Pay up 6.5% in 1998

Source: TBU report No. 1 1999.

In 1998, the TBU included in its report a comprehensive analysis on the development of management salaries (NO9801148N), which has been followed up in the 1999 report. The TBU estimates that management salaries increased by 5% to 8%, compared with a 6.25% increase among average wage earners. These estimates do not include the top managerial level, for whom pay statistics will not be available until March 1999. The equivalent figures for 1997 suggest, however, that this group had a more favourable growth in pay than the average wage earner in general. Increases in pay were at their highest among the top managers of companies with more than 100 employees.

The TBU establishes that there have been no major changes in pay differentials between men and women in 1998. In some groups, there has been a slight narrowing of differentials, while in others there has been either no change, or only minor increases.

Developments in prices, real pay and competitiveness

Prices increased by 2.3% in 1998, measured by the consumer prices index, according to TBU estimates. This indicates that Norway has had higher price increases than both the EU average and Norway's trading partners in general. The TBU expects that price increases in 1999 will be 2.5%. It is stressed, however, that this estimate is tentative, one reason being the present uncertainty surrounding the Norwegian exchange rate.

The TBU has also produced estimates for the growth in real pay after tax for all wage and salary earners, and for specific groups. In 1998, employees in one-person households experienced on average an increase in real pay of 3.7%. This figure is significantly higher than the figure for 1997, when the average real growth in pay was 1.8%. These figures do not take into account increased expenses in relation to interest rates increases on loans. The cost of borrowing increased during 1998, and personal expenditure in some households will have increased considerably as a result.

Pay increases in Norwegian industry were higher than in Norway's trading partners, states the TBU. A provisional estimate suggests that the weakened Norwegian exchange rate, however, has led to a reduction in relative wage costs (measured by common currencies) of 1.8%.

Commentary

The assumption that Norwegian employees achieved a respectable growth in pay as a result of the 1998 pay settlement is confirmed by the TBU report. The significant carry-over effect from 1998 means that in 1999 most groups will receive a nominal increase in pay, even before any pay increases as a result of central negotiations. In the run up to the 1999 spring pay round, the Norwegian economy is faced with considerable challenges, particularly as a result of low oil prices. Indications are that the 1999 pay round will produce quite moderate nominal increases in pay. The fact that the first steps in the continuing vocational training reform (NO9804161F) will be on the agenda during the negotiations strengthens the assumptions about a moderate 1999 pay settlement.

The importance of moderate increases in pay is also emphasised in the Organisation for Economic Cooperation and Development (OECD) report on the Norwegian economy, which was published in February 1999 (OECD Economic Surveys 1999, Norway). The OECD argues that after a long period of growth in the Norwegian economy, there are indications to suggest that a significant slowdown now appears to be underway. The OECD underlines that this situation requires a pay policy that safeguards moderate wage growth, and points to the fact that during most of the 1990s Norway has managed to pursue such an approach through a tripartite cooperative incomes policy (NO9812117N). (Kristine Nergaard, FAFO Institute for Applied Social Science)