LO and DA agree stronger coordinating role in bargaining rounds

In September 1999, Denmark's two main private sector social partner organisations, the LO trade union confederation and DA employers' confederation, concluded a framework agreement on bargaining procedure, the so-called "climate agreement". The aim is to help avoid a repetition of the major industrial dispute in spring 1998 when agreements are renegotiated in 2000. The agreement gives DA and LO a stronger coordinating role, but still leaves their member organisations to negotiate the collective agreements. One of the agreement's aims, bringing forward the start of negotiations, already appeared to be bearing fruit in October 1999.

On 14 September 1999, Denmark's largest employers' organisation and trade union confederation - the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) and the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) respectively - concluded an "agreement on the framework for the arrangement of decentralised collective bargaining rounds" (DK9909148N). The agreement will control forthcoming bargaining rounds in the area of the private sector covered by DA and LO. The next negotiations on the renewal of collective agreements start at the end of 1999, and must be completed, at the latest, by 1 March 2000 when the current agreements expire. The intention of LO and DA's new so-called "climate agreement" (klima-aftale) is to create a framework which can, to the greatest possible extent, help prevent a repetition of the major industrial dispute which broke out in spring 1998, when their member organisations last negotiated agreements (DK9805168F).

The new framework agreement contains a number of tangible changes to the "rules of the game", aimed at preventing a repeat of the spring 1998 strikes. DA and LO are given a stronger coordinating role while, more broadly, their political influence is increased through the strengthening of tripartite institutions (DK9910151F).

Coordinating role for confederations

The agreement does not propose a change of the current form of bargaining, whereby it is the confederations' member organisations or bargaining cartels which negotiate and conclude agreements at sector level. It does not constitute a return to the period before 1980 when the confederations bargained over general demands and thus controlled the entire course of bargaining, on behalf of their member organisations. On the contrary, it is emphasised that LO and DA must only carry out effective coordination of the course of negotiations from beginning to end. It is important that this increased coordination is endorsed beforehand by the confederations' major member organisations, not least the Confederation of Danish Industries (Dansk Industri, DI) within DA and the Union of Danish Metalworkers (Dansk Metal) and the General Workers' Union (Specialarbejderforbundet i Danmark, SiD) within LO. The tendency in the 1990s has been that member organisations just have not allowed such coordination, fearing that the confederations would again become stronger. In bargaining rounds during the 1990s, coordination has thus been weak, which on the employers' side has resulted in internal disruption. This disruption has since 1995 meant an end to synchronised negotiations for the entire DA/LO area: instead of negotiations for practically the entire private sector taking place every other year, negotiations have occurred in different sectors every year. According to the parties' own estimates, this has caused a "lever effect" which has pushed the level of employee expectations up and contributed to the deadlock in 1998 when the DA/LO bargaining area was due to be united again.

Now the member organisations have admitted that without coordination at the confederation level, there is no hope of satisfactory progress. However, it is emphasised in the agreement that its aim is to secure "genuine negotiations in all sectors during decentralised collective bargaining rounds", whereby it is member organisations and not LO or DA which play the main part in bargaining. Nevertheless, the widespread belief that the confederations might abandon any role in bargaining rounds has apparently, at least for now, been confounded. This strengthens the anticipation that the decentralisation of the Danish bargaining system will still take the form of "organised" or "centralised" decentralisarion.

Changed framework

The "climate agreement" will initially apply only to the 2000 bargaining round and can thus be seen as a pilot project which will be evaluated after the spring 2000 negotiations. There have also been a number of changes in the framework conditions for collective bargaining, aimed at creating space for a more coordinated and peaceful bargaining round.

Coordination among the confederations will begin before bargaining rounds start, with attempts jointly to create a realistic level of expectations of the outcomes of bargaining. This will occur, in cooperation with the government, in a "tripartite forum" which was established in August 1998 (DK9809177F). A tripartite statistics committee attached to the forum has a substantial role in this process.

