September compromise marks 100th anniversary

In September 1999, it is 100 years since the Danish Employers' Organisation (DA) and the Danish Confederation of Trade Unions (LO) signed the "September compromise", the first basic agreement regulating Danish industrial relations. As a consequence of the compromise, collective bargaining was centralised and a national system of dispute resolution introduced. The agreement was a result of a major lock-out initiated by employers with the aims of stopping the trade unions' decentralised industrial conflict strategy, and of cementing the employers' right to direct and divide the work. Although the deal can be seen as a strategic victory for employers, the institutionalisation of the bargaining system was, in the wider perspective, to the benefit of both parties. The model created by the compromise strengthened the central organisations, which were thus jointly able to ensure extensive influence over labour market legislation in particular and the development of the welfare state in general.

On 1 September 1999, 100 years have passed since the two most prominent social partner confederations in Denmark - the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) and the Danish Confederation of Trade Unions (Landsordanisationen i Danmark, LO) - concluded the "September compromise" (Septemberforliget), the first basic agreement on the regulation of Danish industrial relations. The main principles of this agreement are still valid. Hardly any other event in recent history has contributed more than the September compromise to the development of Danish society as a "consensus society", in which conflicts between groups and classes are resolved through compromises on the basis of mutual respect.

The September compromise was the culmination of an industrial dispute which lasted 100 days. On the one side was the Danish employers' and masters' confederation and on the other was the Danish Federation of Trade Unions (the LO's forerunner). Both bodies had been founded the year before in order to create stronger means of conducting the increasingly intense conflicts between employers and workers and their respective organisations.

Background to the compromise

The employers were under pressure through the 1890s. The workers had developed a special conflict strategy - the so-called "turn-screw", whereby workers held strikes at one company at a time in a locality. When one employer was brought under a lot of pressure, the strike was then spread to another one in the same area. In this manner, the workers sought to win influence over the employers' unilateral regulation of pay and labour conditions. The employers for their part wanted to maintain the right to be "master of their own house", as they expressed it. For many employers, it was difficult to accept that workers should have the right to strike at all.

The employers' counterstroke against the turn-screw was the use of the lock-out weapon. When workers went on strike at selected companies in an area, the employers struck back by locking out the entire workforce of the industry concerned in that area. The turn-screw thus became a costly means of struggle. The employers sought by using lock-outs to stretch the trade unions and eliminate their attempts to achieve collective agreements. The strategy had a subduing effect on strikes, but it became evident during the 1890s that the right to organise itself could no longer be abolished. In the same decade, workers' industrial action increased, but it was the major lock-outs which dominated the overall dispute picture.

The foundation of the two confederations in 1898 laid the scene for the final battle. It was triggered in April 1899 by a small conflict in the carpentry trade in a number of towns in Jutland, and soon developed in such a way as to focus on the authority and power relations of the confederations. At the beginning of May, the employers' confederation locked out carpentry workers all over the country. On 24 May, the employers made the dispute general and locked out workers from 11 trades within the building sector and the iron industry. To the employers, the dispute was a "preventive war", but apparently they overestimated their own strength at the time and underestimated the resistance of labour movement. The trade union movement received considerable support from other countries and furthermore the alliance at the time between the Social Democrats (Socialdemokratiet) and the Liberals (Venstre) meant that farmers supported the locked out workers with foodstuffs.

The lock-out lasted for more than three months and cost approximately 3 million days of lost labour. It took long negotiations and stubborn efforts at conciliation before the parties agreed on a settlement. On 1 September 1899 Niels Andersen, head of the employers, and Jens Jensen, general secretary of the trade unions, signed the settlement which became known as the September compromise. On 5 September, the organisations' entire executive committees signed the agreement, following which the contents were published.

