Social partners sign new three-year agreement in manufacturing

At the end of February 2007, the social partners signed the new three-year collective agreement for the manufacturing industry following extensive negotiations. The agreement contains improvements concerning company-level bargaining, training and gender equality. Compared with the previous sectoral agreements, this new industry agreement contains a deviation clause for company-level agreements.

On 27 February 2007, the social partners of the manufacturing sector, namely the Confederation of Danish Industries (Dansk Industri, DI) and the Central Organisation for Industrial Employees’ (CO-industri), signed a new three-year sectoral collective agreement, which affects about 250,000 employees. In keeping with tradition, other sectors of the economy waited to finalise their negotiations, which took place under the umbrella of the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and the Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA), until the agreement in the manufacturing sector had been signed first. The collective agreement of the manufacturing industry, the so-called Industry Agreement, is a trend-setting agreement for other sectors, and its provisions are more or less identical to those of collective agreements concluded in other minimum-wage sectors covered by LO and DA.

The new Industry Agreement provides for major social improvements in the area of continuing training, gender equality and strengthening the role of employee representatives at local level. It also introduces a ‘free-choice’ account for employees and sets the minimum hourly wage levels for the sector for 2007–2010 (see also DK0703029I on innovations in the new Industry Agreement).

Provisions of the agreement

Training

With regard to continuing vocational training, employees obtained the right to two weeks of training being paid at 85% of their wage. Employees are free to choose their training programme, which does not necessarily have to be relevant for the company, but should relate to the sector of the manufacturing industry as a whole. The agreement provides for the establishment of a Competence Development Fund of Industry (Industriens Kompetenceudviklingsfond) to finance such continuing training. This fund will be active from 1 April 2009 and covers all employees in member companies of DI. This issue, in particular, separated the signatory parties for a long time as CO-industri wanted the fund to cover their union members only. Co-industri thus aimed to reach a breakthrough in relation to the ‘yellow’ unions – trade unions that stress a harmony of interest between employees and employers – and other non-organised workers. DI opposed the union’s demand on the grounds that Danish collective agreements are sectoral agreements, which means that the Industry Agreement covers all employees in a member company of DI.

Equal rights for parental leave

In relation to parental leave, the new agreement includes a further three weeks of fully paid parental leave in addition to the existing 26 weeks (DK0402104F). These three weeks are reserved for fathers and will otherwise be annulled if they are not taken. Fully paid parental leave means that the employer complements the parental benefit scheme so that employees maintain their income level over the leave period; in other words, the employer pays the difference between the public parental benefit and the employee’s income. The 29 weeks of statutory parental leave are divided as follows: four weeks of ‘pregnancy leave’ for women, followed by 14 weeks of maternity leave after the child’s birth and nine weeks of paternity leave which can be split between both parents – three weeks for the mother, three weeks for the father and three weeks for either the father or mother. Furthermore, the agreement provides for an increase of the pension payments for women during maternity leave to ensure that this leave does not affect female employees’ total pension savings.

Local bargaining system

Shop stewards are given a special compensation for representing workers’ interests outside normal working hours. The amount of the compensation depends on the number of colleagues the shop steward represents; the level of compensation begins at €1,300 (DKK 8,000) and can reach €4,000 (DKK 30,000) if the shop steward represents more than 100 workers. Only shop stewards can negotiate agreements at company level. Furthermore, employees in companies where no shop steward has been elected can select by ballot a spokesperson who is authorised to conclude local agreements under the Industry Agreement. The elected spokesperson must be a member of a CO-industri member trade union.

A free-choice account

The agreement also introduces the establishment of a ‘free-choice’ account for each employee. Employees can choose to pay their salary for the five special holidays (DK0007188F) and/or for any public holidays into this account; an additional 1% of employees’ wages is automatically carried over to this account. The employees are then free to choose whether these funds should be paid as salary, taken as time off or put towards a pension. The following table illustrates the composition of this account.

Composition of free-choice account, 2007–2009
In May 2009, the free-choice account will comprise 7.5% of employees’ wages.
  Existing elements Extra payment Total fund available
1 May 2007 6.5% 0.5% 7.0%
1 May 2008 6.5% 0.75% 7.25%
1 May 2009 6.5% 1.0% 7.5%

Pension and pay provisions

The new Industry Agreement stipulates an increase of contributions to the collectively agreed occupational pension scheme by 0.3 percentage points on 1 July 2008 followed by a further 0.9 percentage points on 1 April 2009; contributions will therefore increase from the current 10.8% of employees’ pay to 11.1% in 2008 and then to 12% in 2009. Employers pay two thirds of these contributions and employees one third.

The hourly minimum wage in the manufacturing industry, which currently stands at €12.77 (DKK 95.15), will be increased in three instalments:

  • €0.40 (DKK 3.00) an hour on 1 March 2007, augmenting the minimum hourly pay to €13.17 (DKK 98.15);
  • €0.34 (DKK 2.50) an hour on 1 March 2008, totalling a minimum hourly pay of €13.51 (DKK 100.65);
  • €0.34 (DKK 2.50) on 1 March 2009, bringing the total minimum hourly pay to €13.85 (DKK 103.15).

The deal only provides for the minimum rates since actual pay increases are negotiated at company level every year.

Overtime payments will rise by 3% a year, while the rates applying to apprentices will, on average, increase by 3.5% per year.

Furthermore, the agreement provides for an improved warning time for shift workers in the case of any changes in the shift schedule. A joint committee will investigate the impact of night and shift work on workers’ health.

Deviations from agreement

Another provision of this agreement strengthens the decentralisation of the bargaining system in the manufacturing industry. If locally agreed by the employer and the shop steward, company-level agreements can deviate from certain rules laid down in the sectoral agreement. These include those rules relating to working time and training. This clause was introduced in the 2000 industry-wide agreement as an experimental scheme. At that time, locally agreed deviations required the acceptance of the sector organisations (DK0002166N). When the agreement was renewed in 2004, the local-level social partners only had to inform the sectoral partners about an agreed deviation. In the new 2007 Industry Agreement, the deviation clause concerning company-level agreements is a provision of the sectoral agreement.

Carsten Jørgensen, FAOS

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