2001 Annual Review for Norway

This record reviews 2001's main developments in industrial relations in Norway.

Political developments

The general election in September and the preceding campaign dominated politics in Norway during 2001. The ruling Labour Party, (Det norske Arbeiderpartiet, DnA) witnessed its most disastrous parliamentary election result since 1900 and, although the largest single party in parliament after the election, chose to resign from office. A new centre-right minority coalition government entered office in October 2001, comprising the Conservative Party (Høyre), the Christian Democratic Party (Kristelig Folkeparti, KRF), and the Liberal Party (Venstre) (NO0110108F). The new Prime Minister, Kjell Magne Bondevik of KRF, had also been Prime Minister in the centre coalition government which resigned in March 2000.

The new coalition does not command a majority in the Norwegian parliament (Stortinget), and relied on the support of the right-wing Progress Party (Fremskrittspartiet, FRP) to assume office. Furthermore, the new government needed the support of FRP in order push the 2002 state budget through parliament, although not without long and intense negotiations.

The new government pledged to pursue a more liberal public sector policy, with a view to creating a more efficient and leaner administrative structure, by means such as allowing greater use of competitive tendering. Furthermore, the government signalled that more extensive measures will be taken to reduce the state's ownership and control of various large companies, and that it will change the present legal framework with regard to overtime work and temporary employment. Despite the slight shift to the right, the centre-right coalition government pledged, in its supplement to the previous Labour government's state budget proposal, to continue Norway's cooperative venture on incomes policy, the 'solidarity alternative'.

Collective bargaining

2001 was the first year in several decades that no central bargaining took place in Norway, as both the private and public sectors were still covered by the provisions of two-year agreements concluded in 2000. Company-level negotiations were conducted as usual, and in a few bargaining areas negotiations were conducted as normal. .

Pay

The two-year agreements negotiated in 2000 provided for central pay rises in 2001. A general hourly wage increase of NOK 1.00 for 2001 was laid down in the 2000 private sector wage settlement (NO0005192F) between the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO). In addition, groups with a low average wage received supplementary hourly increases of NOK 1.50 or NOK 2.00 (depending on their level of pay). Similar increases for 2001 were also provided by the other private sector agreements.

In the public sector, a general annual pay increase of NOK 2,200 took effect on 1 May 2001. Furthermore, funds had also been set aside in the 2000 public sector settlement (NO0006194F) for local, sector-level, and central 'adjustment' negotiations in 2001.

According to the Technical Calculating Committee on Wage Settlements (Det tekniske beregningsutvalg for inntektsoppgjørene, TBU), average wage growth in 2001 was just below 5% (NO0202101N). On average, the increase in real income after taxation was 1.75%, which was slightly higher than in the previous year.

Working time

Working time was not a major collective bargaining issue during 2001, and average collectively agreed weekly hours remained at 37.5. However, as a result of the 2000 central agreements, a majority of employees were given four additional days of annual leave - with two extra days introduced in 2001 and a further two days in 2002.

Pay inequalities

It is generally acknowledged that a gender pay gap persists in Norway, and attention has over the past few years focused on raising pay in sectors and occupations dominated by women. In the 2000 bargaining round, teachers were awarded extra increases (NO0006194F) in order to aid recruitment in the sector. In late 2001, the Norwegian Union of Registered Nurses (Norges Sykepleierforbund, NSF) was disappointed by the fact that the new centre-right government had not introduced a similar improved wage package for nurses. In early 2002, nurses were taking strike action over a new collective agreement (NO0202102N).

Job security

There were no prominent job security agreements concluded in 2001, although the year saw a number of high-profile restructuring and merger plans, possibly involving job losses (see below under 'Company restructuring').

Training and skills development

Trade unions failed in the 2000 settlements to win employer's agreement to their demand for a central fund to finance subsistence for workers during leave for continuing and initial vocational training purposes (NO0109141N)- an issue which dominated several bargaining rounds during the late 1990s. The labour market parties nevertheless agreed to a greater commitment to training and to consider the issue further. However, no progress had been made by the end of 2001, and there is speculation in many quarters that the issue has been put to rest for the time being.

