Definitive Report - Report No 279, November 1991

1. 91. The Norwegian Trade Union Federation of Oil Workers (Oljearbeidernes Fellessammenslutning, OFS) presented a complaint of violation of trade union rights in Norway in a communication dated 20 March 1991. The Government supplied its observations in a communication dated 1 October 1991.
2. 92. Norway has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainant's allegations

1. 93. In its communication of 20 March 1991, the OFS alleges that the Government violated ILO Conventions Nos. 87 and 98 by using compulsory arbitration in June 1990 to end a legal strike by the oil workers in the North Sea.
2. 94. A wage agreement, valid until 30 June 1990, existed between the OFS and the Confederation of Norwegian Business and Industry/Oil Industry Association of Norway (NHO/OLF). The negotiations over a new agreement failed and a joint walk-out of some 4,000 OFS members was initiated on 30 June at 12.00 p.m. On 2 July, the Government adopted a Provisional Arrangement prohibiting strikes in the North Sea and referring the dispute to compulsory arbitration. Up to that date all procedures had been duly carried out under the Labour Dispute Act.
3. 95. Recourse to compulsory arbitration in Norwegian labour law is approved by a special Act of the Storting (Parliament), or a Provisional Arrangement if the Storting is not in session. The Government, in each case, decides whether the dispute in question should be solved by compulsory arbitration; there is no law which indicates the circumstances allowing the authorities to use compulsory arbitration to solve labour disputes. In this instance, the Government gives the following reasons to justify its intervention: loss of revenue, taxes and duties; hurting Norway's credibility as a reliable gas supplier; risks of damage to the installations in case of a lengthy shut down; dismissal of employees in related operations (maintenance, supply, transport); indications of a long conflict because of the complete standstill in negotiations.
4. 96. The OFS considers that the potential losses to the Norwegian economy are the main reason invoked by the Government; it points out in this respect that any strike has the purpose of creating financial set-backs. As to the risks of damage to the installations, these problems may easily be solved by excepting necessary maintenance personnel from the strike and, if necessary, by doing additional maintenance work after the dispute. As regards the alleged possible dismissal of other employees for lack of work, that does not justify prohibiting labour disputes nor does it make compulsory arbitration legal and legitimate. Furthermore, the OFS cannot see how a long dispute could decrease Norwegian credibility as a reliable gas supplier.
5. 97. The OFS points out that the Norwegian Government has been consistently using compulsory arbitration to end any labour dispute in the North Sea oil installations. In effect the parties are not really free to negotiate. In addition, because of this systematic recourse to compulsory arbitration, employers do not show any willingness to negotiate. This intervention in June 1990 should be put in perspective with other instances, in December 1983 and November 1986, where the Government also imposed compulsory arbitration in that sector. The OFS refers in particular to Cases Nos. 1255 and 1389 where the Committee on Freedom of Association concluded in similar circumstances, between the same parties, that the Government's actions were contrary to the freedom of association principles as embodied in Conventions Nos. 87 and 98. The OFS claims that, in practice, any dispute concerning the North Sea oil installations is prohibited through compulsory arbitration, which undermines entirely the workers' freedom to organise and negotiate in this sector.

B. The Government's reply

1. 98. In its communication of 1 October 1991, the Government points out that the right to industrial action is not expressly embraced by the Articles of ILO Conventions, but is considered part of the principles of freedom of association. According to ILO standards as interpreted by the ILO bodies, the consequences of a labour conflict may become so serious that government intervention or restrictions on the right to strike is compatible with the principles of freedom of association. Limitations on or prohibitions of strikes are thus accepted when the strike involves: (a) public servants engaged in the administration of the State; (b) essential services in the strict sense of the term, i.e. services the interruption of which would endanger the life, personal safety or health of the whole or part of the population. According to the ILO interpretation, the damaging effects must, in addition, be clear and imminent.
2. 99. According to the Government, the oil conflict of 1990 must be considered in the light of the general 1990 settlements. Temporary pay and dividends regulation Acts were in force in 1988-89. During this period signs of improvements had occurred in the Norwegian economy. The last regulation Act expired on 31 March 1990. The challenge then was for the employers' and workers' organisations through free collective bargaining to reach new agreements which would not jeopardise the improvements gained during the wage regulation period. General negotiations for the private sector started on 2 March 1990. OFS withdrew from these negotiations on 12 March, while other central unions came to terms on 15 March. In leaving the central negotiations, OFS lost its possibility of influencing the economic framework of the forthcoming settlements. Based on the agreed general economic framework, union-by-union negotiations were carried out. In the North Sea, new agreements were made between NHO/OLF, on the one hand, and the Norwegian Oil and Petrochemical Union (NOPEF) and the Norwegian Association of Supervisors (NALF), on the other. These two unions had as their members about one-half of the organised workers on the oil installations at the time.
