The Danish Model Under Increased Politicization, Europeanization, and Digitalization
FAOS' research program 2024-2028
The Danish model is once again an international role model. This time, the focus is not on flexicurity but on the model itself – or more precisely, our coordinated collective bargaining system. An international debate gained momentum after the OECD published a comprehensive report on collective bargaining in 2019. The report concluded that neither highly centralized bargaining systems with extensive cross-sector national agreements nor fully decentralized systems, where most negotiations take place at the company level, are the most effective. Instead, the best-performing systems are those where certain issues and frameworks are determined centrally – sometimes through sector-based negotiations – before being finalized at the company level in a flexible manner. In other words, productivity, employment, fair wages, and working conditions benefit from coordination from the top down within the bargaining system. This is precisely where the Danish collective bargaining system was highlighted by the OECD.
When Denmark was ranked the most competitive country worldwide for the second consecutive year in IMD’s World Competitiveness Ranking, international interest in our model increased—something we are experiencing firsthand at FAOS.
Thus, the Danish model currently has strong momentum. However, this does not prevent significant challenges from emerging. When the Social democratic-liberal coalition government abolished ‘Great Prayer Day’ (Store Bededag) as a public holiday, it directly interfered with collective agreements. Similarly, the government's promise of wage increases for certain public-sector groups through additional state funding also constitutes an intervention. While there may be solid arguments for both measures, they raise discussions and doubts about the extent of negotiation autonomy. This could create future expectations that politicians will – or should – intervene, potentially weakening the collective bargaining model.
In many ways, recent EU initiatives in labor market regulation also represent a politicization of the Danish model, though here it is political institutions at EU-level that set the rules. The EU directive on minimum wages triggered strong reactions in Denmark and raised the fundamental question of how far the EU can go in regulating wages within member states. While Danish employer organizations and trade unions broadly support the EU, there is also frustration that their efforts in Brussels often turn into defensive maneuvers when new directives, court rulings, and other regulations clash with the Danish bargaining system and model as a whole. In this context, understanding European political processes – who the key actors are and what drives them – is essential, as is insight into the consequences of EU regulations.
Technological innovations continue to emerge. Digitalization has already significantly transformed both everyday life and work. However, there is particular attention on artificial intelligence (AI). International studies indicate that both employers and employees recognize AI’s positive potential, but especially on the employee side, there are concerns about its impact on the labor market. Which jobs will disappear? How much will job functions change? There is a special focus on algorithmic management – how will it work, and to what extent will employees be involved in its implementation? We will monitor developments in this area closely.
Research Areas
Below, we present six research areas that will form the foundation for projects and activities in the upcoming program period:
- Collective bargaining systems
- Labor market organizations
- Negotiations and cooperation at the workplace level
- The revitalization of Social Europe
- Digitalization, flexible employment forms, and security
- Labor market actors, labor supply, and future skill needs