- Observatory: EMCC
- Published on: 02 March 2008
Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
This report explores the employment impact of globalisation and reviews the attitudes and responses of national governments and the European social partners to this phenomenon in Denmark.
Institutional responses to globalisation
Government action to prevent or reduce the extent of off shoring/relocation
Are there any recent examples in your country (i.e. over the past 3-4 years) of the government intervening to prevent particular activities from being relocated abroad or to reduce the scale of this?
If so, please give summary details and indicate the activities concerned
NO government intervention.
Social partner attitudes towards off-shoring/relocation
Have there been cases over the past 3-4 years where the possibility – or threat – of relocation of production has featured as a factor in collective bargaining?
If so, please indicate the cases concerned, how the possibility has been used and whether its use has become a more frequent occurrence.
THE POSSIBILITY of off-shoring and other effects of economic globalisation in Denmark is an indirect factor in Danish collective bargaining. The unions (union members) are aware that pushing for wage increases as high as possible is not realistic if the companies will stay competitive in the globalised economy. There is a permanent underlying threat that the companies move production to low-cost countries, because the Danish labour costs in generel are very high. Relocation/off-shoring could mean loss of jobs. Thus the bargaining concerning wage increases has for many years been kept inside a realistic framework – 2-3 % in agreed annual increase, and 3 to 4 % in actual annual increase - even if the economic situation as the current (low unemployment, shortage of labour force, low inflation) favours the employees’ side in a bargaining situation.
Are there any cases over the past 3-4 years where trade unions have successfully resisted plans to relocate production abroad or have managed to reduce the extent of this?
CASES OF this kind are not known. Information and consultation about off-shoring takes place in the cooperation committees in the companies, and if offshoring will result in collective redundancies, consultation takes place acording to the Danish act on proceedures in connection with collective redundancies, which is based on the EU-Directive of the same name. But basically it is difficult to change the management’s decision to restructure (e.g. a closure due to off-shoring), allthough it might be possible during the consultations to find a solution that will soften the effects of a closure. Management has the last word due to the managerial prerogative.
If so, please indicate the cases concerned and outline their main features Are there any cases where trade unions have accepted the need for the relocation of production – or part of it – abroad as a means of maintaining or improving the viability of companies and so of preserving some jobs and even ultimately expanding them?
If so, please briefly describe the cases concerned
TRADE UNIONS are not against off-shoring if it means a trade-off for new jobs as compensation for the lost due to relocation of production. This has often been the case – whether it has meant new jobs in the same company or other jobs within the region.
Government policy on foreign-owned firms controlling significant sections of the economy
Does the Government in your country have an explicit policy on restricting the acquisition of domestic companies in certain sectors by foreign-owned firms?
If so, please give summary details and indicate which sectors this applies to as well as whether any distinction is made between companies according to their nationality (e.g. whether non-European companies are treated differently from European ones)
NO, THE government has no explicit policy in this area. Foreign direct investments are actually welcomed in all sectors, and the framework concerning openness in connection with company acquisitions follows the same rules that in most EU-countries.
In 2006, however, the government issued an analysis of the acquisition of Danish companies by international capital funds. The result based of the assesment of 120 Danish companies owned by capital funds during the last ten years showed that the number of employees was increasing in the companies after the take-over and so was the turnover. But it also showed that the borrowing increased significantly resulting in a strongly reduced tax payment from the capital funds. The corporate tax laws were subsequently altered with the aim to limit the possibilities of deductions of expenses including interest rates (L 213 (Lov nr. 540 af 06.06.07)). The argument behind the bill that was passed in the Parliament was that corporates and capital funds buy in Denmark, place the expenses in Denmark and place the income abroad.
Capital funds have been very active the last years taking over large companies like the former Danish Telecom, TDC and the internationl cleaning company ISS. In 2005 Denmark represented 6% of the funds’ global investments. The funds currently own 80 large companies, which together cover 4% of the employees in the private sector.
Are there any restrictions on foreign-owned companies setting up branches or subsidiaries in your country either generally or in specific sectors?
Please indicate the sectors concerned and the stated reasons for the restrictions. Please also indicate whether the restriction apply to companies from other parts of the EU as well as from outside
NO RESTRICTIONS others than the company has to comply with Danish law and collective agreements in force.
Are there any sectors of the economy in which the acquisition of a domestic company has not been allowed over the past 3-4 years?
If so, please indicate the sectors concerned and the nationality of the foreign companies involved as well as the reasons given for the decision
Social partner responses to the take-over of domestic firms by foreign-owned ones
Have there been any recent cases (i.e. over the past 3-4 years) where trade unions have resisted foreign acquisition of domestic companies explicitly because of the nationality of the company concerned?
If so, please give summary details, indicating whether there is any evidence of different attitudes being shown towards European firms as opposed to companies from outside Europe
Have there been any recent cases (i.e. over the past 3-4 years) where domestic companies have resisted acquisition by a foreign-owned firm on the grounds of its nationality?
If so, please give summary details, indicating the nationality of the company concerned and whether there is any evidence of European and non-European companies being regarded differently in this regard.
Attitudes to globalisation
Have employers’ associations in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?
If so, please give summary details, indicating whether or not the position varies across sectors of the economy
THE MAIN EMPLOYERS’ associations have in general adopted a positive position, and there does not seem to be fundamental variations regarding this position across the sectors. The fundamental view is that a global economy (relocations/acquisitions) creates growth and should be perceived as a challenge and not a threat. The largest Danish employers’ association, the Confederation of Danish Industries (Dansk Industri, DI), supports and advices members that consider off-shoring business activities. This does not mean that the DI considers off-shoring as the best solution in all cases. DI has published a considerable amount of reports, surveys, and pamphelts about economic globalisation and relocation of production, which can be downloaded from DI’s home page – among others the book ‘The Global Challenge’ in English as well as Danish. The members of DI mainly come from manufacturing industry where off-shoring is most frequent.
