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NORWEGIAN ECONOMY – WHAT DOES THE NORDIC MODEL HAVE TO DO WITH IT?
Birmingham Business School – Dept of Political Science, 13th of December 2010
Eivind Falkum, Fafo institute of applied social science, Oslo

1 Introduction
“The Nordic region is like the bumble bee: it flies, against all rules of aerodynamics.” (C. Ketel, Nordic Globalisation Barometer 2008) The Nordic countries had on average productivity rates 17 per cent higher than the rest of the OECD states in 2007. They were all in the top 14 of the World Bank ranking for ease of doing business in 2007 (Quintin Peel 2008). The economic growth and the wealth of the Nordic nations after World War II are often explained by the special combination of labour regulations, collaboration between employers and employees and quite generous welfare state offers, all referred to as elements of the Nordic model. Norway has been criticized by OECD for having too generous welfare offers and to low income gaps to be competitive in global markets. Many economists and politicians have turned to the bumble bee metaphor when the Norwegian economy is discussed after the financial crisis in 2008. The levels of public expenditures should make the Norwegian economy fall during the last 30 years, and not grow to the levels of today according to economic theory. All the Nordic countries were drabbed by the financial crisis in the autumn of 2008, but Norway came out almost unharmed during 2009 compared to most other countries, and despite heavy unemployment forecasts in the beginning of that year. OECD lately defined Norway to have managed the financial crisis very well compared to other nations. This is partly to be explained by oil incomes and the governmental funding of oil incomes at the pt amount of about € 370 billion. However, the Norwegian government praises “the Norwegian model” as the main reason for the economic growth and success, including the way to handle large national oil incomes. The

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Norwegian government then makes a distinction between the Nordic and the Norwegian models, claiming that there are special elements in the Norwegian model that are not present in the other Nordic countries. Even Norwegian investors and capitalists now embrace the Nordic model by initiating it to be a major theme on the Davos Economic Forum in 2011. Liberal and conservative political parties that have opposed most of labour and welfare reforms in Norway over the years are now hailing the Norwegian practice of the model. Nowadays there is a political rivalry: who invented and who owns the Norwegian model? This article will discuss the Nordic model and how it is practiced in Norway. Special attention is paid to the way it is related to the national political and economic systems. The article has five parts. First it outlines a theoretic perspective. Second is the analysis of the historic development of the Norwegian model. The third part is an analysis of the elements in the model that affects the economy. Part four presents the institutional development of the industrial relations. The fifth part discusses the potentials for development and economic growth in the Nordic model. The sixth and final part discusses the findings and analyses the Nordic model 1) as a political and economic hybrid and 2) as an investment scheme. Data are historical sources and analysis of the Norwegian labour market and welfare state (Falkum 2008), national statistics from Statistics Norway, case studies of enterprises (Falkum 2008, Stensaker et al 2011 (in print)) and a labour market survey in a random sample of employers and employees (Falkum et.al 2009).

2 Theoretic approach
“The Nordic model” has been identified and discussed by researchers since the late 1960s. Labour and business research referred to “the Scandinavian model” with strong unions, strong employers’ associations and industrial relations based on collective bargaining and basic agreements that regulated the labour markets (Reve 1974). During the 1960s and 1970s human relations oriented concepts of work place democracy were added to the model by employee participation programs (Trist et al 1963, Thorsrud & Emery 1970). Welfare research focused on social security programs, health care offers and education systems as empirical fields. Distribution of public offers, taxation and incomes was related to the organization and performance of public services (Øyen). In the 1980s studies focused on social

and changes in politics. Later on. economy and welfare programs that were derived from these industrial relations as they emerged. This makes theories of institutionalization relevant and useful to reveal and explain how the Nordic model evolved and how it works in the societies. Finland and Iceland as included in the Nordic model. 2) identification and preferences (norms) and 3) meaning and understanding (cognition). Welfare state researchers then left the perception of a geographic defined model for a theoretic and conceptual welfare state model based on universal rights and services. Sweden. the Nordic model was never a readymade scheme. a political program or a master plan that in detail described what to do. economic and social outcomes of long term development of industrial relations. The national industrial relations become a driver of development. In the 1970s the Scandinavian model was the term used by researchers (for instance Reve 1974). Thus it is reasonable to focus on the work life context as an arena for institutionalization of the model. influence and wealth that guides decisions and policies. This . March & Olsen (1995:28) defines political institutions as 1) regulation by rights and rules. More nations than the Nordic countries. Institutional perspective In Norway the Nordic model is the national sum of political. Welfare research referred to the Scandinavian countries.3 justice and equality between social groups and classes (Jacobsen et al 1982). the Nordic model became a common term. However. probably through the development of inter Nordic political relations and establishment of Nordic Council. New Zealand and Netherland were perceived or interpreted as practicing such welfare state principles. Norway and several other European countries. participation. but simultaneously over most of the last century in Denmark. how to do it and by whom. The model consists more of some principles about distribution of rights. Therefore there are. The idea of a specific combination of labour and welfare policies evolved separately. it was still not precisely defined or described. for instance Canada. and have always been different ways to practice the model. Later on the Nordic model was conceptually interpreted as a specific welfare state principle of democratic and just distributions of national wealth (Hippe 19). However.

