1997 Annual Review for Denmark

This record reviews 1997's main developments in industrial relations in Denmark.

Introduction

Denmark has experienced five years of uninterrupted economic recovery, and in 1997 economic growth was estimated at approximately 3%. This has led to sizeable reductions in unemployment rates which have few parallels in Europe during this decade. Unemployment has been reduced from a record-high rate of 12.4% in 1993 to 7.4% in December 1997 - a reduction equal to 205,800 unemployed persons. The reduction has been beneficial for all groups, and especially for women. These positive tendencies are mirrored by an improvement in general government finances. Denmark will be one of the first countries in Europe to be able to show a surplus on the general government account in 1997. The current surplus of 0.7% is expected to increase to DKK 14 billion (ECU 1.9 billion) or 1.2% of GDP in 1998. Inflation stood at 1.9% in 1997.

A minority coalition Government led by the Social Democratic Party (Socialdemokratiet) and also involving the Social Liberal Party (Det Radikale Venstre) was in power during 1997. Elections were due to be held in March 1998 (at which the Social Democrats retained power).

Key trends in collective bargaining and industrial action

Two key results came out of the 1997 collective bargaining round in Denmark; the introduction of a new salary-scale system in the public sector; and, more widely, the introduction of unsynchronised one-, two- and three-year collective agreements.

In February, a two-year collective agreement offering a 4.25% pay increase, wage adjustment schemes, and improved pension and maternity leave provisions was approved by employees in the public sector (DK9702103N). The settlement also brought what has been described as a "peaceful wage revolution", introducing a more flexible and decentralised salary-scale system (DK9707121N).

The 1997 collective bargaining round in the private sector concentrated on the issue of the duration of agreements, with a return to a common expiry date being the major issue (DK9705110F). The Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) proposed that the various agreements in the private sector should be arranged so that they all expire in 2000 (DK9702102N). This would enable DA's largest affiliate, the Confederation of Danish Industries (Dansk Industri, DI), to conclude a two-year collective agreement in the 1998 bargaining round. This strategy was based on the assumption that bargaining sectors outside the domain of DI would have to accept a change in the length of the agreements if the pattern of synchronised bargaining were to be re-established in 2000.

The Confederation of Danish Trade Unions (Landsorganisationen i Danmark, LO) opposed any change in the duration of agreements, arguing that DI had upset the previous pattern of synchronisation so it was therefore its responsibility to revert to this pattern by entering into a one-year or three-year settlement for 1998, so that a common expiry date could be agreed for all sectoral collective agreements in either 1999 or 2001. The result of this impasse was that unsynchronised one-, two- and three-year collective agreements ensued, resulting in a failure of DA's strategy.

Data show that 1997 was a relatively peaceful year in terms of industrial disputes, with a reduced number of conflicts on the Danish labour market (DK9801151N). According to statistics from DA, the number of working days lost due to industrial action in 1997 was significantly lower than in 1995 and 1993, but this was mainly due to the fact that only half of the private sector conducted collective bargaining in 1997. More than half of the lost working days (44,000) in 1997 were due to secondary industrial action and other conflicts that had a background other than disputes over wage-related conditions.

Industrial relations, employment creation and new forms of work organisation

Throughout 1997, government and the social partners discussed the issue of how to reduce the marginalisation of certain groups in the labour market, and to improve employment opportunities for individuals with a reduced ability to work (DK9704108N). The objective of the Government is the creation of some 40,000 "flexi-jobs" by the year 2005, aimed at offering jobs on special terms to people with a disability, illness or reduced ability to work. Employers would receive a wage contribution of between one-third and two-thirds of the minimum wage, depending upon the employee's ability to work. While the social partners support the idea, they do not agree on replacing the tradition of voluntary agreements in this area - the so-called "social chapters" - with legislative provision, as proposed by the Government.

On working time and work organisation, 1997 was a relatively quiet year. A general 37-hour week was introduced in 1991, and a series of changes agreed in negotiations up to and including 1995 increased the scope for greater flexibility in determining working time, which can be agreed on by the bargaining parties in individual companies. In the 1990s, the question of more flexible working time arrangements has therefore played an important role in Danish collective bargaining. Nevertheless, in the 1996-7 negotiations, changes in the length of working hours or flexibility were not a significant issue. The social partners did not seem to consider it important to introduce a further reduction in working time and new flexibility provisions were agreed in 1997 only in the banking sector, where the parties agreed to introduce the possibility of Saturday opening. Having agreed on more flexible provisions on variable weekly working time in the 1995 bargaining round, the National Union of Metalworkers (Dansk Metal) indicated that it might agree to more flexible working time in 1998's collective bargaining in industry (DK9709131N).

