Thematic feature - collective agreements on changes in work organisation
This article gives a brief overview of collective bargaining on changes in work organisation in Denmark, as of September 2004. It looks at: the extent to which collective agreements introduce changes in work organisation that take into account productivity demands, flexibility and security in an integrated way; the main areas in which changes are being introduced; the overall success or otherwise of bargaining on the topic; and the prospects for the future.
The EU’s European employment strategy was revised in 2003 (EU0308205F), following demands for a more results-oriented strategy contributing successfully to the targets for more and better jobs and an inclusive labour market set at the Lisbon European Council in 2000 (EU0004241F). To support the three objectives of full employment, quality and productivity at work and cohesion and an inclusive labour market, the current employment guidelines identify 10 priorities ('commandments'), including one on 'promoting adaptability of workers and firms to change'. This identifies work organisation (alongside skills, lifelong learning and career development, gender equality, health and safety at work, flexibility and security, inclusion and access to the labour market, work-life balance, social dialogue and worker involvement, diversity and non-discrimination, and overall work performance) as an element in improved quality at work, which should be pursued through a concerted effort between all actors and particularly through social dialogue.
The 2004 Council Recommendation on the implementation of Member States’ employment policies provides for four priorities:
- increasing adaptability of workers and enterprises;
- attracting more people to enter and remain on the labour market, making work a real option for all;
- investing more and more effectively in human capital and lifelong learning; and
- ensuring effective implementation of reforms through better governance.
The Recommendation refers to promoting flexibility combined with security in the labour market, by modernising and broadening the concept of job security, maximising job creation and raising productivity. As defined in the employment guidelines, 'job security' refers not only to employment protection but also to building people’s ability to remain and progress in work. Changes in work organisation thus appear to be seen as a main vehicle for increasing the adaptability of workers and enterprises. Related to this issue is flexibility and security in the labour market and the relative attractiveness of 'standard' and 'non-standard' employment relationships (with the aim of avoiding a 'two-tier' labour market).
With work organisation playing an increasingly important role in European employment policy, in September 2004 the EIRO national centres were asked, in response to a questionnaire, to give a brief overview of the industrial relations aspects of the topic, looking at: the extent to which collective agreements introduce changes in work organisation that take into account productivity demands and flexibility and security at the workplace in an integrated way; the main areas in which changes are being introduced; the overall success or otherwise of bargaining on the topic; and the prospects for the future. The Danish responses are set out below (along with the questions asked).
Recent agreements on changes in work organisation
Please provide information on recent developments (over the last three-five years) in collective agreements on work organisation that introduce changes in flexibility, security and productivity in an integrated way. The kind of issues that such agreements might cover include: introducing autonomous (or semi-autonomous work) teams; reducing the number of hierarchical layers; new forms of employee involvement; reorganising work functions; moving away from product-based structures to business unit; flexible working hours; multiskilling; job rotation; improving training (eg making it more systematic, ensuring wider participation, or changing the focus); new pay systems (eg performance-based pay, profit-sharing, share ownership schemes), and new financial and non-financial performance measures; or new appraisal systems.
The kind of agreements that we are interested in here are those that deal with a number of the issues listed above as an overall 'package'. Please provide any overall information available on this kind of development, if possible, and brief details of three or four agreements (at company and/or sectoral level) that you consider particularly innovative and interesting. Below is an indicative list of the kind of information we are seeking.
In general, the Danish labour market has flexible rules on recruitment and dismissal, including relatively short notice periods for dismissal. This, in itself, facilitates labour market access as employers are presumed to be more willing to recruit from a broader range of employees. This may benefit flexibility and productivity.
Regulation of work organisation is in Denmark closely connected to the managerial prerogative, ie the managers' right to direct and control the work and to issue instructions. This authority is laid down in the Basic Agreement between the main private sector social partner organisations, the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and the Danish Employers’ Confederation (Dansk Arbejdsgiverforening, DA), which constitutes the rules of the labour market and originated in the 'September compromise' negotiated in 1899 between these two organisations (DK9908140F). These provisions have been revised only little over the years and are still in force.
Furthermore, provisions on work organisation are set out in the Cooperation Agreement between LO and DA (originally signed in 1947), which is the basis for a long tradition of employee involvement in terms of information and consensus-based decision-making (DK0309102T). According to the agreement, it is compulsory to inform and consult workers about decisions and managerial issues in the company. Workplace cooperation is typically promoted through a cooperation committee (Samarbejdsudvalget), which has equal representation from the management and employee sides. Decisions are to be taken by consensus, although negotiations in a strict sense do not take place.
