Unions accept pay settlement proposal

In April, Denmark’s unions accepted a pay settlement proposal based on the 2010 collective wage negotiations. The ballot was in doubt because the clerical union HK seemed likely to overturn its traditional ‘yes’ vote. The other large union 3F usually votes ‘no’ to the collective agreement, and if this had happened the labour market would have been thrown into conflict. But in the event both unions voted yes, so the proposal was carried by a comfortable majority despite a low turnout.

The membership ballot on the final settlement proposal that ended the collective bargaining round between the Confederation of Danish Employers (DA) and the Danish Confederation of Trade Unions (LO) turned out to be a ‘yes’. But it also turned the traditional voting pattern upside down. During the build-up to the collective bargaining round early in 2010 there were already clear signs that members of the Union of Commercial and Clerical Employees in Denmark (HK), who normally vote in favour of the wage offer, would vote against the final proposal.

The conflict arose over the so-called 50% rule. The rule was introduced in 1948 when HK succeeded in signing its first national agreement, and it stipulates that half of the salaried employees in a given company must be members of HK before HK can demand that they are covered by the collective agreement in the company. This exception has roots in the first basic agreement in Denmark in September 1899 (Septemberforliget). At that time, salaried employees were seen as trusted members of staff and were therefore excluded from taking part in collective bargaining. The rule has important implications during general conflicts in relation to the renewal of collective agreements, since the employees not covered by the agreement cannot take part in an industrial dispute.

During the wage negotiations early in 2010, a member union of HK, HK/Privat, had called for the 50%-rule to be scrapped, but there was no indication that it would be able to carry the demand through. HK/Privat stated that if the 50% rule was not dropped, its members would vote against the wage offer.

All groups of 3F vote ‘yes’

There was, therefore, a real possibility that HK would for once vote ‘no’ to the wage offer. If the members of the other major Danish union group, the United Federation of Danish Workers (3F), were also to vote ‘no’, as they traditionally do, the situation would be even worse. A vote against the wage offer might give rise to major conflict in the Danish labour market that would have devastating consequences in a time of economic crisis.

As the table shows, this concern proved wrong. Certainly, HK members voted ‘no’ in large numbers, because the 50%-rule was not abolished in the final settlement proposal, but in turn 3F voted according to an entirely new pattern.

Result of membership ballot on the final settlement proposal, 2007 and 2010
  2007 2010
  Yes No Yes No
3F

37.2%

66.8%

69.9%

30.1%

HK

78.4%

21.6%

26.2%

73.8%

Other LO unions

65.7%

34.3%

80.9%

19.1%

LO total

55.6%

44.4%

63.8%

36.2%

Note: The total turnout in 2010 was 33.9% of union members. This percentage is usually higher when there are more ‘no’ votes.

There was a majority of ‘yes’ votes in all member groups of 3F, and overall between two thirds and three quarters of the union members voted ‘yes’. For the first time since the generous settlement in 2000, the majority of 3F members voted ‘yes’. This is remarkable because even in 2000 there was a ‘no’ majority in the transport group. The transport division of 3F is traditionally the group most steadfast in voting ‘no’, so it is significant that it was this group that played such a crucial role in the efforts to reach a settlement and to obtain the necessary number of ‘yes’ votes among union members (DK1003031I). If this is a new tradition that has been created within the largest member union of LO, it is likely that HK’s vote will become less important in the future.

Because of developments in the employers’ representative organisations it was necessary for the employees – and especially 3F members – to make their own adjustments in the wage bargaining round. The Confederation of Danish Industry (DI) has expanded and now covers many new sectors, not least services and transport. The main difference concerning the conclusion of collective agreements is that in the 2010 collective bargaining round, DI for the first time had direct responsibility for negotiating the major industry agreement with the employees’ negotiation cartel, the Central Organisation of Industrial Employees (CO-industri), as well as the guiding settlements in transport with 3F Transport.

Bargaining strategy of 3F

This places 3F firmly in the centre of power. 3F has a unique opportunity to coordinate the process, with 3F Industry as the key player in CO-industri together with the Danish Metalworkers’ Union (Dansk Metal), combined with 3F Transport as DI’s strategic counterpart in the normal-wage area (where wages are negotiated at national level, in contrast to minimum-wage areas such as industry, where wages are negotiated at local level once a year). But this requires strong coordination within the union, not least between the Industry and Transport groups. Such interaction has not been the tradition; in the past, each group has dealt only with its individual businesses. 3F Industry has been dependent on cooperation with Dansk Metal in CO-industri and has kept the other groups within 3F at arm’s length. This has given 3F Industry considerable influence, but left the other groups in a more subordinate position. With DI positioned as the main actor in both sectors of industry and transport, this approach was no longer tenable if the unions were to avoid being played off against each other.

In the period up to 2010, relationships changed within 3F. After the recent election of Jan Villadsen as new group leader of 3F Transport, close cooperation developed between him and the long-standing leader of 3F Industry, Børge Frederiksen, who is also one of two top negotiators in CO-industri. Thus, it was Mr Villadsen and Mr Frederiksen who, in preparation for the meeting of the advisory board of 3F in autumn 2009, took the initiative to change the traditional group strategy. Instead of adopting a long list of different requirements which would create high expectations among the members, yet were unlikely to be fulfilled in a time of crisis, they adopted a resolution that focused on a single theme: protection against social dumping.

The other group leaders and the union presidency supported this strategy. It contributed to a realistic level of expectations that meant that all sides could reach the settlement that the members subsequently accepted in a ballot. This development would have been unthinkable without the crucial change in the negotiation structure of the employers. It has created close links between negotiations in industry and transport. Although the agreement in industry is still trend-setting for the other sectors under LO/DA, it was first signed when the parties could see that soon afterwards the conclusion of a transport agreement would follow.

Rise of a new bargaining pattern?

For DI’s chief negotiator, Hans Skov Christensen, it was imperative to demonstrate that DI could fulfil its new, extended function effectively and successfully. Therefore, much was done to ensure a good climate for negotiations between the new players in transport. The coordination between industry and transport within 3F undoubtedly contributed to the good negotiation climate.

It is clear that the general awareness of the economic crisis made it easier to change the approach of 3F, and under more favourable economic circumstances it may be difficult to get the many critical 3F members to stick to the pragmatic course they have taken. But on the other hand the negotiators have seen that the new negotiating structure places them in a favourable position in the bargaining rounds, and they will probably make great efforts to maintain this favourable position.

It should be mentioned that the strategy of focusing on social dumping was only partly successful (DK1003031I). The unions in transport and construction, also headed by 3F, did not achieve their aim of establishing complete employer liability for agreed wages to encompass subcontractors –so-called ‘third party liability’. On the other hand, it is unlikely that they expected the employers to accept their proposals to the letter.

Jørgen Steen Madsen and Carsten Jørgensen, FAOS, University of Copenhagen

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment