In October 2003, all four Norwegian trade union confederations walked out of a government-appointed committee considering changes to employment legislation. The decision came in response to a government proposal to relax the rules relating to temporary employment, made in connection with the 2004 state budget.
On 20 October 2003, all four trade union confederations - the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO), the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS), the Confederation of Higher Education Unions (Utdanningsgruppenes Hovedorganisasjon, UHO), and the Federation of Norwegian Professional Associations (Akademikerne) - left the government-appointed committee currently considering changes to the Act relating to Worker Protection and the Working Environment (Arbeidsmiljøloven, AML) (NO0210103F). The committee is a tripartite body with representation from all the main social partner organisations and the government. The decision made by the union confederations came in response to a government proposal to relax the rules relating to temporary employment, made in connection with the 2004 state budget. The proposal, and in particular its timing, is seen by the trade unions as a provocation, undermining tripartite cooperation.
Background
In its 2004 state budget proposal, made public on 8 October, the government outlines several measures to combat the increasing level of unemployment in the Norwegian economy. The most controversial are a proposal to relax the rules relating to temporary employment, together with changes to the rules relating to the financing of workers' wage compensation during temporary lay-offs.
The issue of relaxing the rules relating to temporary employment has been on the agenda for some time. In 2001, the public committee was set up to review the AML, with a mandate to produce a proposal for a new and more general act relating to working life by 1 December 2003 (NO0210103F). The present minority centre-right coalition government of the Conservative Party (Høyre), the Christian Democratic Party (Kristelig Folkeparti, KRF) and the Liberal Party (Venstre) has for some time called for a relaxation of restrictions regarding temporary employment (NO0110108F). Following the change in government that took place in the autumn of 2001, the committee was explicitly asked to look at the legal provisions concerning temporary employment.
Increasing temporary employment
The use of temporary employment contracts is at present mainly limited to: temporary replacements; employment under labour market policy measures; work training; or 'when warranted by the nature of the work and the work differs from that which is ordinarily performed in the establishment' (as the AML puts it). The proposed new regulations will allow an employer to recruit an employee temporarily for almost 12 months over a three-year period, with no further justification required. It will be possible to employ temporary replacements (as is the case today), and also to use temporary employment when labour is needed only for a particular assignment (which means a clear relaxation of the present rules). The rules in this area could be circumvented by means of collective agreements between national-level trade unions and employers. This opportunity is currently limited to a small number of employees in the areas of research, sports, and cultural activities, but it is now proposed that it be extended to all branches.
The rationale behind the proposed new rules, according to the government, is that it will ease the entry of groups facing difficulties in the labour market, such as young people, immigrants and people with disabilities. It will also give private sector businesses and industries greater flexibility, and will be an alternative to temporary lay-offs in many industries, not least those that currently use lay-offs as a way of dealing with seasonal peaks and cyclical variations.
New rules on lay-offs
The proposal to relax the rules regarding temporary employment should be seen in the light of another controversial government proposal to extend the period during which the employer is obliged to provide financial support for the subsistence of employees who have been temporarily laid off. At present, employers may lay off workers for 42 weeks over an 18-month period, with the employer responsible for providing wage compensation to the employees for the first three days. Under the new proposal, however, the maximum period of lay-off is reduced to 26 weeks over an 18-month period, with the employers responsible for 30 days of wage compensation. At the same time, the current exemption clauses that provided for extended lay-off periods in some sectors will be abolished.
Together the two measures will, according to the government, make it more costly for companies to lay people off, which will be compensated for by increased flexibility in relation to the use of temporary employees. The issue of extending employers' obligations in relation to wage compensation during lay-offs was originally raised in connection with the 2003 state budget proposal, but was not introduced as a result of a budget compromise reached between the government and the opposition Progress Party (Fremskrittspartiet, FrP).
