2002 Annual Review for Denmark

This record reviews 2002's main developments in industrial relations in Denmark.

Political developments

The current government, headed by Prime Minister Anders Fogh Rasmussen of the Liberal Party (Venstre), is a coalition between the Liberal Party and the Conservative Party (Det Konservative Folkeparti) which came into power in November 2001. The most important political event for the government during the year was undoubtedly the Presidency of the European Union, which Denmark held during the second half of 2002. The main question on the agenda was enlargement of the EU, and the Danish Prime Minister received considerable credit for his handling of difficult issues.

Collective bargaining

There was little private sector bargaining activity in 2002, as most sectors were still covered by four-year sectoral agreements concluded in 2000 (DK0002167F). Most bargaining occurred in the public sector, where new agreements were negotiated in the muncipal/county (DK0205102F) and central government areas (DK0204103F). There is one framework agreement for each of the two areas, followed by a number of lower-level agreements.

In the county/municipality sector, with some 650,000 employees, central bargaining takes place between the local government employers' organisations and the trade union cartel, the Association of Local Government Employees' Organisations (Kommunale Tjenestemænd og Overenskomstansatte, KTO), which has 65 member unions (organising a range of workers, from professionals to unskilled). These individual unions then negotiate 392 specific agreements with the municipal employers.

In the central government sector, with some 175,000 employees, the Ministry of Finance, acting as the employer, negotiates a framework agreement with the Danish Central Federation of State Employees (Centralorganisationernes Fællesudvalg, CFU) cartel, which brings together four central union organisations. The Ministry then negotiates 72 lower-level agreements with the unions.

Traditionally, the conclusion of the central government agreement is followed fairly closely by the municipal/county sector, but in 2002 this did not occur and municipal/county bargaining became deadlocked in February. Disagreement on the economic framework for the recently-introduced 'New pay' system (see below under 'Pay') led the trade union side to leave the municipal/county negotiating table and the Official Conciliation Service (Forligsinstitutionen) was thus asked to step in, for the first time in the sector's history (DK0203101N). A compromise settlement was accepted in a ballot by trade union members by a narrow margin (DK0203101N).

Pay

The new three-year agreement signed for central government employees in early 2002 provided for an overall framework of a 7.55% increase in costs over the life of the accord, plus a continuation of the 'regulation scheme', whereby, if private sector wage increases exceed those in the public sector, public sector workers receive 80% of the difference. With 5.55% of the overall framework earmarked for general wage increases, an increase in real wages was ensured on the basis of current economic premises.

An important element of the central government deal is that a pilot scheme introducing a more flexible and decentralised pay system - known as 'New pay' (Ny Løn) (DK9705110F) - has been replaced by a permanent framework agreement on the issue. However, the scheme is still voluntary, in the sense that is subject to agreement with the individual union organisations. This makes it possible for groups which are firmly opposed to local pay-setting systems, such as police officers, to remain outside such systems.

The new three-year agreement for the municipal/county sector followed the same lines: a general wage increase of 5.55% over three years; a real wage increase over the same period; and additional funding for 'New pay' (DK0205101N).

In October, the social partners in the industry sector announced that they had agreed on a new pay system, known as 'Plus-pay' (DK0211102N). The system is based on a higher degree of flexibility than the current scheme, and will cover both workers paid on an hourly basis and salaried employees.

Working time

Collectively agreed normal weekly working time in Denmark has since 1990 stood at 37 hours. However, in terms of annual working time, two additional days of 'special' holiday per year were agreed in public sector bargaining in 2002. This means that in 2004 public employees will have five such special holidays each year, bringing them into line with the private sector. Special holidays are collectively agreed rather than a statutory entitlement, but should be seen as a supplement to the statutory five weeks of annual leave. More flexibility in the reference period for the calculation of working time was also obtained by public sector employers in 2002.

Job security

The issue of job security was not a particular focus for collective bargaining over the year. However, there were instances of restructuring and workforce reductions which had an impact on employment levels. In November 2002, for example, the management of Orange, the French-owned mobile telephone company, announced that it was to make redundant about 400 employees in its Danish division, bringing the number of recent redundancies in Denmark's telecommunications sector to around 1,000 (DK0212102N). Further, in early 2002, white-collar staff and pilots employed at the Scandinavian airline SAS accepted a 5% reduction in pay and working time in order to maintain jobs at the crisis-affected company (DK0201124N).

