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Collective Bargaining

Agreements reached at national level provide much of the industrial relations framework that in other countries would be provided by legislation. Below this there is a hierarchical structure of annual negotiations at both industry and company/organisation level which set terms and conditions for around 70% of the workforce.

The framework

 

Collective bargaining in Norway operates within a clearly hierarchical structure. At the top there are the basic agreements (hovedavtalene) between the union confederations and the national employers’ associations which set the framework for bargaining and regulate issues that in many other countries are dealt with through legislation. These include rights to information and consultation, procedures for electing employee representatives, including the choice of European works council representatives, and rules for taking industrial action.

 

There are separate agreements between the different union confederations and the bodies representing employers but on many issues the agreements have identical wording, other than changes to take account of the specific structures involved. (There are, however, significant differences between the public and private sector agreements in terms of employee representation – see section on Workplace representation.) The most important of these agreements is the agreement between LO, the largest union confederation, and NHO, the largest national employers’ association in the private sector.[1]

 

At the next level in the hierarchy there are the agreements for specific industries, although these agreements normally include the text of the basic agreements as their first section.

 

A crucial element of the negotiations is the order in which they are conducted. The annual bargaining round opens with negotiations that cover primarily private sector manufacturing plus construction and some private sector services. The results of these negotiations then set the level of pay increases for the settlements in other parts of private services – finance and retail, the privatised industries, and central and municipal government, which come later.

 

The aim of this sequence of negotiations, known as the “frontline model” (frontfagsmodellen) is to allow the export-oriented manufacturing industries, which face international competition, to agree pay increases that retain their competitiveness.

 

The system is supported by regular reports on pay settlements from a joint employer/union/government body, the Technical Calculation Committee for Income Settlements (shortened to TBU in Norwegian). The TBU normally produces two main reports each year, one before and one after the wage settlements. The first report provides an overview of pay and price developments, including a price forecast for the current year and developments in competitiveness. It also analyses developments in the international and Norwegian economy. The second report looks at the results of the settlements negotiated in that year.[2]

 

Below the industry-level negotiations, there are further negotiations at local level (in companies or local organisations). The extent to which pay and conditions are set by industry-level or local negotiations varies, depending on the industry concerned, the unions and the type of employee.

 

The TBU distinguishes between three main types of collective agreement.[3] These are:

  • minimum wage agreements;
  • normal wage agreements; and
  • agreements without central wage provisions.

 

Minimum wage agreements, which are the most frequently found type of agreement in the private sector, particularly for manual workers, set industry-wide minimum rates. However, there is then scope for local negotiations to negotiate top-up payments. These should take account of four specific criteria, company finances, productivity, future prospects and competitiveness, plus, in the Industry Agreement which covers the export-oriented industries, the labour market situation. In some industries, only a few minimum rates are set, covering only the lowest paid. And in these cases, there is a much wider scope for local negotiations. In other industries, minimum rates are set for most points on the scale, leaving less scope for local negotiation. As well as covering much of the private sector, local government workers are also covered by a minimum wage agreement, although here the industry agreement sets out a framework for local top-ups.

  

Normal agreements set all key terms relating to pay at industry level, leaving no room for locally negotiated additions. This type of agreement covers the employees of central government, local government in the capital, Oslo, as well as the bus industry, electrical engineering and cleaning and security.

 

Agreements without central wage provision leave all pay negotiations to the local level, with industry agreements only providing an agreed procedural framework within which local agreements, both collective and individual, can set pay and working conditions. The areas where agreements without central wage provision are dominant include those for highly qualified staff in the private sector and the agreements signed by the YS union confederation for non-manual staff in the private sector.

 

One important aspect relating to local level negotiations is that these are subject to the so-called “peace clause” in the basic agreements, which means that they must be negotiated without recourse to industrial action. The industry level agreement will normally include procedures to attempt to resolve any disputes at company level, but, if the parties disagree, the employer usually has the final say.

 

In the public sector, the agreements apply to all employees, but, in the private sector, they only apply in companies where there are union members, normally at least 10% of the employees, even if the company itself is part of an employers’ association which is a signatory to the agreement. There are no official figures on the proportion of private sector employees covered by collective bargaining, but depending on the sources used, it has been estimated in two separate Fafo reports to range between 46% and 52% in 2018.[4]

 

There is also no general mechanism for extending collective agreements across a whole industry in the way that exists in some EU states. However, under the General Application Act (Allmenngjøringsloven) which came into force on 1 January 1994, part or all of a collective agreement can be extended to companies without a collective agreement where “it is documented that foreign employees perform or may perform work on terms that … are less favourable than those that apply” in the collective agreement for that industry. A joint board made up of representatives of the unions and the employers’ association plus independent members hears applications for the extension and makes a ruling.

 

Initially this provision was hardly used. However, migration into Norway from Central and Eastern Europe since 2004 changed that, and by the start of 2021 nine agreements had been extended in this way, covering large numbers of employees in construction, electrical installation hotels and catering. Overall, these extensions are estimated to add another 240,000 employees to the number covered by collective bargaining, increasing the proportion of private sector employees covered by around 10 percentage points.[5]

 

The TBU estimates that, with 100% coverage in the public sector, and at coverage in the private sector boosted to 55% because of the impact of the extension of some agreements, overall collective bargaining coverage is around 70%.[6]

 

Mediation plays an important role in collective bargaining in Norway. Where negotiators fail to reach agreement, the issue must be referred to a mediator, who has the power to delay any industrial action for up to 14 days (21 in the central government.) Mediation will normally lead to further negotiations with the final compromise, if it is reached, being put to a ballot of the membership. The government also has the power to intervene in disputes and impose compulsory arbitration if it feels this is necessary. This power has been invoked most frequently in disputes affecting the public sector and the oil industry, although also in other sectors.

