Keeping the State out through Legitimacy: Employers' Organizations in Denmark

Abstract

For more than 120 years, Danish employers’ organizations have been committed to collectivism and coordination of employment relations, going against the neoliberal tide in most other countries. We argue that this commitment rests on employers’ interest in regulatory autonomy. To remain autonomous, the state must view employers as legitimate partners able to solve problems of the labour market and the modern welfare state. This is only possible if employers’ organizations can keep trade unions close in productive bargaining relationships that cover the majority of companies and their workers. In this chapter, we trace the historical origins of employers’ commitment to this model back to the September Compromise of 1899 when employers’ organizations and trade unions showed the state their ability to regulate the labour market through autonomous collective agreements. The state challenged autonomy during various crises, especially in the 1970s when the problem-solving capacity of social partners was low. However, legitimacy and autonomy were restored when social partners again solved pressing labour problems; wage restraint during the 1980s, increased flexibility during the 1990s, and welfare benefits in the 2000s. As long as legitimacy continues to be high, employers can count on the state staying out of employment relations.