Go-ahead for merger between major employer organisations

On 1 May 2008, a merger between the Confederation of Danish Industries and the Confederation of Danish Commercial, Transportation and Service Industries will change the balance of influence among the employer organisations. The plan to merge both confederations had been announced in January 2008. The new association will by far be the largest employer organisation in Denmark.

In January 2008, two influential employer organisations – the Confederation of Danish Industries (Dansk Industri, DI) and the Confederation of Danish Commercial Transportation and Service Industries (Handel, Transport og Service, HTS) – confirmed that HTS will join DI, which is already the largest employer organisation in Denmark. The joint decision to merge was a result of an approach made by HTS in early 2007. After months of preparation, the enlarged DI will be a reality from 1 May 2008. On this date, HTS will officially take seat in the administration of DI and the members will be transferred to two new business communities within DI, transport and trade, thus enlarging the existing service considerably.

Coverage of new association

The enlarged DI will be regarded as a ‘giant’ association among employer organisations in Denmark. Prior to the merger, DI already represented the most influential political organisation and employer organisation in the country and had 50% of the votes in the Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA). After the admission of HTS in May, DI will cover 65% of the total payroll represented by the members of DA. The enlarged organisation will have 12,000 member companies, covering 900,000 employees – half a million of whom work in Denmark – and having a total payroll of DKK 150 billion (about €20 billion as at 10 April 2008). The second largest association in the DA-network, the Danish Chamber of Commerce (Dansk Erhverv, DE), accounts for a payroll of DKK 32 billion (€4.2 billion) or 11% of the payroll in DA.

Background of HTS

The merger with DI ends five years of ‘marriage and divorce’ for HTS. In 2002, HTS was originally set up as a federation for associations in trade, transport and services (DK0207102N). The new federation, however, was divided in two: a pure trade interest association, HTS-I, and an employer organisation, HTS-A. From 2002 to 2006, an attempt was made to merge the two parts, but they eventually split in late 2006. At the same time, HTS-A created a trade political department and changed its name to HTS. In January 2007, HTS-I merged with another large employer organisation in the services sector, namely the Danish Commerce and Service (Dansk Handel og Service, DHS), to form DE (DK0611029I). HTS was then the only organisation representing the transport sector – the trendsetting sector within the so-called normal wage area where pay is only negotiated at sectoral level, which is not the case with the minimum wage. This still made HTS a valuable partner.

Challenge to leadership of DI

The formation of DE was a declared attempt to challenge DI’s leading position as the most politically influential employer organisation in Denmark. DE’s strategy was to admit the companies in the growing services sector as members of its organisation and to poach DI’s members in the services industry. Thus, in 2007, DE offered HTS a new opportunity to join forces with the aim of bringing all trade, transport and services companies under one association in due time. This strategy has failed with the merger between HTS and DI.

The large companies in the services sector, such as the Danish-based cleaning multinational ISS, Post Denmark and the large telecommunications operator TDC (former Danish Telecom), will remain members of DI, as DI fulfils their needs as an influential player in relation to the political system at national, European and international level. After the merger with HTS, other large companies such as the security services provider Group 4 Falck, the public transport operator Arriva, the railway cargo carrier Railion and the global supplier of transport and logistics services DSV will further contribute to the trend that all large international companies are represented by DI.

Commentary

For DE, the new merger is likely to be damaging as it did not succeed in becoming a niche organisation for companies in the services sector, not least for the sector’s large companies. As a result, DE will mainly remain an employer organisation for small and medium-sized enterprises (SMEs) in retail trade.

It is interesting to note how DA will be affected by the merger. After 1 May 2008, DI will have almost total control of DA. In fact, DI has already shown that its wants DA to be transformed into a kind of service office while DI progresses along political lines (DK0501103N). However, it is too early to rule DA out. The smaller members of DA’s 13 member associations do not want to be dominated by DI and still need the administrative help of DA. Furthermore, DA plays an important role in coordinating the collective bargaining rounds and has in recent years established itself as a political organisation that shows initiative and engages in serious tripartite cooperation. DI cannot take on such a role as it would cause a split between the employers.

Carsten Jørgensen, FAOS