Finance sector agreements increase flexibility

New collective agreements for the Danish banking and insurance sectors were concluded in March and January 2005 respectively. As well as pay increases, the new accords provide for increased flexibility in a number of areas - for example, working time in the case of the banking agreement and occupational pension contributions in the case of the insurance agreement.

In early March 2005, a new three-year collective agreement for 50,000 employees in banks and mortgage credit institutions was signed by the Danish Employers' Association for the Financial Sector (Finanssektorens Arbejdsgiverforening, FA) and the Financial Services' Union (Finansforbundet, FF). The deal provides for a wage increase of 9.61% over the next three years, and for more flexible working hours.

New agreement in insurance

Prior to the conclusion of the agreement in the banking sector, a more or less similar agreement was signed in the other part of the finance sector, insurance. FA represents the employers in both subsectors, while the 10,000 employees in insurance are represented by the National Insurance Workers' Association (Danske Forsikringsfunktionærers Landsforening, DFL). The agreement, which was reached on 25 January, provides for a total cost-increase framework of 6.13% over a two-year period, of which wage increases represent 5.25%.

A novelty in the agreement is the introduction of a flexible pension arrangement. Occupational pension contributions for all employees will increase by at least 0.5 percentage points. However, at the same time employees under the age of 35 years will be entitled to receive up to 5% of their wage as pay rather than pension contributions (DK0410104N). The employer’s contribution, however, is always to be 10% of pay as a minimum. The members of DFL accepted the agreement almost unanimously in a ballot at the end of February.

General wage increases in banking

The negotiations in banking did not proceed quite so fast. During February, the talks hit a stalemate, and FF gave notice of a strike, which was followed by notice of a lock-out from FA. This is very unusual for the industry, and not since 1991 had the parties in the finance sector had to call in the Public Conciliator.

The disagreement was resolved by extending the agreement's duration to three years instead of the traditional two years. As stated by the director of FA, Steen A Rasmussen: 'Since the year dot we have agreed on two-year periods. The three-year model was obtained in order to find a solution that could include a few things that were not economically possible within a normal two-year period.' This gave space for an agreed pay increase of 2.35% in each of the first two years and of 2.4% in the third year. Furthermore, 0.5% has been set aside for local negotiations. The pension contribution has been increased by 0.5 percentage points and, together with a small increase in holiday allowance, the total cost increase will amount to 6.71% over the first two years and 9.61% over the three years. FF had initially demanded an increase of 6.72% over the first two years.

'It has been a long process and the threat of conflict was not stage thunder. However, the result is satisfying for both sides. Our demands have for the better part been accepted because we, a little unusually, have concluded a three-year agreement,' said the president of FF, Allan Bang.

Individual working time

By way of experiment, it will be possible in the banking sector over the next three years to conclude local agreements at company level on individual working time. According to the new agreement, the individual working day can be between four and 12 hours. The working week must not exceed 48 hours and the reference period during which the weekly average of the normal 37 hours must be maintained is set at 26 weeks. An overtime pay premium of a minimum of 20% is paid for work after 18.00 and at the weekends. The idea behind the experiment, if agreed locally, is to create flexibility at the workplace and to make a flexible balance been family and working life possible.

'Both employees and employers benefit from the voluntary arrangement', according to Professor Jørgen Steen Madsen of FAOS, University of Copenhagen, in a commentary, 'but the employees have secured that the working time will not exceed 37 hours on average over a period of half a year. It is more or less the same tendency we see in the industry sector, where it to a higher degree possible to agree flexible working hours locally.'

Another novelty is that the agreement offers employees a choice between paid overtime and the possibility of saving the time off to take a 'seventh' week of annual leave. The employees already have five weeks' annual leave and five special days of leave, known as the 'sixth' week of leave, which can be taken individually as desired.

Other issues

The finance sector is known for having good maternity leave conditions and the new agreements have added to the existing benefits by securing full occupational pension contributions for staff during maternity leave for up to 60 weeks. Furthermore, despite the fact that both employers and unions had earlier opposed a special maternity/parental leave fund for employees, they have conceded to pressure from political quarters (DK0405102F). This means that FA will establish an independent equalising arrangement for funding additional maternity and parental leave/benefits for employees in the finance sector, whereby member companies of FA with exceptionally high expenses in this area will be able to receive some compensation.

The new agreements in the finance sector also offer a possibility to take time off in connection with childrens’ or relatives’ sickness, and better training conditions. The rules on part-time work for older employees have been improved with the aim of making it more attractive for these workers to stay in the labour market. To this end, employees over 58 years of age and working part time will receive full pension contributions.


The collective agreements in finance are similar to the agreements concluded in the public sector (DK0503101N and DK0502103F), where negotiations took place simultaneously, ending in February with a deal involving a 9.3% increase in costs over three years. Even the duration of the banking agreement is the same, which is a new feature. As in the public sector, the employees are thus ensured a wage increase higher than the expected increase in prices.

The new aspects are the individual time-off arrangement in connection with overtime in banking and the flexible pension rules for employees aged under 35 in insurance. As in the last bargaining round in the finance sector in 2003 (DK0302102F), flexibility thus is a keyword. At that time, the social partners in the finance sector, as in the food processing industry, agreed on 'free-choice' models whereby employees can decide on whether to use a certain amount of the overall wage sum for higher pay, higher pensions contributions or more time off . The 2005 agreements have added further to the flexibility - for older part-time workers, for employees with sick or hospitalised children and relatives, and for young people who want more 'cash' instead of pension contributions, which can be adjusted later in life.

With its change in the whole system of collective agreements in 2001 (DK0103116F) and (DK0011103F), with the possibility of designing individual arrangements on top of a 'common agreement', the finance sector can be said to spearhead collectively agreed flexibility arrangements in Denmark. It should be added that such flexible arrangements are spreading in the Danish labour market, but that they all build on a solid collectively agreed foundation. For example, it is only possible to 'trade' for cash the special days of leave that exceed the basic five-week entitlement, or occupational pension contributions above a 10% minimum in the insurance sector. The FF union did not find this basic 10% high enough and therefore they did not agree with FA to introduce this possibility in banking. Presumably, this reflects a view that it is the pension savings in the early years of the career that release the real 'jackpot' at the end of the career, when it is needed. (Carsten Jørgensen, FAOS)

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