Overall compromise reached in private sector bargaining

In March 2004, collective bargaining in Denmark's main private sector bargaining area was concluded when the central organisations, the Danish Confederation of Trade Unions (LO) and the Danish Employers’ Confederation (DA), signed a three-year overall compromise settlement drawn up by the Public Conciliation Service, which largely follows the lines of an agreement reached in the industry sector in February. The issues of centralised arrangements for employer-financed additional maternity/paternity leave and benefits, and of whether work done to catch up with production lost due to unlawful strikes should attract overtime pay, continued to cause problems up to the last minute. The former issue brought the bargaining parties and politicians close to entering one another's spheres of influence, a development which may have major consequences for the Danish bargaining model.

On 21 March 2004, the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and the Danish Employers’ Confederation (Dansk Arbejdsgiverforening, DA) agreed to an overall compromise settlement to conclude 2004's various sectoral collective bargaining rounds across the major part of the private sector that they represent. The deal was drawn up by the Public Conciliation Service (Forligsinstitutionen), following two lengthy rounds of negotiations with the parties. It must now be put to a membership ballot.

The settlement staved off the threat of industrial action, which neither side seemed really interested in initiating, but had seemed possible due to differences of opinion over two key issues: the introduction of a central cross-sector scheme relating to pay for childbirth-related maternity/paternity leave and benefits above the statutory level; and whether or not work done to catch up with production lost due to unlawful strikes should attract overtime pay. Eventually the employers conceded on the former point and trade unions on the latter. The overall result was more or less along the same lines as the agreement concluded in February (DK0402104F) in the pace-setting industry sector, which is a three-year accord providing mainly for improvements in areas such as occupational pensions, paid parental leave and sick pay, plus minimum wage increases. The overall settlement is thus notable for an increased focus on 'social' issues (higher occupational pension contributions and longer paid sick leave), but also for the more central role taken by LO and DA than in recent years.


At the beginning of the 2004 bargaining round, a call for establishment of a central fund, financed by employers, to finance additional parental leave and benefits was orchestrated by Denmark's largest trade union, the Union of Commercial and Clerical Employees in Denmark (Handels- og kontorfunktionærernes Fagforbund, HK/Handel) - whose membership is 70% female - assisted by the National Union of Female Workers (Kvindeligt Arbejderforbund i Danmark, KAD). The idea was that all employers should contribute equally to the fund in order to alleviate the financial burden for those in sectors with a high proportion of women workers, which would be likely to make greater use of the benefits. The central fund would also, it was claimed, promote gender equality between as it would reduce barriers for women in connection with recruitment. HK made it quite clear that it would not sign an agreement without a central fund to finance additional parental benefits or a similar scheme.

However, the employers could not accept the idea a central fund. The solution was an 'equalisation' scheme - whereby employers' contributions are the same, whatever the gender make-up of their workforce - which in reality is not very different from the idea of a fund, but which was more acceptable to the employers. The industry sector already has its own sectoral maternity/paternity benefits fund and from the outset was not interested in even participating in the debate. Therefore it was expected that the solution would be a creation of a new DA maternity/paternity fund for the areas not covered by the fund in industry. However, instead a new overall DA system has been created, that is at the same time both decentralised and central. The system retains the existing fund in industry and another that has been agreed in construction. The other bargaining areas have the possibility to establish their own arrangements, but will otherwise be covered by a general DA fund. Employers' contributions will be equalised between the companies in the decentralised sectoral maternity funds, while a cross-sectoral equalisation system will also be established. Even the industry sector employers' organisations, Confederation of Danish Industries (Dansk industri, DI), decided to join the scheme, taking the view that as long as the cost is almost the same it is better to be inside the system and able to influence decisions.

Jørgen Hoppe, the president of HK/Handel, the trade section of HK, stated after the compromise had been approved on 21 March that the introduction of an equalisation scheme for additional maternity/paternity contributions was an innovation which would have consequences for welfare in Denmark as far-reaching and positive as the introduction of collectively agreed occupational ('labour market') pensions in the early 1990s (DK0310103F). He urged the union members who are now going to vote on the compromise to vote in favour and thereby not forfeit this opportunity.

