Agriculture and forestry heading for sixth week of annual leave

New two-year collective agreements were concluded in January 1999 for Denmark's agriculture and forestry sector, including horticulture, the dairy industry and abattoirs. The outcomes were similar to the provisions of the government's intervention to end the main private sector collective bargaining round in spring 1998, with three additional days off per year and a total rise in costs of 7.5% over the two years. Two main bargaining areas remained to be settled in early 1999 - the public sector and the finance sector.

Early 1999 is due to see three main sets of collective bargaining in Denmark - covering the agriculture and forestry sector (including horticulture, the dairy industry and abattoirs), the public sector and the finance sector. The settlement in the first of these areas, concluded in January, has shown just how profound is the impact of the government's political intervention in May 1998 which imposed a settlement to end the main private sector bargaining round in the area covered by the Danish Federation of Trade Unions (Landsorganisationen i Danmark, LO) and the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA), following a major industrial dispute (DK9805168F). This intervention has become the benchmark for 1999's negotiations, especially in terms of time off, with the extra days off awarded in the DA/LO area now having been converted into three extra days of annual leave for employees in agriculture and forestry, the dairy industry and abattoirs. This is the outcome of the January 1999 agreements between the Danish Confederation of Employers' Associations in Agriculture (Sammenslutningen af Landbrugets Arbejdsgiverforeninger, SALA), and a number of unions affiliated to LO, primarily the National Union of Food and Allied Workers (Nærings- og Nydelsesarbejder Forbundet, NNF) and the horticulture, farming and forestry group (Gartneri-, land- og skovbrugsgruppen) within the General Workers' Union (Specialarbejderforbundet i Danmark, SiD) (DK9901104N).

The government declared in several statements and proposals during autumn 1998 that there is no money for additional time off (DK9901103F), while there were warnings from various quarters against a wage increase which surpasses the increase in Denmark's competitor countries, particularly Germany. Nevertheless, a number of agreements have been reached in the SALA area which reinforce the tendency towards more time off and large pay rises. The Economic Council (Det økonomiske Råd) is watching developments with concern, fearing that it might aggravate the first signs of a negative economic trend in Denmark (DK9901102F).

The latest pay rise figures, for the last quarter of 1998, show an average increase within the DA area of 4.7% compared with the same quarter the year before. At the same time, the public sector has experienced an even larger pay increase - 4.8% in the state sector and 5.4% in the county and municipal sectors. The higher figure for the county/municipal area indicates that the introduction of a new wage system, which increases the power of local bargaining, has extended farthest here (DK9705110F).

The agreements in the SALA area strengthen the likelihood of the 1998 political intervention influencing the public sector, where collective bargaining, covering some 840,000 workers, was heading for the decisive stage in mid-February 1999. Everything indicated that the extra days off would also feature in this settlement.

SALA agreements' main points

The 1999 agreements between the employers' associations belonging to SALA and a number of LO-affiliated unions - including NNF, SiD and the National Union of Women Workers (Kvindeligt Arbejderforbund, KAD) - all run from March 1999 until March 2001. The main points are as follows:

  • the agreements all provide for three days' extra leave per year, which cannot be exchanged for money as had been the case in the 1998 deal. Most commonly, two days off are granted in the first year of the agreement and three days in the following year;
  • all agreements contain an increase in contributions to occupational pension schemes of 0.9% in each of the two years, with employers paying 0.6% and employees 0.3%. This brings the occupational pension contribution to 7.5% of pay in most cases. The goal is a contribution as high as 9%. Agreements and the 1998 political intervention will mean that the occupational pension contribution in the DA/LO area will reach only 5.4% by 2000;
  • the agreements typically provide for two extra weeks of leave to be taken by fathers as an extension of the mother's maternity leave; and
  • hourly wage rates are increased by DKK 2.25 the first year and DKK 2.20 in the second year.

The partners have agreed that the agreements' contents will result in a total rise in costs of 7.5% over the two-year period - 4% in the first year and 3.5% in the second. The bargaining areas in question are covered by the "standard wage" (normal-løn) system, whereby the central agreement sets actual pay rates (rather than minima, subject to additional local bargaining), which make it possible already to calculate the total rise in costs at this stage. The costs arising from the SALA agreements are thus almost at the minimum of the cost increases to be expected in other sectors. However, it should be mentioned that in the large abattoirs sector, for instance, piecework pay systems are used. Consequently, the total rise in costs will probably be a little higher when the figures are worked out.

