Politics and Analysis
The foundation and dynamics of the Danish labour Market
8. May 2019
Article
The Danish labour market is unique in the way it is regulated, since there is no comprehensive governmental interference or legislation regarding wages and working conditions. There is a clear division of responsibility between the government and the social partners in relation to labour market policies.
Legislative acts on labour issues primarily apply to employees not covered by collective agreements. The same principle applies to EU directives. If the collective agreement ensures the employee the rights of an EU directive, the employee will not be covered by the Danish act that implements the directive.
The regulation of working conditions is primarily in the hands of the social partners, contributing to the creation of a dynamic labour market and at the same time strengthening the influence and relevance of the social partners. This also entails that the social partners can conclude bipartite and tripartite agreements in order to adjust to new developments in the labour market.
The high level of organisation and unionisation has created a strong sense of ownership and the social partners play a central role in society. The system is based on a voluntary approach.
The process of collective bargaining in the private sector is conducted autonomously according to the terms set by the two sides of industry in The General Agreement. It lays the framework for collective agreements. It was concluded between the two main sides of industry:
• The Danish Confederation of Trade Unions (FH)
• The Confederation of Danish Employers (DA)
• Similar systems exist in the public sector
The Cooperation Agreement between DA and FH lays down the conditions for discussions on all relevant issues between the management and employees at the workplace. It reflects the general respect and trust between the two sides of industry. It also reflects the high degree of responsibility placed on the social partners to try to find constructive solutions to problems which might otherwise turn into labour disputes.The General Agreement does not cover professional and managerial staff graduated from universities.
A characteristic of the Danish system is the general peace obligation. This means that during the periods between the renewal of the collective agreements, it is in effect, illegal for the social partners to take industrial action. However, they retain the right to take industrial action if they cannot agree on renewing the collective agreements.
THE DANISH MODEL OF COLLECTIVE BARGAINING
The relationships between employers and employees are regulated primarily through the collective agreements. Examples of issues defined in the collective agreements are:
- Wages, wage-setting and processes
- Pay during maternity/paternity and parental leave
- Occupational pension
- Working hours and flexible workdays
- Access to lifelong learning and ongoing skills development
- Various pay arrangements for employees during periods of illness and paid holiday
Tripartite negotiations and agreements can also function as a political tool to handle issues that have an influence on the Danish labour market and society in general. The Danish government will intervene as little as possible in labour market issues. When it comes to dealing with concrete challenges on the labour market, which can have an impact on society as such, the Danish government will invite the social partners to tripartite discussions.The discussions of how to handle a societal issue will most often lead to tripartite negotiations followed by an agreement concluded between the social partners and the Danish government.
Read more about the labour market in Denmark here.