Public sector faces prospect of implementing pay bargaining reform

From the beginning of 1998, the social partners in Denmark's public sector must put pay bargaining reforms into practice. We examine a number of unanswered questions which have been raised in the run-up to implementation.

Under the terms of the collective agreements reached in the 1997 bargaining round (DK9705110F), from 1 January 1998 government institutions can experiment with new forms of decentralised pay bargaining. From 1 April 1998, 56% of all local government employees and 60% of all regional government employees will be covered by a new system of pay determination - consisting of a centrally determined basic salary and three decentralised negotiated allowances based on function, qualifications and results.

As implementation approaches, trade unions and employers' organisations face the prospect of putting the new pay bargaining system into practice. Both sides are preparing information campaigns and retraining programmes for management and shop stewards for the introduction of this new system of bargaining in the public sector.

For employers, the new pay system is not only a opportunity but also a huge challenge. It is an opportunity to make public sector jobs more financially attractive by offering allowances, and to retain their existing core workers who might otherwise be tempted to seek better paid jobs in the private sector. Employers also face the challenge of adapting to an entirely new role of seeking to link employee pay with job performance. With regard to the relationship between performance and pay, the Danish Federations of County Councils (ARF) has identified a number of basic questions, which have to be faced by all public sector employers, both in national and local government:

• what form will wage profiles take for various groups of employees and in the counties generally?

• which qualifications and functions should be rewarded by allowances and how are these allowances to be distributed?

• at what level are local negotiations to be conducted - at county or administrative level, or at the level of the individual institution?

• how will the new system of pay bargaining affect personnel policy? and

• should employers and local representatives adopt the old criteria set out in previous agreements?

On the trade union side, the agenda seems to be two-fold. Firstly, how to equip and enable local shop stewards to conduct the forthcoming local negotiations. Secondly, what kind of relationship will exist between the trade unions and local shop stewards? What is the scope for local bargaining and how important will it be in relation to bargaining at central level? What importance will be placed on local bargaining by the trade unions?

Answers to these questions will only emerge after the new system has been in operation for some time.