2002 bargaining brings high wage increases and few conflicts

Most Norwegian collective agreements were renegotiated in the first half of 2002. The new agreements in the private, public and semi-public sectors generate annual wage increases of between 5% and 6% in most cases. There was little industrial conflict during the bargaining round.

The 2002 collective bargaining round was a 'main settlement', in that all two-yearly industry-wide agreements were to be renegotiated (NO0202104F). By mid-June, most of the wage negotiations had been completed. The 2002 settlements have generated higher wage growth than anticipated in some sectors, but the bargaining was for the most part carried out without industrial conflict.

Private sector

The negotiations in the private sector were carried out as industry-level negotiations between the affiliates of the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and the Confederation of Business and Industry (Næringslivets Hovedorganisasjon, NHO), with all the collective agreements in this area negotiated separately.

The negotiations started, as is traditional, with the negotiations in manufacturing industry between the Norwegian United Federation of Trade Unions (Fellesforbundet) and Federation of Norwegian Manufacturing Industries (Teknologibedriftenes Landsforening, TBL), and here the parties agreed on a general pay increase of NOK 2.75 per hour. Additional company-level increases will also be awarded. The bargaining result in manufacturing industry is estimated to generate wage growth of approximately 5% from 2001 to 2002 (NO0204103F). However, this estimate is based on the subsequent company-level increases remaining at the levels of previous years. Fellesforbundet did not succeed with its demand for an agreement-based occupational pension scheme (NO0103125F), but the parties agreed that the pensions issue is to be deliberated and determined by the parties at the company level.

Manufacturing's general hourly wage increase of NOK 2.75 and provisions on occupational pensions were replicated in subsequent negotiations in the private sector. Some sectors, however, saw wage increases above the result in manufacturing industry. Bus-drivers were the only group in the private sector to win acceptance for their demand for an agreement-based occupational pension. Most agreements were renegotiated without the parties resorting to industrial conflict. However, in the hotels and restaurant sector strike action was taken over a union demand for higher wage increases for work carried out during inconvenient hours. Newspaper journalists also took strike action, and thereby managed to win partial acceptance for their demand for increased holidays.

Public sector and NAVO

The negotiations in the public sector and in the semi-public NAVO bargaining area were expected to be hard. A number of the trade unions concerned had signalled in advance their intentions to make significant wage demands. Furthermore, the collective agreement structure in both the NAVO area and the municipal sector was placed on the agenda. In the municipal bargaining area, both employers and the union confederation representing academically qualified staff wanted to see a more decentralised bargaining structure, in which a large proportion of wage formation should occur at the workplace level. In the NAVO area, new agreements were to be concluded for three large state enterprises transferred from the state or the municipal sector - Norway Post (Posten), the Norwegian State Railways (NSB) and the new health enterprises (NO0108139F).

Against the odds, agreements were reached for most groups in both public sector and the semi-public NAVO area. An important explanation for this is the fact that significant wage increases were awarded. In the state sector, the parties managed to reach an agreement without the help of the state mediator. The state sector agreement is estimated to generate wage growth of 5.5% from 2001 to 2002.

The negotiations in the municipal sector proved more difficult. Here the parties abandoned the traditional joint state-municipal 'wage table', which on previous occasions had led to a coordination of negotiations. Furthermore, the municipal wage system has been changed considerably, allowing for example groups with higher education to have their pay determined solely at the company level. The other groups have had their relatively complex system of pay tables and pay levels replaced by a simpler system with minimum wage rates for 'core groups' of posts and positions. The implication is more room for company-level wage formation. The negotiations awarded significant wage increases for both the lowest-paid groups and groups with higher education, including nurses and groups with a similar level of education. Overall, estimates suggest wage growth in the municipal sector of around 6% in 2002.

