Norway: EIRO Annual Review – 2008
The 2008 spring wage settlement was carried out in a situation with high labour demand, and as such generated an overall pay increase of around 6 percent, in addition to an agreement, concluded with the aid of the national authorities, on a continuation of the agreement based early retirement scheme, AFP. Issues relating to the wage- and working conditions of foreign employees has also been on the agenda, and the government has adopted several measures to help combat social dumping. Towards the end of 2008 measures against the effects of current financial crisis was placed high up on the agenda.
1. Political developments
There were no elections in Norway in 2008. The majority coalition government comprising the two parties to the left on the political continuum, the Norwegian Labour Party (Det norske Arbeiderparti, DnA) and the Socialist left Party (Sosialistisk Venstreparti, SV), and the centrist party, the Centre party (Senterpartiet, SP) remained in power during 2008 under the leadership of Prime Minister, Mr. Jens Stoltenberg from DnA. Parliamentary election will be held in the autumn of 2009.
The most important political issues on the agenda in 2008 included the climate settlement between all the parties in Parliament, although with the exception of the Progress Party (Fremskrittspartiet, FRP), and measures to deal with the emerging financial crisis. In addition, the government has continued efforts to establish effective measures against social dumping.
In December 2008 the Norwegian government made a decision to recommend that parliament approves the incorporation of the EU services directive into the EEA Agreement, and thus making it applicable in Norway. The issue has been highly controversial in Norway, not least because of concerns that it will undermine measures taken against social dumping or sub-standard wage- and working conditions in the Norwegian labour market. The decision was made against dissent from two of the three governing parties (SV and Sp), but is likely to receive a majority in parliament.
2. Collective bargaining developments
The 2008 collective bargaining round in Norway was a so-called main settlement, where the social partners have the opportunity to completely renegotiate the bi-annual collective agreements.
The agreements between the Confederation of Norwegian Enterprise (Næringslivets Hovedorganisasjon, NHO) and the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO), were renegotiated collectively. The same applies to the agreements between The Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) and NHO, and LO- and YS-agreements to which HSH (the federation of Norwegian commercial and service enterprises) is party.
In the largest bargaining area in the private sector, that of LO and NHO, a general increase of NOK 2.00 per hour was awarded, in addition to a low-wage increase of NOK 3.00 for employees subject to collective agreements characterised as low-wage agreements. Similar increases were given in other parts of the private sector. A majority of private sector employees are subject to company level bargaining in addition to central level negotiations.
Mediation in the state sector was concluded on 26 May 2008 with an agreement between the State and the state sector cartels LO Stat, YS Stat, the Confederation of Unions of Professionals, Norway (Unio) and the Federation of Norwegian Professional Federations (Akademikerne). In this sector all employees were awarded pay increases between NOK 16000 and NOK 32000 per year . 1,3% of wage funds were set aside for company level bargaining. Furthermore 1% was set aside to central adjustment bargaining where equal pay was to be given priority.
In the municipal sector a general pay increase of 2.5 % was awarded, and 1.6 % of the total wage mass was set aside for local bargaining. The parties also agreed on a general wage increase of 3.1 % from 1 May 2009. The municipality of Oslo (Oslo kommune) is an independent agreement area outside the ordinary municipal area, and here a wage increase of 6.4 percent was given, including the wage carry over from 2007. In the municipal sector all the unions of Unio went out on strike. The 12 days long strike, affecting mainly schools and preschool nurseries, did not result in higher wages, but the parties agreed to monitor wage developments of workers in the education sector, as well as to set up a committee to evaluate the need for special pay measures directed at municipal sector employees with a higher education.
The pay increases awarded in the LO/NHO-area of private sector indicate an average wage growth of about 5.6% from 2007 to 2008 (NO0808029I). This year’s settlement in the public sector will provide an estimated wage growth from 2007 to 2008 of 6.1%–6.3% (NO0806019I). In 2007, pay developments in the public sector, at both state and municipal levels, lagged behind developments in parts of the private sector, which may partly explain the higher wage growth rate witnessed in the public sector in 2008.
Outside pay, the agreement-based early retirement scheme (AFP) or ‘agreement-based flexible pension’ was renegotiated as a part of the 2008 collective bargaining round. The government contributed substantial funds to put a new AFP scheme in place (NO0804039I). Agreement was also reached on the main principles of a revised early retirement scheme in the public sector. However, the details of the public sector agreements were not settled during the bargaining round.
3. Legislative developments
As a part of the government’s efforts aimed at combating social dumping (Government measures in Norwegian) (NO0705019I), several amendments were made to existing legislation. Through an alteration of the Act relating to general application of wage agreements, companies hiring the services of another company, and operating within an agreement area covered by the act, will have a duty to ensure that the subcontractor complies with the terms of the collective agreement made generally applicable. Moreover, the shop steward of the company subcontracting services will have a right to inspect the wages- and working conditions of all employees both within their own company as well as those employed in the subcontractor firm. Furthermore, on 1 March 2008 ILO convention No. 94 on labour clauses in public contracts was incorporated into Norwegian law (NO0802049I). Finally, from 1 January 2008 new administrative provisions came into force requiring all employees working at building sites in the building- and construction sector to carry ID-cards. The provisions means that all companies performing work at a construction site are obliged to equip their employees with ID-cards. For such ID-cards to be issued, companies’ must meet a series of requirements with regards to registration in public registers and submission of information to public authorities.
