Denmark: Tripartite negotiations – staged approach seems to be working

When tripartite negotiations broke down soon after commencing in 2012, many labour market researchers and social partners predicted the government would no longer invite the social partners to such negotiations. However, they have started again but only after the involved parties agreed to discuss one topic at a time.

Background

In Denmark, the social partners alone negotiate all aspects of wage and working conditions, but there is also a long tradition for involving the social partners in decisions related to the labour market and welfare-related policy. This takes place partly via numerous committees, councils and boards, but also through tripartite negotiation at the invitation of the government. In Denmark,  tripartite discussions take place on an ad hoc basis and not on a regular basis as in some other EU countries.

In 2012, the then Social Democratic government invited the social partners to tripartite negotiations on several subjects but with a particular focus on working time. However, the negotiations broke down before they had really started. During the first week, the unions declared that they could not negotiate on increased working time, as this was mainly a matter for collective bargaining. The Minister of Finance then cancelled the negotiations. Labour market experts and politicians foresaw a long and dry period before any government would again try to initiate tripartite negotiations.

New government uses new approach

Thus, when the new liberal government in 2016, against all odds, invited the social partner confederations to a new round of tripartite negotiations, the scepticism was tangible. However, Prime Minister Lars Løkke Rasmussen has already concluded two agreements with the social partners and they are preparing for a third round of tripartite negotiations in spring 2017 – that is, after collective bargaining in the private sector is concluded around 1 March.

It should be added that invitations to tripartite negotiations are sent to the social partners at confederation level only (six unions and employer confederations, and Local Government Denmark (LGDK) and the Danish regions). The largest number of representatives comes from the pace-setting confederations in the private sector, the Confederation of Danish Employer (DA) and the Danish Trade Union Confederation (LO). DA and LO are also the first to be contacted.

Labour market experts have credited the apparent success of these negotiations, in contrast to those of the previous incumbent in the chair, Helle Thorning-Schmidt (Social Democrats), to the stretegy of the Prime Minister.

Ms Thorning-Schmidt and her government put pressure on the unions before the negotiations had started by wanting them to deliver DKK 4 billion (€0.53 billion) in savings. One of the proposals was to increase working time by one hour a week and to cancel two public holidays, as had been done in other Member States. The government – and the social partners – also had several other subjects, such as increased productivity and skills development, on the agenda. However, when the unions refused to negotiate working time, the whole set-up collapsed.

In contrast, Mr Løkke Rasmussen has opted to negotiate one subject at a time. The first was how to integrate the extensive flow of refugees into the labour market. This was not on the original agenda for tripartite negotiations, but was forced on them by the unusual situation in Europe at the time. The government made it a condition for further negotiations on improved recruitment and the strengthening of internships that this subject came first. This way the social partners were asked to deliver, or forget the invitation, and the social partners accepted because both subjects were too important.

Important agreement on internships agreed

The agreed main themes of the second round of negotiations were therefore:

  • anticipating the challenges of recruitment;
  • internships – more skilled labour;
  • adult and continuing training.

The strategy seems to have had the intended effect. During both negotiation rounds, one party had to bend their views more than they liked.

In the first phase, it was the unions that were under pressure to deliver a phased-in model that could pave the way for faster integration of refugees in the Danish labour market. The unions view such a model as being a potential means for underpayment and social dumping, but the appeal of having a say in the second wave of negotiations, especially about more apprenticeships, which is a key issue for the unions, was stronger. In the end they accepted an agreement according to which refugees are hired for an apprentice wage. The agreement was reached in the spring of 2016.

Thus, in the second round it was the employer confederations' turn to show flexibility, as they were under pressure to deliver an internship guarantee. The compromise settlement, reached in August 2016, rewards companies that take on apprentices (PDF) and makes employer-funded education fees more expensive for those who do not. All in all, the government and the social partners consider that the agreement will create 8,000–10,000 more internships annually.

Third round ahead

It was the intention from the start of the negotiations that adult and continuing training should also have an overhaul. However, time ran out and the subject will now be discussed when the collective bargaining round in the private sector ends around 1 March, if no conflicts arise. This makes sense as education and training will be hot topics in the collective bargaining negotiations. However, it could be to the disadvantage of the unions if the employers make a strategic move by postponing the ‘real’ negotiations until the tripartite talks on the subject, when the government will also be present.

Meanwhile an independent expert group will draft recommendations for the introduction of a system of adult and continuous training that better meets the requirements of Danish companies and the long-term requirements for a ‘mobile and qualified work force’, as mentioned in the terms of reference of the tripartite negotiations.

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