2003 Annual Review for Norway

This record reviews 2003's main developments in industrial relations in Norway.

Political developments

The centre-right minority coalition government which took office in October 2001, comprising the Conservative Party (Høyre), the Christian Democratic Party (Kristelig Folkeparti, KRF), and the Liberal Party (Venstre), remained in power during 2003 under Prime Minister Kjell Magne Bondevik. The 2004 state budget compromise reached in November 2003 was seen as a historic event as, for the first time since the period following the Second World War, the opposition Norwegian Labour Party (Det norske Arbeiderpartiet, DnA) and Høyre were jointly involved in concluding a state budget agreement (NO0312101N).

Norwegian politics in 2003 were dominated by the local government elections that took place in September. Elections were held for both municipal and county governments. The elections brought major losses for KRF, the Prime Minister's party. The Conservative Party, the largest party in the coalition government, also saw a drop in electoral support. DnA improved its share of the vote in comparison to its poor result in the general election of 2001 (NO0201187F and NO0110108F), but nevertheless experienced a slight drop in support compared with the previous local elections.

Collective bargaining

The 2002 'main' collective bargaining round had generated overall wage growth of 5.7%, which was higher than what was regarded as responsible in light of the present economic situation, and contributed to further undermining the competitiveness of national industry in relation to Norway’s main trading partners (NO0302104F). Moreover the 2002 settlement was also expected to contribute to significant wage growth in 2003 (through 'wage carry-over'). The economic situation deteriorated in 2002, and so did the financial situation of many manufacturing industry companies, which led to redundancies. Unemployment rose and prognoses for 2003 and 2004 indicated further increases to come. Thus, in connection with the 2003 wage settlements, the social partners pledged to reduce wage growth rate closer to the level of Norway’s main trading partners. (NO0302105F)

Pay

The bargaining round in 2003 was an 'intermediate settlement', mainly entailing possible revisions to the pay levels set by the two-yearly agreements entered into in 2002 (NO0206105F). In most bargaining areas, no general pay adjustments were agreed in 2003. In the private sector area covered by the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) (NO0304101N) and the Federation of Norwegian Commercial and Service Enterprises (Handels- og Servicenæringens Hovedorganisasjon, HSH), adjustments were made to the wages of low wage-groups and a framework was set for subsequent company-level bargaining, which was conducted as usual. However, the company-level bargaining parties were given the opportunity to postpone or ignore the pay adjustments made at the central level if necessitated by the financial situation of the company. Similar results were achieved in the negotiations in parts of the 'semi-privatised' NAVO bargaining area (except health personnel).

In the central state sector and the municipal sector, the social partners agreed not to negotiate central increases, nor to make central adjustments or pursue company-level bargaining in 2003 (NO0305101N). In both sectors, the partners also agreed to carry out wage negotiations in early 2004, if it became evident that wage developments among public sector employees were lagging behind developments in the private sector. These types of guarantees are relatively rare in Norwegian collective bargaining. The agreements further stipulate that the wage growth in the public sector is to be attuned to the average growth rate among blue- and white-collar workers in manufacturing industry. It thus seems that the trade unions in the public sector managed to gain acceptance for this new principle whereby wage growth in public and private sector is compared. White-collar workers had previously not been included among the groups setting the bargaining framework for wage formation in Norway (the so called 'trend-setting trades'), which had been a source of great frustration among public sector organisations, given that this group has witnessed a more favourable wage growth than blue-collar workers (NO0007198F).

The average wage growth in 2003 (NO0403101N) for all sectors of the economy is estimated at approximately 4.5% in the national state budget for 2004. Preliminary figures from the Technical Calculating Committee on Incomes Settlements (Teknisk Beregningsutvalg for Inntektsoppgjørene, TBU), referred to in the media, suggest an average wage growth of 4.25% - varying from 3.5% (blue-collar workers in manufacturing industry) to 5.5% (hospitals and educational personnel).

Working time

There were no changes in collectively agreed working time in 2003. However, in the municipal sector the social partners agreed to establish a committee to look into the subject of 'involuntary' part-time work before the 2004 'main' bargaining round, including the possibility of testing measures to combat such part-time work. Late in 2003, the government also put the subject on the agenda by establishing a public committee to look into the subject.

Job security

Unemployment increased during 2003. As part of the authorities’ contribution to the social partners' cooperation on incomes policy prior to the 2003 wage settlement, the government agreed to increase funds reserved for labour market measures.