In the 1980s, when new technologies called for new forms of work organisation, DA and LO concluded a Technology Agreement, which in 1986 was included in the Cooperation Agreement. It stipulates that company cooperation committees are charged with the following tasks:
- adapting the principles underlying local working conditions and employee well-being, and principles for the enterprise's personnel policy;
- developing principles for the training and retraining of employees who are to use new technologies;
- exchanging views and receiving suggestions on guidelines for the adaptation of production and work processes and the implementation of major changes in the enterprise;
- assessing the technical, economic, staff-related, training and health and safety aspects likely to result from the introduction of new technologies or the modification of existing ones, including computerised technologies and systems, where such innovation or modification is on a large scale; and
- advising on any proposals for the basic structure, mode of operation and applicability of incentive payment systems and the possibilities of establishing funds for training and social policy purposes.
In addition, the cooperation committee receives information from the management on the enterprise's financial affairs and prospects for the future, employment situation and any major changes and reorganisations.
What are the main aims of bargaining on work organisation - eg increasing productivity? Increasing personnel flexibility? Improving the company’s position in the market? Avoiding redundancies and lay-offs?
The main aims lie within a spectrum between increasing productivity and competitiveness, and avoiding redundancies. In the trend-setting sectoral agreement for industry (the largest bargaining unit in the LO/DA area), concluded by the Confederation of Danish Industries (Dansk Industri, DI) and the Central Organisation Industrial Employees, CO-industri, a protocol establishes 'Guidelines for establishing labour division (work sharing)'. The signatories agree that work sharing can be useful in order to prevent redundancies as a consequence of a temporary fall in production. The employees thus remain with the company and are only 'part-time unemployed' and the company obtains a necessary reduction of wage expenses without losing qualified staff, who can later take up full work again without further delay or extra training expenses.
Another important aim in negotiating work organisation is the element of job satisfaction as a measure to create a dynamic working environment and reduce sickness absence. To this end teamwork and self-managing groups are accepted and increasingly used forms of work organisation in Denmark (as elsewhere in Scandinavia). Systematic feedback and response is seen as important in efforts to obtain job satisfaction. The concept of 'employee-development dialogues' or 'employee dialogues' (Medarbejderudviklingssamtaler) is an example of a feedback instrument. These interviews take place regularly (typically, once a year) and have the nature of a development-related dialogue between two equal parties who - based on their mutual interdependence - discuss the interplay between the employee, his or her job, and the manager in an organisational context.
What is the extent of bargaining on work organisation - how many agreements are there? How many companies/employees are covered?
No specific statistical data are available on this point. Bargaining on work organisation mainly takes place at company level. Social partner confederations outside the LO/DA area have also concluded cooperation agreements
What are the main areas in which changes are being introduced - eg new organisational structures, new more flexible and less hierarchical methods, new corporate cultures, new business practices, more training, new performance measurement techniques, new reward systems?
Training and working time are traditional topics taken up in workplace negotiations concerning work organisation. These issues are also taken up in collective bargaining at sectoral level. Standard weekly working time has since 1991 been 37 hours according to the provisions of collective agreements. The maximum reference period over which weekly hours may be varied while maintaining this average is in most agreements set at 12 months. Working time flexibility has been extended considerably over the last 10 years with the agreements in industry as a starting point. However, local agreements (at workplace level) are required in order to use the possibility of flexible working time, which gives the local level (shop stewards on the trade union side) a bargaining right in this area.
Further provisions about continuing vocational training were added to the collective agreements in the LO/DA area in spring 2004 (DK0405102F). These state that employees with three years' service are entitled to 14 days of continuing training in connection with redundancies. Training is a topical issue and much debated at present. The government opened a tripartite dialogue in August 2004 about the extent to which the responsibility for vocational and continuing training should be transferred to the social partners and the collective bargaining system, in order to strengthen the development of the competences of Danish workers in a globalised labour market (DK0410106F). The government and the social partners have agreed to conduct an in-depth inquiry into training at all levels as a background for further negotiations. The outcome of these negotiations may be one of the most important issues on the Danish labour market for many years. Training is a large and expensive area, and the 'role model' for possible reform is the financing of occupational 'labour market' pensions on the basis of collective agreements, which was initiated in 1990 after thorough tripartite negotiations (DK0310103F).
New managerial principles and employee involvement are other important areas of change in work organisation.
In the context of the introduction of work organisation changes, what kind of contractual and working time arrangements are provided - ie how is the flexibility and security issue being addressed?
