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General strike looms as Norwegian wage settlement talks head to mediation

Mediation talks over this year's wage settlement between LO and the NHO began on Friday, with nearly 24,500 workers in Norway ready to strike if an agreement isn't reached by Sunday.

Published: 14 April 2023 10:46 CEST

Pictured is a business meeting.

A general strike could happen in Norway if mediation over a collective bargaining agreement fails to find an agreement. Photo by Dylan Gillis on Unsplash

The Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Enterprise (NHO) will meet to try and find an agreement on this year’s interim wage settlement agreement.

The parties first met in March but were unable to come to an agreement. This year’s deal only concerns wages as it is an interim settlement.

READ ALSO: What is a Norwegian collective bargaining agreement?

LO has repeatedly said that it intends to push for a real wage increase for its members. Government figures estimate inflation in Norway will be at 4.9 percent for 2023, meaning a minimum rise of five percent would be required to meet the demands of the union group.

On the other hand, NHO has argued that inflation figures don’t consider the projected profitability of businesses, which it argues are under increased pressure this year.

“There are different earning capacities in the companies. Some are doing well, but the majority have a darker view of the future,” Ole Erik Almlid, leader of the NHO, told public broadcaster NRK.

If an agreement isn’t reached by Sunday, 24,500 workers from LO and the Confederation of Vocational Unions (YS) will be taken out on strike on Monday. The NHO and LO can also opt to extend the deadline if they wish.

Several analysts told NRK that they expected wages in Norway to rise by between 5.25 and 5.5 percent this year.

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Nordic countries urged to set common working from home rules

The proposal is part of a series of recommendations to simplify tax agreements to facilitate free movement of people and make the region “the most integrated” in the world by 2030, as agreed by Nordic Prime Ministers.

The Freedom of Movement Council argues that the pandemic revealed the flaws in the current system, as a large proportion of cross-border workers had to operate from home, facing taxation in two countries, different tax levels and mounting bureaucracy.

“Now that more companies are open to their employees working from home, the current Nordic tax agreement just isn’t keeping up. I hope this analysis will pave the way for dialogue and that the end result will be simplification and less bureaucracy,” said Karen Ellemann, secretary-general of the Nordic Council of Ministers.

Internationally less known than EU free movement rules, the region has a special agreement on free movement of people that dates back to the 1950s.

Under the Nordic Passport Union, citizens can move within the region without travel documents or residence permits and enjoy more rights than those granted to EU citizens within the European Union. Non-EU residents, however, only partially benefit as they do not have the automatic right to work in another Nordic state.

The Nordic free movement area covers Denmark, Finland, Iceland, Norway, Sweden, the Faroe Islands and Åland. Greenland is not part of the Passport Union but is in practice subject to some of its provisions.

The Nordic governments set up the Freedom of Movement Council as an independent body to identify obstacles to this principle and propose how to remove them.

In an interview with The Local, chair Siv Friðleifsdóttir said the Council has identified over 100 barriers to free movement and prioritised 30. The tax system is one of them.

“The Nordic countries currently have several agreements that regulate cross-border and remote working. Common to all of them is that they’re based on the countries’ need to protect their tax base,” the Council notes.

INTERVIEW:

The myths and realities of Nordic freedom of movement

The report, prepared by consultancies KPMG and Resonans Nordic, points at four problems in particular: rules for domestic work, registration obligations in more than one country for employers, as well as taxation of wages and pensions when working in another Nordic state.

The Council therefore proposes to set common conditions on “permanent establishment” when working in the country of residence, including from home. It also suggests to tax salaries in the country of employment and consider work from home in the country of residence equal to work in the country where the employer is located.

In addition, advance tax should be reported and collected in the employer’s country to avoid having different rules for the same salary.

Pension contributions should be mutually recognised as deductible in another Nordic states and returns taxed only under the legislation of the country where the pension plan is established, the Council argues.

In the Øresund region, between Denmark and Sweden, a fully integrated labour market could generate combined annual socio-economic gains of 2.9 billion Danish kroner, the report estimates.

“Our countries have a lot to gain from having a flexible common labour market. It can solve the problem of skills shortages in one country and the problem of unemployment in another. In other words, a functioning labour market is a strong catalyst for our countries’ economies,” says Siv Friðleifsdóttir, chair of the Freedom of Movement Council.

The full report is currently only available in Danish but translations are expected in the coming weeks.

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