1998 Annual Review for Norway

This record reviews 1998's main developments in industrial relations in Norway

Introduction

In 1998, Norwegian GDP grew by 2.5%. For mainland Norway alone (excluding the offshore sector), the growth rate was 3%. The consumer prices index rose by 2.3%. The central government budget surplus, which is transferred to the Government Petroleum Fund, was NOK 34.3 billion. If revenues from the petroleum sector are excluded, Norway had a public budget deficit of NOK 17.1 billion.

The summer and autumn of 1998 were characterised by turbulence for the Norwegian krona (NOK), a rise in interest rates and falling oil prices. This led to increased concern for the Norwegian economy (see below).

The favourable trend in employment growth which was observed in 1997 continued in 1998. Unemployment stood at 3.2% in 1998, compared with 4.1% in 1997. The number of people covered by active labour market schemes was reduced and employment increased by approximately 50,000.

Throughout 1998, Norway had a minority coalition government comprising of three centre parties - the Christian Democratic Party (Kristelig Folkeparti), the Centre Party (Senterpartiet) and the Liberal Party (Venstre). During the autumn, the government came to a compromise with the Conservative Party (Høyre) and the Progress Party (Fremskrittspartiet) regarding the state Budget (NO9811100N).

Key trends in collective bargaining and industrial action

Spring 1998 saw the two-yearly renegotiation of Norway's national sectoral collective agreements. The wage negotiations in the private sector bargaining area covered by the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisajson, NHO) were conducted at industry level - ie the trade union federations affiliated to LO and NHO's branch associations negotiated separately over each agreement (NO9802150F). However, LO and NHO negotiated at confederal level over several issues, including an action plan for the reform of further and continuing training, prior to these industry-level negotiations (NO9804161F).

The bargaining round produced higher than expected wage increases (NO9805164F). Pay growth for 1998 is estimated at 6.25%, varying from 5.5% in manufacturing to 7% in building/construction and transport. This was far higher than any other year during the 1990s (the 1997 average figure was 4.3%). The growth in real wages for 1998 is estimated to be 3.7%, the highest for the past two decades.

Several of the wage bargaining rounds which commenced during spring 1998 resulted in strikes. This was the case for: the private transport sector; LO-organised employees in the Telenor telecommunications company; and several public sector groups within the Federation of Norwegian Professional Associations (Akademikernes Fellesorganisasjon, AF) and the Confederation of Vocational Unions (Yrkesorganisasjonens Sentralforbund, YS) (NO9806173F). While the parties in the transport sector reached a settlement through new negotiations, the Telenor conflict and several of the strikes within the public sector were resolved through the use of compulsory arbitration by the National Wage Board (NO9810191F).

Concerns for the economy were raised in summer and autumn 1998, following turbulence experienced by the NOK, a rise in interest rates and falling oil prices (NO9812115N). As a result, at a meeting of the "contact committee" on incomes policy in December, the social partners and the government agreed to revive cooperation on incomes policy (NO9812117N). From 1993 until 1998, such cooperation contributed to ensuring moderate wage settlements and thereby enhanced job creation. In December, the government appointed a committee which was asked to make preparations for the spring 1999 wage settlement, with a view to including the further and continuing training reform, amongst other issues. A more long-term committee was also to be appointed, with the task of evaluating measures to ensure full employment. In addition, a committee was to be appointed to take a closer look at the institutional framework for wage negotiations and incomes policy cooperation.

Industrial relations, employment creation and work organisation

In Norway, issues such as the reduction of working time, early retirement policies and other measures aimed at employment growth have not been on the political agenda recently. Instead, the employment debate has centred around a broad political acceptance of encouraging older employees to continue working as long as possible, as well as assisting groups with special needs to be reintegrated into the labour market rather than rely on welfare payments.

Despite the political concern with encouraging people to participate longer in the labour market, other schemes have often had a contradictory effect. A voluntary early retirement scheme was developed through collective bargaining throughout the 1990s. This scheme covers substantial parts of the Norwegian labour market, and was most recently amended during the 1997 bargaining round, when the eligible age group was extended to include people aged 62 and 63.

Increased benefits for parents with young children may also lead to reduced participation in the labour market with effect from the autumn of 1999, following the introduction of a controversial new child support scheme in autumn 1998 (NO9807180N). Under the scheme, parents of one-year-old children who do not send their child to a publicly-funded nursery school are eligible for a cash benefit. In 1999, the scheme will be extended to also include two-year-old children. Critics of the scheme fear that it may entail reduced labour market participation amongst women, particularly within occupations where there already is a shortage (for example, in healthcare and social services).

During 1998, no substantial changes were made to working time regulations. However, several issues linked with greater labour market flexibility were on the agenda. In connection with the bargaining round, the parties in the metalworking industry agreed to ask LO and NHO jointly to examine new working time arrangements (NO9804162N). Both the needs of employees for flexibility during different phases of their lives and companies' needs for flexibility in increasingly competitive marketplaces are to be examined more closely in a report. Among the measures to be reviewed are the different types of "time savings account" schemes. The deadline for the report was 1 July 1999.

