Norway: Reaction to new Working Environment Act

The hotly debated changes to Norway’s Working Environment Act came into force on 1 July 2015. They affect temporary employment, working time, age limits, maximum penalties and the collective right to sue. Protests over the changes led to the first general strike since 1998. Opposition parties have vowed to repeal them if they come into power in 2017.

Process and reactions

Plans to change the act were announced by the conservative/right-wing coalition government shortly after they took office in October 2013. The Conservative Party (Høyre) and the Progress Party (FrP) set out their proposals in a political platform document explaining how they would make it easier for employers to use temporary employment ‘so that the rules for the private sector become more akin to the rules in the public sector’.

The government launched its initiative to reform the Working Environment Act in June 2014, under the heading ‘A safe, flexible and family-friendly working life’, but without any of the customary prior consultation with the social partners. A public hearing was quickly initiated (in Norwegian). A consultative paper was issued on 25 June, just as the public summer holiday started. The main peak-level trade union confederations – the Norwegian Confederation of Trade Unions (LO), the Confederation of Vocational Unions (YS) and the Confederation of Unions for Professionals (UNIO) – called for a month’s extension of the three-month deadline to make up for time likely to be lost during the holiday period. LO Leader Gerd Kristiansen called the process and the contents of the proposal a ‘declaration of war’ on the trade union movement and on the Norwegian system of tripartite cooperation and consultation. The government extended the hearing deadline by 14 days, but not for comments on temporary employment, which was the most controversial proposal. Before this deadline, the government also unexpectedly set up a commission on working time – one of the topics due to go before the public hearing – with no representatives from either of the social partners.

The public hearing generated 231 official responses to the Ministry for Labour and Social Affairs. In general, employers were in favour of the changes while trade unions strongly opposed them. The Confederation of Norwegian Enterprise (NHO) called the proposal a ‘necessary modernisation’, opposing only the increased age limit. LO, YS and UNIO described the proposal as a severe weakening of the Working Environment Act, a law designed to protect workers. Notably, criticism also arose from more neutral parties, including the Labour Inspection Authority (Arbeidstilsynet), the Petroleum Inspection Authority (PSA) and the Equality and Anti-Discrimination Ombudsman (LDO). The Labour Inspection Authority, the government body tasked with ensuring that companies comply with the act, raised several concerns (in Norwegian, 328 KB PDF) about the use of temporary employment in relation to health, safety and environmental activities, work accidents and other health issues. It also said it was worried about the health and safety consequences of the proposals on working time, and that these particular proposals seemed to ‘impede our efforts to reduce the number of accidents, social dumping and labour market crime’.

Despite the criticism, the draft bill presented before end of December 2014 was little different from the original proposal. LO called it an ideologically motivated relaxation of the law, and accused the government of using misleading arguments about opening the labour market to vulnerable groups while actually pandering to employers and creating a less inclusive working life. LO and YS announced a two-hour general strike against the legal changes and UNIO joined this initiative shortly afterwards. The strike was held on 28 January and was an organisational, if not political, success. The LO leadership expected rallies in five cities; but there were rallies in 180 locations nationally, and 15,000 people gathered in front of the parliament in Oslo. Nevertheless, it had little effect on the political process. The final draft bill, based on an agreement between the government parties and the supporting Liberal Party (Venstre), and the Christian Democratic Party (KrF) was presented in March and passed by parliament on 24 April 2015. Its content was substantially the same as the initial proposal, and it became law on 1 July 2015.

Main issues and social partner response 

Age limit (for the right to work)

An employer cannot now end an employment contract before an employee turns 72 (previously 70), or before the employee turns 70 if company guidelines say so (previously 67). This change is part of a broader effort to increase the real pension age. It proved unpopular among both employers and unions; the former argue that older workers are less productive, while the latter warn that older workers may find it hard to find work or to carry out their duties and efforts should instead be directed towards retaining workers until the normal pension age of 67.

