Forsvarets kostnads- og personellsammensetning (1994-2007) - sentrale utviklingstrekk og utfordringer

From 1994, the Norwegain defence has experienced a situation where continuously increasing personnel expenses have been the main contributor to a reduction of the defence structure, both for personnel and equipment. The report focuses on the main characteristics of this personnel cost development. In addition, the future development of the personnel portfolio is examined. From 1994 to 2007, the number of man-labour years in the Norwegian defence sector was reduced from more than 26 000 to less than 19 000 (a reduction from ca 2.2 % to ca 1.1 % of the total labour force in Norway). From 2006 to 2007 however, the number of man-labour years in the Defence increased by about 750. In 2007, the average annual salary for employees in the Defence was ca 500 000 NOK, about 100 000 NOK above the average in the public sector as a whole. The main reason for this difference is the use of fixed and variable extras in the Defence. From 1994 to 2007, average personnel expenses per man-labour year, corrected for inflation, increased by ca 62 % in the Defence. The annual growth of personnel expenses per man-labour year in the period was 4.0 %. Fixed and variable extras grew the fastest, about 6.3 % per year, while basic wages showed a growth of 3.2 % per year. The reversing of the downsizing trend from 2006 to 2007 strengthens the challenge when it comes to obtaining a balance between the structure and the budget. When both the number of man-labour years and personnel expenses per man-labour year increase, the Norwegain defence will experience a severe challenge with respect to maintaining a viable share of the budget for investments. In the period from 1994 to 2006, the number of military employees in the Norwegian defence was reduced by about 31 %, while in the same period the number of colonels, lieutenant colonels and majors increased by 16, 40 and 30 % respectively. Correspondingly, the number of captains, lieutenants, second lieutenants and sergeants were reduced by 35, 39, 43 and 56 % respectively. This increase in average rank level seems to be the main challenge for the Defence when it comes to maintaining a balanced personnel portfolio. It is a challenge both because it results in higher average personnel expenses and because it can result in an unbalance between the number of officers in staff and operative positions. Looking closer into the development from 2006 to 2007, the number of temporary employed officers (contract until the age of 35) increased substantially. This may counteract an unbalance in the personnel portfolio because these officers in general have low ranks and are employed in operative positions. However, it will be a few years before the full effect of this is revealed. To obtain better monitoring and control with personnel costs it is recommended that the Norwegian defence to a larger extent integrate cost and personnel statistics in the short and long term planning. Reintroducing fixed promotions and limiting the use of temporary rank can help to reverse the increasing average rank. Fewer wage categories can make it easier to control the cost development. Based on both historic and future development it is recommended that an annual personnel cost growth of 3 % is used in the next long term planning period.