Denmark: Role of social dialogue in industrial policies

  • Observatory: EurWORK
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  • Published on: 02 Wrzesień 2014



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In spite of the traditionally high level of involvement of the Danish social partners in policy areas, for instance education and employment, their role in industrial policy as it was formed in the beginning of the 1990s is rather limited, in particular conercerning the trade unions. The growth efforts in industrial policy are concentrated at regional level in Growth Fora where the trade unions only have one seat out of 20. The employer associations also have one seat in the fora while their members, the businesses, are strongly represented.

Part 1: Overall role and involvement of social partners in industrial policy in the national context

Industrial policy is in this context used in its broader sense as…

those policies that have an impact on the cost, price and innovative competitiveness of industry and individual sectors, such as standardisation or innovation policies, or sectoral policies targeting e.g. the innovation performance of individual sectors.

The policy instruments are then defined as the method or mechanism used by government, political parties, business or individuals to achieve a desired effect, through legal or economic means.

Industrial policy initiatives are often undertaken unilaterally by the government but other forms may include social partners in different constellations, including:

  • bipartite initiative (a common approach by the social partners);
  • tripartite initiative (the social partners in tandem with the public authorities);
  • tripartite+ initiative (the three stakeholders in combination sometimes with other civil society players such as NGOs, research centres or qualified figures);
  • public-private partnership initiatives (one social partner and the public authorities); and
  • unilateral initiatives by a single social partner

1. Is there in your country currently a policy framework to stimulate investments that both create economic growth and employment? Tick Yes/No

Table 1

Policy framework

Yes

No

Economic growth

X

 

Employment

X

 

Both economic growth and employment

X

 

Competitiveness

X

 

2. Is there evidence in your country of involvement of social partners in the process of formulating industrial policy interventions? If yes, please indicate which types of involvement:

Table 2

Type of social partner involvement:

… in the formulation of horizontal (cross-sector) interventions

… in the formulation of vertical (sector-, industry- or company-specific) interventions

Sector-specific involvement

Yes:

Yes:

Cross-sector involvement

Yes

 

Bipartite, tripartite, tripartite+, unilateral, public/private partnership?

Please indicate which, if any, of these types apply:

Tripartite, tripartite+, unilateral, PPP

Please indicate which, if any, of these types apply:

Tripartite, tripartite+, unilateral, PPP

3. How have social partners been involved in the industrial policy formulation process?

Table 3
 

Please indicate (X) the extent to which the different types of involvement are used, including whether this involvement is statutory:

Level of government?

Sector focus?

Specific form of social partner involvement:

Statutory/mandatory

Very common/ used in most policy processes but not statutory

Fairly common but not consistently used

Rarely used

Not used at all

National or regional?

Sectoral or cross-sectoral?

Tripartite standing committee

X

           

Tripartite ad hoc committees

 

X

     

X

X

High-level groups or other multi-stakeholder committees involving other stakeholders in addition to social partners

 

X

     

X

 

If multi-stakeholder committees:

Please indicate which types of other stakeholders are (typically) involved:

NGOs, local businesses, research institutions, trade organisations

(Ex: The Environmental and Economic Committee, the Danish Growth Council, the regional Growth Fora)

Hearings

 

X

         

Consultations

 

X

         

Conferences

 

X

         

Other - please specify below:

             

.

             

4. Is there evidence in your country of initiatives that follows recommendations and development at EU-level? If yes, please indicate in which sectors:

Yes, among other the programmes Solar District Heating in Europe and Copenhagen Cleantech Cluster supported by ERDF (green tech and low carbon industries ) They are set up by the Regional Fora and supported by structural EU-funds

5. Which types of industrial policy instruments/interventions at different government levels have social partners been involved in? Please indicate degree of involvement

3 = high degree of involvement,

2 = involvement to some extent,

1 = low degree of involvement,

0 = no involvement.

