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The Big Question: Could Denmark’s labour market model unlock European competitiveness?
euronews (in English)
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09/12/2024
“It's difficult to continue being a winning country in a continent which is challenged a lot,” Thomas Bustrup told Hannah Brown on this episode of The Big Question.
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00:00
It's difficult to continue being a winning country in a continent which is challenged
00:05
a lot. The last time we didn't agree was in 1998. It's easy for companies to hire people,
00:12
but it's also easy to fire people.
00:20
Welcome to The Big Question, the series from Euronews where we address some of the biggest
00:24
topics on the business agenda. I'm Hannah Brown, and today I'm joined by Thomas Bustrup,
00:28
the Deputy Director General of the Confederation of Danish Industries. So welcome, thank you
00:32
very much for joining us. So I think the big word on everyone's lips in Europe at the moment
00:36
is competitiveness. And on global rankings, Denmark is doing pretty well. So why do you
00:41
think that is?
00:42
I think we have quite a flexible economy and we have a flexible labour market. We've been
00:50
building up a system for more than 100 years. Somebody calls this the Danish model. It is
00:56
a model which is very much about trust, trust between the employees, the unions and the
01:03
employers. I think that plays an important role.
01:06
And do you think there is a particular focus on any kind of businesses or industries in
01:10
Denmark that particularly play a role in making you competitive?
01:13
I mean, we have a very strong sector within pharmaceuticals who are global champions,
01:20
and not only in the minorities, but as one of them. And then I think that the whole green
01:25
transition, a lot of Danish companies have an excellence in that. And not just within
01:31
the last years, but within probably 30, 40 years, you could say that Danish companies
01:36
has done a lot in the green transition and thereby also being popular around the world,
01:45
not only in Europe, but also in the US and Asia.
01:47
Yes, yeah. So you mentioned the Danish model of the labour market. Can you just explain
01:51
a little bit kind of how it works and why it's unique?
01:54
It's based on trust. And you don't build up trust in a couple of years. That takes
01:58
a long time. But we've done that in the Danish society. So basically, we, on behalf of the
02:04
employers, we negotiate with the unions every second, third year on all labour market regulation.
02:10
So it's a very decentralised model. And the government basically only interfere when we
02:15
cannot agree. And last time we didn't agree was in 1998. So more than 25 years ago. So
02:22
the unions will go out to all the employees, all their members and say, you know, we've
02:27
had tough negotiations and they are tough. Normally they last for two, three months.
02:32
And then they go out and they recommend to all their members to vote and the employees
02:38
and the employers and we also vote on the result. And if it's a yes, it's a yes. And
02:44
then you have this common understanding that this is going to be the labour regulation
02:48
over the next two or three years. It creates the platform to say, okay, this is what we
02:53
have. This is how we share. Hopefully, you know, the good results made in the company,
02:59
this is how we share it for the next two or three years. So it creates a common ground.
03:03
And I mean, when I travel around in Europe, in Brussels and other countries in Europe,
03:07
they are very envious of this model, because it's not everywhere that you have this direct,
03:12
good, constructive talk between the unions and the employers.
03:19
What benefits does this bring to a business?
03:25
We have a very flexible labour market. It's easy for companies to hire people, but it's
03:30
also easy to fire people. And of course, that is something what the unions have to sort
03:34
of get their grip around, that, you know, it's easy to fire, but it means the flexibility
03:38
that if a company wants, maybe you have an opportunity there, should we go for it? Yes.
03:43
Because we hire some people, it's easy for us to hire them. And if it doesn't work, we
03:47
find another way.
03:48
So whilst it might benefit businesses, are there any risks for the workers in this model?
03:51
There's the security part, which is, of course, our public model that we have as taxpayers.
03:59
We have a system that if you are out of job and you don't have any way of getting around
04:03
that we have a public welfare system that takes care of the people that are unemployed
04:08
until they find a new job. Because I mean, the flexibility means that you often find
04:13
a new job very quickly.
04:15
And with that, you know, the easy hiring and firing, how has that affected employment
04:19
rates? What are employment rates in Denmark like?
04:22
Very high, very low unemployment. We are constantly trying to get the employment rate even higher,
04:30
but we are sort of getting at a maximum, which also means that we are as a society quite
04:35
dependent on international labor coming from outside. If you want to continue being number
04:41
two or three or four, yes.
04:43
Do you have any statistics around kind of the money that it saves businesses in terms
04:47
of being able to actually be really efficient with how they spend their money?
04:51
I don't know if I have these statistics, but so it's more a gut feeling talking to, for
04:58
example, Danish companies investing in other big European countries, explaining the difficulties
05:05
they have when they have to take this investment decision. You know, should we go for this
05:09
plan or not? Should we hire 200 people more in France or should we do it somewhere else?
05:16
And do you think this model would work only specifically for Denmark or do you think it
05:20
could be applied and be successful elsewhere in Europe?
05:22
No, of course it can, but it takes time and it takes the willingness and it takes a wish
05:26
to actually create this partnership, because that's basically what it is. It is a partnership.
05:32
And of course, also accept that you have different interests, but in a way you have the same
05:38
interests because you want to be successful. And I think if you look two or three decades
05:43
back, you know, some of the unions would say, ah, you know, globalization is not necessarily
05:48
a good thing because Danish companies will start producing in China and not in Denmark.
05:52
What will happen? So at that time, there was also quite a good, well-founded discussion
05:58
in the Danish society. You know, if we want to be number two or three or four, what you
06:02
mentioned in the beginning in the future, you know, should we embrace the globalization
06:07
or should we try to build up walls? And Denmark is a small economy. We have succeeded in making
06:13
it a very open economy. So it's a small open economy, which means that in the time we are
06:17
in right now, we might face challenges because things in geopolitically is getting kind of
06:23
tough.
06:24
So that brings me to my final question. You know, Denmark's already doing very well on
06:28
the global scale of competitiveness, but where do you think there's still room for improvement?
06:33
What changes would you like to see?
06:34
Well, the changes I would like to see is mainly in Europe, because it's a very small economy
06:41
and a very open economy. And it's difficult to continue being a winning country in a continent
06:49
which is challenged a lot. I wouldn't call it a losing continent. But, you know, so the
06:55
changes that we see for is in Europe, because a lot of the regulation also governing Danish
07:02
companies is determined in Europe. And I think we need to look at speed. We need to look
07:08
at simplicity in terms of Europe. I mean, China has their way of assisting their companies.
07:14
In the US, you see new initiatives like the Inflation Reduction Act and things like that.
07:21
In Europe, we want to do the same thing. But the speed and simplicity is a huge challenge
07:25
also for Danish companies. It's simply all the application processes. And also, if you
07:30
want new products to be approved on the European market, it takes too long and it's too complicated.
07:36
And which means that also Danish companies will look for doing their investments outside
07:42
of Europe. And I think that is very challenging.
07:44
Yes, absolutely. Well, thank you so much for your time today and for your fascinating insights
07:49
and all of the questions. Thank you.
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