When McDonalds Came to Denmark
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.
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.
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 it. 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.
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.
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.