Denmark: Annual Review 2010

  • Observatory: EurWORK
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  • Published on: 13 Oktober 2011



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The year 2010 was a collective-bargaining year in the pace—setting private sector under LO and DA. In February, the social partners in industry agreed to a renewal of the collective agreements. The settlements reflected the impact of the crisis but also contained surprising new elements. Although the agreed wage increase was low, innovative welfare aspects were introduced. This accord could be defined as a ‘maintenance agreement’, establishing new elements to be followed up in future collective bargaining rounds. At the same time, a new comprehensive study revealed that union density and membership of an unemployment fund has decreased significantly the last ten years.

1. Political developments

  • The government (s) in office during 2010

The government in office during 2010 was the coalition government constituted by the Liberals (Venstre) and the Conservatives (Konservativt Folkeparti) under the direction of Mr Lars Løkke Rasmussen (Liberals). Mr Løkke Rasmussen took over in April 2009 from Mr Anders Fogh Rasmussen (Liberals), who was appointed new General Secretary of NATO.

  • Any general or significant regional/local elections held in 2010

There were no significant regional/local elections held in 2010

  • Any other significant political events which took place in 2010

No

  • Any forthcoming national or important regional/local elections or significant political events

The current government took office in 2007, which was the third period since 2001 when Mr Anders Fogh Rasmussen took office as the first prime minister of the coalition with the conservatives. New elections are to be held during 2011 and it will be the first election for Mr Løkke Rasmussen in his position as Prime Minister. The date is not set yet.

If a new government took office during the year, briefly summarise the implications for policy on employment and industrial relations.

No change in government 2010

2. Legislative developments

The Danish Labour Market is primarily regulated by virtue of collective agreements negotiated and signed by the social partners. Thus legislation on core requirements on hiring and laying off employees, working time and employment rights in general is not commonplace, apart from historical contingent legislation protecting white-collar personal and public servants, taking managerial or enhanced, pivotal societal functions.

In 2010 the following legislation in the field of employment and IR was approved by the Danish parliament, “Folketinget”:

Posted workers

A revision of the posted workers act (LOV nr 509 af 19/05/2010)  has extended the obligation of controlling that foreign service providers and their posted workers has been registered correctly in the a special register, the Register of foreign service providers (RUT) established under the Danish Commerce and Companies Agency (Erhvervs- og Selskabstyrelsen). Legislation now obliges private households, under threat of being fined, to check that the hired foreign company is correctly registered. Information is used for the Agency of Health and Safety to control that the service providers fulfil Danish health and safety requirements. Furthermore, but not the least, Danish unions have gained access to the register in order to support their efforts to sign collective agreements with the foreign providers.

A new job support initiative for single providers (job premium)

The bill introduces a two-year trial with a job prize to single parents who come into work after having been long-term unemployed (LOV nr 1593 af 22/12/2010). The trial includes persons that have received public benefits for 47 weeks within the last year. The job prize represents 4% of the person’s new income to a maximum of DKK 600 (€ 80) a month. Income from employment in flexible jobs, or employment with wage support also entitles to a jobs prize. The bill is part of the government's overall effort against long-term unemployment.

3. Organisation and role of the social partners (250 words)

In 2010 the largest Danish trade union, the United Federation of Danish Workers, 3F, and the woodworkers in the Union of Wood, Building and Industry Workers, TIB, agreed to merge as of 1 January 2010 under the name of 3F. 3F thus covers a majority of the workers in the construction sector. Only painters, electricians and plummers are represented by their own unions. In autumn 2009 the president of 3F published a vision of ‘one large union’ within the Danish Confederation of Trade Unions, LO, for the private as well as the public sector unions, in order to be able match the powerful DI. The vision is still discussed amoong the union leaders (DK0912029I).

A study (in Danish) published in October 2010 and based on registration data showed that Danish union membership and unemployment fund membership both have been declining significantly. Total union density declined between 1995 and 2010 by six percentage points, from 73% to 67%. If the members of the so-called ‘yellow’ unions are excluded, the density among the traditional unions decreases by 10 percentage points, from 71% to 61%. LO shows the steepest decline from 65% in 1995 to 53% in 2010, during which period the yellow unions registered a slow but steady membership increase, from 3% to 10%. However, the yellow unions, of which the Christian Union is the largest, do not sign collective agreements with recognised employer organisations.

The density of membership in the unemployment funds declined in the period 1994–2008 from 79% to 74%. Those not in unions and unemployment funds tend to be younger workers (aged 18–39 years), immigrants and descendants of immigrants, low-paid employees without vocational education, and employees in the private sector, especially agriculture and fishing.

