2001 Annual Review for Denmark

This record reviews 2001's main developments in industrial relations in Denmark.

Political developments

Parliamentary and county/municipal council elections took place on 20 November 2001. The result was a serious defeat for the Social Democratic Party (Socialdemokratiet), which had formed the outgoing government together with the Social Liberal Party (Radikale Venstre). The Social Democratic Party saw a serious decline in support in the county/municipal elections and lost its position as the largest party in parliament (Folketing), a position it had held since the 1920s. The winners in the parliamentary elections - the Liberal Party (Venstre) and the Conservative Party (Det Konservative Folkeparti) - formed a coalition government. The Liberal Party is the larger party in the coalition and its leader, Anders Fogh Rasmussen, will be Prime Minister for the coming four years, unless a new election is called prematurely.

At the end of 2001, the new government announced a number of initiatives which signalled a departure from the social-democratic approach of the past. In the labour market field, a number of changes were proposed which were seen as challenging the position and views of the trade union movement and thus as possibly jeopardising the consensus which has traditionally existed in the Danish industrial relations system (DK0112147F). Three proposals, in particular, affected the unions.

1. Employees and employers will have the right to conclude an agreement on part-time work. Any direct or indirect obstacle to, or restriction on, this right - such as the provisions of a collective agreement, custom or practice - will be void. The proposal does not give an employee a statutory right to work part-time, but provides 'freedom' for the employee and the employer to enter into an agreement concerning part-time work without any restrictions arising from collective agreements. However, the employee will have no rights in the event that the employer turns down his or her request to work part-time. The proposals has been criticised by the unions, which accuse the government of intervening in the collective bargaining system.

2. Closed-shop agreements will no longer be permitted. It will be up to individuals to decide which trade union they want to join or whether or not to join a union at all.

3. It will be possible to establish cross-sector unemployment insurance funds as an alternative to the existing trade union-run funds based on occupational lines. The government has taken the lead by establishing a cross-sector state unemployment insurance fund, as an alternative to the private union-run funds.

The 'division of labour' between the former Ministry of Labour and Ministry of Social Affairs was changed following the election. All matters concerning employment are now under the competence of the Ministry for Employment, as it has now been renamed. All matters concerning vocational training have been transferred to the Ministry for Education. At the same time, the government abolished around 100 public councils and boards. One of the bodies affected was the recently established Knowledge Centre for Equal Opportunities which was to collect and analyse data concerning, among other matters, equal pay for women and men.

Collective bargaining

Collective bargaining took place in two sectors in during 2001: the financial sector and the agricultural sector covered by the Confederation of Employers' Associations in Agriculture (Sammenslutningen af Landbrugets Arbejdsgiverforeninger, SALA). These sectors each cover about 115,000 employees. Three major agreements were negotiated in the financial sector in 2001, covering the fields of insurance, banks and financial institutions, although there is a single employers' organisation, the Danish Employers' Association for the Financial Sector (Finanssektorens Arbejdsgiverforening, FA). The seven employers' associations affiliated to SALA concluded about 40 collective agreements with seven different trade unions affiliated to the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO). SALA also renegotiated its cooperation agreement with LO in 2001 (DK0109133N). The new agreement aims to help prevent labour market exclusion, giving company-level cooperation committees a role in matters concerning the retention and integration of employees with reduced working capacity.

Neither SALA nor FA are members of the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA), which is the main employers' organisation. The trend-setting DA-LO bargaining area accounts for most of the private sector and was covered in 2001 by the provisions of around 600 four-year agreements concluded by DA and LO member organisations in 2000, affecting some 650,000 employees (DK0002167F).

Pay

Employers and unions in the largest financial sector bargaining unit - banks and mortgage credit institutions - agreed in March 2001 on a pay increase of 6.6% over two years, with two percentage points of this increase available to be used for 'kitties' for distribution at the local level. (DK0103116F) This was the first time that a new bargaining system had been used in this sector, making it possible to conclude agreements on some issues between management and employees at enterprise level, rather than applying central standardised provisions. (DK0011103F). Furthermore, under the new agreement, employees may choose to receive part of their salary in the form of shares or a special bonus. At the same time, the pay system has changed from a seniority-based system to one based on work functions and qualifications.

