New employer organisation favours more company-level agreements

At a joint general meeting on 22 November 2006, the Danish Commerce and Services employer organisation and the Danish Chamber of Commerce, a business interest association in services, agreed to merge to form Dansk Erhverv, a new joint employer and business association in the Danish labour market. This new organisation aims to become a major competitor to the currently dominant Danish employer organisation, the Confederation of Danish Industries. Moreover, it aims to put more emphasis on company-level agreements concerning pay, pensions and working time rather than on collective framework agreements.

On 1 January 2007, a new larger employer organisation was formed, following a decision taken at a joint general meeting on 22 November 2006 to merge the business interest association, the Danish Chamber of Commerce (Handel, Transport, Service, HTS-I), and the employer organisation, Danish Commerce and Services (Dansk Handel og Service, DHS). The new player in the Danish industrial relations system is called the Danish Chamber of Commerce (Dansk Erhverv, DE), thus retaining the English name of the former HTS-I.

During the November meeting, DE declared that the objective of this merger was to become the biggest Danish employer and business interest association over the next five years – a position which is today clearly occupied by the Confederation of Danish Industries (Dansk Industri, DI). In light of the fact that most new jobs are emerging in the knowledge and services sectors, while jobs are declining in industry, the newly-formed DE may reach its objective, as its members largely come from the knowledge, commerce and services sectors.

Lead-up to merger

Associations joining new organisation

The new merger has not taken place without some incident, as it happened only 10 months after HTS-I withdrew from the umbrella employer organisation Commerce, Transport and Service (Handel, Transport og Serviceerhvervene, [HTS](http://www.hts.dk/hts/Service/English information/)). Originally, this confederation aimed to unite the employer side and business policy interest in the field of services, tourism and transportation, but it only lasted as such for four years (DK0207102N). One of the founding organisations of HTS was the Association for Hotels, Restaurants and Leisure Industry (Hotel, Restaurations- og Turisterhvervets Arbejdsgiverforening, HORESTA), which in turn was also one of the first associations to join the new organisation, DE, in the hope that HTS would follow its move. However, HTS will not become a member in the immediate future, as the management of DE has declared that it will need a couple of years to define the future administration of the organisation. HTS had itself tried to postpone the merger so that it would have more time to prepare to also merge, but this effort was turned down by several employer associations behind DE.

Tensions between employer organisations

Thereafter, interest in the merger heightened when the press directly asked the new Chair of DE, Poul Erik Pedersen, whether the merger should be regarded as an organisational declaration of war against DI, which today organises a number of large member enterprises naturally belonging to the services sector, such as the Danish-based cleaning multinational ISS, the large telecommunications operator TDC and Post Denmark. Mr Pedersen answered: ‘Yes – they [the enterprises] are in my opinion placed in the wrong organisation.’ DI strongly disapproved of Mr Pedersen’s statement, and subsequently pointed out that declarations of war within their own ranks were not appropriate, considering the expected start of the important collective bargaining process in their joint field under the Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA) in early February 2007. In terms of payroll coverage, it should also be mentioned that the 6,400 member enterprises of DI cover a payroll of DKK 120 billion (€16 billion as at 23 January 2007), while the existing 20,000 member enterprises of DE cover a payroll of about DKK 80 billion (€10.7 billion). The members of DE are primarily small and medium-sized enterprises (SMEs) with services and commerce being traditionally low pay sectors. HTS has about 6,000 member enterprises covering a payroll of around DKK 35 billion (€4.6 billion).

Current bargaining system needs updating

Futhermore, Mr Pedersen of DE declared that the current collective bargaining system is outdated. At present, DI acts as leader for the entire private sector in terms of the collective negotiations; however, Mr Pedersen believes that DI’s strategy of concluding agreements within a framework agreement, including provisions on minimum wage increases, for all employees in a sector as large as the industrial sector is obsolete. He considers that wage bargaining should take place at company level – individually and not collectively. Moreover, he highlighted that the history of the Danish collective bargaining system dates back as far as the era of industrialisation: ‘The rules on, for instance, working time, pensions and overtime have quite a different importance today than in the old industrial society.’

Membership types offered by DE

DE offers its members three types of membership: DE Basic which provides minimum services to all members; DE Full Service which includes legal assistance; and DE Employer consisting of the other two types of membership plus a number of services in the employer field in connection with DA. The toning down of the employer’s role in the collective bargaining process is obvious as the employer element will become voluntary. Mr Pedersen believes that: ‘Business and trade policy is much more important than collective agreements in the globalised world.’ DE has thus clearly expressed the view that the collective bargaining system is no longer automatically the highest priority.

Commentary

The question arises as to whether these developments will have a negative effect on the Danish collective bargaining system and whether they will mark the beginning of a new organisational structure on the employer side. However, this is not likely to happen in the short term. Company-level agreements on pay are already common in the private sector under the organisation of DA. The confederation, which represents about 600,000 employees and covers the entire private sector with the exception of the financial intermediation sector and agriculture (totalling 85,000 employees), estimates that 22% of its bargaining does not negotiate wage rates at all at the level of the social partner organisations, as wages are exclusively negotiated at company level in this case. Only 15% of agreements in the bargaining field of DA are still negotiated under the so-called normal pay system – a system under which wages are agreed on through central negotiations at the level of the social partner organisations. This system is, in particular, used in the field of slaughterhouses under DI and in the transport sector under HTS. Moreover, it is expected that the normal wage system will be abolished in the long run.

The Union of Commercial and Clerical Workers in Denmark (Handels- og Kontorfunktionærernes Forbund, HK) does not fully understand the objectives of DE. HK/Privat already has an agreement with DHS without fixed pay rates. This agreement covers ‘offices and services’ and working conditions in the companies. The President of HK/Handel, the trade section of HK, Jørgen Hoppe, hopes to take DE Chair, Mr Pedersen, at his word during the impending negotiations in January 2007. DE’s statements concerning company-level agreements can thus be seen as an attempt to underline the new developments in the services sector in terms of information technology (IT) and the knowledge industry, while completely ignoring that DE has through DHS inherited one of the biggest low pay fields – namely, retail; the latter sector does have a minimal wage agreement with the possibility of local wage bargaining, but larger groups of shop assistants are actually paid the minimal wage rate, or a collectively determined wage rate.

It should be added that the statements made by DE concerning its objectives should be viewed as a way of characterising a new type of organisation and not seen as a way of putting an end to the Danish bargaining model. Both representatives of the labour market organisations and researchers have expressed views in line with that of DA Director, Jørn Neergaard Larsen, in his statement: ‘The alternative to the regulation taking place today through the collective bargaining system is not freedom, but statutory regulation and increased use of directives.’

Carsten Jørgensen, FAOS