EurWORK European Observatory of Working Life

Norway: Evolution of Wages during the Crisis

About

Country: 
Norway
Author: 
Bjørn Tore Langeland
Institution: 
National Institute of Occupational Health

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

Trends and relations with other working conditions

Having a unique economic capacity to handle a recession, the evolution of wages during the financial crisis has followed a slightly different path in Norway compared to most other countries. This could be seen from the average yearly wage growth for all employees, which for 2006-2010 were 4.7% and 2.5% in nominal and real terms, respectively. Construction stands out as the sector where the impact of the financial crisis has meant the most in relation to both average wage growth and structural changes. The most used trade-off in Norway in financial crisis is training opportunities, with the aim to bring people into further employment. Several measurements have been put in place by the government to support vulnerable groups, and statistics showing an equalization trend for wage differentials between groups and sexes indicates the policies to be effective.

Questionnaire

Block 1: Wage trends 2006-2010

1.1.a Please provide annual statistics on average gross monthly earnings or yearly average wages by gender, occupational category (ISCO), part-time/full-time in your country from 2006 to the latest available year.

Table 1. Wage development in Norway 2006-2010
Table 1 lists statistics on average gross monthly wages for Norwegian workers by gender, by ISCO occupational classification and for part-time/full-time employees for the period 2006-2010. Gross monthly wage are given in NOK and includes salaries, variable additional allowances and bonuses. Overtime compensations are not included in the figures. For the period, an average annual increase in wages of 4.7 % can be seen.
   

2007

2008

2009

2010

Total

30539

32263

34100

35300

36700

By gender          
1. Male

33059

35035

37200

38400

39900

2. Female

28691

30306

32100

33300

34800

By ISCO occupational classification          

1 Managers

.

47300

50500

53700

52200

55000

2 Professionals

.

41800

44400

46000

47000

47400

3 Technicians and associate professionals

.

39900

42100

43700

44900

46200

4 Clerical support workers

.

27200

28600

29400

30000

31000

5 Service and sales workers

.

23200

24200

25500

26200

27300

6 Skilled agricultural, forestry and fishery workers

.

29500

31000

33400

34400

35500

7 Craft and related trades workers

.

28900

30200

33100

34000

34900

8 Plant and machine operators, and assemblers

.

26500

27800

29600

30400

31400

9 Elementary occupations

.

22500

23600

24900

25200

25300

By contract type          
1. Full-time

33394

34401

35400

36600

38100

2. Part-time

25721

26859

28300

29300

30600

Source: Statistics Norway (SSB)

Notes: Wages are stated in NOK, and the figures given for the ISCO occupational classifications are an average for full- and part-time employees. The figures represent an average salary, and are therefore weighted. The weighting of the wage statistics for all employees is basically based on the weights of the other wage statistics. All pay variables are rounded to the nearest 100 NOK.

1.1.b Please provide the following methodological information on the provided statistics:

Wage statistics for the period 2006-2010 were collected from Statistics Norway. Statistics for all sectors are included, and have counting point 1 October each year regardless of the timing of when results from wage settlements apply. This may affect wage changes in the wage statistics from 1 October one year to 1 October the next year. The statistics are based on a sample of firms covering full-time employees and part-time employees. The term average monthly earnings is the main term in Statistics Norway's wage statistics, and covers basic salaries, variable additional allowances and bonuses. Payment for overtime work is not included in the statistics. Wage developments have been stronger than price developments in Norway, giving a real wage growth throughout this period.

1.2.a Please provide for the selected sectors, when available the following annual trend statistics on average gross monthly earnings and important context variables. The time period is 2006 until the latest available year.

Table 2. Wage development for the Manufacturing sector 2006-2010
Table 2 shows wage trends for employees in the Norwegian manufacturing sector from 2006-2010. Gross monthly wage are given in NOK and includes salaries, variable additional allowances and bonuses. Overtime pay is not included. For the period, an average annual increase in wages of 4.8 % can be seen.
 

2006

2007

2008

2009

2010

Annual average gross monthly earnings

30162

31983

33977

35600

36900

Annual average gross monthly earnings, Male

30767

32710

34638

36400

37600

Annual average gross monthly earnings, Female

27649

29124

31301

32400

33700

Total employment

279000

286000

261000

248000

236000

Total full-time equivalents

153998

153198

152502

151968

147105

Average weekly working time (hours)

37.0

36.9

37.1

36.4

36.4

% Productivity yearly increase          
Collectively agreed pay yearly increase in percentage          
<Measure of wage dispersion><          

Source(s): Statistics Norway (SSB)

Notes: Statistics were not found for productivity yearly increase, collectively agreed pay yearly increase and for measurement of wage dispersion.

