Longest strike in public sector ends with pay settlement

After two months of industrial conflict in the early spring of 2008 over the renewal of collective agreements in the public sector, nurses as well as child and youth educators returned to work in June 2008. Healthcare workers also went on strike for a long period. Together, these three groups account for more than half of the employees in the public sector at local government level. The final settlements have triggered debate over the regulation of pay levels.

On 16 June 2008, nurses along with child and youth educators in the Danish regions returned to work after eight weeks of strike action. The strike had been called due to their disagreement with the settlement proposal offered by the employer, Danish Regions (Danske Regioner), in connection with the renewal of collective agreements in the public sector in the early spring of 2008. The healthcare workers in the public sector union Trade and Labour (Fag og Arbejde, FOA) also went on strike but resumed work a little earlier. This brought to an end the most wide-scale strike ever held in Denmark’s public sector over the renewal of a collective agreement.

Almost 350,000 hospital appointments, treatments and surgeries were postponed as a result of the strike, despite an effective emergency support plan. Elderly people relying on the elder care sector received only essential care, and thousands of children had to accompany their parents to work. It was expected that the government would use its right to intervene if the social partners failed to reach a settlement, as has happened before in similar conflicts. However, the government abstained from using this option, perhaps because the emergency plan seemed to function effectively.

Gender pay gap highlighted

Early in the bargaining process, the elder care assistants in FOA, as well as the Danish Nurses’ Organisation (Dansk Sygeplejeråd, DSR) and the Danish Federation of Early Childhood Teachers and Youth Educators (Forbundet for pædagoger og klubfolk, BUPL) – of which 85% of the members are women – demanded ‘men’s wages for women’s occupations’, as stated by the President of FOA, Dennis Kristensen. The trade unions announced that they were ready to take industrial action in order to reach their goal of a pay increase of up to 15%, which in the public sector must be considered very high. They claimed that the so-called ‘adjustment scheme’ (reguleringsordningen), which automatically adjusts pay increases in the public sector in relation to the private export sector, had not been able to cover historical differences in wages, basically rooted in gender-specific wages.

The three trade unions also pointed to the apparent difficulty in attracting young people to these areas of economic activity due to the low wages on offer. One outcome of this would be that new recruits in the longer term would be hired from groups of unskilled or unemployed persons. Higher wages were therefore essential to attract young people – combined with improved possibilities for upgrading skills and continuous training.

The employers were sceptical about the trade unions’ claims and arguments. It was, however, significant that the political parties intervened in the collective bargaining round even before it started (DK0803019I). Political intervention is unusual in Danish collective bargaining. A few political parties were willing to favour the elder care workers from FOA with an extra pool of payment beyond the agreed economic framework. This resulted in strained discussions among the trade unions.

Agreement at state and municipal level

As is tradition, the parties to the main agreement in the state – the Central Federation of State Employees’ Organisations (Centralorganisationernes Fællesudvalg, CFU) and the Ministry of Finance (Finansministeriet, FM) – were the first to reach a settlement, that is, before the municipalities and the regions. The framework for improvements agreed at state level usually serves as a guideline for the parties in local government.

The state agreed to a total economic improvement of 12.8% compared with the previous agreement. The increase is to be divided between more pay, higher pensions, more childcare days and more days of paternity leave; the overall raise is to be divided over the term of the new three-year agreement.

Next to conclude the negotiations were Local Government Denmark (Kommunernes Landsforening, KL) and, finally, Danish Regions. The regions negotiated alone for the first time. However, the Minister of Finance, Lars Løkke Rasmussen, had secured his right to veto the outcome. After the structural reform of 2007, which changed the responsibilities of the territorial levels within the public sector, the entire hospital activities subsector had become the responsibility of the regions. As part of the same reform, the regions lost their right to impose taxes and the municipalities were assigned limited budgets. Minister Løkke Rasmussen subsequently announced that total increases of more than 12.8% would not be accepted for the municipalities and regions.

Industrial conflict begins

FOA is the largest trade union in the public sector and represented 200,000 members in the health and social work sector when the collective bargaining round for 2008 was due to begin. The largest proportion of its members work as home carers in the area of elder care, or as hospital orderlies and assistants. Traditionally, the sector is characterised by low wages and is not very strike prone. However, during the period leading up to the scheduled start of negotiations, the home carers in the elder care sector demonstrated their discontent with their wage and working conditions several times. FOA was at the forefront of the public debate, and the home carers gained the sympathy of large sections of the population. Mr Kristensen announced early on that, if FOA did not get an extra amount of DKK 5 billion (€670 million as at 18 September 2008) earmarked for its members alone, the trade union would issue strike notice, as was their right according to the rules.

The same willingness for strike action was expressed by the members of the Healthcare Cartel (Sundhedskartellet), consisting of 11 trade unions but spearheaded by the nurses in DSR, and the child and youth educators in BUPL. These unions had announced that they expected substantial pay increases; otherwise, they were prepared to take industrial action. The negotiations between the Healthcare Cartel, which demanded a 15% increase, and Danish Regions soon broke down and 70,000 nurses went on strike on 16 April 2008. FOA began its strike in the area of elder care on the same day; this protest was initially limited to 23,000 home carers but later expanded to a further 12,000 carers.

