Kverva, Norway-based farmed salmon group SalMar has today, 14 November, 2022, sent notice of layoffs to 851 employees at its processing facilities in Frøya and Senja, blaming the move on the 40 percent salmon tax proposal introduced by the Norwegian government.
The proposed tax, SalMar said, has destroyed the market for long-term fixed-price contracts. The group said such contracts are usually entered into well in advance of deliveries and are “absolutely necessary” to fill its facilities with enough processing activity.
In total, 748 employees at InnovaMar in Frøya and 103 employees at InnovaNor in Senja will be laid off. Of those groups, 696 employees work in secondary processing at the two facilities, and the remaining 155 work in slaughtering positions.
SalMar the slaughterhouse job cuts are due to normal fluctuations and lower slaughter volume in the winter months. Limited redundancies linked to slaughter volume have been the norm for many years, SalMar said. The announced redundancies apply to the period 1 January to 30 June, 2023.
“In the future, we will do our utmost to find remedial measures in a difficult and demanding situation for everyone. This will be done in close collaboration with the employees and their union representatives. Such measures can be, for example, maintenance, skills building, and the possibility of part-time employment at other departments in the company,” SalMar said. “There will therefore not be 851 of our employees who will be made redundant at the same time. But in a situation where fixed-price contracts for processing cannot be entered into, processing is also not possible. Political risk is difficult to insure against.”
According to SalMar, if the government's proposal is adopted, the tax on salmon production will triple. It said that taxable income as the basis for the new tax must be a "spot price" for whole fish, which may deviate significantly from the actual realized sales price of a varied product and contract portfolio.
“This has a particularly negative impact on further processing, which is normally based on fixed-price contracts, not spot prices. There is simply no one willing to enter into fixed-price contracts anymore,” SalMar said. “However, there will be room for some activity in processing also after the turn of the year, mainly due to contracts entered into before the government presented its tax proposal on 28 September, 2022.”
The company said SalMar has been hit particularly hard by the tax proposal due to its emphasis on processing and its fixed-price contracts – even though the proposal hasn’t been fully approved yet.
“For many years, SalMar has prioritized the development of advanced production facilities for the further processing of salmon in central and northern Norway. The company had a processing share of over 45 percent in 2021,” SalMar said. “Processing provides three to four times as much employment as the export of whole, gutted salmon. With so much further processing, SalMar and our employees are hit all the harder by the government's proposal.”
In early November, Bergen-headquartered Lerøy Seafood Group confirmed it was laying off 339 employees at four of its processing operations, with the affected companies comprising Lerøy Aurora, Lerøy Midt, and Lerøy Fossen Osterøy.
Photo courtesy of SalMar
