New government challenges trade union movement

On 20 November 2001, a Liberal/Conservative coalition won the Danish general election. In the labour market and employment field, the new government plans a number of changes which will put pressure on the trade union movement - such as the establishment of a public unemployment insurance fund and the abolition of closed-shop agreements - but not, it appears, to an extent which jeopardises the Danish bargaining model. Commentators believe that there is nothing in the government's proposals which indicates that the trade union movement will be attacked in vital fields.

A general election took place in Denmark on 20 November 2001. The result was a comfortable victory for the coalition of the Liberal Party (Venstre) and Conservative People's Party (Konservative Folkeparti), which shortly afterwards formed a government under the leadership of Anders Fogh Rasmussen of the Liberal Party. The new administration replaced the former ruling coalition of the Social Democratic Party (Socialdemokratiet) and the Social Liberal Party (Det Radikale Venstre).

In the labour market field, the new government announced a number of important changes. The new Minister for Employment is Claus Hjort Frederiksen - considered by many to be one the government's chief tacticians - who has been selected to administer the important labour market field with 'an iron hand'. At the same time, the name of the Ministry of Labour was changed to the Ministry for Employment. One of the reasons is that some of the employment-related tasks which formerly fell under the competence of the Ministry for Social Affairs have now been transferred to the Ministry for Employment. At the same time, adult vocational training programmes have been transferred from this new Ministry to the Ministry for Education.

The government's labour market platform

A few days after coming into office, the new Prime Minister published the government's programme, including changes in the social and employment field, as follows:

  • establishment of a cross-sectoral public unemployment insurance fund;
  • introduction of a statutory right to work part time;
  • legislation prohibiting closed-shop agreements;
  • one year's flexible parental leave paid at the full rate of unemployment benefit;
  • freedom for private job placement activities and pay based on performance for actors in this field;
  • restrictions in the powers of the National Working Environment Authority (Arbejdstilsynet); and
  • exemptions from provisions concerning rest periods and rest days in connection with telework

It is the first three initiatives which are of particular interest in industrial relations terms, these being: freedom for the establishment of cross-sectoral unemployment insurance funds, including a public unemployment insurance fund; legislation in connection with part-time work; and the abolition of trade unions' right to conclude closed-shop agreements.

Establishment of public unemployment insurance fund

The government platform reflects the basic liberal principle of individual rights as opposed to collective rights. So it seems a little odd to some observers that the government plans to set up a public unemployment insurance fund as an alternative to the existing private unemployment insurance funds (which are administered by trade unions). 'Freedom of choice' has thus, say critics, been ensured in a somewhat awkward way - seen from an 'arch-liberal' point of view. A public unemployment insurance fund will not be cheap for its members, who will mostly be the same people as those who are now members of the Christian unemployment insurance fund, which is outside the trade union 'mainstream'. For this reason, the Christian trade union movement is very upset about the proposal to establish a public unemployment insurance fund. The unemployment insurance funds of trade unions affiliated to the Confederation of Danish Trade Unions (Landsorganisationen i Danmark, LO) are unlikely to experience any significant fall in their membership.

Part-time work

As regards part-time work, the government states that it 'will ensure that contractual restrictions on the right to part-time work are abolished'. It is also mentioned that employers and employees are free to make agreements concerning part-time work. The wording is a little vague here. The planned new legislation on part-time work will remove provisions concerning part-time work from collective agreements and at the same time give employers the right to decide whether they want to offer part-time work. The employees, in return, will have no right to demand to work part-time.

LO has stated that this legislative initiative is in breach of the basic principle of the Danish bargaining model of no legislative intervention in labour market regulation (DK0112158F). Both trade unions and researchers are also of the opinion that, through this proposal, the government is trying 'to kick open an open door', in that the trade unions' opposition to part-time work is a thing of the past. Today, many collective agreements contain provisions allowing part-time work. The decisive factor for the trade union movement is to preserve the bargaining model.

Abolition of closed-shop agreements

Through its planned legislative interventions concerning part-time work and the abolition of closed-shop agreements (DK9907137N), the new government wants to emphasise 'individual freedom of choice'. It should be up to the employees themselves to freely decide their working time and whether they want to be members of a trade union, according to Mr Frederiksen, the new Minister for Employment. The trade unions' right to conclude closed-shop agreements is to be abolished as it is argued that it is a violation of the right not to be a member of a trade union, the so-called 'negative' freedom of association. In enterprises where a closed-shop agreement has been concluded, all employees are required to be members of a specific trade union in order to maintain their job. About 23,000 people are covered by closed-shop agreements (DK9802153F).

Commentary

Through the initiatives described above, the new Liberal-Conservative government wants to demonstrate to the trade union movement that it is acting from a position of strength. It would appear that this is the limit of its intentions for now. A few agreements and some legislation will be abolished, but that is nothing more than can be expected in any change of government. If the government were making a real 'frontal attack'- through proposals concerning, for instance, abolition of the tax deduction for trade union dues or a separation of trade unions and unemployment insurance funds - this would be much more dangerous for the trade union movement. In the initiatives announced so far, the government has refrained from more aggressive interventions which could jeopardise the trade union movement and the Danish labour market model.

Although both national and international courts of law have tested and accepted Danish closed-shop agreements, this is a practice which cannot be maintained in the longer perspective in the light of the increasing focus on individual human rights. Part-time work is already a possibility in many collective agreements; it is a 'soft' issue, but of course there may be a few employers who will exploit the fact that they have now been given the right of initiative. However, it is not a fatal blow to the strength of trade unions. The Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) welcomes the greater possibilities for flexibility. DA has no concerns as regards the survival of the Danish model as it expects that the social partners will be given influence on the substance of the proposed law.

It is still premature to say whether the government's proposals are the first step in a major war of attrition which could undermine the industrial relations system with a view to using the market as the most important management instrument. The last time that there was a chance to do this was under the Conservative government in the 1980s. However, the opposite took place, and there was a consolidation of cooperation with the social partners. In the light of the economic policy orientation during the 1990s - ie low inflation and moderate cost growth in combination with the social partners pledging in a so-called 'climate agreement' (DK9910151F) to try to ensure moderate wage developments - it may turn out to be imperative for the new government to keep alive a strong bargaining system. At the same time LO may now - with the Social Democratic Party in opposition - feel free to try to seek greater political influence. (Carsten Jørgensen, FAOS)

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