Meeting ‘Danish standards’: The political divide over social dumping

Debatindlæg til den internationale tænketank Policy Networks hjemmeside. Her beskriver Kristian Weise hver måned den seneste udvikling på den danske centrum-venstre-fløj.

The Social Democrat-led government struck a chord by drawing firm political lines in the fight against social dumping. But these lines have now become blurred

For almost all of the last one hundred years Social Democrats have been in charge of Copenhagen. After the elections this fall they will most probably still hold the mayor’s seat in the capital of Denmark.

Indeed, in spite of the general difficulties of progressives in Denmark and most other European countries these days, the only other serious contenders in Copenhagen are candidates of the left parties, the Socialist People's Party (SF) and The Red–Green Alliance (Enhedslisten).

But the election of members to local and regional councils in all of Denmark will not be the red conquest that they have usually been.

In the last election, held four years ago in 2009, Social Democrats won 49 mayoral positions, while right wing parties landed 43. This year there has been a fear that the party of Prime Minister Helle Thorning-Schmidt might not be the largest party at the municipal level any longer.

The difficulties that the centre-left has met at the national level will to some extent be mirrored at the local level. The rule of thumb is that national tendencies have a 50% effect in local elections.

Nevertheless, Social Democrats are heading into the elections with high aspirations of improving local welfare, enhancing job creation, providing more apprenticeship positions and fighting social dumping. And they seem to have hit the right chords: 33% of voters rank employment and labour market policies among the three most important topics, matched only by tax policy at 30%.

In what has so far been an electoral battle that risks paling into insignificance, in which the media has only bothered to process stories about campaign material and the no-can’t-bother attitudes of voters, the fight against social dumping has become the one decisive issue that can help distinguish the left from the right.

Municipalities are among the largest employers in the country, both as service providers and as construction contractors. But in most towns and cities there is no control to ensure that sub-contractors deliver decent working conditions and pay wages according to collective bargaining agreements. Hence, demanding that a so-called ‘chain-liability’ applies to companies performing work on public contracts has become the fastest spreading campaign promise of Social Democrats and the rest of the left.

If a ‘chain-liability’ is in effect, companies that hire subcontractors can be confronted with the liability for paying Danish taxes, social security contributions and wages set through collective bargaining by these subcontractors.

Public works financed by tax payers money should be performed by ‘Danish standards’ and thus shouldn’t undermine the labour market, the reasoning goes.

Until the last couple of weeks before the voting on 19th November, there has been total coherence in that message in the social democratic family: the Thorning-Schmidt government has done more on the issue of cracking down on illegal social dumping than any other previous Danish government, several trade unions have put it as their highest priority, and mayors like Frank Jensen in Copenhagen have worked to introduce social clauses in procurement.

Right-wing parties, candidates and media, on the other hand, have repeated the old refrain that the effort against social dumping goes too far. That as long as companies aren’t breaking the law they should be able to set wages as low as workers – whether they would be Danish, Polish or from any other country – will accept. And that chain-liability is a hindrance to free competition and will only increase costs.

A classic political conflict was in place, even showcasing some good old ideological differences. The centre-left had a new chance to show that at the end of the day they’re the ones who care about the main concerns of blue collar workers. In fact, successful local and regional elections might even have been able to make the struggling governing party shine a bit again.

But then someone struck a false note.

The Social Democratic finance minister, Bjarne Corydon, is in the middle of negotiating next year’s budget and has been met with a left wing demand by coalition-supporter the Red–Green Alliance: chain-liability should be introduced in all public procurement through national legislation so that no public works will be performed below normal Danish pay standards and working conditions.

An easy deal, it would seem. But not to the finance minister who declined the demand, arguing that extending chain liability in this way would be incompatible with “concern for our economy and competitiveness.”

Bummer, thought trade unions, while surprise, bewilderment and confusion where the expressions of leading local candidates.

Though there was some back-tracking on the rejection the following days, the harm has been done and the picture stands: local Social Democrats are out on every street corner campaigning for stronger efforts against social dumping, but can’t be sure of the backing from ‘Borgen’ (i.e. the Danish Parliament).

If anything, that is a missed opportunity.

However, hope is still bountiful that not too many voters will choose to unchain their heart from the many great Social Democrats just because local ambitions of chain-liability aren’t matched with commitments at the national level.

Læs indlægget hos Policy Network her