Norway: Quick settlement in the 2017 bargaining round

In March 2017, the peak-level confederations achieved a quick resolution in their negotiations on this year’s wage increases for major parts of the Norwegian private sector. The agreement set a mark for other sectors in line with this trendsetting bargaining model. This year’s negotiations proved relatively straightforward with no threats of industrial action from unions.

Norwegian system of collective bargaining

Collective agreements for the Norwegian private sector are usually concluded at industry level and are renegotiated at industry level or through cross-sectoral bargaining. The settlement period lasts two years, but allows for wage negotiations during the second year (the uneven years). During the biennial bargaining round (the even years), the entire contents of the agreements are open for revision.

In line with this system, only wages were negotiated in spring 2017. As in earlier years, the peak confederations – the Confederation of Norwegian Enterprises (NHO) and the Norwegian Confederation of Trade Unions (LO) – sat together at the negotiating table, meaning that all NHO–LO agreements were negotiated together. The negotiations covered most of the private sector, including the manufacturing export industry. In accordance with the trendsetting bargaining model, the economic situation for this part of the Norwegian private sector is of vital importance when reaching an agreement on the level of wage increases that Norwegian-based companies can accommodate.

Backdrop to the bargaining round

The Norwegian economy has been slowing down since 2015 due to falling oil prizes. As a result of the bargaining round in 2016, combined with high inflation (due to a lower exchange rate of the Norwegian krone with other currencies), many employees faced a net wage decrease for the first time since the 1980s. The decrease was between 1.0% and 1.5% for major bargaining areas.

In the bargaining policy document (PDF) adopted by LO on 21 February 2017, the trade union confederation stressed that its main task was to contribute to long-term sustainable job growth, while at the same time securing a fair share of the created value for employees and the fair distribution of wages and other kinds of income. LO’s main objective for this bargaining round was to secure purchasing power for its members.

Quick settlement

LO and NHO started the bargaining round on 6 March by exchanging demands, entering into negotiations three days later and setting a deadline of 14 March to achieve an agreement without the use of mediation. A few hours before the time limit was reached, Kristin Skogen Lund and Gerd Kristiansen, the respective leaders of NHO and LO, announced that they had reached an agreement with a total wage increase of 2.4% (including the effect of last year’s wage increases and other effects . All employees were given a small wage increase as a part of the central-level negotiations, while employees in areas where company-level negotiations do not take place were given an additional increase. With an expected rate of inflation of 2.0%, it is anticipated that this result will lead to increased purchasing power for workers.

Reactions

Both LO and NHO were satisfied that they had been able to reach an agreement, and the LO leader highlighted that the settlement had a clear low wage and equal wage profile. The NHO leader argued that they had given as much as they could and that they ended up with a result that could be accepted by both parties. She pointed out that wage levels in Norway were among the highest in Europe and therefore it was necessary to keep wage increases at a lower level than in those countries with which Norwegian-based companies competed.

Oher sectors have since come to an agreement. The services sector and retail trade within the employer organisation, Virke, and the finance sector within Finance Norway finished their negotiations with their counterparts. Both sectors kept within the economic framework set by NHO and LO.

An agreement within the central public administration sector was reached on 29 April. The negotiations in this area also touched on the issue of whether the pay increase should be allocated at central level or if it should be open for negotiation at local level. The state employer, the Ministry of Local Government and Modernisation, has been eager to decentralise wage negotiations in this area and simplify the wage system. This goal is supported by the Federation of Norwegian Professional Associations (Akademikerne), but other trade unions are fiercely opposed to it. The leader of the public sector employees within LO, Egil Aas, said that the bargaining round had been a tough one, not only meeting demands on decentralisation but also demands on amending the pay system. Except for setting part of the wage increase aside for negotiation of allocation, only minor amendments were agreed to. With Akademikerne, the government agreed to continue the decentralisation it had started on in 2016 and decided to remove the centrally fixed pay system.

In the municipal sector, the parties reached an agreement very easily. Most of this year’s wage increase had already been allocated through the 2016 negotiations and the parties did not have much money left to discuss as they had to keep within the limits laid down by the trendsetting sectors.

Commentary

The settlement between the parties was in line with what could be expected in the economic situation that Norwegian-based companies are facing. Having only to negotiate wages this year, it proved quite easy for NHO and LO to reach an agreement; so far, all areas have come to an agreement without the threat of industrial action. It is expected that next year’s revision of the collective agreements will be tougher as topics such as low wage competition, temporary work agencies and training will be on the agenda.

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