From Conflict to Cooperation: Norwegian Labour Market Institutions in the Making

Moving a relationship of widespread conflicts and distrust into a virtuous circle of trust and cooperation is challenging, yet the case examined in this article shows that it is possible. A problematic start can indeed lead to a positive outcome. In the early twentieth century, Norway experienced the highest levels of labour conflict in Europe. Class conflicts were intense and often violent, with deep mistrust between the parties in the labour market. This situation changed markedly when the Norwegian Employers’ Confederation and the Norwegian Confederation of Trade Unions signed the Basic Agreement in 1935. This agreement not only led to a lasting decline in labour conflicts, but it also marked a crucial early step towards a system of close collaboration between labour and capital in Norway. By focusing on the intimate relationship between beliefs, trust, and cooperation, this article explores how the labour market parties transitioned from widespread conflict and open struggle to a system of peaceful negotiations and compromises. Changes in beliefs enabled the parties to coordinate on a new cooperative equilibrium, an equilibrium that continues to characterise Norway’s labour market today.