Yves here. Forgive me if you were already well versed in how Danish workers brought McDonalds to heel, but I wasn’t, and the account is instructive. It shows what solidarity looks like, an orientation that was never that strong in the US to begin with and has been weakened even further by attacks on labor rights and neliberalism fraying community ties.
By Matt Bruenig, a lawyer, policy analyst, and founder of the People’s Policy Project. Originally published at his website</strong>
Every few months, a prominent person or publication points out that McDonalds workers in Denmark receive $22 per hour, 6 weeks of vacation, and sick pay. This compensation comes on top of the general slate of social benefits in Denmark, which includes child allowances, health care, child care, paid leave, retirement, and education through college, among other things.
In these discussions, relatively little is said about how this all came to be. This is sad because it’s a good story and because the story provides a good window into why Nordic labor markets are the way they are.
McDonalds opened its first store in Denmark in 1981. At that point, it was operating in over 20 countries and had successfully avoided unions in all but one, Sweden.
When McDonalds arrived in Denmark, the labor market was governed by a set of sectoral labor agreements that established the wages and conditions for all the workers in a given sector. Under the prevailing norms, McDonalds should have adhered to the hotel and restaurant union agreement. But they didn’t have to do so, legally speaking. The union agreement is not binding on sector employers in the same way that a contract is. You can’t sue a company for ignoring it. It is strictly “voluntary.”
McDonalds decided not to follow the union agreement and thus set up its own pay levels and work rules instead. This was a departure, not just from what Danish companies did, but even from what other similar foreign companies did. For example, Burger King, which is identical to McDonalds in all relevant respects, decided to follow the union agreement when it came to Denmark a few years earlier.
Naturally, this decision from McDonalds drew the attention of the Danish labor movement. According to the press reports, the struggle to get McDonalds to follow the hotel and restaurant workers agreement began in 1982, but the efforts were very slow at first. McDonalds maintained that it had a principled position against unions and negotiations and press overtures were unable to move them off that position.
In late 1988 and early 1989, the unions decided enough was enough and called sympathy strikes in adjacent industries in order to cripple McDonalds operations. Sixteen different sector unions participated in the sympathy strikes.
Dockworkers refused to unload containers that had McDonalds equipment in them. Printers refused to supply printed materials to the stores, such as menus and cups. Construction workers refused to build McDonalds stores and even stopped construction on a store that was already in progress but not yet complete. The typographers union refused to place McDonalds advertisements in publications, which eliminated the company’s print advertisement presence. Truckers refused to deliver food and beer to McDonalds. Food and beverage workers that worked at facilities that prepared food for the stores refused to work on McDonalds products.
In addition to wreaking havoc on McDonalds supply chains, the unions engaged in picketing and leaflet campaigns in front of McDonalds locations, urging consumers to boycott the company.
Once the sympathy strikes got going, McDonalds folded pretty quickly and decided to start following the hotel and restaurant agreement in 1989.
This is why McDonalds workers in Denmark are paid $22 per hour.
I bring this up because people say a lot of things about the economies of the Nordic countries and why they are so much more equal than ours. In this discussion, certainly the presence of unions and sector bargaining comes up, but rarely do you get a discussion of just how radically powerful and organized the Nordic unions are and have been. If you didn’t know better, you’d think the Nordic labor market is the way it is because all of the employers and workers came together and agreed that their system is better for everyone. And while it’s true of course that, on a day-to-day basis, labor relations in the countries are peaceful, lurking behind that peace is often a credible threat that the unions will crush an employer that steps out of line, not just by striking at one site or at one company, but by striking every single thing that the company touches.
We saw this most recently in Finland in 2019 when the state-owned postal service decided to cut the pay of 700 package handlers by moving them to a different sector agreement than the one they were currently being paid under. The unions responded by striking airlines, ferries, buses, trains, and ports. In the aftermath of these strikes, the pay cuts were reversed and the prime minister of the country resigned.