Other issues

Several 'basic agreements' were revised in 2001. These regulate issues such as the rights and obligations of trade unions and employers and the system of information and consultation, and are usually concluded at confederation level. In the manufacturing sector, the new basic agreement signed in 2001 strengthened the social partners' obligations to further gender equality and also improved the working conditions of shop stewards. In the public sector, basic agreements were also subject to revision, although the negotiations in the municipal sector between LO and the Norwegian Association of Local and Regional Authorities (Kommunenes Sentralforbund, KS) broke down because of a failure to agree on procedures for wage negotiations. The matter was due to be reconsidered in the normal bargaining over a new collective agreement in the spring of 2002.

Legislative developments

The legal framework concerning discrimination in employment was strengthened in 2001. The general prohibition against discrimination in recruitment and selection was extended to cover people with disabilities (NO0108138F). Another significant alteration was a new duty on employers, if requested by an unsuccessful job applicant, to provide information in writing on the job-related qualifications and skills of the persons appointed to a job. Furthermore, the principle of 'shared burden of proof' was introduced: if there has beyond reasonable doubt been an instance of discrimination on any grounds, the employer is required to demonstrate the probability of this not being due to discrimination. If it is proven that the employer has acted in breach of the law, the applicant may demand compensation.

On 1 January 2001, new occupational pension regulations came into force. Norwegian employers are now entitled to tax allowances on so-called 'defined-contribution' pension plans, whereby pension rights depend on how much is paid in to a scheme (NO0101119F). The tax allowances formerly applied only to 'defined-benefit' plans, whereby the employees concerned are guaranteed a fixed pension amount.

In November 2001, the Supreme Court (Høyesterett) issued a landmark ruling on closed-shop arrangements in collective agreements (NO0111131F). The court ruled that such arrangements, whereby employment is conditional upon employees' or job applicants' trade union affiliation, are in breach of paragraph 55A of the Act Relating to Worker Protection and the Working Environment (AML), as well as existing practice in connection with the European Social Charter. The issue of the closed shop and the protection of the 'negative right of association' has long been the subject of considerable debate in Norway, even if such arrangements apply to only relatively few workers. LO made a decision in January 2002 to abolish its own closed-shop practice as an employer, as a result of the ruling.

In autumn 2001, the Labour government appointed a public committee to consider and propose changes to the AML legislation. The committee's mandate is to consider aspects of the Act such as the rules concerning information and consultation, working time, non-discrimination, control and surveillance in working life and company transfers. With the coming to power of the new centre-right government in October, the committee's mandate was changed to include a review of the regulatory framework concerning temporary employment.

The organisation and role of the social partners

As in 2000 (NO0012118F), the organisational map in Norway underwent considerable change in 2001, especially on the trade union side. The Confederation of Norwegian Professional Associations (Akademikernes Fellesorganisasjon, AF) was formally dissolved just before the summer (NO0006195N), and a number of AF's smaller member associations joined the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) in the course of 2001.

The founding congress of a new teachers' union, the Norwegian Education Union (Utdanningsforbundet), was held on 2-4 October 2001 and the new organisation became operational on 1 January 2002 (NO0110105N). The new organisation was the result of a merger between the independent Norwegian Union of Teachers (Norsk Lærerlag, NL) and the once AF-affiliated Teachers Union Norway (Lærerforbundet), and has approximately 130,000 members.

Following the decision to dissolve AF in 2000, plans were soon laid for a new public sector trade union confederation (NO0009106F), involving two of AF's largest members, the Teachers Union Norway and the NSF nurses' union, and two independent unions - the Norwegian Police Federation (Politiets Fellesforbund, PF) and the Norwegian Union of Teachers. The new confederation, Utdanningsgruppenes Hovedorganisasjon (UHO) was established in December 2001 (NO0201184F). following the merger of the two teachers' unions. The new confederation's membership base is among organisations for public sector employees with university- and advanced college education.

LO held its four-yearly national congress on 5–11 May 2001 (NO0105132F). There were significant alterations in the LO leadership at the congress, with Gerd-Liv Valla elected as president, the first woman to hold this post.

In 2001, the government decided that the central state should take over responsibility for Norwegian hospitals (NO0108139F). As a result of the reform, employer and bargaining responsibility for public hospitals was transferred to the NAVO employers' organisation, which represents semi-privatised public enterprises. During autumn 2001, NAVO also acquired employer and bargaining responsibility over the national postal service and railways. As a result, NAVO almost quadrupled in size in 2001.