Equal opportunities and diversity issues

There were no particular developments in the area of equal opportunities in collective bargaining during 2002. As expected, an amendment to the Act on Equal Pay for Men and Women, which aimed to create a higher degree of transparency in wage data by introducing gender-based wage statistics, was postponed by the liberal-conservative government in May 2002 (DK0206101N)

Other issues

Occupational pensions were a theme in public sector bargaining in 2002. The central government agreement increased the occupational pension contribution from 5.7% to 9% of pay for employees who are under 25 years or who have not been employed for at least four years in the public sector, ie the groups who are not currently covered by general pension schemes. Similar improvements in pension schemes featured in the municipal/county deal.

The central government agreement strengthened measures for older workers ('senior policy') by giving state institutions the possibility of granting a special 'retention bonus' and one additional paid day of absence from work per month to employees aged over 62 years. At the same time, the age threshold for participation in various existing schemes for older workers was raised - typically from 55 to 60 years or from 60 to 62 years. This reflects a shift in the focus of older workers policy from encouraging early labour market withdrawal to making people stay in employment longer. The municipal/county agreement also contained a number of measures for older workers.

Legislative developments

Shortly after coming to office (in November 2001), the liberal-conservative coalition government published its programme for reform in the social and employment field (DK0112147F). The most important proposals related to the introduction of:

• a cross-sectoral public unemployment insurance fund;

• greater freedom to work part time;

• legislation prohibiting closed-shop agreements; and

• one year's flexible parental leave, paid at the full rate of unemployment benefit;

The programme was entitled 'a freedom package for the labour market', thus stressing personal freedom of choice. This was especially the case in relation to the first three initiatives mentioned.

The most widely-debated (DK0202102N) of the resulting legislative initiatives was the government’s proposal for a new law on part-time work, which was adopted in June 2002 after a lengthy process (DK0206102N). The legislation seeks to make access to part-time work easier, by means including the controversial abolition of restrictions on the use of part-time work laid down in collective agreements. During the parliamentary process, the Minister for Employment made concessions and changed the text of the proposal law, but trade unions remained opposed to the final version. The objection, shared by some employers, was to the new law's intervention in the sphere of collective bargaining, which traditionally regulates core employment issues.

The legislation allowing for the establishment of cross-sectoral unemployment insurance funds (UIFs), in addition to the existing trade union-run sectoral funds, was adopted in June 2003 (DK0204101N). However, the government gave up its initial proposal (DK0204101N) of creating a public unemployment insurance fund as an alternative to the existing UIFs.

March saw the adoption of the government's amendment (DK0203102F) of the existing legislation concerning maternity and parental leave (DK0202104F). Under the new law, the maximum period of combined maternity/childbirth and paternity leave at the full benefit rate is extended from 32 to 52 weeks (14 weeks of which is reserved for the mother); at the same time, the present childcare leave scheme was abolished. Instead, a period of 32 weeks of maternity/childbirth leave can be used by both parents.

The government's legislation preventing trade union closed-shop arrangements (DK0207103F) should be passed in parliament in early 2003.

A reform launched in spring 2002, entitled 'Bringing more people into employment' (Flere i arbejde), represented a step in the direction of a single labour market policy system to replace the former dual system for those with and those without unemployment insurance. Over the summer, the minister of labour held negotiations over the initiative with the social partners and in October, implementing legislation was passed by parliament. The main purpose of the reform is to simplify and harmonise the rules on selection criteria for participation in various labour market measures, contacts, placement activities, availability and sanctions (DK0210102F).

The organisation and role of the social partners

On 1 July 2002, after about 18 months of preparations, three major service sector employers' organisations entered into a formal merger, creating a new umbrella organisation entitled Commerce, Transport and Service (Handel, Transport og Serviceerhvervene, HTS). The founding organisations were the Employers' Federation for Trade, Transport and Service (Arbejdsgiverforeningen for Handel, Transport og Service, ATHS), the Chamber of Commerce (Handelskammeret) and the Association of the Hotel, Restaurant and Leisure Industry in Denmark (Hotel-, Restaurant-, og Turisterhvervets Arbejdsgiverforening, HORESTA). The new organisation has a group structure, with employer interests and business interests being handled separately (DK0207102N).

