In Brief : Oslo Announces Modest Pay Hikes

Finance Minister Gunnar Berge told Norway’s workers today they will have to settle for modest pay raises to help the economy recover from weak oil prices.

He said the government feels positive about the economy of Western Europe’s No. 2 oil producer now. Inflation was down and Norway had its best trade surplus for nearly five years in December.

But Berge told Reuters in an interview that he will not be cutting interest rates again in his efforts to liven up the economy and cut the jobless figures before wage talks with trade unions next month.

There is a chance of a further cut after the pay settlement “providing . . . wage growth is below that in the countries we trade with,” Berge said. “That means that it must be clearly under 4%.”

Annual pay negotiations have been a key element in the Labor government’s attempts to restore order to the economy.

Huge pay rises in recent years boosted both domestic demand for goods and industry’s costs, hitting its ability to compete. Then North Sea oil prices slumped in 1986 in a worldwide glut.

Last year, the government imposed a wage law that virtually froze pay. The law, accepted by the unions, lasts until March.

“Our assessment is that the economic development has been very positive,” Berge said.