The Danish labour market model

When you do business in Denmark, you will meet the trade unions and the employers' organisations. This is because wages and working conditions are defined by the organisations. We explain this special Danish model.

In Denmark, wages and working conditions are typically defined in collective agreements agreed upon by the trade unions and employers’ organisations. This means that the state does not play an active role in determining the wages and working conditions in Denmark. Therefore you will not find a minimum wage defined in the law. The wages and working conditions will be defined in each individual sector.

As a foreign company in Denmark, this means that you should contact the relevant organisation or look into the relevant collective agreements to determine the wage level in your specific sector. This also means that the trade unions and employers’ organisations play different and more active roles in Denmark than in your home country when it comes to wages and working conditions. This way of doing things is typically referred to in Denmark as ‘the Danish Labour Market Model’ or simply ‘the Danish model’.

Who are the labour market organisations?

The Danish labour market is regulated by the trade unions and the employers’ organisations. The organisations represent the majority of workers and companies in the labour market. Around 67 % of the Danish workers are members of one of the trade unions, and a lot of the companies are also members of the employers’ organisations.

Trade unions represent the workers, while employers’ organisations represent the companies. The trade unions are typically organised according to economic sector and educational background. Some of the employers’ organisations are also organised according to sector, but the bigger ones include many sectors.

The individual organisations (trade unions and employers’ organisations) are organised within main organisations. The main organisations are:

The Danish Confederation of Trade Unions (LO)

The Danish Employers’ Confederation (DA)

As a foreign company in Denmark, you will most likely be contacted by the relevant trade union. In the construction sector, this would for instance be the trade union ‘3F’. The relevant employers’ organisation in the construction sector is ‘Dansk Byggeri’. There are other organisations depending on the type of business activity.

For more information on the Danish labour market, wages and working conditions in Denmark you should contact the main organisations.

What are collective agreements?

Collective agreements typically regulate issues on wages, pensions, working time as well as other related issues.

A company can be bound by a collective agreement either directly via an agreement with the relevant trade union (called an ‘adoption agreement’) or via membership of the relevant employers’ organisation. This applies to foreign companies as well. Around 80 % of the labour force is covered by a collective agreement.

Collective agreements are agreements between two private parties on wage levels and working conditions. This can cover the individual worker in a specific workplace or an economic sector as a whole. The workers will be represented by the relevant trade union while the counterpart will either be the individual employer/company or the relevant employers’ organisation.

What does this mean for your company?

The labour market organisations have the tools in order to obtain that collective agreements are concluded and respected. These tools are normally called industrial actions. The trade unions have the possibility to strike or do a blockade in order to impose a collective agreement. Conversely, the employers’ organisations have the right to do lockouts and boycotts. The Danish trade unions can also use these tools when dealing with foreign companies in Denmark.

As a foreign company in Denmark, you might therefore be contacted by one of the Danish trade unions with the ambition to conclude an agreement on wages and working conditions. This might come as a surprise to some foreign companies, but it is in line with the Danish way of regulating the labour market. Foreign companies are not obligated to sign or follow a collective agreement. However, the trade unions have the right to take industrial action.

If your company has concluded a collective agreement, you are obliged to fulfil the requirements in the collective agreement. This means that your workers are entitled to the wage level and other working conditions according to the collective agreement.