Collective bargaining with face masks

The collective bargaining processes are under pressure due to two main factors:

• Unemployment and a frozen economy make many employers feel they cannot afford to pay high wages.
• On the other side, workers in the sectors that have taken the hardest toll during the pandemic – health care and retail – have fresh arguments for wage rises. 

How will things turn out? Jørn Eggum, President of Norway's United Federation of Trade Unions and Stein Lier Hansen, CEO of the Federation of Norwegian Industries, regard each other as Norway's collective bargaining process began on 3 August. The negotiations stopped after only one hour, but an agreement was still reached – with the help of mediation. Photo: Gorm Kallestad, NTB Scanpix

A large apparatus is being ramped up, with similar traits and somewhat different deadlines across all of the Nordic countries. Sweden alone has 55 employers’ organisations and 60 trade unions. The bargaining process has three phases:

First, a central collective agreement is negotiated by the parties in different trades. This creates a framework for how high wages should be.
This agreement then serves as the foundation for local collective agreements between trade unions and different employers. These will also cover more work-specific issues. Once a central collective agreement has been signed, the parties have agreed to "keep the peace". This means that local negotiations take place without any possibility or threat of strike action. 
In the third step, employers and employees reach employment agreements on an individual level.  

Opposition to minimum wages

All of the Nordic countries oppose the introduction of minimum wages, which are common elsewhere in Europe. It is considered to give too much power over wages to politicians, and the labour market becomes too rigid as a result. However, it has long been agreed that competitive industry wages should set the standard for other sectors in society.

Kristine Nergaard and Kristin Alsos put it like this in a Fafo report:

• If industry wage increases are too high, we lose jobs in the competitive sector.
• If wage increases in other sectors are too high, the industry loses in the fight for labour and is forced to increase wages. In the long run, the economy will correct this when higher unemployment pushes wages down. 

In Sweden, this is known as the industry “setting a mark”. In Norway, they call this system of wage coordination “frontfagsmodellen” (frontfag being another word for the competitive sector). 

This means a ceiling is set for wage increases across the whole country. This also makes it easier for low-pay trade unions to achieve wage increases.  

“If left to fend for their own, it is far from certain that LO’s low-pay unions would manage to achieve wage increases similar to the industry norm, the so-called mark. That means the industry norm, together with support form LO, probably has helped these unions be more successful in negotiations than they otherwise would have been. On the other hand, it is not easy to achieve more than the industry norm, and change the wages for other groups – the so-called relative wages,” writes Anders Kjellberg, Professor of Sociology at Lund in his new book:  The Swedish Model in an Uncertain Time, published by Arena Idé (in Swedish, for an English version go here).

Mediation helps

Mediation offices have also been created to support wage negotiations, stepping in to help when the parties get stuck. They have slightly different mandates in different countries. The Swedish National Mediation Office’s task is to make sure the industry wage standard is adhered to, while the National Mediator of Norway’s aim is to maintain “working peace”.

It is also important that the parties have a shared perception of reality. This is secured by using independent players like Statistics Norway and its Teknisk Beregningsutvalg (Technical Assessment Committee) that calculates wage development. It is rare for the Nordic labour market parties to disagree on facts. 

Sometimes, however, the positions are so entrenched and the interpretation of labour market rules so different that special labour courts must decide. They are composed of judges from both parties, as well as independent persons. 

How did it go?

So what has it been like to perform wage negotiations during a pandemic? 

In Denmark, Finland and Iceland the parties chose to carry on with the collective bargaining as before. In Finland, new agreements have been signed for the technology and forestry sector which secures wage increases of 3.3% over a period of 25 months. The forestry industry was paralysed by a two weeks long strike from 27 January.

In Sweden, collective bargaining was postponed. A new industry agreement should have been ready by 31 March, but negotiations will now only start on 1 October. The old collective agreement will be in place until then.

In Norway, the wage negotiations for industry should have started in March, but because of the corona pandemic they were postponed until 3 August. On 20 August an agreement was reached which will secure a wage increase of 1.7% in total for industry until March 2021. The agreement was reached just before 28,000 industry workers were about to strike.

In Denmark, there was debate about whether collective bargaining should be postponed. When it started, before the corona pandemic, the Danish economy was doing well. But employers and employees could not agree on marked wage increases for low-paid workers and the Danish national mediator was called in. He chose to continue. In the end, an agreement for the private sector was reached, securing 7.5 Danish kroner more per hour over three years for low-paid workers.

Danish fathers who work in industry can look forward to eight weeks of parental leave reserved just for them. All in all, it looks like the corona effect on Nordic wage negotiations has been smaller than expected. There have been no radical changes, neither up nor down, compared to earlier agreements.