Employee Representatives in Denmark. How Employers See Them and What They Expect
The current Danish labor market system dates back to 1899 and has been regulated through general agreements since then. We refer to it as the Danish model. The social partners have responsibility over wages and working conditions, only health and safety are regulated by law. There is a long tradition for conflict resolution at company level and through labor law jurisdiction. Consequently, the labor market is highly flexible; employers can easily let workers off, however they will be supported by public security systems. Nevertheless, employers find bodies like the works council and the safety committees to be very old fashioned and troublesome to work with. However, there is a positive expectation of a possible reinvention of the Danish model through better training and education of ERs. Employers especially call for an improvement of the ERs’ competences to analyze and negotiate a more proactive attitude from ERs. To achieve this they find that it’s necessary for unions and ERs to leave the conflicting attitude aside.
KeywordsThe Danish model Flexicurity Conflict resolution Trust Training Education Employee representatives
3.1 Historical Context of the Labor Movement in Denmark
The Danish labor market is only partially affected by the crisis, as a number of other societal changes have a strong influence on labor relations and the framework of cooperation and agreements. Industrial production has undergone vast downsizing, due to outsourcing of labor intensive production such as the garment industry and machine production. Even abattoirs and meat processing are being widely outsourced to Poland and Germany. The public sector has seen an extensive reduction of services and reduction in manpower in the municipalities and in the health sector.
With regards to the labor market this development is influencing the power balance, but has not radically changed the way in which the social partners agree to regulate wages and working conditions, although the results of bargaining have been very meager from the unions’ point of view.
Another tendency will probably prove to have a greater impact on the labor market. Within the last 4–5 years the public employers have strived to reduce the power of the central agreements. In 2012 nurses were in a long conflict on wages, which they more or less lost, and in 2013 the public school teachers lost a conflict—teachers were met with a ‘lock-out’ from the association of municipalities, and were off work for almost 6 weeks. The conflict resulted in the abolition of the teachers unions right to negotiate working hours on a central level. Instead, the school leaders’ rights to define work hours and tasks for the individual teacher were abandoned by a government act to settle the conflict.
These may seem as rather ordinary incidents, they are however radical in a Danish context, because of the long tradition of central agreements, conflict resolution and local negotiating between employee representatives and employers. Historically, labor market issues have been settled between social partners. Government regulation of the labor market is relatively low in Denmark compared to other European countries.
This Danish labor market system dates back to the so-called 1899 September compromise (Due and Madsen 1994). Wages and working conditions—including working hours, maternity leave, flexibility schemes and lately supplementary pension schemes and continuous training—are settled in collective agreements negotiated by the social partners. Traditionally, many of these subjects were mainly negotiated centrally. Increasingly over the last 20 years, bargaining is taking place at workplace level, but under broad framework agreements which guarantee some minimum requirements. Issues such as holidays and paternity leave are determined at central level. As many as 75 % of Danish employees are said to be covered by collective agreements (Rogaczewska et al. 2004). There is however some dispute regarding private workplaces, the proposals of the percentage are ranking from 52 to 77 % (Due and Madsen 2008; Gill et al. 1997; Scheuer 2007). The tendency is however a decline in union density, especially among young people, a development that may threaten the collective bargaining.
The level of employee involvement in terms of co-influence, co-determination and day-to-day cooperation is regulated by the Cooperation Agreement (Samarbejdsaftalen) and not by legislation. Co-determination can be defined as ‘an obligation for both parties to strive for agreement’, while co-influence can be described as ‘timely consultation’ (D’Art 1992). The first cooperation agreement was made between social partners at the central level in 1947 and has been subject to some revisions since. The agreement specifies terms for day-to-day cooperation and information through a cooperation committee about the development of the company, the financial position, technology changes, restructuring, etc… It specifies that management must consult employee representatives on these issues. But basically, management does not have to provide co-determination, but can go for the lowest level of cooperation stipulated, which would be just to provide information on development and decided changes. Co-determination is therefore generally established on employee request.
