Bjarke Refslund* and Trine P. Larsen**
* Centre for Industrial Production, Aalborg University
** Employment Relations Research Centre (FAOS), Department of Sociology, University of Copenhagen
1. Introduction
This project report is part of the Precawo project and has been completed in joint collaboration between Centre for Industrial Production, Aalborg University and the Employment Relations Research Centre (FAOS) at University of Copenhagen, Denmark. The report explores how social dialogue can help reduce precarious wage and working conditions in the Danish labour market by drawing on three distinct cases studies. In this context, the term social dialogue, has quite different meanings, not least in distinct national settings, but also within the same national setting. In this project report, we adopt a rather broad approach to the term social dialogue which is in line with the overall understanding of the term in the Precawo-project.
Therefore, in order to cover as many aspects as possible under the broad term of social dialogue, we have included three very different case studies - each one focusing on a different perspective of social dialogue such as unilateral actions by trade unions, bipartite collective bargaining and tripartite consultation, involving public authorities, trade unions and employers associations.
The concept of precariousness is defined in accordance with the focus of the overall Precawo research project and covers three main protective gaps; 1) regulatory gaps, 2) representation gaps and 3) enforcement gaps. Regulatory gaps concern employee’s eligibility to social benefits, where various thresholds may restrict some employee groups access, as well as the level and scope of minimum standards regarding pay, holiday, working time, pension etc. Other forms of regulatory gaps entail the lack of mechanisms to regularly adjust wages and social benefits in accordance with costs of living and average earnings, along with various practices restricting employees’ opportunities of further training, pay increases and moving from flexible forms of employment to more permanent positions. The representation gaps cover low collective agreement coverage, weak employer’s organisation, low union densities, weak or lack of institutions for collective representation for specific employee groups at sectoral, workplace and supply chain levels, along with rules and regulations limiting employees’ access workplace councils, sectoral and workplace bargaining units based on their employment contract. Enforcement gaps refer to employees’
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unawareness of their social and employee rights, limited or ineffective follow-up procedures to monitor compliance with existing rules and regulations, low sanctions for non-compliance, lack of protection for whistle-blowers along with the unregulated labour market like the informal economy (Bradshaw et al., 2015).
The three case studies in this report deals with different aspects of these protective gaps and explores how social partners have handled such challenges through distinct forms of social dialogue (see table 1 for an overview).
Table 1: Overview of the three case studies
Sector Employee implementation of such labour clauses and their effects in terms of ensuring wage and working conditions according to the standards outlined in the collective agreements and Danish labour law, using the municipality of Copenhagen as the empirical example. In this context, we analyse two specific sectors – industrial cleaning and construction - as they are the two main areas together with transport, where the municipality of Copenhagen has applied labour clauses in public procured work. However, we also draw parallels to other parts of the Danish public sector in order to compare the situation in Copenhagen with other Danish municipalities. The process behind labour clauses has mainly been initiated and driven by the political system in Denmark. This is true both at the municipal level and the national level. In the case of Copenhagen Municipality, the mayor and the city council in Copenhagen has played a significant role in the implementation; whilst at national level, the former Social democratic government played a key role in enacting the new regulation of the use of labour clauses in public procurement, which came into force in 2014.
The second case study concerns Danish trade unions’ efforts to organise labour migrants, in particular unions in construction and 3F (the main union mainly organising lower-paid manual workers in construction
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but also other areas). This case study involves mainly the perspective of unions as well as the workers facing increased risks of precarious wages and working conditions, which in this case is the labour migrants.
The third case study explores the recent development of temporary agency work (TAW) within the manufacturing sector and how social partners have dealt with the associated risks of precarious working conditions among temporary agency workers at sectoral and company levels, respectively. The main focus is on the set-up, implementation and usage of the social partners’ joint task force that formed part of their settlement during the collective bargaining round within the manufacturing sector in 2014. The task force aims to offer advice on ways in which companies can use TAW and how they can exploit the various opportunities for flexibility within the collective agreement covering the manufacturing sector. Therefore, the case study includes the perspectives of not only the social partners representing employers and employees at sectoral and company level within manufacturing, but also the views of individual temporary work agencies and their employer associations.
All in all, the three case studies are examples of very different forms of social dialogue with the first case study being largely driven by the political system, whilst the second case study is an example of a unilateral response initiated by trade unions and the third case study is an example of a joint social partner initiative through the collective bargaining system. However, all three case studies have significant elements of social dialogue, albeit in various forms. In the first part of the Danish national Precawo report, we argue that wage and working conditions that are covered by a collective agreement cannot generally speaking (although with some, notable exceptions) be understood as precarious in Denmark. The three case studies also reflect this, as they - in one way or the other - relate to the Danish collective bargaining system.