The parties aim to resolve bargaining rounds before current agreements expire on 1 March, in order to avoid the current situation whereby there is a concentrated and hectic phase of activity during March, when the Official Conciliator service postpones disputes which have been announced by the bargaining parties in cases where new agreements have not been reached before the expiry of the old ones. Consequently, bargaining will start during November and December of the previous year, rather earlier than is currently the case. This earlier start will be supported by ongoing communication between DA and LO.

The "climate agreement" also seeks to change the current situation whereby notice of a dispute is issued almost automatically, first two weeks and then one week before the expiry of the existing agreement on 1 March. Giving notice adds to the "drama" of bargaining and can increase pressure, forcing the bargaining parties to show their hands, but it can also increase the risk of a dispute. In order to avoid this, DA and LO will in future meet immediately after the first notice of a dispute is issued and evaluate possible means of avoiding the issuing of the second notice.

More time to prevent disputes

If, despite the abovementioned new precautions, bargaining ends with the prospect of a dispute - ie if the negotiations break down, the period of postponement ordered by the Official Conciliator expires, or a mediation proposal is rejected by the bargaining parties' members - DA and LO attempt in the "climate agreement" to improve the possibility of finding a last-minute solution. Currently, an industrial dispute may start three days after bargaining ends, but in future this period of grace will be extended to five days. This should increase the chance of negotiating a solution but without introducing a second round of bargaining. If there were a second round, there would be a chance that, for example, trade union members might perceive a "no" vote to a mediation proposal as relatively "cost-free" and as involving no real threat of a dispute, because negotiations would simply restart.

This new "five-day rule" requires an amendment to the Official Conciliation Act, and the Minister of Labour, Ove Hygum, stated immediately after the new framework agreement was concluded that the government was ready to make such an amendment. This is in accordance with the "Danish model", whereby labour law changes result from consensus between the social partners.

The "climate agreement" also clarifies that a dispute must be suspended if the parties reach a settlement within the five-day period which can be put to the vote. In such cases, a dispute can commence only in the event that the new proposed agreement is rejected by members.

Joint information

In their new agreement, DA and LO state that the presentation of a bargaining result is of great significance to its reception by the signatory organisations' members. It is thus important that the parties to an agreement agree how the deal's central elements are to be presented, thereby, it is hoped, avoiding confused signals about how its contents should be interpreted. This provision is a clear reference to the course of events in spring 1998 when the parties to the industry sector agreement gave very different interpretations of what the total costs were. DI presented the result as very cheap for the employers and, according to some observers, this might perhaps have influenced the deal's negative reception among union members (DK9804163F).

Finally, the confederations emphasise that membership ballots over agreements and mediation proposals must be conducted with a high level of control, and only those affected by the agreement or proposal should participate in the ballot. This also refers to the dispute in 1998, when it became apparent that the ballots were not in all cases conducted correctly.

Commentary

By the beginning of October 1999, it appeared that the new LO/DA framework agreement - and especially the idea of bringing forward the start of negotiations - will probably have a concrete effect. The main bargaining parties in retail, Danish Commerce and Service (Dansk Handel & Service) and the trade section of the Union of Commercial and Clerical Employees (Handels- og Kontorfunktionærernes Forbund/Handel, HK/Handel), have already made the first contacts and have agreed to attempt to reach agreement before the end of the year. This puts pressure on the traditionally dominant bargaining parties, DI and the Central Federation of Industrial Employees (CO-Industri) union cartel.

Internally, the framework agreement means that the employers must swiftly clarify their bargaining strategy. Are all sectors to act freely? Or should a front-runner be designated, with other sectors awaiting the outcome of this sector's bargaining, as in 1998? In 1998, it was DI which played this role, but was not able to deliver the goods. It appears to be against the spirit of the "climate agreement" that DA should decide to repeat its 1998 strategy. If it does, a faster and more efficient bargaining round is required in the industry sector, with DI and CO-Industri concluding a new agreement relatively early (Carsten Jørgensen, FAOS).