European Trade Union Institute, ETUI.

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Industrial relations in Denmark: background summary

In a landmark agreement concluded in 1899, following a major industrial dispute that lasted five months, the social partners laid the foundations for the system of labour relations. This text, known as the ‘September compromise’, established the principles of the interdependence of employers and unions and of the supremacy of bargaining over confrontation.

National context

  • Denmark has three main confederations – LO (Landsorganisationen i Danmark), FTF and AC (Akademikerne) – which are based on profession (LO and FTF) and education level (AC). However, the borders between these three structures are not clearly defined, which sometimes creates tension when recruiting new members, for example. This issue will become less of a problem with the merger between LO and FTF, as AC will be the only confederation clearly based on education level.
  • LO encompasses both small professional trade unions and larger federations such as HK (Handels- og Kontorfunktionærernes Forbund, a trade union for retail and office workers), FOA (Forbundet af Offentligt Ansatte, a public sector trade union), and Dansk Metal (steelworkers’ union). The largest trade union within LO is 3F, which stems from a merger in January 2005.
  • FTF consists of trade unions in three main sectors: private sector, municipal employees and state employees. In total, FTF has 70 member unions. Its main affiliates are the trade unions for teachers (DLF with 90 000 members), educators (BUPL), nurses and finance (Finansforbundet). FTF was set up by a number of trade unions that wanted to dissociate themselves from LO, which they regarded as too close to the social democratic party. FTF claims to be more representative in the public sector, as the main advocate for ‘middle’ level employees.
  • AC has 25 member unions, which are basically for higher education graduates. The main organisations are the association of lawyers and economists and the trade union for higher education graduates (Dansk Magisterforening).
  • Standing apart from the confederations is Ledernes Hovedorganisation, a trade union for executives and managers.
  • A new cluster of trade unions emerged in the 1990s, which wanted to break with a certain ideology and be independent of the political parties. They were nicknamed the ‘yellow’ trade unions (gule fagforbund). The largest are:
    • Det Faglige Hus, literally the ‘trade union house’: this union reached its target of 100 000 members in 2014, and is apparently still growing.
    • Kristelig Fagforening (Krifa): this Christian trade union was created back in 1931and claims to have 200 000 members, although many are attracted by the favourable insurance terms offered.
  • On the employers’ side, there is the powerful employers’ confederation DA (Dansk Arbejdsgiverforening), which encompasses 14 employers’ organisations in the private sector and has over 24 000 member companies in all sectors (transport, industry, commerce), except for finance, agriculture and the insurance sector. It was set up in 1896 to unite employers and use the threat of lockout as a response to industrial action. It is regarded as the counterpart to LO. Its member companies employ around 35% of all workers in the private sector (figure provided by DA), with this figure having remained constant over the last 10 years.It has a monopoly over the negotiation of framework agreements. According to DA (2014 figures), the employers’ organisation for industry (Dansk Industri - DI) is its largest union with 5 623 member companies. DI claims to represent around 1.2 million employees, over half of whom work abroad. This is followed by Dansk Erhverv (4 169 companies specialising in the service and IT industry) and Dansk Byggeri (5 568 companies in construction and building).
  • Finanssektorens Arbejdsgiverforening (FANET) was created in 1989 by the merger between three employers’ organisations in the financial sector, and is the second largest employers’ organisation. It claims to have 200 member companies representing around 62 000 workers, i.e. 80% of employees in the sector.
  • On 1 January 2015, according to the National Office of Statistics – Danmarks Statistik (www.dst.dk) – LO was still the largest confederation with 822 281 members, followed by FTF with 344 139, then by the trade unions not affiliated to a confederation, which have 328 044 members, then by AC with 216 966 members, and finally Ledernes Hovedorganisation (202 616).
  • On 31 December 2015, the trade union organisations had a total of 1 813 046 members, i.e. an overall increase of +0.6% on the previous year, mainly to the detriment of the traditional confederations. In fact, LO and FTF saw their member figures drop by 2.5% and 0.1% respectively. The average increase for AC is 3.8%, 2% for Ledernes Hovedorganisation and 7.5% for the other trade unions. The union density rate is estimated at 70%.
  • This slight reduction in the number of members among the main organisations is explained by a reduction in the number of skilled workers, whilst the increase in members for AC, for example, is explained by the growth in jobs associated with a ‘knowledge’ economy. However, skilled workers also join unions to benefit from the unemployment insurance funds managed by them, because they are no longer as relaxed about their professional futures. It should also be noted that the recent reduction in the tax exemption granted for any union dues has discouraged workers from joining. The ‘yellow’ unions have also attracted members due to lower union dues.
  • This trend is calling into question the legitimacy of the traditional trade unions to negotiate collective agreements, particularly on wage issues. In view of this trend, the FTF and LO confederations have been pursuing a merger process since 2014. A steering committee has been formed, which is responsible for determining the foundations of their initial merger in 2017, which is likely to be completed in 2020.
  • On 31 December 2015, women accounted for 51.1% of all union members, which was unchanged from the previous year. FTF is the trade union that represents most women (69.2%).
  • The coverage rate in Denmark is very high with about 80 % of the labour market covered and this despite the absence of erga omnes agreements. In a recent study it was found that 100 % of employees in the public sector were covered and 71% in the private sector.
  • It was in 1947 that the agreement between LO and DA, known as the ‘collaboration agreement’, recognised the right of workers to monitor a company’s management, in particular through the communication of information to the trade unions and the creation of a works council in all companies with more than 35 employees, if desired by the trade unions and employers. The underlying idea is that good collaboration between employers and unions can only improve a company’s output and competitiveness, increase worker satisfaction and ensure job security. These concepts still currently underpin industrial relations in Denmark.
  • The trade unions are independent, but it is mainly their overarching confederations that have the role of negotiating framework agreements. However, negotiations can also take place at sector and company level.
  • At sectoral level, agreements on pay and working conditions are concluded between the employers’ organisations and trade unions or ‘groupings’ of trade unions in order to cover a number of sectors (for example, manufacturing, printing and media, etc.). At company level, negotiations take place between union representatives and the employer.
  • The Danish model of collective bargaining has its roots in a landmark agreement concluded in 1899, following a major industrial dispute that lasted five months and affected over half of unionised workers. Known as the ‘September compromise’(Septemberforliget), it established the fundamental principle of interdependence between employers and trade unions, based on the idea that bargaining is better than confrontation.
  • The State and legislature therefore rarely intervene, leaving unions and employers to negotiate and set rules.
  • There is no statutory minimum wage as wages are negotiated and set through collective agreements. As collective agreements cover 80% of the labour market wages are set for the larger part of the labour market.. This also explains Denmark’s refusal to allow the European Union to set a minimum wage, which would call its social model into question.
  • Tripartite cooperation brings together representatives of the State, employers and trade unions to discuss issues connected with labour market policy: employment policy, working environment, recruitment and unemployment insurance. Any bill that may affect the labour market is sent for consultation to the various parties before being submitted to Parliament. Two tripartite agreements have recently been negotiated: on 17 March 2016 on the integration of refugees through work, and on 19 August 2016 on vocational training, apprenticeship and work placements.
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