The spring 1999 pay round commences

On 18 March 1999, Norway's spring bargaining round began with the opening of negotiations in the private sector. Employers and trade unions have come to a prior agreement to keep the growth in pay for 1999 within a 4.5% limit, and the most difficult issue during the negotiations will be how skills and training reform will be financed.

On 18 March, the pay negotiations for 1999 in the private sector began when the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) submitted its claims to the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO). Later that day, the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) followed suit. The negotiations proper were due to commence on Monday 22 March, and the following week was also set aside for bargaining. The expectations are that the parties will eventually need assistance from the State Mediator. If so, a break in the negotiations was due before Easter, with mediation then commencing after the Easter holidays.

The pay settlement for 1999 is an intermediate settlement adjusting the two-year agreements signed in 1998 (NO9805164F), which means that only wage rates are to be revised. The proposed reform of skills and vocational training ("competence") will also be subject to negotiations, as agreed in 1998 (NO9804161F). As always during intermediate settlements, the negotiations within the LO/NHO agreement area take place at the confederal level, ie between LO and NHO themselves. The collective agreements between NHO and the member unions of YS will also be negotiated at central level. In the course of spring 1999, bargaining will also take place over other collective agreements in the private as well as public sectors. An important premise for 1999's wage round is the March 1999 report produced by the joint "Arntsen committee", which has set the framework within which the 1999 pay negotiations will operate (NO9903120F). The committee recommends that the growth in pay from 1998 to 1999 should be kept within a limit of 4.5%, which includes the wage "carry-over" effect from 1998 to 1999.

Trade union demands

LO's general council considered the spring pay negotiations at its meeting on 2 March 1999, and approved LO's principal claims. The meeting was held in advance of the Arntsen committee's report, but the general council still advocated a moderate settlement. It stated that the main challenge will be to avoid increased unemployment, while at the same time defending members' incomes through a "re-established and strengthened solidarity alternative" (the long-standing social pact between the labour market parties and the government, stressing moderate wage growth and employment). LO emphasised, however, that this is preconditioned by the government not changing the present legal and collectively-agreed framework in areas such as holidays, sick pay, working time (as governed by the Working Environment Act), and early retirement schemes. All these arrangements have been debated recently and, in autumn 1998, the government had to jettison its own proposal to cancel one day of annual holiday entitlement (NO9811100N). LO also stressed how important it is for the employers' side and the government to contribute financially to skills and training reform.

The general council of YS also decided at its meeting on 10 March to support a moderate pay settlement, although on condition that the main principles of the skills and training reform are implemented. It stressed that the government's contribution to this reform must be seen in connection with the eventual pay settlement, and advocated the need for a tripartite system of financing as an important principle.

NHO's position

NHO's executive board considered the pay negotiations on 10 March, and argued that both local and central pay policies must be pursued in line with the recommendations of the Arntsen committee.

NHO stated that pay increases for clerical staff in NHO-federated companies have been too comprehensive in recent years, and that the changing situation in the labour market means that any increase in pay must be within strict limits. Clerical workers' pay is largely determined at company level. NHO's executive board presumes that both NHO and its member associations will closely monitor the pay negotiations at company level, and it asked the associations to report before 28 April 1999 on how they propose to monitor company-level developments.

The executive board of NHO made no decision on the financing of the skills and training reform, but it did warn against "the development of forms of financing which are not cost efficient or do not provide a firm foundation for the future".

Commentary

It is already evident that the 1999 intermediate pay negotiations will be conducted within relatively moderate limits. All the major social partner organisations have participated in the preparatory discussions, and have all agreed that the growth in pay should not exceed 4.5% (an average of 3.25 percentage points of this figure constitutes a "carry-over" effect in pay from the 1998 settlement). This means that many groups will receive only very small pay increases arising from the central negotiations.

The relatively tight economic framework within which the 1999 pay negotiations will be conducted also means that the central confederations of employers and unions have to exercise control over pay increases at company level in order to restrict wage drift. This affects the company bargaining which occurs in many parts of the private sector, while the increases for clerical staff, the major part of whose earnings are determined at company level, are also important. The decision taken by NHO?s executive board shows this organisation?s willingness to keep its member companies within a moderate framework

The central, and most difficult issue during the negotiations is how skills and training reform is to be financed. The unions emphasise that a precondition for their agreement to an eventual moderate pay settlement is that the employers and the government should contribute to the financing of the reform. The unions want to see the establishment of a central fund to which unions, employers and the government all contribute equally. So far, NHO has been sceptical about such an arrangement and shows no signs of agreeing to such a proposal. However, at the beginning of the pay negotiations the LO leader, Yngve Hågensen, stated that in his view the most important aspect is that all parties should participate in the financing of the reform, and not how the reform is to be administered. The director general of NHO, Karl Glad, does not totally reject the idea of a fund, although he doubts whether it is the right course of action. The government has so far refused to contribute to the fund, but it is likely that it will participate in any agreement made by employers and unions on the financing of skills development.

Spring 1999 also sees the resumption of cooperation on income policy, which has been a characteristic of the relationship between the government and the labour market parties during much of the 1990s. This cooperation resulted in the Arntsen committee's preparatory work prior to the 1999 pay negotiations, in which the committee not only stipulated what it considered to be a desirable level of a growth in pay for 1999, but also suggested a level for 2000. The government also intends to set up similar committees to consider issues such as employment, the working environment and labour law. (Kristine Nergaard, FAFO Institute for Applied Social Science)