Economic boom triggers high employee expectations in bargaining round

The economic upswing complicates the 2007 collective bargaining rounds in the private sector of the labour market as employees have high expectations of generous pay increases, among other improvements in terms of working conditions. Nevertheless, it seems likely that a compromise agreement will be reached, as in previous years. Experience indicates that large-scale conflict will not be a serious threat until the next round – negotiations at local level.

In January 2007, collective bargaining gets underway in the private sector covered by the main organisations, the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and the Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA). The present economic boom combined with the record low level of unemployment of 4% at the end of 2006 make the negotiations more difficult for employers due to the very high expectations of employees, especially with regard to significant wage increases. Nevertheless, as in previous years, a compromise agreement should be possible. Experience has shown that a large-scale conflict will not be a serious threat until the next round, that is, until the negotiations at local level take place (DK9804166N, DK0002167F, DK0402104F).

Further training as main social theme

Considering the fact that wages are mainly negotiated at company level, social improvements will be needed to ensure that the members of the negotiating organisations accept the proposals of the 2007 collective bargaining round. In the past, it has proved to be difficult to agree on a main theme that will facilitate a bargaining compromise. This time, further and continued training has been chosen as the theme to replace – or perhaps rather supplement – the previous themes of maternity and pension provisions. However, the members have shown only moderate enthusiasm in respect of the new theme.

Demands on both sides

Disagreement concerning working time flexibility will again be the crucial hurdle to overcome. The employer side is demanding greater, and especially cheaper, working time flexibility as a condition for meeting employee demands in a number of areas. The trade unions are presenting the traditional demands for higher wage rates, an increase in holiday pay, higher allowances for work at unsocial hours and higher pay for apprentices, trainees and young workers. In addition, the unions propose a number of ‘soft’ demands in relation to further and continued training, improvements in pay for maternity and sick leave, as well as regarding pension issues. Another high priority for the trade unions is better conditions for employee representatives; they are also seeking to include better integration measures as a bargaining theme.

The members of the organisations will have to approve a compromise by a ballot. The deal will probably take the form of an overall draft settlement covering the entire DA/LO field. However, it will be difficult to ensure the necessary support from employees in a period of economic boom and growing expectations unless the compromise comes very close to meeting their demands.

Negotiation procedure

The negotiation pattern that occurred in recent years is likely to be repeated. Consequently, the Confederation of Danish Industries (Dansk Industri, DI) and the Central Organisation of Industrial Employers (CO-industri) will act as leaders and try to reach a trend-setting compromise towards the end of January or early in February. Together, these two employer organisations cover most of the sectors of the Danish economy, including those which are most vulnerable to competition, such as the information technology and telecommunications industry as well as the services sector. Once DI and CO-industri reach agreement, the focus will shift to other sectors of the economy, and LO and DA will aim to achieve an overall result after a coordinating phase in the Public Conciliation Service. Following that, a ballot will take place.

The main demand in the social domain will undoubtedly be training. This has been thoroughly prepared, not least in a jointly managed tripartite cooperation between the social partners and the government.

The social partners have viewed certain examples of government initiatives as interference, especially early in December 2006. These recent measures included extending the sickness benefit period to be paid for by the employers in connection with the agreement on the draft budget, as well as the discussions concerning the work of the Commission for Family and Working Life (Familie- og Arbejdslivskommissionen) (DK0611019I). LO and DA are demanding that the Commission’s report is not issued until after the 2007 collective bargaining round. Overall, however, this has not yet changed the traditional procedure of an initial period where the political system refrains from intervening so that the social partners can organise the collective bargaining process on a bipartite basis.

Carsten Jørgensen, FAOS

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