Collective bargaining round 2011- the Danish public sector in perspective

Research paper by Mikkel Mailand

The results of the public sector collective bargaining round in 2011 in Denmark - that took place when the lay-offs were expected, but most of them still not implemented - were very meagre from a trade union perspective.

In relation to wages, the outcome was a wage-freeze for 2011 and very limited wage-increases in 2012 in all three main sectors - the state, the regional and the municipal. As a result, wage increases in the whole period until the next collective bargaining round in 2013 will most probably be below real wages.

To some extent this was expected due to the economic context and the so-called ‘regulation-mechanism’ (‘reguleringsordningen’) that ties public sector wage to the wage-development in the private sector, although with some delay.

The existence of this mechanism implied that public sector employees ‘owed’ the public employers money when the negotiations started. In a rare situation, as the present, where the economic conditions went from very favorable to very unfavorable within a very short period, the  ‘regulation-mechanism’ will work as a kind of a hidden austerity measure.

Apart from the agreement on wages (which also implied that no national-level financial resources were allocated for local wage-setting) the result included, inter alia, flexibilisation of the central codetermination committees’ agendas, increased job security for shop stewards, and – in the agreement for the municipalities - a security fund for employees made redundant.

The trade unions only managed to get very few of their demands through in the bargaining process. Most trade unions had expected some kind of compensation in the form of job, employment or income security or other benefits in exchange for the wage restraint. But all the trade unions’ demands on job security (e.g. prolonged terms of notice, redundancy payments) were rejected. These demands were clearly related to the crisis and the increasing number of redundancies in the public sector – and they were inspired by similar agreements from the collective bargaining round in the private sector in 2010.

However, in the municipal sector the employer part (KL) proposed in the very end of the negotiation process a ‘security fund’ to finance further training for workers made redundant as a kind of compensation for all the rejected demands. The fund was financed by unused pension funds and could therefore be seen as free of expense for the employers. Importantly, it was only in the municipal sector that that an agreement on this issue was included.

Nevertheless, it can be argued that the trade unions succeeded in blocking the employers’ aims regarding , e.g. , increase in the share of wages set at local level, increased working time, and a movement from collective to individual bargaining at the local level. To what extent this can be regarded as victories for trade unions depends on two issues:

Firstly, whether these employer demands should be seen as short-term or long-term aims. Seen from the perspective of the employers the demands were most certainly part of a long term strategy. In this perspective, the employers’ success - or lack of it - in fulfilling these aims should be judged in a long-term perspective.

Secondly, at least one of the issues – i.e. increasing the share of local-level wage-setting – has support from some of the trade unions. Both of these facts should be taking into account in the evaluation of the result from the collective bargaining round in 2011.

In sum, the outcome of the 2011 bargaining round was not very dramatic. Although both state, regional and municipal employers took advantages of their stronger power position and acted tougher than usual to the confusion of the trade unions, the bargaining round did not lead to any dramatic changes in wages,  working conditions, challenges of employee rights or any other basic qualitative features of the public sector employment regulation system.

The research paper can be downloaded in Danish by using this link (pdf)