In March 2002, the Employers' Association of the Meat Industry (Slagteriernes Arbejdsgiverforening, SA) - which includes one of the three largest companies in Denmark, Danish Crown- decided to leave the Confederation of Employers' Associations in Agriculture (Sammenslutningen af Landbrugets Arbejdsgiverorganisationer, SALA) with effect from 1 October 2002. In August 2002, the SA leadership decided to apply for membership of the Confederation of Danish Industries (Dansk Industri, DI), and its application was accepted (DK0208102F). This breaks with the tradition of the agricultural sector having its own employers' associations. Membership of DI automatically means membership of the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA). The background for joining DI/DA was a poor result for SA in the 2001 collective bargaining round, when the Danish Food and Allied Workers' Union (Nærings- og Nydelsesmiddelforbundet, NNF) negotiated considerable wage increases (DK0104117F). SALA does not have funds which could have supported a conflict, whereas DI has substantial conflict funds.

In October 2002, three trade unions affiliated to the Confederation of Danish Trade Unions (Landsorganisationen i Danmark, LO) agreed to take the first joint step towards a merger (DK0211105F).The process started in the spring of 2002 with a meeting between the presidents of the General Workers’ Union (Specialarbejderforbundet i Danmark, SiD) and the Union of Female Workers (Kvindeligt Arbejderforbund, KAD) to discuss a possible merger. The Union of Wood, Industrial and Building Workers (Træ-Industri-Byg, TIB) later joined the discussions. The merger is planned to take place in 2004, and will be preceded by a comprehensive information campaign. The experiences of merger initiatives in the last years is that the process has not always gone according to the plans of the unions’ leadership. In two cases in 2001, merger plans failed at the first ballot (DK0201163F). In joining the merger discussions, it was of decisive importance for TIB that two employers' organisations, the Danish Contractors’ Association (Danske Entreprenører) and the Danish Building Employers Confederation (Byggeriets Arbejdsgivere, BYG), will from 1 January 2003 merge into a single organisation, the Association of Employers in the Danish Building Industry (Dansk Byggeri).

At the end of 2002, LO presented a new concept for a broader union organisation. The withdrawal of financial support to the Social Democratic Party (Socialdemokratiet) plays an important role in LO's attempt to create a unified trade union movement with broader political influence (DK0210101F).

Industrial action

No significant industrial action took place during 2002 (the most notable being a four-week strike by journalists at the DR broadcasting company - DK0209104N), and detailed statistics on industrial conflict are not available until April 2003. However, it should be mentioned that employees in the meat processing industry, as in 2001, topped the list of disputes for 2002. In 2001, the number of conflicts in meat processing was 153, a figure which increased to 196 in 2002. About every third strike over 2001-2, according to NNF, took place in the meat processing industry.

Employee participation

The new collective agreement in the central government sector strengthens the functions of employee representatives and the role of cooperation committees. This is of special importance in the light of the fact that the new public sector pay system (see above under 'Pay') further decentralises the bargaining system and shifts the focus to the workplace level.

The year saw no major developments in Denmark relating to European Works Councils (EWCs), which are not regarded as having a major influence in the Danish context. However, in November 2002, a major conference on EWCs took place in Aarhus, organised by the European Trade Union Confederation, ETUC, and the main Danish national trade union organisations. The conference, entitled Towards more influence, aimed to discuss improvements in EWC practice and highlight the trade union case for amendments to the EU Directive on EWCs (94/45/EC). Delegates called for stronger legal requirements on companies to consult EWCs about planned restructuring. Specific rights for EWCs in relation to mergers and acquisitions were also proposed (EU0212208F).

No initiatives occurred during 2002 relating to the national transposition of the EU Directive (2001/86/EC) on employee involvement linked to the European Company Statute (EU0206202F).