The settlement

It was the employers that had set the agenda for the dispute. They had demanded that certain goals be met before they would cancel the lock-out. They sought to: secure their right to direct and divide the work; and establish a centralised bargaining system with an embargo on strikes and lock-outs, and institutionalised dispute resolution with prior notice, to replace the former local negotiations and free right to engage in disputes. The Danish Federation of Trade Unions and its member organisations were under pressure during the dispute, but nevertheless they considered that by entering into the agreement, they were not placed in a weaker position than they would have been by preserving the status quo. They ensured their members' right to organise and also managed to avert the employers' demand that only the two central confederations could determine controversial questions of pay and labour conditions.

On the issue of the employers' managerial authority, the September compromise was a victory for the employers' confederation. The agreement's famous §4 determined that: "The employers' right to direct and divide the work as well as to use this right according to their own judgment [in relation] to the labour force appropriate at any time is recognised by the labour organisations." Furthermore, the employers obtained in §5 the provision that "foremen and supervisors with a fixed salary have full liberty not to be a member of the workers' organisations.".

In §2, the confederations recognised "each others' justification to decree or approve work stoppages". However, the preconditions were that the decision to initiate a strike or lock-out had to be taken by three-quarters of the votes cast in a competent assembly and that the opposing confederation had to be given notice of the stoppage. The first notice had to be given two weeks before the beginning of the dispute and the second notice at the latest seven days in advance. This meant a defeat for the workers' decentralised dispute methods: the turn-screw was dead and disputes without notice disappeared as a legitimate part of the bargaining system. The national impact of the settlement was determined by §13, which stated that none of the signatory's member companies and organisations were able to absolve themselves from the commitments in the September compromise by resignation from their confederation during the life of the agreement. The agreement thus had the key elements of a "basic agreement".

After the agreement, both parties proclaimed a victory but it is difficult to see whether the settlement could have had any other outcome than it did. The institutionalisation of the bargaining system was, in the wider perspective, to the benefit of both parties. The September compromise laid the foundation stone for the Danish model which has been the fulcrum for the political stability which has marked Denmark throughout the 20th century.

The Danish model

At the centre of the Danish model are two key elements: the resolution of problems concerning pay and conditions through an institutionalised negotiating relationship between the opposing parties on the labour market, not least represented by DA and LO; and the creation of consensus between these parties as a prerequisite for the implementation of labour market-related political initiatives. There is a connection between the conclusion of the September compromise and establishment of a bargaining system, and the subsequent structure of the "welfare state". The foundation of the welfare state has been that the Danish social partner organisations and bargaining system have been able to function as an arena for the resolution of contrasting interests in the labour market, and have thus contributed profoundly to stable economic and political development. Politically, this development has been characterised by Social Democrat-led governments being in power for almost three-quarters of the period from 1924 to the end of the century.

Accordingly, it is an interesting political and historical point that what started, in a way, as a strategic victory for the organised employers in the shape of a centralised bargaining system turned out to be a solid basis for the establishment of a strong welfare system marked by social democratic values. At the same time, the employers secured maximum influence on the development on the labour market within the framework of the Danish model. Consequently, the September compromise acted as the "constitution of the labour market" for the next 60 years. With regard to the contents of the compromise, the most important elements have survived in the succeeding basic agreements between LO and DA. The decisive provisions of the September compromise are thus still valid 100 years after its conclusion.

Commentary

The regulation of relations in the Danish labour market is undergoing changes. Processes of internationalisation and technological change have led to a change in the political and economic framework conditions. Both private sector companies and public sector institutions and administrations are faced with new conditions which raise the question of adapting the existing customs of regulation. This pressure for change is directed at both: the regulation of pay and conditions through the existing system of bargaining and of social partner organisation; and the political regulation of the labour market.

The processes of change in the system of bargaining and social partner organisation - the key area for the regulation of the labour market - are pronounced. Instead of a model marked by one or two dominant levels of collective bargaining, the tendency is now towards a model which is regulated at a variety of levels. Furthermore, instead of a model marked by a relatively homogeneous system of organisations and of relations between state and the labour market parties, the tendency is now towards less homogeneous and more diverse relations between the labour market parties, between the parties and the state, between companies and their employees, and between employees themselves. (Carsten Jørgensen, FAOS)

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