Views of the social partners
The trade unions have opposed the government’s proposals from the start, regarding them as an attack on important workers' rights, as well as on the Norwegian model of dealing with such labour market issues. They want the issue of temporary employment to be considered within the larger framework of the work of the committee examining reform of the working environment legislation, and to be based on the recommendations made by this committee. Not even extraordinary meetings with the minister responsible for the proposal, the Minister of Labour and Government Administration, Victor Norman, helped to calm the union confederations following the government's announcement. In the discussions, the minister agreed to await the committee's recommendations, but maintained that the proposals would nevertheless be submitted to parliament as a separate bill.
The most significant criticism voiced by the unions has been directed at what they regard as the government’s total lack of respect for industrial relations practices and the tradition of social partner cooperation in Norway. LO, YS, Akademikerne and UHO have all expressed their discontent with the fact that the government has put forward proposals to weaken employment protection at a time when the committee set up to review these issues is still working. In a letter to the government, LO stated that the proposals not only undermine the work of the committee, but must also be seen as undermining tripartite cooperation between the government and the social partners. Indeed, states LO, this is not the first time the government has taken this approach - it also happened in relation to the recent relaxation of rules relating to overtime (NO0304103F). On the grounds that the public committee has lost its legitimacy, the four union confederations decided to leave rather than continue their participation in the joint deliberations. The leader of LO, Gerd-Liv Valla, warned that the government’s handling of the affair may well have a bearing on future cooperation, not least in preparing for the forthcoming wage settlement in 2004. Although Akademikerne supports the intentions behind the proposal, it is disappointed with the government’s handling of the issue, and stresses that the authority of the committee's work has been weakened.
The employers' organisations welcome the proposed new rules on temporary employment, but are on the whole not happy to see the rules on lay-offs being changed. The Federation of Norwegian Manufacturing Industries (Teknologibedriftenes Landsforening, TBL), which is a member association of the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO), states that the proposed changes in this area will make the situation worse for important industries, in that it will undermine companies' ability to retain qualified workers, and thus to improve their competitive standing and continue production. The consequence, according to TBL, will be substantial numbers of redundancies in a period of increasing unemployment.
Commentary
The government is of the view that the present economic situation in Norway requires immediate action, and it thus does not have time for a long process of consideration beyond that which is inevitable when its proposals are placed before parliament (the Stortinget). The more general proposals to be made by the committee examining the work environment legislation would obviously require more time for deliberation and consideration. The proposed changes to the temporary employment rules seem to have majority support in parliament. The government’s most important ally on the issue is the FrP, which in general supports a relaxation of the rules on temporary employment. There is significantly more uncertainty as to whether the government will receive support for changes to the rules relating to lay-offs. A similar proposal was rejected in 2002 and it is doubtful that the government will obtain support for it this time around.
The rationale behind the government's timing of its latest proposals has been questioned, not least since the committee presently deliberating the two issues is still working, but also because it comes at a time when the government is about to embark on the difficult state budget negotiations for 2004. The proposal has widened the political gap between the government and the opposition Labour Party (Arbeiderpartiet, DnA), which will have implications in relation to the number of potential alliance partners available to the government in connection with the 2004 state budget negotiations. The government – which does not have a majority in parliament – must seek support either with the parties to the left or with FrP. The issue of temporary employment, as well as that of lay-offs, may well be incorporated as part of these negotiations. The tense relationship between LO and the government – not least the Minister of Labour and Government Administration himself – suggest that incomes policy cooperation between LO and the government (NO0302105F) prior to the forthcoming 2004 wage settlement may be difficult to achieve. LO has traditionally been a central player in this regard in Norway. Finally, the fact that all trade union confederations have left the committee currently examining working environment legislation – a month before it was due to submit its recommendations – will beyond doubt serve to undermine the legitimacy of the committee’s report. The chair of the committee has nevertheless stated that it will continue its work and deliver its report in December 2003. (Håvard Lismoen, FAFO Institute for Applied Social Science)