2004 Annual Review for Denmark

This record reviews the main industrial relations developments in Denmark during 2004.

Political development

The government formed in November 2001 by the Liberal Party (Venstre) and the Conservative Party (Det Konservative Folkeparti), headed by Venstre leader Anders Fogh Rasmussen, continued in office during 2004. The only election held in 2004 was that to the European Parliament in the spring.

Parliamentary elections are to take place in 2005, as the government had been in place since 2001 and the term of office is four years. On 18 January 2005, the Prime Minister called an election to take place on 8 February 2005 (according to the Constitution, elections takes place three weeks after being announced, and always on a Tuesday). It was expected that the short and very intensive campaign may complicate ongoing collective bargaining in the public sector, which should end in March 2005.

In 2004, a public 'structural commission' published a proposed reform of administrative structures, aimed at creating 'a new geographical Denmark'. The current structure of 271 municipalities and 13 counties will be changed to around 100 municipalities and five regions. The proposal was passed by parliament in 2004 by a narrow margin and planning for the new structure is now advanced. Municipal elections will take place in November 2005.

Collective bargaining

In the early spring of 2004, negotiations took place in the major private sector bargaining area represented by the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and the Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA), covering some 650,000 employees (DK0403103F). LO and DA do not participate directly in these negotiations by their member organisations, but through their so-called 'climate agreement' concluded in September 1999 (DK9910151F) and renewed prior to the 2004 negotiations, they had an influence on the negotiation process and thus again played a political role. There are some 600 agreements at sector and local level in the LO/DA field. The 2004 agreements, which cover manufacturing, service, trade, transport, building and construction, were concluded for a period of three years, compared with four years for their predecessors (DK0002166N).

The bargaining sequence was that collective agreements for hourly-paid and salaried workers in the industrial sector were concluded in February 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 (DK0405102F). The key points of the three-year deal were improvements in 'social' areas, such as occupational pensions, parental leave and sick pay. The settlement was a compromise based on a wish to maintain jobs and its provisions represented 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 industry agreements also provide for greater decentralisation of the 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

On 21 March, LO and 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) and staved off the threat of industrial action. The overall result was more or less along the same lines as the agreement in the pace-setting industry sector (DK0403103F). During April, the members of the trade unions affiliated to LO approved the deal by 57% to 43% in a ballot. However, the turn-out was only 37%, and in some unions there were significantly more 'no' than 'yes' votes (DK0405102F).

Pay

In the trend-setting collective agreement in the industry sector, which normally determines the level to be followed by the other sectors, minimum hourly pay was increased to DKK 90.65 as of 1 March 2004. This was an increase in relation to previous year of DKK 2.25 or 2.5%. The same increase will be implemented on an annual basis over the next two years. The industry sector agreement operates the 'minimum-wage' system, whereby sectoral agreements set only minimum rates, with subsequent local bargaining producing further increases;

Working time

A major innovation in 2004's new agreements, giving the social partners at local level room for manoeuvre, was the introduction of clauses making it possible to deviate at company level from a number of rules laid down in sectoral agreements, including those relating to working time. The parties at local level are given a right to conclude local agreements that deviate from the central collective agreement. The parties to the central agreement must only be informed of such local agreements. Initially, this is a temporary arrangement on an experimental basis.

Job security

No special provisions were negotiated concerning job security during 2004.

Equal opportunities and diversity issues

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 as it would reduce barriers for women in connection with recruitment. HK stated 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 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/paternity funds, while a cross-sectoral equalisation system will also be established. Even the industry sector employers' organisation, 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.

Training and skills development

Although the issue of further and continuing vocational training was not given high priority in the 2004 collective bargaining round, there was one improvement in this field. Workers who are to be made redundant and have service of three years or more will have a right to paid training lasting two weeks.

In the autumn of 2004, the government and the social partners (the main organisations in both the private and the public sector) set up a committee which will undertake a thorough review of current provisions in the field of adult and continuing vocational training (DK0410106F). In August, the Prime Minister had invited the social partners to talks about how to upgrade the competences of Danish workers in order to deal with the effects of globalisation. Danish companies are increasingly relocating production to low-wage countries.

Other issues

Under the new industry sector agreement, contributions to collectively agreed occupational ('labour market') pensions 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 agreement's 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.