Denmark has two parallel representation systems. The shop steward is elected among the employees who belong to his or hers union. This will generally mean everybody with the same training or education. A workplace can thus have several shop stewards i.e. in a hospital you can have up to 50 different agreements and shop stewards. In such a case a general shop steward is appointed by the unions. The shop steward is responsible for negotiating local agreements and working conditions. The shop steward will also have a seat in the works council.
An important exception is the regulation of occupational health and safety. Cooperation between employer and workers is mandatory in this field, as most of the regulation is based on legislation given by the Work Environment Act of 1977. The regulation includes a compulsory safety organization for any company with more than 10 employees, and further an organization in at least two levels if more than 35 employees. What makes the Danish OHS regulation important in relation to cooperation is that it states that the social and organizational issues are equally important to those of hazardous chemicals, noise and ergonomic exposures. As a result of this, Safety Representatives and Employee Representatives (ER) have to cooperate with management on how mental health problems, and for example work related stress, can be prevented. A cooperation that can be challenging, because the Safety Representative is elected among all workers and thus can be a non-unionized colleague, in contrast to the ER who is elected among members of the same union.
In the early 1990s, Danish policymakers established a fiscal policy aimed at breaking the unemployment trend of the time and was further coupled to the first active labor market policy (ALMP) of 1994 which sought to reduce structural unemployment. Although some believed that the natural unemployment rate had simply increased, the Danish government sought to improve the situation by implementing what came to be called the flexicurity model. The policy shift thus came about with the 1994 and 1996 labor market reforms, when the introduction of flexibility was linked to security through the continued provision of generous welfare schemes as well as the ‘activation’ of the labor force through a set of ALMPs (Björklund 2000). Activation in Denmark is regarded as “a societal right and an obligation” (Jørgensen 2000). This takes some of the social pressure of the company level responsibility for workers who are to be sacked. However unemployment benefits and training provision make this system place a higher burden of taxation upon the higher-earning members of the Danish society. This is leading to a pressure on the unions from neoliberal policymakers and a threat of taking over members from a new rise to “unions” who are not part of the labor movement. Denmark currently has high taxation rates (Anderson 2009; Andersen and Mailand 2005), which in part pay for social benefits that may seem generous compared to other European countries. Flexicurity may thus favor low- to middle-income earners. However, this might partially be offset by Denmark’s high-output growth, which is coupled to low unemployment figures (2.8 % in 2008) and similarly low social-exclusion rates (Statistics Denmark 2014). As a more special feature it can be added that Danes in recent years have been consistently ranked as the happiest nation on earth, which has in part been attributed to aspects of Denmark’s flexicurity model (Sherman 2009).
3.2 The Current Situation of Employee Representatives. What do Employers Say?
In this section we will focus upon the most relevant indicators pointed out by the employers in the interviews regarding the profile of the ERs. We support each of these with quotes from the interviews. Our respondents were very reflective and well formulated, thus we think that they account for the many facets of cooperation in the workplace quite well.
