Incomes policy under debate

Cost increases and redundancies following the spring 2002 wage settlement in industry placed the issue of incomes policy cooperation on the Norwegian industrial relations agenda once again in September 2002, with the government calling a meeting with the social partners to discuss the issue. While the LO trade union confederation and NHO employers' organisation have discussed measures to support crisis-hit manufacturing industry, the other union organisations have some misgivings.

Following the spring 2002 wage settlement (NO0206105F) and as a consequence of the continued downturn in the Norwegian economy, the government and social partners have intensified debate on the future of their cooperative venture on incomes policy that started during the 1990s (NO0109102F). The Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO), the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) and the government have, according to media reports, met secretly to discuss further cooperation, and the issue will most probably be discussed again at a meeting planned for September 2002.

The most important reason for the increased communication between LO and NHO is the present situation in Norwegian manufacturing industry. In recent months, a significant number of redundancies has taken place, and companies have warned of further redundancies and company closures in the months to come. The director general of NHO, Finn Bergesen, stated in June 2002 that, as a result of the pay increases agreed in the 2002 wage settlement, those parts of industry most vulnerable to international competition are moving towards a major crisis, which will result in major job losses, company closures and companies relocating their production out of Norway. Taking this into consideration, Mr Bergesen called for a crisis meeting between the social partners and the government to establish a 'common conception of economic developments' in Norway. The Prime Minister, Kjell Magne Bondevik, raised similar concerns when he urged the parties to show more restraint in the future and to place more emphasis on Norwegian industry’s competitiveness vis-à-vis the country's main trading partners. The government thus summoned all the major social partners to a meeting in early September to discuss the prospects for further cooperation on incomes policy, with a view to preventing negative developments in the future.

There has been growing criticism of Norwegian trade unions, and LO in particular, in light of the significant pay increases awarded in the 2002 wage settlement. The 2002 wage settlement is seen by many as evidence of LO inability and unwillingness to deliver wage restraint as part of broader incomes policy cooperation. The president of LO, Gerd-Liv Valla, has emphasised LO's willingness to continue cooperation on incomes policy, but only in so far as the employer side and the government demonstrate a similar commitment. At a press conference on 27 August 2002, Ms Valla stressed that continued cooperation on incomes policy hinges on the willingness of the employers and the government to contribute. She thus urged NHO to make efforts to freeze management salaries for a year. Ms Valla further stated that the government’s contribution should be to abandon its plans for significant tax cuts for high-incomes groups, and instead direct attention to those with the lowest wages. She also accused the government of being too passive in relation to the emerging crisis in manufacturing industry. Mr Bergesen of NHO rejected Ms Valla’s plea as an unviable proposition, since NHO is not in a position to determine the salaries of management in its member companies.

Ms Valla’s position does not enjoy the wholehearted support of the trade union movement. There is growing discontent among the other main union confederations with what is seen as LO’s attempt to monopolise the debate concerning the future of Norwegian incomes policy, and Ms Valla’s latest comments have added to this dissatisfaction. The leader of the Federation of Norwegian Professional Associations (Akademikerne), Per Kristian Sundnes, went so far as to describe the LO leader as arrogant, and claimed that she falsely pretended to represent all wage earners in Norway.

The recent controversies suggest that the meeting between the parties scheduled for 9 September would not proceed easily, and it remains to be seen whether the parties are able to reach agreement on important issues such as the role of those parts of manufacturing industry exposed to international competition in wage formation, and of wage moderation in a future cooperative venture on incomes policy.