Agreement concluded on Faroe Islands after major strikes
The Faroe Islands (a self-governing territory under Danish sovereignty) were hit by major strikes in May 2003 after the breakdown of bargaining over a new collective agreement between five trade union associations and the Federation of Faroese Employers. At the third attempt, and after four weeks of strikes, the bargaining parties concluded a pay agreement in early June.
A large-scale strike which began in early May 2003 more or less paralysed the Faroe Islands. Ships bringing goods and food from Denmark were not unloaded and supplies in shops began to run out. Petrol stations did not receive supplies of petrol and the oil tanks in houses were not refilled. Schools and kindergartens were closed down due to lack of cleaning. Furthermore, all Faroese fish markets and fish processing companies were hit hard by the strike. Overall, about 30% of the working population stopped working due to the strike.
The Faroe Islands are a self-governing territory under the sovereignty of the Kingdom of Denmark, with a population of around 47,000. They have considerable autonomy and have chosen not to be part of Denmark's membership of the European Union. The economy is mainly dependent on the fishing and aquaculture industries.
The strike was a consequence of a breakdown of negotiations over new collective agreements between the Association of Faroese Trade Unions (Færøernes Arbejderforeninger) and the Federation of Faroese Employers (Færøernes Arbejdsgiverforening). The unions had rejected a public conciliator's compromise which would have given a wage increase of 6.8 % over the next two years.
The Association of Faroese Trade Unions brings together the country's five unskilled workers' trade unions, with about 12,000 members, while the Federation of Faroese Employers is the central organisation for Faroese employers and the only bargaining partner on the employer side. The original demand of the trade union association was for a wage increase of up to 67% over the next two years - though this was quickly reduced to around 18% - and an annual increase in early retirement payments. The unions do not feel that their members have had their fair share of the huge economic upswing which the Faroe Islands have experienced in recent years. The employers could not accept these demands. Their final offer was a wage increase of a maximum of DKK 8 per hour over the next two years (ie DKK 4 a year) compared with the unions' final demand for DKK 9 per hour (approx. 10%).
The Faroese labour market model is very similar to the Danish model. The social partners negotiate about most matters and the government only rarely intervenes. In the event of industrial action in connection with a breakdown of negotiations over the renewal of collective agreements it is, in the first instance, left to a public conciliation service to try to work out a compromise which the two sides can accept. If this is not possible, the government may, as the last resort, enact the proposed compromise into law and thus put a stop to the dispute. However, the Faroese government decided not to intervene in this dispute.
On 4 June, the talks broke up for the third time after a further breakdown in negotiations. The situation was becoming critical after four weeks of large-scale strikes, especially for the fishing industry. The Prime Minister (Løgmann) or chair of the parliament (Løgting) of the Faroe Islands, Anfinn Kallsberg, criticised the social partner organisations for not living up to their responsibility as bargaining partners and not observing the rights and duties involved. Shortly afterwards, the partners met again and, after 13 hours of negotiations, reached an agreement. The hourly wage increase for unskilled workers was set at DKK 4.30 per year over two years, corresponding to an increase of 9% (bringing the hourly rate from DKK 92.20 to DKK 100.80 over two years). In spite of the very narrow differences between the two sides' final positions and the outcome, the employers were seen as the 'losers'. The director of the Federation of Faroese Employers stated that employers had been 'taken hostage' by the unions. The very important salmon industry was close to collapse, and the employers felt obliged to end the devastating strike by reaching a compromise offering a little more than they had previously.
This was the first occasion on which that the five trade unions have negotiated together in order to be in a stronger position. Measured by the scope of the strike, this worked well. The action was much wider than a similar strike in 2001 when only two of the trade unions called stoppages in connection with the collective bargaining round.