Working life country profile for Denmark
This profile describes the key characteristics of working life in Denmark. It aims to provide the relevant background information on the structures, institutions, actors and relevant regulations regarding working life.
This includes indicators, data and regulatory systems on the following aspects: actors and institutions, collective and individual employment relations, health and well-being, pay, working time, skills and training, and equality and non-discrimination at work. The profiles are systematically updated every two years.
Between 2012 and 2022, GDP per capita increased by 16.96%; this compares with the EU average increase of 15.29% for the same period. During this time, the unemployment rate decreased by 3.3 percentage points; the biggest decrease was in youth unemployment (-5.2 percentage points), which stood at 15.8% in 2012. In 2022, unemployment rates for all categories were lower than the EU averages.
There is no labour code in Denmark and legislation regarding the regulation of the Danish labour market is minimal. Central labour market issues – such as wages, working hours, working conditions and the right to strike – are regulated on a voluntary basis by agreements between trade unions and employer organisations.
However, an important act concerning regulation is the Consolidation Act No 81 of 3 February 2009 on the Legal Relationship between Employers and Salaried Employees (Funktionærloven). This act – also known as the White-Collar Act – regulates working conditions for salaried employees. Another important act is the Holiday Act (Ferieloven), which specifies that all employees are entitled to five weeks of holiday annually. The Holiday Act thus ensures that employees not covered by collective agreements have the right to five weeks of annual holiday.
The Danish Working Environment Act (Arbejdsmiljøloven) is a framework act that lays down the general objectives and requirements in relation to the working environment. The act aims to prevent accidents in the workplace and work-related illnesses and to protect children and young people in the labour market through special rules.
The Danish industrial relations system, also known as the Danish labour market model, dates back to the conclusion of the ‘September Compromise’ in 1899 and the introduction of collective labour law institutions in 1910. Particular to the model is the interdependence between employers and trade unions, and thus the significant influence of the labour market organisations on wages and working conditions through collective bargaining. The state plays no role in regulating the major issues relating to the labour market.
However, tripartite negotiations about issues that concern the labour market take place after ad hoc invitations are issued by the government to the main social partner confederations.
The level at which collective bargaining principally takes place in Denmark is sectoral level. Negotiations in the industrial sector generally set the trend for other negotiations at this level. This gives the trade union federation, the Central Organisation of Industrial Employees (Centralorganisationen af Industriansatte, CO-industri), and the largest employer organisation, the Confederation of Danish Industry (Dansk Industri, DI), an important role in the Danish industrial relations system.
In recent decades, the industrial relations system has had a significant tendency towards decentralisation of the collective bargaining system, including wage bargaining. Wage negotiations follow two trends. In the flexible ‘minimum wage system’, the agreement concluded at sectoral level is further negotiated at company level. Thus, the actual wage is settled at company level. In the ‘normal wage system’, wages are negotiated and settled only at sectoral level. The normal wage system covers only approximately 20% of the labour market and is mainly concentrated in the transport sector. The rest of the labour market is covered by flexible wage systems such as the minimum wage system and the price list system, the latter operating mainly in the construction sector.
The COVID-19 crisis and the subsequent containment measures prompted major changes in the Danish labour market in the spring of 2020; however, the changes varied between sectors, occupations and employees. Teleworking became a widespread phenomenon. Those still working at their employer’s premises often experienced greater stress. Parents’ work was affected by school closures, with children at home. Many businesses closed altogether.
However, no great changes occurred in the processes, institutions or activities of social dialogue or collective bargaining due to the COVID-19 pandemic. The only exception was that the number of tripartite agreements increased and these were negotiated more quickly than usual. In 2020, 15 tripartite agreements related to mitigating the effects of the pandemic were concluded; the first agreement, on a temporary wage compensation scheme, was passed only three days after the first lockdown began. The social partners were involved in most of the relevant agreements and were generally supportive of the remaining ones. In summer 2020, tripartite agreements were concluded with the aim of stimulating private consumption in order to support Danish businesses, such as the agreement on the payment of frozen holiday funds, which 2.3 million employees applied for.
The current agreements in force cover 2021–2024 in the public sector and 2020–2023 in the private sector.
