AN UNEXPECTED NO

Last November I wondered whether other Danish companies would try and do the same as SAS, and try and cut workers' pay, probably the ultimate taboo in Danish labour relations. SAS managed to push the changes through because the alternative would have been bankruptcy. Nevertheless, a precedent had been set; and once a door has been opened, it's possible that others will attempt the same.

Another Danish industry suffering from high wage costs and cheaper competition is the slaughtering of pigs. Pigs are one of the great success stories of Denmark, but in recent years it has become more profitable to send pigs to be fattened and/or slaughtered in Germany and elsewhere. Exports of live pigs have soared from 1.4 million in 2000 to a projected 10.2 million this year. At the same time, although slaughterings rose from 20.9 million in 2000 to 22.6 million in 2004, they have since fallen to a projected 19.0 million this year. Even worse, everyone believes they will continue to fall over the next 10 years.

Danish Crown, the dominant player in the market, has a turnover of some Dkr.56 billion and employs more people today than it did in 2000. But that is only because it has taken on labour abroad. In Denmark, the number of workers has fallen from more than 15,000 to under 9,000; abroad, it has gone the other way, from a couple of thousand to almost 15,000.

Against that depressing background, the company put forward an unusual plan. The workforce would take a cut in wages, leading to savings of roughly kr.600 million over four years. However, instead of those savings staying within the company, they would be geared up with loans to kr.3 billion and invested in extra production facilities here in Denmark. The key point, of course, is that that extra production would be "captive", and slaughtered in Danish Crown's own abbatoirs, instead of being sent abroad. In order to concentrate the minds, the company said that if nothing happened, then further redundancies in Denmark would probably follow.

Backed by the unions, the consensus was that the idea would be approved by the workforce. So it came as something of a shock this week that the workers overwhelmingly voted against it. Some thought that it was because although they would be providing the equity for the new investment, they wouldn't have reaped the benefits in the form of dividends. Others because although there would be more investment in the sector in Denmark, there was no gurantee that there wouldn't be redundancies anyhow.

The proposal is not completely dead, it may return in a modified form. What it probably shows more than anything is that the average Dane is sceptical of anything that smacks of financial engineering. Which is fair enough.

Walter Blotscher