Table 4

Policy instruments:

National level

Regional level

Local level

Public investment programmes:

(mainly The Danish Growth Council)

(mainly Regional Growth Councils)

(mainly Regional Growth Councils)

infrastructure

0

1

2 (Local Government Denmark)

construction

0

1

1

building renovation

0

1

2 (Local Government Denmark)

other

0

1

 

Innovation programmes

0

1

1

Support for R&D

0

1

1

Cluster promotion

0

1

1

Export promotion

0

1

1

Internationalisation of SMEs

0

1

1

Improvement of access to finance:

     

loan

0

0

0

loan guarantee programmes

0

0

0

venture capital funding

0

0

0

other

     

Public procurement policies

3 (Moderniseringsstyrelsen - Agency for the Modernisation of Public Administration)

3 (Danske Regioner, Danish Regions)

3 Local Government Denmark, KL

Tax and duty policies

0

0

0

Adapting the skills base

3 (Faglige udvalg, vocational education commitees.)

3

3

Subsidies for restructuring/ bail-out of companies in crisis

0

0

0

Social plans in case of restructuring. Training/re-training

3

3

3

Investment incentives

0

1

1

Energy efficiency/ energy shift

0

1

1

Energy supply security

0

0

0

Access to raw materials

0

0

0

Prices of energy and raw materials

0

0

0

Others, please specify below:

     
       

NOTE: The social partners have a seat in the Denmark’s Growth Council, but the trade unions only have a minimum of influence; the employer associations, the Confederation of Danish Industry (DI) and the Confederation of Danish Employers (DA) have more influence since some of their largest members have an important voice in the council.

The social partners have each one representative in the regional growth councils (there are six). The seats are mostly occupied by the regional and local politicians, the companies and university economists. LO has recommended that the employees orgaisations have a stronger representation in the councils (LO 2012), because even if the employers organisations only have one representative, too, many of the representatives from the important companies in the region e members of an employer organisation, as for instance DI.

In general, there is a significant difference between the the influence of the social partners on the employment policy and the industrial policy respectively. There is a larger tradition for the involvement of the partners in the employment policy than in industrial (growth and innnovation) policy, although thehis influence has changed since the beginning of the 1990ies. At the samme the ‘ministry of industry changed to the broader ‘ministry og industrial policy and industrial growth’. The new ministry turned their invitation to cooperation towards the businesses and limited the influence of the social partners significantly in the councils and committees, which otherwise had been the norm in the 1980ies (Sidenius 1999; Mailand 2008).

6. Which, if any, positive effect(s) can be related to the involvement of social partners in the industrial policy process in your country?

Table 5

Positive effects

Tick (X) where applicable

Please comment briefly: How did effect manifest itself?

Speed of policy process

   

Robustness of policy initiatives

   

Relevance of policy initiatives

   

Dynamism in the policy process

   

European coordination

   

Ownership of policy initiatives

X

In particular LO and the unions 3F and Dansk Metal has taken unilateral policy initiatives with the aim to arise awareness of a broader industrial policy, which also integrates considerations on employment and education (LO 2013)

Coherence and coordination of labour market, education, and economic policies

X

This is traditional social partner involvement area, although weakest regarding economic policies.

Stimulating public-private partnerships

X

The social parthers both recommend to strengthen PPP with the special to support innovation and green solutions. The employer organissation DI are part of PPP-projects.

Others, please specify below:

   

.

   

7. Which, if any, problems or challenges related to involvement of social partners in the industrial policy process have been encountered in your country?

Table 6

Problems/challenges:

Tick (X) where applicable

Please comment briefly: How did the problem manifest itself?

Increased bureaucracy

   

Lengthy policy processes

   

Lengthy bargaining processes

   

Dilution (circumvention) of parliamentary democracy

   

Problems of establishing accountability

   

Lack of dynamism in the policy process

   

Lack of culture to involve social partners

X

There is a lack of culture to involve the social partner organisation in the formulation of an industril policy. See also NOTE above.

Others, please specify below:

   

.

