Uncertainty associated with the 1998 pay negotiations

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During the spring of 1998 most of the pay agreements in Norway are to be renegotiated. It is anticipated that the right to further education and training will be a central issue during this year's settlement.

The forthcoming spring 1998 pay negotiations will lead to a "main agreement", meaning that 1996's national pay agreements are to be renegotiated. Several questions are still open, and that means that there is much uncertainty associated with this year's negotiations. Firstly, will it be possible to retain the moderate wage growth which has characterised the Norwegian economy for the past 10 years? Secondly, at which level will bargaining take place between the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO)? And finally, public sector bargaining may be additionally complex due to the split within the Federation of Norwegian Professional Associations (Akademikernes Fellesorganisasjon, AF), and the establishment of a new Confederation for Academics (Akademikerne) (NO9711133F).

Pay claims

Pay settlements in the 1990s have so far been characterised by attempts to reduce unemployment by way of moderate wage increases (NO9702104F). The national strategy to increase employment, the Solidarity Alternative, encompassed the five-year period 1992-7. However, both LO and NHO seem to be set to continue the main features of this policy. It is anticipated that the right to further education and training will be a central issue in this year's pay negotiations (NO9710127F). The question has regularly been on the agenda since the last main settlement in 1996, and senior officials in LO have emphasised the importance of this reform. At the same time, it is clear that this year's wage settlement will take place against a background of healthy levels of profitability among large firms in many sectors of the Norwegian economy, combined with a tighter labour market. This might make it difficult to reach what would be considered to be a moderate settlement. The labour market parties will formally decide on their bargaining demands during the first half of February.

Type of settlement within the LO-NHO area

The major wage agreements in the private sector are due to expire on 31 March 1998. The confederations in the private sector - NHO, LO and the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS- are parties to these agreements, and may jointly renegotiate them (known as a coordinated settlement). In Norway, there is a long-standing tradition that the type of settlement is decided upon prior to the commencement of negotiations for main agreements in different sectors, and that it is LO's general council which decides whether or not the LO-NHO negotiations are to be coordinated or if they are to be conducted separately by their various member federations. In the general council all of the LO's affiliated federations are represented and have a right to vote, even those which are not covered by the private sector settlement. The last coordinated settlement took place in 1992, while the 1994 and 1996 settlements both were federation-based though a fair amount of coordination took place, particularly with regard to the pay increases and welfare provisions. So far, there is no consensus regarding the type of settlement amongst the LO's federations. However, prior to this year's settlement, NHO has already signalled that it believes a coordinated settlement to be the best policy since LO's claims will include social reforms such as the right to further education and training (NO9712141N).

Public sector settlement marked by the AF split?

The public sector agreements expire on 30 April 1998, and the results within the private sector have normally laid the ground for what it is possible to achieve within the public sector. This year's settlement may be complicated by the fact that AF is split. During the autumn of 1997 seven federations affiliated to the AF disassociated. Together with The Norwegian Medical Association (Den Norske Lægeforening), these federations established a new confederation for academically qualified staff, Akademikerne. It is now clear that this new confederation will not be able to participate as a negotiating party within the municipal sector. Within the state sector, the Ministry of Labour and Government Administration has not yet formally replied as to whether or not they will recognise the new confederation as a negotiating party during this year's negotiations. Even though Akademikerne seems to fulfil the statutory formal requirements to be a bargaining cartel, it is likely that this new confederation will not be recognised until the membership dispute with AF is settled. According to AF's statutes the disassociation is not effective before 31 December 1998, and AF is not willing to push this date forward.

Commentary

Both within the Government and the top tiers of LO and NHO, there is a consensus that the Norwegian economy is dependent on a moderate wage settlement. At NHO's wage seminar which was held for the press at 12 January 1998, its director, Karl Glad, emphasised that it was important to ensure that the competitiveness of Norwegian firms was maintained. Not surprisingly, NHO also stated that there was little room for significant wage increases in the forthcoming settlement. At the 1997 LO congress, the delegates voted in favour of continuing its support to the main features of the so-called "Solidarity Alternative", whereby moderate wage settlements have been combined with welfare reforms (NO9705110F). Also the new Prime Minister, Kjell Magne Bondevik of the Christian Democratic Party, places great emphasis on a moderate wage settlement. Nonetheless, there is still a certain amount of uncertainty associated with the forthcoming settlement. This uncertainty is in part due to the expected difficulties in winning the acceptance of workers to the view that the right to further education and training should be given a greater priority than higher wage increases. Although a further education and training reform has significant support amongst central trade union representatives within LO's member federations, we also find advocates for significant wage increases. The choice of the type of settlement is an important indicator for the weight placed on further education and training. It will be easier to negotiate and implement such a complex and overarching reform with a coordinated settlement.

An impression that moderate wage increases do not apply to all groups may also influence the employees' willingness to accept a proposal which does not include significant pay rises. This may be particularly relevant for a main settlement in the 1998 negotiations, where the negotiating results must be put to the vote of all the members by way of a ballot. Recently there has been a certain amount of media coverage focusing on the past year's wage increases for particular groups, amongst others financial brokers and dealers as well as certain top managers within the Norwegian business community. In the 1997 settlement a clause to the effect that all groups within the firms were to be encompassed by the settlement's ceiling, was included (NO9704108F). Wage statistics for 1997 show, however, that higher administrative staff within NHO's member firms have had pay increases of as much as 5.5%, as opposed to 4.4% for manual workers. (Kristine Nergaard, FAFO Institute for Applied Social Science)

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