Employers in commerce sector call for statutory minimum wage

In June 2007, the Norwegian employer organisation for the commerce sector, the Federation of Commercial and Service Enterprises, called on the Minister of Labour and Social Inclusion to introduce a statutory national minimum wage in Norway. Up to now, minimum wages have been decided through collective bargaining, and in rare cases problems arising have been addressed by widening the scope of collective agreements.

The Norwegian employer organisation for the commerce sector, the Federation of Commercial and Service Enterprises (Handels- og Servicenæringens Hovedorganisasjon, HSH), has requested the Minister of Labour and Social Inclusion, Bjarne Håkon Hanssen, to introduce a statutory national minimum wage in Norway. The proposal was made in June 2007, as part of the employer organisation’s contribution to the government’s statement to the Norwegian Parliament (Stortinget) on work immigration (NO0705019I). According to HSH, the minimum wage scheme should replace the existing scheme on the extension of collective agreements, as well as transnational arrangements restricting labour market access for persons from new EU Member States.

Background

In contrast to most European countries, there is no statutory national minimum wage in Norway. Until a few years ago, the issue of low-wage regulation was mainly addressed in collective bargaining between social partner organisations, with minimum wage levels established in collective agreements. However, as a consequence of increasing numbers of labour immigrants arriving from the new EU Member States, Norway has in latter years made use of the long-standing, but never before invoked, opportunity in the national legal framework to extend collective agreements by widening their scope.

During the period 2004 to 2007, the first four decisions on extension have been made. Thus far, parts of the collective agreement for construction workers have been extended to the whole country (NO0612029I); at the same time, sections of the collective agreements for building, electrical and metalworkers have also been made generally applicable in selected areas of the country (NO0411103F, NO0509103F). Moreover, the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) advised that an application for extending the collective agreements for electrical and metalworkers to all of Norway would be submitted in September 2007.

Benefits of a statutory national minimum wage

HSH argues that a statutory national minimum wage is a better instrument to combat ‘social dumping’, compared with the extension of collective agreements. The main rationale behind this argument is that the present system of extension of collective agreements makes it difficult for companies that are unfamiliar with the Norwegian collective bargaining system to find information and fully understand the regulatory obligations placed upon them. A universal statutory minimum wage that applies to all companies in all sectors would be easier to implement.

Furthermore, the employer organisation highlights that a statutory minimum wage would make it easier to prevent situations where employees operate as self-employed persons in order to avoid the coverage of extended collective agreements, since those who are self-employed should also be covered by the statutory national minimum wage. In addition, HSH points to other positive societal effects of a statutory national minimum wage, namely, establishing a minimum security floor for all workers and combating the exploitation of workers exposed to low wage competition, particularly in sectors where the coverage of collective agreements is low.

Commentary

The extension of collective agreements by means of legislation is still a relatively new occurrence in Norway, and considerable uncertainty surrounds both the functionality and the effects of the relevant act. The last decision on the extension of collective agreements – where the collective agreement for construction workers was extended to the entire country – included only a few provisions from the agreement, mainly the minimum wage terms. This will also be the case if the collective agreement for electrical workers is made generally applicable; LO has stated that only the minimum wage levels will be included in their application for an extension of the agreement.

Such a development indicates that the Norwegian strategy of making collective agreements generally applicable bears resemblance to a statutory minimum wage scheme, but one in which wage levels are fixed sector by sector. Nevertheless, moving from this system to a national minimum wage may be a major step: the concept of a statutory national minimum wage is extremely unpopular among the trade unions, as they fear that they will be deprived of their bargaining powers.

Kristin Alsos, Fafo Institute for Applied Social Science