March & Olsen 1995: 31. individuals accept and follow social scripts. Scott (1995:138) describes the predictability of individual behaviour in institutionalised systems in this way: “As situations become more highly institutionalized. obligations and formal rules.no). security and predictability in social systems (Hernes 1975: 52-58. and almost 2 times more than the average GNP per capita in EU27. but the onshore economy is growing more than the average national growth the last five years (www. Women have entered work life during the last 30 years and the female employment rate is only slightly lower than the . routines and performance programs – because they are accepted as “the way things are done by persons like me in situations like this.4 definition is in line with Scott’s (1995) conceptualization of institutions. labour relations and distribution of wealth and welfare are regulated by rights. Export of oil & gas contributes substantially to the growth. Scott 1995: 49). Employment rate is 72 percent of the workforce aged 15 – 74 in 2010. Institutions contribute to stability. work and welfare Norwegian economy has grown constantly for decades. secure and predictable societies compared with others. and it represents the preferred ways to do things (Falkum 2008). This theoretic framework can help to understand how the Nordic model developed and how it works. Labour conditions. agreed solutions to problems and consensus on procedures and decisions about the ways to organize and govern work life and welfare? How does such a truth regime (Foucault 1982) develop and how does it work? These are the essential questions to discuss in order to explain if and how institutions can guide and govern political and economic systems. Narrowing the scope – economy. How do opposing actors with very different opinions and interests at stake develop shared understandings of reality. The Nordic countries are socially stable. Meanings and understanding of society are shared to a large extent. Mayhew 1982: 11.”” It is the third element in March & Olsen’s definition that is important to discuss. For the time being the identification with the Nordic model are strong in most social groups.ssb. at least in Norway. GNP per capita in 2007 was almost 180 percent more than GNP per capita in 1970 (in fixed currency).

In 1905 the union with Sweden was dissolved and Håkon the 7th was coroneted to be King of Norway. A nationwide trade unions’ associations’ confederation (LO) was settled in 1899. while other countries have reduced them. . 3 History of the Nordic model in Norway Modernity finally arrives Norway was industrialised from the beginning of 1900. After the financial crisis in 2008 the public share of Norwegian GNP and consumption has increased. The modernisation of Norway took place within a short frame of time from about 1884 to 1920 and can be described by five different processes (Falkum 2008): First: the parliamentary system was introduced in 1884. In 2005 OECD claimed that the welfare state arrangements were so generous that they were incentives to reduce participation in the labour market.5 male rate. Both the conservative party (Høyre) and the social liberal party (Venstre) were established in 1884. in the sense of paid work. The labour party and the union formed the labour movement as a strong alliance that bound them together. much later than for instance England. compared to 30 percent of men at the same age (www. Norwegian economy still seems to oppose dominant economic theories. while the farmers party (Bondepartiet). Second: Labour. physical and social malfunctions. or unemployment. New concentrations of capital did not develop before the beginning of the 1900s. The labour party was established in 1887. became more common from the end of the 19th century. also conservative. Common suffrage for men was set in 1889 and for women in 1913. Thus we need to understand the connections between economic growth and welfare state expenditures. The noblesse or aristocracy was wiped out by the plague in 1342 and concentrations of capital dissolved. 35 percent of women at the age of 30 years have tertiary education on university level.no) Almost 700 000 persons in the work force are excluded from the labour market due to illness. was established in 1921. and that Norway should cut the support levels. They receive economic support by various welfare state arrangements. Thus feudalism was not common like in Sweden and Denmark.ssb.

