LO evaluates the 1998 collective bargaining round

Denmark's 1998 collective bargaining round, which ended in a major strike and government intervention, underlined the trade union movement's need for improved communication and priorities, according to the LO union confederation. Furthermore, surveys indicate that the demand by workers for a sixth week of paid holiday, raised during the conflict, may not be as clear-cut as it seems.

In April 1998, for the first time in 42 years, workers refused to support in a ballot a joint mediation proposal to settle the bargaining round which was recommended by their trade unions (DK9805168F). According to opinion polls, the reason given by seven out of 10 workers for their rejection of the proposal was the lack of improved holiday entitlement: they had expected the introduction of a sixth week of annual paid holiday (the statutory entitlement is five weeks). In the aftermath, two interesting questions have been raised: is the rejection of the mediation proposal an indication of an emerging gap between the trade union movement's negotiators and individual workers? And did all workers want a sixth week of paid holiday and more free time?

Why the rejection and who is to blame

Following the conflict, the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) has evaluated the 1998 collective bargaining process and its unfortunate ending - a major 10-day strike ended by government intervention. In the view of LO, a number of reasons contributed to the rejection of the mediation proposal:

1. the employers' bargaining strategy, which gave a leading role to the industry sector, and their emphasis on a "zero solution";

2. the general election held in March 1998, and the emphasis in the campaign on more time off to spend with children, along with the political promises made during the campaign and the prior uncertainty about the election's outcome; and

3. workers' "unreasonably high" expectations that a sixth week of paid holiday would be introduced.

The message that workers rejected the mediation proposal due to the lack of improvements in holiday entitlement and to employers' behaviour during collective bargaining, emerged from an opinion poll conducted for the Mandag Morgen newsletter between the second and fourth day of the subsequent industrial conflict (28-30 April).

The issue of reasonable demands and expectations is, LO admits, a question of improving the dialogue between unions and their members. As the president of LO, Hans Jensen, said: "It is crucial that we get our members to understand that there is a limit to the demands, considering the need to protect jobs and the development in real wages." Furthermore, LO admits that it must be better at prioritising demands - "I believe that we took the demand for longer holidays into consideration, but not sufficiently. The priority was not clear enough," said Mr Jensen. The Minister of Labour, Ove Hygum, recommended that the union movement should reflect more on the demands voiced by workers at workplace level, and critically assess the lengthy process from the point when demands are formulated until the union negotiators arrive at the negotiating table.

Admitting that the trade union movement has handled the exchange of information with its members inadequately, LO and its affiliated unions will take steps to improve communication and extend the process prior to the point when actual bargaining convenes, so as to involve everybody in the debate on bargaining demands and the priority to be given to the various demands.

Besides improving dialogue and involvement in prioritising demands, the Central Organisation of Industrial Employees in Denmark (Centralorganisationen af industriansatte, CO-industri) - the LO cartel for the industry sector - emphasised the difficulties in persuading workers not to rank short-term interests, such as improved holidays, over long-term interests, notably improving occupational pension provision. Building up a comprehensive occupational pension scheme is a long-term project which takes several bargaining rounds to complete.

In the evaluation of the bargaining round conducted by Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA), the focus of attention was the bargaining strategy and the result. Whereas DA is pleased with the bargaining strategy and the key role for the industry sector, it is far from satisfied with the outcome. Although company-level bargaining is yet to be completed, DA anticipates that the total increase in costs arising from the bargaining round will be more than 4.1%.

Holidays and more free time are ambiguous demands

The reason for the recent conflict on the Danish labour market has been said to be the demand for longer holidays and more time off for parents to spend with their children. The government legislation which ended the dispute complied with both preferences by offering an additional day of annual leave for all workers, plus two extra days of leave in 1998 and three days of leave per year from 1999 for employees with children under the age of 14.

After the conflict and the government intervention, surveys suggest a certain ambiguity in workers' views on: the introduction of a sixth week of paid holiday; more free time instead of wage increases; and the preferences for spending extra free time with families and children.

In a survey carried out for LO, after the conflict, it appears that the demand for a sixth week of paid holiday is not that popular after all. When asked to choose between more free time in the form of a sixth week of paid holiday or spreading this extra time off over the whole year, the response was evenly divided. Furthermore, although 50% of those surveyed preferred extra days off, a large minority (39%) preferred wage increases instead. Although men, on average, work longer hours then women and therefore could be expected to prefer more free time, a higher proportion of men than women prefer wage increases (44%) rather than extra holidays (45%). On the question of trading more free time and days off for workers with children for a wage cut, two-thirds were against. These findings indicate that although the wish for more free time is present among workers, a large minority feel less inclined to trade free time for wage increases, and a huge majority would not trade more free time for a cut in wages. Since the new government legislation makes it possible to convert into cash the extra day off and the three days off for families with small children, the possibility of achieving a wage increase is present.

A survey conducted by Greens Analyse Institut reveals that the wish for more free time increases proportionally with household income. In the group with an annual household income of up to DKK 150,000, approximately 57% favour more free time while in households earning over DKK 500,000, more than 77% prefer more free time to higher wages. When examining what workers prefer to do during the extra free time, it appears that workers (including those who have children) are less inclined to spend the extra time with their children. From a list of eight activities, hobbies were ranked first (46%), family second (37%) and children fourth (24%).

The emphasis on the conditions for families with small children is, interestingly, not reflected in surveys. According to the abovementioned LO survey, 73% of participants assessed the conditions for families with small children as fairly good or good. Furthermore, a large minority (40% of all respondents and 43% of those with no children) do not find it fair that families with small children were given extra days off.

The survey suggests that the labour force is very diverse when it comes to issues such as wages, the sixth week of paid holiday and leisure time preferences.

Prospect and consequences

Companies which are currently conducting bargaining have responded in different ways to the Government's legislative intervention. A number of large Danish firms have refrained from repeating the differentiation made in the legislation between those with children of a certain age and those with older children or no children at all. Thus some have offered the three extra days off to all parents, regardless of the children's age, while others - wanting to avoid differentiating between workers with and without children - have gone even further by offering the additional days off to all workers, irrespective of whether or not they have children. A common reaction among employers to the legislation giving additional days off to workers with children is concern about the increased administrative burden which it entails. Companies have to gather information on workers with children under the age of 14 and feel that they are thereby infringing on the private sphere. Therefore, some companies have converted the extra days off for workers with children to holidays, which will bring the sixth week of paid holiday within range at the next bargaining round in 2000. Two collective agreements, covering some 5,000 workers, have approached even nearer, providing for four and five days of additional holiday respectively.

The prospect of a sixth week of paid holiday slowly being introduced in the private sector, along with the upcoming collective bargaining in the public sector, have led the Minister of Labour, Ove Hygum, to issue a warning, saying that a sixth week of paid holiday will have a negative effect on the current positive economic development. It will not lead to increased employment, but enhance labour shortages, as the reserve of labour is diminishing, warns the Minister. Unemployment rate is forecast at 190,000 persons (equal to 6.6% of the workforce) in 1998, decreasing further to 180,000 persons (6.2%). The rate of new entrants to the labour market is decreasing, due to demographic changes and the high "exit rate". The number of persons on early retirement schemes is growing at an alarming rate, with seven out of 10 persons aged 60-67 now involved (DK9706114F).

The table below sets out briefly the regulatory framework for working time and holiday in Denmark.