Regulatory agencies to be moved out of Oslo

In May 2003, the main parties in the Norwegian parliament reached an agreement on the relocation of eight state regulatory agencies away from the capital, Oslo, to other cities in Norway. The move means that 900 jobs will be lost in the Oslo area, and it has thus met with significant opposition from the trade unions concerned, as well as from politicians representing the capital.

An agreement was reached on 14 May 2003 between the minority centre-right coalition government - comprising the Conservative Party (Høyre), the Christian Democratic Party (Kristelig Folkeparti, KRF) and the Liberal Party (Venstre) - and the Norwegian Labour Party (Det norske Arbeiderparti, DnA) and the Socialist Left Party (Sosialistisk Venstreparti, SV) on the relocation of eight regulatory agencies from the capital Oslo to other cities in Norway. The agencies concerned have supervisory and regulatory responsibilities in a number of areas, including health and safety at work, competition in business and industry, and the regulation of aviation and maritime activity. The transfers form part of a proposed larger-scale reorganisation of the regulatory agency system, and should also be seen in the light of the government’s plan to modernise the public sector. The transfer means that approximately 900 jobs will be lost in the Oslo area, and it has thus been met by significant opposition from the trade unions concerned, as well as from politicians in the municipality of Oslo.

Background

In January 2002, the government put before parliament a plan to modernise and increase efficiency in the public sector (NO0202103F). The main rationale behind the reform proposal is to create a more effective public administration and to provide greater freedom of choice for the users of services provided by public sector institutions. An important objective in this regard is to draw a clearer distinction between public administrative duties and public service provision. The new initiative to transfer regulatory agencies out of Oslo is so far the most ambitious and visible product of this reform. In a recent report to parliament, the government has sets out its vision for a reform of the present regulatory agency system, which includes freeing agencies from excessive political control, clarifying the various roles/functions of agencies, and generally strengthening the agencies’ competence and expertise.

Relocation of regulatory agencies

Although part of a wider reform, it is the relocation issue that has received the most attention, in the media as well as among those directly affected. The transfer involves eight out of around 40 regulatory agencies overseeing the legality of public and private sector activities, most of which are located in Oslo. The eight agencies to be relocated are:

• the Labour Inspection Authority (Arbeidstilsynet);

• the Post and Telecommunication Authority (Post- og Teletilsynet);

• the Civil Aviation Authority (Luftfartstilsynet);

• the Maritime Directorate (Sjøfartsdirektoratet);

• the Competition Authority (Konkurransetilsynet);

• the Media Authority (Mediatilsynet) - a new body formed by a merger between entities including the Media Ownership Authority (Eierskaptilsynet) and the Mass Media Authority (Statens medieforvaltning);

• the Directorate for Civil Defence and Emergency Planning (Direktoratet for beredskap og samfunnssikkerhet); and

• the new Petroleum Authority (Petroleumstilsynet).

In the light of the goals set out in the government's general public sector reform, the transfer represents not only a regional policy initiative, but also an attempt to make these bodies more cost-efficient and to some extent more independent. Moreover, in some cases, the goal is also to create some distance between the agencies and the enterprises and institutions they are supposed to regulate. Relocation is thus a means to this end.

The new regional structure of the agencies, according to the government, will also contribute to a more balanced regional development, as well as to the development and strengthening of alternative areas of competence and know-how in Norway. Oslo is seen as playing too dominant a role in this regard, at the expense of other university and research areas, in particular those of Bergen, Trondheim and Tromsø. The transfer means qualifications and competence in other parts of the country may now be drawn upon to a greater degree, with the additional benefit of making the agencies more competitive in local labour markets, and providing a more stable labour force within the agencies themselves.

The relocation process will, according to the government proposal, take place gradually over a three-year period, in order to ensure that the agencies are able to carry out their day-to-day responsibilities and duties, as well as to allow employees time to prepare for a possible move or to find new jobs.

The deal reached between the parties in parliament in May to some degree modified the original reform proposal, in that it stipulated that any major changes in the capacities and responsibilities of these agencies, as well as their relationships with relevant ministries and/or political authorities, must be subject to parliamentary discussion and approval. Furthermore, it was also decided that the costs of transfers are to be covered by extra state funds allocated to the agencies, and not within the ordinary operational budgets of the agencies. This is important in order to safeguard personnel-related assistance measures, and to make sure that the agencies are able fully to carry out their day-to-day tasks during the transfer process. The deal did not, as some had hoped, stop the proposed relocation of the agencies. It did, however, clarify the situation of the employees affected by the transfer process. The deal explicitly states that there will be no duty placed on the employees concerned to follow the agencies out of Oslo, and as such their rights in relation to severance pay and priority for other posts in the state sector will be maintained.

