New collective agreements concluded in industry

In February 2004, new three-year collective agreements were concluded for the Danish industry sector. The deal provides mainly for improvements in areas such as occupational pensions, paid parental leave and sick pay, plus minimum wage increases, with pay bargaining largely left to company level. The parties have also agreed to a greater degree of decentralisation in bargaining and further 'individualisation' of working time arrangements. The agreements include a clause allowing negotiations to be reopened if there is new legislation on issues such as paid parental leave which increases employers' costs.

New collective agreements for hourly-paid and salaried workers in the industrial sector were concluded on 1 February 2004 by the Confederation of Danish Industries (Dansk Industri, DI) employers' organisation and the Central Organisation of Industrial Employees (Centralorganisationen af industriansatte, CO-industri) trade union bargaining cartel. The key points of the three-year deal are improvements in 'social' areas, such as occupational pensions, parental leave and sick pay. The settlement is a compromise based on a wish to maintain jobs and its provisions represent an increase in labour costs of nearly 1% per year over its three-year term, leaving room for subsequent local pay negotiations which should ensure real wage increases without jeopardising the competitiveness of enterprises (DK0312102F). The new agreements will succeed the four-year deal concluded in 2000 (DK0002166N).

The new industry agreements also provide for greater decentralisation of the collective bargaining system, which will give employers and workers at enterprise level greater independent room for manoeuvre. From the point of view of the employers, this should open the way for flexible solutions adapted to the needs of individual enterprises, while from the point of view of the trade unions, the role of workplace employee representatives has been strengthened. In the 'classic' way, the negotiators appear to have succeeded in creating a fulcrum of compromises between conflicting demands.

The settlement also contains a number of clauses which have further implications for both the relations between the two sides in the industrial sector and the Danish collective bargaining system as a whole. Current political discussions about a central parental benefits fund (see below) raise the question of the balance between the social partners and the political system. The social partners in the industrial sector have thus included a so-called 'revision clause' in the settlement, allowing negotiations to be reopened in the event of political initiatives which might change the basis of the agreements, such as the creation of a central parental benefits fund or change to unemployment benefit rules.

'Social' improvements

The accord makes major improvements to existing industry sector schemes relating to maternity leave, sick pay and occupational pensions.

With regard to collectively agreed occupational ('labour market') pensions, it is significant that contributions to this scheme in the trend-setting industrial sector will now exceed the previous trade union target of 9% of pay (of which the employers pay two-thirds and the employees one-third) (DK0310103F). For workers paid on an hourly basis there will be two increases during the agreement period of 0.9 points each, of which the employer will pay two-thirds. For salaried employees, there will be a single increase of 0.9 points. Thus, by the end of the agreements' term, the contribution for both categories of employees will be 10.8% of pay. This demand had been given a high priority by union members and its attainment will strengthen the important role of occupational pensions in the Danish pensions system.

The agreements increase the period of fully paid childbirth-related maternity/paternity leave from 14 to 20 weeks - which may now be taken by both women and men - as well as introducing further 'pregnancy leave' of four weeks for women. This in line with the demands of politicians for better conditions in this area, but the social partners in the industrial sector have not taken a position on the issue of the establishment of one or more central funds to cover such additional parental benefits, as demanded in some political circles (DK0312102F). The industry social partners believe that they have managed to deal adequately with this issue in their sector through their own fund; this led some politicians to criticise the agreements while others have praised them as a 'lever' for improvements in other sectors.

The deal also introduces leave of up to one week with full pay if an employee's child is hospitalised. Furthermore, the period of full pay compensation during sickness has been increased from five weeks to nine weeks.

Although the issue of further and continuing vocational training was not given a high priority, there was one improvement in this field. If they are made redundant, workers with service of three years or more will have a right to paid training lasting two weeks.

Finally, the minimum wage in the industry sector, which is presently DKK 88.40 per hour will be increased in three instalments of DKK 2.25 each during the agreement period, while the rates applying to apprentices and trainees will, on average, be increased by 4.5% per year. The only major demand made before the start of the bargaining not dealt with in the agreements is an increase in holiday pay.

Decentralisation

A major innovation in the new agreements which gives the social partners at local level room for manoeuvre is the introduction of a clause which makes it possible to deviate from a number of rules laid down in the agreements. These include those relating to management-employee cooperation, working time, telework and further and continuing training. The parties at local level now have a right to conclude local agreements which deviate from the central collective agreement. The parties to the central agreement must only be informed of such local agreements. From the point of view of the employers, this means a higher degree of flexibility as agreements can be tailor-made to the conditions in individual enterprises. From the point of view of the trade unions, this will give employee representatives (DK0309102T) a stronger role, as it is a condition that consensus is reached between the two sides at local level about such deviations and local agreements can be concluded only in enterprises which have elected employee representatives.

Another provision which increases the decentralisation of the bargaining system in the industry sector is the possibility of introducing variable weekly working hours. Until now, it has only been possible to introduce such schemes if agreed between company management and employee representatives. In future, a framework for variable hours schemes may still be laid down by local agreement, but the actual organisation of the working time within this framework may be subject to a direct agreement with the individual employee or groups of employees. For the employers, this is a step in the direction of 'individualisation' in this field, while the trade unions are pleased to have maintained the collectively agreed framework. Further, the employers have given up a demand for lower 'nuisance' and inconvenience bonuses.

