Norway: Role of social dialogue in industrial policies

  • Observatory: EurWORK
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  • Published on: 14 september 2014



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Norway could serve as an example of a system where the social partners play an important role in policy formation as well as in implementing the policy and developing different tools and measures. The Norwegian industrial relations model – in which tripartism is a key instrument combined with extensive social dialogue at both central, sectorial and local level – is supported across party lines. Representatives of the social partner are found in both green paper committees and on the board of important instruments. Another feature of the model is the active labour market policy aimed at supporting innovation and renewal in the different industries. In a number of areas, there are both initiatives taken by the social partners aimed at the government: some are purely tripartite measures while some – more uncommon – are from the government and one is from the social partners only.

Part 1: Overall role and involvement of social partners in industrial policy in the national context

Is there in your country currently a policy framework to stimulate investments that both create economic growth and employment?

Table 1

Policy framework

Yes

No

Economic growth

Yes

 

Employment

Yes

 

Both economic growth and employment

Yes

 

Competitiveness

Yes

 

2. Is there evidence in your country of involvement of social partners in the process of formulating industrial policy interventions? If yes, please indicate which types of involvement:

Table 2

Type of social partner involvement:

… in the formulation of horizontal (cross-sector) interventions

… in the formulation of vertical (sector-, industry- or company-specific) interventions

Sector-specific involvement

Yes

Yes

Cross-sector involvement

Yes

Yes

Bipartite, tripartite, tripartite+, unilateral, public/private partnership?

All but public/private parterships

All but public/private parterships

3. How have the social partners been involved in the industrial policy formulation process?

Table 3
 

Please indicate (X) the extent to which the different types of involvement are used, including whether this involvement is statutory:

Level of government?

Sector focus?

Specific form of social partner involvement:

Statutory/mandatory

Very common/ used in most policy processes but not statutory

Fairly common but not consistently used

Rarely used

Not used at all

National or regional?

Sectoral or cross-sectoral?

Tripartite standing committee (TBU)

 

x

     

National

C-sect.

Tripartite ad hoc committees

 

x

     

Both

Both

High-level groups or other multi-stakeholder committees involving other stakeholders in addition to social partners

 

x

     

Both

Both

If multi-stakeholder committees:

Please indicate which types of other stakeholders are (typically) involved:

Depending on issue at hand: different NGOs, practitioners

Hearings

NGO

           

Consultations

NGO

           

Conferences

   

NGO

   

Both

Both

Other - please specify below:

             

.

             

Other: ‘The collaboration committee’ – which consists of the top people in LO (the Norwegian confederation of trade unions) and the Labour Party – meet regularly in order to discuss different issues. This committee has been labeled the cornerstone in the relationship between the Labour party and LO. The committee operates whether the party is in position or not.

4. Is there evidence in your country of initiatives that follows recommendations and development at EU-level? If yes, please indicate in which sectors:

A white paper (Stortingsmelding nr 39 Mangfold av vinnere (Meld. St. 39, In Norwegian only) was published in spring 2013. A number of different measurements in order to promote productivity and growth are partly introduced, partly extended. All of the four pillars from the EU’s industrial policy is targeted, but not with explicit references to these recommendations.

5. Which types of industrial policy instruments/interventions at different government levels have social partners been involved in? Please indicate degree of involvement

3 = high degree of involvement,

2 = involvement to some extent,

1 = low degree of involvement,

0 = no involvement.

Table 4

Policy instruments:

National level

Regional level

Local level

Public investment programmes:

     

Infrastructure

3

3

 

Construction

3

3

3

building renovation

3

   

Other

3

   

Innovation programmes:

     

Support for R&D

3

3

 

Cluster promotion

 

3

 

Export promotion

3

3

 

Internationalisation of SMEs

3

3

 

Improvement of access to finance:

     

Loan:

     

loan guarantee programmes

3

   

venture capital funding

3

   

Other

     

Public procurement policies:

     

Tax and duty policies

3

   

Adapting the skills base

3

3

 

Subsidies for restructuring/ bail-out of companies in crisis

3

3

 

Social plans in case of restructuring. Training/re-training:3

3

   

Investment incentives

3

   

Energy efficiency/ energy shift

3

   

Energy supply security

3

   

Access to raw materials

3

3

 

Prices of energy and raw materials

3

   

Others, please specify below:

     
       

6. Which, if any, positive effect(s) can be related to the involvement of social partners in the industrial policy process in your country?

Table 5

Positive effects

Tick (X) where applicable

Please comment briefly: How did effect manifest itself?