Following several rounds of intense negotiations, new agreements were also concluded in the NAVO bargaining area without strike action being taken (NO0206104N), despite the predictions of many commentators. At Norway Post and NSB, the former state sector wage systems, pension arrangements and working time arrangements were prolonged, but will be considered by the parties during the life of the new agreement. For the public hospitals newly transferred to NAVO, an agreement was reached which allowed several groups, including nurses, substantial wage increases. A special productivity agreement between the Norwegian Union of Registered Nurses (Norsk Sykepleierforbund, NSF) and NAVO, which allows for the increased use of overtime work on a voluntary basis, will allow nurses in the hospital sector further wage increases.

Commentary

The 2002 bargaining round produced much higher wage growth and fewer strikes than first predicted. The 5% wage growth achieved in manufacturing industry was initially seen as an acceptable result, and was meant to provide a ceiling for what the other sectors could expect to achieve. Throughout the subsequent negotiations, however, it became clear that many of the results would go beyond 5%, both in private services and in the public sector.

There are worries that 2002's settlements will weaken Norwegian industry's competitiveness and thus in the long term lead to fewer jobs and increased unemployment. Statistics Norway (Statistisk Sentralbyrå, SSB) predicts a gradual increase in the unemployment rate from 3.6% in 2001 to around 5% in 2004. It also expects a fall of 25,000 in the number of employees in manufacturing industry over the same period. A strong Norwegian krona (NOK) amplifies these challenges. Many commentators also expect that the Bank of Norway will increase interest rates. For most wage earners, however, the settlements generate substantial real wage increases, since price growth is expected to be 1.1% (according to the latest estimates by Statistics Norway). The last time Norwegian employees experienced a comparable growth in real wages was in the 1970s.

The 2002 settlements are also likely to spark renewed debate concerning the Norwegian model of collective bargaining. NHO has on several occasions called for a decentralisation of wage formation to the company level, based among other factors on the belief that the present centralised model does not deliver desirable wage growth (NO0109102F). It is evident that a result of 5% or more goes beyond what the employer side regards as responsible wage growth, taking into consideration the financial situation of important segments of Norwegian industry. There was, on the other hand, reluctant support in most quarters for a significant lift for wages in the public sector, in particular among the female-dominated occupations in the health sector. These groups have on several occasions voiced their discontent with the present bargaining model, based on the competitiveness of manufacturing industry, on the grounds that it has prevented female-dominated occupations in the public sector from acquiring the wage increases needed to even out the wage gap between women and men. It is also worth noting that the relatively favourable negotiations in the municipal sector are being followed by a larger-scale reorganisation of the wage system, which may lead to more decentralised wage formation in the years to come.

Various aspects of working time arrangements and flexibility were also on the agenda during the 2002 negotiations. The employer side expressed a wish to see more flexible working time arrangements introduced, calling for working time arrangements to be determined to a lesser extent by central collective agreements and/or, at a minimum, for premium pay rates for work carried out outside standard day-time working hours to be reduced. The unions by and large focused on defending and maintaining existing arrangements. In most cases, the 2002 negotiations did not lead to any changes in working time arrangements. In some areas, however, there has been a strengthening of the rights of employees. In the construction industry, for example, the parties agreed on provisions that allow shop stewards a greater say in relation to the 'hiring in' of labour. Similarly, the social partners in the oil sector concluded a new working time agreement, which gives offshore oil-production platform workers a working time scheme whereby they are on duty for two weeks and then have four weeks off.

Another issue that may well be put on the social partners' agenda in the years to come is that of pensions. A significant challenge for the unions, and in particular LO's member unions in the private sector, is the substantial discrepancies that exist between companies and branches with regard to occupational pension schemes. These worries are amplified by a growing fear among Norwegian employees about a further weakening of public pension arrangements. An issue that made its mark on the previous bargaining rounds - skills and training ('competence') reform – was only to a limited extent on the agenda during 2002's bargaining. (Kristine Nergaard, FAFO Institute of Applied Social Sciences)

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