NHO warns against wage gallop – VG

Updated less than 20 minutes ago

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On Friday 18 February, the committee that compiles the statistics before the wage settlements, the Technical Calculation Committee (TBU), presented its preliminary estimates for wage and price developments in 2021 and 2022.

One of the key figures was surprisingly low; they estimate that inflation in Norway will be as low as 2.6 percent in 2022.

TBU presents new figures on Thursday and it is expected that inflation will be adjusted upwards, estimated at 2.9-three percent.

– 2.6 percent was low and that estimate will probably increase somewhat. We will find out on Thursday, says Fellesforbund leader Jørn Eggum, who will lead the wage settlement for LO.

Putin effect

Preliminary estimates for wage developments in our competitor countries (OECD) are 3.5 per cent.

That was before Putin and Russia attacked Ukraine. Now the situation is completely different, says Eggum.

He points out that after Russia’s invasion of Ukraine, inflation has exploded, with electricity prices occasionally up to NOK 10 per kilowatt hour and petrol prices up to NOK 25.

It gives a real Putin effect into the spring settlement.

Eggum’s counterpart in the wage settlement, leader Stein Lier-Hansen in Norwegian Industry (NHO), warns that the increased prices will give increased demands.

– Many of our companies have already reported layoffs, as a result of the war, because the markets are disappearing. Then I will warn against starting any wage gallop, he says.

He elaborates:

– As the situation is now, with the uncertainty provided by the war and the economic reality around us is changing rapidly, my starting point is that we must get so far down when it comes to additions, that our companies survive the crisis. This can last for many months years.

Salary, not dismissal

He acknowledges that your wallet and increased electricity and gas prices are in the other balance.

– I understand that the employee organizations take care of the members’ opportunity to pay their bills. But the factors that make prices go up for people, make prices go up for companies as well. Then we must find a solution that allows the companies to survive, so that the workers get paid, not dismissal.

The starting point for this year’s wage settlement is that LO requires increased purchasing power.

This means that with the previous estimate, inflation this year of 2.6 per cent, one would have increased purchasing power from 2.7 per cent and upwards.

Read more about the wage settlement concepts here:

At the other end of the room for maneuver, it is wage developments in the countries we compete with that are decisive when NHO employers set their limits – currently estimated at 3.5 per cent.

NHO is clear that we can not go over it, because then we lose competitiveness, compared to the countries we compete to sell goods to.

This means that the room for maneuver has changed from between 2.7 to 3.5, to between three and 3.5 per cent; the room where both LO gets its demand for increased purchasing power and NHO gets its demands not to weaken competitiveness.

Roughly missed last year

The backdrop is also not pleasant:

Last year, they grossly missed the estimates:

Inflation was estimated at 2.8 per cent and the limit on the wage settlement was 2.7.

But then it turned out that prices rose by 3.5 percent last year.

This meant a real wage decline last year of 0.8 per cent on average.

One would think that this led to LO dropping its demands this year by 0.8 per cent, but that logic does not work in practice.

– Think the opposite

LO’s wage settlement general this year, leader Jørn Eggum in LO’s largest union in the private sector, Fellesforbundet, told VG on 24 February that it will not be automatically compensated.

– Think the opposite; that this year we wage growth beats price growth, will pay back to employers. That’s not how it works, he said.

But that backdrop is important:

If the uncertainty about inflation was uncertain last year, it is dramatically much more uncertain now, with war and the highest energy prices ever – and rising food prices.

In order to secure itself against a recurrence, LO can demand that the room for maneuver be fully utilized; it will be able to provide a framework for this year’s settlement of around 3.4, which means that they will have real real wage growth of 0.4 per cent, while companies will not lose competitiveness.

But with the war, neither Eggum nor Lier-Hansen will say anything biased today.

Read about how wages in Norway have developed:

Here are the start-up times for central settlements this spring:

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