Wage Autonomy, Political Reforms, and the Absence of Social Pacts in Denmark

The Danish case represents a somewhat atypical European case as the crisis was handled mainly within the realm of the existing political and corporatist institutions without any austerity measures or social pacts negotiated with the social partners. While the wage development negotiated bilaterally between the social partners was very modest and hence met the expectations of the political system, it did not result in concession bargaining. The Danish corporatist system was thus not directly altered by the crisis, although some labour market policy changes were made without the involvement of the unions, however this is not a break with previous practices, but rather a continuation of the weakening of the social partners involvement in policy preparation and design. Overall, the unions still have the power to force the employers to keep their side of the bargaining, and the changing governments could abide through the crisis mainly with fiscal policies without the direct involvement of the unions, since there was no dramatic cutbacks in wages as seen in many other European countries. The crisis management through other policy measures combined with wage moderation in the bargaining system demonstrates very well how crises and economic ruptures are traditionally handled in the Danish political system.