When I bring this up, people sometimes respond by saying that these kinds of strikes are illegal in the US. This is a true and worthwhile bit of information, but insofar as it is meant to imply that the different legal environment is what accounts for the labor radicalism, this obviously has things backwards. The laws aren’t driving the labor radicalism, but rather the labor radicalism is driving the laws.
We can see this clearly in another recent example, this time from Finland in 2018. There, the conservative government was preparing to pass a law that would make it easier for employers with 20 or fewer employees to fire workers. The stated purpose of this was to stimulate hiring by making it easier to fire and thus less risky to hire — the usual stuff.
The Finnish labor movement did not like this idea and called a massive political strike that sidelined workers in a bunch of different sectors. In response to the strike wave, the government changedthe bill so it only applied to employers with 10 or fewer employees. The strikes continued and they changed the bill again, this time so it just stated generally that courts should consider an employer’s size when adjudicating wrongful dismissal cases. This was acceptable to the unions since, according to them at least, Finnish courts already do this and so the bill was basically moot. So they stopped striking.
One can only imagine what would happen if the Finnish government tried to ban sympathy strikes in the same way the US government has here.
If we are ever going to get to Nordic levels of equality, it is really hard to imagine doing it without building a similarly powerful labor movement. You can certainly get some of the way there, such as by copying certain welfare programs, but without the unions, you’ll always be missing a key piece. And while legal and policy reforms can help build the labor movement some, the power of organized labor is not ultimately rooted in the state, but rather in the ability to halt production and wreak havoc even when the state is aligned against it.
McDonalds doesn’t pay Danes high wages because of a statutory wage floor or even because the state stepped in to enforce a collective bargaining agreement. They pay high wages because back in the 1980s, Danish unions flipped a switch and turned the whole business off, and McDonalds doesn’t want to find out whether they would do it again.
This is where we need to get to.
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Very interesting. I also was not aware of this.
I wonder if Nordic labour unions are careful not to overplay their hand and to make sure their strikes are well targeted and hence not too annoying to the general public.
The regular strike actions of unions, peaking in the winter of discontent, in the UK during the 1970s was undoubtedly a major factor in Thatcher getting elected. Her subsequent crushing of the unions was supported by, if not a majority, at the very least a significant percentage of the electorate as evidenced by the Tories winning 4 elections on the trot.
I’m certainly no expert in UK politics, but I sort of question how important that backlash against the winter of discontent really was.
1) Wasn’t Thatcher looking rather shaky before getting a kind of bailout from the Falklands War?
2) I’ve noticed over the years that there’s long been a kind of low-key propaganda campaign from the right here in the US to re-cast the 1970s as some kind of nightmarish past that needed to be vanquished. The tone from some corners makes it sound like things were as bad as the 1930s went the data show that the 1970s were reasonably prosperous times and normal people weren’t really that upset about inflation, as long as they got pay rises to keep up.
To help illustrate this point, the history of NYC is often involved. 1970s NYC is portrayed as a dystopian nightmare as seen in the movie ‘taxi driver’, whereas by the 1980s, it’s portrayed as a hopeful time of opportunity for hungry wall street types that are often portrayed as coming from the working class and making it big while shaking things up among the old guard of wall street.
The whole thing really hammers home that Orwell point (to paraphrase) “whomever controls the past, controls the present”.
A small union might try to squeeze out as many benefits as possible, but when unions get big enough they have to consider that if they demand too much the whole economy will crash. What good is a 10% increase in wages if inflation rises to 15%?
In Sweden there is the Saltsjöbaden Agreement from 1938, where both sides got together and made up rules for how to negotiate in order to minimize conflicts. This was partly a response to the Great Strike of 1909 where Sweden basically shut down from strikes and lockouts. Even if the employers “won” that time, it was clear that such conflicts were too expensive, and if there was to be any cake to share, conflicts needed to be avoided.
https://en.wikipedia.org/wiki/Saltsj%C3%B6baden_Agreement
Something else to be noted about Sweden, events in 1931 might also have affected things:
https://en.wikipedia.org/wiki/%C3%85dalen_shootings
If wages are kept down then what tend to happen is that profits might go up for a while and then the landlord increases the rent. The landlord can increase the rent as the location is so profitable and other tenants might therefore be willing to pay more in rent causing an upward pressure on rents. Keeping wages down is great for the rent-seeker, bad for just about everyone else.