Temporary agency work is increasingly being used in Denmark as a means of flexibility, and the coverage of temporary agency work by collective bargaining is also increasing in order to secure stable working conditions in the sector. Part-time work is widespread in some sectors, but that is not a particularly new phenomenon. Denmark's flexible 'hire-and-fire' rules are mentioned above.
In the context of work organisation changes introduced with a view to improving productivity, what specific measures have been agreed?
Specific measures agreed related to productivity include new forms of employee involvement, reorganising work functions, introducing flexible working hours and improving training. For example, a 'free-choice model' has recently been introduced in the finance sector and parts of the food industry (DK0302102F). This makes it possible for individual employees to decide on the use of a certain amount of the overall wage sum, choosing between additional leisure time, pension contributions or pay. It is a precondition that this choice be made with due consideration to continued efficient and competitive production in the individual enterprise.
What are the motives of the parties in concluding such agreements - please indicate the motives of each side (management and workforce), such as reducing costs, promoting flexibility, securing employment, preventing compulsory redundancy, or improving terms and conditions.
For the employers, the overall motive in concluding such agreements is promoting flexibility with a view to increasing productivity. For the employees/unions there is an interest in having a flexible workplace that, through greater competitiveness, will secure jobs - also with a view to preventing compulsory redundancy.
Examples of relevant agreements and initiatives
The parks department at the municipality of Gentofte is responsible for the maintenance of a number of municipal sites. It has agreed to introduce a new work organisation based on shared management. Work and the organisation of working time is planned and performed by self-managing groups, with all the employees having been given relevant training, and with systematic dialogue within and among groups and management. The sickness absence rate has been reduced from 14% to 4%. As well as self-managing groups, other features of the deal include:
- establishment of a central fund corresponding to 1% of the paybill, used for training of employees (including, in particular, personal skills such as dialogue and cooperation);
- frequent meetings, both concerning day-to-day planning and with a longer perspective, and monthly assessments of workplaces that are discussed within the groups (nearly 90% are now satisfied or very satisfied with their workplace);
- performance-related pay, based on the performance of individual groups; and
- flexible working hours over the week and year.
The social partners in the agriculture sector covered by the Danish Confederation of Employers' Associations in Agriculture (Sammenslutningen af Landbrugets Arbejdsgiverforeninger, SALA) and LO initiated in 2003 a joint project entitled 'The competence of cooperation committees - job satisfaction and competitiveness' (Samarbejdsudvalgets Kompetence - Trivsel & Konkurrencekraft) which aims at promoting good working and employment conditions and increasing competitiveness, while ensuring job security for employees. In this connection, SALA and LO have developed a number of dialogue tools that cooperation committees are being prepared to use through training and practice.
The social partners in the central government sector are currently seeking to simplify and modernise regulations and agreements. The aim is to improve the way in which the bargaining system functions, with a view to facilitating the local adaptation of agreements and rules. The sector has, at the same time, presented a new general staff policy which aims to create attractive jobs and to develop good employees and professional managers. The specific focus is on: increased diversity and flexibility on the labour market; a higher degree of mobility among employees and managers; competence development and the development of talents and career promotion; and the professionalisation of managers, including their ability to develop and motivate employees.
The partners in the municipal/county sector concluded a central framework agreement on work organisation in 1999. The framework has made it possible for the individual workplaces to conclude agreements on work organisation, so that working hours may be arranged in accordance with their specific needs. As a consequence, the individual counties and municipalities have concluded local agreements or introduced pilot schemes on work organisation, partly with a view to arranging working hours in relation to the need for the optimal performance of tasks, and partly with a view to arranging the working hours for individual staff categories so as to provide better opportunities for cooperation and teamwork and for reconciling work and private life. In order to underpin the opportunities for flexible work organisation, the social partners have launched a joint project to enable workplaces to gain inspiration and draw on the experiences of other workplaces that have had their own agreement on work organisation for a longer period.
Every year the General Workers' Union (Specialarbejderforbundet i Danmark, SiD) makes a workplace of the year award, receiving considerable media attention. The idea is to promote good practice by identifying workplaces where organisational change and a high degree of employee involvement in work organistion has resulted in a well-functioning company in all respects. In 2004 the winner was the roads and parks department at Bornholm municipal council and in 2003 it was a container factory, Bernhard Crone. Several hundred companies participate in the competition.
