The future of work in Denmark

Collective agreements in the gig economy. A flexible approach to economic security. Trade unions using technology to redesign jobs. What can we learn from the future of work in Denmark? 

A different approach to the gig economy    

I get off the plane and to my surprise there is no Uber in Copenhagen. The platform reportedly pulled out of Denmark after failing to persuade the government to change laws to accommodate its business model.   

Naturally I ask everyone I meet here about the gig economy. I’m told most people are delivering food and that these workers are mostly immigrants from southern Europe. But I also learn about other platforms, which seem to be disrupting industries without shifting risk onto workers.   

Hilfr, a platform for domestic cleaners, struck a collective agreement with 3F Union in 2018. This novel agreement entitles workers who have clocked over 100 hours on the platform to receive employment benefits such as holidays, sick pay, pension contributions and a minimum wage of €19 per hour. These workers become Hilfr employees, but those who just use the platform for odd jobs are free to opt out and remain self employed.   

Hilfr workers are actually given the choice to trade off economic security for greater flexibility. Co-founder Steffen Wegner Mortensen has said the company expects to have 50 per cent of cleaning hours covered by the agreement. These take-up rates go some way to busting the myths espoused by less scrupulous platforms that everyone wants to be a freelancer.   

Danish culture may play a critical role here. Treating workers badly is seen as not worth the bad press for firms. Workers are also well paid: the average salary is €39,000 per year. The cost of labour makes the cost of living more expensive (and taxes are also higher). But they all seem much better off because of it. Hilfr customers reportedly pay nearly 40 per cent more for cleaners covered by the agreement – but are willing to because of the level of professionalism that comes with it.   

Danish flexicurity   

The Danish model, also known as ‘flexicurity’, combines labour market flexibility with a comprehensive safety net for the unemployed and an active labour market policy to promote economic security.   

The RSA defines economic security as the degree of confidence that a person can have in maintaining a decent quality of life, now and in the future, given their economic circumstances.  

Denmark has minimal levels of employment protection regulation. Only a small number of employment laws regulate areas such as health and safety at work, holiday entitlements, and the right to a written employment contract. Denmark has high levels of job-to-job mobility and flows in and out of employment, as the lack of employment protections gives employers the flexibility to fire and hire in response to the changing demands of the economy.   

But workers don’t feel economically insecure because unemployed people receive generous benefits. Most workers are signed up to unemployment insurance funds, which provide high compensation rates for up to two years (up to 90 per cent of previous earnings for lower-paid workers). Additionally, Denmark’s active labour market policy gives people adequate opportunities to reskill to enter growth industries. Denmark spends more than two per cent of GDP on this, which is four times higher than the OECD average.   

I’m not going to simply suggest we roll out the Danish model in Britain. But what we can learn from this example is what kind of ingredients are needed to create a system for economic security. Our recipe may be different. The UK already has a flexible labour market. But as highlighted in our recent report Economic insecurity: the case for a 21st century safety net, workers in the UK need better opportunities for training and access to new financial services that help build resilience against economic shocks.  

The future of trade unions  

At first sight it seems that Denmark may have all the answers trade unions are looking for. While there is minimal employment regulation in Denmark, wages and working conditions are instead defined through sectoral collective bargaining by trade unions. Union density is as high as 67 per cent, compared to just 23 per cent in the UK.  

But one union in Denmark is acutely aware of the existential challenges they face. The highlight of my trip to Copenhagen is a meeting with Martin Grønbæk Jensen from HK LAB, the innovation arm of one of Denmark’s largest unions. HK union serves white-collar workers in administrative professions. Martin tells me that “people used to see the union as part of their identity. But the brand – being a HKer – is not as strong as it used to be.” Martin says that “union membership is seen as leftist, nostalgic” and that “young people working in portfolio careers want something else.”   

HK LAB has been set up to innovate the union’s offering to its members, in response to the tech-enabled businesses models in the gig economy and changing social attitudes of young people. Ensuring a sustainable membership base is made more difficult by the prospect of free riding: when collective agreements cover entire sectors, workers can benefit without paying their dues.  

HK LAB has developed new products and services for its members, such as chatbots that provide people with advice on their rights at work (not unlike RSA Future Work Award winner WorkIt). They have also conducted trials to simulate the impact new technologies could have on administrative professionals in the health sector, to understand what tasks tech could easily replace and what new tasks humans could spend their time on – and redesign their jobs based on these insights.  

I smile as Martin tells me “the best way to predict the future is to create it.”