Collaboration on the labour market

The Danish labour market model is built on three main pillars:

• A collaboration between employees, employers and the state
• A very high level of union organisation
• Collective agreements

A characteristic feature of the collaboration between employees, employers and the state is that as long as the three parties can themselves resolve issues regarding wages and working conditions, the state interferes as little as possible.

The labour market parties are better and faster at tailoring agreements for individual companies or sectors, and are more likely to accept conditions that they themselves have been part of determining. This is one of the reasons why it is rare to see strikes in Denmark.

Another characteristic feature of the collaboration is that the three parties are always involved when new legislation is considered which could affect the labour market.

The Danish collective agreement system is based on the fact that more than 75% of Danish workers are members of a trade union. The unions are joined in national federations, which in turn are joined in a few central organisations. Employer organisations have the same structure. Until a few years ago, a collective agreement applied for two years. At the last collective agreement in 2007, the period was extended to three years for the large group in the industrial sector, which is the biggest with approx. 600,000 workers. They usually start the collective agreement negotiations, and so set the trend for the content of the agreements.

Around 80% of the Danish labour market is covered by collective agreements where employees and employers themselves define the area that the agreement covers. The employee-part is always an organisation, while the employer-part can be a main organisation or an individual company. The collective agreement decides the working conditions that apply to the individual wage-earner’s employment. Even though the individual employee may not be a member of a union, the employer is obliged to offer the employee, as a minimum, the same conditions as union members have achieved through collective agreement.

FLEXICURITY

The ’Flexicurity’ concept involves labour market flexibility combined with social security, as well as an active labour market policy regarding rights and obligations for unemployed workers.

The flexibility aspect consists of gentle rules for hiring and laying off employees. Employers can easily fire staff when business is going badly, and conversely can easily hire staff when business is going well. The security aspect consists of employees being secured unemployment aid through their membership of an unemployment fund administered by the unions, or financial aid from the state.

The active labour market policy consists of e.g. guaranteed job offers or further training.

/JB

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