Speed of policy process

x

To isolate different positive effects (as speed, robustness of relevance) of tripartism is not possible. Of course – sometimes the government makes decisions that are opposed by one or both the social partners, but they would have been consulted and involved in the process prior to the decision. To measure effect would indicate that we were able to compare different processes. That would imply far more time that this reporting allow us to do. However, the examples at the end of the report might be helpful.

In the white paper mentioned above – tripartism, social dialogue or the Norwegian model in general – is one of the, if not the, most important measurement in developing the Norwegian working life and industries.

Robustness of policy initiatives

x

Relevance of policy initiatives

x

Dynamism in the policy process

x

European coordination

x

Ownership of policy initiatives

X

Coherence and coordination of labour market, education, and economic policies

X

Stimulating public-private partnerships

 

Public-private partnerships (e.g. in transport sector) was one of the political issues in 2013 election. The “red-green” coalition (who lost power in the 2013 election), as well as the trade unions, were sceptical, while the conservative parties have advocated the issue. This is however more a question of speed – as in building new roads and nursing homes – than industrial policy as such.

Others, please specify below:

   

.

   

7. Which, if any, problems or challenges related to involvement of social partners in the industrial policy process have been encountered in your country?

Table 6

Problems/challenges:

Tick (X) where applicable

Please comment briefly: How did the problem manifest itself?

Increased bureaucracy

 

See above, the same considerations apply. From time to time the relationship and the close connection between LO and Labour Party/red-green coalition government (2005-autumn 2013) is part of the political agenda in Norway – either raised by the opposition parties or by the trade unions outside LO.

Lengthy policy processes

 

Lengthy bargaining processes

 

Dilution (circumvention) of parliamentary democracy

x

Problems of establishing accountability

 

Lack of dynamism in the policy process

x

Lack of culture to involve social partners

 

Others, please specify below:

 

.

   

8. What, if anything, has been done to address these challenges/problems listed in questions 7? What was the outcome?

Table 7

Problems/challenges:

Measures undertaken

Effect positive/negative

 

See above

 

Part 2: Description of relevant sector examples of social partner involvement

This section aims to identify examples of policies targeting specific sectors and involving social dialogue. Among the industrial policies treated in the previous section in question 5, please select 2-3 examples which represent significant industrial policies in your country and describe the policy instruments used and the contribution of social partners to the shaping of the policy and the outcome of their involvement.

The selection of examples should be guided by the following criteria:

  • importance of the sector to the national economy;
  • level of government support to the industry; and
  • best practice of social dialogue in the country.

Key sources for our examples have been Stortingsmelding nr 39 (2012-13) Mangfold av vinnere. Næringspolitikken mot 2020 and Stortingsmelding nr 22 (2011-2012) Verktøy for vekst – om Innovasjon Norge og SIVA SF (white papers to the Parliament) and (example 2) Olberg, Dag (2013), ‘The Norwegian temporary lay-off institution – regulations and reregulation’. Paper for the Åsgårdstrand conference on institutional change 10.-11.6.13 organised by Fafo, ISF and ISS at the University of Oslo.

Example 1

Name of the instrument:

Innovation Norge

Innovation Norway

(see website for information)

Sector:

Cross sectoral

Type of instrument applied:

(use categories from question 5. Some sector policies may apply more than one instrument

5 groups of instruments

Financing – loans, guarantees, funding

Network –international, national, regional and local

Competence building – founders, employers, employees

Consulting – individual companies as well as large programs

Profiling – Norway abroad

Timing:

(Period of implementation of instrument)

Ongoing from 2004 (established by a merger of several previous instruments)

Operational level

National

Regional

 

Please tick the government level and/or provide details of geographical implementation area if relevant:

X

X

 

Funding:

(Please describe the size of the instrument and detail the source(s) of funding, e.g. EU, state budget, levies, stakeholder contributions, etc.).

Innovation Norway is partly owned by the state (51%) and partly by the regional authorities (‘fylkeskommunene’)

Founding for different projects, loans etc; 6,9 billion NOK (862 mill €) per 2013

Target group(s):

(please describe target group in terms of sector/industry, type of company, geographical criteria and/or other relevant characteristics)

All (Innovation Norway has a number of different programs), among others innovation and supporting entrepreneurs, securing business development in rural areas, promoting Norwegian businesses abroad, promoting interaction between enterprises and R&D institutions, developing Norway as a tourist destination etc.

Rationale/motivation for the instrument:

(please describe the problem that the instrument should address – for instance: market failure, need to increase sector competitiveness, crisis intervention, etc.)

