A deal was struck between the United Federation of Trade Unions (Fellesforbundet) and the Federation of Norwegian Industry (Norsk Industri) after talks went into mediation overtime on Sunday. 

Prior to an agreement on wages and working conditions, referred to as collective bargaining agreements in Norway, being struck, unions threatened to take out 30,000 members on strike. 

The overall wage rise could be 5.2 percent, equating to a real wage increase of 1.1 percent for 2024 once estimated inflation is accounted for.

Norway’s Prime Minister, Jonas Gahr Støre, said the deal was a “responsible one”. 

“It is gratifying that the parties have come to an agreement. This shows that the Norwegian model works. This is a responsible settlement that will mean increased purchasing power and better everyday finances for people. It emphasizes that we are approaching a turning point in the economy where people can get better advice,” Støre said.

Sunday’s agreement applies to Norway’s “front line” industry workers. This sector is known as the frontline as it leads negotiation as it is exposed to competition. 

Typically, the sector can also act as a benchmark. However, factors can lead to other sectors securing higher and lower pay rises, depending on conditions within those industries. 

What’s in the deal?

The framework for the deal has the scope for wage rises of 5.2 percent. Everyone in a job covered by the agreement will get a wage supplement of 7 kroner per hour. 

Offshore workers get a wage supplement of 11 kroner per hour. Travel provisions have also been improved. 

Salary negotiations will continue at the company level. This normally happens after the summer holidays. Some 1.4 percentage points of the 5.2 percent salary rise must be negotiated locally. 

The parties have also agreed on education reform for skilled workers in the sector. This will ensure employees earn a full wage if they need to take on extra training.

What does the deal mean for workers in other sectors? 

It means that most unions should make good on their promise to deliver a real wage increase for most workers in Norway.

The benchmark of 5.2 percent has been set, while unions only need to deliver wage rises above 4.1 percent to secure a real wage increase (based on inflation forecasts). 

Wage talks begin for the public sector on April 15th, and the trade union umbrella for the public sector, the Norwegian Union of Municipal and General Employees (Fagforbundet), has said Sunday’s agreement is a good starting point. 

“A wage growth of 5.2 per cent… provides a good basis for negotiations in the public sector. The Norwegian Union of Municipal and General Employees will ensure that the entire team gets an increased salary and that those with the least must get the most,” Mette Nord, leader of the union umbrella, told public broadcaster NRK. 

The risk of strikes hasn’t been averted

Although the agreement quelled fears of a general strike, industrial action could break out in other sectors and industries.

This could happen in sectors that are yet to negotiate their wage rises for the year. Even once a deal on a collective bargaining agreement has been reached for an industry, strikes could break out at a local level. 

For example, in recent years, teachers have gone on strike after an agreement was reached with the public sector, as education professionals felt they were getting a poor deal. 

If talks in the public sector lead to a strike, this could be particularly disruptive, as could action in smaller industries, such as travel. 

Wage rises may affect interest rate cuts 

Norway’s central bank, Norges Bank, has been using interest rate increases to try and curb inflation. Rates peaked at 4.5 percent at the end of 2023 and the first cut is expected to arrive in September. 

The 5.2 percent wage rise is higher than the central bank’s initial forecasts, and some experts believe the increased wages will fuel inflation and delay interest rate cuts. 

“Interest rate cuts in September will be too early. We are sticking to the forecast that there will be a cut in December. The settlement was, therefore, in line with expectations and is higher than Norges Bank’s estimate,” Marius Gonsholt Hov, chief economist at Handelsbanken, told the newspaper E24.