In September 2001, the NHO employers' confederation adopted a new 'employer policy' programme (NO0109102F). In its programme, NHO states that the wage policy pursued during the 1990s has to only a limited extent accomplished its objectives. NHO further emphasises that working life is changing and that both employees and employers demand greater flexibility than is possible in the present system. The implication of these developments for NHO is that collective agreements must become more framework-oriented and flexible, with regard to both pay and working time regulation. The focus of centralised (sectoral) agreements must be on overall principles and the 'rules of the game', while pay and working conditions should mainly be determined at the company level.

In June 2001, Abelia was founded as Norway's first employers' association for the information and communications technology (ICT) sector (NO0107136F). The new association is a member of NHO and initially groups around 300 member companies from the ICT sector and from adjacent knowledge-based companies and consultancies. Abelia's ambition is to be an 'organisational alternative' for companies in the ICT sector, by combining the role of industry association and employers' federation.

Industrial action

There were no major strikes or industrial action in Norway during 2001, the reason for this being the fact that no major negotiations took place during the year.

National Action Plan (NAP) for employment

Norway is not under any obligation to formulate an National Action Plan (NAP) in response to the annual EU Employment Guidelines, as it is not an EU Member State. However, in 2001, as in previous years, Norwegian employment and labour market policy was characterised by a wish to safeguard employment in the private sector industries most vulnerable to international competition, as well as to maintain a high rate of overall employment. As such, policy goals were geared towards maintaining wage moderation in order to strengthen Norwegian competitiveness in relation to its main trading partners. These are the main elements of the so-called 'solidarity alternative', which has guided Norwegian incomes policy for over a decade. The new centre-right government has pledged to continue this cooperative venture on incomes policy.

Company restructuring

2001 was a year of large-scale company restructuring in Norway. In late November, an agreement was reached to merge the long-troubled Norwegian engineering and construction group Kværner with its competitor Aker Maritime (NO0112108N). The formal merger of the two companies was due to take place in March 2002. The financial problems of Kværner had been common knowledge for some time when the merger proposal was put forward by Kværner's largest shareholder, Aker Maritime, in early 2001. Initially employee representatives, as well as the management of Kværner, expressed significant discontent with the decision to merge, which was eventually accepted because it was seen as the only alternative to bankruptcy.

The second major merger event in Norway in 2001 was the bid put forward by the Scandinavian Airlines Systems (SAS) to purchase the Norwegian airline, Braathens. Braathens had been on the brink of bankruptcy, and the situation worsened during the autumn of 2001 (NO0106134N). The initial stance of the Norwegian Competition Authority (Konkurransetilsynet) was to reject the bid, but it later reversed its decision in the light of changing market conditions, related, among other matters, to the terrorist attacks on the USA of 11 September 2001 (NO0111125N). However, although Braathens now appears to have been saved by the takeover, both SAS and Braathens initiated significant staff reductions as a result of changing market conditions, and Braathens warned in late 2001 that as many as 20% of its employees may be made redundant in the months to come.

There were also significant developments in the public sector during 2001. In June, parliament approved a transfer of ownership of public hospitals, as well as most county and municipal specialist health services, from the counties and municipalities to the state (see above under 'The organisation and role of the social partners'). The formal transfer of ownership took effect on 1 January 2002, and the hospitals now operate as subsidiaries under five regional 'health enterprises' and are wholly owned by the state. The implication is that the public hospitals are now separate legal entities, enjoying significant financial and operational independence, and thus not an integral part of the central government administration.

The government's programme for a major restructuring of the armed forces was approved by parliament in June 2001. The government warned of significant staff reductions in the years to come, among both civilian employees and military personnel.

In January 2002, the Minister of Labour and Government Administration, Victor D Norman, informed parliament of the new centre-right government's plan for large-scale restructuring of the public sector (NO0202103F). The main objective of the plan is to make public sector services more efficient and to reduce the costs of state administration. The restructuring proposal involves a number of measures, of which the most controversial is the relaxation of rules governing employment protection and changes to occupational pension schemes in the public sector.