3. 100. The Government explains that the OFS complaint gives on the whole an adequate description of the development of the conflict, but it adds some supplementary observations. The collective agreement expired on 30 June 1990; OFS and NHO/OLF started negotiations for a new agreement on 7 June. OFS broke off the negotiations the same day, maintaining that these should be carried out without regard to the results of the central negotiations, which had also been accepted by the parties in the public sector. OLF, as a member of the employer's body, did not accept this. According to the regulations in the Labour Disputes Act, compulsory mediation by the state mediator started on 21 June. OFS demanded the mediation closed on 26 June. On 30 June the mediator suggested a solution which the parties could not accept. The Minister of Local Government appealed on the same day to the parties to try to reach an agreement, but this final attempt also failed.
4. 101. The Storting was not in session at this time. On 2 July the Government decided by Provisional Ordinance pursuant to section 17 of the Constitution that further strikes were forbidden, and that the dispute was to be solved by the National Wages Board. Despite this Provisional Ordinance, large numbers of workers continued the strike. The employers then brought the dispute before the Labour Court, claiming that continued strikes were illegal and contrary to the collective agreement. OFS for its part claimed that the Provisional Ordinance was incompatible with Norway's obligations under international law and was therefore invalid. The Labour Court rejected OFS's claim, as it found that the Government had given due consideration to Norway's international obligations; it found the continued strike to be illegal and contrary to the collective agreement. Furthermore, one of the leaders of the strike was deprived of the right to serve as a shop steward. OFS has had to accept to pay to the employers a considerable sum in compensation for the losses incurred.
5. 102. The Government lists the consequences of the strike and the Government's evaluation of the situation. First, the strike among about 3,900 OFS members led to the closing down of all fields on the Norwegian continental shelf and full stoppage in all Norwegian oil and gas production. Secondly, there were economic consequences since the oil sector plays a crucial role for Norwegian society and it is the State rather than the oil companies that has to bear most of the loss of income. The OFS strike in question was estimated to incur a loss in gross production value of about 1,500 million NOK per week, with the State suffering a loss of about 800 million NOK per week in taxes and royalties, and about 300 million in income from its direct involvement in the petroleum industry. The State would thus suffer a loss of about 1,100 million NOK per week, or three-fourths of the total loss. Obviously, deterioration of the trade balance and a reduction in the State's income of such dimensions would have a serious impact on the economy, even after a short time. A labour conflict of some duration would have even more serious consequences. The Government knew that the parties were far apart in views, and that there was every reason to believe that the conflict would be a long one. Thirdly, in 1990, the export income from the oil industry contributed nearly one-third to Norway's total export income and the State's gross income from the petroleum sector (including taxes and dividends) amounted to about one-half of its expenditure on the purchase of goods and services. Since the high level of Norwegian social benefits has for a large part been made possible by oil revenues, a long-lasting conflict of this magnitude might undermine the basis of the welfare state. Fourthly, the Government was concerned about Norway's long-term economic interests being damaged, as frequent labour conflicts in the North Sea may endanger Norway's reputation as a trustworthy gas supplier and weaken its position in international negotiations on gas deliveries.
6. 103. The Government also refers to the difficult employment situation as an additional factor influencing its considerations. From 1987 to 1990 the unemployment rate increased from 2 per cent to 6 per cent. All parts of the society are concerned about this situation. Through wage regulation and moderate settlements the industrial partners have made valuable contributions in controlling the rise in prices. It was important to continue the joint efforts for improvements in the mainland economy. All other parties involved in the 1990 settlements contributed to this end, coming to terms on moderate wage increases. These results would have been jeopardised by a better agreement for the OFS members. The Government therefore argues that expected economic losses from last year's full-scale oil strike were of such dimensions that the intervention should be accepted as compatible with the Conventions protecting the freedom of association.
7. 104. The Government notes that the OFS questions the account of the consequences of the strike as presented by the Government in the Provisional Ordinance denying that "a long dispute could decrease Norwegian credibility as a reliable gas supplier" and stating this is not in accordance with the ILO Convention as regards compulsory arbitration. The Government points out that the Provisional Ordinance describes the broad consequences in many fields which the strike would lead to. This does not, however, imply that the Government found each individual factor to be serious enough to cause the use of compulsory arbitration. There would be economic consequences as described above; there would also, after some duration, be an impact on the safety conditions on the installations, and lay-offs of other employees in the oil sector. (An oil strike involves an increased safety risk, because extensive maintenance work is postponed and because corrosion and other damage can occur if the system is out of operation for a long period.) As for the OFS allegation that maintenance work could have been exempted from the strike, the Government states that the employers rather than the authorities are responsible for organising maintenance programmes. The authorities are not in a position to make exemptions of this kind.
8. 105. Observing that the OFS points out that the purpose of industrial action usually is to bring about economic losses, the Government replies that, if it is the third party which suffers the greatest loss from a strike, little pressure is put on the employer. While third parties usually have to endure some inconveniences due to a strike, during the 1990 oil strike the situation was quite the opposite: it was primarily the third party that was hit. The employers suffered small losses compared to those of the State and the society. The workers had minor problems financing the strike, due to the safety crew rules according to which during a strike a number of the oil workers would be on duty as safety crew and get full pay. Contributions from these workers could maintain a strike fund for the members on strike.
9. 106. The Government denies the OFS claims that it continuously neglects freedom of association and the right to lead joint wage negotiations and that "the consistent use of compulsory arbitration in the North Sea proves that the North Sea parties do not have the freedom to negotiate". The Government emphasises that each conflict is examined separately. The previous cases of compulsory arbitration were all mainly due to the general economic situation, the country's dependence on the oil income during the last decade and to the fact that the disputes in question were full-scale strikes leading to a total stoppage of all gas and oil production. There have been other conflicts in the oil sector of more limited extent and consequently less serious effects, with no interference from the authorities. There is in its opinion little basis for the OFS statement that the North Sea parties are deprived their freedom to negotiate; it is the extent of the conflict and the subsequent consequences that are decisive. It notes that the OFS is concerned about Norway not having any permanent legislation prescribing the conditions for intervention in a strike. To the Government, however, the question of intervention in a conflict is so serious that each case must be submitted to the highest legislative authorities of the country, the Storting. It does not wish permanent legislation to delegate authority to the Government in this area because this may make it easier to resort to the compulsory wage board procedure. Moreover, it would be very difficult to establish by law fixed criteria which are both precise and sufficiently flexible. Fixed criteria may, in addition, have the negative consequence that employers' and workers' organisatons may count on the intervention by the authorities, thus preventing real negotiations between the two parties.
10. 107. As for the complainant's reference that this conflict should be seen in connection with previous cases against the Government of Norway (Nos. 1255 and 1389), the Government is of the opinion that it is not relevant to do so. It has noted with appreciation that previous comments from the ILO concerning the use of compulsory arbitration in the North Sea have been based on specific cases, and should not be seen as an evaluation of the Norwegian collective bargaining system.
11. 108. Lastly, the Government explains the relationship between ILO standards and Norwegian industrial relations practice. As a basic principle, the employers' and workers' organisations are responsible for wage settlements and industrial peace. However, there is broad consensus in Norway that the Government has the ultimate responsibility for preventing labour conflicts from causing serious damage to the society. In the very few cases where proposals for resorting to compulsory arbitration have been submitted to the Storting, the Storting has adopted the proposed Act by a large majority. In general, the bargaining system functions well; there are very few labour conflicts and awards of the National Wages Board are respected. Only three organisations have presented complaints to the ILO. None of these are members of the General Confederation of Norwegian Trade Unions (LO), which is the most representative workers' organisation. The right to organise is secured through a diversity of organisations and there is a multiplicity of collective agreements. The Labour Disputes Act of 1927 gives equal rights to all workers' organisations irrespective of size. The Government believes that the Norwegian system has great advantages. With no restrictions on the right to collective bargaining, negotiations and cooperation take place at all levels, and most groups have possibilities to influence their working conditions. Cooperation in the labour sector covers a broad range of subjects. Several different cooperation procedures exist which may overlap to some extent; in addition to collective bargaining, there is a well-developed system for co-determination which gives employees a considerable share of influence in the enterprises; there is also extended institutionalised cooperation between the organisations and the authorities (including the whole range of topics within the areas of legislation in general, labour legislation specifically, incomes policy, etc.).
12. 109. The Government strongly emphasises Norwegian compliance with its international obligatons. It states that the fundamental legal principles concerning collective bargaining are fully compatible with the ILO Conventions in question. Still, complaints brought to the ILO have shown that some cases have been at variance with the ILO's interpretation of Conventions Nos. 87, 98 and 154. The ILO interpretation has attached only little importance to the extensive economic effects on society or third parties as a result of a strike. The Norwegian authorities, however, cannot disregard such effects in connection with large-scale labour conflicts in the oil industry. The consequences of a long-lasting and full-scale oil strike like the one in 1990 are so serious that the oil industry has to be accepted as an essential service for the Norwegian society. The Government is concerned because the ILO has taken a different view in relation to Cases Nos. 1099, 1255 and 1389. Against this background, the Government has recently started to review possible modifications of the system for resolving labour conflicts. The aim is to develop a system which can satisfy both the ILO's and national concerns. As industrial action is a means of putting pressure on the opposite party, a country acknowledging the right to industrial action has to endure the inconveniences entailed by such actions. The limits on how extensive the consequences are to be for society and the general public, as drawn up by the ILO bodies, have been commented on. The Government argues that there are cases where the economic losses for society or third parties are so great that an intervention in the right to strike will be fully in compliance with the Conventions. There are, however, a number of aspects concerning the effects of industrial actions on a modern industrialised country that call for closer reflection. As explained above, it would be almost impossible for any Norwegian Government not to take into account the economic losses that a long-lasting and full-scale oil strike would result for its society. Another important aspect is the broad consensus among the social partners on the Norwegian system and practice, including the use of compulsory arbitration in conflicts of this kind. Corresponding situations also occur in other industrialised countries with a mixed economy, especially where they, like Norway, are highly dependent on one particular industry. The Government feels that the time is right for the ILO to give consideration to these problems and would be prepared to participate in a dialogue on this with other members, as well as with the ILO itself.
