Wage deal reached, strike averted

The United Federation of Trade Unions (Fellesforbundet) and the Federation of Norwegian Industry (Norsk Industri) agreed on a framework for a new collective bargaining agreement deep into mediation overtime on Sunday.

The deal means a general strike was averted. Ahead of the mediation deadline, unions were willing to take around 30,000 workers out on strike.

“This is a big victory,” Jørn Eggum, leader of the union umbrella, said.

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

There would also be a supplement for the lowest wage earners and those who work offshore.

“This has been an expensive and difficult settlement. We took a long time, but when the national mediator finally presented an outline we could live with, we chose to accept it to avoid sending our members into a general strike,” Knut E. Sunde from the Federation of Norwegian Industry said.

PM says the wage deal will lead to increased purchasing power

Prime Minister Jonas Gahr Støre praised the wage deal agreed Sunday, saying it 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.

He also praised the settlement for its focus on maintaining employee training and education.

Local authorities dipping into savings pots

Norway’s municipalities are struggling financially, with more than half dipping into savings and 40 percent having a deficit in 2023.

“The municipal sector has a very high debt. The interest rate increases have meant that the municipalities use a much larger proportion of the income to cover the interest costs,” economist Rune Bye from the municipal organization KS said to public broadcaster NRK.

Net operating profit in the municipal sector plummeted, too. The profit for all municipalities in 2023 was 4.5 billion, down from 17 billion in 2022.

Wage deal could impact interest cuts

The Federation of Norwegian Industry has said that the wage deal would not lead to interest rate cuts being postponed by the central bank.

This is despite the wage increase being higher than central bank forecasts.

Marius Gonsholt Hov, chief economist at Handelsbanken, told the newspaper E24 that the high wage increase would keep inflation high. The central bank has used interest rates to slow inflation. 

The bank is currently forecast to implement its first rate cut in September. 

“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,” Hov said.