Table 3. Wage development for the Construction sector 2006-2010
Table 3 shows wage trends for employees in the Norwegian construction sector from 2006-2010. Gross monthly wage are given in NOK and includes salaries, variable additional allowances and bonuses. Overtime pay is not included. For the period, an average annual increase in wages of 4.5 % can be seen.
 

2006

2007

2008

2009

2010

Annual average gross monthly earnings

29211

30913

32712

34000

34900

Annual average gross monthly earnings, Male

29340

30972

32752

34100

34900

Annual average gross monthly earnings, Female

28440

30028

32100

33000

34600

Total employment

175000

183000

187000

180000

179900

Total full-time equivalents

56920

58160

59079

64480

64618

Average weekly working time (hours)

38.7

38.8

37.9

37.7

37.2

% Productivity yearly increase          
Collectively agreed pay yearly increase in percentage          
<Measure of wage dispersion><          

Source(s): Statistics Norway (SSB)

Notes: Statistics were not found for productivity yearly increase, collectively agreed pay yearly increase and for measurement of wage dispersion.

Table 4. Wage development for the Accommodation and food services sector 2006-2010
Table 4 shows wage trends for employees in the Norwegian accommodation and food services sector from 2006-2010. Gross monthly wage are given in NOK and includes salaries, variable additional allowances and bonuses. Overtime pay is not included. For the period, an average annual increase in wages of 4 % can be seen.
 

2006

2007

2008

2009

2010

Annual average gross monthly earnings

22335

23334

24115

25600

26200

Annual average gross monthly earnings, Male

24402

25027

25679

27100

27900

Annual average gross monthly earnings, Female

21350

22249

23154

24400

25000

Total employment

69000

68000

68000

68000

69000

Total full-time equivalents

35800

35200

34000

37600

38800

Average weekly working time (hours)

32.3

31.2

31.6

29.6

30.1

% Productivity yearly increase          
Collectively agreed pay yearly increase in percentage          
<Measure of wage dispersion><          

Source(s): Statistics Norway (SSB)

Notes: Statistics were not found for productivity yearly increase, collectively agreed pay yearly increase and for measurement of wage dispersion.

Table 5. Wage development for the Financial services, banking sector 2006-2010
Table 5 shows wage trends for employees in the Norwegian financial service, banking sector from 2006-2010.Gross monthly wage are given in NOK and includes salaries, variable additional allowances and bonuses. Overtime pay is not included. For the period, an average annual increase in wages of 4.8 % can be seen.
 

2006

2007

2008

2009

2010

Annual average gross monthly earnings

41448

44013

48500

46700

49600

Annual average gross monthly earnings, Male

48136

51456

58700

55300

58700

Annual average gross monthly earnings, Female

33435

35291

37700

37600

40000

Total employment

56000

55000

55000

53000

52000

Total full-time equivalents

40500

41700

43900

43300

42900

Average weekly working time (hours)

36.4

35.9

35.8

34.4

35.5

% Productivity yearly increase          
Collectively agreed pay yearly increase in percentage          
<Measure of wage dispersion><          

Source(s): Statistics Norway (SSB)

Notes: Statistics were not found for productivity yearly increase, collectively agreed pay yearly increase and for measurement of wage dispersion.

Table6. Wage development for Public administration 2006-2010.
Table 6 shows wage trends for employees in the Norwegian public administration sector from 2006-2010. Gross monthly wage are given in NOK and includes salaries, variable additional allowances and bonuses. Overtime pay is not included. For the period, an average annual increase in wages of 4.5 % can be seen.
 

2006

2007

2008

2009

2010

Annual average gross monthly earnings

31219

32517

35056

36500

38600

Annual average gross monthly earnings, Male

32469

33786

36430

38000

40100

Annual average gross monthly earnings, Female

29365

30753

33234

34400

36500

Total employment

143000

154000

149000

157000

157000

Total full-time equivalents

122600

126800

125700

133700

135800

Average weekly working time

36.6

36.3

36.1

35.0

35.3

% Productivity yearly increase          
Collectively agreed pay yearly increase in percentage          
<Measure of wage dispersion><          

Source(s): Statistics Norway (SSB)

Notes: Statistics were not found for productivity yearly increase, collectively agreed pay yearly increase and for measurement of wage dispersion.

