The labour market has become very tight as high real incomes and investment in the North Sea have stimulated demand for labour. Increasing real wage growth, some increase in participation and a continuing increase in immigration flows have been the results. Although very low unemployment and high capacity utilisation suggest the economy needs additional labour, further efforts to remove some wellknown disincentives to domestic labour supply in welfare and pension policies are needed. The strong surge in labour immigration since 2004 is a new phenomenon in Norway. It seems to have had largely beneficial consequences, although if it continued for long at recent rates it would have a considerable impact on population growth and the response of the labour market in a possible future downturn remains to be seen.