New pay system agreed for industry sector
In October 2002, the social partners in Denmark's industry sector announced that they had agreed on a new pay system, known as Plus-pay. The system is based on a higher degree of flexibility than the current scheme, and will cover both workers paid on an hourly basis and salaried employees.
In mid-October 2002, the bargaining parties in the industry sector - the Central Organisation of Industrial Employees in Denmark (Centralorganisationen af Industriansatte, CO-industri) trade union cartel and the Confederation of Danish Industries (Dansk Industri, DI) - presented an agreement they had reached on the introduction of a new pay system for employees in Danish industrial enterprises, known as 'Plus-pay' (Plusløn). The majority of workers in the sector are members of the Danish Union of Metalworkers (Dansk Metal).
Plus-pay is a performance-related pay system, with a close connection between an element of pay and the performance of the individual employee and the enterprise's results and earnings. It will mean that the composition of the pay of individual employees in the industrial sector will be more transparent, with the aim of increasing motivation. Plus-Pay will replace the industry sector pay system introduced in the 1990s, which applied only to workers paid on an hourly basis. Plus-pay will also apply to monthly-paid salaried employees.
Presenting the new scheme, CO-industri and DI stressed that, in line with developments in enterprises, the distinction between salaried and hourly-paid workers will be reduced. Plus-pay makes it possible to develop wage systems solely for salaried employees, solely for workers paid on an hourly basis or for all employees together. This should be of benefit to both employees and enterprises.
The new pay system is based on four basic elements:
- basic pay, constituting 80% of the total wage, which is to be the same for all employees or vary between broad groups;
- pay based on qualifications, which is to be individually calculated according to the qualifications or educational/training background of each employee;
- a task-related bonus, which is a special wage supplement paid for the temporary performance of special functions or tasks; and
- performance-related pay, which may be individual- or group-based and depends on the results achieved.
Task-related pay - intended as a reward of employees who perform special tasks - is a new concept in relation to the current pay system, and will be identical for both hourly-paid and salaried workers.
CO-industri and DI stress that Plus-pay is not a system which should necessarily be used to the full extent, but that it presents a ranges of possibilities to be used by enterprises and employee representatives according to their specific needs.