NEWS ANALYSIS: Norway’s conservative government coalition, with new Labour Minister Anniken Hauglie playing a key role, was getting much of the credit on Monday for an “historic” agreement between industrial workers and employers that averted a major strike on Monday. It’s a sign of how serious the country’s economic downturn really is, when the unions accepted a deal that may actually reduce their members’ purchasing power, while the government caved in on furlough rules.
The labour agreement presented on Sunday provided no new increase in wages, but will yield a 2.4 percent raise because of earlier pay measures taking effect. With inflation now running higher than that, though, workers risk seeing a decline in real wage growth, but no one seemed to mind. It was more important that other measures were agreed that can help secure their jobs.
“The first reaction we had was jubilation,” Randi Frisvoll, union leader at the Vard Brattvåg shipyard in Sunnmøre, told Norwegian Broadcasting (NRK). That’s because the government, at the last minute, agreed to propose extending the furlough period for Norwegian workers to 52 weeks from the current 30, before jobs can be eliminated.
“If we hadn’t received that increase now, many more of our colleagues would be laid off,” Frisvoll said. She and her colleagues are acutely aware that far fewer orders are coming into companies like Vard since the dive in oil prices caused oil and offshore companiesi to cut back on operations and investment. “The situation in the industry is difficult, with a lot of holes in prodution,” Frisvoll noted. Measures that could preserve jobs for a longer period were simply more important than any improvement in wages and benefits.
Government gave in
With that kind of understanding from the unions, it was easier for the industrial employers’ organization, Norsk Industri, to support a request to extend the so-called permittering period, during which employers can suspend wages without acutally eliminating the wage-earner’s job. And when the employers and the trade union federation Fellesforbundet wrote a joint letter to the government asking for the extension, Labour Minister Hauglie and Prime Minister Erna Solberg dropped earlier objections to it and went along. They will propose the extension to Parliament, where it’s expected to be approved.
“This solution would not have been possible without the government’s help,” state mediator Nils Dalseide, who also has received applause for his handling of the labour negotiations, told newspaper Aftenposten on Monday.
The solution also shows just how keen the government was avoid a major strike at a time when Norway’s economy faces what may be a long-term slump. The negotiations between the industrial employers and unions were also the first of a long series of labour talks this spring, and likely to set the tone for others. If they went on strike, others could follow, rubbing salt into the wounds of both companies and the labour market, both of which are struggling in the downturn.
Pension promise, too
The agreement was also remarkable, even dubbed “historic” by some, since it marked the lowest potential for wage growth since 1935. It was a major example of the “moderation” being called for in troubled times, but the government also helped ease the pain some more. In addition to allowing workers to be furloughed for a full year before losing their jobs, the government also promised to seriously study proposals for additional pension reform on terms that both the unions and the employers like. The unions had wanted to make pension benefits part of the collective bargaining agreement with accumulation starting from the first day on the job, something employers firmly resisted. Both sides settled, however, on having the mediator send a letter to the government requesting “modernization” of pension terms in the private sector. Solberg agreed, also to evaluate proposals to set up individual pension accounts for private sector workers and at what age and income level pension earnings would start.
It all boiled down to what newspaper Dagsavisen called “a victory for the Norwegian model” in which business, labour and the government cooperate on major workplace issues. “We are glad that Prime Minister Erna Solberg chose to keep the motor running when the mediator asked for help,” Dagsavisen editorialized on Monday. The employers hailed the pact by claiming common sense had prevailed, while the unions were pleased because it enhances job security. Dalseide was praised for having done “an excellent job” as mediator in actively bringing the two sides together and offering to approach the government as a neutral third party.
And both Hauglie and Solberg were satisfied, clearly “happy to help” and willing to cave in on some of their own principles to ward off the disruption of a strike. “The year’s labour negotiations are thus off to a good start after all,” Dagsavisen claimed. Even Jonas Gahr Støre, head of the Labour Party and the government’s opposition in Parliament, was pleased. Asked whether his arch political rival Solberg “saved us from a strike,” Støre said he “would rather say that all parts have taken responsibility. That’s what deserves recognition here.”