Spectre of 1998 dispute looms over new bargaining round

In late 1999, the 2000 Danish collective bargaining round is getting underway. There are good prospects of an amicable settlement, but the shadow of 1998's major industrial dispute still lingers, and this may be of importance for the course of bargaining. It is again the industrial sector which is to act as the front-runner in the bargaining round but, after the problems in 1998, there are limits to how long this sector's bargaining parties (DI and CO-Industri) can protract their bargaining. If a settlement is not reached by mid-January, complications may arise. The fear that trade union members might reject a proposed settlement may also add to the risk of an industrial dispute.

The normal pattern in the Danish collective bargaining rounds in recent decades is that a general industrial dispute in one bargaining round is followed by a settlement in the next. If this pattern is repeated, then the major private sector industrial dispute in the spring of 1998, following the breakdown of bargaining (DK9805168F), should be followed by an amicable settlement in 2000's bargaining round. On the other hand, the crisis surrounding the 1998 dispute echoes the period in the 1970s when three consecutive industrial disputes severely shook the Danish model of collective bargaining. Therefore, it cannot be excluded that the industrial dispute in 1998 will be followed by a new breakdown and subsequent government intervention in 2000. Therefore, the question is whether the preparations for the 2000 bargaining round, with the conclusion in September 1999 of the so-called "climate agreement" (DK9910150F) between the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and the Danish Employers' Confederation (Dansk Arbejdsgiverfoprening, DA), and the parties' other endeavours to avoid a repeat of the events of 1998, are sufficient to ease the trend towards crisis, so that it will again be possible to say that after an industrial dispute comes a settlement.

Prerequisites for a settlement

The principal items which are to be bargained between the parties are: first, a sixth week of annual leave - in the form of five extras days of holiday which can be taken individually in the course of the year; and second, a continued expansion of occupational "labour market" pensions. To this may be added improvements of shop stewards' conditions and pay increases in the "standard" pay area (ie in the relatively few cases where sectoral agreements sets actual rates of pay, rather than minima added to in local bargaining). Both the holiday and pension issues must be regarded as "bottom-line" demands in the LO bargaining area. In turn, there is agreement in the trade union movement that expectations for the rate of pay increases are to be dampened. This is clear from the demands made by the General Workers' Union (Specialarbejderforbundet i Danmark, SiD), the Danish Union of Metalworkers (Dansk Metalarbejderforbund, Metal) and the Union of Commercial and Clerical Employees in Denmark (Handels- og Kontorfunktionærernes Forbund, HK). These unions have tried to keep down the level of expectations by not presenting specific financial demands.

To ensure a solution which can improve competitiveness, the employers represented by DA agree that the industry sector - involving the Confederation of Danish Industries (Dansk Industri, DI) and the Central Federation of Industrial Employees (Central Organisationen af Industriansatte, CO-Industri) cartel - must lead the way in bargaining, and that the process should end with an overall proposed settlement for the entire LO/DA area, so that all areas end up with a settlement which is fixed on the basis of the trades and industries which are exposed to competition. "Coordinated decentralisation" of bargaining is again to be the rule. The employers' interpretation of the "climate agreement" between LO and DA is that it contains, in effect, a built-in prerequisite that an overall proposed settlement must be presented. The question is whether there is room to meet these demands at the same time as pay increases are allowed in local bargaining in the enterprises, so that a continued development in real wages and salaries is secured, without this having a detrimental effect on pay competitiveness. This is difficult to achieve within the standard two-year collective agreement period. Therefore, there is a prospect of a three- or four-year agreement.

A longer collective agreement period will mean that improvements achieved at the central negotiating table can be distributed over several years, giving more scope for the local pay bargaining which is a reality for some 85% of the LO/DA area. This should also make it easier to achieve a "yes" vote on the settlement in a ballot of union members. The fear of another "no" vote to a settlement, or to a proposed settlement under the auspices of the Conciliation Board, is probably the greatest worry of the negotiators after the experiences of 1998 (DK9803158F)

Worries during start-up phase

In the course of autumn 1999, increasingly worried statements have been made about the imminent collective bargaining round by politicians and economists from both private enterprises and public institutions. Such statements are part and parcel of any period leading up to a bargaining round. In themselves, they do not constitute an obstacle to bargaining, but may, on the contrary, help lower the level of expectations and consequently improve the possibilities of reaching a settlement.