 

Norway does not have central tripartite body, with representation from unions, employers and government, like the social and economic councils which exist in many European states. However, there is Working Life and Pension Policy Council (Arbeidslivs- og pensjonspolitisk råd) which provides a forum for dialogue between the government, unions and employers, while the tripartite TBU, referred to above, provides technical support for collective bargaining.

 

One indication of the close cooperation between the government, unions and employers is the series of agreements on Inclusive Working Life (Inkluderende arbeidsliv). These agreements, first signed in 2001 and renewed regularly thereafter, aim to develop and implement policies to reduce sick absence, improve the work environment and ensure that all parts of society have access to rewarding work. There are also tripartite bodies such as the TBU, referred to above,

 

There is also the Contact Committee (Kontaktutvalget) which brings together unions and employers in the public sector, including the government, to discuss pay and wider issues.

 

Who negotiates and when?

 

The top-level basic agreements are negotiated between the union confederations and the national employers’ associations. As already noted, there are separate agreements between the different national employers’ associations and the different union confederations. For example, LO has separate basic agreements with NHO, the main private sector employers’ association, Virke (formerly HSH), the main employers’ association for the private services sector, and Spekter, the employers’ association which primarily represents privatised bodies. The same is true with some variations for the other union confederations, which have their own basic agreements with the employers’ associations. However, this is not the case in the public sector, where basic agreements are negotiated jointly with all the union confederations. The basic agreement for central government is signed by the union confederations, Unio and Akademikerne, and LO Stat and YS Stat, the groupings of unions representing these employees in the confederations LO and YS. Similar arrangements apply to the basic agreement with KS, the municipal employers’ association.

 

These basic agreements are negotiated every four years.

 

Industry level agreements are negotiated between individual unions and the confederations on the union side and by the individual employers’ associations for the industries involved and the national employers’ federations on the employers’ side. In the pay review negotiating rounds, which take place every other year (see below), bargaining is almost always centrally coordinated.[7]

 

Despite this, there continue to be aspects of the agreements which are specific to specific industries and in some cases, such as in finance, the individual unions play a greater role.

 

The complete agreements are re-negotiated every two years but pay rates are reviewed in the years in between. As a result, there is annual bargaining at industry level, with settlements normally coming into effect at the start of April or May.

 

Company-level negotiations also take place annually between individual companies and the elected union representatives at company level (see section on Workplace representation). 

 

The subject of the negotiations

 

As already noted, at the highest level, negotiations in Norway cover a range of issues, such as the procedures for electing employee representatives, which in many other countries would be the subject of legislation. The basic agreements signed at this level also cover, gender equality, health and safety, the use of new technology, work monitoring and job evaluation.

 

At industry level the agreements lay down a wide range of detailed arrangements on topics such as pay and pay systems, holidays, working hours, travel expenses, health and safety, special leave – such as bereavement leave, and equality issues. They also deal with early retirement arrangements.

 

Company-level negotiations are intended to adapt the industry-level negotiations to the situation of the company. Their key concern is pay and the specifics of the company.

 

Norway does not have a national minimum wage.

[1] LO website https://www.lo.no/hva-vi-gjor/hovedavtalen/ NHO website http://tariffavtaler.nho.no/?page=list&&sort=navn (Accessed 25.05.2021)

[2] Rapporter fra det tekniske beregningsutvalget for inntektsoppgjørene (TBU)  https://www.regjeringen.no/no/tema/arbeidsliv/lonn-og-inntekt/innsikt/inntektspolitikk-og-lonnsoppgjor/det-tekniske-beregningsutvalget-for-inntektsoppgjorene-tbu/rapporter-fra-det-tekniske-beregningsutvalget-for/id450757/ (Accessed 25.05.2021)

[3] Grunnlaget for inntektsoppgjørene 2021 Institusjonelle trekk ved lønnsdannelsen i Norge, NOU 2021:5 https://www.regjeringen.no/contentassets/34ab14e508fa4c3898f37d3118cae363/no/pdfs/nou202120210005000dddpdfs.pdf (Accessed 25.05.2021)

[4] Arbeidsgiverorganisering og tariffavtaler by Kristin Alsos, Kristine Nergaard and Elin Svarstad, Fafo 2021 https://www.fafo.no/images/pub/2021/20775.pdf uses figures from a collective agreed pension fund from the private sector and estimates coverage at 46%, while Organisasjonsgrader, tariffavtaledekning og arbeidskonflikter 2018/2019 by Kristine Nergaard, Fafo, 2020, https://www.fafo.no/images/pub/2020/10332.pdf uses information from employers’ organisations and estimates coverage at 52%  (Accessed 25.05.2021)    

[5] Arbeidsgiverorganisering og tariffavtaler by Kristin Alsos, Kristine Nergaard and Elin Svarstad, Fafo 2021     

[6] Grunnlaget for inntektsoppgjørene 2021 Institusjonelle trekk ved lønnsdannelsen i Norge, NOU 2021:5

[7] See Labour Relations in Norway, Espen Løken and Torgeir Aarvaag Stokke, Fafo-report 2009:33 (http://www.fafo.no/pub/rapp/20123/20123.pdf)

L. Fulton (2021) National Industrial Relations, an update (2019-2021). Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.