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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.

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.

At the next level in the hierarchy there are the agreements for specific industries, although these agreements include the text of the basic agreements as their first section. The industry level negotiations will normally be conducted in parallel with the different confederations (and their affiliated unions). For example, there is one set of negotiations between the NHO and LO and its affiliated unions and another set of negotiations between NHO and YS (LO’s main competitor in the private sector) and its affiliated unions, although the final outcome of these parallel negotiations is almost always the same. In some bargaining rounds in the private sector, it is the confederation that takes the lead and coordinates the industry level negotiations; in others the affiliated unions bargain separately. The ability to switch between centrally coordinated and separate industry level bargaining, which is decided by LO as the dominant confederation, provides the unions with greater flexibility.1

One significant element of the negotiations is the order in which they are conducted. The annual bargaining round opens with negotiations between the unions (the LO and YS unions) and the main employers’ association NHO, and these negotiations cover primarily private sector manufacturing plus construction and some private sector services. The results of these negotiations typically 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. It is argued that this system allows the export-oriented manufacturing industries, to agree pay increases that are internationally competitive.

This order in which different parts of the economy negotiated, and its impact on Norwegian competitiveness, was one of the issues examined by a committee on pay setting, composed of representatives of unions, the employers and independent experts¸ which was established by the government in 2012. In its report in December 2013, the committee found that the existing system, had worked reasonably well, although it called for LO and the employers’ body NHO to set a framework for pay on an annual basis, based on the regular reports on pay, prices and the economy, produced by the tripartite TBU.2 Specifically the competitiveness report stated that, “the growth in wages of manual and non-manual workers in industry should set the norm for the rest of the economy”.3

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 and this power has been invoked most frequently in disputes affecting the public sector and the oil industry, although also in other sectors.

Below the industry-level negotiations, in most companies and local organisations there are further negotiations to take account of the specific local situation. However, company/organisation agreements cannot set worse terms and conditions than the industry agreements, unless this possibility is specifically provide for in the industry agreement itself (as was the case in the 2009 finance sector agreement). The company/organisation level negotiations are also 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 and one agreement for manufacturing provides for the employees in dispute to reduce their working time and their pay to 45% of normal – a sort of part-time strike. However, in general, if the parties disagree, the employer usually has the final say.

The relative impact of company/organisation level negotiations on pay increases varies between different industries and occupations. The impact is greater in the private sector, particularly services, than in the public sector and greater for non-manual employees than manual employees – this also reflects individualised pay increases, which are more common among non-manual workers in the private service industries. Figures for “pay drift”, produced by the tripartite pay monitoring body the TBU, give an indication of the extent of the importance of company level bargaining and individual deals. They show that over the five years 2010 to 2014, pay drift averaged 1.7% for manual workers and 2.3% for non-manual workers in the LO-NHO sector, and 2.6% in the finance sector. However, among central government employees the figure was only 0.6%, and 0.5% in the municipal sector.4

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 is also no general mechanism for extending collective agreements across a whole industry in the way that exists in some EU states. The only case where parts of a collective agreement can be extended beyond companies with a union presence is where an industry has a substantial number of foreign workers who are employed on inferior conditions to their Norwegian counterparts. Under legislation passed in 1993, 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 has meant that some agreements have been extended in this way.

This means that, while collective bargaining coverage is 100% in the public sector, it is only about 58% in the private sector, according to the calculations in the Fafo study for 2013.5 This produces an overall figure for collective bargaining coverage of 73%.

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. As already noted, in some bargaining rounds it is the union confederation that takes the lead and is the main negotiator in effectively centralised negotiations, while in others the individual unions have more flexibility to negotiate separately. LO, as the largest confederation makes the choice between these two approaches, although the national employers’ association may sometimes look to coordinate its response, even when LO is planning a more decentralised approach. In the pay review negotiating rounds, which take place every other year (see below), bargaining is almost always centrally coordinated.6

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. As with the basic agreements, different the confederations and their affiliates sign separate agreements with the employers. For example, the employers’ association for the finance industry signs separate agreements with Finansforbundet (the YS affiliated union) and HK and Postkom (two LO affiliates). The HK and Postkom agreements are also signed by LO. There may also be differences in the bargaining positions of the unions. For example, the 2009 finance agreement provided for individual companies to have lower increases than those agreed at industry level. The LO and its affiliates objected, but accepted the agreement as the YS affiliate Finansforbundet is the larger union in the sector.

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 in 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 (AFP in Norwegian), which have been of major concern in recent years.

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. They normally produce higher pay rates than the industry-level agreements, although in times of economic difficulty and provided the industry-level agreement permits it, they can allow pay increases to be postponed or even reduced.

Norway does not have a national minimum wage.

L. Fulton (2015) Worker representation in Europe. Labour Research Department and ETUI. Produced with the assistance of the SEEurope Network, online publication available at http://www.worker-participation.eu/National-Industrial-Relations.