Renewal of agreements in manufacturing industry

In April 2006, the social partners agreed on recommendations for the renewal of collective agreements in parts of the traditional manufacturing industries in Norway. The recommendations comprise provisions for a general pay increase, the strengthening of shop stewards’ powers to fight social dumping and a continuation of the early retirement scheme.

On 1 April 2006, agreement was reached on several recommendations for revised collective agreements in parts of Norway’s manufacturing industry, between the Norwegian United Federation of Trade Unions (Fellesforbundet) and the two employer organisations, the Federation of Norwegian Industries (Norsk Industri) along with the Federation of Norwegian Construction Industries (Byggenæringens Landsforening, BNL). These negotiations provide an important framework for the spring 2006 wage settlement (NO0603019I). In addition to changes to pay scales, the social partners also agreed on a continuation of the present agreement-based early retirement scheme (AFP) and on new provisions concerning social dumping.

Provisions of revised agreements

On 6 March 2006, wage negotiations commenced in parallel with negotiations on collective agreements for workers in the metal, textiles, building, and cardboard and packaging manufacturing industries. On 1 April, the social partners agreed on recommendations for revised collective agreements in these four traditional manufacturing industries. The new provisions include a general increase of NOK 1 (€0.13) per hour for all employees covered by the agreements. Employees in areas not covered by company-level negotiations will be entitled to a wage increase of NOK 1.50 (€0.19) per hour. Other pay scale rates, including minimum wage rates, were also adjusted. These increases became effective from 1 April 2006. Within large parts of the traditional manufacturing industries, company-level negotiations will also take place, the outcome of which will largely depend on the financial situation and outlook of individual companies.

The increases awarded in these traditional manufacturing industries – including the wage effects carried over from 2005 – are, according to the state mediator, estimated to generate a wage growth of between 1.7%–1.8% in 2006. In recent years, wage increases in company-level negotiations have reached about 1.5%. Against this backdrop, the bargaining round in the aforementioned manufacturing trades is estimated to produce a wage growth of 3.3%.

One of the main demands from the employee side was the continuation of the AFP. In contrast, the employer side has called for an abolition of this scheme because they view it as being too costly for the companies involved and more generally for Norwegian working life. It was assumed that the present government would contribute to a moderate settlement on this issue by pledging a continuation of the state’s financial contributions to the AFP. Norway is also soon to be confronted with a larger reform of the public national pension scheme (NO0507102F). It is believed that a final decision on the AFP will be taken in conjunction with the drawing up of the new public retirement scheme. The state mediator called on the Norwegian Prime Minister, Jens Stoltenberg, to clarify whether or not the government could help find a solution on the AFP issue. To this end, a letter was sent from Mr Stoltenberg to the social partners, outlining his intentions to extend the AFP scheme for another four years until 1 January 2010. The letter played an important role in helping the social partners to reach agreement.

Another important demand from the employee side was to strengthen the rights of shop stewards in relation to their influence over companies’ use of hired labour and of subcontractors. In this respect, the rights and powers of shop stewards were significantly broadened compared to earlier provisions in the collective agreements. Shop stewards may now request the employer to provide documentation proving that hired labour or employees of subcontractors are paid in accordance with standard Norwegian wage rates and have access to the same standard of working conditions. The social partners have also agreed to cooperate on combating substandard practices among employers.

Statutory provisions introduced in 2005 require companies to introduce occupational pension schemes for all employees from 1 January 2006. The social partners, within the abovementioned manufacturing trades jointly recognise that the introduction of such a pension scheme will imply greater costs for the companies concerned. This means, in effect, that increased costs due to the introduction of occupational pension schemes will be one of several factors providing the basis and framework for company-level wage negotiations.

The recommendations made for the new agreements were to be subject to a ballot, due to take place on 26 April 2006, among Fellesforbundet’s members who are covered by the agreements.

Views of the social partners

Both Fellesforbundet and the employer side have expressed their satisfaction with the results of the negotiations. The employers point to the moderate nature of the outcome. Although they are largely dissatisfied by the continuation of the AFP, Norsk Industri is pleased by the prime minister’s indication that a new pension scheme will be developed in a way that will make it more beneficial to remain in employment than to retire early. It is thus assumed that the AFP will have to be reformed from 2010.

Fellesforbundet highlights the improvements made in relation to its members’ purchasing power as a result of the negotiations, and the fact that the AFP has been safeguarded for another four years. Another significant improvement is the greater powers bestowed on shop stewards in relation to the wages and working conditions of employees from the new EU Member States, in particular those being hired through recruitment agencies or subcontractors. Sub-standard wages and working conditions for such employees are an increasing problem in Norway. Moreover, existing practices and pay rates in relation to such employment relations are not easily monitored or documented.

Other new private sector agreements

Following the conclusion of new agreements in traditional manufacturing industries, several other agreements in the private sector were also finalised. In wholesale and retail trade, a general increase of NOK 1.50 (€0.19) per hour was agreed on between the Norwegian Union of Employees in Commerce and Offices (Handel og Kontor i Norge, HK) and the Federation of Norwegian Commercial and Service Enterprises (Handels- og Servicenæringens Hovedorganisasjon, HSH). A low-wage increase of NOK 2.50 (€0.32) per hour was awarded to the lowest paid groups in this sector. Provisions allowing for one hour of paid leave of absence per day for breastfeeding purposes were also introduced. This arrangement is applicable only to mothers with children under one year of age.

In the hotels and restaurant sector, the social partners agreed on a recommendation for a revised collective agreement on 2 April. A general increase of NOK 3.70 (€0.48) per hour was awarded to all employees in these negotiations. In this sector, no company-level negotiations exist, and from 2004 to 2005, wage developments were relatively poor.

Within the building and construction sector, negotiations between Fellesforbundet and BNL ended in strike action on 2 April 2006. One of the more controversial issues in this case was the introduction of a new wage system in some parts of the sector. Disagreement over the introduction of new provisions on social dumping was also a factor, as was a revision of existing minimum wage provisions. Nonetheless, the dispute was short-lived: following two days of strike action, the parties met for a new round of mediation, and agreed on a new proposal for a revised agreement. Arising from this, employees in the sector will now receive a general increase of NOK 1 (€0.13) per hour.

Commentary

The first round of negotiations in the 2006 wage settlement has been finalised with agreements being reached in the traditional manufacturing industries. Although they still have to be approved through the membership ballots, the results achieved will certainly have a bearing on negotiations elsewhere in the private and public sectors. Some difficult and troublesome negotiations can be expected in other areas. A number of groups in the public sector expect substantial wage increases, and do not necessarily agree that the negotiations should be kept within the economic framework set by other industries in the private sector. Issues pertaining to social dumping and occupational pension systems in the private sector also need to be addressed. In addition, it is likely that some groups may not be satisfied with the economic framework set by the ‘trend-setting trades’.

Kristine Nergaard, Fafo Institute for Applied Social Science