” (Bull 1953:49). Party strategies were changed. The first collective agreement was established in 1902. they left the Communist International in 1923 after controversies with the Russian leaders on sovereignty of national member parties (Langfeldt). and capital was gathered in financial concentrations that allowed for larger investments.6 Third: the employer’s associations’ national confederation was organized in 1900 (N. and the first collective agreement that covered a complete industry was set in 1907. . and the first labour committee was established by the Swedish King Oscar II.. The committee that developed the act had two workers representatives. Norsk Hydro Aktiekvælstofselskab was established that year and soon became the locomotive in industrial development. It introduced a governmental agency that could inspect labour environments and prevent unhealthy and dangerous work in manufacturing plants.. (Falkum 2008) Radical ideas and conflicts of interest Norway was in a national union with Sweden from 1814 till 1905. The first labour market regulation was a legal act in 1892.A.).F. The labour party was at its most radical from 1919 when they joined the third communist international movement led by Lenin. King Oscar II argued in line with Bismarck’s first welfare state arrangements that regulations were necessary to “. and the party lost about two thirds of their members from then till they left the movement in 1923 (Maurseth). The new and joint strategy was to win political power in parliament by democratic means. The labour party and the trade union now revitalised the strength of their alliance. Governmental labour conflict mediation arrangements was launched from 1906 and defined by law from 1915 (Bergh et al 2010). However. Fourth: industrialization took speed and expanded significantly from 1905 on. Fifth: The national stock exchange was expanded and reformed in 1911.keep our growing work force on sound and reasonable tracks. They had support from the conservative and liberal political parties that governed the state from 1884 till 1935. especially chemical process industries. The labour union was more sceptical to the alliance already in 1919...

In the end of the 1920s the impact of the all the conflicts was low productivity rates.A. In spite of political turbulence.) characterised the demand as obnoxious. economic democracy was not the common interpretation of the idea of workers participation at that time. Finland and America at that time.7 The labour union confederation (LO) demanded workers participation and codetermination in the management of private companies for the first time in the national wage negotiations in 1918 (Debes 1918. Thus the government suggested in 1930 the trade unions confederation (LO) and the employer’s associations’ confederation (N.F.A. signed their first basic agreement in March 1935. It was to some extent based on texts and experiences in previous collective agreements and discussions on legally defined labour regulations. shifting governments from conservative to liberal domination and use of military forces towards striking workers in a major industrial conflict in 1931.A. increase productivity rates and to meet the severe economic crisis that developed in the beginning of the 1930s. England. LO and N. Rockefeller supported the idea according to Debes (ibid:8). if necessary with military forces (Bjørnson 1990:550).F. the work peace committee was revitalised in the end of 1934. However. the idea of workers participation in company management was already in 1919 interpreted as an idea of economic democracy that would serve the development of enterprises and business in general. . Employers decided lockouts. Falkum 2008). Debes (1919) showed that the idea was debated in governmental and parliamentary arenas in Germany. Basic agreement and the birth of the Nordic model in Norway However.F. The employer’s confederation (N. It was mostly anticipated as a threat to private property rights and to the administrative prerogative of company owners. and the liberal Prime Minister Gunnar Knudsen guaranteed to protect the employers’ private property rights towards revolutionary workers in 1919. The LO demand of codetermination in 1918 can be seen as the start of more than ten years of heavy labour conflicts.) to join a committee on labour peace in order to restore peaceful labour relation. D. followed by trade union strikes in seemingly endless series (Ousland). Even the US capitalist J. severely damaged national competitiveness and pressure on national economy.

Except for the World War II (1940 – 1945) the labour party held the government till 1965. In Sweden labour peace negotiations took place in the early 1930s. The labour parties were all based on social democratic ideas and the unions communicated across the national borders. New principles of social security legislation were also decided in 1935 connecting the welfare state offers to the employment rates (Skeie 2003). Employment rates would determine national value creation (GNP). It connected national productivity and work life directly to the welfare state – and vice versa: the welfare state arrangements should support productivity. while the basic agreement was settled in 1938 (Lundh 2010). for instance by free and universal education programs. It first and foremost defined rules of wage formation. collective bargaining and employee participation at the work places as a matter of representative democracy. exchanged ideas and experiences and developed policies and politics based on the same ideas and principles (Sejersted 2005. while the welfare arrangements should support participation in labour markets. This is labelled the “labour line” (arbeidslinja) in welfare politics. The stories of industrial relations developed simultaneously in the Nordic countries.8 In 1935 the Labour party won the election for Stortinget (equivalent for Parliament) and entered government offices. child care support and so on. Rules of industrial negotiations and the first labour party government were introduced in Denmark in the mid 1930s (Due & Madsen 2010). This starts the development as well as the practice and institutionalisation of the Nordic model in Norway: 1. tax incomes and thereby levels of welfare arrangements. . obligations and rules to regulate relations between employers and unions. economic housing programs. Bjørnhaug & Halvorsen 2009). 2. the labour line was introduced and decided as principle for development of welfare arrangements. the Basic Agreements settled rights. The Scandinavian countries also introduced their welfare models about simultaneously.