1.2.b Please provide again the following methodological information on the provided statistics:

Wage statistics was collected from Statistics Norway, and have counting point 1 October each year regardless of the timing of when results from wage settlements apply. For the Manufacturing sector the wage growth was for full-time employees up to and including 2009, but per worker/year in 2010. For the years 2006-2009 the annual growth is calculated on the basis of national accounts on the basis of fixed wages, including regular addition, variable additional allowances and bonuses. Overtime compensation, fringe benefits, and employees on long term sick leave (more than 16 days) are left out from the statistics. From 2009-2010, the total wage is calculated on the basis of Statistics Wage Statistics (structural statistics) for all employees which is a compilation of the sector salary statistics, and information from the quarterly wage index that shows wage growth over the year. In the statistics, productivity data is defined by the development of value added per hour worked. Measured for all sectors, the overall productivity growth for the past 10 years has been 2.7%.

1.3 Please provide for your country the available statistical insights/studies on the following wage-related trends, briefly commenting: the period 2006-2010.

  1. Wage drift: differences between the actual wage increase and the collectively agreed wage increases; Are there also remarkable sector differences in this regard? (cf. the 5 selected sectors)

For the tables in 1.2.a the annual growth for the main groups split up into contributions from the overhang (i.e., how much the wage level at the end of a year is above average for the year), contributions from the centrally fixed pay increases and contributions from wage drift. Normally, wage drift contribute most to the wage growth for all negotiating areas. This due to the wage drift for the calculation year affects the size of carry-over into next year. The same consideration applies for pay increases. For large groups of industry officials wage increases are in general agreed locally, so that wages can be defined as the wage drift. For employees in the public sector the contribution of wage drift for the period 2006-2010 have been between 0.3 to 1 percentage point a year. For groups in the private sector wage drift for 2006-2008 varied between 1 and about 3 percentage points except for employees of commercial- and saving banks and insurance (financial services) in 2008 and 2010. For these years the wage drift was particularly strong in financial services, due to large bonus payments. In 2009 there was a negative contribution from wage drift in financial services.

  1. Wage inequality or dispersion: differences between highest and lowest wage categories; the % of low-wage workers; Are there also remarkable sector differences in this regard? (cf. the 5 selected sectors)

Figures from Statistics Norway show that wage growth for the highest and lowest wage groups varied considerably between sectors. For managers the wage growth in example for 2009-2010 varied from minus 4.7 to plus 10.8 percent. For CEOs in the industry, wage growth was 0.3 percent, and for financial services 9.3 percent. For managers of small firms, wage growth was high in the financial services, while growth varied between -1.5 and 6.4 percent in other industries. In business services, manufacturing, construction, transport and hotels and restaurants, wages growth for managers was lower than for wage earners in general in these sectors from 2006-2010. For other sectors, it was vice versa.

  1. The use of variable pay and financial participation; Are there also remarkable sector differences in this regard? (cf. the 5 selected sectors).

Construction (excluding electrical trades) is probably the sector where the impact of the financial crisis has meant the most in relation to average wage growth and structural changes. Workers in the building business comprises almost 25 percent of all workers and consists of two main groups, workers in the electrical trades (about 1 / 3) and workers in construction activities (about 2 / 3). The average annual wage has been compensating for the large fluctuations in wage rates during the year. Changes in wages for construction activities related to the financial crisis and economic conditions are reflected clearly if one measures the wages from 1 October to 1 October the next year. While workers in this group had an average wage of 1 October 2007 to 1 October 2008 at 5.7 percent (before the financial crisis), the increase from 1 October 2008 to 1 October 2009 was 1.8 per cent and of 4.7 percent from 1 October 2009 to 1 October 2010.

Block 2: Studies on the relationship with working conditions

2.1.a Please provide information on relevant studies or statistical findings which show how trends in employment creation or destruction explain possible negative wage trends during the current the crisis in the country. Is there for example playing a composition effect: higher paid industry jobs are cut and partly replaced by lower-paid service jobs? Is it a question of shorter working hours, less overtime?

Aside from financial services there was a generally slower wage growth in the years 2003 to 2005. In 2006, wage growth recovered slightly and ranged between 2.6 and 5.6 per cent. In 2007 and 2008, the wage growth ranged from 3.6 to 6.7 percent. The exception was financial services where high bonus payments in 2008 pushed up wage growth to 9.2 percent. In 2009 and 2010, the wage growth was lower. The annual growth is for some sectors sometimes influenced by special extras such as the new working agreement for the Police Services in 2010. In 2010 a government committee looked into whether changes in employment had influenced the wage evolution under the financial crisis (in especially for the 2008 to 2009) in the major negotiating areas, but concluded that employment changes only to a small extent had affected the wage development.