McDonalds might possibly be able to claim that if their rents were lower then they could afford higher wages but then again we come to this:
https://www.wallstreetsurvivor.com/mcdonalds-beyond-the-burger/
Strikes in Denmark on a large scale are generally in connection with the renewal of the general agreement between members of LO and DA (labour & employer associations, check wiki) every two-three years. They do not happen all that often.Hence employees have a clear interest in the strikes and their success. (that’s a very large section of the population). If the big guns, general strike and general lock-out, are brought to bear the costs go up massively which means both sides are interested in a solution.
Politics as always also play a role. An example from 1985
https://danmarkshistorien-dk.translate.goog/leksikon-og-kilder/vis/materiale/paaskestrejkerne-marts-april-1985/?_x_tr_sl=da&_x_tr_tl=en&_x_tr_hl=da&_x_tr_pto=nui,elem
Wildcat strikes are rare and mostly to do with big problems in a specific company, not a sector of the economy. So they do not affect the over-all economy.
Toys’R’Us also tried to avoid an agreement and was brought to it’s knees with co-operation from Norwegian and Swedish unions
My understanding is that Taft-Hartley prohibits many of these secondary actions that were effective against McDonalds. Taft-Hartley was passed 75 years ago, and Democrats have had numerous chances to repeal or rewrite it but haven’t, even when unions were stronger. I doubt that the current party will take any action.
At one time, US labor unions had a proud tradition of defying strike injunctions, exemplified by the great Mike Quill of ghe NYC Transport Workers Union, who famously said, “The judge can go to Hell in his Black robes,” while on his way to jail for calling a strike in the subways.
There’s also this to think about – we can now network. Like never before. What will the government do, shut down the internet? It’s just a question of time before we realize the power we still have. And not only that, we now have a tail-wind coming from the downsizing of global neoliberal desruction. If we are ever going to get our economics in line with out politics it is now. Now when corporations are going to be SOL just because nobody will be buying anything.
If I were in need of a fast food meal in Denmark, I would head to a red sausage hot dog stand rather than MaccieD, or somewhere selling open sandwich with prawns.
Ok, John.
A GREAT story. With Americans being the supreme celebrators of individualism, and the way that helps our betters to turn us against each other so easily, I can’t see it happening here, sorry as I am to admit it. I mean, we can’t even get Medicare for All after 100 years of trying, and it’s so clearly in the best interest of the 99 percent.
Here’s my recent experience in the US labor market.
Bio-medicine is booming in Massachusetts and I took a permanent position (full benefits) but because I went thru an agency, this had to be changed to 6 month contract so the agency could make their fee.
I gave my manager a couple months heads up that I was to go permanent (50% higher pay plus benefits). The person who hired me ignored her original offer except to lamely said it wasn’t guaranteed because I would have had to do more interviews, and told me to “show her my ambition” and said she was “there for me for any help I need to reach my goals.” My direct manager did what he could, and put thru a raise and another 6 month contract.
The raise fell far short of what perms make, and still no benefits, but our meetings caused me to notice my manager thought my pay was equal to “cost” on his spreadsheet…in other words, he didn’t even know what I was actually paid, hence did not fully get the inequity I was feeling.
I never reached that 2nd 6 month contract because I interviewed for other similar roles and after my first interview was offered a permanent similar role, at the same rate perms were making at the company I was about to leave, with very generous benefits. I realized they were being boneheads about not paying what the market was bearing let alone arrogant about their original offer which I know was not air tight and open to some interpretation…but this is a tight market for this field. Anyone with 6 months experience can successfully seek the next step up in this labor market. An employer ignoring this does so at their own risk.
