UPDATE 1-Danish industry, union seal 2-year wage deal

Mon Feb 22, 2010 4:09pm IST

Stocks

   

* Main employers' association, key union reach 2-yr deal

* Deal for 240,000 workers seen paving way for other unions

* Economist says deal reduces probability of major strike

(Adds details, quotes, background)

COPENHAGEN, Feb 22 (Reuters) - Danish industry and key trade union CO-Industri reached an agreement overnight on a two-year wage deal, the union and employers said on Monday.

Labour agreements made by CO-Industri tend to pave the way for other Danish unions to reach deals with employers, so economists said the deal significantly reduces the chances of a major strike which up until last week had seemed possible.

The agreement affects 240,000 workers and runs to March 1, 2012, the parties to the deal said.

It provides in the first year for a wage increase of 1.10 crown from the current minimum level of 103.15 Danish crowns ($18.88) per hour and an increase of 1.75 crowns in the second year, the Confederation of Danish Industry (DI) said in a statement.

DI is Denmark's biggest employers' association.

Strikes in Europe have hit companies from German airline Lufthansa (LHAG.DE) to French oil group Total's (TOTF.PA) refineries. [ID:nLDE61L03V] [ID:nLDE61I1BB] [ID:nLDE61L0D7]

"The risk of a large conflict (in Denmark) has been significantly reduced as the agreement in the industrial sector is often an inspiration to agreements in other sectors," Danske Bank chief economist Steen Bocian said.

But Bocian added in a research note to clients that it could still be very difficult to reach agreement in the transport sector. "So it is too early to conclude that we will avoid a major conflict."

Bocian noted that the deal between DI and CO-Industri was on minimum wage levels, which provides a guideline, but real wage growth would be decided in local negotiations.

"Although there are prospects for relatively low wage growth, there is still a chance of wage growth in Denmark at the high end seen in international perspective," Bocian said.

He said industrial wages in Denmark's major trading partners were growing on average by 1.5 percent, so it was unlikely that Denmark was poised to recover lost competitiveness after years of high wage growth and modest productivity improvements.

"That said, the markedly lower wage growth will ensure that the loss of competitiveness will not continue," Bocian said and added: "That is good news with regard to the development of the number of jobs in industry."

(Reporting by John Acher; Editing by Stephen Nisbet)

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