Pursuit of compensation 'weakens bargaining culture'

Danish trade unions have been obtaining increasing amounts of compensation for their members through lawsuits or arbitration in the past few years. However, their increasing effectiveness and success in this area come at a price, according to a report from the FAOS research centre, published in September 2005. The study claims that a greater focus on individual court cases may weaken the bargaining culture.

In recent times, Denmark's two largest trade unions, the United Federation of Workers (Fagligt Fælles Forbund, 3F) and the Union of Commercial and Clerical Employees in Denmark (Handels og Kontorfunktionærernes Forbund, HK), have been obtaining increasing amounts of compensation for their members through lawsuits or arbitration. This has attracted attention in the media, with spring 2005 seeing newspaper headlines such as 'Billions back to the members' and 'The millions are pouring in'. The issue is examined in a new report from the Employment Relations Research Centre (Forskningscenter for Arbejdsmarkeds- og Organisationsstudier, FAOS) at the University of Copenhagen, published in September 2005

In 2004 alone, 3F and HK managed to obtain compensation for members of DKK 1,057 million and DKK 333 million respectively. The sums won have been increasing over the past few years - see the table below - with 2003 being a veritable boom year, with the two trade unions witnessing an increase of 31% in the sums recovered compared with 2002. Over 2000-4, the amounts won annually by the two unions doubled. The large amounts won reflect an increased number of cases ending up in court to be decided by a judge, instead of by the two sides to the dispute themselves, as was earlier more common. According to the FAOS study, both trade union and employers' association representatives perceive a trend whereby the old bargaining-based approach, with a focus on contributing to a resolution of problems between the two sides, is gradually being overshadowed by a more professional 'juristic' approach, with the focus more on winning legal cases and less on considering the relations between the two sides.

Compensation won for members by HK and 3F, 2000-4
. HK SiD/3F*
DKK million EUR million DKK million EUR million
2000 153 20.5 548 73.4
2001 213 28.5 684 91.7
2002 268 35.9 768 102.9
2003 352 47.2 1,005 134.8
2004 334 44.8 1,057 141.6

* In January 2005, the General Workers' Union in Denmark (Specialarbejderforbundet i Danmark, SiD) and the National Union of Female Workers (Kvindeligt Arbejderforbund, KAD) merged to create 3F. The figures given thus cover only amounts recovered by SiD during the period covered.

Source: FAOS.

Collection of facts and member focus

According to the report, there are various possible explanations for the increasing sums being won by unions. A thorough study of the sums that 3F and HK have won for their members indicates that this increase is mainly the result of a more professional collection of the facts of the cases concerned by the unions. This has been combined with the unions becoming more effective at achieving a higher profile due, among other factors, to sharper competition for a declining potential membership. The report's conclusion is that trade unions have become more efficient in this field and thus better at safeguarding members’ individual interests.

It has always been a primary task of trade unions to safeguard and promote the rights of individual members, the FAOS study states, and in this connection to bring cases to ensure that employers that disregard workers' rights are ordered to pay compensation. For many people this has, of course, been an important motive for joining a trade union. Nevertheless, the report perceives a major shift in the rhetoric of the trade unions from a focus on collective rights to an emphasis on the protection of the rights of the individual. The individual aspect, the report suggests, seems to be more helpful in trade union efforts to raise their profile.

With this greater focus on the individual, trade unions have increasingly put the member at the centre of their activity. If references to solidarity and common interests have no immediate effect, the report suggests, the emphasis must be shifted to individual protection, which can give members clear value for their union contributions. Union membership makes it possible for members to bring lawsuits that it would be too costly and too risky for them to bring as individuals. In this way, it is participation in the collective body that offers the individual protection and it is also still to a very high degree collective agreements that ensure the rights enjoyed by union members. However, the perspective has changed from collective to individual benefits, the FAOS study argues

It is still mainly in relation to non-organised employers that monetary compensation is obtained by unions for their members. The most frequent violations of members' rights are found in this field. However, the figures also show an increase in the number of cases brought against members of employers' organisations affiliated to the Danish Employers’ Confederation (Dansk Arbejdsgiverforeining, DA).

Shift in the bargaining culture?

In relation to the increase in the number of lawsuits brought by unions on behalf of their members in the part of the labour market covered by the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and DA, the FAOS report finds a possible trend towards a shift in the bargaining culture. It asks how the increase in the number of lawsuits can be explained, if it is assumed that the employers in the DA/LO area have not suddenly begun to treat their employees more badly than earlier.

The analysis carried out by FAOS points to two factors that may be of importance. The first is an increasing complexity of regulation of the Danish labour market, which now features a mix of collective agreements and legislation (a phenomenon that may have a number of unintended effects). The second is the consequent increasing professionalism of trade unions, with a growing number of lawyers and other groups of academically qualified staff employed to support work on legal cases. This has been a continuous process, which seems to have been followed by a concurrent gradual change in the bargaining culture, the report argues. This means that it is to a higher degree the legally correct (or most beneficial) solution to a dispute that is sought, rather than a consensus-based solution according to the collectively agreed rules to resolve labour disputes that date back to 1910. According to these latter rules, two mediation meetings to solve disputes should be held between the parties before resorting to legal proceedings. According to 3F, labour law has replaced considerations of common sense. At the same time, there is pressure from members to take cases all the way through the system.

Commentary

Although the conclusion can be drawn from the increasing amounts of compensation won by unions that safeguarding the financial interests of members must be seen as a benefit, there is also another side to the coin. The complexity of regulation makes it difficult to avoid mistakes and errors, and if the unions just pursue a purely legal perspectives without regard to the established relations between the parties, they may be able to win money for their members but, at the same time, they run a risk of doing harm to more long-term bargaining relations. Of course, this does not mean that trade unions should refrain from winning for their members the compensation to which they are entitled. Justice should be done; but, sometimes, it might be a good idea to try to look on the case from the other side.

The FAOS study analyses cases brought by trade unions against employers, but the problem also works the other way round, for instance in the form of employers' organisations trying to stretch collectively agreed terms in their favour during the a collective agreement's period of validity. It is thus both parties that seem to be moving away from the 'integrative bargaining culture' that has been predominant so far, with its emphasis on seeking compromises through the creation of a bargaining 'game' with advantages for both parties, in the direction of a more 'distributive bargaining culture' that sees bargaining as a 'distribution struggle' or a zero-sum game, with advantages won by one party at the cost of the other party. If the distributive bargaining culture becomes predominant over the more consensus-oriented integrative bargaining culture this could, in the longer-term perspective, turn out to be a challenge for the Danish bargaining model with its precondition of industrial relations based on trust and the will and ability to seek solutions that will benefit both parties. (Carsten Jørgensen and Jørgen Steen Madsen, FAOS)

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