Joint committee establishes foundation for 1999 pay round

Pay growth in Norway for 1999 should not exceed 4.5%, according to a recommendation by a joint committee comprising all the main social partners. The implication of this proposal is that large groups of workers will receive only moderate wage increases in the spring 1999 bargaining round. The committee also recommends a gradual introduction of the proposed reform of skills and training, but says nothing as to how the reform should be financed.

During the autumn of 1998 it became evident that the Norwegian economy would face major challenges from 1999 onwards. Recent estimates from the Bank of Norway and Statistics Norway suggest that unemployment will increase in the latter half of 1999. An important reason given for the increase is low oil prices. In addition, the 1998 pay settlement led to a much higher rate of growth in pay than in previous years, and was also well above that of Norway's trading partners (NO9902116F). As a consequence, an initiative was taken in autumn 1998 to lay the foundation for a new cooperative venture on incomes policy.

At a conference in December 1998, employers, trade unions and the government agreed to establish a committee to consider the issues covered by the 1999 pay round (NO9812117N) - which involves a mid-term adjustment of the two-year agreements signed in 1998 (NO9805164F). The committee was asked to set out guidelines for the pay negotiations, which would contribute to full employment and ensure that labour costs were equivalent to Norway's trading partners. As such, the committee was to take account of the economic situation prior to the 1999 pay round, with special attention given to prices, pay, and labour costs. The committee was also to consider the incorporation of the current reform of skills and training into the 1999 negotiations.

The committee was chaired by a neutral, Oluf Arntsen, and otherwise made up of representatives from the main trade union and employers' confederations, all of which were represented by their leaders. The main points of the report of the Arntsen committee, published in March 1999, are set out below.

Pay to grow by no more than 4.5% in 1999

The committee points to the fact that the economic situation is more serious than was predicted in the national Budget in the autumn of 1998 (NO9811100N). It is therefore necessary for the employers, trade unions and government to act in concert to revitalise the positive elements of the so-called "solidarity alternative", which is a long-standing social pact between the labour market parties and the government, stressing moderate wage growth and employment.

The government's contribution in this regard should be, as before, an active labour market policy and a continuation of the present monetary policy.

The labour market parties are in turn expected to contribute to a reduction in labour costs, to a level commensurate with Norway's trading partners. The committee stipulates that the growth in pay from 1998 to 1999 must not exceed 4.5%, and that in 2000 the growth in pay must be at the same level as Norway's trading partners (3.5%, on the basis of OECD estimates). Norwegian wage earners experienced an average growth in pay of 3.5% in the period 1998-9. The committee thus stipulates that there is no room for general pay increases for large groups during the spring 1999 pay round, and that pay increases in company-level negotiations must be kept within tight limits.

Continuing vocational training

The committee has adhered to the main features of previous deliberations on the reform of skills and continuing vocational training (NO9804161F). It is stressed that vocational training reform must: meet the needs of the labour market; safeguard recognition and certification of non-formal competences; and be introduced incrementally.

There is further consensus about recommending the establishment of a "competence development programme", which will contribute to the development of a market for continuing vocational training. An important goal in this regard is to bring together the suppliers and the users of skills development, and to develop models that safeguard the labour market's need for skills. A possible model may be the distribution of funds to different projects on the basis of applications from companies, industrial sectors, various labour market organisations etc. It is assumed that new arrangements cannot be established without being evaluated by the main employer and trade union confederations.

The committee also considered the financing of skills and training reform, and examined different models. While they discussed possible means of funding, they adopted no particular position on this in the report. In an appendix to the report the representatives from the main union confederations - the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO), the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund,YS) and the Federation of Norwegian Professional Associations (Akademikernes Fellesorganisasjon, AF) - propose the establishment of a fund to finance vocational learning. Employees, employers and the government would contribute to this fund. The scheme would cover the whole workforce and economy, including non-trade unionists and non-federated companies, and the payment of training levies would be regulated by law. The trade unions want the scheme to commence on 1 January 2000, with the first payment of training levies to start on 1 May 1999.

Commentary

A framework of 4.5% for the 1999 pay round means that the spring negotiations will produce only moderate increases in pay for most groups (NO9903120F). This is particularly true for employees in the municipal sector, who are due for a pay increase of 4.5% anyway. The fact that the committee's report was accepted almost unanimously and all the major organisations were represented on the committee, seems to suggest that 1999's pay settlement will adhere to the agreed framework. The fact that the committee expressed a wish to see a growth in pay for 2000 commensurate with that in Norway's trading partners further indicates that the labour market parties will continue to cooperate in adhering to an incomes policy in the same way as they did from 1992 to 1997.

The committee's report is also a significant step forward for continuing vocational training reform. Agreements had already been reached prior to the committees' recommendations on important elements of the reform, particularly on a statutory individual right to study leave (NO9812117N and NO9901113N). Furthermore, the committee emphasises that skills reform of this kind makes the workplace an important arena for learning. The committee also agrees that such reform must be introduced gradually, both to gain valuable experience and to avoid substantial short-term cost increases. The central question in the 1999 pay round will be the principles of financing the reform - first and foremost whether to create funds - and how these funds are to be raised. (Kristine Nergaard, FAFO Institute for Applied Social Science)