After several years of double-digit inflation in Norway, Labor government of Prime Minister Odvar Nordi reluctantly decided in the autumn of 1978 to risk alienating union supporters and impose a wage and price freeze for the next 15 months.
By the end of 1979, when the controls were lifted, wages had crept ahead only 3 percent and prices had increased by less than 5 percent. It was one of the lowest rates of inflation in the industrialized world in the current economic climate.
"It turned out to be the most popular decision our Cabinet made," said Gro Brundtland, the Labor Party's vice chairman. The majority of Norwegians would have liked the freeze continued longer, she added, a claim confirmed by public opinion polls here.
The freeze was successful because it was strictly administered and few exceptions were made, Brundtland explained. The citizens' relative position did not change, so they believed it was fair, she said.
Although Norway's inflation started rising again early this year, the government, employers and labor unions just recently concluded a national wage agreement that will limit pay increases. Under terms of the pact, wage agreement that will limit pay increases. Under terms of the pact, wages will rise only 8 percent in the next year for all but the lowest paid workers, who will get somewhat more. The government expects this to keep inflation under control.
Following Norway's successful experiment, neighboring Denmark and Sweden also are trying controls to help bring down their double-digit inflation.
After imposing an emergency freeze late last year, the Social Democrats in Denmark have proposed freezing wages, prices and dividends for an entire year. The Swedish coalition government has imposed a freeze on prices until May 9, which it has offered to extend for the rest of the year if labor unions join in a national wage agreement strictly limiting pay increases.
All this contrasts with the reluctance of President Carter to try anything tougher than widely ignored guidelines in the United States and British Prime Minister Margaret Thatcher's refusal to try and kind of wage and price controls.
Carter and Thatcher say they doubt that controls would work. Instead, they hope that through tightening of their country's money supplies with high interest rates, wage and price inflation will eventually fall because less money will be available.
Yet during Thatcher's first year in office, the inflation rate and wage increases in Britain soared to around 20 percent. This further reduces Britain's competitiveness in world markets, even if many wage earners at least break even with inflation. But it is difficult for employes of the nearly bankrupt manufacturing industries who settled for pay raises well below the 20 percent average.
"We do not see Britain as a model for us," said a Norwegian Cabinet minister who asked not to be named. "We prefer a model of cooperation rather than conflict among government, management and unions."
This traditional cooperation in Scandinavia helped make Norway's abrupt and well-disciplined wage and price freeze work and produced regular national wage agreements that have minimized strikes and other labor unrest in all three Scandinavian nations.
Until recently, however, the Scandinavian prosperity allowed these agreements to produce generous pay increases, and the well-financed welfare states provided workers with many benefits beyond their pay envelopes. Only in the fight against in-inflation have the Scandinavian governments' income policies begun to bite.
Realizing this, the powerful labor unions in Denmark and Sweden, who do not have Norway's North Sea oil wealth to ease the squeeze in the near future, want something in exchange for their agreement to hold down wage increases -- a share in the ownership of Danish and Swedish businesses.
Despite their extensive welfare states, more than 90 percent of the businesses in Denmark and Sweden are privately owned. The labor unions want the governments to require each business to start profit-sharing funds, which would be financed with 25 percent of its profits.
At first, Danish and Swedish businessmen angrily fought this idea. But now both governments are proposing just such profit-sharing schemes as inducements to unions to agree to wage restraint and in financially troubled Denmark, other austerity steps including proposed cuts in government spending on social programs.
Danish labor union economist Jorgen Hansen said in Copenhagen that unions there actually want wage controls imposed to help bring down inflation. But he added, "We want to get a share in ownership back for our investment in wage restraint. Otherwise, there will be a more unequal distribution of wealth."
The minority Social Democratic government in Denmark may well fail to win support for this proposal from other parties in parliament there. And the right-of-center coalition government in Sweden may have difficulty achieving sufficient wage restraints in ongoing negotiations with unions there even with this bait.