These new provisions can be seen as an extension of decentralisation in the bargaining system, with the central agreements increasingly acting as a framework for bargaining at enterprise level. However, this is centralised or controlled decentralisation, with the parties to the central agreement controlling the process, for instance through their agreed rules on the settlement of industrial disputes.

Relationship with political initiatives

The most discussed aspect of the new agreements in the industry sector is the introduction of a provision (known as a revision or 'mousetrap clause') whereby the parties may reopen the negotiations if parliament adopts legislation which changes the basis of the agreements - for example, by amending the rules on unemployment benefits during temporary lay-offs, the establishment of a central fund to finance additional parental benefits, or other initiatives which will increase employers' costs in the industrial sector. This clause was seen as necessary to secure the agreements' relatively long duration of three years. At the same time, it should be seen as a warning to the political actors against intervention in matters which traditionally fall under the competence of the social partners - ie matters concerning the regulation of pay and working conditions. If parliament decides, for example, to increase the period of maternity/paternity leave on full pay, it is the social partners that have to finance the difference between the level of state maternity/paternity benefits and full pay. The social partners thus feel that it should be left to them to decide how such improvements should be implemented. In this connection, the idea of a central fund to finance additional parental benefits is a hot issue. Such a central fund, financed by employers collectively, would spread the cost evenly between employers in order to support the sectors with a high proportion of women workers. Parliament is working on such a model, and some trade unions want sectoral-level central funds. The industry sector already has its own central maternity fund, and was thus reluctant to take up the issue. However, it must still be addressed, sooner or later.

Industrial action

The issue of industrial action was subject to considerable discussion during the negotiations, and seems to be the topic on which trade union members and employee representatives have expressed the greatest dissatisfaction. The Danish collective bargaining system is based on the principle that the right to take industrial action is reserved for negotiations concerning the conclusion or renewal of collective agreements. Once a collective agreement has been concluded, there is an almost unlimited peace obligation.

The new agreements have introduced somewhat stricter rules on unlawful industrial action. Overtime work which is necessary to catch up with production lost due to an unlawful work stoppage is not compensated by overtime pay until the number of working hours lost as a result of the work stoppage has been performed. A clause has now been inserted in the collective agreement which provides that 'missed working hours' are to be deducted from overtime hours and it is expressly stated that that unlawful work stoppages are to be considered as 'missed working hours'. Until now, the rule has been that has referred to overtime work within the week when the 'missed working hours' occurred, but now the period during which the employer may order overtime work without special overtime pay has been extended to 14 days. It is thus a matter of a minor tightening up of the rules, but not something radically new.

Commentary

The agreements between DI and CO-industri should lay down the main elements to be dealt with in agreements in the entire private sector area covered by the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and the Danish Employers’ Confederation (Dansk Arbejdsgiverforening, DA), and the level of improvements that will be agreed. The social partners in the industry sector have once again managed to play the pace-setting role in the collective bargaining round. The agreements concluded in the industry sector may be put by the public conciliator to a joint membership ballot including the proposed agreements in other parts of the private sector.

However, at the time of writing, it seems that the bargaining in other sectors has reached a sort of deadlock. The remaining bargaining rounds - including in major sectors such as transport and construction - have been referred to the public conciliation service with a view to finding a solution, if possible. The situation differs from the last bargaining round in 2000, when it was a relatively uncomplicated matter to transfer the results from the industry sector to other sectors (DK0002167F). In 2000, the main problem was whether it would be possible to get the so-called 'normal wage sectors', with rigid pay systems whereby the sectoral agreements set the actual wage increases (as opposed to the more common 'minimum wage' system, where local bargaining builds on sectoral settlements), to agree to the long four-year agreement period. This time, the main problem is the question of a central fund for financing additional parental benefits which is so complicated that it may jeopardise the possibilities of reaching a compromise in the longer perspective. The issue of setting up such a central fund has been the most important theme in the political debate and this has put heavy pressure on the social partners. In the major sectors it covers with a predominantly female membership, the Union of Commercial and Clerical Employees (Handels- og Kontorfunktionærernes Forbund, HK) is exerting pressure to introduce a protocol in its agreements with the Danish Commerce and Service Organisation (Dansk Handel & Service, DHS) and the Danish Chamber of Commerce (Handel, Transport og Serviceerhvervene, HTS) to the effect that that negotiations should continue over a central parental benefits fund. This has been turned down by the employers' organisations as they would not be able to obtain DA’s approval for an agreement contained such a protocol. It should be emphasised that it is the central organisations - LO and DA - that are formally the decision-making parties in relation to the public conciliator and, if agreement is reached between LO and DA, it will be possible to present a compromise which might, for instance, include the establishment of a maternity fund in addition to the fund already set up in the industrial sector. However, it is a precondition that the most powerful organisations in both DA and LO approve this so that it will be possible to reach consensus within the central organisations. (Carsten Jørgensen, FAOS)

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