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Why Norway doesn’t have a national minimum wage and how fair pay is ensured

Norway doesn’t have a general minimum wage, but that does not mean your employer can get away with paying you whatever they want.

Why Norway doesn't have a national minimum wage and how fair pay is ensured
Photo by Erik Odiin on Unsplash

For many internationals, high wages are among the things that make Norway and the other Nordic countries attractive to move to for work. Data from Eurostat shows that the hourly cost of labour in Norway was a substantial €50 in 2019, considerably more than in any EU country.

Last year, Norwegians with fulltime employment earned 48,750 kroner, about €4,750, a month on average, according to Statistics Norway. The bureau has also published a complete list of average wages in Norway by profession.

But while wages in Norway are respectable, people who have recently moved to the country may be surprised to learn that there is no official general minimum wage.

Instead, wages tend to be agreed though negotiations between trade unions and individual employers or employer organisations (tariffavtale). In Norway, a country of about 5 million people, 1.4 million workers were covered by a tariff agreement in 2015, according to data from Statistics Norway.

In addition, the tariff agreement also regulates working hours, overtime, holidays, pensions and rules regarding temporary layoffs.

If you are covered by a tarrif agreement, any point in your work contract that violates the terms of the agreement are considered invalid. This is something called the principle of invariability (ufravikelighet).

So if you’re starting a new job in Norway, it may be worth checking out the possibility of joining a union.

Even if you do not join a union, however, a minimum wage has been implemented in a number of sectors, particularly those with many international and temporary workers.

The aim is to prevent exploitation and social dumping in industries where it may be hard for workers to organise.

The Norwegian Labour Inspection Authority (Arbeidstilsynet) has compiled a list of the industries with a minimum hourly wage. Below is an overview of the absolute minimum hourly wage for workers over the age of 18. Depending on a range of factors, such as skill level, overtime and working hours, the employer may be legally obligated to pay a higher wage.

Construction 196.50 NOK
The maritime construction industry 162.60 NOK
Agriculture and horticulture 123.15 NOK
Cleaning workers 187.66 NOK
Fish processing enterprises 183.70 NOK
Electricians 189.52 NOK
Fright transport by road 175.95 NOK
Passenger transport by tour bus 158.37 NOK
Hotel, restaurant and catering 134.09 NOK

In addition, the employer may be obligated to pay for lodging and clothes, if necessary.

The Norwegian Labour Inspection Authority ensures compliance with the rules and can impose injunctions and issue fines if they are broken. In case of severe violations, the employer may be reported to the police.

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PROPERTY

How not to buy a house in Norway: Five pitfalls to avoid 

Buying a home in Norway comes with many challenges, from the dreaded bidding rounds to the small print. Here are some of the mistakes you need to steer clear of. 

How not to buy a house in Norway: Five pitfalls to avoid 

Norway’s property market moves quickly, and most homes do not spend too long on the market. 

Furthermore, rising property prices can make it feel like it’s constantly getting harder and harder to get on the property ladder. 

However, despite rising prices and the market’s breakneck speed, it’s important not to rush into things and end up making a massive mistake. 

Not sorting your paperwork 

Before you are ready to start putting in offers on houses, you will need the mortgage offer from the bank. Therefore, you should fix this before really getting stuck into viewings. 

Banks in Norway offer mortgages of up to 85 percent of a home’s value, with a 15 percent deposit required. 

They will also stress-test your finances against interest rate raises and consider factors such as your income and any existing loans you may have. In Norway, your debt typically can’t exceed five times your income when purchasing a property. 

Once you’ve got an offer, you can approach other banks to see if they will better the offer you received, and after this, you are ready to begin searching as you know what you can afford. 

READ ALSO: What foreign residents in Norway need to know to get a mortgage

Not reading the small print 

There is quite a lot of important small print when purchasing a house that will cost you big time if you don’t properly read it. 

All homes in Norway generally come with an in-depth report on the property’s condition, and in most cases, the buyer is responsible for uncovering flaws in the property. 

During a condition report, an appraiser will check for deterioration on the property, assess the materials used in the construction and thoroughly evaluate the home for any areas where maintenance will be required in the immediate or near future. 

Pay particular attention to things like the electrics, plumbing, kitchen, bathroom, and moisture damage, as repairs to these can be incredibly expensive. 

Then there’s the information about the housing association to which many, but not all, homes in Norway belong. 

It is crucial to check the association’s monthly costs and shared debt, as well as any future plans for major renovations that could increase those costs. 

Being able to tell a well-run housing association with healthy finances from one in a more perilous position can make or break whether a home is for you.

READ ALSO: How to analyse a Norwegian housing association’s finances

Showing the realtor your proof of funds 

Banks issue proof of funds certificates (Norwegian: finansieringsbevis). However, you should never show this to the realtor selling the property. 

This is because it will reveal how much money you have available, and as the realtor is working for and being paid by the seller, they will do what they can to ensure a higher price for the seller. 

Bidding on homes that you aren’t quite sure about 

Once you have your mortgage offer or proof of financing, you can put in offers on homes. 

Be warned, though. You shouldn’t just put in bids to be involved and get a feel for the market. 

You also shouldn’t put in offers on “maybes” either, as all bids in Norway are legally binding. 

This means that you could end up having to buy a property you put a speculative bid on if it is accepted by the owner. 

Agents do their utmost to prevent people from bidding on more than one home at a time, but some offers can slip through the cracks, so you also need to make sure you only bid on one property at a time. 

You also need to make sure you don’t offer more than you have, as you will be expected to follow through with the purchase. 

It is incredibly difficult to back out of a home purchase in Norway, and if you do manage to wriggle out of the process, it will likely end up costing you quite a lot of money. 

Not having money for the other costs 

Given that property is typically the largest purchase of most people’s lives, it’s easy to lose track of the smaller costs. 

One of these is stamp duty (dokumentavgift). When buying a freehold property in Norway, you will need to pay 2.5 percent of the purchase to the state in stamp duty. 

Banks in Norway don’t offer financing for stamp duty. So it’s worth remembering that you will need to pay this cost. 

One advantage of buying into a housing association is that you will not need to pay stamp duty. 

READ MORE: The hidden extra costs when buying property in Norway

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