Legislative developments

In general, legislation is scarce in Danish labour market regulation. However, 2004 saw the adoption or proposal of a number of relevant items:

  • an amendment was proposed to the Act on daily sickness benefits, as part of the follow-up to a government action plan, issued in December 2003, which aims to reduce sickness absence (see below);
  • an amendment to the Act on the legal relationship between employers and salaried employees was passed by parliament in December 2004 and heavily criticised by the opposition, all four main trade union confederations and the trade union Danish Salespeople (Danske Sælgere);
  • an amendment was proposed to the Act on prohibition of discrimination in the labour market. The proposal implements parts of EU Directive 2000/78/EC on equal treatment, amended the existing law to include discrimination on grounds of age and disability;
  • an Act was proposed on information and consultation, implementing EU Directive 2002/14/EC. This Directive was also implemented in the cooperation agreement between LO and DA (see below);
  • EU Directives 2002/15/EC and 2002/47/EC on road transport and employee protection in the case of employer insolvency, respectively were transposed into Danish law; and
  • in connection with the abovementioned administrative reform (see under 'Political developments'), a proposal on responsibility for active labour market policy was passed by parliament. The proposal is in line with the wish to introduce a centralised unemployment system with a single point of entry into the system. Part of the new system is to transfer the responsibility for the system from the state to the municipalities. However, this met with criticism from LO and DA, as they do not believe that the power of the municipalities will be sufficient (DK0405101N).

The organisation and role of the social partners

The most significant merger of the year was between the National Union of Female Workers (Kvindeligt Arbejderforbund, KAD), representing unskilled female workers, and the General Workers Union in Denmark (Specialarbejdderforbundet i Danmark), representing (mainly) unskilled male workers. The merger was accepted by the members in a ballot after two years of preparations. The new trade union is called Fagligt Fælles Forbund (3F) - an 'official' English translation of the name is yet to be announced. 3F has 370,000 members and is thus the largest union in Denmark. On 24 September 2004, 3F held its inaugural congress, attended by 1,250 delegates. Officially, the new union started operations on 1 January 2005 (DK0211105F and (DK0410103N).

In December 2004, the executive committee of the Confederation of Danish Employers (DA), adopted the organisation's strategy for the period up until 2010. The new strategy will lead to organisational changes - DA is relinquishing its entire regional structure - and DA's budget will be reduced by about a third over 2005 (DK0501103N). The plan, adopted unanimously by the executive committee, will be presented to DA's general assembly. Currently, DA has a budget of about DKK 120 million and 135 employees. Several DA member organisations have merged in recent years (DK0207102N). The latest merger was announced in December by the Danish Construction Association (Dansk Byggeri) and Tekniq, the employers' organisation for heating and plumbing engineering and electrical installation. This reduced the number of DA member organisations to 12.

Professional football players are organised in Danish Football Players' Association (Spillerforeningen, SPF), which conducts collective bargaining with the clubs represented by the Danish League Association (Divisionsforeningen, DF). During the summer of 2004, a long conflict between the two organisations about transfer rules for young players motivated SPF to join the LO trade union confederation (DK0407102N). This gave them support in the conflict that took place a month later (see below).

Industrial action

There are no statistics available as yet of working days lost due to industrial action in 2004. The table below gives the latest figures.

Number of work stoppages and lost working days, 2001-3
. Work stoppages Lost working days
2001 954 59,500
2002 1,349 193,600
2003 681 55,100

Statistics Denmark: Arbejdsstandsninger 2003, 28 April 2004.

The number of lost working days in 2003 was the lowest since 1989, and this was only the third time since these records began in 1973 that there were fewer than 60,000 lost working days a year (DK0406101N). The decrease, compared with 2002, was 71.5%.

A strike in the food processing industry was much debated at the end of the year. Slaughterhouse workers at the Tulip plant in Ringsted were faced with the choice of reducing their wages voluntarily by 15% or facing a relocation of production to a Tulip factory in Germany. After negotiations, the workers agreed to reduce their wages. However, the national trade union representing slaughterhouse workers, the Danish Food and Allied Workers' Union (Nærings- og Nydelsesforbundet, NNF), did not agree with this and claimed that pay reductions were the worst scenario for the survival of free collective bargaining. Slaughterhouse workers in factories owned by Danish Crown, the company that owns Tulip, went on strike. In the end, the workers at Tulip in Ringsted were made redundant and production will be moved during 2005.

Danish professional football players launched their first-ever strike on 17 August 2004. This followed the breakdown of negotiations over the renewal of the collective agreement between the players' union, SPF, and the clubs' association, DF, despite the efforts of the Public Conciliation Service. The central focus of the dispute was the interpretation of a FIFA rule that gives clubs the right to demand compensation for training and developing young players if these players are transferred to foreign clubs after the expiry of their contracts (DK0408102F).