Unions lose right to sue for unlawful use of temporary workers

Unions have lost the right to sue companies for the unlawful use of temporary agency workers. The unions argue that the government has thus removed a key sanction against labour market crime and social dumping.

Maximum penalties

There has been relatively little controversy over the increased penalties for various infringements of the Working Environment Act.

Working time

The relaxed regulations on working time have been hotly contested. Unions, several non-governmental organisations and government agencies have all warned against the adverse consequences for health and safety if working time is extended, while employers have argued the changes are essential for flexibility. LO was especially critical about the removal of the right of central labour organisations to override local agreements on working time. Unions have also said that increased access to overtime, increased access to calculation of average working time and fewer restrictions to working on Sundays will negatively affect workers. Increased Sunday working is especially controversial and not just among the general public. The Christian Democratic Party's demands for stricter rules on Sunday working than those originally proposed by the government were successful. Where Sunday working is allowed, the number of Sundays an employee can work consecutively has been raised from two to three. The government had suggested a new limit of five consecutive Sundays.

Temporary employment

Temporary employment was previously only permitted under specific circumstances such as replacing an absent worker, and for tasks which were inherently temporary. The new law now permits the general use of temporary employment for up to 12 months without preconditions. This is a radical change and has been harshly criticised by the unions in particular, which argue that this shifts the balance of power between employers and employees and increases job insecurity.

The government has insisted that the purpose of the new legislation is to boost employment. Reducing the long-term financial risks for employers associated with open-ended employment contracts will make it easier for those in vulnerable groups to enter the labour market (in Norwegian, 1 MB PDF), such as the young or the disabled. The Minister of Labour and Social Affairs, Robert Eriksson, has frequently used the analogy of try-outs for a football team to support this argument. However, opposition parties and trade unions have been very critical of this line of argument. LO has pointed to research by the Organisation for Economic Co-operation and Development (OECD) that increased access to temporary employment does not increase overall employment rates; it only increases the proportion of temporary employees and effectively replaces permanent jobs with temporary jobs.

Some safeguards have been set up. When a worker’s temporary employment ends, the employer cannot employ someone else on a temporary basis to perform similar work tasks for at least 12 months, and a maximum of 15% of a company’s workforce (or a maximum of one employee in a workplace with few employees) may be employed on a temporary basis. The Labour Inspectorate is tasked with monitoring compliance with these restrictions. Trade unions and opposition parties have voiced concerns about the control mechanisms, arguing that it will be almost impossible to properly enforce these rules given the available resources.

Outlook

It is too early to assess the effects of the new provisions; statistics on changes in working time or employment type are not yet available. A government-funded project on temporary employment is being carried out by the research foundation Fafo in cooperation with the Centre for Applied Research at the Norwegian School of Economics (SNF) for 2014–2018. Preliminary results indicate that employers are not more likely to hire candidates with questionable qualifications, health, language skills or CVs just because the position is temporary. It is also expected that the proportion of temporary employees will increase. A recent survey conducted by Fafo shows that a majority of union representatives in LO fear that more temporary employment will worsen the working environment in their company (in Norwegian).

The opposition parties in parliament, including the Labour Party (Ap), have strongly opposed the changes and have vowed to repeal most of them if elected into government in 2017. These parties gained traction in the municipal elections in September 2015. As a consequence, more than 40 of Norway’s 428 municipalities – including Oslo – have so far decided to base their employment practices on the old rules, ignoring the new opportunities for extended working time and temporary employment. The changes are likely to be felt most in the private service sector, where employers’ demand for temporary employment and extended working time has been the highest, and where collective bargaining coverage is low. Leaving aside the damage done to the tripartite dialogue by the introduction of this new legislation, it is not certain whether or how this will change Norwegian working life. The evidence, based on similar changes in Sweden, suggests that the proportion of temporary employment will rise significantly. 

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