Equal opportunities and diversity issues

In most sectors, the 2003 negotiations resulted in zero or very moderate central-level wage increases. However, in the private sector, groups with low incomes and groups without the right to company-level wage adjustments were granted central raises. Since there are more women than men among these groups, a higher proportion of women than men received central-level wage increases. This is a negotiating principle for public sector. The fact that such increases were linked to a blue-collar/white-collar average rise was welcomed by the female-dominated public sector trade unions. In the municipal sector, the social partners agreed to map gender pay differences before the 2004 wage negotiations.

Training and skills development

The issue of training and skills development did not feature on the central-level bargaining agenda during 2003.

Legislative developments

In February, the rules regulating overtime work were changed (NO0304103F). The Act relating to Workers Protection and Working Environment (AML) was amended to allow for greater flexibility in relation to the use of overtime work. Furthermore, the opportunity to work voluntary overtime (ie between 200 and 400 hours per year) was made easier by allowing such extended overtime on the basis of an agreement between the employer and the individual employee (previously, overtime beyond 200 hours per year was only allowed on the basis of an agreement with the relevant trade union or of a permit issued by the Labour Inspection Authority).

In April 2003, the rules regulating shop opening hours were changed (NO0304103F). Opening hours for ordinary retail shops have been a source of great controversy over the years, and have been subject to change on a number of occasions (NO9707116F, NO9901108F, NO9906138N and NO9804160N). This time, the Opening Hours Act was abolished, which means there are now no restrictions on opening hours on ordinary weekdays, including Saturdays. The general ban on trading during Sundays and public/religious holidays, however, remains in place.

In the summer of 2003, a proposal was put forward to alter the AML legislation in order to bring it into line with the EU framework equal treatment Directive (2000/78/EC) (EU0010274F). The proposal includes a ban on age discrimination and an extension of existing regulations on discrimination, which are at present applicable only to cases of discrimination in connection with recruitment. The proposed new rules cover all aspects of the employment relationship (NO0301102N and NO0308105T). The government’s proposal will most probably be approved by parliament during the spring of 2004.

In autumn 2003, parliament approved new legislation imposing a 40% quota of female board members in both public and private limited companies. The new rules will be made applicable to private companies only if this quota is not achieved voluntarily (NO0203104F). At present, the number of women on company boards in Norway is well below the stipulated 40% goal, and private companies have until 2005 to increase their quota to avoid being subject to the new rules.

The organisation and role of the social partners

In June 2003, the Norwegian Union for Municipal and General Employees (Fagforbundet) was created as a result of a merger between the Norwegian Union of Municipal Employees (Norsk Kommuneforbund, NKF) and the Association of Health and Social Care Personnel (Norsk Helse- og Sosialforbund, NHS) (NO0308101N). With approximately 300,000 members, a majority of whom are women, it is the largest trade union in Norway. The new organisation is affiliated to the Norwegian Confederation of Trade Unions (Landorganisasjonen i Norge, LO). Other trade union merger processes were also initiated in 2003, although not completed (NO0312102F and NO0312102F). These merger efforts have been largely triggered by a trend towards overlapping organisational boundaries as a result of reorganisation and deregulation in the public sector in recent years, as well as a general consensus among the unions concerned about the advantages of forming larger organisations in order to cater more adequately for members’ interests and needs.

Industrial action

No industrial action of any significance took place during 2003.

Employee participation

There were no significant developments in relation to the issue of employee information and consultation during 2003. The implementation of the EU information and consultation Directive (2002/14/EC) (EU0204207F) and the employee involvement Directive (2001/86/EC) linked to the European Company Statute (ECS) (EU0206202F) were being considered by a committee deliberating general changes to working environment legislation in Norway (NO0210103F). This committee was to present its report in February 2004.

Stress at work

Stress forms part of the wider debate concerning working environment hazards and sickness absence in Norway, and as such is being dealt with in the efforts to achieve a 'more inclusive working life' (see below under 'Other relevant developments'). However, no concrete initiatives in the form of legislative change or agreements have been taken, although the labour inspectorate has, in cooperation with the social partners, developed a guide to stress and a checklist to be used by employers in identifying and dealing with the problem in their companies (Stress at work: do something about itPDF). The guide was published in connection with the stress-themed European Week of Safety and Health in October 2002.

Undeclared work

As in many other countries, work in the clandestine economy, tax evasion and failure to register employees is seen as a significant problem in some parts of the Norwegian economy. Nevertheless, a recent survey indicates that the proportion of employees operating in the hidden economy has gone down since the 1980s.

The issue of substandard employment and business practices rose up the agenda during 2003 as part of the debate on the forthcoming EU enlargement in May 2004 (NO0312103F and NO0310102F). It is regarded as a particular problem in the building and construction sector. A number of recent studies seem to confirm that the situation in this sector is far from ideal, and there are indications to suggest that a substantial number of actors operate on the borders of legitimacy. Lack of an adequate regulatory framework and poor enforcement mechanisms make it difficult for the authorities to cope with misconduct. In recognition of the detrimental effects of such practices, the social partners in the building and construction industry, along with relevant regulatory and enforcement bodies, joined forces in 2002 to establish a working group with a view to examining and recommending measures to deal with the problem. The first report of the working group was published in November 2003 (NO0312103F).

