can convert temporary contracts into permanent ones, availing themselves of the employment-promoting contract, which envisages a smaller redundancy payment. The issues pending in the field of labour reform are very important, since this is a very significant area for the effectiveness of the numerous liberalisation measures implemented first, under the Plan de Dinamización (plan to bring about a more dynamic economy), and further under the National Reforms Programme.

This is why the Fund is an integrated entity located in Norges Bank. Norges Bank works to preserve the Fund’s long-term financial value. Responsible investment is part of that task. As a long-term financial investor, the Fund stands to benefit from sound and sustainable growth in the companies and markets included in its investment universe. We use a variety of instruments to exercise our ownership rights. We engage in close dialogue with companies, investors and regulatory authorities. We vote at shareholder  BIS central bankers’ speeches  5  meetings in line with pre-defined principles and publish our voting results on a regular basis. We also submit shareholder proposals and participate in consultations based on the fundamental principles that we apply in the exercise of ownership rights. Norges Bank integrates the considerations relating to corporate governance, the environment and social conditions into the investment process. Because the Fund is a longterm financial investor, we place considerable emphasis on our role as responsible investor. The overriding goal, which is the highest possible return at an acceptable level of risk, remains firmly established. If Norges Bank is assessed using criteria other than return and risk, its mission will become unclear. This might also impact return performance. There must be no doubt as to the objective of investment management. Norway’s enormous economic progress since 1814 has not been linear. Rapid population growth and food crises in the latter half of the 1800s led to the massive emigration of close to 1 million Norwegians to America.