This system has emerged and evolved since the end of World War II. These committees were developed into company committees and department committees by a revision of the basic agreement in 1966. In the negotiations on the revision of the basic agreement in 1966 the employers followed liberalist ideas and would give the individual workers more freedom and influence on their own individual work situations. labour politics are now mostly decided in collaboration between the two confederations and the state in what is called tripartite relations. Moderate wage demands were exchanged with increased investments in more work places and modernisation programs.9 4 Three parts sharing power The basic agreement is called the constitution of the Norwegian work life (Bergh ed.A. It defined the workers’ and unions’ rights to participate and codetermine. to solve the disputes. Production committees with union representatives were established in some large plants and factories. The union would have more influence for shop stewards and members in representative democratic arrangements should be defined in the revised basic . They hoped for employee responsibility in business development and rise in productivity in return. and had some success with that in the 1970s. They have eagerly tried to keep this power to define labour politics without interference from the government or the parliament (Falkum 2010). By asking LO and N. The union and the employers’ confederation made the production agreement (Produksjonsoverenskomsten). However. The government made efforts to withdraw the political power from the work life organisations from 1945 on. The union and the employers’ confederation wanted to solve problems by agreements and deals between them. Management and unions should cooperate for increased productivity. Developing industrial relations Norway was restored after war damages from 1945 on. define the industrial relations and thus decide on how to regulate the work life in 1930 the government gave away political power to them. Workers rights to participate and union rights to codetermine was developed and extended in this revision. This tripartite collaboration is consensus making and a core driver in the interplay of work and welfare and thereby the practice of the Nordic model in Norway. while the state tried to introduce labour laws and regulations by parliamentary decisions.F. 2010).

The revision was made under heavy political pressure. H&S officers and H&S committees to be elected from and by all employees.10 agreement. and that in essence tries to get people that are excluded from the labour market back to work. The work life and the development of industrial relations have changed the political system. discussions and consensus on how to create values and how to spend them. The work environment act from 1977 defined Health and safety (H&S) rights. The 1970s is the only decade where laws dominated over party based agreements. (Falkum 2010). all employers associations and the state. corporatism has grown Since World War II as well. and not by agreement between the work life partners alone. Thus the partners speeded up the process and fulfilled the revision in a hurry in order to settle the industrial relations before the political system could act. However. The labour politics in Norway are now based on collaboration between the social partners and the state. Democracy and corporatism Norway is governed by democratic political elections for parliament by the citizens. Political control over industrial relations was avoided and the social partners kept their political power from the process in 1930. Most other rights to have work place democratic arrangements are defined by agreements between the labour market actors. Two democratic principles were introduced simultaneously to the work places: individual direct participation and collective representative codetermination. The act of limited companies was decided in 1972 and defined rights to demand one third of the company board members to be employee representatives. The power battles are more or less replaced by dialogue. Then both partners got their way: the new agreement stated individual workers’ rights to participate in business development and trade union representatives got their right to codetermine. The government worked to define the workers’ rights to participate by political decisions and laws. After the war the labour government wanted . even the Including Work Life reform since 2001 that try to reduce illness leaves and to make labour available for disabled reduce levels of early retirement. They wanted influence on the business strategies and organisation in line with more socialist inspired ideas. not only union members. This is based on an agreement between all unions.

This dual system of democratic and corporate arrangements is a basic condition for tripartite relations. NHO. All three levels were implemented. but both the national advisory board and the branch level boards failed and turned into more or less informal networks. explore. describe and advice governmental agencies.11 to establish a national industrial advisory board of coordination with members from the union. This very hierarchic and firm structure was to give control over economic development. earlier N. (Falkum 2008). Rokkan’s (1975) famous analysis of corporate pluralism explains how strong interest groups participate and influence the political democratic system through numerous public councils. employers’ confederation. Participation in the corporative system gives political influence and power that exceeds the power of the ordinary citizens by far. the government and other important organisations. the government and researchers. The corporative arrangements are developed a lot since the 1960s and are in use in most sectors and fields of politics. They set up a public document that describes the economic values to be negotiated. The wage formation process is an illustrative case.) and the government.F. no matter party in office. To create such shared understanding of the economic situation is also the aim of Council of (Teknisk Beregningsutvalg) headed by a high rank officer in ministry of finance and with members from LO. meet informally at the Prime Minister’s office every spring to discuss the possibilities and challenges in the annual wage negotiations. By agreeing on how to interpret the economic situation the negotiations will principally concentrate on LO demands and NHO offers . Normally they will come to a shared understanding of sustainable levels. boards and committees that are set up to investigate.A. Tripartite wage formation LO. Also branch advisory boards were suggested. The conclusions in the report is discussed and agreed upon before publishing. The third part of this corporate structure was the production councils at work place level. As Rokkan (1975) concluded: votes count. NHO (the modernised employers’ associations’ confederation. The lowest level was developed into company councils that still work as mentioned above. but resources decide.