In 2008, the share of double members, i.e. members of a union and a unemployment fund at the same time, comprised a little less than two thirds of the labour force (not including self-employed workers). This is equal to an 8% decline since 1994. Without including the ‘yellow’ members in the calculation of double members, union density is 56%. This means that the core group of employees in the collective agreement system, that is members of both the union that signs a collective agreement and its connected unemployment fund, only covers a little more than half of the labour force (see also table 1) (DK1012019I). membership is on the way from ‘double-membership’ to ‘double deselection’.

Table 1: Divison of labour force minus self-employed, 18-66 years old, according to organisational relationship, in thousands and percent
 

1994

1997

2000

2004

2008

Change

1. Labour force minus self-employed

2,515

2,492

2,524

2,531

2,587

+72

+2.9%

2. Insured in an unemployment fund

1,992

79.2%

1,992

79.9%

1,984

78.6%

1,969

77.8%

1,921

74.3%

-71

-3.6%

3. Not insured in an unemployment fund

523

20.8%

500

20.1%

540

21.4%

562

22.2%

666

25.7%

+143

+27.3%

4. Double members

1,750

69.6%

1,739

69.8%

1,722

64.7%

1,662

65.7%

1,602

61.7%

-148

-8.5%

5. Single members (unemployment fund)

242

9.6%

253

10.2%

262

10.4%

307

12.1%

319

12.3%

+77

+31.8%

6. Single members (union)

187

7.4%

182

7.3%

200

7.9%

205

8.1%

233

9.0%

+46

+24.6%

7. Union members (4+6)

1,937

77.0%

1,921

77.1%

1,922

76.1%

1,867

73.8%

1,835

70.9%

-102

-5.3%

8. Non-union members

578

23.0%

571

22.9%

602

23.9%

664

26.2%

752

29.1%

+174

+30.1%

9. Double deselection (3-6)

336

13.4%

318

12.8%

340

13.5%

357

14.1%

433

16.7%

+97

+28.9%

Source: Jesper Due, Jørgen Steen Madsen: Udviklingen I den faglige organisering: årsager og konsekvenser for den danske model, p. 17. LO-dokumentation, Nr. 1/2010.

4. Collective bargaining developments

In 2010 collective bargaining took place in the trend-setting private sector under the area of the Danish Confederation of Trade Unions, LO, and the Confederation of danish Employers, DA. Negotions took place during the first months of 2010 – i.e. still in the light of recession. From the beginning it was clear that there was not much space for significant wage increases.

After a period of intense negotiations, the social partners in industry – the Confederation of Danish Industry (DI – organisation for erhvervslivet, DI) and the Central Organisation of Industrial Employees (Centralorganisationen af Industriansatte, CO-industri) – concluded a renewal of the Industry Agreement, i.e. the collective agreement in the pace-setting manufacturing industry sector on 22 February 2010. DI and CO-industri signed a two-year agreement covering 240,000 employees. The agreement is traditionally the first to be signed during collective bargaining in the private sector by the organisations affiliated to the Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA) and the Danish Confederations of Trade Unions (Landsorganisationen i Danmark, LO). 2010 was no exception and, soon after, other sectors such as transport, construction and the cleaning industry signed collective agreements that more or less mirrored the agreement in manufacturing. The LO/DA area covers together around 650,000 employees (DK1003011I).

The agreement is a sectoral framework agreement which will be negotiated further at company level, where the actual pay is negotiated as well as special working time arrangements like work-sharing for instance.

The sectoral agreement includes an increase in the current minimum wage of DKK 103.15 (€13.86) by DKK 1.10 an hour (€0.15) in the first year and by DKK 1.75 (€0.24) in the second year. This corresponds to an increase of 1.07% in 2010 and 1.7% in 2011. The period runs from 1 March each year. The minimum wage will thus be DKK 106.00 (€14.24) on 1 March 2011. In addition, bonuses for unsocial working hours will increase by 1.5% on 1 March 2010 and 2% on March 2011. The wage for apprentices increased by 2% in 2010 and will increase by 2.5% in 2011.

On the other hand, the employees were compensated by agreements on job security and social dumping. A new development was that hourly paid employees with a minimum of three years of seniority are entitled to severance pay – in principle following the same rules as in the Act on the legal relationship between employers and salaried employees. The severance pay is meant as a supplement to the unemployment benefit and covers 85% of the difference between the unemployment benefit and the wage of the redundant person. It is the first time that severance pay is part of a national agreement in the sectors covered by LO and DA (DK1003011I).

