Minimum wage for cleaning industry

In June 2011 the Norwegian Tariff Board declared that the collective agreement in the cleaning industry was generally applicable and that a minimum wage would be introduced in this sector from 1 September 2011. Both the unions and the employers’ representatives in the cleaning industry agreed that such an extension of the collective agreement was necessary. The ruling of the Board was nevertheless passed with some dissenting votes from the employers’ side.

General application of agreements

According to the Act of 4 June 1993 No. 58 relating to the general application of wage agreements (52Kb PDF), the General Application Act, the so-called Tariff Board (Tariffnemnda) is vested with the authority to make decisions about making collective agreements generally applicable to all workers in Norway. The purpose of the act is to ensure that foreign workers’ wages and employment terms are in line with those of Norwegian workers. So far, decisions regarding the general application of agreements have been made in relation to collective agreements in sectors such as construction, shipyards, electrical work (in parts of Norway) and the ‘green’ sector (NO0912029I, NO0808019I, NO0612029I, NO0411103F, NO0509103F).

Decision by Tariff Board

On 21 June 2011 the Tariff Board decided to make the collective agreement in the cleaning sector generally applicable. The petition to do so was submitted by the Norwegian Confederation of Trade Unions (LO), which, together with its affiliated trade union the Norwegian Union of General Workers (NAF), is party to the collective agreement. The party representing the employer side is the Confederation of Norwegian Enterprise (NHO) together with the National Federation of Service Industries (NHO Service) the employer association representing cleaning industry companies.

A decision to make an agreement generally applicable may only be taken if it is proven that foreign workers are working, or will be conducting work, under conditions that are generally worse than those established under the provisions of the relevant national collective agreement or common practice within the specific geographical area and occupation.

The members of the Tariff Board agreed that the documentation requirements had been met in this case. Disagreement centred on the level of pay rates to be made generally applicable. The LO board member wanted to use the rates established in the collective agreement, while the NHO member opposed this. The NHO called on the board to take advantage of the General Application Act’s opening preamble (section 6) to make other provisions than those laid down in the agreement generally applicable. The independent members of the board, however, supported LO’s motion to use the existing rates in the collective agreement.

The leader of the NHO, John G. Bernander, argued that the board’s verdict goes beyond the main rationale behind the general application, namely to protect employees against unfair working conditions. He feared that the decision would have serious consequences for many actors in the industry, especially small cleaning businesses in rural areas. Wage rates in the cleaning industry are the highest for unskilled workers ever made generally applicable in Norway. Bernander argued that, as an alternative, terms of pay established in other agreements that also regulate this type of work, such as the collective agreement in the hotel and restaurant sector, could also be used for cleaning.

The Director of NHO Services, Peter Furulund, on the other hand, stated that the board’s decision marked a happy day for all those fighting for better conditions in the cleaning industry. He felt it was also an important step in the fight against social dumping. The industry suffers from many disreputable companies and a large black economy. The general application of the cleaning industry agreement will help to put things right, said Furulund.

Both LO and NAF welcomed the decision. Lise Myrvold, union secretary of NAF, said that the decision, together with the introduction of ID cards for cleaners, regional safety officers and a certification scheme for cleaning companies, are key measures to combat social dumping in the cleaning industry. Following the board’s decision the only thing that remains to be put in place is a certification scheme for cleaning businesses. A proposal to this effect was sent to the affected parties in July 2011.

Commentary

The cleaning industry agreement is the first is the first pay agreement of its kind subject to general application in Norwegian working life. It is a standard-pay agreement (normallønnsavtale), which means that the rates in the collective agreement are higher than in agreement areas where company-level negotiations take place. In other sectors the wage rates set by the Tariff Board have been minimum rates that are considerably below the sector average.

There was some uncertainty over how the tariff board would deal with this case. First, because wage statistics indicated that around 15% of employees in the industry were on less than the relevant rate, which meant that a general application would drive wages upwards. In addition there are other agreements that regulate this type of work, where rates are lower. How the decision will affect other agreements has not been finally settled. However, the board’s decision means that the rate in the cleaning industry agreement will now be the minimum wage for most of the cleaning industry.

Kristin Alsos, Fafo

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