Response

When the plan for the relocation of the regulatory agencies became public knowledge, it met with significant protests from trade unions, the agencies concerned, and not least from both parliamentary and local politicians in Oslo. Although there seem to be a general consensus about the desirability of relocating public enterprises and institutions away from the capital in the pursuit of a positive regional policy, there are differing views and preferences as to how this can best be achieved and which institutions should be moved. Thus most of the trade unions concerned wanted the agencies to be considered separately and not collectively, which was ultimately the case.

The main argument from the critics is that the relocation will involve a loss of valuable skills and qualified staff within the agencies themselves, since few current employees are expected to follow the agencies out of Oslo. Previous experience from similar transfers, along with surveys carried out within the agencies concerned, confirm that only a handful of employees will actually move with the agencies out of Oslo. This loss of qualified staff will, according to the critics, undermine the agencies' ability properly to carry out their tasks, in particular in the short term when entirely new institutions have to be put together, but also in the long term since the reputation of the agencies will be weakened. The Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) calls on the government to exercise caution and not to sacrifice employees in the pursuit of political principles and goals.

The Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) emphasises the detrimental effects of such a relocation on the work of the Labour Inspection Authority, not just in the short term as a result of the transfer process itself, but also in the long term as a result of diminishing contacts between the authority and the main social partner organisations, which for the most part are located in Oslo. It will, according to LO, also have a detrimental long-term effect on tripartite cooperation, which is the basis for the Inspection Authority's health and safety work.

Furthermore, criticism has also been directed at what is regarded as the Ministries' lack of clarification with regard to the costs and benefits of moving the institutions. The Federation of Norwegian Professional Associations (Akademikerne), representing almost half of the employees affected, states that relocating these agencies will not make them more efficient and cost-effective, but rather the opposite. The leader of LO, Gerd-Liv Valla, has called for the plans to be reconsidered before any decision is made, since the total costs of the relocation as well as their socio-economic effects have not been taken into consideration

There has also been significant opposition from local politicians in Oslo and parliamentary representatives from the capital. The relocation initiative will lead to the loss of several hundred jobs in the capital, and has been described by Marit Nybakk, a DnA parliamentary representative for Oslo, as reflecting an 'old-fashioned' regional policy approach. Even among the government's own Oslo representatives, in particular within the Conservative Party, criticism has been voiced that the proposal is ill-founded and that the government underestimates the costs involved and the consequences for the capital.

Commentary

The establishment of public institutions outside the Oslo region is not in itself controversial, because there is a general consensus about the desirability of regional development in Norway. There is also a general consensus about the challenges facing the Norwegian public sector in the years to come, and that a restructuring is necessary in order to ensure that services are delivered in an efficient and effective manner, as well as to safeguard the proper utilisation of resources. However, it is evident that there is little agreement as to the means by which these objectives can best be achieved.

The controversy surrounding the relocation of government agencies also reveals that the issue cuts across organisational and party lines. There are significant geographic tensions within social partner organisations, and the proposed relocation is seen by some trade unions in the regions affected as a valuable contribution to the development of regional competence centres and the sustainability of regional labour markets. The issue has also divided parties in the political sphere. In Oslo, Conservative Party representatives feel to a certain extent let down by their own government, while Conservative representatives from the relevant regions outside the capital have welcomed the move. There has been significant tension in the other parties between members from different regions.

The critics’ strongest argument about the detrimental effects on employment in the Oslo region seems to be highly credible. Unemployment in Oslo is increasing more rapidly than anywhere else in the country, in particular among groups with higher education, and as such the task of finding new jobs for such a substantial number of highly educated people in the public sector will be difficult.

It also remains to see whether the cost-saving estimates of the government hold true, not least following the agreement between the parties in parliament. Not only will a significant number of employees receive compensation for having to move house and family, but those choosing not to move will be entitled to severance pay and help to find new jobs. Severance pay benefits in the state sector are well known to be favourable for the employees and costly for the state. Furthermore, extra funds for the relocation will be awarded as a result of the parliamentary agreement, which will doubtless push the previous estimates made by the government upwards. Finally, the loss of qualified labour will in the short term lead to extra costs in building up new organisations, not least in relation to attracting qualified employees and training new employees. (Håvard Lismoen, FAFO Institute for Applied Social Science)