NORWAY – The governor of the Norwegian central bank, Svein Gjedrem, has called for pensions to be amended to help boost employment.

“Pension schemes and the application of social security rules should also be changed to provide better incentives and opportunities to seek employment,” Gjedrem said in an address to Norges Bank’s Supervisory Council.

“Legislation and rules governing the labour market can also be better designed to promote production and employment,” Gjedrem added.

According to the bank, around 11% of Norwegians of working age are on disability pensions with around one percent on early retirement. In addition there is structural unemployment of around four percent.

The bank’s Norges Bank Investment Management wing manages the NOK 988.1bn (€119.4bn) Petroleum Fund.

Citing the strength of the economy, Gjedrem also stated that the use of petroleum revenues in the domestic economy, calculated as a share of the petroleum Fund, should be curbed.

Due to lower than expected tax revenues over the last few years, the government is using just over six percent of the scheme, which contradicts rules that it should use four percent over time, although small deviations are allowed.

“Both short-term and long-term considerations imply that the use of petroleum revenues as a share of the Petroleum Fund should be curbed ahead,” Gjedrem said. “The Norwegian economy is growing at a brisk pace.”

“Hence, the conditions are now conducive to returning to the use of four percent of the Petroleum Fund.”

Earlier, Norges Bank’s accounts revealed that its 2004 surplus had tumbled to NOK1.1bn from NOK20.8bn in 2003. “No transfer will be made to the Treasury from the Transfer Fund,” it said.