- Observatory: EurWORK
- Published on: 14 July 2009
Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
The impact of MNCs on the Danish collective bargaining system is limited. Although large Danish companies and MNCs have a certain influence on the bargaining agenda through membership of the dominating employers’ associations, the influence of foreign MNCs is hardly present. In general foreign MNCs experience the Danish model of collective bargaining as a guarantee for a peaceful labour market. Most MNCs have signed collective agreements.
1. MNCs and collective bargaining: basic data
1) MNCs account for a significant proportion of private sector employment in many European countries. Please provide the following information according to availability:
a) proportion of private sector employment accounted for by MNCs, and recent change (e.g. since 2000)
c) proportion of service sector employment accounted for by MNCs, and recent change (e.g. since 2000)
In 2003 a study among the private sector members of the second largest trade union in Denmark, Union of Commercial and Clerical Employees (Handels- og Kontorfunktionærernes Forbund, HK) found that 75% of the private-sector members were employed by Danish-owned or foreign-owned MNCs (DK0305102F). The same year the largest union, Danish General Workers' Union, SiD (now United Federation of Danish Workers, Fagligt Fælles Forbund, 3F) estimated that 50 to 75% of their private sector members worked for MNCs. However, both are estimates based on surveys. The percentages should rather be seen as an indication that more than 50% of the members of the two largest unions in Denmark work in Danish or foreign based MNCs. In this connection more works in manufacturing than in service. (E: 65% against 35%).
2) Please provide any available information on the breakdown of employment in multinationals between foreign-owned MNCs and home-based MNCs
The HK study found that among the private sector members employed by MNCs 61% worked for foreign-owned companies, while 39% were employed by Danish-owned companies.
3) What is the level of collective bargaining coverage amongst MNCs, and how does this compare with levels of collective bargaining coverage within the private sector? In the absence of precise figures, please provide an estimate of whether it is higher or lower than the average in:
No exact figures are available
i) the private sector overall
iii) private services
4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are MNCs covered by sector agreements? What is the nature of the relationship between MNCs and sector agreements?
a) If Yes, do they mainly conform with the provisions specified in these agreements?
b) If No, do MNCs conclude their own company agreements? If so, what if any relationship do these company agreements have with the sector agreement?
Yes, they do mainly conform with the provisions specified in these sector agreements
5) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, to what extent are MNCs regarded by other employers as pattern setters for wage negotiations?
Denmark is not characterised by single-employer agreements
2. MNCs and change in national systems of collective bargaining
1) To what extent have MNCs been a source of recent change in the agenda and outcomes of collective bargaining in respect of any of the following issues. Please distinguish between manufacturing and private services:
a) payments systems? If so, please elaborate and give examples.
b) working time arrangements? If so, please elaborate and give examples.
c) flexibility arrangements (other than working time)? If so, please elaborate and give examples.
d) handling restructuring? If so, please elaborate and give examples.
MNCs have not been source of recent change in the collective bargaining agenda in any of the given examples (a-d). In general, the Danish IR-system is characterized by a very high union density and a high level of trust and cooperation between employers’ organizations and unions. This system seems to be so well consolidated that new HR policies that questions the fundamentals of the IR-system have very limited influence.
2) Are any of these changes associated with MNCs headquartered in particular countries? If yes, which countries?
3) Are MNCs introducing new issues onto the bargaining agenda? If so, what are these new issues? (Examples might include equality and diversity practices; environmental issues; new employee participation practices; teleworking.)
MNCs have not been introducing new issues to the bargaining agenda at sector level. This is the task of the labour market organisations. However, the recent decades have been characterised by a decentralisation process concerning the collective bargaining competences. Many issues in the sector agreement are negotiated further at company level. Pay, for instance, is decided at company level. Therefore there might be cases where MNCs have introduced new issues on the local agenda, but they are not known. It should be added that the agenda already contains the examples given in the question and that employee participation practices are rather developed through agreements as well as legislation.
4) Are any of these new issues associated with MNCs headquartered in particular countries? If yes, which countries?
5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what has been the role of MNCs in opening up greater scope for company negotiations? Please distinguish between developments in manufacturing and private services.
a) are company negotiations mainly confined to issues on which sector agreements
i) provide openings and/or a framework?
ii) establish minimum standards or conditions?
Company agreements are mainly confined to issues on which sector agreements provide openings and a framework.
b) are there company negotiations on issues which are not addressed by sector agreements? If yes, please give examples.
c) are there any instances of company negotiations resulting in breaches of provisions in sector agreements? If yes, please give examples.
