Merger of public services marks first stage of social welfare reform

In November 2006, the first Norwegian Labour and Welfare Organisation (NAV) office was officially opened. The opening marks the start of the biggest social welfare reform ever undertaken in Norway. Employees affected by the reform, along with their trade unions, have welcomed the initiative, but insist that success can only be achieved through their participation and consultation.

The first office of the Norwegian Labour and Welfare Organisation (Arbeids- og velferdsforvaltningen, NAV) was officially opened on 2 November 2006, marking the start of the largest social welfare reform ever undertaken in Norway. The so-called NAV reform entails the merger of employment, national insurance and social security services into one single organisation, known as NAV. The main purpose of the reform has been to coordinate front-line services of all three public services at local level.

NAV welfare reform

The reform, which was approved by the Norwegian parliament (Stortinget) on 31 May 2005, is the largest public administrative reform ever undertaken in Norway. The decision followed almost a year of deliberation (NO0409106F). The NAV reform involves approximately 16,000 employees, responsible for an annual budget of NOK 265 billion (€32 billion), and serving in one way or another almost half of the Norwegian population.

The main objective of the reform is to encourage more people into employment thus reducing the number of citizens on different types of social welfare benefits. Other important objectives are to create a more user-friendly welfare service, to enhance coordination among the various service agencies and to increase welfare service efficiency.

Division of tasks

The first stage of the reform was introduced on 1 July 2006, with the merger of the state-run National Insurance Administration (Trygdeetaten) and the National Employment Service (Aetat). No change has been made in relation to administrative responsibility over social security benefits, and the provision of basic services, which are still managed at the level of the individual municipalities. Thus, the organising principle at central level remains the same: a division of responsibility between the state and individual municipalities. On the basis of a central framework agreement, local level agreements between the individual municipalities and local NAV offices are to be concluded, drawing up the division of work between the two levels of public authority.

The main organisational change will be evident at local level, where the front-line offices of the three public services will be merged into joint local offices. Thus, instead of three service outlets, there will now only be one outlet to which users must refer. However, not all offices or services will be converted immediately. Pilot projects involving the establishment of a selected number of NAV offices around Norway began in November 2006; another 20 offices will be opened by the end of the year. These pilot projects will serve as models for the other offices to be established during the reform. Moreover, the pilot projects will test new modes of work organisation and new roles for the employees involved. The reform is to be completed by the end of 2009, at which time NAV offices will be present in all municipalities in Norway.

Impact of reform on employees and trade unions

Overall, employees affected by the reform, and their trade unions, are in favour of the merger of welfare state services. The process of merging the two public sector services (employment and national insurance) in July ran relatively smoothly. The restructuring process took place in close cooperation with the employees concerned and their representative organisations.

The more immediate challenge at present is to encourage employees from the public sector at national and municipal level – both levels are subject to different rules and regulations – to develop a common culture and work together in the front-line offices of NAV. The trade unions emphasise that it is vital to draw up a clear division of responsibility between the two groups of employees, and to resolve potential conflicts with regard to this division of work in negotiations between the relevant social partner organisations.

Challenges of the merger

Important regulatory differences exist between public sector employees at municipal and national level, particularly in relation to participation and co-determination, but also in respect of pay. The Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) underlines that municipal employees must enjoy, within NAV, the same rights that public sector employees at national level have in terms of participation and consultation. This means, in effect, an improvement of the present municipal system. The unions also emphasise that the situation should be avoided whereby some employees (at national level) are paid more than others (at municipal level) for the same work.

Acknowledging the challenges generated by merging two different agreement systems, the government will enter into restructuring agreements with the social partners. At a political level, it also pledges to maintain a good dialogue with the main confederations concerning the reform. The government also asserts that no employees will lose their jobs as a result of the reform. However, some staff may be required to move to different locations and offices.

Håvard Lismoen, Fafo Institute for Labour and Social Research

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