Suspense as 2002 bargaining round approaches

In February 2002, the Norwegian Confederation of Trade Unions (LO) issued its demands for the spring bargaining round. The 2002 wage settlement will see all the current two-year national sectoral collective agreements renegotiated, and the outcome is awaited with some suspense, not least in the public sector, where a number of groups have warned of significant pay demands. Furthermore, employers are seeking a decentralisation of bargaining.

On 5 February 2002, the general council of the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) made public the confederation's demands for the forthcoming spring wage negotiations. Bargaining demands have also been issued by the other main union confederations. This marks the beginning of the 2002 wage round in Norway, when all the current two-year collective agreements are to be renegotiated. In the private sector, the 2002 round will take place at industry level and start in March 2002 with the negotiations in manufacturing industry. As in previous years, there is great suspense associated with the outcome of the 2002 settlement, not least in the public sector, where a number of groups have warned of significant wage demands. Nurses in state-owned hospitals are striking for higher wages (NO0202102N).

Wages and pension demands

Both LO and the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) call for wage moderation, but only in so far as their demands with regard to social reforms are met. In recognition of the challenges facing the Norwegian economy in the months and years to come, the two union confederations do not want to see excessive wage increases in 2002, but rather an overall improvement of the income situation of all wage earners. The main objective of negotiations, however, should be generally to raise the income of groups with a low average wage, and to direct funds to enhance equal pay.

Both YS and LO support the demands of certain groups that have lagged behind in settlements in recent years, comparatively speaking, including municipal sector employees. The report of the Technical Calculating Committee on Wage Settlements (Det tekniske beregningsutvalg for inntektsoppgjørene, TBU), published on 25 January 2002, found that the municipal sector was the bargaining area with the lowest wage growth rate in 2001 (NO0202101N). The TBU is made up of representatives of the main union confederations and employers' organisations, along with the relevant ministries and Statistics Norway (Statistisk sentralbyrå, SSB). Its report, which is presented prior to each wage bargaining round, constitutes an important basis for the negotiations.

Both confederations also recognise the need to give special attention to groups with higher education, whose loan liabilities and costs in connection with education have not sufficiently been compensated for in terms of wages – this is especially the case for some groups in the public sector. The new confederation for unions organising employees with higher education, Utdanningsgruppenes Hovedorganisasjon (UHO), has warned of significant pay demands on behalf of its member groups when the wage bargaining starts in the public sector on 5 April 2002. UHO was established on 1 January 2002 (NO0201184F).

The issue of pensions will also be given priority by unions in the 2002 settlement, and the emphasis is on improving pension schemes in the private sector, as well as retaining the relatively advantageous schemes already in existence in the pubic sector. A significant number of private sector employees are not covered by occupational pension schemes, which are seen as an important supplement to the national insurance scheme (Folketrygden). Occupational pensions have been one of the more important social security arrangements in the public sector in Norway, and unions have long aspired to establish the same kind of schemes in the private sector (NO0103125F). The trade unions also stress that they will not accept any changes to the public sector occupational pension schemes. Recently, there has been some worry that the new centre-right coalition government's proposed public sector reform will contribute to undermining existing public pension arrangements (NO0202103F).

The so-called 'competence' (skills and training) reform has been a recurring theme on the bargaining agenda in recent years, but progress has been halted by disagreement between the parties over the issue of financing employees' subsistence during educational leave (NO0109141N). Both YS and LO have pledged to continue to work to find a solution to the problem, and expect the government and employers to contribute as well.

The future of centralised bargaining

The employers' organisations seldom reveal their demands prior to negotiations, but in 2002 it may be that the bargaining system itself will be placed on the agenda. There is a general consensus among all the major employers' organisations in both the private and public sector that it is time to move away from centralised bargaining to more company-level wage formation. The rationale behind this argument is that the economic and labour market situation in Norway today calls for a system of wage formation much more sensitive to the financial situation of individual companies and to the recruitment needs of companies/municipalities.

The Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) has called attention to the fact that the wage growth rate in recent years has been much higher in Norway than among its main trading partners and, coupled with expensive social reforms, this has served to undermine the competitiveness of Norwegian industries. In the light of these developments, according to NHO, the so-called 'solidarity alternative' (the cooperative venture on incomes policy that has characterised most wage settlements from the 1990s onwards) has failed to achieve its basic objectives and NHO thus wants to see a move towards more company-level wage formation and bargaining, which will provide a more financially-sound distribution of wage increases across branches and sectors. NHO does not envisage a large-scale transformation of the Norwegian bargaining system in the short term, but rather incremental changes taking place over a longer period, and based on the experiences of previous as well as future settlements (NO0109102F).

Decentralisation of collective bargaining is also an issue in the public sector. The Norwegian Association of Local and Regional Authorities (Kommunenes Sentralforbund, KS) wants to see a number of changes to the present system of bargaining. Its proposal implies that current wage scales/levels would be replaced by more flexible pay systems very much determined by the individual municipalities themselves, and that local-level parties would agree on the criteria to be followed by the municipalities in determining individual employees' wages. The union confederation for academically-qualified staff, Akademikerne- which represents groups such as doctors, dentists and legal professionals - supports the proposal, and envisages in future a total decentralisation of wage formation, at least for its own member groups. Several other trade unions within the municipal sector have also more or less accepted that, for certain groups, wages may be decided at the local level only. However, such a system is strongly opposed by the largest trade union in the municipal sector, the LO-affiliated Norwegian Union of Municipal Employees (Norsk Kommuneforbund, NKF).

Commentary

Collective bargaining in 2002 will be no easier than in previous years, and indeed it may prove to be particularly difficult, because there is significant discontent among a number of groups in the public sector, and in particular among municipal sector employees. Furthermore, in the light of the 'wage package' awarded to teachers in the 2000 settlement (NO0006194F), it may well be that other groups will demand similar advantageous wage increases in 2002. Many groups in the public sector have demanded annual pay increases of NOK 50,000 and more, arguing that public sector employees with higher education have long lagged behind in wage development, and that wage and working conditions needs to be improved in order to attract qualified personnel. This is the case for nurses already on strike in the public hospitals recently transferred from the county/municipal sector to the state sector. More strikes may come when the formal negotiations start in March and April.

Although calls for decentralisation of wage formation from the employer side are not new, in 2002 this point has been emphasised even more strongly in all sectors of the Norwegian labour market. It remains to be seen, however, how far the employers' organisations will go to achieve their objectives. Presently the Norwegian bargaining system is under a dual pressure. The centralised bargaining model allowing NHO and LO - as the major actors within the private sector - an influential role in setting the agenda in wage and policy formation, has been criticised as sidelining a significant number of trade unions outside LO. More recently the strongest criticism has come from the many unions representing professional and highly educated groups in the public sector, which have on numerous occasions questioned the viability of the centralised model allowing private sector industries to be the 'leaders' in national wage formation, including the public sector. Lately the model has also been questioned by NHO, which argues that the system can no longer guarantee moderate wage increases and thereby secure employment and profitability within the manufacturing sector. NHO therefore wants a move to a much more decentralised system for wage setting.

If the incomes policy goals of recent years are to be accomplished ,there is little room for major wage increases in 2002, and the the governor of Norges Bank (the central bank of Norway), Svein Gjerdrem, has warned that excessive increases may lead to both a rise in interest rates and price growth. Furthermore, he also argues that large increases will first and foremost have a negative effect on the competitiveness of, and the employment situation in, private sector industries in Norway. (Håvard Lismoen, FAFO Institute of Applied Social Sciences)