Low-Wage Work in Denmark

CHAPTER 3

CHAPTER 3 Feeling the Gale or Enjoying a Breeze in the Eye of the Storm? The Consequences of Globalization for Work and Workers in the Danish Food-Processing Industry Lars Esbjerg and Klaus G. Grunert Work in the Danish food industry is not low-wage work. Even though the globalization of the food industry has given foodprocessing companies strong reasons to focus on reducing costs (especially companies facing international competition), so far this has not led to strong downward pressure on wages. The production of some products for which price is the main competitive parameter has been offshored, but food companies have mainly responded to globalization by increasing capital intensity (through production automation and rationalization of production processes) and by focusing on quality and innovation. Four major developments are currently influencing the Danish food industry—and the food industry in general. First, globalization and the liberalization of world markets have led to increased competition : Danish producers in world export markets (and at home) face competitors that have strengthened their competencies in areas in which the Danish industry has traditionally been strong, such as costeffectiveness and efficient quality control. Second, because structural change in the retailing industry has led to changes in the power balance of food value chains, retailers are much stronger today (Dawson 2000; Grant 1987). Manufacturers have come under increased price pressure as retailers try to capture a larger part of the overall value creation in the chain by emphasizing private label programs. Third, consumer demands have become more fragmented and dynamic: the traditional demand for tasty and healthy foods is now supplemented by demands for varied, natural, and convenient products. Finally, devel104 opments in production technology and biotechnology have rapidly changed the whole production setup of the food industry. The industry ’s traditionally low R&D expenses may change given the new product development possibilities offered by biotechnology. As companies have responded to these changes, workers in the Danish food-processing industry have experienced many changes in the nature and conditions of work. For many workers, the automation of labor-intensive work processes has changed the content of their jobs from manual labor to monitoring production processes and machinery. Workers are required to work faster. The increased work pace, the frequent changes of organizational structures and work processes, the introduction of new technology, and the uncertainty about the future of their workplaces have all caused many workers to experience work-related stress. Overall, however, job satisfaction appears to remain high. Changes in job content and work processes have largely been implemented without major conflict between workers and managers (although there have been exceptions). Workers and managers, in mutual recognition of the need for action and change, have generally worked together, although they have not always agreed about what changes should be made or how they could best be accomplished. At least part of the explanation can be found in the “Danish model” (see chapter 2), the associated trust between workers and managers, and the generally good labor market relations in Danish workplaces, as described in chapters 1 and 2. In this chapter, we present the findings of a case study investigating how Danish food producers are coping with the changes in the food industry, particularly the pressures of globalization, and how these changes and food producers’ responses are affecting pay and job quality for workers in the industry. In the next section, we describe the methodology we used and discuss how we constructed and analyzed our empirical material. We then give an overview of the Danish food processing industry and various important institutions, focusing on the meat-processing and confectionary sectors. Next, we present the findings of our case studies . Finally, we provide conclusions and discuss our findings. STUDY DESIGN AND METHODOLOGY To study how companies in the Danish food-processing industry cope with globalization and the consequences of globalization for Feeling the Gale 105 workers, we conducted seven case studies in two sectors, meat processing and confectionary. Meat processing has traditionally paid very high wages and been male-dominated, whereas more female workers have filled jobs in confectionary and the work has been less well paid. We gained various degrees of access to the companies we studied, but our goal—not always realized—was to speak to top managers, human resource officials, frontline managers, employee representatives , and production workers at each of the companies (see the appendix for the main characteristics of the case companies). In...