1999 Annual Review for DENMARK

This record reviews 1999's main developments in industrial relations in DENMARK

Economic developments

The Danish economy grew moderately in 1999, despite forecasts of a significant slowdown. Total GDP growth was 2.7% in 1999, higher than the 2.4% achieved in 1998 and above original estimates of 1.7% growth in 1999.

At the start of 1999, it looked as if there would be a balance of payments deficit which would be sustained over the medium term. However, by the end of 1999, the economy experienced an upturn which resulted in forecasts of a very modest deficit, with a surplus expected for 2000. Commentators attribute this economic recovery to growth elsewhere in Europe - including Sweden and Germany, which are Denmark's most important trading partners - which in turn has led to an improvement in Danish export figures and thus halted the looming economic recession.

In 1998, Denmark's net foreign debts amounted to DKK 208 billion, corresponding to 24% of GDP. Total public debt was DKK 639.5 billion or 52.8% of GDP in 1999, a decrease compared with figures of DKK 649.7 billion or 55.5% of GDP in 1998.

According to Eurostat figures, inflation was running at 2.8% in the year to January 2000, while the unemployment rate stood at 4.1% in December 1999.

Political developments

The present government - a coalition of the Social Democratic Party (Socialdemokratiet) and the Social Liberal Party (Det Radikale Venstre) - remained in office during 1999, although a crisis in the connection with the reform of the voluntary early retirement scheme towards the end of 1998 seemed to point in the direction of a general election being called before term (DK9902111N). This did not happen, but the senior coalition partner, the Social Democrats, recorded its lowest-ever figures in opinion polls during 1999 - between 22% and 23%. Most of the support lost by the Social Democrats has - according to the opinion polls - been switched to the Danish People's Party (Dansk Folkeparti), a populist party with strong anti-immigrant polices. The public debate concerning immigration and refugee policy was one of the hottest political topics during the second half of 1999. The future of the welfare system was another much debated theme. In spite of growing public expenditure on schools, care for the elderly and healthcare, hospital waiting lists persist and the Danish schools system and the system for care of the elderly are the targets of recurrent criticism.

The low levels of support for the Social Democratic Party may have an impact upon the debate concerning Denmark's participation in EMU. The Social Democrats recommend that Denmark should join EMU and have intensified their campaign concerning this issue. This party's loss of support, together with rumours that Prime Minister Poul Nyrop Rasmussen is losing popularity heavily among his own party's ranks, have led commentators to believe that the party's focus on EMU may turn out to be risky. The idea was to have a referendum at some point during 2000, but considering the present situation, the Social Democratic Party is expected to delay this.

According to Denmark's constitutional rules, the next ordinary general election is scheduled to take place in 2002. However, it is not unusual for a general election to be called before the expiry of the normal term.

Collective bargaining

The collective bargaining round in 1999 was relatively peaceful compared with the very turbulent events of 1998 (DK9805168F), which saw major industrial disputes in the area of the private sector covered by the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) and the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO), ended by government intervention. The collective bargaining round in 1999 (which, as is traditional, took place during the first few months of the year) covered three sectors, employing an estimated total of 1 million employees (DK9903114F), a rather larger number than in 1998 - the entire DA/LO area covers some 600,000 employees.

The largest group covered by bargaining in 1999 was the public sector, with some 840,000 employees - 640,000 in the county/municipal sector and 200,000 in the state sector. These are two separate bargaining units but, especially on the employer side, there is a high degree of shared interest on the part of the negotiating bodies. The Finance Minister - currently Mogens Lykketoft- is the main negotiator for the state sector, bargaining with the joint union negotiating body the Danish Central Federation of State Employees (Centralorganisationernes Fællesudvalg, CFU). In the county/municipal sector, the negotiations on the employer side are conducted by the National Association of Local Authorities in Denmark (Kommunernes Landsforening, KL) and the Danish Federation of County Councils (Amtsrådsforeningen, ARF), together with the Municipality of Copenhagen and the Municipality of Frederiksberg. Employees are represented by the joint union negotiating body, the Association of Local Government Employees' Organisations (Kommunale Tjenestemænd og Overenskomstansatte, KTO). On the employee side, both joint negotiating bodies - CFU and KTO - include representatives of member organisations of the three central organisations, LO, the Danish Confederation of Professional Associations (Akademikernes Centralorganisation, AC) and the Confederation of Salaried Employees and Civil Servants in Denmark (Funktionærernes og Tjenestemændenes Fællesråd, FTF). This means that there will often be internal disagreements within the coalitions of unions.

