On 29 March 2007, the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO [1]) and the Confederation of Norwegian Enterprise (Næringslivets Hovedorganisasjon, NHO [2]) concluded an agreement in this year’s wage bargaining round. The agreement provides for a general wage increase of NOK 2.50 (€0.30) to take effect on 1 April 2007. Workers in typical low-wage sectors, namely sectors where the average wage is below 90% of the average wage in manufacturing, will receive an additional increase of NOK 1.00 (€0.12) an hour. This increase specifically for low-wage earners involves about one fifth of workers covered by the pay negotiations; approximately 50% of female workers who are covered by the agreement will be awarded this additional pay increase. The Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS [3]) and NHO have also concluded a similar agreement. These wage agreements cover the following sectors: manufacturing, construction, transport, and hotels and restaurants.[1] http://www.lo.no[2] http://www.nho.no/[3] http://www.ys.no/
In late March 2007, the Norwegian Confederation of Trade Unions and the Confederation of Vocational Unions, respectively, concluded agreements with the Confederation of Norwegian Enterprise in the nationwide private sector pay negotiations. The average annual wage growth rate provided for in the settlement is estimated at 4.5%, including a general wage increase of NOK 2.50 (€0.30) an hour.
Agreement in the private sector
On 29 March 2007, the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and the Confederation of Norwegian Enterprise (Næringslivets Hovedorganisasjon, NHO) concluded an agreement in this year’s wage bargaining round. The agreement provides for a general wage increase of NOK 2.50 (€0.30) to take effect on 1 April 2007. Workers in typical low-wage sectors, namely sectors where the average wage is below 90% of the average wage in manufacturing, will receive an additional increase of NOK 1.00 (€0.12) an hour. This increase specifically for low-wage earners involves about one fifth of workers covered by the pay negotiations; approximately 50% of female workers who are covered by the agreement will be awarded this additional pay increase. The Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) and NHO have also concluded a similar agreement. These wage agreements cover the following sectors: manufacturing, construction, transport, and hotels and restaurants.
The 2007 wage settlement is a so-called intermediate settlement as only the pay scales in the nationwide agreements are subject to renegotiations; member unions of LO and YS and NHO affiliates will negotiate all of the collective agreements at company level. At national level, agreements were reached relatively quickly following negotiations that appeared quite uncontroversial. This year’s wage bargaining round in the private sector is expected to generate an average annual wage growth of 4.5%. This figure also includes estimates on the results of company-level negotiations which are to follow the central negotiations in many parts of the private sector. Company-level negotiations are to be carried out within a framework set by the financial situation and future prospects of each individual company, as well as under a ‘peace duty’, which disallows strike action.
Social partners satisfied with agreement
Both workers and employers have welcomed the agreements. Representatives from the central organisation of LO, as well as its individual member unions, are satisfied with the economic framework of the agreement, the additional increase awarded to low-wage earners and the equal pay profile of the agreement; YS equally approved the agreement. The general impression is that this is a rather favourable settlement for the employee side, strengthened by an expected low inflation rate; meaning that the annual growth rate in real wages may actually be as high as 4%.
On the employer side, NHO has also shown satisfaction with the agreed wage provisions, by stating that these are in line with prior expectations. Overall, profitability in the Norwegian industry is good and labour demand is high. According to Labour Force Survey data, the unemployment rate stood at 2.7% in January 2007, which represents the lowest unemployment level since 1999. However, experts anticipate a continued rise in interest rates in 2007.
Commentary
In the course of April and May 2007, the other nationwide agreements in the Norwegian labour market were also to be renegotiated. LO and NHO take for granted that the ‘total wage growth negotiated at both central and company level should provide the framework for developments of management pay and other groups of employees in these companies, as well as for the labour market in general’. On 12 April 2007, the social partners in Norway’s services sector also agreed on wage settlements providing for an average annual wage increase of 4.5%; this so-called HSH agreement covers, among others, wholesale and retail trade which are organised in the Federation of Norwegian Commercial and Service Enterprises (Handels- og Servicenæringens Hovedorganisasjon, HSH).
Nevertheless, there are reasons to expect that large groups in the public sector will demand pay increases exceeding the given economic framework of 4.5%. The Chair of the Confederation of Unions for Professionals (Hovedorganisasjonen for universitets- og høyskoleutdannede, Unio), Anders Folkestad, believes that an average annual wage growth of 4.5% is far too low for certain professional groups in the public education sector. Mr Folkestad points to pay developments of white-collar workers in the private sector, which were significantly higher than for other groups of workers in 2006.
Kristine Nergaard, Fafo Institute for Applied Social Science
Eurofound recommends citing this publication in the following way.
Eurofound (2007), Annual pay agreement reached in private sector, article.
