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What Are the Challenges Ahead for Danish Unionism ?

What Are the Challenges Ahead for Danish Unionism ?
 Christian Lyhne Ibsen
Associate Professor at FAOS/ University of Copenhagen

How influential are labor unions in Denmark? Do they play specific roles in Denmark society in comparison with other European countries? In this paper, Christian Lyhn Ibsen, associate Professor at FAOS/ University of Copenhagen, provides a brief overview of the origins of unionism in Denmark, its connection to political developments, the foundational principles, and its evolution over time.

From self organization to national federations

The origins of unionism in Denmark started out during the 19th century in local initiatives, as workers self-organized and formed local unions at factories but also through the guilds system in construction or trade. Denmark being a relatively small country, self-organizing workers were soon able to build national federations based on the principles of trade. Owned by local branches, these unions were based on worker’s occupational identity rather than industrial sectors. Each trade would thus have their own, such as carpenters or teachers. The trade union movement was intertwined with politics, and early on considered as a sort of social democratic union, from which the Social Democratic Party was created. This prevailing social democratic tendency contributed to the rise of a reformist type of unionism in the beginning of the 20th century - particularly among metal workers in manufacturing. Reformists did not aim to overthrow capitalism, but to act within capitalism to gradually reform both society and economy.

1899 : The principles of basic agreement 

Even though Danish unionism is less adversarial than some of its counterparts in Europe, it was a massive strike in 1899 that set the frame for the “basic agreement” still used in our contemporary society. Up then, industrialization was still modest ; the economy depended on small to medium companies and plants that heavily relied on trade and low tech. The strike sparked among woodworkers, who were fighting regional disparities in wages. 

At the time, employers did not recognize trade unions for collective bargaining in any systematic way. They responded with a lockup that included workers from multiple trades, preventing workers from accessing their workplace and getting a salary - thus creating a dead end crippling the whole economy. 

The trade union confederation and employers association eventually came together to negotiate a bilateral agreement. Without any state implication, they set down a sort of constitution of the labor market in Denmark. It implied, among other things, the right to unionize, the right for employers to manage workers, the right to conduct collective bargaining, and the peaceclause - so no right to industrial action - once a collective agreement was put in place.

This prevailing social democratic tendency contributed to the rise of a reformist type of unionism in the beginning of the 20th century

1910 : Birth of a conflict resolution system 

A sketch of a conflict resolution system was also set up, with a series of  formalized procedures to avoid any industrial action. But it quickly became apparent that it couldn't stand alone.

So in 1910, after a series of conflicts in the labor market, the state intervened through a dedicated commission, and institutionalized a 3 pillars conflict resolution system which consist of : 

  • A labor court system : composed of representatives of the social partners and judges appointed by the state, the labor court deals with the cases of conflict or breach of a collective agreement between social partners. 
  • A mediation agency when it comes to interest conflicts when parties negotiate a new agreement. 
  • An arbitration system when it comes to interpretations of the agreements. 

Thanks to this institutionalization, trade unions earned recognition and adhered to this conflict resolution system.

The Ghent system and the occupational principle 

Several specificities need to be highlighted when it comes to understanding unionism in Denmark. 

Most importantly, in the case of Denmark and some other European countries - e.g. Sweden and Belgium - trade unions were put in charge of administering unemployment insurance very early on. It has been called the Ghent system, after the name of the Belgian town where it originated. This specificity is key in understanding the high density of unionism in Denmark: workers are incentivized to join unions and to keep their membership within a union to protect themselves from times of unemployment. 

Due to the occupational principle of unions in Denmark, three main confederations essentially existed during the 20th century, based on education level. 

  • Blue collar workers were thus organized in the LO (The Danish Confederation of Trade Unions). 
  • Salaried workers (usually) with up to three years of education, who mainly worked in the public sector (as nurses or teachers) were organized in FTF (Confederation of Professionals in Denmark). FTF merged with LO in 2018 to form FH. 
  • A third confederation, brought together academics - that refers to people that graduated from tertiary education or more. 

These three confederations divided up the labor market among themselves with the help of internal agreements based on occupational/educational lines.

Trade unions were put in charge of administering unemployment insurance very early on

These confederations established themselves as main representatives for employers who tend to prefer negotiation with one single union and one agreement at one workplace. Aside from these recognized confederations, one can also join Christian union (KRIFA) that was established in the late 19th century in opposition to the more social democratic unions.  

