NHO adopts new policy on incomes policy and bargaining

In September 2001, the Confederation of Norwegian Business and Industry (NHO) adopted a new 'employer policy' programme. NHO is not satisfied with the results of the centralised wage policy pursued in recent years and will work towards a decentralisation of the determination of pay and conditions to the company level.

The executive board of the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) adopted a new 'employer policy' programme, developed by an internal committee, in September 2001. The programme argues that the wage policy followed during the 1990s has to only a limited extent accomplished its objectives. The so-called 'solidarity alternative'- the cooperative venture on incomes policy that characterised most wage settlements in the 1990s - has not been successful in strengthening the competitiveness of Norwegian industry. The wage growth rate has been higher in Norway than among its main trading partners (NO0104128F), and employment in manufacturing industries has gone down. Furthermore, strike action took place in 1996, 1998 (NO9805164F) and 2000 (NO0005192F).

NHO further emphasises that working life is changing and that both employees and employers demand greater flexibility than is possible today. The implication of these developments for NHO is that collective agreements must become more framework-oriented and flexible, with regard to both pay and working time regulations. Wages and regulation of employment conditions such as working time should as far as possible be determined at company level.

Future incomes policy

NHO sums up its vision for a future incomes policy as follows:

• the overarching goal of future incomes policy in Norway must be wage growth at the level of its main trading partners;

• pay and working conditions must be determined at the company level and be based on the financial situation within each enterprise;

• NHO will work towards an increased use of result-oriented wage systems, at the individual level or the level of the group, department or company. An alternative to this may be that wages are given partly in the form of stock options;

• regular pay should to a greater extent be individualised and differentiated; and

• NHO will contribute to making member companies able to develop better wage systems that take into account the points mentioned above.

Decentralising bargaining

NHO argues that collective agreements are often impediments to competition between companies bound by agreements and companies not bound by such agreements. NHO is thus of the opinion that agreements must be simplified and made more flexible. The focus of centralised (sectoral) agreements must be on overall principles and the 'rules of the game', while pay and working conditions should mainly be determined at the company level. To the extent that pay and conditions are dealt with in the central regulatory framework, this should be through guiding and not determining principles. Deviating arrangements should not have to be subject to approval from the central parties.

NHO also want to see its member companies given greater freedom with regards to choice of collective bargaining arrangements, including the opportunity to establish different types of agreement within the same sector. The programme points to options including the possibility of entering into so-called 'vertical' agreements (ie a single agreement covering all employee groups within an enterprise). At present, with very few exceptions, this is not possible within the bargaining area covered by NHO and the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO).

Other issues

NHO also want to see alterations to labour law in the direction of more flexible solutions and fewer regulations. Another important point for NHO is safeguarding sufficient access to qualified labour. To this end, NHO want measures introduced to encourage people to remain longer in working life as well as increased labour immigration (NO0012113N).

Commentary

The new policy programme is by and large in line with previous policy documents produced by NHO, which have included the wish for more decentralised wage formation and for working time to be more often determined at company level. NHO has nevertheless accepted and been part of the centralised bargaining model that marked much of the 1990s. However, the new programme's lucid critique of national wage formation and of the bargaining system that has been prevalent in the latter parts of the 1990s, seems to indicate that the programme may reasonably be interpreted as a shift in NHO's wage policy.

The programme also emphasises views raised by NHO on recent occasions, among others in the reports of various public committees deliberating wage formation and the bargaining system (NO0104129F and NO0007198F). NHO argues that centralised wage formation is no longer able to safeguard levels of price and wage growth that strengthen Norwegian competitiveness, and that trade unions seem unable to maintain sufficient commitment to the strong coordination called for by the employer side. Among other points, NHO criticises the practice of trade union membership ballots which on several occasions in recent years have led to situations where trade union members have rejected bargaining results which have been accepted by their representatives (NO0004188F). However, an issue that remains to be settled by NHO is its position on the extent to which the right to strike should be tied to wage negotiations in each individual company.

A question that may be asked is how NHO intends to achieve the goal of moving wage formation from the central to the company level. There is no doubt that most LO-affiliated unions want to keep the present system of nationwide sectoral collective agreements. The employer side may end up in a situation in which instead of the current coordination at the main confederation level the outcome will only be fragmented negotiations at the level of individual trade unions and employers' associations. Such a model has traditionally contributed to a greater wage growth than the coordinated bargaining model. The programme has little to say about how such a decentralisation will be achieved, but through the media there have been hints of a gradual development extending over several wage settlements. It is nevertheless clear that it will be difficult to force changes to the bargaining system in a period when the labour market is tight, as the case is in Norway today.

NHO's call for a more flexible agreement structure, including vertical agreements and company-based agreements, may be interpreted partly as a wish to satisfy the expectations of its members, partly as an attempt to address increased competition for members between Norwegian employers' organisations (NO9712138F), and partly as an effort to attract new groups outside the traditional NHO industries. To some extent, one may argue that NHO shares the views and worries of the LO unions within manufacturing industries, which have also raised doubts about the adequacy of the present collective agreements in a changing labour market. NHO will most probably also meet support among some LO unions with regard to its demand for vertical agreements. This is something that the larger manufacturing industry unions are ready to consider seriously, but which has been met with opposition from the LO unions organising white-collar workers in manufacturing. (Kristine Nergaard, FAFO Institute for Applied Social Science)