Complicated negotiations start in public sector

Collective bargaining over new agreements started in the Danish public sector in December 2004. One of the key issues in the talks will be the sector's decentralised 'New wage' pay system, to which municipal health workers' trade unions are opposed. However, some other unions are more open to some form of decentralised wage setting. The bargaining is overshadowed by the forthcoming general election and a radical reform of municipal structures.

Public sector collective bargaining started in earnest in December 2004, but is not expected to culminate until the first months of 2005, when the current three-year agreements signed in 2002 for municipal/county authority workers (DK0205102F) and central government workers (DK0204103F) expire. The negotiations are the first since several structural changes that took place in late 2003. The Health Cartel (Sundhedskartellet) of trade unions- in which the Danish Nurses’ Organisation (Dansk Sygeplejeråd, DSR) is the largest union - withdrew from the joint negotiation body in the county/municipal sector, the Association of Local Government Employees’ Organisations (Kommunale Tjenestemænd og Overenskomstansatte, KTO) (DK0312101N). At the same time, KTO decided to conduct future negotiations in 'reverse order' compared with earlier practice, so that a number of themes are first negotiated between the individual trade unions and the employer side. It is only afterwards that the general negotiations will start between KTO and the four employers' organisations - the National Association of Local Government Employees’ Organisations (Kommunernes Landsforening, KL), the Danish Federation of County Councils (Amtsrådsforeningen, ARF) and the municipalities of Copenhagen and Frederiksberg. It was especially the withdrawal of the nurses' union that has given rise to concern. The fact that DSR has chosen to go its own way involves a risk of a breakdown, with the Health Cartel seeking a pay rise which is above that for other county/municipal staff, and also a more or less radical break with the public sector's 'New wage' (Ny Løn) decentralised pay scheme (DK0409104F). The new model of starting the negotiations at individual union level was developed to take into account the wishes of the Health Cartel and DSR.

Important compromise in municipal sector

There have been signs of a certain softening of the parties' positions in the early stages of bargaining in the county/municipal sector, making the prospects of a compromise more realistic. On 29 November 2004, KTO and the municipal employers concluded an important compromise on specific themes. This involves the introduction of full pension contributions during the period of maternity leave when the worker's full wage is not paid, as well as a higher position on the wage scale for all employees. In return, it has been agreed that general wage increases will not be awarded during the first year of the new agreements. This compromise is seen as a token of the two sides’ will to reach a solution and as a positive contribution to the individual trade union-level negotiations.

Negotiations in the state sector

The perspectives for a quick compromise in the central state sector are promising. The most important demand on the trade union side is a significant pay increase and it is not expected that this demand will be achieved without a struggle. However, the unions in the state sector have no problems with 'New wage' and, as a further development of local wage formation is the main demand on the part of the employers, it should be possible to reach a compromise. The same applies to another important theme in the negotiations - a reform of working time rules.

HK acts as bridge-builder

The largest trade union in Denmark, the Union of Commercial and Clerical Employees (Handels- og Kontorfunktionærernes Forbund, HK) may become a key player in the public sector bargaining round because it is strongly represented in both the central state sector and the county/municipal sector. It is thus possible that a compromise between HK's state sector section (HK/Stat) and the Ministry of Finance may have a knock-on effect on its municipal section (HK/Municipal) and then on the rest of the county/municipal sector. HK, which is one of the unions which is most eager to reach a compromise, is an advocate of 'New wage', and there seem to be no major hurdles in the way of a compromise between the county/municipal employers and the sector's administrative employees represented by HK. For this reason, HK/Municipal may become a 'lever' in the county/municipal sector. This analysis has also been carried out in some of the other unions in the sector and a 'coalition' has therefore been set up which - in addition to HK/Municipal and the Danish Association of Social Workers (Dansk Socialrådgiverforening, DS) - also comprises the craft workers' groups and, partly, the General Workers’ Union (Specialarbejderforbundet i Danmark, SiD) and the National Union of Female Workers (Kvindeligt Arbejderforbund, KAD). In addition, there are 14 small groups belonging to the Confederation of Salaried Employees and Civil Servants in Denmark (Funktionærernes og Tjenestemændenes Fællesråd, FTF), which are seeking their own influence instead of awaiting a compromise with HK, which is, under the circumstances, expected to be trend-setting for comparable sectors.