2002 liberalization reform : the rise of Yellow unions

During the late 1990s - early 2000s, the so-called alternative unions, unaffiliated to the confederations, including the Christian union, grew in importance. Following the liberalization of the Ghent system in 2002, non-occupational unions were able to enter the market for unemployment insurance : all unions or unemployment insurance funds could provide unemployment insurance to any worker, independently of his or her occupation. 

A market emerged for these unaffiliated unions, also called “Yellow unions” - organizations that provide unemployment insurance and advice for workers in a union wing, usually without being parties to collective bargaining. Thanks to their low membership fees, these alternative unions became very attractive to the Danish people - especially those not fully brought into the idea of being a union member - at the cost to traditional unions. 

Understanding key figures: collective bargaining coverage, unionization rates and numbers of collective agreements

The collective bargaining coverage (the share of workers who are covered by a collective agreement that is negotiated between the employers associations and the trade unions) stands at around 80% of the labor market. This share reaches more or less 100% in the public sector, compared to 72-73% in the private sector. Part of the explanation lies in the fact that workers working in a covered firm will be covered by the collective agreement - whether or not they are members of the union. 

When it comes to the unionization rate, it is estimated at 68% overall

When it comes to the unionization rate, it is estimated at 68% overall. However, if we subtract the alternative unions without collective agreements, it drops to around 60%. In the private sector, the unionization rate is down to around 50% whereas in the public, it stands around 80%.

This rate is not uniform, as some industries' unionization rates do not exceed 30%. A specific trend can be observed for the last 15-20 years, which is a drop of union densities for the younger cohorts. It appears to be a cohort phenomenon more than an age phenomenon, as people who were young 20 years ago and are now in their forties still have a lower probability of being union members than before. This is bound to be a demographic challenge to trade unions. When the older generations with very high unionization rates retire from the labor market, the overall unionization rate will suffer.

Some agreements can be defined to cover particular occupational groups within a firm. To give an example from the public sector, the University of Copenhagen, has a collective agreement for academic staff, another for admin staff and a third one for auxiliary services. Usually agreements for blue collar workers or hourly wage workers define a minimum wage on top of which actual wages are agreed at the workplace level. In contrast, salaried workers have figureless agreements and wages are individually negotiated. This practice results in a high diversity of agreements: 500 to 600 different collective agreements coexist in the private sector. 

The central role of local bargaining in ensuring workers’ right and fair working conditions

The bargaining coverage isn’t as high as in France, but given the absence of statutory regulation of wages and terms of employment the content of the collective agreements has a larger effect than some of the agreements in France. Moreover, the Danish system is much more decentralized than in most other countries. Indeed, since the years 1980-1990, there has been a trend to move from very detailed collective agreements with centralized and standardized regulation towards framework agreements composed of minimum regulations and procedures then filled in by local bargaining between shop stewards and management. 

It is particularly the case for wages: there is no statutory minimum wage in Denmark. It implies that if a worker is not covered by a collective agreement, there is no wage regulation. In addition to that, roughly 80% of the covered workers in the private sector are covered by agreements that only set minimum wages, or are figureless. It is the local wage bargaining between union Shop-Stewards and management that sets the worker's actual wage.

In addition to the wages, local bargaining also sets up working time, vacation, and oftentimes plans for continuous education. It is therefore of the utmost importance that the local branch or the local shop stewards are present and that the workers at the firm are unionized, as it will guarantee them more bargaining power to negotiate their working conditions.

In Denmark, there aren’t any statutory representativeness requirements to unions.

In Denmark, there aren’t any statutory representativeness requirements to unions. It is voluntarist in the sense that companies and trade unions will figure it out during their bilateral negotiations.

Typically, collective agreements are initiated in the aftermath of an industrial action initiated at the firm by a trade union. Unions could initiate a strike against an unorganized employer - not affiliated to an employer's association - based on their members at the workplace, or they could use “sympathy strikes”. Sympathy strikes refer to an industrial action against an employer that is not directly part of the main conflict but that deals with the employer of the main conflict. The best example is the McDonald's case. Upon installation in Denmark in the 1980s, McDonald's refused to set a collective agreement with a trade union. The union initiated a strike against the firm, whose posture did not change. The union responded by calling for sympathy strikes of workers who worked in companies that delivered french fries, buns, meat and coke to McDonald’s. Lacking these provisions, McDonald's eventually agreed on a collective agreement with the union - and since then has an extremely well-functioning bargaining relationship with the union. Though being very powerful, this approach can be very costly for the union, as it needs to keep up with constant company developments of a wide range of industries.

