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Collective Bargaining

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Bargaining at national level provides a framework for much of the Danish industrial relations system. Pay and conditions are negotiated between unions or “cartels” of unions and the employers at industry level, but complementary negotiations at company level are becoming increasingly important. Overall 83% of employees are covered by collective bargaining.

The framework

 

Collective bargaining in Denmark operates within a clearly defined structure. At the highest level there are the framework agreements between the LO and the Danish employers' federation (DA), which set the rules for issues which in many other countries would be regulated by the law. The most important agreement at this level is the general agreement which covers the right to organise, rights on dismissal and industrial disputes. The cooperation agreement (see below), which has been revised several times since it initially came into force in 1947, was also signed at this level.

 

Agreements covering pay and conditions, which in the 1960s and 1970s were largely also signed at this national level, are now dealt with at the level of individual industries. In most cases, these industry level agreements leave substantial room for further negotiations at company level, particularly on pay.

 

In the private sector, agreements can be divided into two main groups. For one group, by far the largest, pay is set through local negotiations at company level. The industry-level agreements are limited to other conditions, and for some industries, although not all, these industry-level agreements will also set basic rates – a floor which applies in very few cases. The main manufacturing settlement, the retail and finance agreements all follow this pattern, and, in total, around 80% of employees in unions in the LO confederation (now part of the largest confederation FH) have their pay and conditions set in this way. For the remaining 20%, which include the transport sector and food, the industry level agreements set out all the main terms, including on pay, which are then followed locally.[1]

 

In the public sector, in contrast , the central agreements between the unions and the three employers (central government, regional government and local government) are crucial in setting pay rates, although since the late 1990s a small part of the pay of public sector employees has also been determined through local bargaining.

 

Overall, the coverage of collective bargaining is high. A study, from the Danish employers’ federation DA, found that 74% of those employed in the private sector and 100% of those in the public sector were covered by collective bargaining in 2015. This produces an average level of coverage of 83%.[2]

 

One other factor in the final outcome of negotiations is the frequent intervention of the official conciliator, appointed by the government, to resolve disputes.

 

Who negotiates and when?

 

At national level, the main parties for the framework agreements, which lay down the rights and obligations of the two sides, are the LO and the Danish employers' confederation DA. Collective agreements at industry level, dealing with pay and conditions, are reached between employers' associations and unions or "cartels" of unions grouped together to cover different industrial sectors, one for most manufacturing, one for printing and media and so on. There are also cartels of unions in the public sector. At company level, the negotiations are between the trade union representatives and company management.

 

There is also a fairly rigid calendar for negotiations on collective agreements, with the negotiations for the bulk of the manufacturing sector between the union cartel CO-industri and the employers’ association DI starting the process.

 

Agreements normally last for several years, typically either two or three. The most recent agreements in the private sector, reached in early 2017, run for three years to 2020. In the public sector, they were signed in 2018 and run until the end of March 2012.

 

Most private sector agreements begin in March with public sector agreements beginning in April.

 

The subject of the negotiations

 

As already noted, negotiations in Denmark cover a range of issues that elsewhere are often dealt with by legislation. And since the late 1980s, bargaining at industry level has covered issues such as pensions, increased flexibility in working time – by providing frameworks for local agreements – and collective funds for maternity leave and training.  As already stated, for the overwhelming majority of the workforce in the private sector, only the minimum rates are determined by industry level negotiations and actual earnings depend on negotiations at company level. This is much less the case in the public sector, where the majority of the pay increase is typically determined in the central agreements.

 

There is no system for setting a single national minimum wage.

[1] Hovedforhandlingsområder og -forhandlere i den private sektor 2017, FAOS, 1 December 2016  https://faos.ku.dk/temasider/ok-forhandlinger/2017/fakta/Hovedforhandlingsomr_der_2017.pdf

[2] I Danmark er de fleste dækket af overenskomst   https://www.da.dk/politik-og-analyser/overenskomst-og-arbejdsret/2018/hoej-overenskomstdaekning-i-danmark/

L. Fulton (2020) National Industrial Relations, an update. Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.