Dear participants, ladies and gentlemen

I wish you all welcome to Norway and to Bergen. I am honoured to be given the opportunity to address this conference. I am especially pleased that you have chosen to locate the conference to Bergen, which is my hometown.

I have understood that The International Chemical Industry - Labour Relations Committee is an informal committee for discussions on matters of common interest of chemical industry employers. The fact that the organisation has existed for about 50 years should be the best proof of the usefulness of this kind of informal network.

My responsibility as a minister in the Norwegian Government lies within the extensive field of responsibility of the Ministry of Local Government and Regional Development. The Ministry is divided into six departments: The Department of Migration, the Department of Local Government, the Regional Development Department, The Housing and Building Department, the Department of Saami and Minority Affairs and the Department of Planning and Administrative Affairs. In a greater part of my working hours I’m occupied with questions connected to refugee, immigration and integration policies, questions connected to local and regional development policies and questions connected to housing policies and building legislation.

The overall labour market issues are the responsibility of the Ministry of Labour and Government Administration. But Norwegian labour disputes legislation is within my field of responsibility, and it is an important task to secure a well-functioning legal framework for collective bargaining and provide assistance in the resolution of labour conflicts in connection with wage settlements. The Ministry have the administrative and budgetary responsibility for the State Mediator and the Labour Court, and we also safeguards that Norway complies with our obligations as to freedom of organisation under international law.

Wage settlements and conflict resolutions are traditionally questions that find their solutions at national level, and the legal framework and practice vary from country to country. The international development towards globalisation, however, with an increasing boundless labour market, in Europe especially due to the development inside the EU, but also due to an increasing number of large multinational companies, makes it interesting to discuss common international solutions also to these kinds of questions. In Europe, an important element in this connection is the introduction of EURO as common currency in the EU. A common currency makes it easier to compare cost levels and wage levels between countries, and a common currency supposes a common monetary and interest policy. A development towards a common fiscal policy is also conceivable within the European countries with common currency. This leaves the national governments with fewer instruments in their internal economic policy, and the incomes policy becomes more important. In order to meet this challenge, several of the larger trade unions in Europe have entered into agreements with unions in other countries, with the aim to cooperate on wage demands and other issues of common interest.

In the light of this development it has become more relevant to discuss the framework of collective bargaining, labour disputes legislation and different methods of avoiding or solving labour conflicts, also in an international context. And there are differences. Even between the Nordic countries, although they have a lot in common, the legal framework and practical solutions vary. Thus, I would like to give you a brief overview on how we deal with these questions in Norway.

One important feature in Norway is the central position of the social partners in society. This position has its basis in the extended cooperation, participation and co-influence, which takes place at all levels of the labour market. The workers' and employers' organisations and the authorities cooperate constructively in several fields. The organisations take initiatives and have advisory functions both in matters relating to labour law and general economic affairs.

Parts of the cooperation have been institutionalised. Since 1966 representatives of the Government and the organisations have met regularly in the Contact Committee, where the economic situation is discussed and where the authorities submit their views on incomes policy. With a close connection between general economic policy on the one hand and the development of wage-costs, prices and competitiveness on the other, the authorities place great emphasis on carrying out an open dialogue with the organisations regarding these issues. Representatives of the farmers’ and fishermen’s organisations also participate in this Committee.

Moreover, we have another permanent committee, the Technical Reporting Group for Wage Settlements, which since 1961 prepares annual overviews of developments in wages, prices, competitiveness etc. This committee consists of representatives from the authorities and the national organisations for workers and employers. Its reports constitute important background material for the parties involved in the wage negotiations.

Although the wage settlement is the responsibility of the negotiating parties, the authorities have from time to time made contributions which either directly or indirectly have been a part of the settlement (e.g. tax reductions), or which, as during the two last decades or so, have had a more indirect effect. All political parties in Norway agree that reducing the unemployment and keeping a high employment rate is a prime goal. This has thus been a central goal of economic policy. During the 90’s and especially the first half, there was a close connection between wage policy and employment policy. The Social Democratic Government launched the so-called Solidarity Alternative according to which the authorities, among other things, committed themselves to extensive contributions to employment schemes and to keep a stable economic policy. In return the industrial partners committed themselves to conduct moderate wage settlements. We did get considerable improvements in Norwegian economy, with increased growth, improved competitiveness and reduced unemployment in this period, but it is disputed whether this was because of the Solidarity Alternative or the effect of high unemployment.

