When SAS employees recently made the tough decision to accept pay cuts and longer working hours in order to keep the airline flying, the negotiations were followed breathlessly by the national press. SAS workers, however, were not the only employees at Danish companies to agree to salary cuts recently. This year has seen workers at several well-known companies agree to go down in pay, and experts say that more is coming.
Bente Sorgenfrey, the head of the union blanket organisation FTF, said that encouraging members to take a pay cut is sometimes the only option.
“Wages are certainly not something that we like to cut, but if the alternative is a closed workplace, a reduction in pay is a necessary solution,” Sorgenfrey told Information newspaper.
Sorgenfry helped broker the deal between cabin crews and SAS that kept the airline flying … for now.
Flemming Ibsen, a labour researcher at Aalborg University, said that the lower wage trend could continue into the foreseeable future.
“It used to be that workers would rather quit than take a pay cut, but more and more Danes are accepting lower pay and longer working hours as the new reality,” Ibsen told Information.
Last month, employees at retail giant Jysk agreed to a deal that would see new hires start working at 25,000 kroner less per year than those already on the job. Current employees, meanwhile, will receive no raise until those new hires make up that difference in salary. Workers also gave back their paid lunch break.
Last summer, employees at Inspiration stores agreed to across-the-board wage cuts that the company – which has been operating in the red for several years – said were necessary if they were to stay in business.
Even the sacred corner hot dog wagon is not safe from hard times. Employees at sausage maker Langelænder reluctantly took a ten percent cut last spring.
Over 40 percent of Danes queried in a recent survey said that they would be willing to take a pay cut if it meant saving their job.
Mads Lundby Hansen, chief economist at the liberal think tank Cepos, said that job cuts during the financial crisis have left those still working more willing to take a reduction.
“Many jobs have been lost during the crisis, both skilled and unskilled, which creates downward pressure on wages,” Hansen said. “Danes are sensible people and we can see that our wages are very high when compared to those of our trading partners.”
Jan Villadsen, head of the union 3F’s transport sector, however, said that cutting wages is the wrong way to go.
“I do not think that wage cuts are the solution to anything,” he told Jyllands-Posten newspaper. “We have seen companies experiment with pay cuts, and it hasn’t helped. SAS has tried this several times.”
The leadership of the labour confederation LO said that part of the problem is that too many workers do not even understand how their salaries are negotiated. Seven in ten Danes believe that wages are fixed at the political level, according to a survey conducted by the confederation. LO and its affiliated unions have launched a campaign which aims to increase knowledge about collective bargaining agreements and to increase support for the unions.
Professor Henning Jørgensen from Aalborg University said that Denmark does not have a minimum wage. Wages are established during negotiations between trade unions and employers’ organisations. Things get complicated, he said, when government leaders get involved in those talks.
The finance minister, Bjarne Corydon (Socialdemokraterne), has been under fire for what many saw as improper behavior during the recent SAS negotiations after he sent an SMS to union officials telling them that “it would be tragic if SAS doesn’t survive.”
But it’s not just politicians. Hans Nicolaisen, a small business owner in Horsens, believes that both workers and unions are part of the problem when it comes to wages in Denmark.
“Wages have been too high in Denmark for too long and the unions have too much power,” Nicolaisen told The Copenhagen Post. “If a business owner makes a mistake paying a worker, instead of just paying the worker whatever the difference is, the union wants a 50 or 60 thousand kroner fine on top of it. They are running businesses out of Denmark.”
Nicolaisen said that it is easy for the government and the unions to promise high salaries and pay for things like snow days and higher pensions, but the money has to come from somewhere.
“You have no rights as a business owner; workers have all of the power,” he said. “They can steal from you, and if you fire them, they will find a way to have the union kick you in the balls.”
Sorgenfrey expects that companies will continue to trim wages and unions will have to struggle to maintain Danish salaries at their current levels.
“Wages are one of the major costs of doing business, so it is natural to look at them as a place to cut,” she said. “I am not sure it is the right way to go because lower wages reduce an employee’s purchasing power.”
Ibsen said the pay cuts could be felt at every level, but unskilled and low-paid workers have the highest risk of being forced to take cuts in the coming years if they want to keep their jobs.
“We are already working more hours because of the new closing laws,” a 16-year old Rema 1000 employee who did not want their name in this story told The Copenhagen Post. “Now they come to us and say that there will be a meeting after the first of the year to discuss cutting our hourly pay.”
Hansen said the gap between those with high and low incomes will grow in the coming years.
“Wage increases among the highly educated will be larger while wage growth among low-skilled and unskilled workers will be lower,” he said. “We must adapt so that we can preserve jobs that otherwise would not be here.”