(Bloomberg) -- Norway's employers and industry unions averted a strike by clinching a wage agreement with the help of the state mediator.
The Federation of Norwegian Industries reached a deal with Fellesforbundet and Parat unions, the federation said in a statement. The parties agreed to wage increase of 3.7%. That's in line with the central bank's latest forecast on March 24.
Wage pressures in the richest Nordic country on a per capita basis have been growing as its economy has returned to pre-pandemic levels ahead of most developed peers. Labor shortages are growing and inflation has accelerated more than expected, spurred by sanctions against Russia over its invasion of Ukraine. Norway's finance ministry has urged spending restraint to avoid overheating.
More than 28,000 members and others from the two unions, representing parts of the manufacturing industry exposed to international competition, were prepared to strike if a deal wasn't reached. In Norway, the outcome of these talks sets the starting point for the rest of the wage negotiations in other sectors.
Norway had the highest hourly labor costs in the Nordic region last year, at an equivalent of 51.1 euros, compared with the European Union average of 29.1 euros, according to Eurostat.
The central bank last week raised its projection for annual wage growth this year to 3.7% from the December estimate of 3.2%, after last year's wage growth of 3.5% also exceeded its previous forecast. It sees next year's increase at 4%.
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