The strengthening Norwegian krone is poised to complicate upcoming wage negotiations, potentially limiting pay increases for workers, according to Harald Magnus Andreassen, chief economist at Sparebank 1 Markets.
The Norwegian currency has appreciated significantly in recent months, with the euro now trading at 11.29 kroner, down from nearly 12 kroner at the start of the year. The dollar has also fallen against the krone, currently at 9.53 kroner compared to around 10 kroner at the beginning of 2025 and 11.50 kroner in January 2025. This rebound represents a reversal of much of the krone’s depreciation experienced in 2022 and 2023.
Andreassen explained that a stronger krone reduces the willingness of companies to offer substantial wage increases. “The exchange rate is impacting wage negotiations, that’s obvious,” he told Nettavisen. “It reduces companies’ willingness to go along with and accept high wage increases.”
The wage negotiations in Norway typically begin with the industrial sector, known as the “frontfaget.” The principle is that wage growth should align with the capacity of internationally competitive businesses. The krone’s exchange rate plays a crucial role in this calculation. When the krone is weak, companies benefit from higher revenues when converting foreign earnings, creating room for larger wage increases. However, a stronger krone diminishes these gains, limiting their ability to offer substantial pay raises.
Kjetil Olsen, chief economist at Nordea, echoed Andreassen’s assessment, stating that employers are likely to leverage the stronger krone during negotiations. “The slightly stronger krone we’ve seen throughout 2025 and into 2026 will be used by the employer side,” Olsen said. “Wages must be set to preserve the competitiveness of exposed industry, but the downside is that workers should also have their share of the cake over time.”
Data from Norway’s national accounts for 2025 indicate that industrial profits have been high in recent years, although the share of value creation going to employees has been at a record low. This had fueled expectations of a more generous wage settlement this year. However, Andreassen believes the recent strengthening of the krone alters this dynamic.
“The results in the business sector, in parts of industry, the front if you will, are getting worse because the exchange rate has already strengthened considerably. And that dampens the require to increase wages to restore the balance between owners and employees,” Andreassen stated. He added, “The answer to that is that the exchange rate may develop into stronger, and then the results will disappear on their own without wages having to rise quickly.”
Despite the potential for lower nominal wage increases, a stronger krone can benefit workers through reduced inflation on imported goods, potentially improving purchasing power even with a more moderate wage settlement.
The Bureau of Statistics Norway (TBU) estimates that price growth for 2025 will be 3 percent. However, Kjersti Haugland, chief economist at DNB Markets, suggests this estimate may already be too low. “Before the inflation shock last week, it actually looked like growth would be lower than now. Newer information led to a higher estimate,” she explained. Haugland indicated that the 3 percent figure is likely a minimum, and that prices could rise further, with new figures due to be released on March 11th potentially prompting a revision.
Haugland emphasized the importance of accurate calculations for wage earners, stating, “We are relating to 3 percent price growth, and with a real wage increase that must be at least 3 percent. The requirement for a real wage increase will be around 1 percent. It does not stand in the way of Norges Bank being able to stick to its forecast of a wage growth of 4.2 percent.” She concluded, “The most important thing is that the negotiations based on TBU’s estimates actually hit the mark.”