2.1.b If there is no negative wage trend, please provide information on relevant studies or statistical findings which explain why wages in the country did not reacted in a negative way to this economic shock of the current crisis? Are trends in working conditions and employment included in these explanations?

Several studies have shown that the Norwegian economy is very robust in turbulent economic situations such as the financial crisis compared with most countries, and there is reason to believe that the Norwegian bargaining model is an important part of the explanation. The model requires a good understanding of how the economic system works, and has long contributed to employees experiencing a good real wage growth. As mentioned over, employment changes only affected wage development to a small extent during the financial crisis.

2.2 Please provide information on relevant studies or statistical findings (current or from the past) on what effect a change in wages (increase, freeze or cut) has on the working conditions in the country or their outcome (job security, well-being at work and job satisfaction).

The financial crisis and economic uncertainty has led to more than a third of Norwegian employees are more loyal to their employers than ever before. This is revealed in a global workplace survey conducted by Kelly Services. The survey, called the Kelly Global Workforce Index obtained the views of around 134,000 employees worldwide, including about 2,000 in Norway, and was conducted between October 2009 and the end of January 2010. Among the findings revealed, among other things, that 35 percent of Norwegian workers believe the financial crisis has made them more loyal to their employers. To the same question four percent responded that they were less loyal, while 61 percent said that the crisis has not made any difference. The impact of economic uncertainty is greatest among older workers (48 to 65 years), amongst which 38 percent say they have become more loyal, compared with 36 percent of those between 18 and 19 years and 33 percent of those between 30 and 47 years. Surprisingly, wage is not the main reason for employees feeling more loyal than before. On the question of "what factor would make you more committed or engaged in work", only 14 percent stated that higher wages or better benefits were critical. Respectively 35 and 31 percent answered "more interesting / challenging work" and "more or improved job training" as the two main reasons.

2.3 Please provide information on relevant studies or statistical findings showing a trade-off effect between wages and other working conditions in the crisis. Possible other working conditions are other forms of rewards, job security, working time revisions, changes in work organisation, and training opportunities.

For Norway there are few statistical data and surveys showing trade-off between wages and other working conditions under financial crisis. Regarding job security, the terms of layoffs in Norway are not regulated. Tariff agreements (agreement between workers and employer (s) on wages and working conditions) contain detailed rules on layoffs, which the tariff bound must follow, while other employers must adhere to non-statutory principles. Lay-off period and payroll responsibilities during layoffs are governed by laws and regulations, and to ensure flexibility and avoid unnecessary redundancies, these were significantly expanded during the financial crisis and lay-off right was extended to one year. The trade union has recently increased the pressure to get back the lay-off rules that applied in the Norwegian industry during the previous financial crisis, when the government shortened the time period that employers must pay wages to laid-off employees. This probably helped lay-off to be a popular measure, while the extent of dismissals was slowed for the 2008-2009 period. The most common trade-off in Norway therefore appears to be changes in the training opportunities, as elaborated in Section 3.1 below.

2.4 Complementary to question 2.3, we have included in annex data of the EWCS 2010 for your country that compare access to training, feelings of job security and changes in working time for employees that have been experiencing a wage decrease, increase or no change in the year prior to the survey. These data are indicative for possible trade-off effects. Could you please have a brief look to these data and comment?

According to figures from The Fact Book on Occupational Health and Safety 2011 (Faktaboken om arbeidsmiljø og helse 2011) in all, 28 percent, or nearly 700 000 people, reported that reorganizations affected their own work, during the period 2006-2009. The corresponding figure for 2006 was 775,000, which is the same level as for 2003. One of three Norwegian employees reported to have experienced job cuts in their own activities during the period 2006-2009, and nearly 450 000 people experienced reductions in their own department. In all, 54 percent reported to have to familiarize themselves with new technology or new administrative systems during the past year. One in three reported lack of sufficient training. Despite the high rate of change, there is however little evidence suggesting an increase in so-called atypical employment, such as temporary employment and part-time work. The proportion of temporary employees in Norway has been relatively stable over the last decade: Between 10 and 12 percent of all employees have been temporarily hired during this period. About 10 percent of the economically active were temporarily employed in 2009. However, there are clear differences in the use of temporary employment, and this practice is particularly prevalent in occupations for unskilled workers, child and youth worker, nursing and care worker, doctor /psychologist, etc., and for service personnel in hotels and restaurants, where between 20 and 27 percent are working on a temporary basis.