3.2.1 ‘The Formal Structure is Perceived as Far too Rigid’
Several of the respondents pointed out that the formal structure of the cooperation system creates a gap between the side of A and the side of B, as one of the respondents puts it:
It is a somewhat rigid structure. In the general cooperation committee one is reminded of the division in an A and a B side. In daily life one tends to forget it. The cooperation system needs to develop into the next generation, there are some hurdles. They are bounded by the many rules which create rigidity. (Manager of a public university)
The managers from the finance and the production sector are also struggling with the national focus which is embedded in the structure, since some of the companies have become Nordic (Scandinavian countries) or international, or if they have not, they still need to play in the international field. This makes the national structure of the cooperation structure a hindrance to involve their employees. To a respondent from the finance sector it makes no sense at all:
It is a bit cumbersome that there has to be a national cooperation committee. Why is it not possible to create a more Nordic structure with structures of cooperation across country boundaries, so it responds to the condition, that in the bank things have gone from national independent banking businesses to a single large joint Nordic business? (Manager from a bank)
A few of the workplaces stand out as successful in creating a close cooperation and the key seems to be to pair the formal meetings with frequent informal meetings and day to day contact, as they do in the following example:
The senior employee representatives meet with the respondent every fortnight and apart from that they meet at other meetings and are in frequent mail contact too. They meet the top management four times a year formally to preparation meetings, and also three times a year informally. (Manager from education)
3.2.2 ‘There is a Need for More Professionalism’
The core of the issue is how to collaborate with the ERs on even terms. All respondents formulate that they wish for a professional attitude from the ERs. To most this means focusing on the interest of the business, but not necessarily at the cost of the employee’s rights and interests. The following respondent feels that ‘old union rhetoric’ is hindering the cooperation:
Why isn’t it possible for ERs to think along the lines of the business when pursuing the needs of the members? Business interests aren’t necessarily in opposition to the interests of the employees. It seems outdated to hold on to old union rhetoric and A-B side thinking, when we live in a time, where more and more employees are highly specialized with co-leadership tasks, and where there is a greater need for strengthening the cooperation, than the battle rhetoric. (Manager from finance)
In a few of the workplaces they seem to have found the balance and again the key, according to our respondent, is informal dialogue:
They can become surrogate managers with the right support, but it requires a continuous and informal dialogue. If you have that they can appreciate the management’s views and perspectives and the other way around. We share a common aim and understand that both parts need to get something to take back to their group, in order to retain their legitimacy. (Manager from education)
To collaborate on even terms thus requires a shared understanding but, as a respondent point out, also the right qualifications:
I would like a stronger business orientation in the advice from the trade unions. That would improve the ER’s qualifications for inclusion in the strategic discussions. (Manager from manufacturing)
3.2.3 ‘ER’s Lack the Competencies Needed to Engage in Development’
The competencies the employers ask for are mainly communication, negotiation and argumentation skills. They argue that the ERs could have more influence than they currently have, if their proposal were more business oriented and holistic, but first and foremost well prepared. This respondent states the problem clearly:
The ERs do not think holistically about the problem and therefore they do not get the influence they could get. It stems from the problem of lack of competences. (Manager from manufacturing)
But again we see that some workplaces have better experiences. In the following example the respondent explains that the former CEO taught the ERs to prepare their propositions well before raising them in the committee and that effort is paying off, for the good of both parts:
In the cooperation committee (Works Council) the ERs are good at presenting thorough proposals, they learnt it the hard way from the former CEO. He required well prepared and thorough proposals. (Manager from manufacturing)
There seems to be a general agreement that it is the unions’ obligation to develop the competencies of their ERs, but many state that they are not doing it well enough. Some feel that it would be beyond their mandate to educate the ERs; others that it is the easiest, that way they can also direct the competencies towards the business. The following respondent has not yet made up her mind:
We are discussing if it is our business to develop the competences of their ERs, or if it the unions’. During the staff reduction period we held sessions for the ERs with external consultants, to teach them how to help their colleagues and take part in the talks, with good results, so we are considering offering competence development courses. (Manager from education)
3.2.4 ‘The Unions are Behind in the Perception of the Real Challenges’
The managers from the finance and the production sector seem to be the unhappy with the unions, as in the following example:
The traditional trade union perspective does not match our effort to maintain the production work in Denmark. The ERs are advised to stick to dogmas about working hours and working time arrangements and that makes it hard to get flexibility. The lack of flexibility means that we have to hire and fire more than necessary. ERs are, in my view, advised against the company’s interests and thus also against the interest of maintaining production jobs in Denmark. (Manager from manufacturing)
It is however a question if this manager is aware that the ERs need to represent the employees, even if they might be behind too. In a recent case from butchery, the ERs negotiated a cut in wages in return for keeping their workplace in Denmark, but the agreement was turned down from the employees when they voted. The ERs in that case thus were out of sync with their base. In another case from the retail case however, the employees accepted a similar agreement. It is not a clear picture among the respondents, thus the following respondent who is also in the production sector feels that the Unions are more pragmatic than the ERs:
The unions advance further than the ERs. They are well aware that if we go out and rationalize or close down parts of the operations, then it’s sensible with regards to the total operations. (Manager from manufacturing)
3.2.5 ‘It is Unclear Who They Represent and on What Mandate’
The respondents from the finance and the production sectors pointed out that the ERs are losing their base, but the tendency was not prevalent in the education sector.