The other main areas involved in bargaining in 1999 were:

  • the finance sector, which covers some 60,000 employees. Employers are represented by the Danish Employers' Association for the Financial Sector (Finanssektorens Arbejdsgiverforening, FA) which negotiates in the banking sector with the largest affiliate of FTF, the Financial Services' Union (Finansforbundet), which covers all employees in this sector, and in the insurance sector with the National Insurance Workers' Association (Danske Forsikringsfunktionærers Landsforening, DFL); and
  • agriculture and forestry, with some 55,000 workers employed in organisations such as meat factories - which lead the negotiations - dairies and horticultural enterprises. The employer organisations are members of the Danish Confederation of Employers' Associations in Agriculture (Sammenslutningen af Landbrugets Arbejdsgiverforeninger, SALA) - which, like FA, is outside the DA confederation. The main organisations on the employee side are the General Workers' Union (Specialarbejderforbundet i Danmark, SiD) and the Danish Food and Allied Workers' Union (Nærings- og Nydelsesmiddelarbejdernes Forbund, NNF), both affiliated to LO (DK9902110F).

Pay

In the public sector, total pay increases amount to an estimated 7.55% over the three-year duration (increased from two years) of the agreements signed in 1999. In food and agriculture, the agreement signed in 1999 increases costs by 7.5% over two years, while the two-year finance sector agreement provides for a total framework of a 6.5% increase in pay costs (DK9903114F).

The annual increase in hourly pay in the DA field was 4.4% in 1998. During the first three quarters of 1999, the hourly wage increased by 5% (according to DA statistics). Most of the wage increases during the first part of 1999 were the result of local, enterprise-level bargaining. With an increasing rate of inflation - 3.1% in December 1999 and set to rise in early 2000 - the employees' relative moderation in wage demands may change in the decentralised wage negotiations which will follow the central negotiations in the entire LO/DA field in the spring of 2000. The corresponding wage growth in the public sector was 4.8% (3.8% in the municipal sector) up to the third quarter of 1999.

Working time

The government intervention in the disputes of 1998 largely centred on extra holiday entitlement, granting at least two extra days of annual holiday, as well as two (rising to three) "care days" for workers with families. This clearly increased expectations prior to the negotiations in 1999, when unions demanded an extra week of holiday entitlement - which would have increased total annual entitlement to six weeks (five weeks are guaranteed by law) - or, as a minimum, the same increase in time off as awarded in the DA/LO area in 1998. This illustrates clearly the fact that the DA/LO field sets the standard for the other main bargaining units. The employers' problem in 1999 was that economic development was, at best, stagnating. The Finance Minister declared that it would be irresponsible to demand shorter overall working hours, arguing that working time should rather be increased in view of the forecast labour shortages in the coming years (DK9901103F). The employers' starting point was therefore a "no" to demands for increased time off. It seemed that the negotiations would be difficult and there was a clear risk of industrial disputes over the question of extra days off. The same increase in holiday entitlement as that granted in 1998 was a "bottom-line" demand on the part of the unions and it was very difficult to imagine that they would not succeed, given that the Finance Minister had himself, in his intervention in the DA/LO field in 1998, gone further than the draft settlement and awarded extra time off.

