Could a long period of stagnant real wages in Norway be about to end?
Norway’s unions and employer organisations will soon thrash out terms on this year’s collective bargaining agreements. Many expect workers to see a real wage bump.
Real wages, which account for how much salaries rise in line with inflation, for many workers in Norway have remained stagnant over the last decade.
Last year saw real wages in Norway fall, according to The Technical Calculation Committee for Income Settlements (TBU). The government committee calculates price and wage levels and wage growth in various industries in Norway.
When accounting for inflation, wages fell by 0.2 percent last year, according to the TBU’s figures. A surprisingly weak krone throughout 2023 contributed to the higher than initially forecasted inflation figure of 5.5 percent, while workers on average secured a 5.3 percent wage increase.
Norway’s national data agency, Statistics Norway (SSB), reported last year that real wage growth in the country slumped to the lowest level seen since the 1980s. It calculated that by the end of 2023, workers in the country would only be marginally better off than they were in 2015.
Real wage decreases weren’t the reality for everyone last year, and recent figures from Statistics Norway show that several groups saw significant increases.
READ MORE: Which professions in Norway have seen the largest and smallest pay rises?
Trade union umbrellas have reiterated several times this year that the overall goal for 2024 was an increased real wage increase after several lean years.
“It is clear that many of our members put their trust in a solid wage settlement. And it will be our task not to disappoint them,” Peggy Hessen Følsvik, leader of The Norwegian Confederation of Trade Unions (LO), told public broadcaster NRK.
“After years of high inflation and an increasingly tough interest rate level, increased salaries are the most important thing for our members,” she added.
The TBU estimates that prices will rise by 4.1 percent in 2024, meaning that any wage rises would need to exceed this to meet the unions’ goals.
Wage negotiations begin on March 15th, and the LO leader has said that it is prepared to take union members out on strike to secure its terms.
“We are prepared to strike to take what is fair. We must have our share of the cake, and we must have a fair distribution,” Følsvik said.
READ MORE: Will this year's wage settlement negotiations lead to strikes in Norway?
LO is expected to set its final salary demand at well over five percent to secure a real wage increase if inflation once again ends up being higher than forecast.
Negotiations between the state sector and state and municipal employees are expected to be more challenging. Last year, state employees secured an overall wage increase of 6.4 percent on average.
Norway’s central bank, Norges Bank, has previously forecast wage increases of 5 percent in Norway in 2024. This amounts to a raise of 30,000 kroner for an employee with a salary of 600,000 kroner per year.
Heading into future years, one key figure could be that wages now make up a much smaller share of companies’ overheads compared to 20 years ago. Wages comprise around 71 percent of a company’s cost compared to 80 percent two decades ago.
“We have seen a trend over the years now where the wage share has decreased. We cannot continue with that. We have to reverse this development,” Følsvik told Norwegian newswire NTB.
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Real wages, which account for how much salaries rise in line with inflation, for many workers in Norway have remained stagnant over the last decade.
Last year saw real wages in Norway fall, according to The Technical Calculation Committee for Income Settlements (TBU). The government committee calculates price and wage levels and wage growth in various industries in Norway.
When accounting for inflation, wages fell by 0.2 percent last year, according to the TBU’s figures. A surprisingly weak krone throughout 2023 contributed to the higher than initially forecasted inflation figure of 5.5 percent, while workers on average secured a 5.3 percent wage increase.
Norway’s national data agency, Statistics Norway (SSB), reported last year that real wage growth in the country slumped to the lowest level seen since the 1980s. It calculated that by the end of 2023, workers in the country would only be marginally better off than they were in 2015.
Real wage decreases weren’t the reality for everyone last year, and recent figures from Statistics Norway show that several groups saw significant increases.
READ MORE: Which professions in Norway have seen the largest and smallest pay rises?
Trade union umbrellas have reiterated several times this year that the overall goal for 2024 was an increased real wage increase after several lean years.
“It is clear that many of our members put their trust in a solid wage settlement. And it will be our task not to disappoint them,” Peggy Hessen Følsvik, leader of The Norwegian Confederation of Trade Unions (LO), told public broadcaster NRK.
“After years of high inflation and an increasingly tough interest rate level, increased salaries are the most important thing for our members,” she added.
The TBU estimates that prices will rise by 4.1 percent in 2024, meaning that any wage rises would need to exceed this to meet the unions’ goals.
Wage negotiations begin on March 15th, and the LO leader has said that it is prepared to take union members out on strike to secure its terms.
“We are prepared to strike to take what is fair. We must have our share of the cake, and we must have a fair distribution,” Følsvik said.
READ MORE: Will this year's wage settlement negotiations lead to strikes in Norway?
LO is expected to set its final salary demand at well over five percent to secure a real wage increase if inflation once again ends up being higher than forecast.
Negotiations between the state sector and state and municipal employees are expected to be more challenging. Last year, state employees secured an overall wage increase of 6.4 percent on average.
Norway’s central bank, Norges Bank, has previously forecast wage increases of 5 percent in Norway in 2024. This amounts to a raise of 30,000 kroner for an employee with a salary of 600,000 kroner per year.
Heading into future years, one key figure could be that wages now make up a much smaller share of companies’ overheads compared to 20 years ago. Wages comprise around 71 percent of a company’s cost compared to 80 percent two decades ago.
“We have seen a trend over the years now where the wage share has decreased. We cannot continue with that. We have to reverse this development,” Følsvik told Norwegian newswire NTB.
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