   

8. What, if anything, has been done to address these challenges/problems listed in questions 7? What was the outcome?

Table 7

Problems/challenges:

Measures undertaken

Effect positive/negative

Involvement of social partners

None in particular

n/a

     

Part 2: Description of relevant sector examples of social partner involvement

This section aims to identify examples of policies targeting specific sectors and involving social dialogue. Among the industrial policies treated in the previous section in question 5, please select 2-3 examples which represent significant industrial policies in your country and describe the policy instruments used and the contribution of social partners to the shaping of the policy and the outcome of their involvement.

The selection of examples should be guided by the following criteria:

  • importance of the sector to the national economy;
  • level of government support to the industry; and
  • best practice of social dialogue in the country.

Please provide references to key sources.

Example 1

Name of the instrument:

In national language and English

Regionale Vækstfora (Regional Growth Fora)

Sector:

Green tech, low carbon industry, innovative business solutions, infrastructure, etc. (at regional and local government level)

Type of instrument applied:

(use categories from question 5. Some sector policies may apply more than one instrument

Innovation programmes, support for R&D, cluster promotion, internationalisation of SMEs, financial and knowledge measures supporting entrepreneurship and micro companies, etc. Nearly all aspects that supports sustainable growth and innovation.

Timing:

(Period of implementation of instrument)

The regional growth fora were set up in continuation of the implementation of the Structural Reform in 2007 that changed the geographical areas as well as the administrative repsonsibilities of the state, the regions and the municipalities

Operational level

National

Regional

Local

Please tick the government level and/or provide details of geographical implementation area if relevant:

 

X

(X)

Funding:

(Please describe the size of the instrument and detail the source(s) of funding, e.g. EU, state budget, levies, stakeholder contributions, etc.).

The regional efforts for growth and business is supported by more than DKK 1 billion (€ 133 million) per year. Approximately DKK ½ billion (€ 69 million) comes from the European Regional Fund and the EU Social Fund. In addition, there are funds from the regions, municipalities, state, private and non-profit institutions, because EU funds must be financed € to € with Danish funds.

Target group(s):

(please describe target group in terms of sector/industry, type of company, geographical criteria and/or other relevant characteristics)

The geographical target area are the regions, which also include the municipalities. The target groups are companies that involve new technology or other innovative aspects into the field of the company. Green tech, smart grids, broad band to smaller populated areas, CO2 neutral solutions like windmills, heating pumps and solar cells. In other words the metal industry sector, consultancy services and the energy supply sector are probably the most relevant target groups although there might be others within manufacturing.

Rationale/motivation for the instrument:

(please describe the problem that the instrument should address – for instance: market failure, need to increase sector competitiveness, crisis intervention, etc.)

The main rationale behind the growth fora is to increase Danish companies’ competitiveness and create new sustainable jobs

Policy stage

Please describe stage of involvement of the social actors i.e.

policy preparation (consultation),

policy decision (co-determination? and

policy implementation (fx. by involvement in agencies)

The Danish Growth Councils give advice to and monitor the work of the growth fora. Besides, there are five ‘growth houses’, which are more ‘hands on’ advisory councils set up and finaced by the munipalities

Objectives of the instrument:

(please describe the objectives and any quantitative targets set for the instrument– e.g.

increased employment by X% in sector Y by 20xx

increase in sector exports by X%

increase in FDI by X%

The starting point for the regional economic policy is to strengthen productivity and growth through targeted regional approach to entrepreneurship, education and skills, innovation and use of new technology.

There are no specific quantitative targets. However, the municipalities have to report about steps taken to support the above mentioned targets.

There are no specific export targets by %

Activities and implementation:

(Please give details on the implementation of the intervention)

The growth fora finance and support growth activities set up by the enterprises.

They develop and prioritise the efforts to transform the national strategy into concrete improvements in regional growth conditions. This includes recommending/advising the state on the use of structural funds and to the regional council on the use of regional funds for business.

It could transformation of a company’s energy policy into green energy areas. Examples from the Capital Region Growth Forum are: Innovation and research, strong competitative clusters (‘Copenhagen Cleantech Cluster in cooperation with Growth Forum Zealand), and entrepreneurs with an international perspective.

.

