The Standard Foundations of the ‘Non-Standard' Danish Labour Market

The Danish political economy is arguably best known for its now (in)famous system of ‘flexicurity’. Despite changes over time, the core of flexicurity is taken as the ‘Golden Triangle’ of   liberal labour market policies, a high level of welfare security and active labour market policies. However, relatively little attention has been paid to the social organisation of work and employment in securing the flexicurity system. We argue that the Danish model combines elements of ‘standard’ and ‘non-standard’ in a distinctive manner that is crucial to the flexicurity system.

On the face of it, the Danish system contains many features of employment that are ‘non-standard’ where standard models of bureaucratic employment emphasise larger firms, set rules and hierarchies at work, internal labour markets and legal grievance procedures. However, the Danish labour market is characterised by a majority of small and medium enterprises, high levels of worker autonomy, high labour market turnover and relatively weak legal regulation of the workplace (no minimum wage, weak working hour regulation, weak limits on hiring and firing, and so on). However, the ‘flexibilities’ of the Danish labour market are underpinned by a distinctive model of ‘standard’ employment shared by a wide range of workers – with a particularly high employment rate, an emphasis on full time employment, relatively short but full-time hours, widespread good conditions of work, access to the collective agreement protections through direct employment, embedded within a strong and encompassing industrial relations system. Taken together, this offers a system of ‘standard employment’ that departs significantly from the firm-centred model of most internal labour market theories. However, this set of labour market – level conditions is critical to the flexicurity system, in its various forms. It is this normative standard employment which conditions flexicurity, for which Denmark is famous, and not the much accepted view that flexicurity defines standard employment.

This article therefore shows why the Danish model of employment can successfully operate with both typically liberal and social democratic elements. Using interviews with business, trade union and political representatives, the article will show that the Danish model is a normative one, which acts as a standard but not in the typically standard bureaucratic model. Instead, it comprises a number of assumptions about work organisation, working conditions, employer-employee relations, and the general interaction between peak level institutions – all embedded in the meso-institutional level of the industrial relations system, rather than in specific individual firms.

Finally, if these labour market conditions erode, then the flexicurity system will find itself under significant pressure. Arguably, this is already happening. The system is already subject to significant pressures – including the economic imperatives of globalized competition (liberalising of shop hours requiring more flexibility etc), the growth of ‘yellow unions’, and ‘social dumping’. Furthermore, we consider whether recent shifts in the welfare state regime alter the meaning of standard employment, or actually reinforce it (in response to pressures and tensions). How might standard employment assumptions shape the retractions in the ‘security’ component of flexicurity?