Finance sector bargaining leads to higher wages and improved pensions

The 2001 collective bargaining round in the Danish financial sector took place - as usual - in a peaceful atmosphere and in accordance with the timetable fixed for the negotiations. In February and March respectively, agreements were concluded for insurance and for banks/mortgage institutions. Both agreements provide for relatively high wage increases and improvements in occupational pensions. The finance sector did not follow the trend towards concluding four-year agreements set elsewhere in the private sector, as the new settlements were concluded for the usual two-year period.

The financial sector is not included within the main private sector bargaining area covered by the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) and the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO), where new four-year agreements were concluded in 2000 (DK0002167F). Instead it bargained separately in spring 2001 over agreements to replace the two-year deals concluded in 1999 (DK9903114F).

As expected, the 2001 bargaining round in the financial sector took place without major problems, resulting in relatively substantial increases in both wages and pension contributions. The first steps in the direction of the introduction of a new bargaining structure in banks and mortgage institutions were taken with the changed commencement date of the new agreement for this subsector, which will become operative from 1 July 2001. It is up to employees and employers at enterprise level to reach agreements on some issues by this date, or be covered by the central agreement's provisions.

First agreements in insurance

On 2 February 2001, the National Insurance Workers' Association (Danske Forsikringsfunktionærers Landsforening, DFL), representing most employees in the insurance sector, and the Association of Danish Insurers (Centralforeningen for Danske Assurandører, CDA), representing insurance agents, concluded a joint cooperation agreement with the Danish Employers' Association for the Financial Sector (Finanssektorens Arbejdsgiverforening, FA). The two trade union organisations, DFL and CDA, have a number of common agreements concerning matters such as training and a group life assurance scheme, which have been entered into through a joint body, the Insurance Cartel (Forsikringskartellet), in negotiations with the FA employer's organisations. The whole insurance sector has about 12,000 employees.

On 15 February 2001, DLF and FA reached agreement on the content of a new collective agreement which will run until 2003 and provides for a framework for cost increases of of 7.4%. Of this total, 6.4% takes the form of direct wage increases, while 0.8% will be used for improvements in occupational pension contributions. The wage increases will be awarded over a period of two years. Most employees in the sector are covered by the so-called "normal wage system", whereby agreements are exclusively concluded at the central sectoral level without subsequent local bargaining, but under the new collective agreement a larger number of enterprises will adopt a more individualised pay system, in the form of a basic wage plus a number of wage supplements.

Uniquely in Denmark, the occupational pension contributions of insurance sector employees are financed exclusively by the employers. Dependent upon seniority, the agreed increases in pension contributions will be 1.5 to 2 percentage points. If the current contribution is 10% of pay, it will increase by one percentage point a year to stand at 12%. Furthermore, the criteria for joining an occupational pension scheme will be changed. From 1 July 2002, the present service requirement for eligibility will be changed from 12 months to six. The new agreement also gives step-parents the right to absence from work in connection with a child's sickness. The DLF-FA agreement covers about 8,500 insurance officers, information technology workers, technicians and ancillary staff and is comparable to an industry agreement. CDA concluded a similar agreement with FA on 20 February.

Agreement reached for banks and mortgage institutions

The next agreement to be concluded was the largest collective agreement in the financial sector. On 10 March, FA and the Financial Services' Union (Finansforbundet, FF) concluded an agreement which also provides for an increase of 7.4% over a two-year period. This agreement covers nearly 50,000 employees in banks and mortgage credit institutions. The agreement is almost identical with that concluded in the insurance sector: 6.6% has been earmarked for wage increases over the two-year period, and two percentage points of this increase may be used for "kitties" for distribution at the local level. The improvements in pension arrangements take the form of pension eligibility from the first day of work and a minimum contribution of 14.25%, of which the employer pays 9.5 points, as a minimum.

The agreement introduces a new bargaining structure, as previously discussed (DK0011103F) This will make it possible to conclude agreements on some issues between management and employees at enterprise level, rather than applying central standardised agreements. The parties also agreed to make use of the flexibility in the timing of annual leave recently introduced in connection with the new Holiday Act (DK0007188F). The provisions of the EU Directive (1999/70/EC) on fixed-term work (EU9903162N) were incorporated into the agreement and the right to absence from work to take care of sick children was extended to apply to step-parents. Finally, the parties concluded a protocol on equal opportunities.

Commentary

In the ballot of union members on the new insurance sector agreement, the turn-out was 68%, of whom 96% voted in favour of the deal. The ballot in the financial sector was due to take place on 10 April. The parties have expressed great satisfaction with the new agreement and a huge majority in favour is expected.

The new finance sector agreements contain significant increases in occupational pension contributions for the employees with the lowest pension contributions, while new employees will be covered by such schemes earlier than under the existing rules. Furthermore, the door has been opened for variable pay schemes. An October 2000 agreement in the private services sector concerning deviation from the normal rules on rest periods in connection with telework (DK0011102N) seems to have had a knock-on effect on the financial sector. No concrete agreements have been concluded, but the parties have agreed to await a proposal from the Minister of Labour concerning teleworking. Flexibility is thus a key factor in current developments in the financial sector, a point which is also emphasised by a more active role for employee representatives.

No changes were made to the duration of the finance sector collective agreements, which will still be two years. This is mainly due to the fact that the sector is covered by the "normal wage system" which does not allow for local negotiations. However, this is also undergoing change. New bargaining structures and pay systems have introduced flexibility in the system, and the possibilities for concluding agreements at enterprise level may turn out to have far-reaching implications in a longer-term perspective. It is possible that the four-year agreement period which now exists in the dominant LO/DA private sector bargaining area may be tempting for the social partners in finance in two years' time when the new structures have been tested. (Carsten Jørgensen, FAOS)