The Royal Ministry Of Foreign Affairs,
Oslo Press Division

Norway Daily No. 89/00

Date: 10 May 2000

STOLTENBERG DOWNPLAYS SETTLEMENT (Dagsavisen)

Prime Minister Jens Stoltenberg is trying to play down the consequences of the labour settlement even though it exceeds the previously agreed upon framework. He continues to urge politicians to maintain responsible budget policies. Mr. Stoltenberg says it would have been best if the unions and employer organizations had kept within the bounds agreed upon in the Arntsen commission. He declines to comment on the outlook for further strikes and a sharp rise in public sector personnel costs in the wake of the settlement in the private sector.

BERGESEN: SETTLEMENT IS NO FIASCO (Dagbladet)

Confederation of Norwegian Business and Industry (NHO) president Finn Bergesen jr. confirms that he maintained a dialogue with Norwegian Confederation of Trade Unions (LO) boss Yngve Hågensen during the entire strike. Mr. Bergesen is not letting the settlement bother him. I do not view the outcome as a fiasco, but rather a solution in which the result was somewhat higher than it should have been under the circumstances, he says.

REVISED BUDGET NEEDS ANOTHER NOK 3 BILLION (Dagens Næringsliv)

Minister of Finance Karl Eirik Schjøtt-Pedersen will have to find another 3 billion kroner for higher government payrolls and social security payments when he presents the Revised National Budget in another two days. It is now clear that wage growth at LO/NHO workplaces will be 4.5 to 5 per cent this year. Due to substantial labour shortages combined with high expectations, few believe the outcome will be any lower in the public sector. The 2000 Fiscal Budget presented (last autumn) by former Finance Minister Gudmund Restad calculated with 3.25 per cent wage growth this year, but Mr. Schjøtt-Pedersen will have to reckon with wage growth 1.5 percentage points in excess of this figure in his revision.

INTEREST RATE HIKE WILL NOT TAKE EVERYTHING (Aftenposten)

According to Aftenposten’s calculations, this year’s wage settlement will give workers more spending power even if interest rates climb one percentage point in the coming year. The big winners are low-income groups and people with moderate debt loads. With the 4.56 per cent payroll increase obtained in the private sector settlement, the municipal sector is concerned that demands from public sector workers will overstep existing frameworks.

WORK REDUCTION NEXT IN LINE (Dagens Næringsliv)

Shorter work hours will be the next major reform sought by the Norwegian Confederation of Trade Unions (LO), says LO vice-president Gerd-Liv Valla. One of our official goals is a gradual reduction of the work week to 30 hours, says Ms. Valla, who will probably head the LO in next year’s settlement.

NORWAY OFFERED JETFIGHTER LEASE (Aftenposten)

Eurofighter International is offering Norway a leasing arrangement for jetfighters. At the same time, the Government is warned that a halt in aircraft procurement plans could affect Norway’s role in the European political scene. Eurofighter Cesare Gianni is now making a final desperate attempt to prevent the Government from postponing the NOK 10.7 billion purchase of new jetfighters until 2010. This procurement will be dealt with in the Revised National Budget to be presented by the Government on Friday.

12,000 NEW IT WORKERS NECESSARY EVERY YEAR (Dagsavisen)

Norway will need 12,000 new IT workers every year up until the year 2003 in order to keep pace with developments in Europe. According to Norwegian School of Management (BI) estimates, Norway will be around 50,000 IT workers short between 1999 and 2003. If we are unable to obtain workers with these skills, we will drop the ball in new technology, and Norway will fall behind the rest of Europe as an IT nation. The repercussions will be felt in the offshore sector, fishing, aquaculture and just about every sector of the Norwegian economy, says associate professor Øystein Fjeldstad of BI.

WORTH NOTING

• In public, LO boss Yngve Hågensen and NHO chief Finn Bergesen denounced each other’s lack of initiative in resolving the strike. Yet on the very first day of the strike, they met in deepest secrecy at an unknown location. When mediation resumed on Monday, the most important issues had already been resolved at their undercover meetings. (Verdens Gang)
• Central bank Governor Svein Gjedrem will have to raise interest rates today. Because he provoked LO members by raising key rates a month ago, he has no choice but to do it again today. If he doesn’t, he will be violating his own logic. (Dagens Næringsliv)
• LO president Yngve Hågensen warns Svein Gjedrem not to raise key rates again before summer. It would not make sense to raise rates now. But I do not know if they are competing in the common sense event, says Mr. Hågensen. (NTB)
• Hits on the major papers’ Internet editions were up nearly 50 per cent during the strike, while TV news broadcasts saw only a slight increase in viewer ratings. (Aftenposten)
• Telenor is losing 1,000 customers every day to other operators. Telenor’s market share has gone down more than we like. We must pursue a more offensive strategy, says Telenor Group CEO Tormod Hermansen. (Dagens Næringsliv)
• Storting president Kirsti Kolle Grøndahl has had it with Ministers who do not appear at mandatory meetings in the Lagting (one of the two divisions of the Storting). Prime Minister Jens Stoltenberg has now sent a memo to all ministers in his cabinet asking them to shape up. (Aftenposten)
• Norway is having difficulties with the EU in the gas directive negotiations. There is little to indicate that the EU will accept a longer transition period than three years. Norway has asked for a five-year transition period. (Dagens Næringsliv)

TODAY’S COMMENT from Nationen

Five days was what it took before unions and employers came up with a new settlement. But the NHO’s and the LO’s negotiators did eventually reach agreement. More money, a faster timetable for the holiday increase, and a shorter agreement period is the result. But this is still only a draft, and the rank-and-file will vote on it on 25 May. There are plenty of pitfalls to be negotiated until then, such as today’s meeting of the central bank’s executive board, which could raise interest rates, offsetting the wage settlement to one degree or another. The Government will present its Revised National Budget on Friday, and it is now rumoured that an additional NOK 5 billion will be necessary simply to offset the accumulated budget overruns. It is also conceivable that the central government will have to provide extra funding to local governments in order to ease the conflict in the ongoing public sector labour negotiations. The two sides of the conflict are not talking at the moment, and it is up to state mediator Reidar Webster to come up with some solutions. If the public sector follows the lead of the private sector, the Revised Budget will have to accommodate several billion kroner in added expenditures. This is likely to lead to austerity measures which in the end will have a significant impact on the household economy’s bottom line.