Dictates from politicians trigger crisis of trust

More and more often the Danish government makes labour market policy decisions away from the other parties to the labour market. Several experts now say this could undermine the mutual trust and responsibility between employee and employer organisations which form the basis of the Danish - and the Nordic - flexicurity model.

This development could in the long term make it more difficult to secure the broad support needed to solve major and important social tasks, predicts Lars Andersen who is the managing director at the Danish trade union think-tank and policy centre the Economic Council of the Labour Movement.

"We often see political decisions being made without the involvement of employee or employer organisations. The government recently decided to half the period people can receive unemployment benefit without any form of tripartite negotiations. This kind of action undermines the mutual trust and willingness to co-operate which exists between the parties to the labour market, and which is crucial for a flexible and well-functioning labour market," he says.

Another serious example, according to Lars Andersen, is the Danish government's decision last year to delegate all responsibility for labour market policy to municipal job centres. This happened despite serious protests from both employer and employee organisations which did considered the municipalities unfit to take on such an important role. 

"Dictates from politicians in important questions regarding the labour market put pressure on the entire labour market system. When the balance is being upset and parties loose influence, they will become less willing to show flexibility and act responsibly," says Lars Anderse.

Reduced responsibility

He predicts that all this could result in tougher and less responsible demands from all negotiating parties, and that it will become harder to future-proof the labour market. 

"The more influence and responsibility the parties loose, the harder it will be to make them accept a broader social responsibility. This in turn means it will become harder to see through a policy of growth which is able to improve and increase the workforce when the current crisis ends. And we will be needing that," says the managing director at the Economic Council of the Labour Movement.

Henning Jørgensen, professor at Aalborg University's Institute for Economics, Business and Politics is also worried about the many political decisions made in isolation. 

He calls the government's decision to half the unemployment benefit period from four to two years the latest in a row of political decisions which undermine the flexicurity model. He says the first serious blow to the model was in 2007, when the government decided to kick the parties to the labour market out of Denmark's regional labour market councils. 

"Since then we have witnessed a range of actions where the government has acted like a thief in the night, dictating solutions without asking the parties - and in the process it has really dealt itself a handicap."

The swarm is wiser than the bee

According to Henning Jørgensen the Danish and Nordic labour market model is strong because it is based on trust. The parties acknowledge each other's standpoints, and they can trust that awarding a point to the opposition will be reciprocated. The parties also understand that they can find better solutions collectively than if they acted in isolation. The professor calls this phenomenon 'swarm intelligence' - and it is under threat, he says:

"The deeply conservative notion of trust is absolutely crucial for the functioning of the Nordic labour markets. The parties reckon with each other's rationale and the fact that the swarm is wiser than the individual bee. Yet now we see politicians in Denmark and Sweden increasingly legislating without acknowledging the swarm's intelligence, which is deeply unfortunate. Especially during an economic crisis where there is a need for crisis solutions which everybody can support," he says.

The result will be a politicised and lesser co-ordinated labour market where the parties more and more often will comment from the side-lines: 'we told you so' when things go wrong, predicts Henning Jørgensen. He praises the Finnish for their continued involvement of all the parties. He reckons that has opened up for a responsible and effective pension reform.