In the 1997 budget, a 40% penalty tax on overtime payments was introduced in the civil service, aimed at reducing the level of overtime work. As a result, overtime payments declined by 40% over the first three quarters of 1997. Some see this as an indication that institutions have reorganised work and improved planning in order to avoid the penalty tax on overtime payment, while others argue that overtime work and compensation for it may merely have taken another form - such as time off in lieu, unpaid overtime work and permanent pay supplements (DK9711141N).

In 1997, an analysis of the prevalence of home-based teleworking carried out for the Ministry of Research and Information Technology showed that within the next decade the number of people performing home-based telework is expected to increase substantially from the present level of 9,000 - potentially to as high as 250,000 (DK9703106N). In the 1997 collective bargaining round, the social partners in the central state sector took the first steps in Denmark toward regulating home-based telework in collective agreements (DK9711142N).

Developments in representation and the role of the social partners

In October 1997, the LO trade union confederation decided on the future division of tasks and competences between the three elements of its structure - the central confederation, the 23 affiliated trade unions and the six sectoral union cartels - as well as on the methods and scope of cooperation between them and the financial arrangements (DK9801148F)

With the intention of ensuring and safeguarding employees' influence, and speaking with only one voice on a number of issues, LO and the Danish Confederation of Professional Associations (Akademikernes Centralorganisation, AC) signed an agreement to delineate organisational boundaries between the two confederations, and to minimise competition for members (DK9707120N). The political leaders of the two confederations will meet regularly to discuss issues of common interest, such as the need to meet the increasing demand for qualified labour in Denmark.

Privatisation and contracting-out caused inter-union conflict in 1997. The restructuring of the public sector in Denmark has affected the terms and conditions of employment for many employees, as they switch from being covered by one collective agreement to another. This has caused much conflict between LO-affiliated trade unions over organisational boundaries (DK9709129F). From the LO standpoint, the conflicts are tarnishing the image of the Danish trade union movement, and as the president of LO, Hans Jensen, put it: "the public and the members may begin to believe that the trade union movement is putting the interest of the union organisations before that of the affiliated membership as a whole."

With regard to the European Commission's current proposed initiative on "information and consultation of workers within the national framework" (EU9711160N), the Danish trade union movement is in principle against Community action. It is argued that the subject matter should remain a national issue regulated via the national traditions and practice which have evolved in a particular political, social, cultural and economic setting.

Still on the participation front, the 275 Danish municipalities and 14 counties took the first steps in 1997 towards implementing a new framework agreement for cooperation covering 625,000 employees (DK9706113F). The agreement makes it mandatory for local agreements to provide for more cooperation between workers and employers, to improve conditions of employment and to enhance the role of shop stewards.

Industrial relations and the impact of EMU

While Denmark meets the entry criteria for EMU, it appears unlikely that the country will join the single currency in the first wave. There will be a referendum on the Amsterdam Treaty in 1998, and with a view to to ensuring a "Yes" vote, LO launched a campaign in September 1997 (DK9709128F). Because the debate leading up to the 1993 referenda on the Maastricht Treaty was seen to be influenced by a negative campaign, which focused mainly on the undesirable consequences of a "No" vote, this time LO has decided to concentrate on ensuring that as much information as possible on the Treaty is available to its members. By spending DKK 3 million (ECU 400,000) on the campaign, which is 50% more than was spent on the 1993 EU campaign, LO is demonstrating its awareness of the importance of this new poll. LO has a major task, since a large proportion of its members voted "No" in 1993.

Conclusions and outlook

The involvement of the social partners in the policy-making process is a key feature of the consensus-oriented "Danish model" of industrial relations. However, on two accounts the Social Democrat-led Government showed its discontent with the efficiency of the Danish model in 1997 (DK9708122F):

  • in its amendment of the Work Environment Act (DK9706116N), the Government was accused by unions and employers of hastiness and lacking the will to involve the social partners; while
  • the Government's plan to create 40,000 "flexi-jobs" questioned the effectiveness and willingness of the social partners to play their part by way of agreement-based initiatives.

Although the two cases illustrate a tendency to downplay the use of the traditional interplay and involvement of the social partners, tripartite talks between government and the social partners were convened at the end of 1997 (DK9712145N). The Danish model of collective bargaining and involvement of the social partners is expected to remain stable, despite the turbulence of recent years.

Another important issue for the coming year will be the progress of the new pay reform in the public sector and the question of whether this means a real breakthrough for the decentralisation of pay setting in the state and county/municipal sector.

(Kåre FV Petersen, FAOS)

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