Norwegian wage settlements in 2011

Norwegian kroner

Norwegian kroner

The Norwegian Technical Calculation Committee for Wage Settlements presents the preliminary report on the basis for wage settlements in 2011.

The report outlines recent years’ developments in pay, earnings, prices and competitiveness. The Committee also presents a projection of consumer price growth from 2010 to 2011 and briefly describes prospects for the international economy and the Norwegian economy. The report is based partly on preliminary figures and estimates for 2010. Parts of the report will therefore be updated at the beginning of April, inter alia with pay development figures for women and men.

Main points of the report

The Calculation Committee puts average pay growth from 2009 to 2010 at 3¾ per cent for employees at enterprises affiliated to an employer’ organisation and in the public administration including the health trusts. Differences in pay growth between the major bargaining areas were smaller in 2010 than in 2009. Pay growth varied between 3½ per cent and 4½ per cent apart from in financial services where the figure was 6 per cent. Pay growth in financial services was pushed up by bonus payments, which were higher in 2010 than the previous year.

The wage carry-over into 2011 is estimated to average 1¾ per cent for employees at enterprises affiliated to an employer’ organisation, and in the public administration including the health trusts, about a ½ percentage point higher than in 2010. The wage carry-over into 2011 varies from just over 1 per cent for manual manufacturing employees to 2½ per cent for local government employees.

Growth in executive pay in 2010 in industries for which pay statistics are available was with some exceptions lower than for wage earners in general in the same industries. For managing directors and others with managerial functions in financial services and retail trade, pay growth in 2010 was 9.3 and 10.8 per cent respectively. Bonuses are included in these figures, whereas options and benefits in kind are not included.

Real after-tax pay for wage earners as a whole is expected to have increased by 1½ per cent from 2009 to 2010, compared with 2.1 per cent the previous year. The lower pay growth and higher price growth in 2010 compared with 2009 pushed down growth in real after-tax pay.

The Committee estimates an average consumer price growth of 2 per cent from 2010 to 2011. The figure for 2010 was 2.5 per cent. The uncertainty in the price growth estimate for 2011 relates partly to energy prices, which often fluctuate widely through the year; much uncertainty also attaches to the krone exchange rate and international commodity prices.

Cost competitiveness in manufacturing, measured by relative hourly wage costs in a common currency, has weakened over the past few years. From 2009 to 2010 the higher growth in wage costs in Norway than among our trading partners along with an appreciation of the Norwegian currency meant that relative hourly wage costs in Norway measured in a common currency rose by 6.9 per cent. Exchange rate movements accounted for just over 4 percentage points of this figure.

Average hourly wage costs in manufacturing in Norway in 2010 were an estimated 50 per cent higher than a trade-weighted average of our EU trading partners, measured in a common currency. For manual manufacturing employees alone, Norwegian hourly wage costs are estimated to be 54 per cent higher than among Norway’s trading partners in the EU.

Enclosures

Table 1. Annual pay growth from 2009 to 2010 and wage carry-over into 2011 in some bargaining areas

Pay growth from 2009 to 2010 in per cent Wage carry-over into 2010 in per cent
Manual manufacturing employees at firms affiliated to NHO(1) 1
Non-manual manufacturing employees at firms affiliated to NHO(1)
Employees at firms affiliated to HSH2, retail trade 3.6 1.2
Financial services 6.0 1
Central government 4½4
Local government 3 2/3
Employees at firms affiliated to Spekter3, excluding health trusts 1
Employees at health trusts, calculated by Spekter (3)
Employees at health trusts, calculated by Statistics Norway 3.1 2.2

1. Confederation of Norwegian Enterprises

2. Federation of Norwegian Commercial and Service Enterprises

3. Employers Association.

4. Annual pay growth for the central government bargaining area includes a new employment contract for the Police Service adding 0.6 percentage points and a change in calculation method estimated to have added up to ½ percentage point

Table 2. Pay growth (1) from 2009 to 2010 for managing directors (2) and managers of small firms (3) in some sectors

Managing directors2 Managers of small firms3
Pay growth Pay level 2010 No. in sample 2010 Pay growth Pay level 2010 No. in sample 2010
Manufacturing 0.3 932 400 1 171 6.1 561 600 675
Construction 0.8 734 400 646 6.4 560 400 1 115
Retail trade 10.8 727 200 2 983 3.2 462 000 7 401
ICT 4.9 1 030 800 935 2.1 698 400 200
Financial services 9.3 1 400 000 702 15.1 942 000 302
Business services -4.7 798 00 337 1.8 555 600 346

1. Monthly pay exc. overtime x 12. Wage concept comprises contractual pay, irregular increases and bonuses.

2. Managing directors at firms with 10 or more employees.

3. Managers of small firms with fewer than 10 employees.

Source: Ministry of Labor

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