Survey shows an increase of fringe benefits as part of the wage

An increasing number of Danish employees receives a so-called 'wage-package' where the actual pay is supplemented by different fringe benefits. This is the result of a survey to be published in August 2005, made by the employers’ association Danish Commerce and Service, DHS, among its member companies.

More Danish employees in the service and commercial sector choose to receive a number of personal fringe benefits if offered by the employer. This is the result of a survey, which will be published in August 2005, made by the employers’ association Danish Commerce and Service (Dansk Handel & Service, DHS) among its member companies. It is mostly bonus or commision arrangements, but also benefits like free internet and/or daily newspaper, healthy food at work, childcare, share options, keep-fit exercises, additional days off or a company-paid car, which have been chosen by the employees of the companies interviewed in the survey. Four hundred retail and service companies has been involved.

Three years ago 44% of the members of DHS had introduced wage-packkages containing different combinations. In summer 2005 this number has increased to 51% and the increase is expected to continue. A third of the companies without wage packages have answered that they will introduce them in the years to come. According to the survey, the main reasons for the introduction of performance promoting wage packages are: increased motivation among emplyees, better results for the company and to attract and keep key employees.

Bonus and commision pay top the list as the most used supplement to actual pay in the companies, which is not surprising. These arrangement have existed for several years, and they account for 53% and 23% respectively. It is more noteworthy that life-style elements and daily life facilities, in the survey called gross wage settlements, together form 16%. A gross-wage settlement means a decrease in pay in return for payment of a PC, season tickets to train or bus, etc. Many life style issues are popular: change the home made sandwich with good and healthy food at work. It is practical and also cheaper than the canteens. Go to the local fitness centre after work or have a massage after lunch. More practical but none the less useful are settlements like childcare, free telephone and internet or having a company paid car. A so-called 'trend researcher' interviewed in connection with the survey by the daily paper Jyllands-Posten says that the tendency to exchange pay with these facilities began in the dot.com era. The wage-packages can be seen as a picture of the spirit of the time. They are an expression of individualism, he says.

The individual choice, here in the form of fringe benefits, is thus again in the focus when it comes to wage and working time. Free choice models, as exchanging pay for more pension or more holiday are already a reality in the collective agreements in finance and food processing industry in Denmark (DK0302102F). The question is, if the trend shown in this survey will affect the collective bargaining in the future.

Poul Erik Skov Christensen, president of the largest union in Denmark, the United Federation of Danish Workers (Fagligt Fælles Forbund, 3F) says that these issues are not normally topics for collective bargaining, but he will not exclude the possibility that 'soft packages' in the form mentioned could be part of the bargaining agenda of 3F in the future. He mentions that next time negotiations will take place, he would like the employers to 'signalise that they are willing to offer healthy food at work'.

One of the main reasons for the increasing existance of wage-packages is the tax advantage. The advantage is that the value of the benefits is set off against the gross wage, i.e. before tax is deducted. Since the tax level in Denmark is very high, the highest in Europe, wage supplements and life-style inspired fringe benefits that the employee perhaps would want anyway, are certainly an issue.

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