Denmark: Private sector collective agreements concluded – despite difficulties

Collective agreements concluded in March in the private sector provided for small wage increases and improvements to education and training. However, many union members voted against an agreement about systematic overtime and measures to avoid social dumping. The deals follow the pace-setting Industrial Agreement concluded in February by the social partners in the manufacturing sector.

At the end of March 2017, the social partners in the private sector, covering 550,000 employees, concluded their collective agreements. As is traditional, the first parties to conclude an agreement were the social partners in manufacturing – the Confederation of Danish Industry (DI) and the Central Organisation of Industrial Employees (CO-industri). On 12 February they concluded the Industrial Agreement, which is pacesetting for the whole of the private sector.

Wage increases and more training

Training options have improved significantly as part of the collective agreements. The aim is to provide an economic boost to training, which will upgrade unskilled workers to skilled ones, and assist skilled workers to gain further competencies. Wages were also raised. For the first time since the crisis, a collective agreement reflected optimism: the wage increases were visibly higher than in the first three agreements during and after the crisis, in 2010–2012, 2012–2014 and 2014–2017 (when increases did not exceed 1.6%). The increase in hourly pay in the new Industrial Agreement is DKK 2 (€0.26 as at 19 June 2017) every April for the three years covered by the agreement. That is an increase in the agreed minimum wage in the sector of a little more than 2% every year, or 7% over the three-year period.

One of the most significant changes was a gradual rise in the ‘free-choice wage account’ from 2% to 4% of the total wage during the agreement period. This account, which was initiated in 2007, is an amount set aside that an employee can chose to spend either on extra holiday leave, higher pension contributions, more childcare days or senior holidays (available from five years before the official pension age). The employee’s choice is normally closely connected to age and marital status. Seniors will have the right to ‘buy’ extra senior holidays through the free-choice system which, in total, can give 32 days of leave per year.

Great dissatisfaction with compromise proposal

As is traditional, the collective bargaining round is finalised by the Conciliation Board at the House of the Danish Labour Market in Copenhagen. The agreement goes before the Conciliation Board, partly because there will always be a few sectors that cannot agree and in which the negotiators need help from the Public Conciliator. More importantly, this tradition allows all sectoral agreements to be set in a single compromise proposal, or ‘a concatenation of the agreements’, set up by the conciliator in order to allow one joint ballot among the union members. This rule originated 100 years ago from a demand by the Confederation of Danish Employers (DA), which wanted to avoid smaller sectors staying outside the agreement and then striking after larger sectors had concluded their agreements. If union members reject the compromise proposal, the Danish Confederation of Trade Unions (LO) will be made aware that there is conflict among its members.

On 20 April, 56.5% of the union members voted ‘yes’ to the final compromise settlement proposal set up by the Public Conciliator. There was a historically high participation rate (51.8%) by LO members in the ballot, with only the Danish Food and Allied Workers’ Union (NNF) recommending that its members reject the compromise settlement. Thus, it seemed that the new agreement had a high level of legitimacy. However, the result of the ballot showed that most members of Denmark’s largest union, the United Federation of Danish Workers (3F), had also voted ‘no’, as had the Painters’ Union (Malerforbundet), the Union of Danish Railway Workers (DJ) and – as expected from its recommendation – (NNF) . Suddenly the high percentage of turnout seemed to be a result of dissatisfaction with the final settlement proposal, rather than the opposite.

The protests were directed against one provision in the agreement and the lack of another. The fight against social dumping is always high on the agenda in two of 3F’s negotiation areas, construction and transport. In the bargaining rounds since 2007, the employer organisations have categorically refused to accept any kind of ‘chain liability’ in the agreements, which would mean ensuring that subcontractors are linked to the agreement in force and hence avoid social dumping. This time, union negotiators were again met with the same attitude, and union members found the limited concessions obtained unacceptable after so many bargaining rounds.

The other element of widespread discontent was a new right on the part of employers to introduce ‘systematic overtime’ –that is, a working week of 42 hours (37 hours being the norm in Denmark). Again, this mostly affected 3F’s members in construction, transport and the food industry, but also in parts of the manufacturing sector. Union members claim that, under this agreement, an employer can order one hour of overtime every day in a week even if employees do not want to do it. Thus, the slogan ‘no to a 42-hour working week’ was often heard in the period up to the ballot.

It is correct that, under the agreement, employers can give notice of overtime – four days before the first day – without the agreement of the employees (which previously had been a condition). However, overtime has always been a possibility. In the new agreement, the extra hour a day is paid as overtime, which it was not before. Furthermore, time off in lieu can be taken instead.

Commentary

Behind the discontent and the protests directed towards union leaders for ‘feathering their own nests’ is a continuing dissatisfaction with the ‘concatenation of the agreements’. As the conciliator collects the elements of the different agreements in one proposal settlement, the areas or sectors where agreements have not been reached are encompassed by the proposal settlement. The likelihood of the settlement being rejected by the union members’ ballot is small, because most of the large unions usually vote ‘yes’. Those who vote 'no' consequently claim that the settlement proposal is undemocratic and only to the advantage of those unions with more straightforward working conditions, such as in manufacturing and services. This can put the members of the Danish Metalworkers’ Union (Dansk Metal) and the National Union of Commercial and Clerical Employees (HK Danmark) on the 'yes' side and most members of 3F on the other.

However, the compromise proposal has also ensured that smaller sectors get the same wage increases as manufacturing. Nevertheless, the issue now is how the LO unions – and especially the leaders of 3F – might be able to negotiate with the no-voters in order to avoid the LO unions splitting into two parties during collective bargaining rounds. One of these, and the more powerful, would mainly consist of Dansk Metal and HK Danmark. On the other side would be parts of 3F (its construction and transport sector affiliates), NNF and Malerforbundet.

If this basic disagreement continues, it will not be very constructive for coming renewals of collective agreements; moreover it will, in the long run, be unsustainable for the whole trade union movement. One solution could be CO-industri including principal claims, such as combatting social dumping, from construction and transport unions, when the main bargaining agenda is set up.

If the negotiating unions had established a closer connection in this round, it is questionable whether the much criticised ‘systematic overtime’ would have been accepted.

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