The average wage growth among Norwegian wage earners between 2004 and 2005 stood at 3.25%, according to preliminary figures issued by the Technical Calculating Committee on Wage Settlements (Teknisk beregningsutvalg for inntektsoppgjørene, TBU) in March 2006. This is slightly lower than the 3.75% growth rate observed in 2004 but significantly lower than the 4.5% growth rate recorded in 2003. The estimated 2005 wage growth rate is in line with developments among Norway’s main trading partners. However, over the same period, management salaries continued to increase by 8.7%, according to figures from Statistics Norway (Statistisk Sentralbyrå, SSB).
In 2004–2005, the average annual wage growth rate in Norway was estimated at 3.25%, down from 3.75% in the previous year, according to figures issued by the Technical Calculating Committee on Wage Settlements in March 2006. Wage growth is slowly beginning to match developments among Norway’s main trading partners. Management salaries, however, continued to rise over the same period.
The average wage growth among Norwegian wage earners between 2004 and 2005 stood at 3.25%, according to preliminary figures issued by the Technical Calculating Committee on Wage Settlements (Teknisk beregningsutvalg for inntektsoppgjørene, TBU) in March 2006. This is slightly lower than the 3.75% growth rate observed in 2004 but significantly lower than the 4.5% growth rate recorded in 2003. The estimated 2005 wage growth rate is in line with developments among Norway’s main trading partners. However, over the same period, management salaries continued to increase by 8.7%, according to figures from Statistics Norway (Statistisk Sentralbyrå, SSB).
The TBU comprises representatives from all four trade union confederations, as well as representatives from the two major employer organisations. In addition, the TBU has representation from SSB, the Ministry of Finance and the Ministry of Labour and Government Administration (NO9908145F). The committee’s report, which is presented prior to each wage settlement, constitutes an important statistical basis for collective bargaining, and its statistical estimates are normally accepted by the social partners.
Wage developments 2004–2005
With a rate of 3.25% average wage growth from 2004–2005, wage growth has reached its lowest level in over a decade. This declining wage growth rate in recent years suggests that the social partners are achieving their overall policy objective of bringing the national wage growth rate down to the same level as observed among Norway’s main trading partners.
By sector, wage growth was highest among employees in the financial services sector (7.7%), followed by white-collar workers in manufacturing industries (4.25%). The relatively high growth rate observed in the financial services sector is largely due to extensive bonuses being awarded in 2005. In retail and wholesale trade, workers benefited from an average wage growth of 3.4%. In the public sector, wage growth varied between 3.5% for municipal and county employees and 3.33% for state employees. Blue-collar workers in manufacturing industries recorded the lowest wage growth (3.25%) over the same period. Table 1 shows preliminary figures which illustrate these variations in wage growth for selected groups of employees.
| Groups of employees | Increase (%) |
|---|---|
| All groups | 3.25 |
| Hourly-paid workers in establishments affiliated to NHO, manufacturing industry | 3.25 |
| Salaried employees in establishments affiliated to NHO, manufacturing industry | 4.25 |
| Employees in retail and wholesale trade (HSH) | 3.4 |
| Employees in commercial and savings banks | 7.7 |
| Central government employees | 3.33 |
| Municipal and county employees | 3.5 |
Figures for the manufacturing industries relate to companies organised in the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO); figures for wholesale and retail trade are based on data from companies in the Federation of Norwegian Commercial and Service Enterprises (Handels- og Servicenæringens Hovedorganisasjon, HSH).
Source: TBU, 2006
Developments in real wages
Continued wage growth, although moderate in the period from 2004 to 2005, contributed to a continued growth in real wages, after allowing for inflation. Over the same period, the consumer price index rose by 1.6%, compared with 0.4% in the period from 2003 to 2004. Growth in real wages is, therefore, estimated at 2.5% in 2005.
The competitiveness of the Norwegian industry has steadily improved over the last few years, although the most recent developments, coupled with a relatively strong Norwegian currency, have reversed this trend to some degree. Moreover, hourly wage costs in Norway are still higher than the average hourly wage paid among Norway’s main trading partners; the difference is estimated at 21% in 2005.
Continued increase in management salaries
Developments in management salaries have been subject to much controversy over the years, particularly in conjunction with annual wage settlements in Norway. Indeed, the continuous increase in management salaries is viewed as disrupting efforts made by the social partner organisations to foster compliance with wage coordination and moderation in the economy as a whole.
The average pay of top management in public limited companies with more than 25 employees rose by 8.7% from 2004 to 2005, compared with 6.3% in the previous year. Overall, the figures issued by SSB clearly indicate that management salaries have continued to rise at a much higher rate than ordinary wages over the past two years. Significant differences exist depending on the size of the company, with the highest average wage growth, of 13.7%, among managers in medium-sized enterprises with 100 to 249 employees (Table 2).
| Company size, no. of employees | Increase (%) |
|---|---|
| All groups | 8.7 |
| 250 employees or more | 10.7 |
| 100–249 employees | 13.7 |
| 50–99 employees | 10.6 |
| 25–49 employees | 5.3 |
Source: Statistics Norway, 2006
It must also be assumed that substantial differences exist between companies with regard to management salary developments. Wide variations between management remunerations, particularly of larger companies (more than 250 employees), will affect wage growth rates considerably. A recent study on top management salaries (in Finnish, PDF 1.2MB) in larger Norwegian companies, carried out by Fafo for the period 1998 to 2004, reveals that remuneration varies considerably between companies and within companies from one year to another (Fafo, 2006).
Håvard Lismoen, Fafo, Institute for Labour and Social Research
Eurofound recommends citing this publication in the following way.
Eurofound (2006), Wage growth lowest in 10 years, article.
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