In the finance sector the problem was mainly that academics are taking over from bankers, but the bankers union is the one to make the agreement still, as this respondent explains:
I find it problematic that employee representatives cover less and less of the actual employees. There are more and more academics, but as mentioned before, they aren’t covered by Finansforbundet (The Union of Financial workers). The members of that group are dying out. (Manager from finance)
In the production sector it does not seem to be one specific group that has the problem, but the fact that still more people are not members of a union, or if they are it is the wrong one:
I would also like to see an end to the trade union’s silo-thinking. If you do not belong to the right union they will not lift a finger. It does, on one hand, make sense, but on the other hand, I miss some innovation. The platform they used to have has changed. One can represent more broadly than they do. (HR manager from manufacturing)
Another issue regarding the representation of the ERs was raised by a manager from the production sector. The normal custom is to compensate the ERs with a certain percentage or fully, to give them time for their ER tasks, but apparently the ones who are fully compensated risk getting out of touch with the reality of his or her colleagues:
I think we have an outdated and failed system with the ‘bought out’ ERs. We have created a system where we have ERs who are not part of the daily operation and it is a great deficiency. They become detached from reality when they are not part of the production. And there may be too many ERs as well. They will stick to particular interests and local conditions and thus we cannot elevate the perspective and focus on the common issues. (Manager from manufacturing)
3.2.6 There is a Lack of Trust
The issue of trust is of course at the core of the ERs’ task, but it is a concept with various layers and the answers we got reflect this. The basic requirement for trust is that confidentiality is respected. All managers responded that they trust the ERs regarding confidentiality, except one:
We recently had an example, where two employee representatives on the board couldn’t keep their cards close with regards to sensitive information about a competitor. They wrote to some colleagues about the information, after having been told in the board, that the information was confidential and not supposed to leave the room. (Manager from manufacturing)
But the general picture is that the confidentiality is respected. But confidentiality is not sufficient. As a respondent explains:
It is subjective. For confidentiality is a 10 (top level). Nothing is revealed that has been given as confidential information. There is also great confidence in all parts to respect agreements. That we can reach an agreement that will hold is also a 10. However, if we talk about confidence in the business insight, then it is lower. My confidence in their understanding of our burning platform is small. (Manager from manufacturing)
To fully trust an ER enough to include him or her in the strategic discussions they need more than confidentiality. In the production and the finance sectors they call for business insight as in the example above. In the education sector they call it to have a common aim:
The old fashioned employee representative who is driven by distrust and advocates single cases will not do. There need to be trust and a common aim and understanding. (Manager from education)
3.2.7 EU Policies
Regarding the EU policies on labor relations, labor market regulation and occupational health and safety among others, there are no differences among the sectors; there is a general lack of knowledge on these policies among all of them. It relates to a general low perception of the importance of EU legislation for Danish labor market conditions. The common belief even among managers is that in Denmark the social partners and the national authorities share the responsibility for regulation and enforcement.
In general we see that the main division is not between sectors, in all sectors we have heard about positive and negative examples. The division seems between the workplaces that have been able to create trusting relations and the ones that for various reasons have not—across sectors.
3.3 Perceptions of Employers on ERs. Results of the Survey
Results are presented based on the survey among 90 Danish Managers and HR managers of different sectors, compared to the score of 614 Managers and HR managers from 11 other countries in Europe. T tests were conducted to analyze differences between the Danish results and results of the rest of European participants in this study. The significant differences have been circled.