The unions prevailed and the 1999 agreements in the agricultural sector and in the public sector (the finance sector already enjoyed better holiday entitlement) provided for an extension of annual holiday entitlement by a total of three extra days. This brought the introduction of the sixth week of holiday onto the agenda in the 2000 bargaining round in the DA/LO field.

A further key outcome of the 1999 agreements was an increased tendency towards a more flexible treatment of working time. Working time in most sectors is now calculated over a longer time horizon - allowing for weekly variations around an average of 37 hours over a reference period. This tendency had been making headway for some time, for example within the all-important industrial sector, where the 1998 collective agreement allowed normal weekly working hours to be varied, as long as an average of 37 hours is maintained over the year (DK9803158F). In the public sector, the 1999 agreements increase flexibility by allowing local variations from the centrally set rules, if employees agree. The new agreement for the financial sector provided that weekly hours may vary between 31 and 41, though maintaining an average of 37 hours over a four-week reference period.

Equal opportunities

New initiatives were introduced in the DA/LO field in the area of equal opportunities. The two central organisations issued a joint declaration to Danish enterprises inviting them to recruit refugees and immigrants on equal terms with Danish citizens. Public attention had been attracted by a case in which a young Lebanese woman was turned down for a job in a department store because she wore a headscarf in accordance with Muslim tradition. She contacted the media and heavy press coverage accused Danish supermarkets and departments stores of discrimination. The Ministry of Labour intervened and expressed disapproval of the conduct of the shops; however, no decision has yet been taken as to whether it is lawful to refuse to recruit women because they are wearing a headscarf (DK9908141N).

A number of conferences in the autumn dealt with inequalities in men's and women's remuneration. New studies showed that pay increases for women were not as high as those for men in the public sector, following the introduction of a more locally-based new wage system.

Job security

There were no significant new developments in this area in 1999.

Training and skills development

Denmark's active labour market policy, involving job creation and continued training programmes, was a focus in 1999. In many cases, the numerous attempts to "activate" unemployed people turned out to take the form of therapeutic programmes rather than proper job training. A committee composed of representatives of the Ministry of Labour, the Ministry for Finance and the Ministry for Education published an extensive report on the entire Danish system for continuing vocational training for adults, which revealed a lack of transparency in many of the programmes (DK9909145F). It stated that the programmes and courses seemed to be incoherent and without any proper purpose. The report also recommended that programmes for training of those groups with the poorest skills and qualifications should be strengthened and that the financing of the programmes should to a higher degree be the responsibility of the social partners. This will, in particular, affect employers, and the DA was not very satisfied with the report. This report is now being discussed in a tripartite forum.

Legislative developments

Regulation of pay and working conditions in Denmark normally takes place by means of the conclusion of collective and other agreements between the social partners. Legislation is used only to a minor extent and the social partners are normally closely involved in the legislative process. This is the reason why the social partners attach such great importance to the fact that it has been made possible to implement EU Directives by means of collective agreements. This means that EU regulation may be implemented without undermining the special Danish traditions governing labour market regulation. However, in late 1999 the implementation of the 1993 working time Directive in Denmark by means of agreements proved controversial, with the European Commission sending a formal letter of notice to the Danish government on 22 November 1999 concerning the character and extent of its implementation of Directive. In response, LO and DA concluded an "implementation agreement" on the Directive, effective from February 2000, which means that it now in practice covers all employees. Accordingly, the Danish model should be able to survive (DK0001164F).

One of the most important legislative development in 1999 was the adoption of the new Act on settlement of industrial disputes. On the basis of a joint proposal from DA and LO, the Danish parliament (Folketing) adopted - on the recommendation of the Minister of Labour - an amendment to the Conciliation Act which postponed the time at which industrial action - of which due notice had been given - could become effective. Former legislation allowed a dispute to become effective on the third day after the breakdown of negotiations. In order to give the parties a better chance of negotiating a solution, the new Act provides that a dispute - of which due notice has been given - may, at the earliest, become effective on the fifth day after the breakdown of negotiations (DK9909148N).