There seems to be one particular point of contention. Many economists attach importance to the possibility that the trade union movement's basic demand for the introduction of a sixth week of holiday may in itself have a negative impact on Denmark's economic development. The trade union movement maintains that the demand for more leisure time is not as irresponsible as the economists claim. In support of this, the trade union movement refers, among other arguments, to new surveys which show that Danes are, in effect, working more and more. Admittedly, the figures cover only the period up to 1998, but the current system seems to function relatively flexibly. The same may also be the case with the proposed new days of holiday.

The expected course of bargaining

In the run-up to the bargaining round, there was a tendency for HK/Commerce (HK/Handel) and the Danish Commerce and Service (Dansk Handel & Service, DH&S) employers' organisation to try to act as front-runners (DK9912158N). Bargaining in the retail trade area has, in fact, commenced, and there is no doubt that, with their early start, it will be possible for the parties to sort out many problems before the decisive industry bargaining round. However, new signals were sent out at the beginning of December. There was no reason to be hasty, said the leadership iof DH&S. The president of HK/Handel, Jørgen Hoppe, has acknowledged that his wish for a pre-Christmas settlement will not be met. There is hardly any doubt that the overall employers' strategy has dictated the pace. It is still the industry sector which is to lay down the line.

This has also been acknowledged in the building and construction sector, in which both Danish Federation of Master Builders (Byggeriets Arbejdsgiverforening, BYG) and Danish Contractors' Association (Danske Entreprenører) will await the results in the industry sector. In the transport area, the situation is more open. The chair of SiD's transport group, Holger Nielsen, has made it clear that the same course of events as in 1998 will not be accepted. The question is therefore for how long the Federation of Employers in Commerce, Transport and Services (Arbejdsgiverforeningen for Handel, Transport og Service, AHTS), which was also unhappy with the course of the bargaining in 1998, can make SiD toe the line.

The very lengthy bargaining process in 1998 has, however, made an impression. DI is therefore unlikely to be allowed to protract bargaining in industry for so long again. The unity within DA could probably not survive this. Therefore, there is pressure on the industry sector's negotiators, and if they cannot show the way by concluding a settlement within a reasonable period of time, they will probably have to leave the field to other parties. Otherwise, a major breakdown in bargaining may result.

Commentary

What are the factors in favour of a settlement? The parties' joint concern over the future of the Danish collective bargaining model seems to improve their will to reach a settlement. The model gives the social partners possibilities of having influence, and this may be threatened if the bargaining system is eroded. A critical factor which points in the direction of a settlement is the financial problems suffered by trade unions because of the industrial dispute in 1998 (DK9805170N). In effect, some of them simply cannot afford an industrial dispute. They may, of course, be forced to engage in such a dispute, but the negotiators will go out of their way to avoid this situation. Events so far have strengthened the chances of a settlement. In the start-up phase, the parties have, if anything, managed to talk themselves closer to each other. Therefore, the most likely course of events will be that the parties will themselves reach a settlement in the industry sector.

A variation of the "settlement scenario" is the "conciliation scenario", whereby no bargaining areas manage to reach a settlement before bargaining passes to the Conciliation Board in February. This scenario could be the most likely one if unexpected complications arise during the parties' own bargaining. However, in any event, the Conciliation Board will probably have a part to play because DA will demand a joint conclusion to the bargaining and consequently an overall proposed settlement. Therefore, LO and DA will have a central position.

The evaluation must be that a proposed settlement under the auspices of the Conciliation Board - without a prior breakthrough and consequently a direct settlement in the bargaining between the parties - will find it very difficult to achieve a majority of votes in favour of it in a ballot. Therefore, the risk of an industrial dispute can by no means be ruled out. It is a problem that there is so little latitude in central bargaining because there must also be room for local pay bargaining. The trade union movement's negotiators' concern that they may yet again not have the support of the members is probably the single most important factor which may drag the course of the bargaining towards an industrial dispute. Trade union negotiators will say no to a settlement if they are not completely sure of having the support of their members in a ballot. (Carsten Jørgensen , FAOS)