Social partner involvement

 

Type of social partner involvement:

(Bipartite, tripartite, tripartite+, unilateral, public/private partnership? – cf. qu. 1)

Tripartite+

Level of involvement of social partners involvement:

European, National, regional, local

Sectoral

Regional

Specific form of social partner involvement:

(tripartite standing or ad hoc committee, high-level group, hearing, consultation, conferences, etc.? – cf. qu. 2)

Tritartite standing

The social partners are members of the growth fora.

Timing and nature of social partner involvement:

(Please provide more details on the processes that social partners were involved in, their input, the timing, etc.)

The social partners are represented by one member each out of 20 members.

Three members are appointed by the Regional Council

Six members are appointed by the municipalities in the region

Six members from the trade and buusinesses are appointed by trade organisations chosen by the Regional Council

Three members are appointed by the knowledge instituons of the region chosen by the council

Two membr are appointed by the social partner organisations

Seen in the perspective of numerical representation, the division of members does not favour the social partners and their representativeness in the growth fora

Impact of social partner involvement on design and implementation of instrument:

(Please describe how/if the design and/or implementation was affected through the involvement of social partners)

The social partners are permanent members of the growth fora. Their influnce is limited. This goes in particular for the trade unions, since the bussinesses – or the potential members of the employer organisations - are well represented.

LO and the Confederation of the Professionals (FTF) have pointed out that this is a problem regarding the actual influence of the trade unions on Denmark’s growth and employment policy

Other stakeholders involved, if any:

(please name stakeholders and briefly describe their roles)

The other – and more influential - stakeholders are local government politicians, the chairmen of the five Regional Councils and the local bussinesses. Three member are appointed from universities and other high level knowledge institutions.

Results and outcomes

 

Outputs/results:

(Please give details of the outputs/results of the intervention; e.g number of jobs created/retained, number of workers upskilled; wage increases, investment increases, increased co-operation between social partners, etc.)

The main target is to increase productivity, mainly based on green and innovative solutions and to increase the labour force. Labour force have not increased much due to the demographic change in combination with fewer jobs as a consequence of the crisis.

However, figures from the Danish Business Authority (Erhvervsstyrelsen) throw some lights on the outcome.

Percentage of innovative enterprises by innovation type, region and time, whole country:

2007: 43% , 2008: 41% , 2009: 44% , 2010: 47%, 2011: 44%

The category 'Innovative in total’ includes companies that have implemented at least one of the four types of innovation (product, process, marketing, organization)

(source: Statistics of the Danish Business Authority, ERSTS40)

Percentage of newly established growth companies by size (5+employees), area and time, whole country:

2007: 13.5%, 2008: 11.9%, 2009: 7.4%, 2010: 6.5%, 2011: 6.1%

Percentage of newly established growth companies by size (10+employees), area and time, whole country:

2007: 12.3%, 2008: 11.5%, 2009: 6.0%, 2010: 6.7%, 2011: 6.7%

(source: Statistics of the Danish Business Authority, ERSTS401)

Note: Newly established growth companies are defined as new firms in the market industries that has 5 (10) or more employees two years after their establishment and an average annual growth of more than 20% in the following 3 years. The proportion of newly established growth companies is calculated by number of newly established growth companies in relation to the number of new businesses (up to 5 years) with at least 5 (10) staff of market industries.

Job creation in growth companies by region and type, whole country 2008-2011:

- Job creation per growth company (5 +): 26%, whole country

- Job creation per growth company (10 +): 45%, whole country

Job creation in growth companies by region and type, whole country 2007-2010:

- Job creation per growth company (5 +): 31%, whole country

- Job creation per growth company (10 +): 56%, whole country

Note: Growth companies are defined as companies in the market industries that have had an average annual growth in the number of employees at least 20 %. over a three year period and have at least 5 + employees (at least 10 + of high-growth enterprises) at the beginning of the growing season. The percentage is calculated by number of growth companies relative to the total number of companies with at least five (10) employees during the period.