SALA is especially satisfied with the fact that the cost increase is lower in the second year than in the first. This might help to lead to a lower general level of cost increases when bargaining occurs again in the DA/LO area in 2000, therefore contributing to securing Danish competitiveness. The agriculture employers thus believe that they have achieved the best possible result in a bargaining round in which they could not do much other than grant the same amount of time off as the government granted employees in the DA/LO area in 1998. In addition, they granted the same pay rise as that which resulted after workplace pay negotiations - within the manufacturing area, for example - in the local bargaining in the wake of the spring 1998 settlement.

Outstanding problems

The main bargaining within agriculture, forestry, horticulture, the dairy industry and abattoirs has been settled, with new agreements covering just over 42,000 employees. Still to come is the negotiation of agreements which do not expire until 1 April 1999, between the Dairy Employers' Organisation (Mejeribrugets Arbejdsgiverforening) and SiD, KAD and the Danish Clerical Organisation (Dansk Funktionærforbund), covering just over 4,000 employees. Finally, agreements need to be concluded for the office workers who are members of the Union of Commercial and Clerical Employees (Handels- og Kontorfunktionærernes Forbund, HK).

Elsewhere in the private sector, it proved impossible for the Bakery Employers' Organisation (Arbejdsgiverforeningen af Bager- og Konditormestre, ABK) and NNF to reach an agreement to renew the settlement for 4,500 bakers. NNF's demand for five extra days off per year to compensate for irregular working hours was rejected by ABK, and the negotiations have now been moved to the Public Conciliator's Office. NNF's demand in bakeries seeks to extend its draft agreement with the Cakemaking Employers' Organisation (Konditorernes Arbejdsgiverforening, KA), which covers around 50 enterprises with some 300 employees, in which five extra days' leave were granted. This was too much for ABK, and the members of KA clearly feel the same way, having refused to approve the settlement. A new bargaining round is thus ahead in cakemaking - initially between the parties on their own and, if this does not bring a settlement, then in the Public Conciliators' Office.

In the financial sector, current agreements do not expire until 1 April 1999 and bargaining between the Employers' Association for the Financial Sector (Finanssektorens Arbejdsgiverforening, FA) and the Financial Services' Union (Finansforbundet) began in mid-February. Demands for more time off are not an issue in this sector, because improvements corresponding to those in the DA/LO area were achieved in the 1997 bargaining round.

Commentary

It is an interesting sign that the two extra days' annual leave and the three days annual family care leave for parents, which were the result of the LO/DA area agreements and government intervention in 1998, have been converted in the agriculture and forestry sector into three days off for the benefit of all workers. The government's attempt to grant the time off selectively to certain groups thus appears to have gone awry. This is primarily because trade union members demand general, rather than group-specific, improvements. The SALA agreements have thus taken a serious step towards a sixth week of annual leave (legislation provides for five weeks). It will be a general demand by the unions within the DA/LO area in the negotiations in 2000 that the days of family care leave are converted into days off for all. By adding one or two more days, the sixth week of annual holiday would thus be a fact. The general secretary of SiD's manufacturing group (Fabriks- og Industrigruppe), Willy Strube, has already confirmed that the sixth week of leave will be the main demand in 2000.

The SALA agreements illustrate the problems concerning the lack of synchronisation which has arisen in the Danish bargaining system since 1995 (DK9804163F). Until then almost every bargaining unit negotiated collectively every other year. This breakdown of synchronisation causes the settlements in one year for some units automatically to set the norm for the remaining units in the following year. This causes a leverage mechanism which presumably means that increases in costs will be forced to a higher level.

Consequently, it must be in the interest of the employers to re-establish synchronisation. That this has not occurred within the SALA area is presumably because historically there is a certain schism between SALA and DA. Furthermore, the agriculture employers do not think it is reasonable for them to pay an extra price to re-establish the synchronisation which DA's members, with the Confederation of Danish Industries (Dansk Industri, DI) leading the way, have removed. For SALA, DA's member associations must pay the price on their own if they want to re-establish synchronisation.

At first glance, it seems that it is in the interest of the trade unions to maintain the current division of negotiations because it provides possibilities to make the most of the leverage mechanism. However, simultaneously there is the risk that the expectations of the members are raised excessively. This can hinder the possibilities of agreeing a new binding cooperation between the social partners and the government to secure Danish competitiveness. (Jørgen Steen Madsen, FAOS)

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