There is a shortage of qualified labour in many industries. Although unemployment is now very low, employees’ share of value added has been reduced. This conflicts with previous experience. Historically, unemployment has been high when the wage share was low. What are the factors that can explain the current situation of both low unemployment and a low wage share? Developments have been influenced by a number of positive supply-side conditions. First, due to high export prices and low import prices, we can now import considerably more for a given quantity of export goods. This means that Norway’s terms of trade have improved considerably. Second, an ample supply of foreign labour has been an important factor behind output growth. There was a particularly sharp increase in the supply of foreign labour after EU enlargement in 2004, and inward labour migration and population growth have risen to record-high levels. At the same time, this has enabled Norwegian companies to be bolder in accepting new assignments and making investments, in the knowledge that they can procure labour not only from the Nordic countries, but throughout Europe. Norwegian firms also have greater scope for relocating production to other countries if labour costs become too high. This has resulted in intensified competition in the labour market and has probably had a dampening effect on wage demands. Third, productivity growth has been unusually strong, for both companies competing on international markets and those supplying goods and services to the domestic market.

Robust compliance function The compliance function of a financial institution is an important element in mitigating risks of abuse of the financial system, especially financial crime and terrorism financing risks. To this end, financial institutions are expected to ensure that the compliance function is independent and have sufficient authority, stature and resources to perform its function effectively. The required AML/CFT compliance program of each institution must clearly describe and outline the roles and responsibility of different segments of the institutions with respect to its compliance function. In this regard, the principle of collective responsibility between senior managements and compliance officers should be upheld in the case of failure. In compliance, continued vigilance is necessary and required. The 2017 National Risk Assessment, by the National Coordinating Committee for Money Laundering (NCC) and the financial sector, showed that the banking sector continues to face high money laundering risk and medium high terrorism financing risk. The sector records the highest value of cash transactions and high risk customers; and provides the highest number of high risk products compared to other sectors within the financial industry. This reflects the central role of the banking sector in intermediating money flows within an economy. One important compliance function that needs to be undertaken is the identity of the ultimate beneficial owner of companies, assets and financial transactions. Financial institutions need to have controls and procedures to identify, verify and conduct due diligence on the beneficiaries. This must be complemented by a rigorous monitoring process.