The main official instrument for innovation and productivity growth in Norway

Policy stage

Please describe stage of involvement of the social actors i.e.

policy preparation (consultation),

policy decision (co-determination? and

policy implementation (e.g. by involvement in agencies)

Innovation Norway is an important source of funding for local initiatives, among others initiatives based on collaboration between the social partners.

But – here we use Innovation Norway as an example of the involvement for the social partners. At the head board we find the former President of LO and in 14 of the regional board (out of 18) LO is represented at the board, in 8 NHO (the main confederation of employers.

Innovation Norway is thus an example of how the social partners are integrated in policy instruments in Norway.

Objectives of the instrument:

(please describe the objectives and any quantitative targets set for the instrument– e.g.

increased employment by X% in sector Y by 20xx

increase in sector exports by X%

increase in FDI by X%

Not possible since Innovation Norway has a large number of programs/instruments. The programs are evaluated as to whether the targets are met or not.

Activities and implementation:

(Please give details on the implementation of the intervention)

Not possible since Innovation Norway has a large number of programs/instruments.

Social partner involvement

 

Type of social partner involvement:

(Bipartite, tripartite, tripartite+, unilateral, public/private partnership? – cf. qu. 1)

See above

Level of involvement of social partners involvement:

European, National, regional, local

Sectoral

National and regional

Specific form of social partner involvement:

(tripartite standing or ad hoc committee, high-level group, hearing, consultation, conferences, etc.? – cf. qu. 2)

Board members, hearings (in case of funding, new programs, evaluations etc.), consolations and conferences, ad-hoc involvement in specific instruments/cases.

Timing and nature of social partner involvement:

(Please provide more details on the processes that social partners were involved in, their input, the timing, etc.)

To pinpoint timing and nature of social partners is complicated since Innovation Norway has a large number of programs/instruments. However, here is some examples:

Conference on ‘mountain tourism’ sept 2013 – organised by local authorities and NHO (largest employers confederation)

Conference on ‘Norwegian companies and EU’ - organised by local authorities and NHO

9 different programmes on funding is established and (see below) and the social partner take place in administering the overall resources of Innovation Norway.

Impact of social partner involvement on design and implementation of instrument:

(Please describe how/if the design and/or implementation was affected through the involvement of social partners)

Not possible since Innovation Norway has a large number of programs/instruments. However, the organisational structure of Innovation Norway (regional and national board) and the fact that all boards have one or both social partners represented is important for the functioning of the organisation.

Other stakeholders involved, if any:

(please name stakeholders and briefly describe their roles)

Different central and regional authorities, NGOs, local business organisations etc. participate in programmes and may ask for funding by Innovation Norway.

Results and outcomes

 
Example 2

Name of the instrument:

The temporary lay-off institution

Sector:

Sectors affected by the economic crises from 2008 and forward

Type of instrument applied:

(use categories from question 5. Some sector policies may apply more than one instrument

Social plans in case of restructuring/bail-out for companies in crises

This is a long lasting institution in Norway, but the use of – and changes in - this institution during the crises might serve as an example of social dialog and a bipartite initiative aimed at the government.

Timing:

(Period of implementation of instrument)

2008-

(The instrument has historical roots back to the early 1950s, and is supported by the 1988 Act relating to the obligation to pay wages during temporary lay-off periods)

Operational level

National

Regional

Local

Please tick the government level and/or provide details of geographical implementation area if relevant:

X

 

X (company level)

Funding:

(Please describe the size of the instrument and detail the source(s) of funding, e.g. EU, state budget, levies, stakeholder contributions, etc.).

State budget – part of the social security scheme (National Insurance Scheme).

.

Target group(s):

(please describe target group in terms of sector/industry, type of company, geographical criteria and/or other relevant characteristics)

The long lasting temporary lay-off institution (no: “permittering”) illustrates one of the special traits of the Norwegian labour market model. It illustrates a form of “hybrid” employment (or unemployment) used in economic downturns and some other situations where a company has no work for its workers. The affected employee is not expected to fulfil the obligations according to the employment contract (temporary cancellation of the employment contract). The employee receives unemployment benefits from the state, not pay, yet is at the same time not regarded as laid off; that is, the employment relationship still exists and the employer is obliged to take the employee back.

The instrument is aimed at temporary decrease in demand for labour due to unexpected circumstances (typically bad weather or a decrease in demand due sudden changes in international markets) which is expected to last only a short time.

Rationale/motivation for the instrument:

(please describe the problem that the instrument should address – for instance: market failure, need to increase sector competitiveness, crisis intervention, etc.)