Sometimes the state plays a major role in the wage formation.12 LO and NHO will base their negotiations on this report. and quite unprofitable to establish or run simple and low technology production. lifelong learning programs and policies for developing new work places. After the crisis in economy in 1986/1987 the parliament passed a wage law that forbid rise in wages above specific levels. The education system is held to be the most successful part of the Norwegian welfare arrangements by politicians (Steen 1999). Instead of high rises in wages the state introduced new welfare arrangements like early retirement programs. Thus it is profitable to establish technological advanced production in Norway compared to neighbour countries. Still today academic and high educated employees have lower wages than in other comparable countries. The Including work life . Highly educated labour is cheap. This logic has been supported by education programs. In the early 1990s the labour party introduced what they called the Solidarity alternative for the wage formation. but it was the start of a compression of wage levels in Norway. while the low educated work force is quite expensive in Norway compared to other countries in Europe. The result of this negotiation sets the levels for all the later negotiations among all unions and employers associations. Tax rates. This was done to support the national economy. The law was withdrawn the next year. It is always the wages in the most competitive industries that are negotiated first. This has reduced numbers of low technology enterprises and increased production of commodities and services that needs educated staff. What the employers gained from moderate union wage demands was supposed to be invested in new work places. sick leave compensation and pension program may be discussed and play a role in the negotiations. especially for high educated and high waged groups. The intention is to avoid rises that will give increase in prices and inflation. In times of economic downturns the government has increased student numbers and arrangements for tertiary education. They will discuss alternative solutions and try to sort the opposing interests in give and take balances that can be supported by the union members in the end. This program was developed and agreed upon by all the political parties in the parliament and the social work life partners.

Political strikes are not allowed. Business and value creation is supported by welfare state politics. The partners can approach each other via the public mediator in order to end the strike and find solution that is agreed. In this respect the welfare state is not only to be defined as public expenditures. Economy and politics are interwoven and directly interconnected. and the union will select a sample of work places to start the strike. the labour court and . This has to be reached within 48 hours. normally legitimated when a strike may endanger health and life for a third part. If the social partners do not agree they have to contact the neutral and independent public mediator (Riksmeklingsmannen) appointed by the government since 1906. The public mediator. This perspective will be further outlined in the final discussion. If the partners reach agreement the solution has to be voted over by all the union members. Norwegian work life is quite peaceful compared to for instance Denmark and France that have more than 1000 labour conflicts some years. Normally 3 – 15 strikes take place annually. There are some examples that such solutions are turned down by the voting members. Labour conflicts The wage formation processes is where Norwegian labour actions can take place. The last lock out from NHO members was in 1986. and a strike is then implemented.13 program in 2001 is a further development of the logics of the Solidarity alternative and signed by the same actors. for instance patients in hospitals under nurse strikes. if not there will be strike. It is not allowed to strike or implement lockouts during the period of the collective bargained agreement. The negotiations then continue through the mediator who will try to find solutions that ends the conflicts of interest. Strikes and labour conflicts may be stopped by a governmental wage council. There are arguments to define the welfare state arrangements as investments in a sustainable economy. They are all results of disagreement during wage negotiations. In these ways the wage formation connects the price of labour directly to the public welfare programs.

A former second head of LO explained why they never demand strong rules towards collective dismissals in this way: “We always thought it more important to create new and modern work places than to keep the old ones going by all means. closing down work places or moving business to low cost countries will often be opposed by unions. former head of LO) . the many welfare arrangements and the direct connection between production and welfare arrangements have over the years made the work life flexible and dynamic. Organisational change and enterprise development There are weak rules on collective dismissals in labour laws and agreements. and in those few cases the union at the work place have come up with some kind of offer to contribute to the enterprise business. Thus it is quite easy to downsize or close down enterprises compared to most European countries. most employers that downsize will normally give compensations that exceed these standards pretty much. change production methods or implement new technologies quite easily. 5 Sustainability of the work life – high road development The compressed wage levels. politicians and sometimes result in massive protest marches. enter new businesses.14 the different tripartite councils all contribute to peaceful solving of opposing interests and consensus among the social partners. while the protection towards individual dismissals is in line with other European countries. Unemployment after those three months will give the workers economic support by the social security system. Norwegian companies are developed and changed in dynamic ways. If the employer can argue and prove that major organisational changes have to be implemented to save the business. Normally the employer will have to pay the employees three months wages as compensation. This is accepted as normal also by the unions. Downsizing. there are minimal obstacles to do so. However. There are only few cases where such plans have been stopped. but they will nevertheless be implemented as planned (Falkum 2008).”(Jan Balstad. They may move across branches.