The first case study reveals that labour clauses in public procurement tend to follow the standards set in the collective agreements, while the second case study on unions’ organsing efforts deals with ways to make migrant workers part of the Danish industrial relations system, and hence increase both union densities and collective agreement coverage. The last case study regarding the implementation of the social partners’ joint task force within manufacturing stem from their collective agreement. Hence, the three case studies, relate to the Danish industrial relations model, where wages and working conditions primarily are regulated by collective agreements negotiated and signed by social partners at sectoral and company levels. However, our case studies also indicate that this traditional way of regulating wage and working conditions is being challenged. For example, the usage of labour clauses in public procurement challenges implicitly social partner’s rights to decide wages and working conditions autonomously as they demand private contractors to follow certain wage levels and sometimes other labour standards which typically are regulated through collective agreements. Likewise, TAW also tests the Danish bargaining model, since the collective agreements typically are suited for full-time employment rather than non-standard types of employment (Larsen, 2011).
The report consists of five chapters. The second, third and fourth chapter present the case studies with the first being on public procurement and labour clauses, which is then followed by unions approach to organising labour migrants and the third case study concern how social partners have dealt with TAW within manufacturing. Chapter five sums up the main findings and highlight some of the patterns identified cross the three case studies.
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Methodologically, the three case studies draw on data gathered through semi-structured interviews as well as secondary sources such as policy documents, reports from union and employer associations, media reports, collective agreements and past research studies. As part of the project report, a total of 42 interviews have been conducted with representatives from trade unions, employer associations, local union branches, shop stewards, local managers, temporary work agencies and migrant workers. The interviews were conducted between March and August 2016 and all interviews were recorded and then summarised. In each of the case studies we interviewed experts and key actors at national, sectoral and company level.
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2. Case study 1: The use of labour clauses in public procurement
Introduction
Public funds allocated to private operators through public procurement and through increased use of outsourcing of public service provision are a growing phenomenon in most European countries. The recent economic crisis appears to have reinforced this development, since the crisis in general and the subsequent austerity policies in particular have resulted in strains on public finances across Europe (Marino et al., 2017;
Grimshaw et al., 2015; Schulten et al., 2012). The public procurement of services and goods as well as outsourcing aim to reduce costs and/or increase productivity e.g. increasing work pace or efficiency, which may lead to downward pressure on wages and working conditions for the workers affected and, hence, increased precarious labour market positions (Grimshaw et al., 2015; Hermann and Flecker, 2012; Schulten et al., 2012). This has led to an upsurge in how the state and other public authorities can act “as a responsible customer” (Jaehrling, 2015) with a growing public and academic interest in the usage of labour clauses and social clauses in public procurement. Labour clauses entail demands by the public authorities that the private contractors follow certain wage levels and/or other labour standards outlined in the labour law and/or collective agreements when carrying out work for the public sector. The public authorities’
demands can also include that the private subcontractor employ a certain share of employees with special needs or apprentices as well as other types of so-called social clauses.
Public procurement and labour clauses have also gained increased attention in Denmark at the governmental, regional and municipality level and among social partners. Some prominent cases of very poor working conditions and low wages among (mainly foreign) workers working for the public sector through private operators e.g. in industrial cleaning have propelled the issue high up on the agenda of social partners and public authorities (Refslund, 2014).
This case study examines how labour clauses on public procurement have been initiated, developed and implemented in Denmark, using the municipality of Copenhagen as the empirical example. We use Copenhagen as an example, mainly because this municipality has often been highlighted as the good example of its usage of labour clauses in public procured work and tends to take the lead within this area – not least with respect to formalising the social dialogue with social partners and implementing follow-up procedures to ensure private contractor’s compliance. However, in the case study we also draw parallels to the broader development of labour clauses in Denmark; in particular the development at the national political level, which has been important for the implementation of labour clauses in public procurement within Copenhagen. The municipality of Copenhagen also use social clauses in their contracts with private contractors regarding the number of apprentices in the companies performing public jobs as well as a CSR-policy on human rights, environment etc. However, in this case study, we only focus on the implementation of labour clauses and their effects to prevent precarious employment as well as the involvement of social partners in this process.
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The case study is structured as follows: First, we briefly present the recent development of labour clauses and public procurement in the Danish public sector, before focusing on the usage of labour clauses in the municipality of Copenhagen. We then turn to two specific sectors – industrial cleaning and construction – as they are the two main areas together with transport, where the municipality of Copenhagen has applied labour clauses in public procured work.