The Nordic labour market models are all characterised by both a high degree of collective bargaining coverage and a high degree of unionisation. The models are described as self-regulating in the sense that they are characterised by a high degree of autonomy for social partners, with the State essentially excluded from the pay formation process. However, State intervention does occur in various ways. For example, legislation in Finland, Norway and Iceland allows for the largest collective agreement in a particular sector to be declared universally applicable. This extends the collective agreement to employers who have not signed a collective agreement. Universal declaration is particularly important for setting minimum wages in different sectors. In the majority of EU Member States, including Germany and France, minimum wages are set by the State, which generally means that the minimum wage is a national standard that applies irrespective of the conditions or profitability of different sectors. In Denmark and Sweden, pay level and working conditions set out in collective agreements apply only to the parties covered by the agreement.
The Nordic countries are similar in that they are relatively small and export-oriented industry is given a special status in the countries’ pay formation processes. This chapter provides a brief overview of how this is administered and comments on the role of the various institutions for mediating labour market disputes in each country. From a gender equality perspective, the issue of the pay-setting power of export-oriented manufacturing industries is of some importance, as industries dominated by women are primarily comprised of companies, public authorities or organisations that serve the domestic market. The limited format of the report does not allow for detailed reference to the variety of discussion topics to which the frontline labour model regularly gives rise.
In Denmark, it has been an established tradition since the 1990s for export-oriented industry to be the first to conclude agreements on pay and working conditions for the private sector. These agreements largely do not include figures. However, the agreement signed between Dansk Industri (Confederation of Danish Industry) and CO-industri (the negotiating organisation for LO trade unions in the industrial sector), which applies to workers, does include figures. It indicates a minimum pay level as well as the level of pay increase for apprentices. This also serves as a guide for the appropriate rate of pay increase for other contractual areas. Second is the transport sector, which is subject to the largest normallønsoverenskomst (standard pay agreement), with pay levels defined within the agreement itself. This is followed by the other sectors. Lønstrukturkomitéens hovedrapport (the Wage Structure Committee’s main report) shows that pay developments in the private sector provide the overarching framework for the overall rate of pay increase in the public sector. The role of Danish forligsmænd (mediators) is limited to reaching agreements between opposing parties.
In
Finland, there has so far been no institutionalised bargaining system implemented by which a particular sector serves as a standard for the rest of the labour market. At the beginning of 2024, Finnish trade union organisations carried out widespread strikes for a number of reasons. One of these was that the Government intended to restrict the ability of the
Riksförlikningsmannen (National Conciliator’s Office) to negotiate. The purpose of these restrictions was to prevent future mediation bids above the so-called
allmänna linjen (general line). This would mean that no pay rises could exceed those within the export industry. The largest Finnish-Swedish daily newspaper
Huvudstadbladet reported at the end of November 2023 that “discontent is brewing against industry setting the level – carers and teachers could end up in a pay trap”.
In
Iceland, there is no established bargaining system that corresponds to the models in Denmark, Norway or Sweden. One of the reasons is the lack of anything resembling the Danish
hovedavtal (main agreement). According to information received from the
Ríkissáttasemjari (State Conciliation and Mediation Officer), broad agreements in the private labour market tend to prompt the government to adopt certain ‘action packages’. These government measures mean that other areas within these agreements also have to relate to general arrangements on pay. The State Conciliation and Mediation Officer has no instructions to maintain any specific pay level in its mediation activities. In 2019, the study
A new model for wage formation in Iceland was published. The study suggests that Iceland should introduce something similar to a frontline labour model. According to the study, such a model could be a stabilising factor for the Icelandic economy as a whole. The report provides an overall picture of how the frontline principle has been applied in other Nordic countries. A news article dated 8 March 2024,
New Wage Agreement Aims to Stabilise Iceland’s Economy, states that a four-year agreement has been reached. Behind this ‘stability agreement’ is a broad coalition of social partners. Neither of the documents referenced above links to the issue of pay equity.
Norway’s negotiation system shares some similarities with the Danish and Swedish systems in that the manufacturing industry, characterised by a high degree of competition, sets the level of pay increases that other parties to the labour market are expected to follow. More specifically, this concerns
Industrioverenskomsten (the Industrial Agreement) signed between
Fellesforbundet (the United Federation of Trade Unions), a member of the trade union umbrella organisation LO, and
Norsk Industri (the Federation of Norwegian Industries), a member of
Næringslivets Hovedorganisasjon (NHO; the Confederation of Norwegian Enterprise). In the private sector, agreements on the level of pay increases are only made for blue-collar workers. Pay formation for white-collar workers takes place at the local level. The level of pay increase in the Industrial Agreement is calculated on the basis that pay increases for salaried employees relate to the norm established in local negotiations, without serving as either a floor or a ceiling. The mark set for other sectors is based on the overall level agreed in central and local agreements through the frontline labour model
. Riksmekleren (the State Conciliator of Norway) has the sole task of mediating disputes between labour market parties in collective bargaining negotiations. Unlike the Swedish National Mediation Office, the State Conciliator of Norway does not have a specific mandate to promote well-functioning pay formation from a broader societal perspective. A report on the possible impact of the frontline model on the gender pay gap is briefly reviewed in
Chapter 7,
Likelønn og det kjønnsdelte arbeidsmarkedet. Individuelle preferanser eller strukturelle begrensninger? (Equal Pay and the Gendered Labour Market. Individual preferences or structural constraints?).
For the Swedish National Mediation Office, the socio-economic mission is paramount to the mission of avoiding labour market conflicts. It is therefore not part of the mediators' task to seek to achieve industrial peace at all costs. This means that mediators appointed by the National Mediation Office do not participate in agreements that conflict with well-functioning pay formation, which is interpreted to mean that the competitive sector sets the standard for rates of pay increase and other labour costs. The first agreement reached by industry serves as the norm, i.e. the ‘benchmark’ (märket) for the rest of the labour market. Two agreements comprise the leading collective agreement. One is the Technology Agreement for blue-collar workers, between Teknikarbetsgivarna (the Technology Industries of Sweden) and IF Metall. The other is the Technology Agreement for white-collar workers, between the Technology Industries of Sweden and the three trade unions Unionen, Sveriges Ingenjörer (Engineers of Sweden) and Ledarna. The standardisation of the benchmark is also consolidated through a series of negotiation agreements.
In addition to the above-mentioned tasks, the work of the National Mediation Office includes analysing pay development from a gender equality perspective, monitoring the issue of discrimination in pay setting on grounds other than gender and, in its deliberations with labour market parties on upcoming and ongoing collective bargaining negotiations, drawing attention to the importance of constructing central collective agreements in such a way as to promote labour market parties’ work on pay issues from a gender equality perspective..
Discussion
As indicated in the introduction, the debate on the legitimacy of frontline labour models is ongoing and highly complex, with the gender perspective being only one of many aspects. Here, we refer very briefly to three recent contributions to this debate from Norway and Sweden. In each case the authors point out that the country’s frontline labour model allows for considerably more flexibility in its application than mainstream interpretations claim. This is particularly true with regard to pay developments in the public sector, which is dominated by women.