Unibank employees accept pay reform

Employees at the second-largest bank in Denmark, Unibank, have accepted a new pay system based on the individual job's degree of responsibility and functions. Some of the 10,000 or so employees will have to accept a minor decrease in real wages from 2002, while others' wages will increase by more than they would have done under the old seniority-based pay system. The new pay system means that all positions in the bank are being examined and divided into 250 job functions. The employees are critical on some points but generally satisfied.

Employees of Denmark's second-largest bank, Unibank, have accepted the introduction of a new pay system to replace the existing one, which according to tradition is based on education, job title and seniority. The new pay system means that all positions in the bank are to be examined and divided into 250 job functions. To each function is attached a pay framework which is determined on the basis of the degree of responsibility and difficulty of the job. During 2000, all employees will determine with their organisational superiors where they are to be placed in the system.

The key points of the new scheme are as follows:

• 10,000 Unibank employees will be divided into 250 job functions with pay levels to match. Each job function is ascribed a number of "success criteria". For instance, a banking consultant has 13 criteria which cover issues such as business results and customer relations;

• every year, each employee will determine along with their manager how well the success criteria have been met, and accordingly where in the pay grade the employee is to be placed. Workplace trade union representatives can be involved as desired;

• a special pool of money is to be set aside from the collectively agreed pay increase and used in 2000 and 2001 for those employees who will receive pay increases under the new system;

• employees who are placed at a lower pay level under the new system will not experience a full-scale pay cut. However, from 2002 they will remain at the same position in the pay scale until the general development of pay has caught up with their pay level; and

• particular members of staff, such as managers, stockbrokers and special information technology positions are not included in the new pay system.

Employees insecure

The Unibank employees' association, Unikreds, is involved in the task of completing the entire job function calculation by spring 2000. The association takes a positive attitude but admits that many of the employees feel insecure about the new system. The Unikreds president, Lene Haulik, states that the insecurity is due, among other factors, to the fact that most of the employees have never before negotiated pay on their own. Others will find that they are currently placed in a wrong position and that their pay is too high as it is. However, Mr Haulik appreciates the new pay system because it allows employees to influence their job and pay determination, and because all the pay levels in the various jobs will be open to everybody.

It was Unibank's management which took the initiative to introduce the new pay system. It is management's intention to emphasise the "success criteria" for each job function. Neither the management nor the employees' association want to guess how many employees will experience a pay freeze from 2002. However, both parties estimate that the total pay level will not change significantly. One of the bank's 40 workplace combined union representatives, Stig Rohde, has expressed great dissatisfaction with the new pay system. "When employees have to negotiate over their own pay it will be the old and the uneducated employees who are going to pay," says Mr Rohde. He fears that the bank will be able to achieve a lower total paybill through the changed pay rules. The criticism is dismissed by the vice-president of the employees' association, Kent Petersen. "We have given priority to maintaining the permanent jobs. Some employees will experience a decrease in pay but it is our belief that this is better than not being able to maintain the positions," says Mr Petersen.

Commentary

The Danish banking sector has long been characterised by pay and working conditions which can be compared to those of state sector civil servants. To start training in a bank was the beginning of a lifelong career in the service of the same company. Automatic pay increases were based on seniority and a determined career path. Bank employees are ahead of almost any other employee category in employment conditions such as the length of annual holiday.

The bank mergers and the tougher competition of the 1980s let to the closing of branches and the end of the almost unlimited job security. At the same time, there has for some years been an incipient move in the direction of a new and more individually-based pay system. Unibank's pay reform is a decisive breakthrough in this development, which runs alongside a corresponding pay reform in the public sector.

The complex system of evaluating positions involves extensive change as regards individual pay determination, in relation to the existing seniority-based pay system, but at the same time it can be perceived as a system which seeks to make all functions measurable. This is in keeping with banking employment's values - similar to those of the civil servants - which allow objective criteria to explain differences in pay.

Even though the determination of actual pay in the future will be a matter between the individual employee and their manager, this does not mean an end to the collective agreement-based system. Workplace union representatives can be involved in the process if desired. (Carsten Jørgensen, FAOS)