In BUPL, events took a slightly different turn. The federation had signed an agreement but, as expected, it was rejected by its members in a ballot. A total of 61% vetoed the agreement and the child and youth educators consequently went on strike on 19 May. This was followed by a lockout notice issued by KL that would have encompassed all municipalities. However, on 13 June, BUPL agreed to a settlement with the municipalities and regions – the same day as the nurses also reached a deal. FOA had already concluded settlements with KL and Danish Regions, which subsequently were accepted in ballots on 29 May and 6 June respectively. On 25 June, members of both the Healthcare Cartel and BUPL voted yes to the compromise settlement, by a large majority of 86%. Alternative options were not realistic and thus eight weeks of strike action had definitively ended.

Results of strike action

It is debatable whether the comprehensive strike resulted in worthwhile increases above the first agreement of 12.8%, which in itself was a good result compared with other years – or whether it was ‘much ado about nothing’. The latter opinion was expressed in an analysis (in Danish, 197Kb PDF) by labour market researchers Jesper Due and Jørgen Steen Madsen at the Employment Relations Research Centre (Forskningscenter for Arbejdmarkeds- og Organisationsstudier, FAOS) in the Department of Sociology at the University of Copenhagen (Københavns Universitet, KU).

FOA received improvements corresponding to a total of 13.3% for the new three-year period; DSR also got 13.3%, which was well short of the 15% it had sought. Meanwhile, BUPL obtained improvements of about the same size. The chief negotiators claimed that they were satisfied on behalf of their members. The President of DSR, Connie Kruckow, added that it was ‘the best result possible taking into account that the negotiations in reality were controlled by the Minister of Finance’.

On the other hand, the long strike depleted DSR’s conflict funds and the organisation had to take out loans to fund its striking members. After the settlement, DSR announced a significant increase in its membership fee that was equal to – or some say higher than – the wage increases achieved by the collective agreement. During the summer of 2008, FOA revealed that part of its workforce would be cut in order to avoid an increase in the membership fee.

Gains for some but losses for others

The exact calculations behind the percentages quoted are in fact rather complex and the result is open to several estimations. The following analysis will present the main features concerning the 13.3% granted to FOA, examining how it was possible to gain half a percent more than stipulated by a very determined minister of finance.

Not all members of FOA will receive a 13.3% increase in pay; the total amount achieved is not shared equally among the occupational groups within the trade union. The home carers took the greater part of the increase, which means that other groups actually received a little less than 12.8%.

Wage bargaining in the public sector is centralised and negotiations are centred among employees’ coalitions or cartels and one employer for the state, municipality and regions respectively. The total amount of improvements, that is, the overall economic framework set aside for negotiations, in reality do not change much. Therefore, the trade unions have a solidarity principle that no one should get more at the expense of the others. Nevertheless, this system also implies that the unions are competitors.

By trying to operate independently, Mr Kristensen broke this traditional understanding among the trade unions in the public sector. If a union can achieve more by going on strike, the next bargaining round would most probably feature several strikes. Influential trade unions such as the Danish Teachers’ Union (Danmarks Lærerforening, DLF) warned FOA and also DSR, which demanded 15%, about breaking the principle of solidarity. However, the unusual step which the latter unions took did not lead to further acrimony among the trade unions because the achievements of FOA and DSR were within acceptable limits; 13.3% was within a tolerable range. Another factor which made it acceptable for all is the presence of the special adjustment scheme mentioned earlier.

Adjustment scheme evens out pay increases

The adjustment scheme ensures that the increases in the public sector follow the level of the private sector. For instance, if the increase in the public sector – combining general wages, pension, extra days off, payment during sickness and maternity leave, excluding holiday pay – adds up to a total increase of 3% in a particular year and this percentage is 4% in the private sector, the adjustment scheme will ensure that 80% of the difference will be released the following year in the public sector. This regulation also means that higher wage increases in the public sector will automatically be reduced.

The latter situation is actually the case in 2008–2009, whereby the wage increase in the public sector is high according to the agreement. In line with the adjustment scheme, it will be lower in the following year and lower still in the last year of the three-year term. Consequently, the half percentage over 12.8% will be absorbed and regulated by the adjustment scheme. The presidents of DSR and FOA argued during the negotiations that the scope of the adjustment scheme should be diminished; otherwise, collective bargaining on wages in the public sector was meaningless.

Commentary

Collective bargaining and the long-lasting conflicts in the public sector do not have a real effect on the size of wage developments in that sector. Due to the adjustment scheme, wage developments in the private and the public sectors are closely connected and improvements in the economic framework set aside for collective bargaining in the public sector will, in reality, be reduced by the adjustment scheme. Therefore, collective bargaining in the public sector only concerns the division of the framework and the timetable for payment of the wage increases. Seen in this perspective, the long strikes were effectively ‘much ado about nothing’.

On the other hand, the conflict is a clear sign of the level of discontent that must be taken seriously by the employers in state and local government. It should also be seen as a signal for the responsible social partners to discuss the future of the centralised wage formation in the public sector. Finally, the significant political intervention should be noted, as offering special pools of payment outside the framework to certain occupational groups sent the negotiations on a collision course before they even started.

Carsten Jørgensen, FAOS

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