6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are there any recent examples of MNCs:
i) leaving a sector agreement? If yes, please give details.
According to Danish labour law it is not possible to leave or change a sector agreement in force. If a MNC after the peace period wants to cancel a collective agreement, the trade unions have the right to conflict for a renewal of the agremeent. No examples of MNCs leaving a sector agreement are known.
ii) placing new operations or sites outside of the coverage of the sector agreement(s) which apply at existing sites? If yes, please give examples.
Not known, but hardly existing. Sector agreements cover nationally.
MNCs can avoid being member of an employers’ association and thereby stay outside the sector agreement as a whole. A known case is the Danish based pharmaceutical company Novo. On the other hand Novo has concluded their own agreements with the trade unions, which are a little better that the normal standard for the sector.
7) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any evidence of the practice of ‘double-breasting’ by MNCs? (Double-breasting is when companies recognise trade unions for collective bargaining purposes at longer established sites, but not at more recently opened ones.) If yes, please indicate the extent of the practice and provide examples.
Not relevant for Denmark
3. MNCs and the cross-border dimension to collective bargaining
1) Is there evidence of MNCs using comparisons of labour costs, flexibility and performance drawn from company operations in other countries in the course of local company negotiations? If yes, please give examples when answering the following:
i) in which sectors does this typically occur?
ii) what is the geographical focus of the comparisons (e.g. western Europe, eastern Europe, Asia, worldwide)?
iii) what is the impact of these comparisons on the outcome of local negotiations?
There is no known evidence for this kind of behaviour. MNCs generally accept Danish conditions based on sector agreements.
2) Is there any evidence of threats to relocate operations influencing the agenda and outcomes of local company negotiations? If yes, please give examples when answering the following:
i) in which sectors has this occurred?
ii) what are the destination countries / regions of the global economy for any threatened relocations?
iii) what has been the impact on the outcome of local negotiations?
It is unusual for the management to explicitly threaten with relocation of operations during local negotiations; however for many companies outsourcing and relocation is a real possibility and more subtle threats will occasionally appear in local negotiations. Such behaviour mainly occurs in the production sector, among others meat production, where the destination countries include Germany and Central- and Eastern European countries. In general the conditions of the local relations are of great importance: High trust between the partners results in few outsourcing threats, while low trust results in more explicit threats.
There is one well-known example of openly threatening with relocation. In 2004 the management of the international meat company Danish Crown threatened to shut down the Tulip Slaughterhouse in the city of Ringsted. According to the management production would be moved to German operations with lower labour costs, if 230 workers didn’t accept a 15% wage cut. Initially the employees accepted the demands, but after protests from the trade union the Danish Food and Allied Workers' Union (Nærings- og Nydelsesmiddelforbundet, NNF) and massive strikes at other Danish Crown slaughterhouses they refused. Ultimately the Tulip Slaughterhouse was closed and the production moved to Germany.
3) Is there evidence of MNCs seeking to introduce so-called ‘best’ practices and/or corporate policies from their operations in other countries in the course of local company negotiations? (This may arise through the use of benchmarking.) If yes, please give examples when answering the following:
i) in which sectors does this typically occur?
ii) is the process linked to the use of comparisons of labour costs, flexibility and performance or other Human Resouces policies (if so, please specify)?
There are some examples that foreign-owned multinationals have tried to introduce Human Resources policies from operations in other countries. This especially applies to North American companies and multinationals from countries where the negotiation culture is significantly different from the Danish.
For instance, when the American radio company Motorola bought the Danish radio manufacturer Storno in 1986 the management tried to introduce tougher - American - Human Resources policies, especially concerning lay-off practices. This led to protest from The Danish Association of Professional Technicians (Teknisk Landsforbund, TL) and threats of legal action. Ultimately Motorola accepted the Danish conditions.
A more recent example: Since Denmark’s leading telecommunications company, TDC, was bought by a group of private equity funds in 2006, the management has introduced tougher Human Resources policies concerning staff policy and payment. Since the purchase The Danish Metalworkers' Union (Dansk Metal) has criticised an increase in work pressure and poorer working conditions.
4) Do MNCs employ significant numbers of posted workers (e.g. amounting to more than 5% of the workforce)? If yes,
i) in which sectors does this typically occur?
ii) are these posted workers covered by local sector and/or company agreements?
There is no available information concerning this matter.
