The Economic Council and the Danish model

Article by Jesper Due and Jørgen Steen Madsen

On the 6th and 7th of December 2012, the Economic Council of Denmark (Det Økonomiske Råd) hosted a conference celebrating their 50th anniversary. On that occasion, an anniversary-book was published. Researchers from FAOS have contributed with an article regarding the historical role of the Economic Council in relation to the Danish labour market model.

This article stress that the Danish labour market model, including the relations between the Council and the different labour market parties, are dynamic and can therefore be perceived as processes. It is particularly changes in the actions of trade unions and employers’ associations that have been crucial in determining the Council’s role in relation to the regulations of the labour market.

The article divides the Council’s 50 years of history into three periods - each period dominated by distinct characteristics:

1. The 1960s and 1970s: a period dominated by a political discourse on income and attempts to establish a permanent ‘tripartite regulation’ which would limit social partners’ self-regulation.

2. The 1980s, which was a transition period dominated by political abolition of the indexation, the great conflict of ’85, the economic adaptation and the joint statement in 1987.

3. The 1990s and onwards was a period characterised by so-called centralised decentralisation, which led to enhanced flexibility through extended possibilities of bargaining at company level. At the same time, the politically oriented welfare goods were increasingly a part of the collective agreements.

The early period is the main focus of the article, mainly because the Danish bargaining model faced various challenges during this period, which could have resulted in the Council having been given a more significant role with regard to the regulation of the Danish labour market.