In Denmark, pay and working conditions are typically laid down by collective agreements concluded between trade unions and employers' organisations. This system of labour market regulation is referred to as the Danish Model.
The Danish Model is characterised by the fact that it is the social partners themselves that determine the rules of the game on the labour market. The philosophy is that the social partners are in the best position to know what the problems on the labour market might be. This means that they will also be the best at finding quick solutions and adapting to the current challenges on the labour market.
Strong labour market organisations with a high membership rate is a precondition for a system based on the social partners’ self-regulation and this is also the case in Denmark.
This is the reason why statutory regulation of labour market matters has been introduced only in relation to those groups on the labour market which have traditionally not been covered by collective agreements such as, for instance, white-collar workers. However, the co-operation in the European Union and other fora has led to further legislation in different fields, but core issues such as, for instance, the determination of wages are still exclusively left to the social partners to decided through the collective bargaining system.