A reduction in employers' costs constitutes an important part of the state Budget settlement reached in late 1998 between the two government parties - theSocial Democratic Party and the Social Liberal Party- on the one hand and the four opposition non-socialist parties - the Liberal Democratic Party, the Conservative Party, the Centre Democrats and the Christian People's Party- on the other.
As a result of Denmark's 1999 Budget settlement, employers' costs are to be reduced, a majority in Parliament having concurred with employers' demands for tax reductions, including the abolition of the "employers' labour market contribution". This will result in a certain improvement in companies' competitive situation, which was otherwise threatened by relatively large pay increases arising from the spring 1998 collective bargaining round.
A reduction in employers' costs constitutes an important part of the state Budget settlement reached in late 1998 between the two government parties - theSocial Democratic Party and the Social Liberal Party- on the one hand and the four opposition non-socialist parties - the Liberal Democratic Party, the Conservative Party, the Centre Democrats and the Christian People's Party- on the other.
Following on from the outcomes of the 1998 collective bargaining round and the government intervention to settle the widespread industrial dispute in the spring (DK9807178F), the rate of pay increases has been rising. As recently as a couple of weeks before the broad political settlement on the Budget for 1999, the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) expressed deep concern about this trend. DA claimed that the only way of immediately alleviating the situation was to grant tax reductions to companies. In this context, employers particularly wanted their share of the so-called "labour market contribution" (arbejdsmarkedsbidrag) - currently 0.6% of paybill, split between employers and employees - to be scrapped (DK9811193N).
Both the Liberal Democratic Party and the Conservative Party brought the views of the employers with them to the political negotiations, and the result was that the employers' labour market contribution has indeed been abolished. However, this will take effect only from 2000. At the same time, the political parties involved in the settlement have agreed to reduce the rate of corporate tax from 34% to 32% in 1999 and jointly to examine the possibilities of obtaining financing of a further reduction to 30% in 2000.
Overall, these new provisions may result in a certain alleviation of companies' competitive situation, which can be further improved by the new labour market policy amendments which are being implemented on the basis of a recent agreement between the two central organisations, the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and DA (DK9810187F). The president of DA, Niels Fog, has stated that his organisation is confident that the autumn 1998 adjustments to labour market policy will contribute positively to an improvement of the labour market situation and of competitiveness. However, at the same time, he calls for new reforms which can ensure a greater difference between pay and benefit payments and thus create an incentive to work.
The bleak picture which the employers are painting of the competitive situation has, moreover, been confirmed by the presidency of the Council of Economic Advisers which, in its latest report published on 9 December 1998, puts the overall loss of competitiveness in the period 1993-2000 at more than 10% and the overall loss of market share at around 14%. A quick restoration of competitiveness is therefore essential in order to re-establish a balance in the Danish economy, according to the economic advisers.
Eurofound doporučuje citovat tuto publikaci následujícím způsobem.
Eurofound (1998), Employers' costs are reduced, article.