What have been the results of collective agreements introducing work organisation changes? Drawing on assessments/evaluations made by researchers or the parties to agreements (employers, trade unions, works councils etc) or other sources, please provide information on issues such as the following:
whether agreements have been successes or failures, and the reasons why in both cases;
the impacts on flexibility and security (eg are there any successful examples of collective agreements addressing this issue as part of work organisation changes?);
the impacts on productivity (has productivity been improved as a result of the work organisation changes introduced?); and
Change in work organisation is part of the DA-LO Cooperation Agreement and thus part of the collective bargaining system at individual workplace level. This system seems to be widespread and well-functioning but it is difficult to say if individual agreements have been successful or not. Some of them take the form of projects supported financially by a local authority or by the European Social Fund. It seems that the SiD 'workplace of the year' prize has had a positive impact. On the other hand, many cases of companies relocating production to low wage countries show that, if the management sees it necessary to move production, it can do so by exercising managerial prerogative and following the Cooperation Agreement's provisions on informing and consulting the employees.
An evaluation commissioned by the Ministry of Employment and published in 2001 examined the achievements of a national programme for 'better working life and increased growth'. The objective of the programme was to improve working life for employees, increase growth and flexibility without exclusion, improve the involvement/commitment of employees and establish coherence or cooperation between enterprises and educational institutions. The main results of the evaluation were that:
- better working life and economic growth can be achieved at the same time - however, 'synergy' does not come easily;
- many different forms of work organisation can be applied;
- traditional cooperation committees did not play any significant role in the process;
- managers are generally more positive than employees;
- increased flexibility and higher motivation is generated;
- there were sustainable results at company level (more than 90% continued the activities six months after the termination of the programme); and
- there was poor dissemination of 'good practices' among the companies involved
The evaluation emphasises that the interaction between company development and the working life of employees is primarily connected to the cooperative relations between employers and employees. Traditionally, the interaction between working life and growth is not an area that has been within the scope of the cooperation between the social partners, either at company or national level.
the impacts on collective bargaining - are such deals broadly considered as concession bargaining, or as 'zero-sum' or 'positive-sum' situations? What are the implications for the structure, process or nature of collective bargaining (eg company versus sectoral? workplace representatives versus trade union? from “distributive” to “integrative” bargaining [with mutual gains for both sides]) and the role of management?
There are no recent signs that indicate a change in importance between the company level and the sectoral level in dealing with work organisation. It might be said that the protocol on work sharing in the influential industry sector agreement (see above under 'Recent agreements on changes in work organisation') is a 'concession agreement', in so far as the employees whose working time is reduced do not receive any compensation when work is fully resumed. Some of the other examples given above are arguably 'win-win' situations based on changes in hierarchical organisation and employee involvement.
Where significant differences of interpretation exist in assessments on these questions - notably between the social partners - please report on the differing views.
The social partners agree that this is an area of great importance. Some of the major challenges when dealing with new forms of work organisation were identified by a Danish trade union representative during a European conference on 'New forms of work organisation' held in Roskilde in November 2002 (during the Danish EU Presidency):
- the risk of reintroducing 'Taylorist' jobs based on production lines;
- attitudinal barriers among employees;
- lack of competence among managers;
- a lack of balance between work and family life (many employees do not want to invest too much energy in the job);
- the position of weak and marginalised groups;
- stress, seen as the most important work problem of today; and
- how small and medium-sized enterprises (SMEs) deal with these challenges. The threshold for setting up workplace cooperation committees is 35 employees, unless both sides agree to establish one. It is thus difficult to know how many SMEs have cooperation committees or a policy in the field of work organisation.
Debate and prospects
What impact has the kind of agreement referred to above had in your country, and what impact might such agreements have in future? What is the current debate on the topic? Please provide an assessment of prospects for the future in terms of work organisation bargaining in your country (differentiating by sector, if relevant).
A topical issue in Denmark is the consequences of an increase in the outsourcing of production, or its total relocation, to low-wage countries, mainly in industry (DK0502102N). If Danish companies still want to be competitive, changing work organisation and organisational structures is an important tool. Equally, education and training of the workforce (including workplace learning) are regarded as tools of great importance for Danish companies in order to face the challenge of relocation. Denmark must compete on skills and flexibility, it is claimed by experts and representatives of the social partners.
A special field of consideration in connection with changes in work organisation is the role of the shop steward (workplace trade union representatives). The shop stewards often play an important role in the concrete process of change and it is often the shop steward that is at the heart of various workplace projects. This raises the question of what competences these representatives should have, as 'agents of change'. They already have bargaining competences concerning flexible working time, which is subject to local agreement.
Another are of interest in work organisation is work (or job) rotation within production clusters. Where the work-sharing protocol to the industry sector collective agreement (see above) applies, workers could be hired out to other parts (companies) of the cluster if needed. (Carsten Jørgensen, FAOS)