In Fig. 3.1 the graph illustrate each variable’s mean comparison between Europe and Denmark. These results suggest that HR managers’ perception of industrial relations in terms of trust is higher in Denmark (M = 3.76) than in Europe (M = 3.31). The ability of ERs is perceived as higher in the Danish sample (M = 3.50) compared to Europe (M = 3.14). Additionally, the organizational commitment of ERs is perceived as more positive in Denmark (M = 3.31 versus M = 3.16). Diversity in competencies and attitudes of ERs seems to be lower in Denmark (M = 3.21) than in Europe (M = 3.38). Managers need for control seems to be higher in Denmark (M = 3.30 versus M = 2.86). Relationship conflicts are lower in Denmark (M = 2.09) compared to the rest of Europe (M = 2.29). Task conflict is perceived a little lower in Denmark (M = 2.65) compared to Europe (M = 2.81), and also the competitive conflict management by ERs is perceived lower in Denmark (M = 2.13 versus M = 2.59). Impact by ERs on traditional issues shows a significant lower score in Denmark (M = 2.39 versus M = 2.65). No significant differences were found between Danish HR managers and the rest of European HR managers participating in this study for the rest of the variables.
3.4 Suggestions Given by Employers to Improve Social Dialogue in Denmark
The qualitative and quantitative results point out the issues which are considered to be the most important by the HR managers. In some cases the interviews have further revealed other suggestions given by employers, on how they consider the social dialogue in Denmark should be improved.
The statistical results do not have a very high statistical power, but in combination with the qualitative results they indicate that HR managers in Denmark regard social dialogue as essential, but at the same time they call for substantial improvements in ER’s role, competencies and attitudes.
3.4.1 Improving ERs’ Competences to Analyze and Negotiate
A majority of the managers consider their counterpart as an important and relevant partner in developing the company or the workplace. But they find that many of the ERs do not have a sufficient background for meeting the challenges to develop a sustainable business strategy. We have found different opinions in relation to what kind of competences are needed. A common denominator is that the ERs need to improve their ability to think and act strategic. Basically this means that they should be able to merge the interests of the employees with the interests of the company. Within the production sector and the financial sector managers find that ERs lack understanding of markets conditions, development cost, accounting etc. They would like the ERs to take their point of departure in the situation of the business, which is as an example how to create more jobs, or how to develop a better economy and an improved competiveness of the company. In the university sector the pressure is not as much market conditions as to live up the economic framework and demands for results and documentation given by the authorities.
3.4.2 Proactive Attitude from the ERs and the Unions (International)
The managers point out that their ‘counterparts’ often seem to lack support and training from their unions, and if they receive it, it is not promoting development and shared goals. Rather it is considered to be stuck in old fashioned ideas of class struggle and conflict strategies. Unions are in general considered very conservative and very much restricted by fighting for a “local” conception of member rights. HR managers propose to broaden their view on development. Further they want them to be able to work across borders with other unions, when supporting ERs in transnational companies (especially within the financial and the production sectors)
3.4.3 Unions and ERs Should Leave the Conflicting Attitude
The managers recognize that ERs are required to ensure that the employees are given acceptable working conditions and wages. As well as the managements prime task is to develop the company’s market strength and value. Among them they like to see this as an opportunity to find a common goal for the company or the workplace to work for the best of all. Thus, they propose to the unions and to the individual ERs to rethink their approach, and to think of negotiations as a way to find to best way to reach a common aim, and not as a conflict-situation in which each part aims to win at the highest possible cost of the opponent.
3.5 Discussion on Expectations of Danish Employers on ERs’ Roles, Attitudes and Competences
The interviews and the survey data indicate that the development in Denmark represents a continuously developing labor market, characterized by a very high level of trust between employers and employees on company level. Regulation through negotiation and conflict resolution through the labor market institutions, including the National Arbitrating Institution and the Court of Labor Law, is a long well-functioning and well established tradition in Denmark. The employers are confident that the institutionalized mediation and conflict resolution is fair and most importantly, it works very swiftly. Furthermore, they generally accept the fact that trust and co-operation are essential to improve productivity and that that is the strength of a “modern” business strategy. The importance of the concept of social capital—in Denmark defined as trust, justice and skills of cooperation—as a prerequisite for a healthy business development has also been widely accepted among employers in both the private and public sector.