but many other industries were affected. mostly in service sectors and especially in public health care and shopping malls. A state owned oil company. The oil and gas fields were discovered in the North Sea in the 1960s. Some other politicians opposed to that and defined the explorations and field operations to be national tasks. That seems to drab even highly regulated work lives like the Norwegian to some extent. However. The oil and gas industry – an example of high road development Norwegian economy has depended on export of raw materials from mining.15 A survey in a recent random sample drawn from the public national employers – employee register we found that 29 percent of Norwegian employees had shifted job during the last two years (Falkum et al 2009). as it has increased from 1993 to 2009. Politicians proposed that multinational oil companies should operate the fields and that the national economy should only receive bargained incomes. The oil and gas production is an exception. In 1993 the equivalent figure was 21 percent (Salvanes 2003). adapt to work place development and labour markets and in these ways contribute to the structural and functional flexibility needed in globalising economies. Knowledge of methods and technologies has been imported to some extent. The Norwegian employees are mobile and flexible. Statoil. Standing (2010) shows that precarious work increases in the globalizing economies. supply ships and highly specialized boats need for very special North Sea operations. technologies and supply chains needed. The mobility and flexibility seem to be growing. Not only those employed in oil industry. During the last decade they have outsourced the building of shells to low cost production sites abroad. Ship yards turned from building ordinary ships to production of oil rigs. production and economy. The production of commodities has concentrated on low degrees of fabrication like aluminium and artificial fertilizers. woods and fishery. was established in 1972 in order to handle the national oil and gas properties and to develop the industry. The nationalisation made it necessary to develop knowledge. Several other nations nationalised their oil reservoirs in this period (Ryggvik ). some industries and branches increase the amount of part time labour in recent years. and towing them home to . Natural and technological sciences got strong supports and tertiary education systems like universities and business schools oriented towards oil exploration.

engineering expertise and high competence vocational training. The high road development in the oil and oil related industries was conditioned by the public education system. We had 3362 answers. age. It is an example of high road development: opportunities are used to develop knowledge and competencies in constant innovative development in several areas. location and number of employees at the work places. The oil politics in Norway is in line with the intentions of the Nordic model. Results so far are shares in Russian and Brasilian oil and gas fields. A random sample of 8000 was drawn from the national employee/employer register. Work places with 10 employees or less was left out.16 do the most advanced labour and technical installations by themselves. public research and development funding and collaboration and consensus between the social partners. In a small country like Norway it is hard to find parts of the society that are completely untouched by the national oil production. . industries. Extreme technology makes it possible to drill and produce at 3000 meters depths with all operations executed in on shore installations and without any diving. Ship building in Norway is now based on innovative design. This net sample was tested if representative along key dimensions like gender. the Hydro oil & gas division in 2006. Status of work place democracy The survey (Falkum et al 2009) was made to mirror the state of work place democracy. This was part of a restructuring of national industrial interests. education. sectors. The nationalisation of the oil industry was done in harmony with core ideas in the Nordic model: shared efforts should result in fair distribution of results. Norway has now leading competence and experience in deep water oil production. but we still have some of the smallest workplaces in the sample since some of them were reduced after the data was obtained in the national register. Statoil was merged with the other national industrial actor. The funding of oil incomes since the late 1990s was established to carry increasing welfare future expenditures. We lack data from the informal sector and companies that are not represented in the register. The merger should give Statoil the capacities and competences needed to become a recognized operator on international oil fields.

The use of indexes makes the analyses more robust towards coincidences.7 2.7 2. AVERAGE SCORE ON A SCALE WHERE 1 = LITTLE INFLUENCE AND 5 = MUCH INFLUENCE Respondents position Own work situation 4. The liberalist and managerial intention of work place democracy as individual influence on own work situation.17 The survey was obtained in the spring 2009 when the forecasts about unemployment rates were at the darkest.6 2. “In on governing and organization” consist of all together 12 related variables in the survey. WORK ORGANIZATION AND GOVERNING AND RUNNING OF BUSINESS AFTER WORK PLACE POSITIONS . but the differences are small. The table shows that the respondents perceive their influence on their own work situation as very high. Managers have some more autonomy than the other groups.4 3.5 3. but organization of work is a managerial task and the difference .4 Work organisation 4.6 N Manager Shop steward H&S officer Ordinary employee Total average 542-427 782-585 459-347 2493-1789 3071-2244 The variables “Influence on own work situation” is an index of three different variables in the survey. We interpret this to express strong support to the national work life regime.5 Governing and organisation 3. The average influence on the organization of work at the work place is less than influence on individual work situation.0 3. Managers have more influence than the others.4 4.7 4.3 2.3 4. seem to be highly fulfilled. the basic agreements and the collective bargaining to be very important to recognize. 91 percent of the employers and 93 percent of employees supports the labour regulations as the claim the labour laws. TABLE 1 THE RESPONDENTS EVALUATION OF THEIR OWN INFLUENCE ON OWN WORK SITUATION. but still on the positive side of the median (3 on the scale from 1 – 5). follow and obey by all actors in the labour market.5 4. or autonomy. as expected. “Influence on work organization” is likewise put together with four different variables on this issue.5 3.