Telework

The agreement on telework signed in July 2002 by the EU-level central social partners (EU0207204F) was greeted with great satisfaction in Denmark (DK0207104F). The fact that the agreement is to be implemented by the social partners themselves, rather than via a Directive, was seen by Danish employers' organisations and trade unions as giving a new impetus to Denmark's model of regulating the labour market through agreements rather than legislation. A study undertaken by Eurobarometer, and published in the Danish newspaper Politiken in July 2002, found that Denmark has the highest level of teleworking in Europe, with some 20% of workers using telework compared with an EU average of 6%. The EU telework agreement will be implemented by amendments to existing collective agreements.

Vocational training

There was no specific response in 2002 by the Danish social partners to the 'joint framework of actions for the lifelong development of competencies and qualifications ' agreed by the EU-level social partners in March 2002 (EU0204210F). The training issue received some attention in public sector bargaining - the central government agreement included new provisions on 'competence development', with the earmarking of DKK 200 million for this purpose. Otherwise, there were no significant developments concerning vocational and further training, or lifelong learning, in 2002. However, in connection with the Danish Presidency of the EU, a conference was held in October 2002 entitled Lifelong learning - learning for adults in the 21st Century.

New forms of work

As mentioned above (see under 'Legislative developments'), new legislation adopted in 2002 sought to make access to part-time work easier. With regard to temporary agency work, there were no significant legislative or bargaining developments during 2002, although this form of employment was a topic for discussions and policy statements.

The use of temporary agency workers in Denmark has been steadily increasing for a number of years. In 1992, there were 73 registered temporary work agencies with about 3,000 agency workers, a figure which grew to 396 agencies with 21,000 employees by 1999 (according to figures from Statistics Denmark). If the growth rate recorded since 1997 has continued, there were probably about 370 agencies with about 35,000 workers by December 2002. In 2001, the agencies' turnover was more than DKK 3 billion - a 10-fold increase over a decade. The trade unions have so far not given any particular attention to the question, but given the increase in the use of temporary agency work, and the draft EU Directive on the issue (EU0204205F), the unions are trying to form a policy towards agency work, especially with regard to when agency workers should have the same rights as user company employees on open-ended contracts. The employers are generally satisfied with the status quo, as temporary agency work is flexible, but they are not unwilling to discuss the matter (DK0212103F).

Other relevant developments

Integration of immigrants into the labour market was a major issue in 2002. In late January, LO and DA concluded an agreement on integration, thus taking the lead in a sometimes very heated debate (DK0201166F) In May, the government and the social partners agreed a set of common conclusions on integration, aimed at enabling swifter and easier access to the labour market (DK0206104F).

In late September 2002, LO and DA presented a joint paper to the Danish representation at the European Convention- the body charged with preparing for the EU's next Intergovernmental Conference - by proposing a new framework and structures for the EU, notably in the light of enlargement. The joint DA-LO paper includes proposals on social dialogue in the future European labour market (DK0211101N). The basic attitude expressed in the paper is that the European social partners should be empowered to conclude agreements independently and that agreements in individual countries should, to the widest possible extent, be respected.

Outlook

One of the first issues the government is due to tackle in 2003 is the matter of closed-shop agreements. At the end of 2002, the minister of employment had not yet been able to achieve a political majority in parliament for his proposal to remove closed-shop provisions from collective agreements.

Collective bargaining will take place in the finance sector and meat processing industry in 2003, with both sectors renewing agreements signed in 2001. (Early 2003 saw the negotiation of new collective agreements in both sectors - DK0302102F.)

In February 2003, LO's member unions will gather for an important extraordinary congress on the theme of a 'New LO' (Nyt LO), with delegates to debate a new set of basic values and a new decision-making structure (thus removing barriers to merger with other union confederations), plus the abolition of financial support to the Social Democratic Party and a solution to the problem of demarcation disputes between member unions. (The majority of these measures were subsequently adopted at the congress, though LO did not completely succeed in finding a solution to the problem of demarcation disputes. Furthermore, it has been questioned whether the foundation for the 'New LO' is sufficiently strong to prevent tensions among unions or between the confederation's leadership and member unions - DK0302103F.) (Carsten Jørgensen, FAOS).