Top management salaries rose 5.4% in 2002

Source: Statistics Norway/TBU: Report no. 1. 2003. Note: company size is based on the number of 'employment relations'- ie the number of people who had an employment relationship with the company during 2002.

TBU has published management salary figures since 1998 (NO9711137N). On the whole, managers in Norwegian companies have enjoyed a higher wage growth than 'ordinary' wage earners over this period. This is particularly the case for managers in larger companies - over 1995-2002 they experienced an average annual salary growth of 12.5%, twice as high as that of ordinary workers.

TBU also presents management salary figures broken down by gender. In 2002, female managers saw lower salary growth than their male counterparts, with the exception of managers in enterprises with between 100 and 249 'paid employment relations'. The salary of female managers is on average 70% of that of their male counterparts. Female managers are few and far between, in particular in companies with more than 250 'paid employment relations'. They make up only 11% of all managers covered by the TBU statistics.

Social partners' response

The figures from TBU met with appreciation from the social partners. The director general of NHO, Finn Bergesen, welcomed the findings and called attention to the fact that NHO has on numerous occasions emphasised the universal application of the principle of pay moderation. The most recent figures, according to Mr Bergesen, confirm that this principle is gaining ground. The president of LO, Gerd-Liv Valla, saw the latest findings as a step in the right direction. Ms Valla stressed, however, that LO assumes that future figures will show that these developments are of a more lasting nature. The leader of YS, Randi Bjørgen, stated that the new figures provide hope for the cooperative venture on incomes policy (see below) in the years to come.

In January 2003, it became public knowledge that the president and chief executive officer of one of Norway’s largest industrial corporation, Norsk Hydro, received a total salary increase of NOK 1.2 million from 2001 to 2002. The Norwegian state is the largest shareowner of Norsk Hydro, and the Minister of Trade and Industry, Ansgar Gabrielsen, explicitly criticised the board of Norsk Hydro and its chair over the pay rise. The minister assumes that companies in which the state is an important owner will contribute to achieving moderate management salary growth in 2003. He even went as far as to suggest that he would be willing to replace boards that to not comply with the incomes policy goal of moderate pay growth for top management.

Commentary

In January 2003 the government’s Contact Committee on Incomes Policy, which has representation from the all the main social partner organisations, issued a statement calling for compliance with the principle of moderation in the forthcoming 2003 wage settlements (NO0302105F), in which management pay was a central theme. The employer side in both the public and private sector were given the responsibility of keeping salary developments among management at the level of those for other workers. The employers must thus be pleased with the recent figures. Indeed this is the first time since TBU started publishing such estimates that management salary growth has actually been at the level of the general wage growth.

Management pay has frequently been placed on the agenda of the social partners in the past decade. An important principle underpinning Norwegian incomes policy during the 1990s was moderate wage developments as a means to achieve full employment. Figures from TBU show that managers – not least those in larger companies – have seen a salary growth that far exceeds that of other workers. Trade unions have long emphasised that the principle of moderation must be applicable to all groups. Soaring salary growth among management in general, as well as individual cases of particularly lucrative management packages, have made it more difficult for trade unions to foster support and compliance among their own members for a policy of wage moderation. Many commentators are of the opinion that revelations in the media about profitable salary packages for individual managers were a contributing factor to the rejection by LO’s members (in a ballot) of the proposed wage settlement between LO and NHO in the spring of 2000, which culminated in a major strike in the private sector (NO0005192F).

The employers' organisations have repeatedly appealed to their member companies and their boards to demonstrate restraint on management salaries. To this end NHO, has developed internal guidelines for management salary formation (NO0104127N). Openness about the scale and character of management salaries is stressed (including severance pay and pension arrangements), and NHO also recommends allowing the whole board of a company to have a say in setting management remuneration. NHO nevertheless emphasises that it does not possess the means directly to influence the salaries of management in its member companies. It also points to the fact that a majority of Norwegian managers have in recent years enjoyed a salary growth equivalent to that of 'ordinary' employees. It is first and foremost among the management of large corporations (only a small minority of Norwegian managers) that salary developments substantially deviate from the general norm for employees.

In February 2003, the government altered the rules regarding employment protection for top management. Senior managers with 'post-employment' salary arrangements - ie special payments such as 'golden parachutes' on the termination of their employment - will not enjoy the same protection against dismissal as those without such arrangements (NO0203101N). The aim is to prevent situations in which managers use these provisions as bargaining tool to negotiate lucrative pay-offs in the event of dismissal.

The issue of management pay increases has also been linked to a debate on management pay levels as such. Some commentators argue that the salary level of Norwegian managers is low when compared with managers in other countries, and that companies that aim to attract the best and most qualified leaders must provide internationally competitive salaries (NO0012115N). This imbalance will thus lead to a significant growth in management salaries in the years to come, from this viewpoint. Others argue that a low management salary level in international terms is the result of the egalitarian wages and incomes policy in Norway, a policy which is subject to broad consensus. They further point to the fact that few Norwegian managers have in fact moved abroad to achieve higher salaries, and thus the issue of internationally competitive salaries cannot be employed to justify higher pay growth among management groups than other groups of employees. (Kristine Nergaard, FAFO Institute for Applied Social Science)