Assessment of effectiveness:

(Please provide an assessment of the effectiveness of the intervention - were the objectives reached? If possible, base the assessment on evaluation reports or similar)

Of the evaluation from April 2011, which the consultancy firm COWI has prepared for the Danish Enterprise and Construction Authority, it appears that work is well underway (‘Strategic evaluation concrning the structural fund period 2007-2013’). The expectations for the results exceed in many cases the performance targets.

Until now, approximately 10,000 companies and more than 20,000 people have benefited from the regional growth efforts.A previous thematic evaluation (also made by COWI, september 2009 ) focused in particular on promoting innovation. It concluded that there is a strong relationship between the EU Structural Fund programs and regional business strategies. In particular, the strong structuring around the four sources of growth, "Human Resources Development", "innovation, knowledge sharing and knowledge building", "creation and development of new businesses" and "use of new technology" according to the evaluation was successful (‘Thematic evaluation concerning the structural fund peiod 2007-2013’)

Possible explanations for the effectiveness of the instrument:

(Please provide possible explanations for the degree of effectiveness achieved, including the contribution of the social partner involvement; e.g. improved bargaining process? Increased dynamism in the policy process? Other explanations?)

Not evaluated. A possible explanation might be that a broad scope of regional social actors have a seat in the regional growth fora. They share a common interest in developing thye region’s potentialities. Besides areas as green tech, innovation, strengthened education, climate change– all ‘alternative’ ways of developments seen in a contrast to a traditional industry policy are high on the Danish industryal policy agenda. These measures are seen as the almost only Danish way of maintaining the competitiveness of Danish companies. Transferabilty is also a key word in this connection.

However, the contribution of the social partners, in particular the trade unions, is rather limited.

Assessment of efficiency:

Did the outputs/results measure up to the effort/resources invested? If possible, base the assessment on evaluation reports or similar)

The COWI- report concludes that in most cases results exceeded expectations.

In the case of the Regional Development Fund, the stipulated minimum limits have not been reached for the fields of action "Application of new technology" and "Entrepreneurship", given that 75% of the activities fall under the field of action "Innovation, knowledge sharing and knowledge building". A less rigorous distinction should be sought in order to distinguish between "Application of new technology" and "Innovation, knowledge sharing and knowledge building", as a significant share of the innovation projects also include "Application of new technology" (COWI 2011)

Possible explanations for the efficiency of the instrument:

(Please provide possible explanations for the degree of efficiency, including the contribution of the social partner involvement)

Not evaluated. A possible explanation might be that a broad scope of regional social actors have a seat in the regional growth fora. They share a common interest in developing thye region’s potentialities. Besides areas as green tech, innovation, strengthened education, climate change– all ‘alternative’ ways of developments seen in a contrast to a traditional industry policy are high on the Danish industryal policy agenda. These measures are seen as the almost only Danish way of maintaining the competitiveness of Danish companies. Transferabilty is also a key word in this connection.

However, the contribution of the social partners, in particular the trade unions, is rather limited. The businesses and trade organisations, on the other hand, are strongly represented, which means that the single member of the employer associations is surrounded by members and/or potential members

Carsten Jørgensen, FAOS, University of Copenhagen

References:

COWI (2011): Erhvervs- og Byggestyrelsen: Strategisk evaluering vedrørende strukturfondsperioden 2007-2013 (Strategic evaluation of the structural fund period 2007-2013)

Final report, April 2011.

Mailand, M. (2008): Regulering af arbejde og velfærd – mod nye arbejdsdelinger mellem staten og og arbejdsmarkedets parter (Regulation of work and welfare - towards new divions of labour between the state and social partners) Djøfs Forlag.

LO (2012): Regionale styrkepoistioner – anbefalinger fra LO’s projekt ”Vækst for fremtiden” Regional strongholds – recommendations from the LO-project ’Growth for the future’)

Sidenius, Niels Christian (1999): “Industripolitik – ‘Business as usual’? i Blom-Hansen, Jens & Carsten Daubjerg

Magtens organisering – stat og interesseorganisationer i Danmark, Århus: Systime. (’Industrial policy – business as usual?’)

COM(2010) 614 An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage. EC 2010

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