Published on Wed, 2007-04-11 - 14:47

I can't believe the news today. The danish bus drivers are on strike again. They want higher salaries, but then who does not?

It's all thanks to the labour unions. They've made a big deal of whipping their members into a frenzy this year, talking about how Denmark can "afford it". To me, that's a completely ridiculous notion. The Danish workforce has gotten so used to this twisted thinking that their salaries should always increase faster than the inflation.

Why is that twisted, you might ask. Well, every time employers are forced to increase salaries without getting more value from their workers (harder work, more hours etc.), it cuts into their profit margin, and that usually leads to higher prices. Which leads to inflation, which makes the the increase in salaries pointless. The net effect on the workers purchasing power is neglible.

In addition to accelerating inflation, the continuous demand for higher salaries, and the resulting price hikes causes Danish products to be even more expensive in comparison with products from, say, Taiwan. Which causes Danish consumers to buy foreign products instead. And export becomes harder aswell, since the expensive Danish products are less attractive.

The net effect of this (oversimplified) calculation is a negative skew of the import-export balance, more inflation and a neglible difference for the Danish working man. The only winners here are the labour unions which can attract more paying members due to their perceived effectiveness in bettering the conditions of the workforce.

I don't know if they are complete cynics or they actually believe they are doing good. What I do know is that the union bosses live very plushly north of Copenhagen. Perhaps they've come so far from the conditions of the workers they are to represent that they've completely lost sight of their objective.

The original objective of the unions was that no one should be forced to live in poverty. Everyone should get paid enough to support their families. The changes they fight for might increase salaries today, but they add to the problems of the Danish economy – which is, sadly, on fast track to be the slowest growing economy in Europe...

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