Have trade unions in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?
If so, please give summary details, indicating whether or not the position varies across sectors of the economy
THE DANISH Confederation of Trade Unions (Landsorganisationen i Danmark, LO), which is main organisation for the unions in industry, service, commerce, transport and construction, has not taken an uncompromising position against any aspect of relocation. One of the main tasks for the unions is to keep and create jobs. When the Danish shoe manufacturer, Ecco, moved the production of shoes to Portugal the jobs that emerged instaed in Ecco Denmark were within IT, design, sales, and administration. Within a few years these jobs by far exceeded the former production jobs in numbers. It is the opinion of LO that as long as new jobs emerge as a result of off-shoring/relocation they do not see a problem. Most important in this connection, however, is education and further training. If Denmark has to meet the ‘Global Challenge’ education is essential. If unskilled production job increasingly are relocated to low-cost countries the response must be upgrading of the domestic workers’ level of skills.
LO in January 2005 issued a ‘10-points plan to combat relocation of jobs’ (see: DK0502102N) that is centered on education and training.
The largest union of the LO-family, the United Federation of Danish Workers (Fagligt Fælles Forbund, 3F) expressed in 2004 that ‘innovation’ in Danish companies is the keyword in dealing with off-shoring. It was mostly the unskilled among 3F’s members that at that time were made redundant due to relocation of production. By the help of researchers 3F tried to turn ‘innovation’ into something concrete. The result was that 3.F recommended that Danish companies should not necessarily try to compete with USA regarding R&D or China regarding mass production. Danish companies should be innovative through what we do best: cooperation between management and employees, and upgraded training. Virtual factories of ideas should find new ways of cooperation with focus on innovation, new products, and new lines of production that would keep Danish companies competitive and thus avoid rigid off-shoring with nothing to replace the loss of jobs.
*A Eurobarometer survey on globalisation was carried out in 2003 in the EU-15 Member States. This might serve as a useful point of reference for the countries concerned, to see, for example, whether or not national attitudes expressed in the survey are in line with similar surveys which have been conducted nationally. The survey findings are available at:
Have there been any surveys of public opinion in your country over the past 3-4 years on attitudes towards globalisation or on the various dimensions of this (as listed above)?
YES, ONE. In September 2003 prior to the WTO-summit in Cancun, the LO-based weekly magazine A4 published the results of a survey made by the marketing company Gallup for A4. The survey by and large concludes the same as the Barometer survey – that the Danes do not in particular fear effects of globalisation. The survey is, however, broader in the interpretation of globalisation, i.e. it also covers internet, travelling, and migration. Six out ten asked (56%) answered that they think they have benefitted from globalisation and that globalisation influences Danish society in a positive direction. Only 8% perceive globalisation as a negative effect on their lives. All in all 1,002 persons over 18 years of age participated. Young people as well as old people agreed that globalisation was mostly to the advantage of the young people. The person behind the analysis, Professor Roger Buch from Syddansk Universitet, says to A4 that there are differences in the perception of globalisation, but they are variations of how positiv the persons are. There are no particular groups ‘for or against’ globalisation and no group among the respondents are ‘absolutely against’ globalisation.
The part of the survey that is published is not broken down by gender, education, socio-economic status or age. The most relevant question concerning this study is the following:
Do you agree or disagree that Danish companies collectively will gain economically from globalisation?
Do neither agree nor disagree: 13%
Do not know: 19%
Unfortunately, seen in the perspective of this study, the Gallup survey does not distinguish in particular between off-shoring and acquisition. The Gallup survey operates with distinctions between economic, technical and cultural globalisation. One could say more in the direction of the perception of globalisation as ‘the global village’.
In 2004 there was a public debate based on information in the newspapers under headlines as ‘Thousands of jobs move abroad’ – ‘Danish SMEs say goodbye to Denmark’ – ‘Off-shoring in manufacturing explodes’ – ‘New conditions for the IT-industry: off-shore or die’. These headlines, even brought in respected papers and magazines, were more spectacular than based on reality. In his book from 2004, Dansk erhvervslivs placering i globaliseringen (The position of Danish industry and trade in economic globalisation), professor Torben Pedersen points out that at this time very little were known about the extent of the off-shoring of Danish companies. It is his conclusion, however, that the employment impact had not been devastating. 5,000 jobs are off-shored a year but they are replaced by other jobs.This is also the conclusion of two surveys made jointly by employees’ and employers’ organisations (see: DK0506102F). In comparison 260,000 jobs in Denmark are made redundant a year, but they are also replaced by new jobs. All in all, most employees made redundant because of off-shoring find new jobs.
If so, please summarise the main findings of these. Please give a breakdown, where possible, in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region).
Have these surveys made a distinction between the different dimensions of globalisation (as listed above) or have separate surveys been carried out on these dimensions?
If so, please summarise the main findings of these as regards:
off-shoring(or the relocation of production abroad;
the take-over of domestic companies by foreign-owned ones and/or the growing extent of control by foreign companies of parts of the domestic economy
the establishment of new plants and offices by foreign-owned companies
Where possible, please give a breakdown in each case in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region)
Have these surveys made an explicit distinction between globalisation and the process of European integration, by, for example, distinguishing between relocation of production to other EU Member States and relocation to countries outside the EU or between the take-over of domestic companies by EU-owned firms and take-over by a non-EU company?
If so, please give summary details of the differences in response to EU integration as opposed to globalisation.
Carsten Jorgensen, FAOS