1 July 2008all Norwegian employees were given a statutory right to reduced working hours from the age of 62 years. The intention behind this initiative is to make it easier for older workers to combine work and pension. Furthermore, it aims to encourage more people to stay in employment after having reached the age of 62 years, from which age employees are entitled to an early retirement pension (NO0807019I). In that same month a new Act relating to enterprise reorganisation came into force. The new legislation aims to the parties affected time to consider alternatives to closure in cases where owners want to close down companies (NO0809049I).
In the autumn of 2008 a decision was made to extend important parts of the manufacturing industry collective agreement. The decision came following a lengthy process of pulling and hauling, including a legal deliberation from the Ministry of Justice on whether or not the extension of collective agreement would be a violation of Norwegian commitments through the EEA Agreement (NO0808019I).
4. Organisation and role of the social partners
No significant changes have taken place when it comes to the organisation and role of the social partners.
5. Industrial action
The 2008 private sector bargaining round was carried out as industry-wide negotiations, which normally limits the number of strikes if compared to negotiations at the industry level. The labour disputes that took place were all solved through negotiations, i.e. that there were no cases of compulsory arbitration.
In the private sector strike action was taken at several airports by 220 LO members. The strike lasted six days, and was grounded in poor wage developments among the lowest paid workers. Strike action was also taken by employees in the dairy industry when the LO affiliated Norwegian Food and Allied Workers Union (Norsk Nærings- og Nytelsesmiddelarbeiderforbund, NNN) took a little over 1,000 members out on strike when mediation with NHO broke down. The strike lasted nine days, and was grounded in a wish, by the employee-side, to retain control over the content of occupational pension schemes.
The largest conflict in 2008 took place within the municipal sector where around 12,000 members of Unio went out on strike. It was triggered by dissatisfaction with the levels of pay for groups with advanced college-and university education within the municipal sector, and in particular what is seen by the employee-side to be a lag in pay development among teachers.
Around 60,000 working days were lost to strike action in 2008, and the wage settlement, thus, became the most peaceful settlement in several decades in terms of the number of days lost to strikes.
6. Restructuring
The Norwegian oil and gas company StatoilHydro was formed by the 2007 merger of Statoil with the oil and gas division of Norsk Hydro. StatoilHydro restructured its onshore office activities with the loss of 2,500 white collar jobs in 2007. The process of downsizing that followed was base don voluntary departures through early retirement, and the employees affected left the company from 1 January 2008 and onwards. A revised offshore organisational model was approved on 22nd of December 2008, and the final job cuts turned out to be 352. The new model will be gradually introduced throughout 2009.
Corus Packaging Plus (CPP), a supplier of light gauge steel for packaging and non-packaging applications, announced the closure of its factory at Bergen with the loss of 260 jobs from 9 July 2008. The job losses are attributed to the difficult market situation for packaging steels.
Nortura, a group organized as a cooperative, producing meat and eggs, has cut 183 jobs by closing 3 plants in Bodø, Mosjøen and Brønnøysund. The group, as part of ongoing restructuring, decided in 2006 to build a new production plant in Nordland country, replacing the three smaller plants in Bodø, Mosjøen and Brønnøysund. This plant was officially opened in August 2008 and the number of employees has now been reduced from 270 to 83 (plus 70 temporary workers during high season).
7. Impact of financial and economic problems
The number of job loses as a result of the financial crisis has so far been relatively small. One exception is Hydro Aluminium, which as a result of the problems in the international automotive industry reported in July 2008 of substantial reductions in its workforce. A total of 120 out of 600 employees would be affected, of whom 1/3 would be dismissed or receive an early retirement offer. The financial crisis is expected to generate more job loses in the course of 2009, particularly in the manufacturing industry and in the construction industry. The contractor Skanska has warned that around 3400 employees will be laid off in Scandinavia, of which 800 may come in Norway.
Both unions and employers have proposed measures to minimize the impact of the crisis. LO has, among other things, called on the national authorities to make funds available, almost NOK 15 billion, for building- and construction efforts in the state and municipal sectors, the expansion of loans from the Housing Bank (Husbanken), emergency measures establishing 20,000 places on public work placement schemes for the most vulnerable, strengthening the municipal economy, and exploit state ownership to initiate future environmental investments. LO has also proposed the setting up of a finance commission to review the causes and effects of the financial crisis on the Norwegian economy. NHO has also put forward proposals for measures to alleviate the effects of the financial crisis.
They include measures in credit market, tax reductions, expedite the projects within transport and construction, increase investments on environmental measures, as well as various labour market measures. Labour market measures include increased support for training, strengthening and streamlining of employment exchange services and expanding opportunities with regards to company specific on-the-job training. The government has already initiated and proposed various measures in the autumn of 2008. Additional measures will be implemented in 2009. Measures already undertaken include a package of measures aimed at boosting the bank sector, loans to the export industries, as well as increased funds for transport and construction works.
Kristin Alsos, Fafo