During 1998, the government made it known that it wished to appoint a committee to review the 1977 Worker Protection and Working Environment Act's provisions regarding working time. Owing to skill shortages within certain trades and sectors, the provisions regulating maximum allowed overtime are to be reviewed (NO9810193N).

A publicly appointed committee reviewing issues including current provisions governing temporary work agencies and the hiring-out of labour, presented its recommendations in the autumn (NO9809186F). There is a general ban on the hiring-out or leasing of labour in Norway, though with a number of exemptions, including one for temporary work agencies. The committee proposed amending the regulations in such a way that it is the act of hiring in labour - and not the act of hiring out labour - which is regulated. Businesses would be able to use employees from temporary work agencies in the same type of situations in which they currently may employ persons on fixed-term employment contracts. The main recommendations from the committee were unanimous, but the proposals have been met with some criticism from various trade union organisations.

Reform of further and continuing training/education was put on the agenda in 1997 when a public committee recommended increased efforts within this area. Prior to the industry-level bargaining in the private sector in 1998, LO and NHO agreed on an action plan on the issue. The two confederations agreed that: employees should have an individual right to leave of absence for educational purposes; people who have not completed 12 years of schooling (primary and secondary school) should be offered the opportunity to do so through the public school system; and further and continuing training/education should be strengthened at the workplace, funded by the labour market parties and the government (NO9804161F).

Several publicly appointed committees subsequently dealt with questions relevant to the reform of further and continuing training/education. Notably, the committee which looked at the rules which govern leave of absence for educational purposes, proposed a system whereby: employees would have the right to unpaid leave for up to three years; the education concerned should be relevant to the labour market, but not necessarily relevant to the employee's present job; employees would have the right to take additional leave once they had been back in employment for twice the length of time of the duration of the leave; and employees who took a brief period of leave could demand a new period of leave after one year (NO9812103F).

Developments in representation and role of the social partners

In 1998, 55% of Norwegian employees were members of a trade union. Union density has remained more or less the same over many years. The vast majority of Norwegian trade union organisations are affiliated to one of the four confederations (LO, YS, AF and Akademikerne). LO is the largest confederation, accounting for around half of all organised employees, but its share of union members has gradually declined over the past years.

Autumn 1997 saw major defections from AF, when several of its affiliates organising employees with higher degrees from universities and colleges left and established a new confederation, Akademikerne. During spring 1998, even more affiliates decided to leave AF (NO9807174F). There are thus now two confederations organising employees with higher degrees.

NHO is the dominant private sector employers' organisation, and has traditionally set the standard for wage determination in other sectors through negotiations with LO. However, there are a number of other employer organisations within the private sector, and competition between different employer organisations over new members and political influence have tended to increase over the past years (NO9809189N).

In February, the representative bodies of LO and NHO approved a new Basic Agreement for the four-year period 1998-2001 (negotiated in November 1997). Among other provisions, the agreement expands the rights of trade union representatives at the overall concern level ("concern representatives") have been expanded. A specific concern representative may be elected in concerns with more than 200 employees. The rights and duties of union representatives set out in the Basic Agreement are made applicable to concern representatives. In addition, it was agreed that companies which breached information and consultation rights would face economic sanctions.

There were no major changes in 1998 to the regulations governing employee representation on the company board or other decision-making bodies of a company.

The European Work Councils (EWC s) Directive was implemented in 1995/6 by way of a central collective agreement, supported by legislation. The general opinion is that the Directive, so far, has not had any significant impact on employee representation in multinational companies operating in Norway (TN9807201S). The majority of Norwegian-owned companies which are affected had already established EWCs when the Directive was made effective in Norway.

A substantial number of Norwegian employees have the right to be represented in the company board and other decision-making bodies of the companies of which they are employed. The current system for employee representation in a company's decision-making bodies is uncontroversial, and issues relating to the European Company Statute have so far not affected the debate in Norway (TN9809201S).

Industrial relations and the impact of EMU

Norway is not a member of the EU, and the creation of EMU and a common European currency will not have direct implications for the Norwegian economy. The general opinion is that neither EMU nor the euro will entail significant changes to Norway's economic policy or industrial relations system. The main social partner organisations consider that the Norwegian industrial relations system is well equipped to meet the challenges that the introduction of the euro brings. However, they are concerned about the danger of a more unstable Norwegian currency and have suggested examining the possibilities for linking the NOK closer to the euro. Increased volatility of the NOK in autumn and winter 1998 led to a debate on whether or not Norway's stable exchange rate policy is sustainable.

Conclusions and outlook

At the end of 1998, the Norwegian economy faced significant challenges, and there were expectations that unemployment would rise in 1999 and into 2000 (NO9812115N). The 1998 pay settlement led to substantially higher wage growth than had been the case in previous years, and was thus a departure from the moderation which has otherwise characterised the 1990s. During autumn 1998, however, the government and the social partners signalled an interest in revitalising cooperation on incomes policy. It was expected that the 1999 pay bargaining round - a mid-term adjustment of the two-year agreements signed in 1998 - would lead to very moderate wage increases. Questions relating to the planned reform of further and continuing training should feature during the 1999 wage settlement. The labour market parties have been discussing working time arrangements, but any changes to current collective agreements will take place during the main bargaining round in 2000, at the earliest. (Kristine Nergaard, Fafo Institute for Applied Social Science)