Norway’s Supreme Court had the last word in a long-standing battle between Norwegian shipyard employers and trade unions when it ruled this week that foreign guest workers are entitled to the same wages and rights as permanent employees. The industry voiced concern over its future competitiveness related to higher costs, while labour officials hailed the ruling as historic.
At the core of the battle has been the question of whether collective bargaining agreements for permanent Norwegian employees can apply to foreign workers, which wages and work conditions should be in force at the shipyards and whether contractual rights such as free board, housing and travel should apply for workers who aren’t union members. The yards already have been going along with such terms of employment, but were hoping to win and cut costs.
Norway’s leading business lobby NHO, the Federation of Norwegian Industries (Norsk Industri) and nine shipyards collectively lost the case against the government and Norway’s trade union federation LO, and now must pay around NOK 4 million (USD 700,000) in court costs.
The business and industry officials believed making all agreements applicable also for foreign guest workers would be in violation of Norway’s economic agreement with the EU, the EEA agreement (EØS-avtalen), and specifically the free movement of labour. LO, however, believed it is an important measure in the fight against social dumping to have generalized rules and regulations. The case has been labeled “the most important court case for LO in modern times” by Arve Bakke, head of the United Federation of Trade Unions (Fellesforbundet).
“This is a major step forward in the fight against social dumping,” declared Roar Flåthen, head of LO, in a press release after the ruling. Flåthen told newspaper Dagavisen on Wednesday that LO chose to approach this case through the argument of “generalization” of employer agreements to counteract the effects of free movements of labour – social dumping. He accused the employers of consistently trying to undermine this element.
The industry already had lost in two lower courts, but was met on many arguments by the European Free Trade Association (EFTA), which only acted as advisory. For many foreign workers, Tuesday’s court ruling is like winning the lottery: Wages in Norwegian industry are far higher than in most other countries. A Polish worker, for instance, can earn close to eight times more in Norway than in his home country, according to newspaper Aftenposten. The new agreement will in addition provide the workers with money for board, housing and regular free travel back to their home country. The Supreme Court said that anything else would undermine the good conditions for employees in Norway.
Probably end to EEA battle
The ruling is a relief for LO, but also for the Labour-led coalition government because it means a battle in the making over the EEA-agreement will probably fade away. Norway’s pact for doing business with the EU as a non-member has been the subject of heated debate lately. Officials at LO has claimed the agreement is not consistent with Norwegian working life. Had LO lost the case, it would have provided them with more ammunition to renew the fight against the EEA, which would have been a headache for the coalition government seeking a third term this year. Several unions, including Fellesforbundet, have raised demands to pull Norwegian work rights out of the EEA pact and warned a battle.
Prime Minister Jens Stoltenberg confirmed earlier this year that the agreement remains firm after his coalition partners, often critical of both the EU and the EEA pact, had sparked speculation about a possible re-negotiation.
The Supreme Court decision will result in higher costs related to hiring foreign workers living abroad compared to hiring local workers, foreign or Norwegian. According to calculations made by Aftenposten, a foreign worker living abroad will cost around 50 percent more than a foreign or Norwegian worker living in Norway.
Industry officials remain worried about their costs and competitiveness, as do government officials trying to appease the interests of both business and labour. “I am worried that the cost level in the long run will increase in Norway compared to other countries,” Ståle Rasmussen, CEO at Kleven Maritime Contracting told Aftenposten. Rasmussen is also spokesperson for all shipyards involved in the case.
“Our fear is that this will unreasonably hurt the competitiveness of Norway’s industry,” he said, adding that measures are needed. “We have to put in place measures to increase our future competitiveness,” Rasmussen told Norwegian Broadcasting (NRK).
LO’s Roar Flåthen told NRK that he is not worried about the competitiveness of Norwegian shipyards, noting that they are already following these agreements. “We have seen many orders for the shipyards, and yards in western Norway have built ships for both Norwegian and foreign shipowners,” Flåthen said, even though several offshore yards recently have lost orders, even from state-owned Statoil, to foreign yards.
Representatives from the industry said that although they were not pleased with the outcome of the court case, they were satisfied a conclusion was finally in place.
Views and News from Norway/Aasa Christine Stoltz
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