Another new development was the introduction of elements of protection against social dumping. This was introduced mainly in the transport and construction agreements, where many Polish workers are employed – not always not a regular basis in accordance with the relevant collective agreement. The employees in 3F had demanded a full chain liability scheme in cases of subcontracting, obliging the Danish main entrepreneurs only to do business with organised subcontractors and to guarantee that ordinary wages were actually paid in all subcontracting levels. It was a very ambitious negotiation demand – and it was promptly rejected by the employers in DI (that for the first time represented the employers in transport as a consequence of the merger with HTS in 2009, DK0802029I). DI claimed that these issues could not be handled in the collective bargaining system. However, DI transport agreed that 3F got the right;

  • to monitor pay slips and other information about working conditions in member companies of DI if they suspect discrepancies in relation to the agreement, such as underpayment;
  • to access information about a subcontractor to a member company of DI. The problem here comes not so much from foreign companies but from smaller Danish hauliers performing tasks for major haulage contractors on terms that undercut the agreement (DK1003031I).

After the transport agreement had been signed, the ‘full-chain liability’ required by the unions in construction was a lost cause even before the beginning of the negotiations. 3F’s construction group and TIB have instead, in their agreements with the Danish Construction Association (Dansk Byggeri), introduced a recommendation that construction companies will stipulate in their contracts that the subcontractor shall be subject to the relevant agreement of the Danish Confederation of Trade Unions (LO). At the same time, in cases where there is a suspicion that the agreement has been broken, the Danish Construction Association is obliged to attend an organisational meeting on site with the participation of all stakeholders within 48 hours. This also applies in the case of subcontractors who have signed an adoption agreement. All relevant information, including pay slips, must be provided. The parties also agreed to establish a permanent arbitrator, so that cases where they do not agree can be settled quickly – within seven to 10 days. Both employees’ and employers’ organisations have an interest in keeping the market under regulation in order to protect their members from unfair competition from bogus self-employed contractors and employers hiring foreign workers for low wages.

5. Responses to economic downturn

There were no initiatives from the side of the government and/or the social partners with the special aim to support specific groups or companies on the labour market. As in 2009 the crisis did not have any impact on industrial relations or employment law.

Work sharing schemes was one method used to mitigate decreasing employment levels during 2009. However, the level of work-sharing declined during 2010. In 2009 the number of persons participating in work-sharing up to 13 weeks, which is the collectively agreed period, was 33,364 angainst only 8,515 in 2010. In December 2009 the number was 4,295 compared to 977 persons on work-sharing in December 2010.

6. Pensions

A hot issue in the policy debate 2010 was the maintenance of the ‘voluntary early retirement scheme’ (or the post-employment scheme). Early retirement was introduced in the end of the 1970ies as an option for withdrawing voluntarily from the labour market against receiving a benefit – and then allowing for the entrance of young people at the labour market. Several high profiled economists have during the last years repeatedly recommended a gradual abolition of early retirement benefit because the public expenses are too high. They have also recommended a higher normal pension age.

In general the employers want to abolish the scheme while the unions are severely against giving up a benefit that is given to physically worn out workers/members. During 2010 the government did not take any initiatives to make any changes in the scheme

General elections to the Parliament are to take place in 2011. The early retirement scheme is already estimated to be the most hot issue and turning point in the coming election campaign.

It should added that the early retirement age and the normal pension age was regulated in the so-called Welfare Agreement passed by a majority in the Parliament in 2006. The early retirement age will be raised from 60 to 62 during the years from 2019 to 2022. The normal pension age will be raised from 65 to 67 during the years 2024 to 2027. The trade unions were then in general satisfied with the bill while the employers had rather seen a more far-reaching reform.

7 Developments in working conditions

Career and employment security

The employment level decreased further in 2010 compared to 2009. In the fourth quarter of 2010 the employment decreased with 16,000 people compared to the fourth quarter of 2009. Furthermore the number of ILO-unemployed, that is unemployed people in the labour force who are actively looking for work, increased during 2010 to 229,000 which corresponds to 7.9 % of the total labour force (Danmarks Statistik, Arbejdskraftundersøgelsen 4. kvartal 2010).

In 2009 the income level increased by 0.1 %. Corrected for increases in consumer prices the real income level decreased by 1.2 % in 2009 (Danmarks Statistik, Indkomststatistik 2009). The income statistics for 2010 are not available yet.

