On 31 March 2007, the Technical Calculating Committee on Wage Settlements (Teknisk Beregningsutvalg for inntektsoppgjørene, TBU) presented its report on the economic predictions for the forthcoming 2007 wage settlement. It follows a preliminary report published at the end of February 2007. TBU’s report, which is published annually, provides estimates for wage developments within large parts of Norwegian working life, including developments in management salaries, as well as estimates on wage carry-over effects from 2006 to 2007 (Om grunnlaget for inntektsoppgjørene 2007 (in Norwegian, 1.14Mb PDF) [1]). The report also provides statistics on the competitiveness of Norwegian industry. TBU figures form an important basis for the renegotiation of wages in the national collective agreements, set to take place during the spring of 2007.[1] http://www.regjeringen.no/Upload/AID/publikasjoner/rapporter_og_planer/2007/TBU_2007_hele.pdf
New figures show that wage earners in Norway witnessed an average wage growth of 4.1% in 2006. The wage growth rate was highest among employees working in the financial services sector, where wages increased by 5.6% on average.
On 31 March 2007, the Technical Calculating Committee on Wage Settlements (Teknisk Beregningsutvalg for inntektsoppgjørene, TBU) presented its report on the economic predictions for the forthcoming 2007 wage settlement. It follows a preliminary report published at the end of February 2007. TBU’s report, which is published annually, provides estimates for wage developments within large parts of Norwegian working life, including developments in management salaries, as well as estimates on wage carry-over effects from 2006 to 2007 (Om grunnlaget for inntektsoppgjørene 2007 (in Norwegian, 1.14Mb PDF)). The report also provides statistics on the competitiveness of Norwegian industry. TBU figures form an important basis for the renegotiation of wages in the national collective agreements, set to take place during the spring of 2007.
Wage developments in 2006
The average wage growth rate for all wage earners in Norwegian working life is estimated to have increased by 4.1% from 2005 to 2006. This is higher than the estimated wage growth of 3.3% recorded between 2004 and 2005 (NO0603029I). Blue-collar workers in the manufacturing sector saw an average wage growth of 3.6% in 2006 (see Table below). Wage growth for white-collar workers in the same sector was 4.6%, while employees in the financial services sector experienced the highest growth rate of 5.6%. Wage growth in the latter sector is partly attributed to large bonuses granted to employees.
| Sector | 2005 % | 2006 % |
|---|---|---|
| Manufacturing* | 4 | 4.6 |
| - Blue-collar employees | 3.4 | 3.6 |
| - White-collar employees | 4.3 | 4.6 |
| Wholesale and retail trade** | 3.9 | 4.2 |
| Financial services | 7.7 | 5.6 |
| State sector employees | 3.4 | 4.5 |
| Municipal sector employees | 3.4 | 4.1 |
Note: *Companies affiliated to the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO); **Companies affiliated to the Confederation of Norwegian Commercial and Service Enterprises (Handels- og Servicenæringens Hovedorganisasjon_, HSH)._
Source: Technical Calculating Committee on Wage Settlements, Report No. 1, 2007
TBU also calculates estimated management salary developments. From 2005 to 2006, management salary growth was 8.9%. The growth rate was highest in companies with between 100 and 249 employees. In terms of persons who have been in the same management position for a period of two years or more, the growth rate in management salaries was on average 12.1% for all companies, and as high as 20% for managers in companies with more than 250 employees.
In 2006, the gender wage gap decreased in most of the sectors covered by TBU statistics. One exception is the financial services sector, where the gender wage gap has in fact increased. The gender wage gap – measured as women’s average wage level as a percentage of men’s wages – is smallest among public sector employees and among those employed in the hotels and restaurants sector. The largest wage gap is evident in the financial services sector and also among white-collar employees in the manufacturing sector (NHO-affiliated companies).
Industry competitiveness
The competitiveness of Norway’s national industry is a central issue in TBU’s reports; the latter is calculated on the basis of the relative hourly wage costs for manufacturing industry workers, as measured in common currency. In 2006, relative hourly wage costs increased by 1.3%, which implies a weakening of the competitiveness of Norwegian industry. Productivity growth is not taken into account in this estimate, but the committee points to the relative profitability gains of Norwegian industry in recent years.
Price growth and growth in real wages
From 2005 to 2006, the consumer price index rose by 2.3%, while growth in real wages after tax increased by 1.9% in the same period. TBU predicts that inflation in 2007 will be significantly lower than that in 2006.
Commentary
The latest figures from TBU show that some groups have benefited greatly compared with the national average wage recorded from 2005 to 2006. Among others, employees in the financial services sector and in the state sector, as well as white-collar workers in traditional industries, have benefited significantly. The same may be said in relation to management salaries.
Conversely, the wage growth of blue-collar workers in the manufacturing sector has fallen well below the national average, despite an economic upswing and a tight labour market in this area of the economy. Expectations concerning this year’s wage settlement nevertheless predict that negotiations will run relatively smoothly and without significant conflict. A prime concern of the negotiations is expected to be the revision of wage levels or scales, as part of the so-called intermediate settlement. Even greater suspense is associated with the impending results of the company-level negotiations for 2007, in particular within the traditional manufacturing industry. A tight labour market and upsurge in large parts of the Norwegian economy may lead to higher wage demands and subsequent growth than industries most vulnerable to international competition may be able to accommodate.
In January 2007, Statistics Norway (Statistisk Sentralbyrå, SSB) presented its latest predictions, indicating that the wage growth rate for 2007 will be 5.5%. This is higher than previous estimates. SSB further estimates a growth in real wages of 15% in the next four years (see report Economic trends for Norway and abroad).
Kristine Nergaard, Fafo Institute for Labour and Social Research
Eurofound recommends citing this publication in the following way.
Eurofound (2007), Financial services sector records highest wage growth, article.
