AFTER: There is room for real wage growth in the spring wage settlement

AFTER: There is room for real wage growth in the spring wage settlement

Knut Anton Mork thought in his article “Safe in Norway?” In DN on March 3, the Norwegian trade union movement is not in line with the economic situation because we demand an increase in purchasing power in the spring wage settlement. He claims that higher energy prices should mean real wages will fall.

I do not agree with that.

Higher electricity and gasoline prices have increased expenditures for most people. By itself, an increase in the cost of living should mean higher wages, not lower wages.

Merritt Anchos

Merritt Onchos (Photo: Thomas Braun)

In addition, the employee side and the employer side take into account what the economy and companies can withstand. This is an old tradition, and it has helped give us an economy that can withstand changes well.

When the industry first negotiates and sets the framework for the rest of the settlement, it considers what the competitive sector can live with over time.

The Norwegian model of wage formation gives us advantages in good times and in difficult times. In good times, strong unions ensure that workers get their share of growth. It is important to maintain an even distribution of income.

In stressful times, when businesses are struggling, in many cases it may be necessary to adjust the real wage level to avoid unemployment rates rising too much. Usually it takes to achieve, but in Norway we do it better than in many other countries.

A good example of this happened after the drop in oil prices in 2014. From 2015 to 2016, real wages in Norway fell by 1.8 percent. We have not seen a similar decline in the post-war period.

Real wages did not return to their 2015 level until 2019. Employees relaxed their wage demands, because they realized this would help get the economy back on track quickly.

Wage demands have also been withheld during the pandemic.

If employees are willing to agree to give up purchasing power to prevent more people from losing their jobs in bad times, they should trust that they will also receive some rewards when times change. This trust is not an issue, of course. If employees feel that the gains from upswings are still accruing to business owners, while they themselves are only participating in downturns, it goes without saying that trust will eventually erode.

Trust is also built through a policy that settles differences and provides financial security for all.

Although the winter energy support scheme also had problematic aspects, it provided more safety and predictability for many families. One advantage of this is that there are lower requirements than we would have in this year’s wage settlement.

Although the war in Ukraine and rising commodity and energy prices are giving more uncertainty about the future economic situation, the overall picture is that the Norwegian economy is doing well. The first report of the year from the Technical Account Commission for Income Adjustments (TBU), released on February 18, describes the situation in which the post-coronavirus recovery is progressing rapidly. Economic growth is expected to be good this year, employment is rising and unemployment is declining.

Profitability in the Norwegian industry as measured by the share of labor costs remained virtually unchanged from 2020 to 2021, and productivity increased.

Competitiveness in the Norwegian industry deteriorated somewhat in the past year, but from a historically good level in the previous year. In that time, hourly wage costs in the industry, compared to our trading partners, have fallen almost continuously since 2013.

So it must be time for a good settlement for Norwegian workers in 2022.

An increase in the cost of living should mean higher wages, not lower wages

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Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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