Given the government’s strong interest in ensuring a compromise in the public sector, the most like scenario is that the Minister of Finance will conclude a compromise with the negotiating cartel for central state employees, the Danish Central Federation of State Employees' Organisations (Centralorganisationernes Fællesudvalg, CFU), whose chair, Peter Waldorf, is also the president of the Association of Danish State Employees’ Organisations (Statsansattes Kartel, StK) and HK/Stat. Such a compromise might lay down an overall framework and ensure a solution that will maintain the continued development of decentralised wage formation. The county/municipal employers and the abovementioned coalition could then take the next step, with HK/Municipal leading the way. This would contribute to the introduction of a municipal wage model, which would also ensure the continued development of local wage formation.

Local wage formation is key issue

The question of decentralised, local wage formation - the 'New wage' system - will undoubtedly be the key to an overall solution. It is a top-priority demand on the part of the employers that local wage formation should be continued and further developed. However, the number-one demand of some unions is that this wage system should be - if not be abolished - then at least radically changed. If it is not possible to resolve this disagreement, it will not be possible to solve the other problems and reach a general compromise. The employers have emphasised that it is not 'New wage' as it stands today that should necessarily be maintained. It is rather the principle of local wage formation that should be ensured and further developed. This is where the possibility of a possible compromise can be found, but it will be an extremely difficult process.

In the negotiations that have taken place so far between the new union coalition and the municipal employers, a special model has been developed - called the 'incentive model' or the 'give-and-take model'. Subsequently, the same model has been presented by the employers to other unions, for instance the Trade Union of Public Employees (Forbundet af Offentligt Ansatte, FOA) representing social and health workers, and the Danish Federation of Early Childhood Teachers and Youth Educators (Forbundet for pædagoger og klubfolk, BUPL). This model has - very unusually in such a process - been published on the website of FOA. Here it is presented as an employer-initiated model, but it is a model that the union coalition seems to find relatively unproblematic.

The model is based on a distribution of pay increase resources between central and decentralised 'pools' in a way that will reward organisations that prioritise local pools for decentralised wages. Taking the example of a total indicative framework for bargaining of a pay increase of 3.7%, of which 2.7% is to be used for local wage bargaining and 1% for the central pool, if a union wishes to have a bigger share for central purposes, for instance an extra 0.5%, a double amount will be deducted from the local 'kitty', ie 1% in this case. The distribution would thus be 1.7% for the local pool and 1.5% for the central pool or, in total, 3.2%. This means that it will cost money to give priority to central pay improvements. In principle, the union coalition is not opposed to the so-called 'incentive model'.


Negotiations in the public sector are always wrapped up in politics, as public employees confronting the state and county/municipal sector not only as employers, but also a counterpart that is at the same time responsible for financing policy. The employers have a double role and this applies, in particular, to the central state employers, with the Ministry of Finance as the main negotiator. This means that there is also a direct interplay between overall financing policy and the determination of pay and working conditions in the state sector; in Denmark, this is personified as it the same Minister - currently Minister of Finance Thor Pedersen - who has overall responsibility in both fields. This interaction also exists in relation to the county/municipal sector - although more indirectly - through agreements between the Minister of Finance and the employers (KL, ARF, and Copenhagen and Frederiksberg councils) about finances in the county/municipal sector. During the collective bargaining rounds in 2005, this political aspect will be even more distinct than usually. The first reason is that the public employees are facing a state counterpart which has decided that the entire structure of the public sector is to be changed, with very important consequences for the staff. The counties will be abolished and replaced by five regions; mergers will take place between municipalities so that their number will be reduced from 271 to just over 100; and tasks will be redistributed among the three levels of government. Second, they are also facing a state employer that is coming close to the expiry of the government's term of office, and it is thus not possible to exclude the possibility that considerations of political survival will play a major role for the government in negotiations. The election campaign has started, the political atmosphere is very tense and this will inevitably have an impact on the collective bargaining rounds.

When it comes to the structural reform, a large number of new statutes (48) are to be implemented during the first half of 2005 to implement the reform - ie in addition to laying down the borders of the new municipalities, also determining the division of labour among municipalities and regions. Only a few main principles have been laid down in the agreement on the issue between the Liberal Party (Venstre)/Conservative Party (Det Konservative Folkeparti) coalition government and the opposition Danish People’s Party (Dansk Folkeparti) - this means that many questions with far-reaching for public employees are still outstanding. It is expected that the final legislation will not be ready until the summer of 2005 and, public employees and their unions are thus entering into the negotiations without knowing what their future work situation will be. (Carsten Jørgensen, FAOS)

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