Changes in the instrument were aimed at companies hit by the 2008/2009 economic crises. As the crisis was expected to pass the instrument (and the changes) made it easier for companies to hold onto qualified labour and avoiding lay-offs (see for instance Employment measures to tackle the economic downturn: Short time working arrangements/partial activity scheme: Norway: Temporary layoffs – saving jobs or delaying readjustments? for the 2009 policy measures.

Policy stage

Please describe stage of involvement of the social actors i.e.

policy preparation (consultation),

policy decision (co-determination? and

policy implementation (e.g. by involvement in agencies)

The instrument is anchored in the Basic Agreement between LO and NHO. The state has the economic responsibility and the benefit to the temporary laid off is paid via unemployment benefits.

The arrangement is based on the ‘normal’ aspect of the Norwegian model – the burden is shared by the employees (as the benefit is less than normal wages and ‘waiting days’), the employers (responsible for the first number of days) and the state.

Objectives of the instrument:

(please describe the objectives and any quantitative targets set for the instrument– e.g.

increased employment by X% in sector Y by 20xx

increase in sector exports by X%

increase in FDI by X%

To avoid permanent layoffs (dismissals) and to allow employers to keep the labour force and thereby make it easier start (full) production as soon as possible.

Activities and implementation:

(Please give details on the implementation of the intervention)

Regulations on temporary lay-offs have been changed several times, changes relating to both downturn and upturns in business cycles and to labour marked problems affecting different industries.

The length of the “employer period” where employer was obliged to pay wages in the initial phase of temporary lay-offs was in 2004 increased from three days to ten days, and in February 2009, reduced to five days (if the working time reduction was less than 40 per cent, the employer still had to pay wages the first 15 days). After the recent changes (2012) of regulation, the ”waiting days” where the employee is not entitled to wages, nor unemployment benefits, was reduced from five to three days.

The maximum period an employee can be on temporary lay-off was entitled to receive unemployment benefits was, until 2002, 52 weeks. This limit was later decreased to 42 weeks, then to 30 weeks. As an effect of the international financial crisis in 2008/2009, the maximum period was re-adjusted to 52 weeks in 2009. Also, among other initiatives, in Mars 2009 initiatives were taken in order to ensure that also temporary lay-offs where the employee remained on 60 percent of full time (for instance 3 days per week).

The relaxed regulations of 2009 were in effect during both 2010 and 2011. Both LO and several industry based unions and the employer confederation NHO with its affiliated industry organization Norsk Industri, had warned against tightening regulations – as would be the usual practice when production and labour market were back to normal. Both the employee- and employer side argued that due to the financial crisis and the debt crisis the economic situation in Europe was still uncertain, something that would also affect exposed sectors in Norwegian industry. These arguments were accepted by Government, and the temporary lay-of regulations were pro-longed. Regulations were tightened, however, in connection with the proposed state budget 2012. Both the union Fellesforbundet (and other unions) and the employer organization had during autumn 2011 opposed the proposed changes in the 2012 budget. Reactions concerning the role of temporary lay-off in 2013 were much less pronounced. All in all, the regulatory restrictions seemed to have been accepted.

Social partner involvement

 

Type of social partner involvement:

(Bipartite, tripartite, tripartite+, unilateral, public/private partnership? – cf. qu. 1)

.

See above. This might serve as an example of then the social partners go hand in hand and approach the government when measures are seen as needed.

Level of involvement of social partners involvement:

European, National, regional, local

Sectoral

Both national and sector level was involved. At local level some trade unions and companies questioned the way the local Norwegian Labour and Welfare Administration (NAV) administered the unemployment benefits (as the pay is part of this budged). Representatives from the LO and NHO at central level met with the Minister of Labour, who made the Labour and Welfare Directorate consider their practices, while LO and NHO were invited to participate in further work concerning the issues. In mid-November 2012 the Directorate issued temporary guidelines instructing the NAV-offices regarding less restrictive practices. If it was documented agreement by the social partners at local level that the employer had made the provisions that could reasonably be provided, and that the reason for the temporary lay-offs was unforeseeable, this should normally be guiding the decisions made at the NAV-offices.

Specific form of social partner involvement:

(tripartite standing or ad hoc committee, high-level group, hearing, consultation, conferences, etc.? – cf. qu. 2)

See above, the involvement was based on the ‘normal’ on-going collaboration at both national and local level.

Timing and nature of social partner involvement:

(Please provide more details on the processes that social partners were involved in, their input, the timing, etc.)

See above

Impact of social partner involvement on design and implementation of instrument:

(Please describe how/if the design and/or implementation was affected through the involvement of social partners)

See above

Other stakeholders involved, if any:

(please name stakeholders and briefly describe their roles)

See above

Results and outcomes

 

Inger Marie Hagen, Fafo

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