Wage negotiations between Norway’s confederation of trade unions LO and the national employers’ organization NHO were getting underway this week, with LO leader Roar Flåthen saying that pay issues were “especially challenging” this year. Norway’s strong economy versus budget and debt crises abroad make it harder for the unions to demand big raises.
On the one hand, Flåthen and many other labour leaders are keen to raise the wages of workers in the lowest-paid sectors but they also need to keep overall raises moderate. Years of rising wages, pension premiums and employer taxes have raised employer costs so high that Norway’s international competitiveness is at risk. Exports are already hit hard by Norway’s strong currency and Norway’s biggest markets in Europe are hurt by the debt crises of several large EU members. Prime Minister Jens Stoltenberg, who heads a Labour-led coalition government in Norway, has been worried that Norwegian exports will be even more threatened if costs continue to rise.
Despite the strong ripple effects from Norway’s robust oil and gas sector, other parts of Norwegian industry are suffering. Flåthen is acutely aware of severe trouble in the forest products business, for example, and in other production-intensive sectors.
“We will take into consideration that it’s not going so well in parts of Norwegian business and industry,” Flåthen told newspaper Dagsavisen on Monday. “For many, layoffs and factory shutdowns are a fact already.”
Flåthen and his team at LO are charged with getting the best possible pay for union members, and LO wants pay raises high enough to keep purchasing power at current levels. He can point to signals from state statistics bureau SSB that domestic demand will be a key part of propelling Norway’s economy at a time when exports are threatened.
The LO boss promises, though, “a reasonable settlement” and stresses he has “great understanding” for the difficult situations many Norwegian companies currently face because of the crisis in Europe. The paper industry, for example, is arguably in the worst situation of all. And in an election year, with a Labour-led government seeing another term, it would be all but unthinkable for Flåthen to lead his troops into the sort of strikes that occurred last year.
“What complicates things is that it’s going very well in other branches,” he told Dagsavisen, so he and his negotiators naturally will want to extract the most possible for their members. Demand for workers is also high, with some companies literally facing a supply and demand situation in the labour market that’s still sending up the price for labour.
Workers in Norway received average pay raises of 3.2 percent, and one economist told Norwegian Broadcasting (NRK) on Monday morning that he expects around the same this year, maybe nudging 4 percent.
NHO wants to reverse the trend
Svein Oppegaard, who’ll be among those Flåthen will be up against at NHO, said he thought Flåthen had a “wise” starting point because he’s most concerned about NHO members who are struggling at present.
“We have cost levels that are 161 percent over our trading partners,” Oppegaard told Dagsavisen. He and his NHO colleagues wants this year’s lønnsoppgjøret (pay settlement) to mark a turning point, where pay raises will be lower than they were the year before.
Oppegaard noted that Norway’s inflation rate is around 1.5 percent. If Flåthen is serious about only securing the current rate of purchasing power, NHO officials think pay raises should be around 1.5 percent, too.
Views and News from Norway/Nina Berglund
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