This is how your new pay will be decided – if you have a collective agreement

Leni Aurora Brækhus

foreignworkers@lomedia.no

Well over 50 per cent of all employees in Norway are covered by a collective agreement. Every year, the pay levels of these employees are adjusted in what is called collective bargaining or pay settlement (tariffoppgjør, lønnsoppgjør).

There are several reasons why pay is negotiated on an annual basis. These include the fact that the prices of goods and services increase and that employees should receive their share of the profits of the company that employs them.

Non-union employees do not have the right to demand pay bargaining in the same way as employees who are part of a trade union. If you are not a member of a trade union, it will in theory be up to the employer to adjust your pay. This does not have to happen on an annual basis, although even companies without a collective agreement may have annual rounds of pay bargaining.

In some industries, a statutory minimum wage level applies. The minimum pay level will normally be adjusted annually when the bargaining to reach a collective settlement has been completed.

In the following, we will provide a brief explanation of how the annual pay settlement proceeds.

Related article: Norway does not have a common minimum wage for all workers. Here we explain why

Strength in unity

In Norway, the pay of employees who are organised in a trade union is negotiated on a collective basis. The organisations representing the employers’ side and the employees’ side – referred to as the parties – meet for collective negotiations (kollektive forhandlinger).

The reason that negotiations are conducted on a collective basis is that large groups have found that their position will be stronger when they present a united front. Moreover, it has been found to be more practical for employers to bargain on behalf of their entire industry. This prevents pay levels from being pushed upwards in the competition for labour.

Pay and rights are regulated in collective agreements (tariffavtaler), which remain in force for two years at a time.

Every other year the employers and employees re-negotiate the entire collective agreement. This is referred to as the main settlement (hovedoppgjøret).

Between the main collective settlements, bargaining is generally confined to issues of pay. This is referred to as interim settlement (mellomoppgjør).

The 2022 bargaining round is a main settlement. This means that negotiations will cover pay as well as other rights such as working hours, leave or work clothes.

Related article: What is a collective agreement?

Voluntary bargaining

The collective bargaining process starts with what are referred to as centralised wage bargaining (sentrale forhandlinger). For employees in private companies, in the private sector, bargaining is either coordinated (samordnet) or union level (forbundsvis).

Most trade unions are members of a national federation of trade unions and the federations in turn are part of a confederation, such as the LO (Norwegian Confederation of Trade Unions).

A coordinated settlement means that all the collective agreements (also referred to as the accords (overenskomstene)) within an area or sector is negotiated as a single agreement by the confederations. For example, LO, which is the largest employee confederation, negotiates with the largest employers’ confederation, Confederation of Norwegian Enterprise (NHO).

Union level bargaining means that there is one negotiation for each individual collective agreement. This enables the individual federation to put forward their own demands to their counterpart employers’ organisation.

In the private sector, the 2022 pay settlement will be negotiated at union level. In the public sector, covering local and central government employees, negotiations are always coordinated.

If the negotiations bear fruit, the negotiated result will generally be sent out to the membership for a vote in a ballot (uravsteming). The negotiated result can then be approved or rejected.

If it is not approved the parties must resume their negotiations.

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Compulsory mediation

If the parties are unable to negotiate an agreement, they can resort to an industrial dispute to push their demands through. For the employees, this will take the form of a strike (streik) and for the employers a lockout (lockout).

However, before a strike or lockout goes ahead, the parties are required to submit to mediation through the National Mediator of Norway (Riksmekleren).

Strike or lockout

If the parties are still unable to agree, even with the assistance of the National Mediator, industrial conflict will follow in the form of a strike or lockout.

In a strike, the employees withdraw all or parts of their labour. In a lockout, an employer or national employers’ association, shuts the employees out of the workplace.

A strike or lockout will continue until the parties meet again across the negotiating table and agree on a new collective agreement, or until the authorities intervene and stop the conflict by means of compulsory arbitration (tvungen lønnsnemnd).

Compulsory arbitration will take place if central government reaches the conclusion that a strike or lockout puts life, health or safety at risk or threatens vital public interests.

Negotiations at local level

When centralised negotiations have been completed workplace negotiations (lokale forhandlinger) take place.

These negotiations are conducted at company level between representatives of the local trade union branch and company management.

Financial framework

In a pay settlement, the parties agree on a financial framework for the settlement. This is the cost ceiling that the parties are required to remain within.

National and local pay increases, other financial supplements (such as higher rates of pay for weekend work) and the estimated value of other benefits (such as longer holidays or shorter working hours) must be kept within this ceiling.

You may also be interested in this: What is a regular salary in Norway? This is what the statistics tell us

The «frontline model»

Traditionally, in Norway the industrial sector – referred to in this context as the frontline sector (frontfaget) – will start the bargaining round.

The financial framework agreed by the LO federation Fellesforbundet and NHO’s Federation of Norwegian Industries (Norsk Industri) in this settlement will provide guidelines for subsequent settlements.

The goal of this approach is to prevent Norwegian pay levels from being forced upwards to a level at which Norwegian industry is no longer able to compete with foreign competitors.

The fear is that if jobs in the industrial sector are lost because the competitiveness of Norwegian companies on export markets is reduced then the Norwegian economy will be weakened. This in turn could weaken the Norwegian welfare state.

Article in Polish: Tak ustalane jest Twoje nowe wynagrodzenie – jeżeli jesteś objęty układem zbiorowym

Article in Lithuanian: Naujo darbo užmokesčio nustatymas – jei turite kolektyvinę sutartį

Translated by Robert Lovering