Pay restraints abroad harm Danish competitiveness

Pay restraint in Germany and Sweden over 1996-7 have led to a decline in the competitiveness of Danish industry, according to figures recently issued by the Danish Employers' Confederation.

According to recent figures from the Danish Employers' Confederation (DA), pay restraint in Germany and Sweden has led to a decline in the competitiveness of Danish industry. Whereas over the course of 1996-7 pay increases in Germany and Sweden were limited to 1.5% and to 2.6% respectively, the average annual pay increase in Danish industry was just under 4%. Germany and Sweden are by far the largest export market for Danish industrial goods, comprising more than 30% of total Danish industrial exports. The increases in Danish pay, according to the Confederation of Danish Industries (DI), affiliated to DA, have arisen as a result of company-level bargaining, pension contributions and the performance-related pay system.

According to DI calculations, average wages account for nearly half of the total cost of production. Every time a company sells goods for DKK 1, then DKK 0.41 is used to pay the wages and salaries of the company and its suppliers. The wages share of total turnover differs considerably from one sector to another. In the paper manufacturing sector and graphical sector, for instance, 53% of the companies' turnover is accounted for by wages. In the iron and metal industry, the percentage is 50% and in the chemical industry only 33%.