An example of a more direct contribution is the so-called “agreement-based flexible pension”, the AFP. This is a voluntary early retirement scheme, which was introduced by a general agreement in 1988 between the Norwegian Federation of Trade Unions (LO) and the Confederation of Norwegian Business and Industry (NHO). The original purpose with this retirement scheme was to give industrial workers a possibility to end their working life while they still are in good health. For instance, for workers with hard manual work the general retirement age at 67 years often is too high. The Government agreed to contribute to the financing. In return the parties committed themselves to enter into an agreement on efficient remedies to limit the growth in wage-costs, with the aim to keep inflation on the same level as Norway’s most important trading partners.

Since 1988 the voluntary early retirement scheme has gradually expanded. Today it covers employees between the age of 62 and 67 years in both private and public sector. The financing still takes place in collaboration between the industrial partners and the Government.

However, the pension scheme is under constant debate, as it in many ways has become too popular. The lack of manpower is a growing problem in Norway. This makes it an important task to motivate people to remain at work longer than what is common today. In our social policy many initiatives has been taken to try to increase the actual retirement age. Nevertheless, during the last ten years the actual retirement age has been reduced from 64 to 60 years. This makes the pension scheme problematic.

Through the Social Protocol, which became part of the EEC Treaty in Amsterdam in 1997, the employers’ and workers’ organisations on European level have strengthened their position within the EU in the so-called Social dialogue.

Although Norway is not a member of the EU, the Norwegian labour market parties participate in the Social dialogue through their membership in the European employees’ and employers’ organisations, e.g. UNICE and ETUC. Thus, in the area of the Social dialogue the social parties have better access to information and maybe more influence than the Norwegian authorities. To meet this challenge, we have established a national social dialogue, where the authorities and the parties meet and discuss EU and EEA questions of common interest, especially new initiatives from the union.

Today the greater part of the Norwegian workforce gets its wages settled through collective agreements. About 55 percent of the workers are members of a trade union, but – directly or indirectly – most workers follow the pay scales of collective agreements.

Collective bargaining is conducted either at intersectoral level or industry level. In the central and local government sectors the bargaining is always conducted at intersectoral level. In addition local or workplace bargaining is widespread, mainly as a supplement to a national agreement. There is, however, a tendency towards an increase in local bargaining, and in some sectors the greater part of the wage increase is settled in local agreements.

In Norway, as in all Nordic and most European countries, the labour disputes legislation makes a distinction between disputes of law and disputes of interest. Disputes regarding the validity or interpretation of an existing collective agreement are disputes of law and handled by the Labour Court, while a dispute concerning the conclusion or amendment of a collective agreement is a dispute of interest, which is mainly the responsibility of the parties themselves.

The permanent mediation institution led by the State Mediator is nevertheless an important part of the machinery for the settlement of disputes of interest. Through the regulations laid down in the labour disputes legislation, mediation is in practice compulsory. If negotiations between the parties fail, they cannot resort to industrial action immediately but have to notify the Mediator. In most cases, dependent on the possible damage the conflict may cause, the Mediator prohibits work stoppage until compulsory mediation has been tried.

If mediation is terminated without result or a proposal for a new agreement is rejected, strike or lockout may take place. As an alternative to industrial action the organisations can decide to let the dispute be solved by arbitration, by the National Wages Board. However, this hardly ever happens.

The wage settlement is the responsibility of the workers’ and employers’ organisations, and the authorities do not wish to interfere in the negotiations between the organisations. No prohibition against strike or lockout exists, with exception for the military forces and senior civil servants. Moreover, we have no permanent legislation authorising governmental intervention in strikes or prescribing use of compulsory arbitration, not even in conflicts with seriously damaging effects.

