Limited options expected in new bargaining round

In early January 2012, the social partners in manufacturing, CO-industri and DI, began a new round of collective bargaining to renew the 2010 two-year agreement. It was decided in 2010 that the agreement should cover two years only, as by 2012 the repercussions of the economic crisis might have eased off and a new round of bargaining could take place at the start of an upswing. However, this has not been the case and negotiations in 2012 will again be influenced by the crisis.

Background

On 4 January, the social partners in the manufacturing industry, the Central Organisation of Industrial Employees (CO-industri) and the Confederation of Danish Industry (DI), began the negotiations that mark the start of the renewal of collective agreements in the private sector.

The negotiations encompass 600,000 employees within the large sectors of manufacturing, transport, construction, trade and services. Traditionally, the negotiations begin in the manufacturing industry, which covers a quarter of a million employees and is the largest sector.

When the two negotiators from each side left the conference room on the first day, they confirmed what was already expected, that there is no prospect of a wage increase for employees.

The economy is still in crisis and the employers have again argued, as they did in 2010, that costs must be reduced and competitiveness increased (DK1003011I).

The main negotiator for CO-industri was its President, Thorkild E. Jensen, who was modest in his predictions but said that it was unlikely that employees would secure even small wage increases in this bargaining round.

The new chief negotiator for DI, CEO Karsten Dybvad, made it clear that not even increases to help secure real wages, namely the balance between increases in wages and prices, were to be expected.

The negotiations are expected to finish on 10 February.

Invitation to tripartite negotiations

In September 2011, Denmark elected a new government. After 10 years in opposition, a coalition of the Social Democrats, the Socialist Peoples’ Party (SF) and the Social Liberal Party took office under new Prime Minister Helle Thorning-Schmidt.

During the election campaign Prime Minister Thorning-Schmidt had argued the need for tripartite negotiations concerning the labour market.

The Danish Confederation of Trade Unions (LO) was eager to hold the negotiations before collective bargaining in January and the employers in the Danish Employers’ Confederation (DA) accepted the invitation.

The topics to be discussed mostly concerned active labour market issues, which is the government’s area of responsibility. Neither employers nor employees would ever miss an opportunity to influence these policies, although the employers did ask for the tripartite negotiations to be postponed until after the collective agreements have been renewed. They stressed that collective bargaining is autonomous and that is entirely up to the social partners to decide which topics are going to be negotiated.

Expected wage developments

During the negotiations, the employees’ negotiators in CO-industri will try to maintain a wage level that secures the real wage level. In the manufacturing industry, actual wage increases are decided at company level on a yearly basis after the conclusion of the sectoral agreement. However, the sectoral-level agreement gives an indication of what might be expected at company level.

However, the labour market economists from LO say that it is realistic to expect that some sectors will see a rise in real wages while others will maintain the status quo. This will depend on the economic development of each sector in 2011 and during 2012.

Employee requirements

It is reasonable to believe that, with the current economic situation, CO-industri will try to enhance the job security of employees in various ways.

In 2010, employees sought more job security and severance pay was agreed for the first time ever. It is possible that this topic will be raised again, but security should be understood in a broader sense than the guaranteeing of severance pay or prolonged notice periods.

‘Community and security’

In October 2011, the largest union in the bargaining cartel, CO-industri, and the largest union in Denmark, the United Federation of Danish Workers (3F), drew up its requirements for the upcoming negotiations under the theme ‘Community and security’.

3F points out that the Danish model of regulating the labour market requires that all employees support it since they all benefit from it. Danish collective agreements are area agreements, meaning that all employees are covered by the actual agreement, regardless of whether they are members of the union or unions that took part in the negotiations.

However, the unions also argue that the process is costly for them since they have to meet considerable expenses to administer issues raised by the social partners, such as managing vocational training and funding health and safety costs.

They argue that since all employees, union members or not, are covered by such provisions, then everybody should make a contribution – they should not be funded solely by union members.

