Oil prices slumpGondola in free fall

Strike and lockout

person by Trude Meland, Norwegian Petroleum Museum
The pay bargaining round in 1986 concerned a biennial main agreement and became extremely dramatic. It took place against the backdrop of a slump in oil prices during 1985-86 which frightened the petroleum industry and made a number of Norwegian fields less economic.
— The canteen at Statfjord A (Illustration photo). Photo: Odd Norway/Norwegian Petroleum Museum
© Norsk Oljemuseum

As a result, the companies became more concerned about their payroll expenses than they had been when oil prices were high. And the cost of a possible shutdown was reduced. The government’s oil revenues fell, but the national economy was overheated and the labour market tight, so that workers expected a good pay settlement.

Before the bargaining round, the employers had succeeded in coordinating their approach, and the Norwegian Operator Companies Employers Association (Noaf) had extended its membership from the original 12 operators to include four catering and six drilling contractors. It was renamed the Norwegian Oil Industry Employers Association (with the same abbreviated name).

Noaf presented a proposal to the unions as early as the autumn of 1985 on establishing a common agreement on pay and conditions for production, catering and drilling operations in order to clear up the existing complicated web of such deals. This suggestion was rejected by the unions.

The Federation of Offshore Workers Trade Unions (OFS) wanted to negotiate with the employers on a union-by-union basis, without coordination on the employee side. At the same time, however, it defined some common demands – a reduction in the retirement age to 55, working hours cut from 55 to 33.6 per week, extended maternity leave and equal pay for equal work. Although the OFS wanted harmonisation across unions and professions on such claims as equal pay for equal work, negotiations were to be conducted on an independent basis by each union.

Noaf made it clear that agreements and negotiations were to be coordinated, and that an integrated bargaining process would be conducted in which negotiations by one union would affect the next one’s chances of getting its demands discussed.

The Catering Workers Union (CAF), an OFS member, was the first to sit down at the negotiating table because the federation felt it evoked the greatest sympathy among the employers. Contractor employees followed, and then operator personnel. A 28 per cent pay harmonisation claim was submitted by the CAF. Acceptance of this demand was a precondition for continued negotiations, and it was decided to postpone the talks to the autumn with a full right to strike for the union. This was so that it could adapt supplementary demands to the awards achieved by the other unions.

This resulted in a shutdown of production across the whole Norwegian continental shelf and a compulsory settlement imposed by the National Mediator. The CAF downed tools during the early morning of 6 April, and the rest of the OFS loyally followed suit despite certain misgivings. Since it was unable to accept the union demands, Noaf notified a lockout of all members of the Noaf and the Norwegian Oil and Petrochemical Workers Union (Nopef) on every fixed production platform.

This conflict suited both the government and the companies because of the low oil prices, pressure on Norway from the Organisation of Petroleum Exporting Countries (Opec) to reduce output, and signals from the USA that production cutbacks would be desirable.

As a result, the government dragged its heels on intervening. But after two weeks the OFS took out all its members on the UK side of Frigg and shut down production from the whole of this gas field for the first time. That was perceived as a big problem by the government, which feared the consequences for Norway’s credibility as a gas exporter. It accordingly imposed compulsory arbitration on 25 April and work immediately resumed. A settlement along the lines agreed nationally between the Norwegian Confederation of Trade Unions (LO) and the Norwegian Employers Confederation (NAF) was accepted.

Oil prices slumpGondola in free fall
Published December 3, 2019   •   Updated December 13, 2019
© Norsk Oljemuseum
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