Employee participation

In February 2004, LO and DA signed an agreement on the incorporation of EU Directive 2002/14/EC establishing a general framework for informing and consulting employees (EU0204207F) into their existing cooperation agreement (DK0403102N). This agreement currently covers around 50% of the Danish labour force in the private sector. The implementation of the Directive via the DA-LO cooperation agreement means that company-level joint cooperation committees (DK0309102T) will now have a duty to consult all groups of employees in the enterprise and not only those who are covered by a collective agreement between LO and DA member organisations. It is further clarified that it should be possible for employee groups outside LO to obtain representation in the cooperation committee if there is consensus about such representation.

A law on employee participation in European Companies was adopted in 2004, implementing the relevant EU Directive.

Nordea, the leading financial services group in the Nordic and Baltic Sea region - listed on the Stockholm, Helsinki and Copenhagen stock exchanges - announced in November its intention to be one of the first companies to take on the new European Company form, although no date has been fixed as yet. With Nordea thus planning to operate at overall European level, four trade unions organising its employees in the Nordic countries have formed a single transnational Nordea trade union organisation in response (DK0411101N).

No particular significant developments connected with European Works Councils took place during 2004.

Absence from work

In December 2003, the liberal-conservative government launched an action plan aimed at reducing absence on the grounds of sickness. According to the Ministry of Employment, total sickness absence in Denmark corresponds to about 140,000 full-time persons being absent from work over the year.

Absence from work on grounds of sickness is dealt with in a 2004 amendment to the Act on the working environment. According to the law, it should now be assessed to what degree the working environment, including the 'psycho-social' working environment, influence absence from work on grounds of sickness. The aim is to reduce absence in cooperation with companies and employees. However, no particular steps were taken during 2004 to bring the issue forward in the collective bargaining round.

Psychological harassment

The 'psychological working environment' is dealt with by several government agencies, in legislation on the working environment and in various agreements by the social partners and information material issued by them. Bullying, 'mobbing' and harassment form an important part of this. Where a collective agreement does not exist it is the role of the Working Environment Authority (Arbejdstilsynet), to supervise rules on psychological harassment and breaches of these rules. An evaluation of the psycho-social working environment is part of the so-called workplace assessment (Arbejdspladsvurdering, APV) of a company’s working environment carried out by the Working Environment Authority.

In a political agreement behind a working environment reform launched in February 2004, the psycho-social working environment is listed as one of the top four areas to be monitored.

In May 2001 the social partners in the industry sector, DI and CO-industri, concluded an agreement on the psychological working environment (DK0111101N). This agreement is still in force. It states that conflicts about harassment will be solved within the collective conflict resolution system - ie by the partners themselves. Similar agreements exist in other sectors, for instance in retail, where an agreement has been in place since the spring of 2002.

New forms of work

The amount of working time filled by temporary agency workers and the turnover of temporary work agencies has increased considerably since beginning of the 1990s. 2004 was no exception, although there are no figures as yet. However, in spite of a impressive growth rate over the past 10 years, the use of temporary agency work is still relatively limited in Denmark compared with other European countries such as Sweden, the Netherlands and the UK. Temporary agency work covers 0.9% of the workforce in Denmark. The spectrum of temporary agency work is wide but is mainly concentrated in the health sector. Pay for agency workers differs according to sector - those earning the highest amounts are currently hospital nurses.

Some 80% of all temporary agency work is covered by collective bargaining. The agencies are organised in Danish Commerce and Service (Dansk Handel & Service, DHS), and the collective agreements were renewed spring 2004.

Other relevant developments

The government and the social partners made a great effort during 2004 in tackling undeclared work. A rare degree of cooperation on this issue took place between police, governmental agencies, ministries, employers’ associations, employers’ trade organisations and trade unions (DK0408101N). A number of illegal workers, in particular from eastern Europe, Turkey and middle-eastern countries, were found to be working in hotel and restaurants, in pizzerias, in kiosks and in the construction sector. Critics claimed that the raids undertaken by the police were concentrated in areas and sectors mainly populated by people with a non-Danish ethnic background, whereas undeclared work in private homes, which has existed since the introduction of income tax in 1903, was not inspected in this way.

Outlook

In addition to the outcome of the parliamentary election, two issues are likely to dominate 2005. The first is the final shaping of the new structure of regions and municipalities and, not least, new legislation and the relocation of employees to the new environments. The public sector trade unions are following this development closely and will demand promises of job security from the government for municipal employees after the restructuring has taken place. Currently they are protected by the law on the transfer of undertakings, but only as long as collective agreements remain in force. Furthermore, the change in labour market policy will attract attention

The other main issue will be efforts in the field of continuing adult and vocational training. One of the main themes of the ongoing electoral campaign is 'education, education and more education'. Denmark is losing jobs due to the relocation of manufacturing to low-wage countries. Research, education and further training are seen by experts as the only response. In particular the financing of a comprehensive education and training programme will be a focus of interest. (Carsten Jørgensen, FAOS).

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