Employee participation

The EU European Company Statute and its employee involvement provisions (adopted in October 2002 - EU0110203N) was not formally placed on the agenda for discussion in Norway in 2001, nor was the new Directive on information and consultation (finally adopted in February 2002). Both, however, are likely to be extended to Norway through the operation of the European Economic Area (EEA) agreement. In Norway, the issue of information and consultation is traditionally an area left to the social partners themselves, and as such mostly regulated through agreements. However, the gaps in the coverage of collective agreements means that supplementary legislation making the agreed regulations universally applicable to all employees will have to be adopted.

In 2001, in connection with the implementation of the 1997 EU Directive (97/81/EC) on part-time work, Norwegian regulations concerning the election of employee representatives to company boards were changed to enable part-time employees working less than 50% of normal hours to participate in ballots, as both voters and candidates.

New forms of work

New forms of work are frequently discussed in Norway. Since new regulations concerning the hiring in/out of labour came into force in June 2000, there has been a significant increase in the activities of temporary work agencies. This has been notable in the hospital sector, where there has been an upsurge in the hiring out of nurses and other healthcare workers, including from outside Norway. The NSF nurses' union has concluded collective agreements with agencies that hire out nurses.

Other relevant developments

On 3 October 2001, the social partners and the outgoing Labour government concluded an 'agreement of intent' with the view to creating a more 'inclusive working life' (NO0110107F). It is hoped that the agreement's various measures will help to reduce the use of sickness benefits and cut the number of employees who are dependent on disability pensions. The agreement addressed the controversial issue of sick pay by setting an explicit goal of reducing the sickness absence rate by at least 20% over the period 2001-5, and stating that the present sick pay scheme will remain unaltered for the time being. The new centre-right government subsequently signalled that it would monitor developments closely, and warned that changes to the legal framework may be made if the agreement fails to accomplish its objectives.

Outlook

As has been the case for most settlements in the past few years, there is great suspense associated with the spring 2002 wage bargaining round. In 2002, all the existing two-year agreements are to be renegotiated and there are significant challenges facing the social partners in most sectors.

Wage bargaining in the private sector LO-NHO area will most probably occur at industry level. There are, however, reasons to believe that the greatest challenges will come in other bargaining areas. In the NAVO semi-public bargaining area (see above under 'The organisation and role of the social partners'), new agreements are to be negotiated for employees in the public hospitals which have been transferred from the state sector and the county/municipal sector. Here, attempts will be made to achieve convergence between the differing wage systems for the state and municipal sectors. Most of the unions involved in the hospital reform agreed to postpone negotiations over new agreements until the scheduled bargaining round in spring 2002. However, the NSF nurses' union refused to do so, and took strike action in January 2002 (NO0201114N).

As in bargaining in previous years, large groups with higher education in the public sector - including nurses - are demanding significant wage increases in 2002. In the 2000 settlement, teachers were given special attention (NO0006194F), and there are reasons to believe that in 2002 nurses may receive the same special consideration. Supporters of this approach argue that the government must take action to raise nurses' wages in order to improve recruitment.

Furthermore, wage statistics indicate that municipal employees experienced the weakest wage growth in the period 2000-1 (NO0202101N). LO member unions in the municipal sector will thus also demand significant increases in 2002. The municipal employers, on the other hand, want to alter the wage system so as to allow for more individual wage-setting, which has been rejected by three out four trade union confederations.

There are fears in many quarters that the policy of wage moderation, which marked much of the 1990s, will be further undermined in the 2002 pay settlements. There are worries that these developments will serve further to undermine the position of those industries most vulnerable to international competition, which have traditionally set the pace for wage formation in Norwegian collective bargaining. NHO has called for an end to centralised wage formation and a change in incomes policy. A 2002 settlement generating much higher pay growth than among Norway's main trading partners may expedite NHO's wish gradually to move the bargaining system in the direction of greater decentralisation.

The comparatively high sickness absence rate in Norway and the national sick pay scheme was high on the agenda during the 2001 election campaign. Although an agreement on this question was reached between the social partners in early autumn 2001, the issue will most probably remain on the agenda in 2002. Many commentators believe that the goal of a 20% reduction in sickness absence will be difficult to achieve, especially in a situation where the pressure on the labour market is as great as it is today.

Finally, the proposed restructuring of the public sector will also dominate 2002. Many of the measures proposed are controversial, and have been met with significant opposition both from within parliament and among trade unions.