1998 collective bargaining commences in industry

Pay, pensions and flexible working time are key issues in the 1998 collective bargaining round in Denmark's industrial sector, which started in early January 1998. More flexible working time arrangements may be the price trade unions will have to pay for a satisfactory result.

Since Denmark's industry sector concluded a three-year collective agreement in 1995, while the rest of the private sector bargaining units concluded two-year agreements which were renewed in 1997 by one-year agreements (DK9705110F), industry is faced with two main issues in the 1998 bargaining round, which began in January. On the one hand, the industry bargaining parties - the Confederation of Danish Industries (Dansk Industri, DI) and the Central Organisation of Industrial Employees in Denmark (Centralorganisationen af Industriansatte i Danmark, CO-industri) - will have to catch up with the results achieved in the other bargaining units (transport, building and construction, hotel and restaurants, and services) in 1995 and 1997. On the other hand, the parties will aim to set a norm by finalising their bargaining prior to these other areas, whose collective agreements also expire on 1 March 1998.

CO-industri seeks improved pension or conflict

According to the CO-industri trade union cartel, if the 1995 collective agreement is to be renewed without strikes, then a satisfactory solution to the pensions issue will have to be found. In the 1997 bargaining round, the rest of the bargaining area covered by the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) agreed an increased occupational pension contribution of 0.9% of pay, of which 0.6 percentage points is paid by employers. Consequently, whereas employers in industry pay a pension contribution of 3.6% of pay, the other employers within the LO/DA bargaining area pay a 4.5% contribution.

Bargaining in industry is expected to be completed before other sectors and, besides closing the "pensions gap", CO-industri will include demands similar to those which can be anticipated for the other bargaining areas. The DI/CO-industri bargaining covers approximately 200,000 workers, or some 62% of all the employees whose collective agreement is to be renewed in 1998. The norm-setting effect of the agreement in industry is estimated to affect collective agreements covering an additional 100,000 workers.

Dansk Industri says no room for improvements

Dansk Industri demands that the 1995 collective agreement should be renewed without changes, saying that costs imposed by legislation and moderate wage developments abroad (DK9709127N) do not allow for any pay increase at the central level. The Government's introduction in the 1998 Budget of an environment tax and a sick-pay tax of DKK 325 per employee per year will, according to DA, increase companies costs by 0.65%, which will have to be subtracted from the available wage-sum for bargaining. Furthermore, since Danish wages have increased by 4% per year and wages in Germany and Sweden by only 1.5% and 2.5% respectively, the competitive situation of Danish companies is deteriorating. Finally, as the collective agreement is a "standard-wage" agreement, in which only the minimum pay rates are determined at the central level, DI argues that room should be made for company-level bargaining.

With limited room for manoeuvre, a key question in the industry bargaining round will be what CO-industri chooses to prioritise. If DI and CO-industri agree to follow the other bargaining units and increase occupational pensions by 0.9% of pay (of which employees pay 0.3 percentage points) per year, this will mean either that a large part of the overall improvement is spent on pensions, at the expense of other issues, or that CO-industri will have to succeed in convincing employers to be more generous. Other issues on the agenda are longer holidays, improved compensation for shiftwork and an extension of the current 14 weeks' paid maternity leave.

According to a recent Gallup opinion poll on 12 key bargaining issues, conducted on behalf of LO in December 1997/January 1998, pensions were ranked as the fourth most important issue. Notable wage increases are seen only as the sixth most important issue and fighting unemployment is ranked second. "Labour market" or occupational pensions have not always been such an important issue: when they were introduced in 1989, LO members were very sceptical and opposed to the idea.

Flexible working time - the wild card

Although the issue of more flexible working hours is not directly an issue at the industry negotiation table, it may prove to be the "wild card" in the forthcoming negotiations. If CO-industri is willing to introduce more flexible working hours, DI says that it may be willing to offer some concessions on the total cost of the renewed collective agreement. CO-industri does not reject talking about furthering flexible hours, as long as the details are decided at the company level and workers are given more influence in the planning of working time.

In the 1995 collective agreements, the employers' unilateral right to plan weekly working time was replaced by co-determination between employees and employers at company level (DK9709131N). In exchange, the reference period within which weekly working time can vary was extended from six weeks to six months. Employers must give 12 months' notice of variable weekly working hours, and over the six-month reference period an average weekly working time of 37 hours may not be exceeded

If both DI and CO-industri - and thus the other bargaining areas - cannot come to an agreement by 1 March 1998, when the current collective agreement expires, the Public Conciliator will mediate. However if this mediation fails, strikes and lock-outs will unfold.

Commentary

The pensions gap is one effect of 1995's collective bargaining, which inaugurated an unsynchronised duration of the collective agreements within the LO/DA bargaining area. An important issue in current bargaining is a return to common expiry dates and durations of agreements. For this to happen, DI and CO-industri will have to conclude a "normal" two-year collective agreement and thus establish a common expiry date for the entire LO/DA bargaining area in 2000. The public sector, agricultural and finance bargaining areas, which will undertake collective bargaining in 1999, will then have to conclude one-year agreements - otherwise, the unsynchronised duration of agreements will continue.

It is still too early to say which of the parties will take it upon themselves to restore synchronisation. Nevertheless, all parties do have a mutual interest in getting back to "normal" two-year periods of duration. Seen from the employers' point of view, synchronised bargaining and expiry dates diminish the ability of trade unions to use a costly "leap-frogging" strategy - as with the pensions gap. Seen from the unions' point of view, the two-year collective agreements have made it possible to conclude agreements which contain both social improvements and a wage policy that shows solidarity. Seen from the politicians' point of view, two-year collective agreements promote stability and fewer industrial disputes, thus contributing to a more stable economic development. (Kåre FV Petersen, FAOS)

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