Denmark decided in 1999 to implement the EU Directive on the posting of workers (DK9910154N). In addition, the Danish Act on European Works Councils was amended, making technical adjustments due to the fact that the UK is now covered by the EU Directive.

The role and organisation of the social partners

The proposal from LO and DA to amend the Conciliation Act was one of the most important initiatives as regards the organisation, cooperation and responsibility of the social partners. This was based on a so-called "climate agreement", concluded by the two central organisations with the 1998 major industrial dispute in mind, which aimed to improve their chances of preventing negotiations from being dragged out for such a long time as was the case in 1998 (DK9910150F) With this agreement, the DA and LO committed themselves to monitoring the course of developments and to helping to ensure that negotiations are constantly in an active phase. Firm commitments were also made to cooperate to ensure a realistic level of expectations in relation to the agreements which were to be concluded in 2000.

The dispute in 1998 thus restored LO and DA to their positions as leading organisations, a position which they had not held for many years (DK9910151F). However, collective agreements continue to be negotiated directly by their member organisations. This means that Denmark has not returned to the pre-1958 situation, when it was the two central organisations which essentially both formulated and negotiated general demands.

The trend towards union mergers continued in 1999 - as did the debate on the issue - and, in some cases, disputes concerning unions' right to organise employees of privatised companies were intensified. A struggle which had gone on for many years between the Danish Union of Postal Workers (Dansk Postforbund) and SiD about the right to organise former public servants in the Post Denmark national postal service resulted in a merger between the two unions within SiD (DK9909146N). The Danish Union of Graphical Workers (Grafisk Forbund) was disbanded and its members were admitted to SiD and the Union of Clerical Workers and Shop Assistants (Handels- og Kontorfunktionærernes Forbund, HK) (DK9908139F).

Attempts by unions outside the "mainstream" of DA, FTF and AC - such as the Danish Christian Trade Union (Den Kristeligt Fagforening, DKF) and Denmark's Free Trade Union (Danmarks Frie Fagforening, DFF) - to challenge the main unions' position, through court cases attacking closed-shop agreements, proved largely unsuccessful in 1999 (DK9905123F and DK9907137N).

Industrial action

Following the major dispute in 1998, one has to go back as far as 1981 to find year with fewer disputes than 1999. The DA statistics - which cover disputes in breach of collective agreements - show that there were 713 disputes in 1999, compared with 999 in 1998. In 1981, the number was 613. The 713 disputes in 1999 resulted in a total of 43,809 lost working days, compared with 85,000 (in breach of collective agreements) in 1998.

Two disputes arose in 1999 in connection with the renewal of collective agreements. The first involved nurses and centred on demands for higher wages. The nurses went on strike to show their dissatisfaction with the 1999 municipal sector deal, which was rejected by the members of the Danish Nurses' Organisation (Dansk Sygplejeråd, DSR) in a ballot. After a one-week strike, the government intervened and turned the bargaining result into legislation (DK9905126N). Since the 1930s, it has been a feature of the Danish collective bargaining model that the government may in exceptional cases intervene in a dispute in connection with the renewal of collective agreements and bring an end to it by passing legislation, if the government finds that the dispute may have major negative consequences for society.

The second dispute involved midwives. The government refrained from intervening and the outcome was that the midwives finally accepted the original compromise with minor amendments (DK9907135N).

National Action Plan (NAP) for employment

A number of ministries and social partner organisations contributed to drawing up the 1999 Danish National Action Plan (NAP) for employment within their respective fields of competence. The social partners were involved both at the central and regional level in drawing up and implementing the NAP. It is the regional/local employment services which are responsible for the implementation of the NAP's activation measures, and this takes place on the basis of instructions from the regional labour market boards - on which the social partners are represented - concerning the priorities for the activities. The public employment services implement the measures by, for example, making contracts with educational institutions concerning the purchase of activation programmes. It is an important element of the recent "third reform" of the Danish labour market (DK9810187F) to strengthen this cooperation to ensure that the best possible use is made of the special expertise and experience of the individual actors.