In the largest bargaining unit covered by SALA - the 'green' sector (agriculture, forestry and horticulture) - a four-year agreement was negotiated in 2001, providing for wage increases of around DKK 10.5 per hour over four years (the equivalent of a rise of 10.65%). The agreement also provided for: an extension of the period during which sickness benefits are paid; increases in education/training allowances; and two more special holidays (bringing the annual total to five) and the establishment of 24 December as a holiday. Altogether, this meant an annual increase in wage costs of 3.7% (DK0101112F).

By opting for a four-year agreement, the 'green' sector, together with the dairy sector, were brought into line with the duration of agreements in LO/DA sector. However, the difference is that SALA's sectors, unlike most of the LO/DA area, operate the 'standard wage' system, whereby wage bargaining takes place only at central level and sets actual pay rates. No adjustments are negotiated at local level and agreements are not subject to renegotiation during their term. In this context, a four-year duration is long, but the bargaining parties chose to follow the example set by the transport sector in 2000. The transport sector is the only 'standard wage' sector in the LO/DA field, but it also opted for the same four-year duration as other LO/DA sectors which operate the 'minimum wage' system, whereby local bargaining builds on the minimum rates set in the sectoral collective agreement. Four years represents a long period of industrial peace, which seems to have been a priority issue for employers.

In the food sector within the SALA area, there is a tradition of difficult negotiations, particularly in the slaughterhouses and meat factories subsector. The bargaining process in this subsector proved particularly difficult in 2001 – it took three ballots before the slaughterhouse workers organised in the Food and Allied Workers' Union (Nærings- og Nydelsesmiddelforbundet, NNF) approved a compromise deal (DK0104117F). The outcome was the most advantageous for workers in decades and arguably represented a major defeat for a relatively weak employers' organisation (Slagteriernes Arbejdsgiverforening, SA). The result was a two-year agreement providing for a total pay increase of 9.5% over two years, an increase in occupational pension contributions to 9.9% of pay and a number of fringe benefits. The employers gained a higher degree of flexibility, both in terms of working hours and in connection with the introduction of new technology. The two-year term means that the agreement in this sector will be renegotiated in 2003, whereas bargaining in the trend-setting LO/DA sector will not take place until 2004. Another bargaining round in slaughterhouses and meat will thus take place before the next bargaining over renewal of the four-year agreements in the rest of the private sector, and this may shift the leading role to this small sector. Even a moderately positive result for employees in slaughterhouses and meat in 2003 may be a cause for concern for the larger employers' organisations due to bargain in 2004. The result may very well be that the SA meat employers' organisation will join DA before the 2003 bargaining round. SA has no strike fund to draw upon and this may weaken its bargaining position.

In other sectors outside finance and the SALA area, pay increases in 2001 were governed by the provisions of the four-year agreements signed in 2000. For example, in the industry sector, which operates the 'minimum wage' system, the average collectively agreed wage increase for 2001 stood at 2.4%.

Working time

Collectively-agreed normal weekly working time in Denmark stands at 37 hours. Flexible working time has been a topical issue in recent years and the 2001 collective bargaining round was no exception, although this issue was not a top priority. In the financial sector, it was agreed that it should be possible to agree on varying hours in individual enterprises, with the average maintained over a reference period of either six or 12 months. The same provision was introduced in the SALA/LO field, where seasonal work and piece-rate work still predominates.

In addition, the number of extra days of holiday was increased from three to five days a year in both the SALA and financial sectors. Employees thus now have six weeks' annual leave, in line with the provisions introduced in the LO/DA sector in 2000.

In January 2001, LO proposed a life-long working time flexibility scheme, under which employees could work longer hours in the earlier years of their working life and reduce their hours accordingly in later years (DK0101110N).

Pay inequalities

There were no particular developments in the area of pay inequalities in collective bargaining during 2001. However, the gender pay gap is perceived to be a persistent problem in Denmark and in June 2001, parliament adopted legislation amending the Act on Equal Pay for Men and Women (DK0106123N). The aim of the new legislation is to create a higher degree of transparency in wage data, especially in the light of equal pay for women and men. Employees, employee representatives, the Equal Opportunities Board (Ligestillingsnævnet) and trade unions with one or more members in an enterprise may require companies with more than 10 employees to draw up wage statistics. Furthermore, employees are now explicitly allowed to discuss wages openly, as it is no longer lawful to impose a duty of secrecy on employees relating to pay matters. However, the future of this legislation does not look bright under the new liberal-conservative government, which believes that such gender-specific wage statistics impose too much bureaucracy on employers.