The Danish Union of Electricians (DEF) has suggested that all employees covered by an agreement should pay a small fee to a ‘common fund’. The idea is to limit the expenses taken out of membership fees.

The ‘security’ of all employees, including the unemployed, will also be discussed in the upcoming talks.

Government amendments in recent years have restricted access to unemployment benefits and shortened the period of entitlement from four to two years. Furthermore, the level of allowance has not mirrored the level of pay increases over the previous decade, which means that even the low paid will be noticeably poorer if they go from paid work to unemployment benefits. Given this, industrial employees might press their negotiators to secure longer notice periods, particularly if they do not win any concessions on topics they see as important, such as real wages and education.

Education

Education is a recurring theme in the trade unions’ bargaining demands. It has also been designated as a job security issue in the context of anticipating and managing economic restructuring. An obvious possibility here relates to demands to further develop the existing education funds.

Social dumping

Initiatives from the new government against social dumping laid down in the new budget mean that social dumping is not as immediate an issue this year as it was in 2010, either for collective bargaining or for future tripartite negotiations. The government has set up a committee to deal with the issue of social dumping to which the social partners are also invited.

Questions about social dumping are difficult to solve purely via collective bargaining, since the employers involved in social dumping are often those who operate outside the organised labour market and who are not covered by collective agreements.

However, there are questions that lie within the scope of collective bargaining.

In construction, 3F has suggested that a special allowance be paid when employees are not on piecework. This will give a bonus to those who work according to an agreed, but lower, hourly minimum wage. These workers are typically from eastern European countries. The employers reject this suggestion, claiming that it would result in an actual rise in hourly pay, and the construction workers covered by the Danish agreement would no longer be competitive on the market.

The last topic is the fight against bogus self-employed construction workers (DK0801019Q), which has been going on for many years. Social partners in the sector already have provisions in the collective agreement about how to deal with the bogus self-employed. The problem on the employees’ side is that there no set procedure for raising the matter with employers, and subsequently they want to tighten the provisions.

Risk of conflict

In Denmark, when employers insist on very low or no increases in labour costs there is a risk of major industrial relations conflict. However, as in 2010, it seems that both employees and their negotiators know that now is not the time to battle for higher wages, but rather to try and develop various security measures for employees.

One requirement, however, could be decisive. As in 2010, the Union of Commercial and Clerical Employees in Denmark (HK) has demanded that the so-called 50%-rule is cancelled (DK1001019I).

This rule stipulates that the prerequisite for salaried employees and clerical workers in a company to be covered by a collective agreement is that HK can prove that at least 50% of the potential union members are members of HK. The rule goes back to the early days of the Danish collective bargaining model, when the employers in DA required that trusted employees in administration (white-collar workers) were excluded from concluding collective agreements. Over the years HK won the right to have an agreement if they organise 50% of their potential members.

HK/Private, one of four HK departments, says it will stand firm on the demand and has already said it will recommend a no vote to the final settlement if this demand has not been met.

However, this might not mean that industrial conflict is approaching. CO-industri President Thorkild E. Jensen will forward the requirement, but not as an ultimate demand. The employers are more than reluctant to dismiss the rule. They claim that if HK wants agreements it is welcome to try to recruit new members. Furthermore, there are no reasons to believe this requirement will be supported by the other unions’ members when they vote for the final settlement proposal in a ballot.

Commentary

On 6 January the negotiations in transport between 3F and DI began and will run parallel to negotiations in the manufacturing industry. The main negotiator and President of 3F Transport, Jan Villadsen, made it clear what he expected of his own negotiations, but his comment could also sum up the approach of every other organisation taking part in this year’s collective bargaining for the private sector. Mr Villadsen said:

It’s about security at all levels. Education while in work and education while in the notice period. It’s about better conditions for young people, because we have lost a generation of young people, and it’s about special schemes for older employees.

Carsten Jørgensen, FAOS, University of Copenhagen

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