Trade unions face financial difficulties

The Norwegian Confederation of Trade Unions (LO) and its member unions are facing financial difficulties, due to falling membership and increasing trade union activities. Some unions may thus have to cut back on their activity in 2001.

A number of Norwegian trade unions are facing financial difficulties due to falling membership levels and increasing trade union activities. The Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and its member unions witnessed significant operating revenue deficits in 1999, most of which were compensated for by substantial net incomes from financial operations. However, a few unions have experienced significant net deficits, and as such will have to reduce their trade union activities in 2001.

Financial difficulties

The overall financial situation for the LO central organisation is not "life-threatening", despite the fact that it had an operating revenue deficit of approximately NOK 2.7 million in 1999. Its income from financial operations was substantial in the same period, and thus its net income for 1999 was NOK 97.6 million. LO and several of its member unions are involved in a number of financial enterprises and activities, and as such are able to raise a substantial amount of funds if needed. However, the operating deficit, according to an article in LO's bulletin for members, LO-Aktuelt, is expected to rise to NOK 8.8 million in 2000. As such, the central LO organisation has warned that it too may have to reduce its primary activities in the near future and stop taking on new staff in order to save money.

In most of the major unions, positions that are vacant are not filled, and employees leaving the organisation are not replaced. Some unions - such as the Norwegian Union of Municipal Employees (Norsk Kommuneforbund, NKF) - are able to maintain normal activity levels through the sale of shares and stocks. However, even the unions with the best financial results, such as the Norwegian United Federation of Trade Unions (Fellesforbundet) and the Norwegian Chemical Workers Union (Norsk Kjemisk Industriarbeiderforbund, NKIF), also expect a reduction in their activities within the next year or two. Fellesforbundet went through a difficult economic period in the early 1990s, but managed to regain its financial strength through, for example, the assets it holds in several trade union-owned companies.

Service sector unions struggling

There are unions which are already struggling for survival, especially those in the private services sector. The hardest-hit union is the Hotel and Restaurant Workers' Union (Hotell- og Restaurantarbeiderforbundet, HRAF). Throughout the 1990s, HRAF struggled with economic problems, and its union activities have increased while its membership rate has fallen steadily. Due to its substantial economic problems, the central board of HRAF has decided to cut 6.5 posts out of 30 in its organisation in 2001. HRAF estimates a deficit of approximately NOK 5 million for the first six months of 2000, despite initiating several cost-cutting measures at the start of the year. This compares with a NOK 5.5 million deficit in the whole of 1999. The organisation has approximately 13,000 members, and states that it lost almost 11% of its membership base from January 1999 to August 2000. Furthermore, a significant number of members are working part time, which means reduced trade union fees.

The redundancies at HRAF include two regional trade union secretaries, positions which are an important part of the representative apparatus and a tool for coordinating union activities nationwide. As such, employee representatives and members in the regions will lose an important link to the central organisation. Further redundancies may follow, according to the leader of HRAF, Jens Hoel, if the union fails to recruit more members.

Falling membership levels

Decreasing membership levels is an important reason for the economic problems that are slowly emerging within LO and its affiliates. Membership of LO-affiliated unions fell by 5,465 to 822,966 in the first quarter of 2000, and figures from Statistics Norway (Statistisk Sentralbyrå, SSB) show a decrease of almost 10,000 members in 1999 (NO0008101F). This fall was to a certain degree compensated for by increased contribution income due to relatively advantageous wage settlements (trade union fees constitute a small percentage of members' wages). The fall in membership levels must be seen in the light of poor recruitment of new members to the LO unions in recent years. LO admits to having failed to attract new members, despite initiating campaigns to attract groups with higher education levels (NO9901110F), as well as seeking to increase efforts to improve recruitment to private services sector unions and in the information technology sector. However, declining membership is not the only explanation for deteriorating union finances. NKF has had a relatively stable membership rate for several years now, and the recent decline in membership has mainly been attributable to non-fee paying members such as pensioners leaving the organisation. Despite this fact, NKF was the LO union with the highest deficit in 1999, and it must be assumed that its trade union activities have increased significantly compared with the increase in its operating income.

Furthermore, the expected increase in the provision of collective insurance schemes by unions at the beginning of 2001 will have further consequences for the financial situation of several trade unions, and it will especially hit those unions which operate an integrated insurance and trade union fees scheme.

Commentary

Generally speaking, it can be argued that LO is lagging behind when it comes to recruiting new members, especially with regard to new employee groups in the public sector as well as in the private services sector - the two fastest-growing sectors of employment in Norway today. Although it has expressed willingness to recruit in these areas, LO's organisation is still oriented towards manufacturing industry bargaining, and therefore may not appear an attractive option to groups of employees with higher education levels or to low-wage groups in the private services sector.

However, there are also problems more specific to individual LO unions. HRAF is a rather costly organisation to run, with a geographical base spanning the whole country and covering many small enterprises and businesses. Thus, national coordination of trade union activities is an expensive affair, as is attempting to recruit new members in a sector already suffering from low union density. In this part of the private services sector, only 20%-30% of employees are unionised. Furthermore, the hotels and restaurant sector in Norway has large numbers of immigrant workers, especially from countries and cultures where unionisation is traditionally low. The employer side is also seen to be less "union-friendly" in this sector than in many others. A final but equally important factor is the fact that the Norwegain labour market is relatively tight at present, and it is thus easier for people, regardless of education, to find jobs. This high turnover of labour creates additional challenges for trade unions, which have to recruit new members among new employees in the sector. (Håvard Lismoen, FAFO Institute for Applied Social Science)