Political intervention

Political intervention in industrial relations matters is not very popular in Denmark, and intervention during the process of collective bargaining in the private sector is quite unheard of. However, this appeared to occur on this occasion. Before, during and after the bargaining, politicians expressed their views on the possibility of setting up a central additional maternity/paternity benefits fund and some stated that if the social partners failed to resolve the problems on their own, the issue would be taken up in parliament (the Folketing). This led the industry sector social partners to introduce a 'revision clause' in their February agreement which makes it possible to resume negotiations on the issue of maternity/paternity regulation if new rules are adopted by parliament. Since the conclusion of the compromise for the whole DA/LO area, there have been political discussions over whether the deal should be extended by legislation to cover all employees. The DA/LO sector covers 650,000 employees but there is an equally large number of employees in the private sector who are not covered by the new agreement. Most of them are covered in another or similar way by a maternity/paternity benefits scheme, but a residual group of 250,000 employees are without any coverage at all. It is this group that the politicians wish to cover in the form of possible follow-up legislation, as is done in connection with implementation of EU Directives (DK0106125F). Prime Minister Anders Fogh Rasmussen of the Liberal Party (Venstre) has put this issue to one side, but it will probably be taken up again.

Time lost due to strikes

The other complication in the last round of talks at the Public Conciliation Service related to the treatment of 'missed time'- ie extra hours worked when an enterprise has to catch up with production lost due to unofficial industrial action. The February industry sector agreement introduced a new rule whereby overtime work in these circumstances will not attract an overtime pay premium, thus essentially tightening the rules concerning unofficial strikes. The Danish Food and Allied Workers’ Union (Nærings- og Nydelsesmidelforbundet, NNF) refused to the very last to accept this new rule in the two bargaining areas where its negotiates with DI - the tobacco and chocolate sector and the food processing industry. LO, however, decided to accept DA's demand for the generalisation of the new rule as a price for the maternity/paternity equalisation, including in the NNF area - despite having initially rejected the change, describing it as being similar to 'long forgotten employers’ methods'. If winners and losers are to be identified among trade unions in the final phase of the bargaining round, HK appears to be a winner at the expense of NNF. After the conclusion of the deal, 1,400 slaughterhouse workers at the Crown meat-processing firm took one-day industrial action in protest.


Problems relating to the balance between the actors in the political system and the social partners have been highlighted in the 2004 bargaining round. However, it is not possible to deduce from this that the solution should be either that the politicians leave full responsibility to the social partners, nor that the scope of collective agreements should be narrowed in order to reduce potential conflicts of interest between the social partners and the political system. Both the labour market pension system and the new scheme for additional maternity/paternity benefits are good examples of the need for the social partners to assume a number of 'social' tasks, and this will inevitably lead to problems of imbalance between the spheres of industrial relations and of politics

A possible solution to these problems could be the development of tripartite relations. There has always been a relatively close interplay between the social partners and the actors in the political system in Denmark, but this has been rather informal and sporadic. Maybe the time has come for extending tripartite cooperation on a more regular basis, both at the formal and informal level. This could contribute to a better handling of potential problems so as to avoid the political 'outbidding' which has characterised two out of the last three bargaining rounds. In this connection it is particularly important that the parties in government or supporting the government show restraint and that the social partners accept that social issues, even if they are regulated by collective agreements, are also, in the last analysis, subject to a political agenda. This supports the view that a special Danish 'erga omnes' model is developing these years.

Finally, LO and DA played a more central role in the 2004 bargaining process than in previous rounds. Although they always conclude the final negotiations in the Public Conciliation Service, more issues were left to them to resolve this time. However, this does not change the fact that the sectoral level still prevails in Danish collective bargaining. (Carsten Jørgensen and Jørgen Steen Madsen, FAOS)

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