OUTLINE OF THE MID-TERM SETTLEMENT 2013

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1 Adopted by the General Council on 19 February OUTLINE OF THE MID-TERM SETTLEMENT Basis for negotiations The following was formulated in the front runner industry: Before the end of the first year of the agreement, negotiations shall be opened between NHO and LO or a body appointed by LO concerning possible wage adjustments for the second year of the agreement. The parties have agreed that these negotiations shall be conducted on the basis of the situation in the economy at the time of the negotiations, the prospects for the second year of the agreement and developments in prices and wages in the first year of the agreement. The changes in the wage agreements for the second year shall be considered by LO s General Council or the body appointed by LO and NHO s Executive Council. If the parties fail to agree, the organisation by which the claim was presented may within fourteen (14) days from the end of the negotiations, terminate the individual wage agreements upon fourteen (14) days' notice (but not to expire before 1 April 2013). Similar formulations exist in other areas in the private sector. For the state sector: a) Before the end of the first year of the Agreement, negotiations shall be taken up between the Norwegian government and the trade union confederations concerning any pay adjustments for the second year of the Agreement. b) The parties agree that the negotiations shall be conducted on the basis of the general economic situation at the time of the negotiations and the prospects for the second year of the Agreement. The nominal pay development for government employees in posts covered by the Basic Collective Agreement (HTA) shall be considered in relation to the remainder of the labour market. c) If the parties fail to agree in negotiations, the parties may terminate the Basic Collective Agreement within 14 days following completion of the negotiations and with 14 days notice with expiry on 1 May 2013 at the earliest." The National Mediator s minutes book has the following supplement: The parties have agreed to review wage levels in 2012 for the state employees compared with the wage levels for workers and salaried employees in industry (NHO companies). The review shall be conducted by the state Statistics and Calculation Committee when the report "Basis for wage settlements 2013" from the Norwegian Technical Calculation Committee for Wage Settlements (TBU) is 1

2 ready. The review shall be included in the basis material for the mid-term settlement in 2013 and be reflected in the supplements granted from 1 May And for the local government sector (KS) the following has been recorded: "a) The outlook for wage growth for workers and salaried employees in industry for this year is uncertain. The parties have agreed to review wage levels in 2012 for employees in the local government sector compared with wage levels for workers and salaried employees in industry (NHO companies). This review will be conducted by the Technical Calculation and Statistics Committee for the Municipal Sector (TBSK) when the report entitled "Basis for Wage Settlements 2013" from the Norwegian Technical Calculation Committee for Wage Settlements (TBU) is ready. The review shall be included in the basis material for the mid-term settlement in 2013 and be reflected in the supplements granted from 1 May b) Recent settlements have been strongly marked by to some extent differing assessments of the relationship between the financial frameworks for the local government settlement and frameworks for the private sector (industry) and other comparable settlements (the state). The parties will evaluate and clarify these factors during the term of the collective agreement. c) 1. Should one of the parties so require, negotiations shall be held on the pension provisions in Chapter 2 of the Basic Collective Agreement, as well as regulations for contractual pension (AFP) and occupational pension during the mid-term settlement in Demands for new negotiations can only be linked directly to changes resulting from new disability rules in the National Insurance Scheme and the Norwegian Public Service Pension Fund as well as changes in pensioner taxation in that connection." 2. Main challenge 2

3 Our adjacent economic areas will be affected by the crisis in the euro zone in the years that lie ahead. Unemployment is rising steadily here, and the prospects for further growth are highly uncertain. The risk of a collapse of the euro cooperation will remain, with a new financial crisis as a possible outcome that will have a major negative impact on Norway as well. Nor is the U.S. economy definitely on the rebound, and growth among the new emerging economies is unlikely to provide the same contribution to the stabilisation of our economy as before. Thanks to a combination of favourable terms of trade, a fortunate business structure and long-term responsible policy, Norway has so far fared exceptionally well. The trade unions contribution to reasonable wage determination has meant a lot. Job growth has again been high and has not just benefitted foreign workers as it did in 2009 and For the period job growth was around 50,000 among both domestic and foreign workers. The measured unemployment rate changes little, and we struggle to include more groups in working life. The employment rate is still the equivalent of persons lower than in Parts of Norwegian industry such as wood processing and aluminium production are already affected by weak export markets. Even without a new financial crisis, the situation for other parts of industry and their associated communities and subcontractors is weaker. We have a division of the production sector, which may both weaken the employment situation and complicate comprehensive wage determination. Going forward, the export sector and associated businesses are clearly facing more difficult times than domestic industries and the public sector. LO s main task is to help avoid an increase in unemployment and establish a basis for better inclusion and long-term sustainable job growth. An important element of this is to ensure that employees receive a fair share of value added and that wages and other income are fairly distributed. Employment rates must now take centre stage, also in wage determination. Coordination is particularly important, but also very demanding when the situation differs so much in different parts of the economy. LO must emphasise: Ensuring trade union participation in the management of the economy with a view to high employment rates and economic stability Our goal of a just distribution of the wealth and social development LO also refers to the newly appointed Holden III Committee whose purpose is to strengthen the foundation for wage determination that serves employment and 3