5) Are there any instances where MNCs headquartered in your country have engaged in transnational negotiations at either European or global levels? If yes, please provide details of the MNC(s) concerned and the issues addressed.
A unique example of multinationals engaged in transnational negotiations is Nordea - the leading Nordic financial company registered at the Stockholm, Helsinki and Copenhagen stock exchanges. Nordea was one of the first multinationals to make use of the European Company Statute, which allow companies to operate at European level. As a response four trade unions organising the Scandinavian employees formed the transnational trade union - Nordea Union (DK0411101N).
These transnational structures deal with issues such as the working environment, stress, training and strategic development - though core isssues as pay and other employment conditions are still decided at national level. The employee representatives are also consulted on the preparations when Nordea enterprises move their activities from one country to another or outsource activities. One issue addressed by the Nordea Union was to obtain collective agreements in a newly formed joint venture company between Nordea and IBM
4. MNCs and the social partners
1) Are MNCs affiliated to the main employers’ organizations at cross-sector and sector levels?
The large Danish as well as foreign MNCs are members of sector organisations, in particular the Confederation of Danish Industry (Dansk Industri, DI) DI is the largest and most influential of the employers’ sector organisations. The members covers manufacturing, trade and transport. In fact only a few Danish multinationals stay outside DI – one example is Novo.
2) To what extent are MNCs regarded as key players within the main employers’ organizations at cross-sector and sector levels?
Large Danish companies including MNCs are key players within the employers’ associations. Not the least because their size. Membership fee is paid according to the total wage paid to the employees. An informal rule is that, the larger the company the more influence on the policy of the association as a whole, i.e. also the trade or business policy of the association. On the other hand the foreign MNCs are not very active but seems satisfied with the support they receive from the employers’ association.
3) Are MNCs also organized in country-of-origin specific assocations (e.g. American or German Chambers of Commerce). If yes:
Do these associations intervene on industrial relations issues? If yes, please provide details.
Only Danish based companies can through membership of an employees’ association intervene on industrial relations issues.
4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what influence do MNCs exercise over sector negotiations? For example, how far are MNC personnel involved as lead negotiators for employers’ organizations?
The MNCs are not directly involved in sector negotiation. When joining DI, for instance, the MNC leaves the mandate to negotiate to DI. DI appoints their own negotiators to bargain with the counterpart. Individual companies are not present at sector negotiations.
5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what, if any, kind of reforms to sector agreements are MNCs proposing? For example, are they pressing for:
i) limited reform, with modest extension of scope for company bargaining within sector agreements? If yes, please give examples.
ii) extensive reform, under which sector agreements are confined to establishing either minimum standards or a basic framework governing a few key issues? If yes, please give examples.
MNCs are not particularly pressing for reforms in the Danish bargaining system. Probably because sector agreements are already confined to establish minimum standards and a basic framework to be further negotiated at company level. Furthermore, one of the selling points of the Danish IR-system when attracting foreign direct investments is the high level of industrial peace and long-lasting (typically three years) collective agreements. Interfering in the system on other areas will invariably also change the unions willingness to accept long-lasting collective agreements.
6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any indication of the advantages or disadvantages that MNCs perceive in continuing to be party to sector agreements?
MNCs in general find it advantageous to be member of an employers’ association and thereby party to a sector agreement. And, it should be added, to be party to the cooperation at company level that is stipulated in the sector agreement. In general foreign MNCs accept and even appreciate the Danish model of regulation of the labour market with strong representation of the social partners. It provides, so to speak, a basis for ‘law and order’ at the workplace, not the least because the employees’ are heard and consulted in all important issues concerning the day-to-day running of the company.
4b. Trade unions
1) How have trade unions responded to the impact of MNCs on the agenda and outcomes of collective bargaining? Please give examples.
MNCs have limitid impact on agenda and outcomes collective bargaining, as mentioned above. There are no examples that unions have responded to any MNCs in particular.
2) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to attempts by MNCs to broaden the scope of company negotiations? Please give examples.
The scope of company negotiations provided in the sector agreement is substantial. There is no evidence that MNCs should try to broaden this further, and if they did, it would even be in the spirit of the sector (framework) agreement. Furthermore, changes in the scope of company negotiations can only take place if both parties agree.
3) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to any attempts by MNCs to:
i) leave sector agreements? Please give examples.
ii) place new operations or sites outside of the coverage of the sector agreement which applies to existing operations? Please give examples.
These examples have not taken place. See also above.
4) In what ways have trade unions responded to the use by MNCs in local, company negotiations of:
i) comparisons of labour costs, flexibility and performance?
ii) threats to relocate? Please give examples.