In a European context, Norwegian workers are also among those least likely to report fear of losing their job. There is no general trend towards more or less job security in Norway, and about 10 percent reported job insecurity in 2009.

Block 3: Relevant policy practices

3.1 Please identify and describe 3 key company or sector examples where a trade-off has been realised between wages and other features of the employment contractual arrangements during the crisis.

Although Norway was generally less affected by the financial crisis than most other countries, there are some sectors being more affected by the downturn than others. This in particular applies to the construction industry, which is the sector most affected by the financial crisis having both the highest unemployment rate and the highest growth in the unemployment rate of all industries. Other industries that are hit hard are the hotel and restaurants and consultancy industry. The most used trade-off in Norway during the financial crisis was (as mentioned in 2.3 and NO1010029Q) an increase training opportunities, with the aim to bring people into further employment (either within the same company/industry or into different activities). The increase was especially pronounced after the government in October 2009 decided to allocate 247 million NOK to labor to help sectors that were affected by the downturn to make use of in-house training. Through the initiative enterprises were given the possibility of applying to receive grants for training their own employees. The scheme has been particularly widely used in the building- and construction and the hotel- and restaurant sectors which through internal training raise unskilled employees to craft. In the public sector external training was most frequently used, but the use of internal training increased also here.

3.2 Please identify policies recently put in place to support vulnerable groups of workers who have been possibly most affected by the recent wage trends. Priority should be given to policies and measures put in place to support low-wage workers, working poor and women. Additional attention could be paid to young workers, elderly workers and migrant workers.

Several policy measures have been initiated by the government since the financial crisis to support vulnerable groups who have been most affected by wage trends. One measure is continued grants from the government to give low income unskilled workers in the construction and hotels and restaurants sector, through in-house training, an opportunity to develop their skills and become craftsmen (as mentioned in 3.1).

Another group that has been especially hard hit by the financial crisis is composed by foreign workers. Both during and after the financial crisis, several examples have been seen of foreign workers, particularly craftsmen, working for unacceptable low wages compared with what Norwegian workers normally earn. The General application scheme (Allmenngjøringsordningen) is one of the most important measures in Norway against social dumping, and revision of this law has made ​​it easier for foreign workers to obtain better wages and holiday pay. From 31 December 2009, contractors and subcontractors could also be held solidarity liable.

A number of equal pay measures, like legislation and prohibition of discrimination, development of better and more available statistics, preventive measures (pro-active) and national plans of action have also been initiated and the wage gap between women and men were according to wage statistics estimates decreased from 2009 to 2010 in almost all areas. The changes were not larger than one usually sees from one year to another. Equal pay measures in the 2010 wage settlements may therefore have had an effect. For the period from 2006-2010 there was a general approach or stability between women's and men's wages for most negotiating areas, with the exception of employees in financial services.

Commentary by the NC

Norway is in a unique financial situation globally and has therefore been less affected by the financial crisis than most other countries. Having the economic capacity to handle a recession, the evolution of wages during the financial crisis has followed a slightly different path in Norway compared to most other countries. Some sectors, like construction, are however more effected by of the recession than other sectors, as can be seen especially for the development in wages for the period 2007-2009. A survey conducted by Kelly Services also showed that due to uncertainty connected to the financial crisis more than a third of Norwegian employees stated to be more loyal to their employers than before the crisis. At the same time, the most used trade-off in Norway during financial crisis is training opportunities, with the aim to bring people into further employment. Policies have been put in place by the government to support more vulnerable groups of workers such as immigrants, and figures from Statistics Norway show that measures such as equal pay scheme has led to an equalization of wage differentials between men and women. Although it is too early to call off the crisis there are several signs that the economic bottom is reached in Norway, and we are facing a new period of growth.

Bjørn Tore Langeland, National Institute of Occupational Health

References

The Level of Living Survey (LKU) 2009. Statistics Norway (SSB)

  • Aagestad, C., Tynes, T, Sterud, T, Løvseth, EK, Gravseth, Eiken, T, Lenvik, K, Bye, E, Langeland, BT, Rosenquist, E and Aasnæss, S. “HMFaktaboka om arbeidsmiljø og helse 2011- Status og utviklingstrekk,” 2011

  • Langeland, BT. “NORWAY: EWCO CAR on Getting prepared for the upswing: Training and Qualification during the Crisis”, 2011, NO1010029Q,