Restructuring and low-wage workers
in a high-wage economy: the case of
Danish hotel room attendants
Tor Eriksson and Jingkun Li
Aarhus School of Business
April 2006
Introduction

The hotel industry: classic low wage, labour intensive service
industry

Restructuring process: subcontracting of services; attempts at
more flexible staffing

This paper: How are workers in low-end jobs affected?

International project (RSF); results from in-depth case studies
from Denmark

Denmark: high wages, the most compressed wage structure
among industrialized countries; comparison to U.S.
Competitive conditions

Large hotels, part of international chains in the bigger cities; small
personally owned hotels in the ”province”

Copenhagen area more sensitive to variations in international
demand (international business travelers and tourists)

Number of hotels decrease, but capacity increases due to new
larger hotels especially in Copenhagen area

Drop in profitability in 2000-02 (econ. downturn, SARS, terrorism);
continued increased competition pressure thereafter

Increasing problems recruiting employees. Reflects general
shortage of labour. Hotels compete for labour with the retail industry
Workforce

Students make up about over 30% of employees in hotel
industry. Many room attendants (50-60%) are immigrants.

Trend increase in employment, largely due to increasing number
of students and other casual workers

Young (50-60% below 30), females (70 %), unskilled (45 %
primary school only)

Unemployment higher than average: 14-22% in recent years

Trendwise increase in wages; parallel for student and nonstudent employees
Compensation: wages
12000
180
160
10000
8000
120
100
6000
80
4000
Hourly wage
No. of employment
140
60
40
2000
20
0
1992
1993
1994
1995
Year
Source: IDA/CCP data
1 Euro = 7.5 DKK
1996
1997
Employment
Hourly w age
1998
1999
0
2000
2001
2002
Employment excluding students
Hourly w age excluding students
Employment relationships

Regulated chiefly by agreements between unions and employers
organisations (less by law)

Flexibility, but guaranteed number of weekly working hours

Within- but not between-job flexibility

Two groups of employees: those who want a more permanent
employment relation and those who appreciate flexible hours and
conditions

Trade-off: flexibility vs. quality of employees
Hiring, opportunities for training




Some years ago, outsourcing of cleaning popular
Less more recently and signs of return to in-house
due to inflexibility and quality concerns.
Hiring from job centers and pool of ”pop in”
applicants
Increasing considerations of provision of more
training and career opportunities to compete in
recruitment with the retail sector
Case study design
Capital city
Provincial cities
Luxury hotel
(4-5 stars hotel)
2
2
Budget hotel
(2-3 stars hotel)
2
2
- Hotels with outsourced housekeeping are included
- Personnel from external cleaning companies interviewed
- Hotels with more than 10 full-time employees are selected (hotels with more
than 100 beds)
Job quality






Job contents
Employment and recruitment
Compensation (wages and benefits)
Work schedules/hours
Opportunities for advancement/job ladders
Collective agreements
Employment and recruitment


Many part-time jobs
Turnover is low



Recruitment (announce, word of mouth and job centers)



Some hotels experience difficulties in recruiting, whereas others do not
Some hotels require to speak Danish, whereas others do not. Head
housekeeper usually speak Danish as a requirement
Maintenance




Full time and fixed contract (a few months up to 5/10 years, some even 30
years)
Casual (a few months up to ½ years)
Flexibility
Social activities
No pay incentives
Job qualification


Good health (no back problems)
Stability
Compensation: 1) wages

No differences between luxury hotels and budge
hotels




Room attendants (RAs): 13 -14.7 € per hour (excl. 12.5%
holiday benefits)
Assistant head housekeepers:14-15.3 € per hour (excl.
12.5% holiday benefits)
Head housekeeper: 15-16 € per hour (27,000 € per year,
excl. 12.5% holiday benefits)
Outsourcing

Hourly pay is 1-2 € higher than in-house housekeeping
Compensation: 2) benefits

Additional payments for overtime work




typically 1-3 € higher than normal hourly pay
However, external cleaning companies are more
strict on overtime pay.
Some hotels provide RAs breakfast with very
little charge as other employees.
Some hotels provide discount of their
hotel/chain hotel rooms for RAs
Work schedules/hours

Many part-time staff (20-30/32 hours per week and fixed
contracts ). Most of workers are guaranteed the fixed hours with
fixed schedules and specific days off

Some casual contract workers, typical students, weekend shifts
and “on call” during weekdays

Head housekeeper is usually full-time employed

Working hour is typical kl. 7/8 -13/14

Flexibility of switching shifts

Over-time pressure exists but in a acceptable level
Job satisfaction and opportunities for
advancement/job ladders

Most of RAs are very satisfied with their jobs

RA→ assistant head housekeeper → head housekeeper

A few have ambitions to seek for promotion

Most of them do not want to change hotels for opportunities for
further job ladder’

Students do not tend to seek their career in the housekeeping
area.
Collective agreements

Few (20-30%) are member of trade union

Most of casual workers are not member of trade union

Expensive to be member of trade union (about 400 € per year)

Hotels recommend RAs to join the trade union for extra security
US – DK comparison

Compressed Danish wage structure but not necessarily higher
total costs. Other employees relatively cheap. Less staffing and
higher within-job flexibility in DK.

Higher job satisfaction levels and lower turnover rates in DK

Danish firms react to increased competition by making jobs more
attractive (training, careers).

Less outsourcing, return to in-house. Outsourced employees
slightly higher paid, but less satisfied. Employers less satisfied
with quality of outsourced work