Can’t tell you how infuriating it was working side by side with mates in the exact same position performing the exact same job while they made 50% more, as I listened to them making paid vacation plans despite being hired months after myself (as a temp I received no paid vaca). I could take if knowing is was only for 6 months. When they took that away, I recalled that University of Vienna study on how dogs react when they see other dogs getting treats for giving paw, while they are given nothing.
I knew it was unfair. Dogs know it’s unfair. Why didn’t top management at Big Pharma company know it?
Note: they are stepping up hiring of contract workers as their bio medical factory approaches its opening, so while my circumstances were a bit unique in the beginning, that is changing.
Some may find this amusing…
The company followed policies of enforced cheerfulness and happiness. There was a biweekly department meeting via Team and everyone is asked if they are 1 thru 10. 1 being miserable, 10 being awesome. At my first meeting I took this a face value and was about to enter 5 but quickly noticed the scale. Later, learned that any 7 is required meeting with management to discuss. If you are 8 you get “what does it take to make you a 10?”. Same for 9. Some folks who say they are, for example, a 1400 or some such number. The giving of numbers is generally preceded by topic like “Are you a pineapple on you pizza person” with extensive discussions of what toppings you like.
Was tempted to send a Team message to my original manager, of nothing but a summary of that University of Vienna dog study showing dogs understand fairness and become stressed and aggravated when they experience unfairness. In the end I didn’t, and just sent a matter-of-fact notice that I had taken a similar position at 70% higher pay will full benefits.
Ha, your pineapple pizza story reminded me of an acquaintance who’s been bringing up the exact same thing for weeks now. Maybe it was the same place.
There are a lot of penny wise pound foolish employers out there, particularly in this moment of hyper-inflation. Those that get attached to their existing wages and force employees to come into the office are suffering some serious brain drain at the moment.
What hyperinflation? A little hyperbolic, perhaps?
I appreciate you sharing this experience,Timbers. Because I found the McDonalds story about labor abuses, your story fit right in.
I think the lesson you learned is one that those of us at my employer (a large, but not TBTF large) bank learned some years ago.
If you want to get a raise….you need to jump ship to another job. Then, come back to the former employer in a year or two for another raise.
I can actually name several colleagues, current/former, who pulled this trick. Some of whom have been with the bank for close to two decades, but with a 1-2 year gap in the middle which enabled them to get their pay ‘in line with market rates’.
One other thing to keep in mind is that the use of the temp agency recruiter firm often confuses and complicates matters. Those agencies like to tie their clients down with contracts.I don’t know what the terms are in those contracts, but I’m aware that they can gum up the works.
I find maximizing life to be better than maximizing pay. For years I was accepting below market rates but that gave me lot of flexibility with work. My boss knew he was underpaying so he never pushed for tight deadline.
Having been an adjunct teacher- or is it lecturer – or could one call it ‘professor’ I was fully aware of getting less than 1/2 the pay of the tenured people – who had no more qualifications than me – or the other adjuncts.
Actually – I think it was 1/4 pay. However, my field is in the arts (Photo) and the labor force per college job is high – without a union – little – no – bargaining power.
timbers I had a similar fate back in 2007 working as a contractor for Kaiser Permamente. Boss couldn’t hire me for 6 months; was training new hires that were making 3 times as much plus full benefits. No happiness scale tho so I guess it could have been worse. My previous job came and made me an offer during that 6 month timeframe.. When I presented that to my boss and said I’d be giving my 2 weeks notice, he quickly topped their offer by quite a lot. Point being, employers are only moved when the employees have options.
Nice story but not currently very relevant to McDonald’s operations in Wisconsin, where it is clear that they more-or-less are the industry standard. It isn’t just that the mechanism of sector agreements aren’t in place, but the Danish motivation isn’t there either.
