Finance and insurance sectors agree small pay rises

The finance and insurance sectors renewed their collective agreements in February 2012, with employees accepting pay increases of just 2% over the next two years. This suggests that the trend of ‘crisis agreements’ still prevails in Denmark. To compensate for small wage increases, such agreements simplify and increase the flexibility of working time rules, improve training and skills development for workers, and improve redundancy terms and social provisions.


In early February 2012, the Financial Services’ Union (FF) and the Union of Insurance Employees (DFL) signed new collective agreements with the Danish Employers’ Association for the Financial Sector (FA). The agreements run for two years and set wage increases of 1% from 1 July 2012 and a further 1% from 1 July 2013.

This staged increase of 2% will probably not be enough to maintain the real value of current salaries.

The economic crisis continues to overshadow collective bargaining in Denmark, as it did in 2010 in the large private sector that covers areas such as manufacturing, service and transport, and in 2011 in the public sector. Wage increases have been negligible.

Social partners in the finance sector should have renewed their 2008 agreement in 2011, but they agreed to delay negotiations until early 2012. This kind of delay is rare in Denmark, but the partners hoped that economic conditions would improve and the postponement would provide a more favourable context for collective bargaining. When this did not happen, employees were happy to accept modest wage increases in return for stronger guarantees of job security.

Financial sector negotiates first

The financial services sector has always maintained an independent collective bargaining culture, separate from both private and public sectors.

Historically pay and working conditions were, in many respects, similar to those of statutory civil servants, being determined centrally and offering employees the same stable employment relationship as civil servants.

However, mergers among financial services organisations have resulted in the emergence of two main bargaining sectors, the banking sector and the insurance sector. Collective bargaining has been decentralised in recent decades and the types of agreements simplified.

Two main types of collective agreements now exist in these sectors, either a standard collective agreement or company-level agreements, the latter giving significant autonomy to the company and its employees. However, common provisions in the standard collective agreement have to be retained in the company-level agreement. Both types of agreement provide for local wage negotiations through which employees can choose to have a proportion of their pay converted into extra holidays, a higher pension or greater working time flexibility.

Working time changes

In the 2012 agreement in the financial sector, the rules on working time have been modernised and made more flexible:

  • all employees will now have the option to work flexitime if their role makes it possible;
  • the agreement introduces a time bank in which an employee can collect flexible hours, overtime and any extra hours worked, including care days;
  • employees can decide whether to withdraw their time from the bank as extra time off work, or as extra payment;
  • the time bank balance has a maximum limit of 481 hours and a minimum of minus 21 hours, unless otherwise agreed locally.

Training and skills

The provision of a training plan is replaced by a new provision making it mandatory for companies to conduct an appraisal interview with employees. The appraisal interview should, among other things, include the preparation of a development plan that clarifies the employee’s skills, ways to improve them and a dialogue on future job opportunities.

Outplacement provisions

With the new agreement, employers have also committed themselves to a ‘code of good outplacement’, which outlines how employees should be treated if they are made redundant due to company circumstances:

  • the company is obliged to offer an outplacement programme equivalent to a value of at least DKK 25,000 (€3,360 as of 8 May 2012);
  • employees have the right to take part in outplacement activities and training during their notice period;
  • employees who are not entitled to compensation will get a month's salary if they have not found new employment by the end of the notice period;
  • psychological support should be offered by the company.

Social provisions

A number of social provisions have been introduced or strengthened, including:

  • improved group insurances;
  • a new provision allowing for local agreement when an employee needs to take leave to care for a family member with a critical illness;
  • the right to paid leave to care for a sick child is increased from two days to five days although the employee will have to show that it was not possible to find alternative care after the second day.

New insurance agreement follows

The trend-setting agreement in the finance sector, covering around 50,000 employees, was followed by an almost identical agreement in the insurance sector, covering around 9,000 employees. Wages will increase by 1% each year during the two-year period, as in the finance sector agreement.

A time bank on the same model and similar social provisions have been agreed, adjusted only in relation to the insurance sector. Provisions on working time have also been adjusted, but here the agreement is closer to the specific working conditions in insurance. A special provision makes it possible for employees to work part-time for one year.

Pay committees introduced

At the employers’ request, both sectors appointed a committee to consider the creation of a clearer and more transparent pay system. The employers’ association FA had wanted to make the existing pay system, mainly based on seniority, more flexible but their proposals were rejected.

At the end of March, union members voted to accept the new agreements; 86% voted yes in the financial sector, and 80% in the insurance sector. Neither agreement gives wage increases that can match inflation, but they provide more job security for employees and this is less costly for employers.

Carsten Jørgensen, FAOS, University of Copenhagen

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