Job security

There were no prominent examples of job security agreements concluded during 2001, although the economic climate, as in most other European countries, begin to worsen from mid-year. The most high-profile case of bargaining to mitigate redundancies was a local agreement, reached in spring 2001 for employees at the agricultural machinery manufacturer P Nordsten A/S. These employees will receive a substantial pay increase over the next two years, whereafter the plant will close and production will be transferred to Poland (DK0105118N) (see below under 'Company restructuring').

Training and skills development

There were no significant developments concerning bargaining on training and skills development in 2001.

Other issues

Occupational pensions were a major theme during 2001's collective bargaining in the SALA and financial sectors. The year before, LO and DA affiliates had agreed on a total increase in occupational pension contributions to 9% of pay before tax (with two-thirds paid by employers and one-third by employees) over four years. Increases in pension contributions were a priority demand on the part of unions in the SALA area in 2001 and, somewhat surprisingly, they achieved an increase in total contributions to 9.9% of pay. The SALA area has thus set the standard for future bargaining on pensions for the entire private sector. A 10% total contribution, which has been a target for trade unions, will probably be exceeded during the next bargaining round in the LO/DA area. Improved pension arrangements were also achieved in the finance sector agreements in 2001.

Legislative developments

In 2001, new legislation focused on equality and non-discrimination issues and on working time - the latter being an area formerly regulated principally by collective bargaining.

In spring 2001, legislation prohibiting discrimination was revised (DK0102113N). The reason for this was mainly the need to comply with EU Directive (2000/78/EC) of 27 November 2000 establishing a general framework for equal treatment in employment and occupation (EU0010274F), but also a concern that job advertisements were increasingly specifying the age groups which would be considered for vacancies, often excluding people aged over 45. It was thus decided to add the criterion of age to the list of prohibited grounds for discrimination in the legislation, which applies in the absence of collective agreements covering this field. In June 2001, parliament adopted legislation amending the Act on Equal Pay (see above under 'Pay inequalities').

The EU Directive on part-time work (97/81/EC) was implemented in 2001 in a unique way in the Danish context (DK0106123N). Normally, the Directive would have been implemented exclusively through collective agreements. However, in this case, the then Minister of Labour, Ove Hygum, decided to use legislation to give legal status to an agreement on the issue drafted by LO and DA. The legislation provides that fields which are not covered by their own agreements implementing the Directive are covered by the agreement on the issue between LO and DA. The other main social partner organisations were very hostile to this initiative because they had not been consulted in the process. As a result of the new legislation on part-time work, the government amended the Act on Salaried Employees (Funktionærloven) - which governs some aspects of the employment conditions of white-collar staff - so as to change the definition of the part-time workers covered by the legislation from those working 15 hours a week to those working eight hours a week. Employers were unhappy with the new eight-hour threshold, which they believe increases their administrative burden.

Later in 2001, this new 'dual method' was also used in connection with completing the implementation of Directive (93/104/EC) on certain aspects of the organisation of working time (DK0112158F). The Directive had been implemented in Denmark by means of collective agreements and, according to the Commission, this was not sufficient to ensure full and correct transposition, as about 15% of employees are not covered by a collective agreement. The Commission had threatened to take Denmark to the European Court of Justice over the issue. However, this was averted in December 2001 when the Danish social partners agreed to ensuring full implementation of the Directive through subsidiary legislation. On this occasion, all the main organisations were consulted on the drafting of new legislation. It seems that this new method will also be used in connection with the implementation of future EU Directives in the social and labour field.

The organisation and role of the social partners

In June 2001, four organisations representing companies in the service sector tabled a proposal for a large-scale merger, bringing together organisations representing both employers' and business interests (DK0107127F). The new organisation would be similar to that already existing in industry, the Confederation of Danish Industries (Dansk Industri, DI). The aim was to establish a single main organisation - ServiceErhvervene (SE) - which unites member organisations under one umbrella, but which would, at the same time, be able to meet the very diverse needs of its 12,000 member companies in a flexible way. The proposed merger sought to shift the balance of power within the DA employers' confederation away from industry and to strengthen the political influence of the service sector. However, the fact that Danish Commerce and Service (Dansk Handel & Service, DHS) is not (at least so far) participating in the merger may be an obstacle to the creation of a strong unitary organisation. Initially, the planned merger involved the Employers' Federation for Trade, Transport and Services (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) . However at the end of 2001, DTL (representing 1,500 employers) declared that it would probably withdraw from further cooperation over the creation of the new organisation.

A study carried out by the University of Copenhagen and published in 2001 found that Denmark has 'too many' trade unions (DK0105120F) - there are currently 169 trade unions, of which one-third have fewer than 1,000 members. It claimed that that too much energy is thus expended on rivalry among the unions and internal power struggles, to the detriment of the members and of flexibility at the workplace. Many union tasks are duplicated, many union officials spend their time meeting each other and organising the framework for activities, instead of engaging in trade union activities which are really to the benefit of their members. The members receive unprofessional advice, are losing political influence and pay excessively high membership fees. The report concluded that enterprises could increase productivity by at least 5% if mergers led to fewer unions, as work tasks could be organised in a more flexible way if demarcation lines were erased.

Union mergers are not a new idea and many have taken place in Denmark in recent years. The negotiations preceding such mergers have always been protracted and difficult and the mergers have ultimately been dependent on the approval of the members.

In 2001, two merger ballots failed. In both cases, the members rejected plans carefully prepared by the leaders of their unions. It appeared that the members were very concerned about their occupational status and very reluctant to merge with other occupational groups and thus risk a loss of influence. In the first case, a large majority of local branches of the Danish Union of Electricians (Dansk El-Forbund, DEF) rejected a merger with the Danish Union of Metalworkers (Dansk Metal) in spite of massive support for the merger from union leaders and experts (DK0110101N). Furthermore, the skilled childcare workers organised in the Danish Federation of Early Childhood Teachers and Youth Educators (Forbundet for pædagoger og klubfolk, BUPL) rejected a proposed merger with their unskilled counterparts organised in the National Union of Nursery and Childcare Assistants (Pædagogmedhjælpernes Forbund, PMF) (DK0111102N).

Industrial action

No major strikes or industrial action took place in 2001.

National Action Plan (NAP) for employment

The involvement of the social partners in the drafting of the Danish National Action Plan (NAP) for employment, in response to the EU Employment Guidelines, took place in 2001, as in other years, on the basis of the following three-stage process:

• the Ministry for Employment (formerly, the Ministry of Labour) and the Ministry of Economic Affairs invite other ministries and the social partners to preliminary discussions;

• the social partners may subsequently submit contributions on what they want to see incorporated in the NAP. When the draft Plan has been completed, it is sent back to the social partners, which have the possibility to conduct internal discussion before the third phase of drafting; and

• consultation takes place, which gives the social partners the opportunity to submit amendments to the draft.

The social partners thus play a central role in the drafting of the NAP, though the Ministry of Employment is in charge of the final drafting of the text. All main private and public sector social partner organisations are invited to take part in the drawing up and implementation of the NAP.

Denmark has a tradition of involving the social partners, at the national, regional and local level, in various social and labour market coordination committees. It has thus not been necessary to set up a special 'NAP council' or take any other special measures with a view to drafting NAPs. The fact that the EU Employment Guidelines now include a 'horizontal objective', whereby Member States are called on to 'develop a comprehensive partnership with the social partners for the implementation, monitoring and follow-up of the employment strategy', will not change existing practice in Denmark, as such a tradition already exists. The consensus which generally characterises the Danish model is reflected in the NAP discussions.

Company restructuring

Company restructuring continued in Denmark in 2001, although no major controversies took place in this area. The rights of employees to information and consultation in such circumstances are laid down in the cooperation agreements concluded by the social partners and this helps ensure that there are usually no major disputes in connection with restructuring. However, there were two specific cases of company restructuring during the year. The Scandinavian Airlines Systems (SAS) airline was forced to restructure in the wake of the international crisis in aviation following the attacks on the USA on 11 September 2001. White-collar employees and pilots at SAS agreed to a pay cut of 5% in order to maintain jobs (DK0201124N).

Under a local agreement reached in early 2001, employees at P Nordsten A/S, a Danish agricultural machinery manufacturer, will receive a substantial pay increase over the next two years, whereafter the plant will close and production will be transferred to Poland (DK0105118N). Each month from February 2001 until March 2003, the hourly wage will be increased by DKK 1.25, producing an hourly wage increase of DKK 32.50 after 26 months. This local agreement is very unusual, but at the same time an example of an ad hoc solution to company restructuring in Denmark.

Employee participation

There were no legislative or other significant developments in the area of employee participation in Denmark in 2001. The employers are aware of the potential of the European Company Statute - adopted in October 2001, along with the accompanying Directive on employee involvement (EU0110203N) - but there was no major debate concerning this issue in 2001. European Works Councils still have no major influence in Denmark.

New forms of work

In 2000, the Danish Commerce and Service (DHS) employers' organisation and the services section the Union of Commercial and Clerical Employees (Handels- og Kontorfunktionærernes Forbund/Service, HK/Service) concluded an agreement regarding new rules for teleworking, with the aim of facilitating work at home (DK0011102N). This is so far the only collective agreement which has been concluded on this issue in Denmark, though teleworking was highlighted as a new possibility in the 2001 bargaining round in the financial sector

During the course of 2001, there was an increase in the number of full-time employees, whereas the number of part-time employees declined. The fall in female part-time employment was double that in male part-time employment. The level of part-time employment in the third quarter of 2001 was 8% lower in the same period the preceding year.

Other relevant developments

On 15 May 2001, the Minister of Labour, Ove Hygum, announced that an order would be issued, extending the powers of the Working Environment Authority (Arbejdstilsynet) in cases concerning the 'psychological working environment'. The Authority would be authorised to intervene in cases of sexual harassment and serious bullying in enterprises. This decision was taken without involvement of the trade unions and employers' organisations, and thus gave rise to considerable turmoil as these matters are normally regulated exclusively by the social partners.

Consequently, the social partners in the industrial sector, the Confederation of Danish Industries (DI) and the Central Organisation of Industrial Employees in Denmark (CO-industri) concluded their own collective agreement on the psychological working environment, prioritising internal handling of matters such as bullying and harassment and thus bypassing the Working Environment Authority (DK0106124F). These initiatives led to a long debate over the regulation of health and safety at work and over the degree of involvement of legislation or agreements in the psychological working environment (DK0107128F). In October, an agreement was concluded between the Working Environment Authority and LO and DA, that gave competence to the Authority in these matters only in cases where an agreement had not bee concluded on the psychological working environment (DK0111101N). This met with criticism from some quarters, and at the end of the year the new liberal-conservative government looked likely to set a new and different agenda.

Outlook

During the early months of 2002 the new government will table a labour market reform which may very well become the focus of heated debate among the social partners. This is in addition to a number of changes in the social and labour market field already announced by the government towards the end of 2001, including what was seen as an 'offensive' against trade unions (see above under 'Political developments'). In particular, the right to tax deductions for employees' contributions to trade union-run unemployment insurance funds may come under consideration, though the government had not addressed this issue in its plans announced by the end of 2001. In any event, the government's initiatives during its first 12 months in office will be followed very closely.

In the area of immigration policy, the new government has tabled what is seen as a radical proposal to bring more immigrant workers into employment. Whether the target for such employment will be reached in 2002 will be a controversial issue. Another important issue will be the extent to which the right-wing Danish People's Party (Dansk Folkeparti) – with a strong nationalistic position on immigration policy - will manage to influence this aspect of the government's policy.

The 2002 collective bargaining round in the public sector began in January, with the new wage system, 'New pay' (Ny Løn), likely to be at the centre of debate, especially in the municipal/county sector. This system, which has been introduced in the public sector in recent years, makes employees' pay more dependent on their functions and qualifications than on their seniority . Towards the end of 2001 and during the preparations for the 2002 bargaining round, there was strong criticism of the new pay system from employees in the public sector, especially on the part of pre-school and youth teachers.