Lerøy Seafood has to lay off 339 employees in processing in Norway

Salmon processing. Photo: Adobe Stock.
Salmon processing. Photo: Adobe Stock.

Redundancy notices have been sent out today for 339 employees at four of the Lerøy Group's processing operations. – This is primarily an absolutely terrible situation for our skilled employees who are being made redundant and their families, but also for all the rest of us in Lerøy. Unfortunately, the redundancies will also affect our suppliers and customers.

We want to create as many jobs as possible along the Norwegian coast based on the fish we produce. We no longer get the opportunity to do that. The market opportunities for processed Norwegian salmon are more or less completely gone after the government's tax proposal. The result is that we do not have work to offer many of our employees and then we have no other choice but to notify layoffs, says CEO of Lerøy Seafood Group ASA, Henning Beltestad.

The redundancies are a completely unavoidable consequence of the chaotic situation the government has inflicted on the industry, Lerøy and all our employees.

– Although we have worked intensively for over a month to get contracts in place with our customers, we have not succeeded. To process the salmon, we have to have long-term contracts, and this market has almost completely disappeared following the government's proposal to triple the tax and the model they are using. If we don't have customers for our processed products, we can't produce them either, says Beltestad.

– I am sure that this is not the government's intention, but it is very much the consequences of their proposal. Neither we nor our customers can take the risk of having to pay tax on an income we may not have, Beltestad points out.

Bjarne Kristiansen, who heads the cooperation committee for NNN (Norwegian Business and Leisure Workers' Union) in Lerøy, says that this will have even greater consequences than they first feared.

– It is terrible that it is us employees in the processing industry who will be affected by the government's tax proposal. It is quite clear to me that Vedum and Støre's proposal is very poorly prepared and poorly thought out. There is only one way to correct this, and that is to postpone introduction until 1st of January 2024 at the earliest, after the consultation and after the Storting has made its decision in the spring of 2023. Then we can hopefully get a broad settlement that ensures framework conditions for aquaculture and a tax scheme that neither destroys the industry, the coastal districts nor our employees, Kristiansen points out.

The proposal from the government has created enormous uncertainty in the companies and in the market. The government's proposal for ground rent will apply from 1 January 2023, while a final tax model will not be decided by the Storting until the summer of 2023. Only then will companies know what tax they must pay for the past six months and what details form the basis of a possibly new tax base.

In Norwegian history, such a major change in taxation has never been proposed with entry into force before an impact investigation, consultation and broad settlement.

The uncertainty surrounding what income should be used as the basis for the tax is one of the many major challenges with the government's proposal, which a number of professionals have pointed out. The same professional circles also highlight the serious knock-on effects of investments that will now not be carried out, the damaging effects on Norwegian business in general and the industry's weakened ability to finance, reduction in demand for Norwegian salmon, loss of jobs in rural areas and development of the industry in other countries rather than in Norway.

In sum, the proposal means that an industry, which already contributes significantly more than other industries beyond ordinary taxes and fees, will have reduced value creation, reduced employment and actually provide reduced income to the state as a long-term result.

In the situation that has been created, Lerøy can only relate to the fact that from 1.1.23 the government has removed the market for processed salmon products from Norway with the consequence that a great many of Lerøy's employees within this part of the value chain must be made redundant from the same date.

– It is critically important that the government understands the industry's entire value chain, the level of activity and central function in the Norwegian coastal community. According to the plan, the industry will export more than 40,000 tonnes of food a week in the future. That amounts to close to 200 million meals, says Beltestad.

– When we see that we do not have tasks for our employees, we are obliged to notify them, that is what we are forced to do. We hope that the politicians listen, and wake up, so that any changes in taxation are based on facts and the knowledge that we know will emerge in the consultation round. The change cannot be made effective before 1 January 2024.

It is urgent if we are to succeed in re-establishing the trust of our customers and redundancies can be avoided. This is very serious, concludes Henning Beltestad.

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