New private sector agreement concluded

The national pay negotiations in the private sector between the Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Business and Industry (NHO) ended in agreement on 12 April 1999. A majority of the employees covered by the new agreement will not be awarded any central pay increase. The parties believe that the settlement is in line with what they agreed at the beginning of the negotiations, which specified that the general pay increase for 1999 should not exceed 4.5%.

The Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) reached an agreement early on Monday 12 April 1999 to conclude the national pay negotiations in the private sector. Agreement was also reached in the parallel negotiations between the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) and NHO. The new agreements - which cover the manufacturing sector, construction and private transport - are based on the proposal put forward by the State Mediator, who had been called in when the negotiations broke down on 25 March (NO9903124N). The spring 1999 wage round is an intermediate settlement adjusting the pay terms of the two-year agreements signed in 1998 (NO9805164F). Agreements between LO and NHO affect approximately 250,000-275,000 employees in NHO-affiliated companies, while the agreement between YS and NHO covers some 25,000-30,000 employees.

Pay

There was a moderate outcome to the national pay negotiations, with a majority of the 300,000 employees affected receiving no general pay increase at all. Those employees in sectors covered by the agreement with average pay of less than 95% of the industrial average - which implies an annual income of less than NOK 218,000 - will receive a general increase of NOK 1.20 per hour from 1 April 1999. The exact number of employees falling within this category is unknown, but it is estimated to be around 40,000.

However, a large majority of employees within the LO/NHO agreement area have the right to local negotiations following the central deal. As usual, employers and unions stress that the local negotiations should be conducted according to the criteria stipulated in the prevailing collective agreements, which means that local increases in pay should be awarded on the basis of the economic conditions affecting individual companies.

The parties believe the settlement to be within the framework they agreed to prior to the negotiations, according to which the general increase in pay for 1999 should not exceed 4.5% (NO9903120F). A precondition for this is that any local increases in pay should be kept within moderate limits.

Skills and training reform

Aside from pay, an important issue during the 1999 negotiations was the implementation of a reform of skills and training ("competence") - as agreed in 1998 (NO9804161F) - and especially how this should be financed. The trade union organisations wanted to see a tripartite financing scheme in exchange for acceptance of a moderate pay settlement. Following the breakdown in the negotiations about this issue before Easter, LO and NHO sent a joint letter to the Prime Minister, in which they stated their priorities, and asked the government to clarify its contribution to financing the reform (NO9903124N).

The Prime Minister replied that the government, as part of its economic policy, wanted to see the continuation of the cooperative venture on incomes policy (NO9812117N), including cooperation on competence reform. The Prime Minister argued that such reform must be introduced and implemented gradually, and in close cooperation with the labour market parties.

The government's contribution will by and large take the form of modifying the educational system to meet the needs of reform, and adapting existing arrangements for educational funding such as the State Education Loan Fund (Statenes Lånekasse for Utdanning). The government will thus:

• start work in 1999 on the development of a scheme for certifying non-formal competence. The work will be further developed from 2000;

• contribute NOK 400 million over a period of two to three years to the development of educational institutions. The first allocation will be part of the state Budget for 2000. A precondition is, however, that the users themselves contribute financially;

• enable adults without any further secondary education to re-enter the educational system to pursue appropriate educational courses. The government believes that such a scheme for adults may be organised so as to make it cheaper than similar schemes which exist for young people, by allowing for the certification of non-formal competence, and a more compressed educational time-span. Information technology will be employed to a much greater extent. One scheme to be further developed is the so-called "§20 - scheme", which allows adults to incorporate practical work experience into their vocational education;

• change the regulations of the State Education Loan Fund, so as better to adapt it to meet the educational needs of adults; and

• put forward a proposal for an individual right to leave of absence for educational purposes.

Several of these initiatives have already been widely debated, and have received broad political support (NO9901113N).

The 1999 settlement did not result in the setting up of funds, or similar schemes, for the financing of competence reform. However, it did ensure that the issue will feature in future settlements. The parties agreed that a part of the total paybill in future settlements may be set aside to provide subsistence payments for employees who opt to undergo vocational education. These funds are to be put to use by individual companies to support subsistence for those pursuing a vocational education from which the companies themselves will benefit. A precondition is that the government continues to contribute to the reform. The parties will consider the extent to which these schemes will be made generally applicable. The implication is that the funding issue has been postponed to the next pay settlement. LO and NHO also agreed to establish a secretariat consisting of two representatives from each organisation, which will continue the work on developing competence reform.

Other issues

LO and NHO agreed to strengthen their work on gender equality in working life. This includes an evaluation of existing collective agreements to see whether they generate pay discrimination against women.

Commentary

The 1999 spring pay round in the private sector was carried out within the moderate framework set by the joint committee which drew up a report prior to the negotiations (NO9903120F). As long as the local negotiations are carried out in the same fashion as in previous years, pay settlements in this part of the private sector will not deviate much from the committee's unanimous proposal.

It is expected that the agreement reached between the LO and NHO in the private sector will strongly influence other bargaining areas in both the private and public sectors. However, two important groups deserve some additional comments; salaried staff in the private sector and public sector employees. Pay for clerical staff is important in periods of cooperation on incomes policy, because of its normative effects in cases where groups which conduct individual pay negotiations receive significantly greater increases than those covered by collective negotiations. NHO has signalled a willingness to monitor developments on the pay front for groups which are not covered by these collective agreements, by asking its national sectoral federations to report back on developments in their member companies (NO9903121F). The director general of NHO, Karl Glad, has argued in the media that higher clerical workers and managers, who have had much higher salary increases in recent years than other groups, should not receive any increases in 1999 (quoted in the Dagens Næringsliv newspaper on 13 April).

Pay negotiations in the public sector were due to begin on 20 April 1999. The leader of the Federation of Norwegian Professional Associations (Akademikernes Fellesorganisasjon, AF), Aud Blankholm, has stated that the private sector's decision to award pay increases only to the lowest paid employees will not be a benchmark in the public sector negotiations. Complicated negotiations are expected in the municipal sector, because prior to the negotiations the growth in pay for the period 1998-9 had reached almost 4.5%.

The 1999 spring pay round has moved competence reform one step further on. However, it is clear that the reform will be introduced incrementally and will thus not lead to significant changes in Norwegian working life in the short term. Furthermore, several elements remain outstanding, and the organisation and financing of the reform will no doubt be key issues in future pay negotiations. The financing of the reform in the coming years will be tied to incomes policy, partly because the parties presuppose that funds will be set aside within the framework of pay settlements, and partly because the government's involvement is conditioned by keeping the growth in pay under control. (Kristine Nergaard, FAFO Institute for Applied Social Science)