Yahoo Finance Norway Labor Unions Reach Wage Deal to Avert Large Strike
(Bloomberg) -- Norway’s employers and two industrial trade unions clinched an agreement on wages with the help of the state mediator, averting a wide-ranging strike.
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The Federation of Norwegian Industries reached a deal in overtime with the Fellesforbundet union for a wage increase of 5.2%, the union said in a statement, with Parat, a smaller union, agreeing on a similar increase late on Sunday. The central bank forecast annual wage growth of 4.9% this year in its March monetary policy report.
The uncertainty regarding wage developments remains a key factor for Norwegian policymakers who last month signaled they will probably hold off cutting borrowing costs from a 16-year high of 4.5% until the autumn, most likely September.
“We expect that this estimate will stand when all the settlements are finished,” Danske Bank A/S’s economist Frank Jullum said. “In that case, this will be a bit higher than Norges Bank assumed in its March monetary policy report of 4.9%, and will probably add to the recent repricing of cut expectations even in Norway.”
The two unions represent parts of the manufacturing industry exposed to international competition. In Norway, the outcome of these talks sets the starting point for wage negotiations in other sectors.
The unions had sought increases in wages that would exceed price growth — projected at 4.1% by a government committee — after a decline in inflation-adjusted pay in the past two years.
The mainland economy, helped by a robust labor market, has remained more resilient in past months than expected, while a weak krone may also factor into delaying the first cut.
The “agreement has strengthened our belief that Norwegian households and the economy will experience a better development ahead, even with the rate hikes we have behind us,” Nordea Bank Abp’s analysts Dane Cekov and Kjetil Olsen said in a note to clients. “A better economic development implies that the urge for rate cuts is lessened and we thus still don’t expect a first rate cut from Norges Bank until December.”
(Updates with other union joining deal in second paragraph, analyst comment in fourth and eighth.)
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