13. 110. In conclusion, the Government emphasises again its concern that Norway complies with the Conventions it has ratified. However, there is a broad consensus that the Government has an ultimate responsibility for preventing strikes from causing serious damage to the society and third parties. In the 1990 oil conflict, the Government had to take into consideration the enormous economic losses a full-scale oil strike would bring about for the country, in a severe economic situation and high and growing unemployment. A strike would also have undermined the joint efforts of the other organisations and the whole community in trying to master negative developments. The Government trusts that the information given demonstrates that the Provisional Ordinance imposing compulsory arbitration on the parties in the 1990 oil conflict was in compliance with Conventions Nos. 87 and 98.

C. The Committee's conclusions

1. 111. The Committee notes that this case concerns the Government's intervention in collective bargaining through the imposition of compulsory arbitration and the adoption of a legislative measure putting an end to a legal strike by the oil workers of the North Sea.
2. 112. The Committee recalls that in the past it has dealt with many cases concerning compulsory arbitration in Norway: Case No. 1099 (217th Report, paras. 449-470, approved by the Governing Body at its 220th Session, May-June 1982); No. 1255 (234th Report, paras. 171-192, approved by the Governing Body at its 226th Session, May-June 1984); No. 1389 (251st Report, paras. 191-214, approved by the Governing Body at its 236th Session, May 1987); and No. 1448 (262nd Report, paras. 93-123, approved by the Governing Body at its 242nd Session, February-March 1989).
3. 113. The legislative intervention which is the subject of the present complaint therefore is not an isolated case. The Committee notes that the situation evolved according to a familiar pattern:
   • - in 1980, a strike commenced on 3 July; the Government imposed compulsory arbitration by Provisional Ordinance on 18 July 1980;
   • - in 1981, a strike commenced on 24 August and was ended by order-in-council dated 25 August;
   • - in 1982, a work stoppage which started on 13 October ended on 18 October, through a Government Bill;
   • - in 1986, the strike commenced on 6 April and was terminated on 5 May by the Government;
   • - in the present case, the strike started on 30 June and was ended on 2 July, again through government intervention, 36 hours after the beginning of the work stoppage.
4. 114. The dispute in question took place in the oil sector in the North Sea. To justify its intervention, the Government mainly argued that, on the one hand, the strike caused important losses to the Norwegian economy and, on the other hand, that there would also, after some time, be risks for the safety conditions on the installations. The Committee cannot ignore such arguments advanced by the Government but it is impossible for it to determine whether the dangers caused by this work stoppage were such as to satisfy the criteria which it has established to determine situations in which a strike could be prohibited, that is to say where there exists a clear and imminent threat to the life, personal safety or health of the whole or part of the population. In the Committee's opinion, it would be desirable if, in cases like the one before it, the concerned parties, with the participation of the Government if necessary, could reach an agreement on minimum services that would be strictly necessary in order not to compromise the life, personal safety or health of the whole or part of the population.
5. 115. Taking into account these considerations, the Committee thus has to express doubts as to the compelling need to have had recourse to compulsory arbitration in the dispute in question.
6. 116. More generally, the Committee notes that many complaints have been lodged in recent years concerning the same sort of cases. Therefore it does not appear that the present system of resolving disputes in the oil sector meets with unanimous agreement in the country. In addition, recourse to compulsory arbitration poses problems in this case as regards the implementation of the principles of freedom of association. The Committee considers in this regard that to avoid disputes that are harmful to all the parties concerned, the latter should endeavour to give priority to collective bargaining as the means of determining employment conditions.
7. 117. The Committee notes with interest that the Government has started to review possible modifications of the system for resolving labour disputes. It expresses the hope that during this examination the conclusions adopted by the Committee in the present case, as well as in previous cases concerning Norway, will be duly taken into consideration. It also draws the Government's attention to the fact that the advisory services of the International Labour Office are at its disposal, if it so wishes.