Workers increasingly excluded from bargaining model

Union membership and collective bargaining have declined in Denmark in recent years, as in the rest of Europe. A new anthology of Danish studies, looking at employee groups such as fixed-term, part-time, migrant and temporary agency workers, has found that union membership and collective agreements do not guarantee consistent wages and working conditions for all co-workers. The studies also suggest that not being in a union does not always mean worse pay and working conditions.

Introduction

A new anthology entitled Insiders and outsiders – the scope of the Danish bargaining model (in Danish) draws on a series of studies carried out by scholars at the University of Copenhagen’s Employment Relations Research Centre (FAOS). It explores the impact of union membership and collective bargaining agreements on employees.

It examines how insider-outsider status in the Danish bargaining model – whether or not a worker has union membership or is covered by an agreement –affects workers’ employment relations, the quality of their job, their wages, access to social benefits and further training.

Individual chapters examine union density, coverage rate of collective agreements, and the wages and working conditions of freelancers, fixed-term workers, part-time workers, temporary agency workers and Polish and non-western migrants in the Danish labour market.

The study draws on recent quantitative and qualitative research conducted by scholars at FAOS, which explores the different challenges insiders and outsiders face in the labour market.

Danish model under pressure

An increasing number of employees in the Danish labour market are no longer covered by the Danish bargaining model, despite its comparatively high union density (67%) and coverage rate of collective agreements (83%). Unions are finding it increasingly difficult to recruit young people, unskilled workers, temporary agency workers, Polish migrant workers and people from outside Europe. Workers in these groups are also more likely to be employed by companies not covered by a collective agreement.

By contrast, union density is relatively high among migrants from outside Europe, fixed-term workers, part-time workers, older workers and freelancers such as artists. However, while many of those who make up these employee groups work in sectors such as manufacturing, construction, banking and the public sector where there is a relatively high coverage rate of collective agreements, this is rarely the case for non-western migrants or the majority of freelancers. As a result, some groups of employees end up being ‘involuntary outsiders’ in relation to the Danish bargaining model. If they work in companies not covered by the relevant collective agreement, they find that they have no access to the social benefits of those agreements despite being union members.

Others are ‘voluntary outsiders’ in relation to the Danish model. They include those who have:

  • decided to be non-union members and work in the unorganised labour market;
  • opted for membership of the so-called ‘yellow’ unions that are rarely party to collective bargaining (DK1012019I);
  • decided not to join a union although are covered by the sectoral collective agreement.

The last two groups of workers are often referred to as ‘free-riders’ because they access the benefits of collective agreements, without contributing to the system through membership of the traditional unions.

The final employee group is the insiders, who are both members of traditional unions and covered by a collective agreement.

Insiders versus outsiders – wages and working conditions

Although the Danish model is able to organise groups such as fixed-term workers, part-timers, freelancers and non-western migrants, this is no guarantee that they are covered by a collective agreement and have access to the benefits and employment protection provided by the Danish bargaining model.

Some groups of employees face a greater risk of becoming outsiders, through unemployment, even if they appear to be insiders. Temporary agency workers, fixed-term workers, freelancers and part-time workers with relatively few weekly working hours and short-term contracts all have less job security than their colleagues in full-time positions. The findings also show that migrant workers and their families experience lower levels of job security, mainly because they tend to be overrepresented in fixed-term positions, part-time jobs or as self-employed workers with no employees.

Other studies in the anthology reveal that some groups of outsiders tend to have limited access to the various social benefits and salary increments stipulated in the collective agreements – even in companies respecting the rules and regulations.

For instance, several collective agreements require workers to have been with a company for between nine and 12 months before they are entitled to benefits such as further training, accrued rights to an occupational pension, full pay during maternity leave, paternity leave and parental leave. Some groups such as fixed-term workers and freelancers, although covered by an agreement, may never meet its qualification criteria.

Some fixed-term workers and freelancers, such as artists, seldom receive pay increases during their employment and have to settle for the minimum wage each time they start a new job. By contrast, some groups of temporary agency staff such as nurses and social care workers are paid more than their peers in permanent positions. This is in compensation for less job security and limited access to the social benefits included in the collective agreements for permanent employees.

Segmentation of the labour market

The Danish bargaining model grants employees some minimum rights, often more extensive than those required by law and irrespective of their employment contract. To some extent these rights counteract the increasing differentiation in the labour market.

However, because the Danish model promotes greater diversity among employees, it has produced an increasing inequality and segmentation in the labour market. It can indeed be considered an insider-outsider model, where only the groups covered by the model in principle have access to the benefits of its collective agreements. In some instances, the model provides better wages and working conditions for workers who have decided not to join a union. In other instances, this type of outsider is excluded from the model.

The Danish bargaining model therefore embraces, to varying degrees, increased segmentation of the labour market, while in other instances it counteracts such differences among employees when it comes to union membership, coverage rate, social benefits, employment contracts, job quality and further training.

Commentary

The insider-outsider debate has attracted increased attention not only in Denmark, but also in the six other countries taking part in the BARSORI project, funded by the European Commission and coordinated by the University of Amsterdam – Germany, Italy, the Netherlands, Slovenia, Spain and the United Kingdom.

The main characteristics of the Danish system are that wage and working conditions are regulated through a series of collective agreements signed by social partners at sectoral and company levels.

In the long term, increasing numbers of employees are no longer covered by collective agreements and/or choosing not to be union members may have a profound effect on the sustainability of the Danish bargaining model.

If representative social partners are not able to guarantee that wage and working conditions in a large part of the labour market are regulated through collective bargaining, increased legislation may be needed to protect employees who are outside such agreements. The introduction of such legislation may mean that the fundamental characteristic of the Danish bargaining model will have to change.

Trine P. Larsen, FAOS, University of Copenhagen

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