New forms of work

The proportion of both temporary (fixed-term) employment and employees on part-time contracts has remained stable in Norway in recent years. However, both part-time and temporary employment were on the political agenda and on the agenda of the social partners in 2003.

The centre-right government has, since entering office, argued that the rules concerning temporary employment need to be deregulated, and has asked a committee deliberating changes to working environment legislation to consider the issue. However, the wish to change this legislation has met with strong opposition from the trade unions. The debate concerning temporary employment reached new heights in 2003, when the Minister of Labour and Government Administration proposed relaxing the rules relating to temporary employment in connection with the 2004 state budget. The proposal, and particularly its timing, was seen as a provocation by the trade unions (NO0210103F). Eventually, the government had to give up its controversial proposal in order to achieve a state budget agreement in the autumn of 2003 (NO0312101N).

In November 2003, a committee was set up to consider the causes of part-time work, and how the use of part-time work affects participation and flexibility in the labour market. The committee is also to look at the extent of involuntary part-time work, and propose measures to reduce the incidence of such work. The committee will deliver its recommendations in October 2004.

Other relevant developments

The prospect of further enlargement of the EU brought the issue of 'social dumping' back onto the agenda in 2003. Part of the discussions involved whether or not transitional arrangements were to be put into place to limit the initial free movement of workers from new EU Member States in central and eastern Europe (NO0310102F). Trade unions, particularly in the building and construction sector, fear an inflow of cheaper foreign workers from central and eastern Europe, which would put further pressure on pay and working conditions in a sector of the economy already struggling with substandard practices (see above under 'Undeclared work'). Among the measures proposed to deal with the new situation was the extension to all workers of the pay and employment conditions provided for by collective agreements. In response to this demand from the unions, the employer side raised the issue of introducing a statutory minimum wage. The extension of specific collective agreements is now being considered by a statutory wage board, which will make a ruling on the issue some time in the spring of 2004.

In November 2003, the social partners and the government agreed to continue their joint efforts to create an 'inclusive working life' (NO0311104F). An agreement on this issue, which was entered into in 2001 (NO0110107F), was evaluated in the autumn of 2003, and the parties agreed that the country was far from achieving the main objective of reducing the sickness absence rate by 20% by 2005. Furthermore, the employment situation of people with disabilities had not been significantly improved. The parties had the option of the terminating the agreement, but there was a general consensus about the need to allow the agreement more time to take effect, and that new measures should be introduced.

Outlook

It seems that 2004 will be a year of economic and political stability in Norway. GDP growth is expected to increase further and inflation will remain low. Interest rates have been reduced significantly (from 7% in December 2002 to 2% in January 2004), and the Norwegian krona (NOK) has weakened against other currencies. However, the unemployment rate will most probably continue to increase and reach a peak in 2004. The next general elections are less than two years away, and there seems to be little willingness to unseat the minority government among the opposition parties.

The 2004 'main' wage settlement will be a further test of the continued viability of the compromise that has marked Norwegian incomes policy and wage formation for over a decade (NO0007198F). Over this period, the industry most vulnerable to international competition has provided the framework for wage formation in other sectors of the economy. This model has come under threat in recent years from discontented groups within both the public and private sectors. The economic developments mentioned above, coupled with low inflation forecast for 2004, suggest that the upcoming wage settlement will generate only moderate increases.

Pensions will most probably be on the agenda in 2004, not least in relation to discussions on the report of a public pensions committee presented in January 2004 (NO0209103F). Among other issues, there will be discussions over the relationship between the existing national insurance pension scheme and labour market-based schemes (ie occupational pensions schemes), and on the fate of the agreement-based early retirement scheme (AFP). The recommendation presented in January 2004 was met with significant criticism from the trade unions, not least with regard to a proposal to end government contributions to the AFP. Pensions might also be an issue in the 2004 bargaining round. In the private sector, significant groups are without occupational pensions schemes, and the report of the pensions committee has provided renewed incentives to give priority to this issue on the bargaining agenda.

In February 2004, the committee deliberating changes to working environment legislation was to make public its recommendations (NO0403102F). It is expected that there will be significant disagreement between the trade unions and employers' organisations represented on the committee, among others matters in relation to working time and temporary employment. As such, the report will most probably generate significant political debate during the course of 2004. (Håvard Lismoen, FAFO Institute for Applied Social Science)