On Wednesday, the wage settlement started, with the LO union Fellesforbundet on the one hand, and the NHO organization Norsk Industri on the other.
This year’s showdown will be a thriller of the very rare.
In order to get into the settlement, the parties get a demanding financial situation in several ways:
High inflation creates trouble
First, we are both in Norway and elsewhere in the world in a period of high price growth, driven by, among other things, very high commodity prices.
Already on the way out of the pandemic, inflation was high, while the war in Ukraine has raised commodity prices even higher. High raw material prices result in record high prices for electricity and fuel, but also make many other goods more expensive.
It reduces our purchasing power.
A main requirement when the wage settlement now starts is that you want increased purchasing power. When inflation is high, wage growth must necessarily be even higher to secure purchasing power.
Thus, the room for maneuver in this wage settlement is smaller than usual.
High commodity prices also eat away at the profits of companies, because they incur increased costs. It will be used as an argument on the part of the employer to keep wage growth down.
Read more about the wage settlement here
Stretch the layer
Secondly, there are big differences between how things are in Norwegian companies now.
Large parts of the Norwegian business community are doing well, at the same time as many companies are struggling to get out of the pandemic.
At one end of the scale are aviation, tourism and transport. At the other end are the oil and gas and seafood industries.
Finding one framework for the wage settlement that suits everyone will not be easy. Therefore, the employer side will argue that there must be room for more supplements locally, to take into account the large variations.
The counter-argument on the employee side is that, in principle, there are no local negotiations in many industries and in the public sector. Then wage growth will be limited by what you get centrally.
The front subject model under pressure
In addition to a demanding financial backdrop, there are also disputes between the private and public sectors.
As always, it is what is called the front subject that negotiates first. In Norway, it is the part of the industry that competes with industry abroad, which lays the foundation for wage development in both the private and public sectors.
The reason why you have such a system is that you want to find a level of wage growth that makes Norwegian companies stay competitive. If wages in Norway, for example, rise twice as fast as in neighboring countries, it will be demanding for Norwegian companies to make money.
Then you risk “negotiating out of the gate”, which is a well-known expression when the wage negotiations are on.
In recent years, however, support for the front-line subject model has come under pressure.
Will get a lot of attention
The importance of the front subject will therefore receive much attention. The vast majority of the parties in working life support the model, and point out that it is important for keeping unemployment low, value creation high and that it also results in few labor disputes.
But several groups in the public sector, especially teachers, have felt cheated after the wage settlements two years in a row. For while they have ended up with a wage increase within what was agreed when the front subject was negotiated, the wage growth in the private sector has proved to be higher. The private sector has run away.
LO leader Peggy Hessen Følsvik and Unio leader Ragnhild Lied
Photo: Terje Pedersen / NTB
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Unio, with its nearly 400,000 members, represents many of the teachers. This year, they want a higher framework for public employees than for the private sector. In practice, this means that you want to set the front-line subject model aside.
Can get teacher strike
For while public employees have “remained in solidarity with the framework”, as they themselves put it, it is pointed out, among other things, that they struggle with low recruitment to teacher education. Wages are cited as an important reason.
Teachers will demand that the backlog in recent years be made up. If you do not get it in place, there is a high probability of a teacher strike.
This year, the possible line of conflict will not only be between employer and employee, but there may also be conflict internally on the employee side – with the private and public sectors on either side.
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