I would like to point out that according to the Big Mac Index that Big Macs currently cost $5.31 in Denmark as compared to $5.65 in the US. Denmark McDonalds sell their burgers for 34 cents less (16%) than in the US.
So with Danish employees making $22 an hour and having 6 weeks of vacation, McDonalds can still make a profit selling burgers at a 16% discount. Hmm, must be due to the vast cattle herds in the Danish outback.
That’s great. I suppose there’s a caveat in that the exchange rate suggests the Danish Krone is undervalued a bit.
Nonetheless, in the wages/prices debate in the US more broadly, the idea that maybe, just maybe, large multinationals might need to get comfortable with lower margins is completely off the table.
It sounds like Denmark is telling us that workers and consumer can both win…at capital’s expense!
I wonder where the money went. Do US franchise owners get more, or McD’s corporate, or both? It seems like the franchise owners, to the extent they are paying rent to McD’s for the menu and logo and bondage to the supply chain, but still invest the capital and take the risks, are the first gig workers. At the same time, they are means-of-production-owning capitalists.
Does McDonalds pay for health insurance in the U.S.? That is a significant cost for companies.
Good question, and a good point in general. What other rentiers are feeding off a McD’s. It has the ironic tang of truth…
Using a search engine to find the answer, it says that MacDonalds requires a worker to work a minimum number of hours to qualify for medical insurance. I’m betting not a lot of workers get enough hours to qualify.
But that’s probably just my cynicism.
That is only for direct McDonald Corporation employees. Many McDonald’s restaurants are franchises, meaning that they aren’t corporate-owned. As such, the benefits packages that are offered by a franchised store and how the benefits can be obtained can vary from restaurant to restaurant. Each franchise makes its own rules for health insurance for its workers.
Which is exactly why the US should have single payer; the employer-based healthcare model should have been long ago scrapped as the anachronism it is. Unlikely, however, because freedom.
BTW years ago my company had firmwide appreciation calls where we were offered ice cream socials.
Danish alchemy. Cooperation made into money. How nice.
Michael Hudson has commented that Germany has an alternative to labor unions which he thinks has been more successful.
Europe has had its share of bloody labor battles. One of the goals of the Nazis was to eliminate Bolshevism. The first people they sent to the concentration camps were the communists. After WWII, the CIA undermined communist/socialist political parties in countries like Greece and Italy.
The U.S. also had a large communist movement during the Great Depression, but that history seems largely forgotten. The communists are not the same thing as the labor movement, but they are an indication of attitudes.
As I recall, the US used the Butcher of Lyon to suppress the French communists (a/k/a much of the French Resistance) as the US army rolled towards Germany. Much of the US power structure was far less horrified by Nazis than commies.
And not just the Americans; in the beginning the British hoped the Nazis would serve as a force against communism.
Perhaps overlooked in the above is the fact that by ditching the ‘understanding’ by screwing its labour Macdonalds was also undercutting its opposition – Burger King is cited – so that the workers’ strike would have largely had the support of the business community too. Even those who might have lost some income in the short-term such as the advertisers, plastic spoon makers etc. saw the danger of Macdonalds being allowed to drive their competitors out of business and then being able to set their own price for adverts, plastic spoons.
In short the Danes, having a strong social ethic (my wife is Danish), recognise the benefits of maintaining a level playing field while the US ethic of every man for himself (and the devil take the hindmost) inevitably leads to a race to the bottom which screws not only the workers but any competing business.
Common sense, really, which seems in lamentably short supply in the US.
>>>Common sense, really, which seems in lamentably short supply in the US.
The then far more socially conservative American population used to be far more conscious of the general welfare of the society or community a hundred years ago; however, economically, they were far less conservative than we are today. It seems the more libertarian economic ideas become accepted, or the more literal brainwashing there is of us to worship the god Mammon, the more the idea that there must be an actual functioning society for anything to exist, but especially the individual, is brushed off or denied.
We were made foolish, unwise, and ignorant, even plain stupid, by those who would profit from such conditions.
Interesting article. I wasn’t aware of that history.
