18 February 2020

Denmark - Progressing the voluntarist approach

With a digitally connected population and heavy public investment in digitising government services, Denmark is considered a ‘digital frontrunner’, and well prepared for economic and labour market changes associated with the fourth industrial revolution. It is estimated that job content and skill requirements could change for up to 40% of the current workforce, and non-standard employment and self-employment is on the rise. Jobs will change in form and content – how fast is still unclear.

The Danish labour market is mainly regulated via collective agreements negotiated between member based organisations – labour
unions and employers’ organisations. This voluntarist approach still stands at the core of the system, with legislation playing only a limited role. Reform is primarily initiated through union–employer negotiations, but it can also occur through one side taking unilateral action, or tripartite cooperation, with government typically taking a leading role.

Therefore adjustments to the evolving digital economy depend on initiatives by Danish social partners – especially trade unions and employers’ organisations. However, whether this will work in practice is the subject of debate. Some scholars believe the voluntarist model has potential for governing the digital economy in a sustainable way: changes resulting from the fourth industrial revolution call for rapid and incremental adjustment close to the individual company and worker – something that regulation via legislation does very poorly. Regulation via negotiated agreements often results in more flexible and efficient rules.

Others highlight that it will be much more difficult for workers and companies to organise in the digital economy. If unions and
employers’ organisations have fewer members and less bargaining power, how can they negotiate agreements? The share of solo self-employed (self-employed without employees) and marginal part-timers has been increasing in the Danish labour market, now respectively accounting for 5% and 10% of the workforce. It is difficult for unions to organise these workers, and new digital platform companies are less likely to join employers’ organisations because they often rely more on the self-employed than employees, so their total wage bill is low.

Read the full chapter on p. 275 in "Work in the Digital Age" by Anna Ilsøe.