Research programme – University of Copenhagen

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Open markets and the Danish model

FAOS' research programme 2009-2013

The pace at which markets are opening up has accelerated in recent years. Within the European Union, particular attention has been paid to the development of the internal market for services. The 2009 Service Directive will make it easier to provide services that transcend borders within the Union. The labour markets are also becoming increasingly more open. The EU enlargement which includes Eastern- and Central European countries, along with the recent economic boom, has triggered mobility between member states, by which many Eastern Europeans has travelled towards the west to find work.

The general perception of what open markets will mean for the Danish labour market has changed. It became clear some years ago that a part of the trend towards 'globalisation' included the establishment of a new division of labour. Labour-intensive jobs, especially in manufacturing industries, were relocating away from Denmark. In time, it became evident that new information technologies facilitated the outsourcing of particular services and clerical posts, and that location had become less important for certain knowledge-based jobs. As a result, the debate started to revolve around which jobs would be retained in Denmark.

However any fears of increased unemployment proved unfounded. One of the main explanations on the beneficial development in the employment area we have seen this decade, is grounded in the concept about flexicurity. The extent to which flexicurity is applicable can be questioned, but in any case it is evident that the existing regulation of the labour market has not erected barriers to unusually positive trends within economic and employment areas.

The question now is how the balance between flexibility and security in the labour-market regulation, will develop over the next few years - and how it will be affected by the financial crisis. In this context, the fact that markets are becoming ever more open will certainly play a role. It may be assumed that Danish companies will be subjected to increased international competition. Various forms of foreign ownership of companies will also become more common. This will have an impact on relations between employees and management and on the question of finding balanced solutions to the regulation of terms and conditions in individual companies. During the deteriorated economy, will it be possible not only to retain but also to develop the flexicurity approach to the labour-market regulation? And what impact will the economic climate have on the number of migrant workers?

One significant characteristic of the Danish model is the high level of trade union membership. Since the Court of Human Rights in 2006 rejected the use of exclusive agreements, the organisation of workers and employers now takes place in a more open market. This represents a challenge regarding the traditional Danish single-union system, where e.g. both workers and employers are joining the Christian organisation in increasing numbers. Besides more and more workers also choose not to join a union at all.

In line with FAOS' two previous research programmes, this programme will assume that the Danish model is moving in the direction of a multi-level system of regulation, reflecting the complexity that characterises the labour market of today and the future. The research programme is devided into research area 1research area 2research area 3 and research area 4.