New industry agreement marked by innovatory elements

The first new collective agreement for 2007 was signed in Denmark at the end of February. The renewal of the agreement contains four significant changes in relation to: continuing training, strengthening of decentralised bargaining, ‘free-choice’ accounts and gender equality.

The Danish collective bargaining round for 2007 was awaited with a certain degree of anticipation. The positive economic climate prior to the negotiations created expectations of substantial improvements among employees (DK0612029I). The first agreement to be signed was the Industry Agreement between the Central Organisation of Industrial Employees (CO-industri) and the Confederation of Danish Industries (Dansk Industri, DI), which took place on 23 February after several disrupted attempts.

This agreement is traditionally the first to be signed and sets the pace for subsequent agreements in the private sector under the umbrella of the Danish Confederation of Trade Unions (Landsforeningen i Danmark, LO) and the Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA). The Industry Agreement does not, however, definitively settle the wage increase during the three-year agreement period apart from establishing the increase of the minimum wage rate, which in practice only applies to a few groups of employees. The actual wage negotiations follow during the spring of 2007 in the companies (DK0703019I).

Innovative aspects of agreement

This year’s agreement in industry contains a number of significant changes. With regard to four elements in particular, the new Industry Agreement can be argued as being one of the most innovative in the history of Danish collective bargaining, namely in terms of:

  • further access to continuing training;
  • strengthening the role of the employee representative at company level;
  • introducing a ‘free-choice’ account for employees;
  • allowing three weeks of paternity leave.

Continuing training

In the preparation of the strategy for the 2007 collective bargaining round, it was emphasised that a greater effort towards continuing training should be a high priority of the agreement. The employee representatives cited increasing competition pressure in companies on a day-to-day basis due to economic globalisation. Continuing training was seen as a means to develop the competitiveness of companies.

The collective agreement provides for the establishment of a Competence Development Fund of Industry (Industriens Kompetenceudviklingsfond), to which the employers pay €35 per employee each week, increasing to €70 over the agreement period. These funds will be used to finance the employees’ wages while they are on two weeks of continuing training.

Stronger role for employee representatives

The agreement will strengthen the bargaining system at company level. From now on, employee representatives are to receive a payment as compensation for their extra work. This sum will amount to between €1,000 and €4,000 a year depending on the number of employees represented. The remuneration will add prestige to the role and will possibly improve the chances of recruiting and retaining these representatives who are pivotal to the bargaining system at company level, especially in a period of further decentralisation. The payment will be made from a fund set up by the social partners in order to avoid the employer having to pay directly through the company payroll.

More choice for employees

For some years, the social partners have discussed whether the collective agreements should provide for more individual choice concerning pay, time off or pensions. By introducing more ‘free-choice’ options in the collective agreements, the current tendency towards individualism would be met without endangering the collective foundation. Similar arrangements were introduced in the abbatoir workers’ agreement between the Danish Food and Allied Workers’ Union (Nærings- og Nydelsesmiddelarbejder Forbundet, NNF) and DI (DK0302102F).

That system has functioned satisfactorily and DI recognised that there was interest in introducing an element of free choice in the renewal of the Industry Agreement. This resulted in the introduction of a ‘free-choice’ account. Funds to finance the five special holidays and the public holiday payment will be collected in this account, which is supplemented by 1% of employees’ wages during the agreement period. The employees then choose whether these funds should be paid as salary, taken as time off or put towards a pension.

Paternity leave

The Industry Agreement extends paternity leave to three weeks. This basically constitutes an extension of the rules concerning payment during maternity leave, which were introduced in the Industry Agreement in 1995. Nonetheless, a new provision is that these three weeks are to be reserved for fathers and otherwise will be annulled. This represents an important advancement in the area of gender equality, which for years has been on the agenda of trade unions with many female members. A further improvement is that women have obtained the right to receive pension contributions during maternity leave.


The former agreement of 2004 has been referred to as a ‘maintenance agreement’ (DK0403103F): in other words, the result was a little more of everything. Accordingly, the 2007 collective agreement may be characterised as being a reform agreement in the context of the series of innovations made.

Cartsen Jørgensen, FAOS

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