we expected the shop stewards and H&S officers to have more influence than they report in the survey. The respondents’ perceptions of their influence on governing and organisation of the enterprise are much lower than the other two. and the single employee influence on this is supposed to be lower than their influence on work organisation and own work situation. On one hand this is what unions and shop stewards are supposed to influence in collaborative representative councils. collective bargaining or basic agreements. . However. The representative democracy seems to have potential for improvements. The survey also shows that to have collective bargaining. We have interpreted this as an indication of institutionalization: the labour regulations have been established for so long that they have become work life norms that influence on employers and employees behavior despite formal approvals of unions.18 is expected. FIGURE 1 DEMOCRATIC ARRANGEMENTS AT PLACE IN WORK PLACES WITH AND WITHOUT UNIONS (N=3262 PERCENT) This figure shows that a large majority of work places with union members have established democratic arrangements according to laws and agreements. trade unions and shop stewards improves the practice of democratic work place arrangements. A surprising amount of work places without unions have also established such arrangements.

but comparable data from other countries are needed to make more subtle analyses. On the other hand it is interesting to see how employees react to change. 29 percent of the respondents got new CEO/Top managers 19 percent was in a work place that was merged with another enterprise 14 percent was transferred to another organisation unit 11 percent got new owners and 7 percent worked in a unit that was outsourced These figures describe the level of change in the Norwegian work places. These are figures of major changes during the two last years. PERCENTS) . FIGURE 2 HOW DID YOU REACT TO THE IMPLEMENTATION OF THE LAST CHANGE DECIDED BY MANAGEMENT AND THAT YOU DISAGREED IN ? (N= 968.19 Work place changes If the Nordic model works according to its intentions it should help work places to adapt to market situations and help business development. We asked the question in the figure heading below. It seems quite turbulent. The survey shows how the Norwegian employees are exposed to work place changes and how they react to that.

establishment of conflict mediators and labour court.20 Almost half of the respondents would support the change that they were against. A majority of 77 percent would actively or passively support the change process despite disagreement. Labour regulating rules was developed from 1885 on and culminated with the basic agreement in 1935 as a first stage of institutionalisations. The industrial relations showed to be reliable. and they were slowly internalised as norms that guided actions and work life behaviour. and are still adjusted or modified from time to time. The labour movement was an alliance of the trade union and the labour party. By the beginning of the 1980s most employers’ and employee rights are defined and formally agreed and decided. From rules to norms The rules and regulatory mechanisms were developed further from 1945 till the early 1980. The social partners could . This finding can indicate that also individual participants in the Norwegian work life are most likely to avoid conflicts. 6 Institutionalisation of the Nordic hybrid The empirical findings will be discussed in the institutional theoretic framework From conflicts to regulations The first element in institutionalisation theory was the establishment of rules to regulate relations and actions. agreements on collective bargaining. Regulation by rules finally succeeded in 1935. 32 percent would react indifferently while 22 percent would oppose the managerial decision by resistance to change. Loyalty is more likely than voice or exit on individual levels. wage formation and working conditions. exchange of information. Most of them were practiced from the 1960s and forwards. Conflicts and conflict arenas were calmed down and replaced by dialogue. Many of the rules were introduced to settle ways to handle conflicts and balance out differing interests more peacefully: laws to reduce unreasonable exploitation of workers. On the other side the liberal and conservative state formed an alliance with the employers’ associations. negotiations and bargaining.

incidents. There were many elements implemented to prevent conflicts and press the social partners towards consensus: the labour court. The dynamics of economy is embedded in well defined . the formal wage formation procedures and the governmental welfare contributions to agreements and balance of originally differing interests. society will know how to handle it. that individual employers must participate that the government will contribute to the solving of problems and that the welfare arrangements are there when the work life fails Simultaneously this regime defines and is the key to understand the appointed dynamics and the opportunities for high road development. Even conflicting interests became predictable and possible to prevent in this system. It emerged and evolved. events and incidental in incremental ways. Norwegian work life seems to be dominated by rules and regulations. norms and social identifications and by understandings of realities that are shared by all the actors.21 trust each other to an extent that made it possible to predict actions and reactions in different situations that might occur. the wage formation council. From truth regimes to dynamic economy This truth regime makes the rules for actions to be taken and behavioural procedures: that unions and employers must collaborate. They developed slowly by dialogues. These are the basic functions of social norms. This development was not planned or decided. the public mediator. Mutual trust. The findings from the work life survey confirm this impression to some extent. Norms may develop into a truth regime that governs the perceptions and interpretation of almost any occurring situation: Whatever happens. that shop stewards must codetermine. respect and conflict solving procedures were finally established as a shared understanding of how the industrial relations work and are connected to the various welfare arrangements. From norms to truth regimes The third part of the institutional perspective was cognitive: the development of shared understandings of reality.