There is, however, a broad consensus in Norway that the Government has an ultimate responsibility for preventing labour conflicts from causing serious damage to the society. If the Government after a close evaluation finds that the damaging effects of a labour conflict is of such nature that life, personal safety or health is endangered, the Government submits a separate bill to the Storting, the Norwegian Parliament, proposing the conflict in question to be forbidden, and that the conflict is to be solved by the National Wages Board. The Storting by a large majority has adopted bills proposing compulsory arbitration. Norway has, however, on some occasions been criticised by the ILO and the European Council, who have concluded that certain interventions in labour conflicts have not been consistent with the relevant ILO Conventions and the European Social Charter.

Although the use of compulsory arbitration has diminished over the last decades, the Government strives to reduce the use even further. It’s important for Norway to secure the right to free collective bargaining, including the right to industrial action, which are essential rights both according to Norwegian national law and to international law. Furthermore, a comprehensive use of compulsory arbitration also have a negative impact on the bargaining system as it in many ways reduces the parties’ responsibility for the results of the negotiations and the consequences of a work stoppage. Still, we believe compulsory arbitration is a necessary remedy in a system like ours with very few limitations on the right to collective action.

In this connection I would like to add that the members of the Federation of Norwegian Process Industries are not any “good customers” neither with the State Mediator nor the National Wages Board. This year, for instance, the Mediator’s assistance was necessary in only one of their agreement areas. And labour conflicts are rare in this sector. Both employers and workers live up to the principle that the wage settlement is the responsibility of the industrial partners.

When I’m given the opportunity, I would also like to say a few words about one of my other fields of responsibility, namely the regional development policy. As a part of the Norwegian efforts to maintain settlement in all parts of the country, also up North, Norway has a rather special arrangement, which I believe will be of interest, namely the regionally differentiated social security tax.

This is a major measure of the regional policy in Norway. The social security tax is paid by employers and calculated as a percentage of gross salary payments to employees. The system of the regional differentiation of the tax, established in 1975, was an answer to the problem of a high unemployment rate in the peripheral areas, compared to the central parts of the country. For more than 25 years the system has been seen as one of the most important regional policy measures. Evaluations have also documented that the regional differentiation of the social security tax is one of the most effective ways to stimulate companies to locate in the peripheral areas and to create new jobs.

The main features of the regionally differentiated social security taxation are:

• The employer's social security tax is geographically differentiated according to the municipality in which the employee resides.
• The system is applied automatically on the basis of objective criteria.
• Except for employees in the Central Government, the system applies to all employees in both private and public sector.
• Until the year 2000 the system was neutral with respect to the type of industry, company size, economic activity, form of ownership etc. As from 2000 some industries were excluded in order to meet the requirements of the EEA state aid regulations, put forward by the EFTA Surveillance Authority.

The prevailing system consists of five geographical zones. The tax rates vary from 14.1 per cent for employees living in central municipalities in Southern Norway to a zero rate for employees residing in Finnmark County and in municipalities in the northern part of Troms County.

The selection of regions to benefit from regionally differentiated social security tax is based on the population density criteria. In addition, the industry in the area to benefit from the tax reduction must have additional transport costs due to peripheral location.

The objective of the regional differentiation of the tax is to promote employment of persons living in disadvantaged regions. These are regions with real economic handicaps. Some parts of Norway are characterised by sparse population settlement, long distances, a harsh climate, a high level of dependence on the public sector and a narrow industrial base. Geographically, both the peripheral location relative to and compared with the most important European markets, as well as long distances to national markets, represent significant obstacles to economic activity in the areas eligible for regional aid measures.

To counteract the undesirable consequences of high distance-related costs on employment opportunities and settlement in the actual areas, a measure directly linked to employment and settlement is assessed to be more effective than e.g. direct transport aid. A general reduction of the social security tax within these areas is such a measure. It increases the use of labour by reducing the price on labour within the actual region. A general reduction of the costs of labour in the regions subject to real handicaps allows for firms to survive under the specific natural conditions, without unnecessary distortion of competition.

Finally, I would like to thank you for your attention. By the look of the program for this conference, I’m sure you have some interesting days ahead of you here in Bergen. But I hope you also will find time to get around a bit and take a closer look at Bergen and the beautiful surroundings of the city.