One of the differences seems to be that the labor unions in Denmark are probably not as corrupt as they are in the US. What are the factors that lead to that corruption?
Part of it is that the anti-union bureaucrats have access to a huge amount of personal financial information about union officials, but that information is not available to the membership.
This results in a power imbalance. It is impossible to clean house without knowledge, and by-and-large, union members are ignorant of their officials’ sources of income.
The anti-union government is very good at pressuring union officials to back down.
I was a local union official back in the 90s, and I remember being very frustrated by the international union president, and his recalcitrance at standing up to the outsourcing of millions of US jobs.
During the ensuing decade, and more information became public, I learned he was sitting at the table with the globalists, being promised the leadership of millions of global workers, and given sweet-heart deals with multi-billion dollar internet companies.
I suspect he’s not the only union official who doesn’t see the well-being of his union members as crucial to his own, personal well-being.
Well the Nordic countries don’t have the Democratic Party.
As I understand it Denmark had a series of bloody strikes in the latter 1800’s and drafted a series of labor laws and established labor courts to settle cases. Also, as I understand it, it is illegal for management to engage in strike breaking. Imagine that.
I give up on the US to have any meaningful labor movement anymore. We are a nation of sheep. We put up with covid deaths, infant mortality, gun deaths, child poverty, and myriad other ills. The Oligarchs have won beyond their wildest dreams. The masses think we are #1. Sad.
We want low wages so we can make more profit.
I am on a mission to help policymakers and business leaders get a better grasp of how capitalism actually works.
I have come up with this equation, which really helps.
Disposable income = wages – (taxes + the cost of living)
Employees want more disposable income
Employers want to maximise profit by keeping wages as low as possible
The rentiers gains push up the cost of living.
Governments push up taxes to gain more revenue
The dynamics of the capitalist system are more complex than policymakers and business leaders are aware of.
I’ve let the CBI (Confederation of British Industry) have a quick peek at the equation.
Disposable income = wages – (taxes + the cost of living)
Two seconds later …..
They realise the UK’s high housing costs push up wages and are actually paid by the UK’s employers reducing profit.
Employees do get their money from wages, so employers are actually paying through wages.
The neoliberal squeeze.
Disposable income = wages – (taxes + the cost of living)
Keep wages down, and let the cost of living soar through high housing costs.
When it gets bad enough, the yellow vests hit the streets.
Macron found out the hard way.
The Chinese learn the hard way.
Davos 2019 – The Chinese have now realised high housing costs eat into consumer spending and they wanted to increase internal consumption.
https://www.youtube.com/watch?v=MNBcIFu-_V0
They let real estate rip and have now realised why that wasn’t a good idea.
The equation makes it so easy.
Disposable income = wages – (taxes + the cost of living)
The cost of living term goes up with increased housing costs.
The disposable income term goes down.
They didn’t have the equation, they used neoclassical economics.
The Chinese had to learn the hard way and it took years, but they got there in the end.
They have let the cost of living rise and they want to increase internal consumption.
Disposable income = wages – (taxes + the cost of living)
It’s a double whammy on wages.
China isn’t as competitive as it used to be.
China has become more expensive and developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines.
Also worth noting that McDonald’s seems to be doing fine in the country when paying much higher wages and benefits, as did Burger King before it. Paying low wages is a choice, not a necessity.
There is a very good book on Scandinavian economics.
Viking Economics by George Lakey.
He is an American that went to live in Norway, and so can easily see the differences between the American system and the Scandinavian system.
Scandinavia used to be just like everywhere else in Europe, but they had a quiet revolution in the early 20th century.
They just withdrew their labour power, and protested, until they brought about real change.
The capitalists said they would leave if their demands were met, as they always do, but this didn’t happen. A few did leave, but the vast majority stayed.
This is why Scandinavia is the way it is today.
The neoliberals are working on it though, and it’s not as good as it used to be, but progress in the neoliberal direction has been very slow there.