Proposed mergers will unite service sector employers

In June 2001, four of the organisations representing employers in the Danish service sector tabled a proposal for a large-scale merger, bringing together organisations representing both employers' and business interests. The aim is to establish a single main organisation, ServiceErhvervene (SE), which unites member organisations under one umbrella, but which will, at the same time, be able to meet the very diverse needs of the members in a flexible way. The merger seeks to shift the power balance within the Danish Employers' Confederation (DA) away from industry, and to strengthen the political influence of the service sector. However, the fact that Danish Trade and Commerce (DHS) is not so far participating in the merger may be an obstacle to the ambition of creating a strong unitary organisation.

A reorganisation of employers' representation in the Danish service sector will soon be a reality. On 11 June 2001, four of the service sector employers' and business organisations tabled their plans for an upcoming merger, which aims to ensure that the service trades will in future be able to speak with a single voice in the business environment. So far, the planned merger comprises the Employers' Federation for Trade Transport and Service (Arbejdsgiverforeningen for Handel, Transport og Service, AHTS), Danish Transport and Logistics (Dansk Transport og Logistik, DTL), the Chamber of Commerce (Handelskammeret) and the Association of the Hotel, Restaurant, and Leisure Industry (Hotel-, og Restaurant- og Turisterhvervets Arbejdsgiverforening, HORESTA).

If all four organisations are able to gain support for the proposal from their respective congresses and executive boards, this new giant organisation grouping 12,000 employers, known as The Services (ServiceErhvervene, SE), will become a reality in the course of the next year. With this proposed merger, the service trades have taken a major step in the direction of an organisational structure similar to that of the Confederation of Danish Industries (Dansk Industri, DI). With the participation of the Chamber of Commerce, SE will become a very broad employer and trade policy organisation.

Background

During a period where the various service trades are prospering and contributing significantly to the growth of the Danish economy and employment, the borderlines between the different organisations have become increasingly blurred and illogical. Their power, influence and political impact are no longer commensurate with the importance of the service trades for the national economy and their dominant role in Danish business life. This accentuates the need for a more clear-cut organisational structure, so that the interests of the service trades will no longer be handled by a patchwork of medium-sized organisations. In line with the reduction of employment in the industrial sector, the time seems to have come for a stronger role for the service sector and the merger may thus also be seen as reflecting a confrontation with DI as regards competition for members. The borderlines between the industrial sector and the services sector are becoming less clear. The ambition of the upcoming merger is to strengthen the service trades, both internally in the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) - to which SE will be affiliated - but also in political circles, by assuming a more independent role and detaching themselves from the role as an "appendix" to the industrial sector. The idea is that the business world will obtain a stronger position by being represented through two channels - the industrial sector in DI and the service sector in SE.

This was reflected in a comment made by the general secretary of DTL, Kaj Nielsen, on the planned merger: "It is a matter of power." As a new central organisation for the service trades, and with the slogan "together we are strong" as the guiding principle, the participants are confident that the larger membership will not only give SE a financial buffer, but also greater political influence in relation to legislative initiatives. Through efficiency gains in administration and in the information technology field, the merger will allow more room for lobbying activities in relation to the political environment in Denmark. A relaxation of the tax burden and better training opportunities for employees in the services sector are among SE's political priorities. Another priority is the wish to improve the promotion of Danish business interests at the EU level by setting up a common EU office in Brussels at a later stage.

Freedom of choice and flexibility will be very much needed when the patchwork of medium-sized service organisations with different needs and traditions are merged. The traditions of the four organisations are very different. AHTS has been a traditional employers' organisation with special expertise in handling legal matters and collective bargaining, whereas the Chamber of Commerce and DTL have had a more outwardly-directed role in trying to exert influence on the political system and making their viewpoints known in the public debate. Other barriers in connection with the merger are diverging positions in relation to matters such as the Shops Act, depreciation rules and corporate taxes. These divergences will undoubtedly generate a need for internal sectoral units which will be able to cope with the conflicting interests within the new organisation.

DHS will not be part of the merger

Denmark's third-largest employers' organisation, Danish Commerce and Service (Dansk Handel og Service, DHS) which represents the retail trade, office services and knowledge-based services, will not form part of the merger. From its foundation in 1993, DHS has been a combined employers' and trade organisation and can thus be seen as having taken the first step in the direction which has now led to the establishment of SE. DHS - which is considered to be the "enfant terrible" within DA because many of its members are not organised in DA - was not informed about the plans until after the decision had been made to establish SE. DHS was invited to a meeting on 4 July 2001 where the perspectives for participation in the merger were discussed. According to the general secretary of DTL, Kaj Nielsen, this late involvement of DHS was due to the fact that some of the employers in this organisation are not members of DA and this has been considered problematic in relation to the planned merger. However, with its 6,000 member companies, DHS has a major say in DA and the question is whether the other parties in SE will stick firmly to their principles or whether DHS, which has shown an interest in joining this new umbrella organisation, will soon become a member of SE.

Commentary

The merger of the representation of the service trades seems necessary at a time where there is no longer a clear-cut difference between matters which are settled by collective bargaining and other business matters - a reality which the industrial sector realised and acted upon a decade ago. A joint organisation for the service sector will strengthen its importance and will thus have an impact upon the power balance on the labour market and in industrial policy. However, SE's vision of a unitary organisation with a stronger political influence will probably come about only if the strong central actor, DHS, becomes part of the merger. The exclusion of DHS is even more astonishing as it had only shortly before been announced that it would be drawing closer to the other parties.

The forthcoming establishment of SE reflects a development which relies heavily on strong sectoral organisations so that the role of DA becomes less influential. It is, however, an open question whether DI will have lost its dominant role among the employers on the next occasion that the representatives of the service trades sit down at the negotiating table. SE seeks increased influence and power, but will probably have to recognise that DI - with its 49.4% share of the total paybill of DA's member companies - will still be the "big brother" in relation to the service trades which, even with the participation of DHS, will not represent more than 27% of the DA paybill. (Lene Askgaard Hyldtoft, FAOS)