Norway: Moderate outlook dominates mid-year pay negotiations

The 2015 negotiations of wage rates in nationwide collective agreements were characterised by moderation, as social partners adapted their demands to a bleaker economic outlook. The trend-setting industries agreement is estimated to increase wages by 2.7% in 2015.

The mid-term of the biannual collective agreements takes place in 2015, and only wage rates are negotiated (intermediary negotiations). An initial agreement between the largest social partners, the Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Business and Industry (NHO) was reached on 26 March 2015. Most wage rates in nationwide collective agreements were renegotiated during the second quarter.

Decelerating economic growth and an expectation of increased unemployment set the backdrop for this year’s negotiations. For years, high oil prices have stimulated the Norwegian economy and contributed to high wage increases. With the drop in crude oil prices in autumn 2014 and early 2015, the petroleum industry is weakened and the Norwegian krone (NOK) has fallen markedly against the US dollar and the euro. Before the negotiations started, the largest (LO-organised) trade union in the private sector (Fellesforbundet) – somewhat surprisingly – made it clear that they would settle for zero general wage increase in the central bargaining, in light of the economic situation and given that this year’s agreement would be taken into consideration in the 2016 negotiations. LO's final demands included a wage rise in low-wage sectors, but otherwise showed considerable moderation.

The negotiations between LO and NHO were relatively quick, ending in an agreement which resulted in a wage increase of NOK 1.75 (about €0.19) an hour in low-wage sectors, and zero real increase in all other areas. The subsequent negotiations in both public and private sectors have largely followed the trend set by the LO-NHO agreement, with lower-than-usual wage increases in most agreements. The pay rise, including drifts and effects of wage increases given in 2014, was calculated by the parties to be 2.7% for the LO-NHO area in 2015.

In 2014, the wage increase in manufacturing was 3.3 %. A summary report of mid-term settlements (in Norwegian, 3.2 MB PDF) with updated estimates by the Technical Calculation Committee for Wage Settlements (TBU), released on 19 June, indicates a significantly lower wage increase in 2015 than in 2014. In 2014, the average wage increase was 3.1%, the lowest in 20 years. Final figures for total wage increases in 2015 are yet unknown, as the central agreements open up for company-level bargaining. This takes place after the central-level negotiations have concluded, and are still ongoing. The Committee estimates the pay growth in the NHO-area manufacturing sector, including effects of increases in 2014 but before wage drift (mainly from wage increases that will be agreed at company level), to be 1.1%–1.2% from 2014 to 2015. In retail firms affiliated to the employer organisation Virke, the pay growth before wage drift is estimated to be 1.7%. For government employees and municipal employees, the wage increase before wage drift is estimated to be 2.2% and 2.7%, respectively. Health professionals and other professions affiliated to the employer organisation Spekter will receive a 2.7% wage increase before wage drift.

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