Open markets and the Danish model

FAOS’ research programme 2009-2013

The pace at which markets are opening up has accelerated in recent years. Within the European Union, particular attention has been paid to the development of the internal market for services. The 2009 Service Directive will make it easier to provide services that transcend borders within the Union.

The labour markets are also becoming increasingly more open. EU enlargement with include Eastern and Central European countries, along with the recent economic boom, triggered mobility between members states, with many Eastern Europeans, in particular, travelling west to find work.

The general perception of what open markets will mean for the Danish labour market has changed. It became clear some years ago that part of the trend towards ‘globalisation’ included labour being distributed in a different manner. Labour-intensive jobs, especially in manufacturing industries, were relocating away from Denmark. In time, it became evident that new information technologies facilitated the outsourcing of particular services and clerical posts, and that location had become less important for certain knowledge-based jobs. As a result, the debate started to revolve around which jobs would be retained in Denmark.

Any fears of rising unemployment proved unfounded, however. In the current decade, Denmark has enjoyed favourable trends in employment; the extent to which this is due to flexicurity is debatable, but it is evident that the existing regulation of the labour market has not erected barriers to unusually positive economic and employment trends.

The question now is how the balance between flexibility and security in labour-market regulation will develop over the next few years – and how it will be affected by the financial crisis. In this context, the fact that markets are becoming ever more open will certainly play a role. It may be assumed that Danish companies will be subjected to increasingly intense international competition. Various forms of foreign ownership of companies will also become more common, and this will have an impact on relations between employees and management and the question of finding balanced solutions to the regulation of terms and conditions in individual companies. As the economy deteriorates, will it be possible not only to retain but also to develop the flexicurity approach to labour-market regulation? And what impact will the economic climate have on numbers of migrant workers?

One significant characteristic of the Danish model is the high level of trade union membership. Since the Court of Human Rights rejected the closed shop and exclusive agreements in 2006, the organisation of workers and employers now takes place in a more open market. This represents a challenge to the traditional Danish single-union system, and both workers and employers are joining e.g. Christian organisations in increasing numbers. Larger numbers of workers are also opting not to join a union at all.

In line with FAOS two previous research programmes, this programme will assume that the Danish model is moving in the direction of a multi-level system of regulation, reflecting the complexity that characterises the labour market of today and the future.