We need to strengthen social dialogue to respond to the on-going global health crisis: Lessons from Denmark

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We need to strengthen social dialogue to respond to the on-going global health crisis: Lessons from Denmark

This article is part of a series in which OECD experts and thought leaders – from around the world and all parts of society – address the COVID-19 crisis, discussing and developing solutions now and for the future. It aims to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge. Opinions expressed do not necessarily represent the views of the OECD.

To keep updated on all of the OECD's work supporting the fight against COVID-19, visit our Digital Content Hub.

It is in times of crises that you should start building up a common response in order to find answers that support businesses as well as workers.

The COVID-19 pandemic is a grim reminder of the vulnerability of our societies. We are in many ways interconnected and the deadly virus knows no borders, moving fast under the radar from continent to continent.

Thousands of people will die from the pandemic. According to the ILO, up to 25 million workers will lose the jobs because of the lockdown and the disruption of activities.

We have all experienced a steep learning curve over the past weeks and months.

Twelve years ago, we witnessed a financial crisis transforming into a social crisis with millions of workers losing their jobs.

Now we are facing another shock and we should do everything that is possible to prevent this from happening again today.

The response to the global financial crisis was in many countries detrimental to collective bargaining and social dialogue. The most vulnerable workers paid the highest price.

"Protecting people and societies": Read the OECD's key impacts report on Supporting people and companies to deal with the COVID-19 virus:

Strong co-operation between stakeholders is crucial to responding to the current health crisis.

In Denmark, we have a proud tradition of social dialogue and tripartism. The mutual recognition of the roles that government, employers and workers play serves as a strong foundation to a bold response to the COVID-19 crisis.

Image: Shuttertock/studiolaska

Mutual trust between the parties led to the negotiation of a new tripartite agreement on temporary wage compensation for private sector employees, to support companies and avoid massive layoffs.

The agreement covers employees working in private companies that are particularly affected: those having to give redundancy notices to either 30% or more of their employees or over 50 individuals.

The companies can use the new wage compensation scheme if they opt out of the existing possibilities for temporarily laying off employees without pay.

Companies continue to provide full pay for their employees during the compensation period, even though they may be severely affected. Employees who are at risk of redundancy cannot work, but are instead laid off temporarily with full pay during the compensation period.

It is also a precondition for the duration of the wage compensation period that the company refrains from dismissing employees for economic reasons.

The individual worker for whom the company seeks wage compensation must take holiday or time off in lieu, amounting to a total of five days in connection with the compensation period. If the employee cannot do this, they must take leave without pay or holidays from the next holiday year. Companies cannot receive wage compensation for these days.

Unions must support a stronger public COVID-19 response and a new global economy by Rosa Pavanelli, General Secretary, Public Services International

Unions must support a stronger public COVID-19 response and a new global economy by Rosa Pavanelli, General Secretary, Public Services International

The monthly state wage compensation for full-time employees who are at risk of redundancy will constitute 75% of the wage bill up to DKK 30,000 (approximately EUR 4,020). For non-salaried employees, the state wage compensation may amount to 90%.

Companies can benefit from the scheme for a maximum of four months between 9 March and 8 July 2020.

Since the application system came into function, more than 75,000 companies have applied for wage compensation. To date 150,000 workers benefit from the wage compensation packages.

Unfortunately, the scheme cannot avoid a rise in unemployment figures. From 9 March to 20 April, more than 87,000 people have registered themselves as unemployed. However, without this agreement that number would have been significantly higher.

The Danish experience can surely be improved, but it should be a source of inspiration for all, and for the OECD in particular: social dialogue and tripartite co-operation deliver and contribute to more inclusive societies. It is in times of crisis that you should start building up a common response to find answers that support business as well as workers. 

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excellent article

More learning SDGs 4.7