Danish trade unions are generally displeased when MNCs threaten to relocate or introduce foreign Human Resource policies, and have often responded by organising strikes or threatening with legal action as mentioned above.
Comparison of labour costs is not a typical issue at the local agenda in MNCs. If it was, the unions would no doubt point to the agreed wage levels in the sector or sub-sector. There is no national minimum wages in Denmark. It is also doubtful if MNC’s would introduce comparisons of flexibility or performance in the company negotiations since the sector agreement leaves substantial room for agreeing on these matters locally.
Changes in this pattern due to the current economic recession are not seen yet, but it is possible that Danish trade unions will be forced to make concessions in future bargaining rounds at sector as well as at company level.
5) Are there instances where trade unions have targeted specific MNCs because of public, media or political interest in their practices? If yes,
i) have they involved political exchange, involving mobilization of popular sentiment against foreign companies as political leverage to gain concessions from government (e.g. the cases of Alstom in France and Alitalia in Italy)? Please provide examples.
ii) have new industrial relations actors, such as NGOs, been involved in such campaigns? Please give examples.
There are a few examples. Among others the German-owned supermarket chain Lidl with more than 6,000 stores in a number of European countries was targeted by Danish trade unions in 2004 when it came clear that the company would set up stores in Denmark. At the time Lidl had a public reputation of poor staff policy, low wages and anti-union attitude. One of the largest unions in Denmark, Union of Commercial and Clerical Employees (HK) threatened to take industrial action to force the enterprise to sign an agreement. In November 2004 Lidl concluded an agreement with HK at enterprise level based on the closest sector agreement before opening its first store, and in January 2006 an agreement was signed with Denmark’s largest union the United Federation of Danish Workers, 3F. (DK0601103N).
NGOs have not been involved.
6) Are trade unions in MNCs engaged in compiling their own cross-border comparisons of working conditions etc. at sites in different countries? If yes, please give examples.
If an EWC has been estableshed there is a flow of information and cross border comparison. If the MNC has under the obligatory 1,000 employees in two countries the compling at company level is almost not existing. Ex: When Disa in Denmark had an EWC compiling and changing information was good with other countries’ employees’ representatives. When the EWC was dissolved the cross border activities were slowly brought to an end.
7) Are national and local trade unions involved in European-level negotiations with MNCs on any issues? If yes, please give details.
Not known. Negotiations with MNCs in Denmark are to a high degree connected to Danish working conditions and consequently Danish collective agreements.
8) More generally, do trade unions have policies aimed at developing the cross-border and European-level dimensions to collective bargaining in MNCs?
Traditionally Danish unions were not in the first row of those speaking in favour of Europen-level collective bargaining. The last decade this position has slightly change. However, according to the Danish Metalworkers Union (Dansk Metal) no stright policy in this area is taken up by the unions in industry. However, there are examples of common policies across Europe: 1) A European agreement of remuneration to employees’ representavitive in the board of SSEs. 2) A joint decision to present a common demand during a national bargaining round, i.e. the right to education. A similar common decision at union level about precarious work is currently being discussed.
5. Commentary by the NC
Each NC is asked to comment on the issues covered by this study, paying particular attention to the implications of MNCs for recent, and likely further, developments in collective bargaining. References to relevant research evidence and publications on this issue should be included.
Large Danish companies and MNCs have a certain impact on sector and company level collective bargaining, wheres foreign MNCs in general do not. There are no signs in the crystal ball that this pattern will change in a foreseeable future. However, even if none of the foreign MNCs have directly tried to influence the collective bargaining system, the employees in such companies experience that the cooperation at workplace has changed.
- Steen E. Navrbjerg 2006: Ledelse på tværs af grænser – konsekvenser af virksomhedsovertagelser i Danmark (Cross-border management – consequenses of company takeovers in Denmark – read English abstract. FAOS, University of Copenhagen.
There is no evidence of research that concentrates directly on the impact of MNCs on the Danish collective bargaining system. However, see also:
- Kristensen, Peer Hull and Jonathan Zeitlin 2005: Local Players in Global Games. The Strategic Constitution of a Multinational Corporation. Oxford: OxfordUniversity Press
- Kristensen, Peer Hull, G. Morgan and R. Whitley (eds.). 2001. The Multinational Corporation: Organizing across National and Institutional Divides. Oxford: OxfordUniversity Press.
Anders Søberg, Carsten Jørgensen, FAOS