Health and well-being of workers

In regards to risk exposure and health at work, the 2010 statistics are not available yet. The annual report for 2009 (Arbejdstilsynets Årsopgørelse Arbejdsulykker 2009) from the Danish Working Environment Authority (Arbejdstilsynet) does however state that the number of work accidents decreased significantly from 2008 to 2009. In 2009 42.544 work accidents were reported which is the lowest number since 2003 and 14% fewer than in 2008. Furthermore the number of work-related diseases reported decreased from 2008 to 2009. In 2009 15,596 work-related diseases were reported, which is about 1,100 fewer than in 2008 (Arbejdstilsynets årsopgørelse arbejdsbetingede sygdomme 2009). For a different calculation method on work accidents and work-related diseases see the annual report (Arbejdsskadestatistik 2009) from the Danish National Board of Industrial Injuries (Arbejdsskadestyrelsen).

Regarding harassment at work the annual report on discrimination from the Danish Board of Equal Treatment from 2009 (Ligebehandlingsnævnet) outlines that the board received 200 cases in 2009. Although the annual report for 2010 is not available yet, the Board of Equal Treatment states that it received about twice as many cases on discrimination in 2010 compared to 2009, which could indicate, that the level of discrimination has increased in 2010. Note however that the Board of Equal Treatment handles cases on discrimination both in and outside the labour market.

There are no aggregated statistics on violence at workplaces in Denmark.

Developing skills and competences

During recent years there has been a widespread focus on the negative effects of the financial crisis in regards to employee development. A report (Erhvervslivets forskning, udvikling og innovation 2009) from the Danish Agency for Science, Technology and Innovation (Forsknings - og Innovationsstyrelsen) does however stress that there is no straightforward tendency in Denmark, as some companies have cut down on the employee development expenses while others have chosen a more proactive strategy and invested further in employee development. Research confirms that the financial crisis has made many companies cut down on their HR (human resource) development activities especially training but at the same time forced companies to think more creatively, which have also had positive effects on the development activities (Temarapport HR træfpunkt 2010)

Work-life balance

During 2010 there has been a continued focus on the so called borderless work (det grænseløse arbejde), which is a widespread phenomenon in Denmark due to the extent of modern forms of work organisation. Research centres and trade unions have especially focused on how to limit the negative consequences of the borderless work in order to avoid that they overshadow the positive effects and create a negative work-life balance. See the National Research Centre for the Working Environment (NFA) and The Danish Confederation of Trade Unions (LO) for details.

8. Major conflicts and restructuring cases

There was no major incidents of industrial action in 2010. The moderate trend from 2009 was followed despite the fact that 2010 was collective-bargaining year in the private sector. There was only a small increase in unofficial strikes in the second quarter, where the negotiations at company level begins after the signature of the sectoral framework agreement, from 2,900 lost working days in first quarter to 9,900 lost working days in the second quarter. In the third quarter the number fell again to1,600.

The most noteable restructuring case was the case of the Danish based multinational windmill manufacturer Vestas. On 26 October 2010 Vestas announced the closure of four factories in Denmark and 1919 job losses. Across Europe, Vestas fired close to 3000 employees in total. Layoffs arose in anticipation of a decrease in demand for wind turbines in Europe in 2011. The announcement was surprising in so far that Vestas only in August had made 300 employees redundant and in so far as experts believed that windmill production would start increaseing again.

2010 was also the year where a tendency to mass redundancies in the public sector appeared due to significant savings on the budget. Many hospitals had to cut staff, mainly nurses, and several municipalities were cutting jobs in hundreds among administrative staff, social and health care workers, child and youth educators and teachers. See European Restructuring Monitor for single cases, including Vestas.

9. Other relevant developments

There were two issues concerning gender equality in the collective agreement signed early 2010. It was agreed to form a Tribunal of Gender Equality and it was agreed to improve the paternity leave.

A tribunal has been set up modelled on the Tribunal of Dismissals, which has a labour court judge as chair. The new board will ensure that all disputes relating to equal pay are treated within the labour law system. The main organisations LO and DA are formally called to nominate board members, so that it will cover all sectors represented by LO and DA, not only manufacturing. The tribunal had not yet been formed at the end of 2010.

In 2011, pay for parental leave will be extended by two weeks: one week extra for mothers and one week for fathers. This gives mothers the right to a total of 22 weeks of paid leave, including four weeks of pregnancy leave before birth. Six weeks are earmarked for the fathers, while three weeks can be shared between the parents.

Carsten Jørgensen, FAOS, University of Copenhagen and Stine Milling, Oxford Research

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