It was developed under influence of many differing directions. It is a true hybrid in the sense that it combines opposing ideas and interests in an almost Hegelian way: thesis and antithesis are developed into synthesis in various respects as the opposing ideas. understandings and interests are successively played out by the actors as windows of opportunity incidentally pass by. organisational structures and human behaviour. FIGURE 3 THE COMBINATION OF OPPOSING IDEAS IN THE N ORDIC MODEL . These synthesis and combinations of ideas forms the Nordic model as characteristics of the social. Hence the Nordic model is a competitive advantage in global economies. implementation and governance in work life. It ends up in a steadily firmer structure that eventually guides decision making.22 industrial relations. political and economic system emerge in society by events and incidents over most of the last century. The figure below presents this development from contradictions and conflicts to consensus on synthesis. welfare state and society. The hybrid Nordic model The Nordic model was never a fixed plot.

This body of regulations implemented the political system for decision making. and they formed the basic rules that regulate the work life. but was not accepted by the conservative party until the principle was to support the work life as well. The law of social security was introduced to provide economic aid to those in need. labour movements’ accept of the private property rights and liberal parties’ accept of the labour party as a legitimate player in the parliamentary system.23 The first work life conflicts developed in some small production plants already in the end of 1800s. Opposing interests of labour and capital developed to contradictions that were almost antagonist in 1918. This is the basic synthesis of liberal thesis and socialist antithesis along the line. employers accept of the union as economic counterpart. Social democracy combined some of the values and analysis in socialism with the methods of political decision making in liberalism. The labour movement had to leave the socialist refusal of private property rights in order to be a legitimate parliamentary actor. New meanings and understandings of reality was . The social partners had organised and played out their differences especially during the 1920s. These are the synthesis developed from labour and capital contradictions. This ended in the basic agreement.

This social democratic pragmatism came to dominate politic and the complete society to the end of the 1960s. and thereby accepted capitalist production systems in 1948 (Bergh 2009). So far this is a sketch for further discussions. Lex Brofoss. but the level that turns welfare policies to contradicting antithesis is dubious and blurry. Norway offers a case where that line is drawn much longer than economic theories recommend. According to economic theory the welfare state arrangements forms a body of antithesis towards the productivity thesis when they become too generous. The welfare state compares to a bank or an investment fund that control. To discuss the welfare state arrangements as investments may help us out of the confusion. expand and provide resources in shared manners according to needs. Rokkans pluralist corporatism is the scientific synthesis of the same contradiction. of politics and economy and labour and capital make it relevant to identify and discuss the Nordic model as an investment scheme. The interconnections of work life and the welfare state. The Nordic model as investment scheme The previous outline has pointed to developed praxis in Norway in frame of the Nordic model. politics and social life. were left behind. The government gave way for liberalisation of markets in order to have the economic benefits of the plan. The social democratic government implemented heavy price and production restrictions and intended to implement a soft socialisation of enterprises in a kind of states capitalism (Bergh 198 ). The last synthesis combines the productivity thesis with welfare state ideas. We can identify investors. The US Marshall plan demanded removal of these regulations. their investments and the returns of investments on all levels in the work life. This is where all the other synthesis come together in one that now guides economy. The third contradiction is between plan economy VS market capitalism after WWII. The fourth synthesis is tripartite decision making: the three part collaboration between the state and the social partners derive from democratic VS corporative methods. The liberalist thesis became the synthesis while the socialisation policies. .24 derived from the agreements on how to regulate and end labour conflicts.

That is what makes an investment perspective relevant. pensions rights. predictable economy. .25 TABLE 2 INVESTMENTS AND PROVIDED RETURNS Individual investment labour taxes union participation enterprise development participation Provided returns autonomy. influence job improvements. predictable and growing economy future wealth for generations to come) This table presents an analysis of the Nordic model as it is played out in Norway. employer rights. and simultaneously confuses liberal economic theories based on the ancient sharp distinctions between politics and economy. It may represent a path for new perspectives and theories in labour and welfare research. In this perspective the Nordic model becomes a context for economic growth. personal development Work place investments economic capital taxes employers association member tripartite industrial relations union collaboration Provided returns autonomous work force. decisions and implementation that govern of the society. good work environment free education and services. high road development support for agreed development National investments welfare expenditures tripartite arrangements (governmental investment funds Provided returns high road development stable. The hybrid Nordic model combines economy and politics as two aspects of the same intentions. cheap competencies educated work force. political influence predictable ecomomy. not a virtually hopeless and helpless insect. welfare state support network.

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