Norway’s annual season of labour negotiations between trade union confederation LO and the employers’ organization NHO got off to a rocky start on Tuesday. LO’s Gerd Kristiansen ended up calling NHO “arrogant,” because the employers signalled average pay hikes of just 2 percent and flatly refused to discuss pension improvements.
That led to immediate rumblings that another series of strikes may be called later this spring. “NHO has been very lofty and tough after Frp (the Progress Party) and Høyre (the Conservative Party) came to (government) power,” Kristiansen said after the first formal encounter between the two groups. “They have tried to negotiate a settlement for a long time already.”
Kristiansen claimed that when NHO “refuses to talk about pensions with us, and straight off claims that we’re only going to see a 2 percent rise in pay, that’s just plain arrogant. And that makes the negotiating climate difficult.”
Taming wage growth
Calls have gone out for months that Norwegian wage growth needs to slow down, because the country is pricing itself out of the international market. Wages in Norway are much higher than in most other countries, leading to higher costs for the companies that pay them and threatening their competitiveness.
Already last month, Finance Minister Siv Jensen from the Progress Party signalled that “we can’t simply take for granted that the favourable wage development we’ve had until now can continue.” At a seminar with another union boss, Anders Folkestad of Unio, Jensen said Norway’s high wages are “a benefit we will take care of,” but also that “we must prepare for the challenges that will come, and everyone must take responsibiity.”
Her message was clear: Wages won’t fall, but the rate of wage growth must be reduced. Folkestad responded that some sectors, not least the teaching profession, still needed a real boost, but otherwise there was general agreement among labour leaders that wage demands this year would be moderate.
The definition of “moderate” is up for debate, with NHO setting it at the rate of inflation in Norway and LO still looking for average raises of around twice that, or 4 percent. Some economists also expect wage growth to remain at around 4 percent.
Large bonuses paid out to executives, though, continues to embarrass NHO and cause problems for companies that demand moderation from their employees but don’t practice it when it comes to executive pay. Average wage growth in the finance sector, for example, was 6.7 percent last year, reported newspaper Aftenposten on Tuesday, while multi-million kroner compensation to executives makes it difficult for them to demand acceptance of modest wage hikes from their workers.
Pensions remain the thorniest issue, with LO and other trade union groups realizing that new pension programs imposed on workers as a result of government-induced reforms in recent years simply aren’t lucrative enough for their members. The days of guaranteed pension income equal to 66 percent of a retiree’s final pay are gone. Now it’s the employees who have had to assume the risk of pension fund investments, and their ultimate pension payouts won’t be anywhere near the levels of the past.
With NHO refusing to discuss pensions, or giving LO more say in employers’ pension programs, the stage is set for conflict and possible strikes.
“It’s too early to talk about major strikes this spring,” Kristiansen told state broadcaster NRK. “But it frustrates us that they (NHO) have so clearly flagged percentage levels with no flexibility on pensions.” Some union leaders are already promising that they’ll deliver better pensions to their members nonetheless. Negotiations get underway in earnest later this week.