Social partners’ significant role in corporatist policy making : vocational training and the COVID-19 case

Danish trade unions are also heavily involved in corporatist policy making. “Corporatism” implies that the state delegates decision-making power, or implementation power, i.e. policy-making powers to non-state actors, such as employers associations and trade unions. 

One of the key issues trade union and employers associations are involved in is vocational education and training, for instance for technicians, plumbers, or nurses. Traditions inherited from the guilds play a major role in those education systems, as students will be trained at the workplace. The system is similar to those of Germany, Switzerland and Austria: employers offer apprenticeships, and young people try to set up apprenticeship agreements with the employers. Trade unions and employers associations de facto own those educations, as they design the curricula, make sure each school has the suitable curriculum and update educational programs according to market needs. Back in the day, it used to be done almost independently of the state, which is now much more involved. Vocational education and training systems are part of the regular educational system, but social partners are heavily involved in governing firm-based training.

On behalf of their unemployment insurance funds, trade unions also have huge leverage on labor market policies. Recent years have seen the resurrection of tripartite agreements, or social pacts, on particular issues that matter to the government and the population at large. COVID-19 economic relief agreements would be one of the latest examples.

Employers offer apprenticeships, and young people try to set up apprenticeship agreements with the employers

When the pandemic hit the country, the government invited trade unions and employers' associations to draw up agreements that would help sustain both businesses and workers during the lockdowns. It was assumed that getting a good compromise with various social classes would balance different interests and be legitimate in the eyes of the public. For COVID-19, a wage compensation scheme was put in place. It essentially meant that employers committed to keep workers on board, and in return, the state would give the companies wage compensation to pay the bill as long as the lockdown was in effect.

Maintaining union density : first challenge for Danish labor unions

The first challenge is the declining union density: to maintain the high unionization rates, unions need to restore their ability to recruit and retain members. This issue is particularly significant, as studies show that unorganized workers or non-members who join a new firm are much more likely to join the union if they get into a high union density firm than if they get into a low union density firm. 

One of the drawbacks of the occupational principle of unionism is that many people will change occupations within their lifetime and might change industries. Unions face a hard time when figuring out how to encompass that kind of labor market mobility. It is a crucial issue for retention, as young workers might get into one union early on during their first jobs, but leave a few months or years later.

A study conducted recently by the Confederation of Trade Unions shows that a lot of the young people have been a member of the union in their early years in the labor market, but then dropped out for various reasons. Life changing events, like having a child or getting a mortgage also affect the retention rate, as they often imply a review of priorities in personal finances, making individuals drop the union membership for financial reasons. In this line of thought, trade unions will have to tackle their lack of appeal to young people. They will have to create new momentum around union clubs and social activities, and expand their efforts when it comes to enlivening youth divisions.

They will have to expand their efforts when it comes to enlivening youth divisions. 

Within the “market for unions”, the danger for traditional unions comes from the competing yellow unions or alternative unions that are not party to collective bargaining putting the representativeness of traditional unions and thus the collective agreements at peril.

 In the future, employers and the government might legitimately consider that unions cannot claim to be representative and to bargain on behalf of workers if they do not have sufficient members in the related industry. It is especially true of hotels, restaurants, retail, and cleaning industries that have very low union densities. 

The risk of employer’s refusal of collective bargaining 

Employers could also argue that if trade unions are not organizing enough workers, it is more sensible to set their HR policies by themselves. This could be very problematic for the mid to low skilled workers, who would not be in a good position to negotiate good wage and employment deals on their own. The implication of this would be that a smaller share of the workforce would benefit from all the non-wages issues that are included in a collective agreement, such as pension, rights to education, and rights to paid parental leave.

Ensuring regulatory autonomy 

The last challenge is the principle of regulatory autonomy of trade unions and employers. In Denmark, the state kept out of work regulation as well as conditions of wages. But in the scenario where trade unions can no longer get employers to do collective bargaining, there will come a time when a statutory minimum wage would be needed. In that event, it would mean a transformation from a voluntarist system to a more statutory based system, as known in continental Europe. A European Union minimum wage directive could also come into play to a much larger extent than it does right now. And that forces the social partners to figure out ways to cover more workers and firms in the private sector to keep their bargaining autonomy.


Copyright : EMIL NICOLAI HELMS / RITZAU SCANPIX / AFP - People attend a May Day rally on Labour Day in Copenhagen, Denmark, on May 1, 2023

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