Municipal coordination committees with representatives of the social partners and other relevant local actors have been set up in order to promote the participation in working life of disadvantaged groups. The municipal authorities are responsible for activation measures in relation to people receiving social assistance.

At the central level, tripartite negotiations between the partners take place concerning most of the elements in the NAP and the labour market reform.

The participation of the social partners in connection with the Danish NAP mainly reflects a wish to strengthen tripartite negotiations and LO has on earlier occasions indicated that LO and DA must assume a wider financial responsibility for continuing adult vocational training programmes.

The impact of EMU on industrial relations and collective bargaining

DA and LO both support Denmark's participation in the third stage of EMU. However, while DA has almost 100% support among its member organisations, internal disagreement means that LO has to be very cautious in its arguments in favour of EMU participation. During the autumn of 1999, LO published a detailed report on EMU and recommended a "yes" vote when a referendum is held (DK9909144F). LO also suggested that it would be a good idea to have a discussion within its member organisations so that facts, myths and attitudes could be openly voiced for the benefit of the debate.

Like LO, the Social Democratic Party is also recommending Danish participation in EMU, and this will be a very hot political issue during 2000 among the electorate and the members of the trade union movement.

Employee representation

During the course of 1999 there were a number of contacts between LO, DA and the Ministry of Labour concerning the introduction of a new procedure for information and consultation of employees on the basis of the European Commission's proposal for a Directive establishing a general framework for informing and consulting employees in the European Community, issued in November 1998. The social partners are not in favour of the adoption of this Directive. In Denmark employee participation has already been introduced within the collective bargaining system and is based on negotiations between the two sides of industry. The opposition to the proposed Directive is based on the argument that legislation provides for one-way communication and is basically a superfluous element in connection with the Danish model. As mentioned above (under "Legislative developments"). Denmark's EWCs legislation was amended in 1999 to reflect the Directive's extension to the UK.

New forms of work

Flexibility continues to be the keyword in relation to work organisation. In 1999 - as in 1998 - the average working week is 37 hours, often as an average over a longer reference period (see above under "Working time"). However, studies carried out by the Confederation of Danish Industries (Dansk Industri, DI) in the autumn of 1999 showed that only 15% of enterprises had some form of flexible working time arrangements in place (DK9909147N). Flexible working time is negotiated at the local level and this may have contributed to the fact that developments in deviations from the normal working week were limited.

In the municipal sector, the EU Directive on part-time work was incorporated into collective agreements over the course of 1999. This means that employees with a weekly average working time of 10 hours now enjoy the same rights as full-time employees; the limit had previously been 15 hours.

Outlook

The first months of 2000 will be characterised by collective bargaining in the LO/DA field. There are good prospects of the social partners arriving at a compromise and thus avoiding a repetition of the major industrial dispute in 1998 (as indeed proved to be the case in February 2000 - DK0002167F). This is considered to be a precondition for ensuring the future of the current collective bargaining system, which is important to both sides of industry. Politically, it is expected that the Social Democratic/Social Liberal government will devise new proposals concerning the future of the welfare state. This is a problem which is of great importance to the social partners and which is also a natural follow-up to the adoption of a new welfare programme at the LO congress in October 1999 (DK9911156F). This programme envisages a strengthening of tripartite institutions. LO's principal argument is that it is possible to maintain the welfare state only if the social partners assume a wider political and financial responsibility for those parts of the welfare state which are directly related to the labour market, including the question of continuing and further training. 2000 is expected to be the year when the debate concerning Danish participation in EMU will enter into a decisive phase. At present, all signs seem to indicate that a referendum on these issues will be held in the early months of 2001.

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