Employees in the hotel and restaurant industry have been on strike since April 19. While the demand for companies to advance sick pay has garnered significant attention, the 4.4% wage increase frame established in the “frontfag” settlement is creating intense friction.
Tony André Eide, a hotel owner and board chairman of NHO Reiseliv Oslo and Viken, argues that the hospitality sector lacks the financial margins to meet these demands. He notes that if the industrial sector provides a 4% increase, employees in hospitality expect the same to maintain an acceptable wage.
The Margin Gap: Hospitality vs. Industry
Eide contends that the current wage framework hits the tourism and hospitality sector more than twice as hard as the industrial sector. He illustrates this through a comparison of revenue allocation.
According to Eide, if a hospitality business earns 100 kroner, 40 kroner go to employees. In contrast, in Norsk Industri, only 17 kroner—or 17% of revenues—are allocated to staff.
Based on this, Eide estimates that a 4% wage increase for the hospitality sector is equivalent to roughly a 10% increase for the industrial sector. He asserts that the industrial sector would never have accepted such an increase.
Financial Pressure on Local Businesses
The impact is evident at the company level. For Oscarsborg Hotel &. Resort AS, where Eide serves as general manager, wage costs accounted for 41% of operating income in 2024.
With a 2024 turnover of approximately 48.5 million kroner, a 4% wage increase would cost the hotel roughly 800,000 kroner. For an industrial firm with the same turnover, that same 4% increase would cost approximately 330,000 kroner.
This makes the burden for the hospitality business roughly 2.4 times greater than for an industrial business given the same revenue.
Critique of the Frontfag Model
The frustration extends beyond Eide. Former Glava chief Jon Karlsen has described the recent wage settlement as “unthinkably high,” arguing that small and medium-sized enterprises are left to limit damages on their own.
Karlsen suggests the “frontfag” model is flawed in the current climate. He claims that while the model was designed for the most competition-exposed sectors to negotiate first, the opposite is now happening, with those least exposed to competition negotiating first.
The Struggle for Viability
Eide points to restrictive framework conditions—including taxes, regulations, and the “tourist tax” (overnight stay fee)—as the primary challenges for the industry. He argues that the frontfag model would be easier to sustain if the industry had better margins.
While he is doubtful that leaving the frontfag model would help, as he believes there is no alternative, Eide urges NHO to stand more united. He suggests that Fellesforbundet is more effective at maintaining unity than NHO has been.
Eide emphasizes that the industry wants to pay “good, acceptable wages” and does not wish to be a low-wage profession. However, he notes that increasing prices is difficult, as many customers already find the cost of a glass of wine at a restaurant to be too high.
Potential Future Developments
The conflict may continue as Eide attempts to conduct separate negotiations with Fellesforbundet, though the union currently demands the same terms as the frontfag settlement.
If framework conditions remain tight, some businesses could face long-term stability issues, as Eide suggests that a company unable to provide wages in line with the rest of society may struggle to survive.
Frequently Asked Questions
When did the strike in the hotel and restaurant industry begin? The strike began on April 19. What is the specific wage increase frame causing controversy? The controversy centers on the 4.4% wage increase frame established in the frontfag settlement. How do wage costs differ between the industrial and accommodation sectors according to SSB? In 2024, the industrial sector had wage costs equivalent to 17% of turnover, while accommodation businesses had wage costs of 36%. Do you believe national wage frameworks should be adjusted based on a sector’s specific profit margins?