On the other hand the employers have a general critic of their counterparts from the unions. They find that their ability to develop trust is restricted by old fashioned thinking and institutions. HR managers in general perceive the union’s approach to the structure and role of ERs is very conservative. There is nevertheless a great variation in HR managers’ expectations of ERs’ competencies and attitudes, both between organizations and within the same organization. The unions are in several cases described as being slow, counterproductive and non-innovative. In particular, they are criticized for not cooperating in regard of acting proactive in the current situation with a financial crisis. So even though the trust is high between HR managers and ERs, there is a great need for improvement according to employers. One manager even argues that by not being proactive and going along with a proposed wage reduction in tough times, they jeopardize the interest of their members.
It is interesting that some of the managers express themselves to be more in favor of the compulsory Health and Safety Organization and the elected Safety Representatives than of the Workers Council and the Shop Steward. They argue that the safety representatives represent all workers at the workplace—unionized or not—in comparison to the ERs, who only represent workers from their own profession, and more so only the ones that are unionized. In the production sector and in the public sector it is still a very large fraction, however in the service and financial sectors the percentage of unionized employees is decreasing.
Most of the data in the Danish study were collected at the same time as the Danish public school sector established a lockout of all public school teachers. A part of the public press focused heavily on the low flexibility of the unions. This may have influenced the HR managers in this study to perceive unions more negative than expected. In several interviews the HR managers refer to this conflict when giving examples of the unions’ lack of innovative capacity. In general they request a far more comprehensive and integrated approach to development and to labor relations. They refer to this as a lack of ability to see the larger picture and to be stuck with details and formalities, when entering negotiations. Also they point to a lack of competencies among the ERs in relation to communicate and to negotiate broader issues and dilemmas.
HR managers represent a management task and a management level that has seen a substantial growth in Danish workplaces in the recent years. It seemed like some of them consider themselves as ‘the way’ a contemporary company deals with labor issues. From this perspective they request a similar and corresponding development among the unions; however they risk failing to recognize it. They are in some cases to fast to generalize the failure of the unions as a common trend, without being very specific in their demands for the development they would like to see among unions.
In general the managers were far more specific when they provide examples of positive cooperation with the ERs on a company level. They confirm that there is a high level of trust in the daily cooperation and coordination of tasks. Whereas they find the mandatory institutions inflexible, they refer to the ability to solve problems on the spot through daily contact and partnership between managers and individual ERs, as very positive.
To sum up, HR managers in Denmark have a very broad acceptance of unions and ERs as significant counterparts to secure a motivated and competent workforce. However they wish for the structures of representation to be more flexible and for the ERs to have better capabilities to integrate their strategies into a common aim, and to have better skills in relation to communication and negotiation.
The current study indicates that the development in Denmark on one hand is moving towards a labor market which is characterized by a very high level of trust between employers and employees on company level, emphasized by the employers generally accepting the fact that trust and cooperation is essential to improve productivity and the strength of a business strategy. The concept of social capital—in Denmark defined as trust, justice and skills of cooperation.
On the other hand the employers have a general critic of their counterparts from the unions. HR managers in general perceive the ERs role as old fashioned. There is a great variation in HR managers’ expectations of ER competencies and attitudes, both between organizations and within the same organization. The unions are, as several of the interviews suggests, very often seen as being old fashioned and non-innovative. Several of the managers state that ERs are not cooperating in the sense of perceiving a shared goal, especially the call for the ERs to be more proactive in the current situation with the financial crisis. So even though Denmark can boast that the trust level in general is high between HR managers and ERs there is a great need for improvement. Proposals to fuel such a development covers very practical issues such as performing training programs in a “trio” setting, which means that manager, Shop Stewards and Safety Representatives participate in training and education together in order to achieve a shared knowledge, and to develop negotiation and decision taking skills. But managers also provide broader ideas for the unions to change their approach from demanding rights to collaboration and to cooperate with the employers’ associations to lead the way and present a common ground for mutual participation in workplace development.
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