4 wealth distribution in the future. Economic governance through the front runner model and collective wage determination based on national wage agreements are important for ensuring employment and long-term economic sustainability. 2. Requirements of economic policy Together with Norges Bank's interest rate and exchange rate policies and organised wage determination, government policy must support employment and an equitable distribution of benefits and burdens. The banks attempts to further increase the interest margin as the only response to the authorities measures to increase capital adequacy is not acceptable. So far, the Government's economic programme for 2013 seems reasonably well adapted to the current economic situation. Together with the uncertain outlook, the inclusion challenge implies, going forward, that labour policy should be strengthened in terms of resources and policy instruments. The public support system for industrial policy should also be gearing up to make exports more robust. High readiness for measures via the fiscal budget is now the Government's primary task. The record-high exchange rate for the krone is a major burden for industry and must be given considerable weight going forward by the authorities and central bank. 4. Income trends in 2012 and outlook for the second year of the agreement As measured by the consumer price index, inflation from 2011 to 2012 was only 0.8, compared with the estimate of approx. 1¼ during the negotiations. With an average wage increase of 4 per cent most groups again saw a clear real wage increase. The TBU estimated price development in Norway from 2012 to 2013 to be 1½ per cent. Average wage growth among trading partners may fall below 2 per cent partly because of the euro crisis. 5. Pension Pension was not raised as an issue in the General Council s resolution for the main settlement in This year was characterised by the follow-up of the pension reform primarily at government level. The issue, however, was key in some agreement areas. Since then, the trend among companies, the finances of 4

5 the insurance companies and the progress in the work of public committees (the Banking Law Commission) have reinforced the foundation for LO's longstanding demand for a broader and more robust system in the private sector. The situation in the private sector has become more worrisome. While the pension reform has strengthened overall pensionable earnings, the trend for the private occupational pensions is a negative contribution, with higher insecurity and inequality. For years, LO has been pointing out the fact that the current system means that, because of longevity differences, either higher premiums must be paid or pension payments for women must be lower or of a shorter duration than for men for the same pensionable income. LO and several public committees have therefore pointed out that this must be solved by occupational pension schemes no longer being the responsibility of each company alone, but must be based on a wider range of employers. Such restructuring will also mitigate other weaknesses of occupational pensions in the private sector: They will be far cheaper in operation per employee The expense for employers will be more predictable The pensions will be safer for employees without danger of impairment or conversion, as is currently the case Employees can change jobs without the problems that occur today LO's goal is that all employees shall eventually achieve at least 2/3 of previous pay in retirement from 67 years of age when pensions funded by national insurance and employers are combined. In connection with the mid-term settlement LO can carry out a more concrete follow-up of this. 6. Wage demands During the main settlement in 2012 the demands were summarised as: a) Protection of purchasing power for all b) A combination of own key supplements, improvement of minimum wage rates and guarantee schemes that promote equal pay and counteract low pay c) Structural measures for equal pay, including measures that promote basic staffing, full-time work and enhancement of expertise, reliability and ability to pay wages in sectors exposed to international competition d) Prioritisation of female-dominated groups within centrally agreed frameworks in the public sector e) Prioritisation of equal pay in relevant industries in the private sector 5

6 Based on the demands of the main settlement, the following terms are established for the mid-term settlement for 2013: Purchasing power We note that the purchasing power from 2011 to 2012 were either maintained or increased considerably for the main groups of wage earners. The mid-term settlement must entail continued protection of purchasing power. Concerning pay distribution Equalisation of average wage level of men and women is progressing very slowly, particularly as a result of the still highly segregated labour market, where women and men work in different industries, professions and positions and where women work part-time far more often than men. NOU 2012:15 Politikk for likestilling (Policy for Gender Equality) (Skjeie2) focuses on equality challenges in the workplace. The Government's new proposals for a statutory right for part-time employees to a higher percentage full-time position in line with actual working hours, is another important measure. The trade unions goal of more equitable distribution of wages continues to encounter increasing obstacles. The benefits of internationalisation are easily inequitably distributed and the financial sector s and employers increasingly creative ways of circumventing established rules and mechanisms for labour relations and wage determination often outweigh agreement-based measures for wage equalisation. The main settlement was marked by low-wage premiums and significant boosts in minimum wage rates and continued regulatory arrangements for these groups going forward. A low and equal-pay profile for centrally and locally agreed premiums must continue to have priority. Increasing the flow of labour and services in combination with competitive tendering and privatisation exerts downward pressure on the distribution of wages, particularly in many service sectors. Structural measures relating to dubious practices in that regard are adequately followed up by the authorities and will over time make a positive contribution to ensuring wage levels in areas vulnerable to low-wage competition. In addition to the fact that the low-wage problem is largely also an equal pay issue, it is clear that many femaledominated occupations provide low pay for high qualifications. This applies to both the public and private sectors. For some groups with higher education, it is important to reduce the wage gaps between the private and public sector. Concerning other groups 6

7 In the parties and the authorities work for socially responsible wage determination where consideration for employment is a priority, it is essential that all groups are covered. At a time where most of the workforce has good income prospects and while some areas are struggling, this consideration is particularly relevant to avoid further imbalance in income distribution. There is still a tendency for the senior management of undertakings and intermediaries in finance and business to receive exorbitant commissions and salaries from assets and profits to which all employees contribute. This also has negative spillover effects on top-level administrators in the public sector. These mechanisms also help with respect to directing the distribution in the right direction: smaller gaps between top and bottom; and smaller gaps between women and men. The contrasts widen when large parts of the service sectors are pressured by dubious practices and low-wage competition. 7. Negotiation authority The Executive Board/negotiating committees are authorised to formulate the final demands on the basis of the above guidelines. 7