How does a Danish McDonald's worker make 20$/hour, without a minimum wage law?

Denmark has a low unemployment rate, but ensures workers good wages. How can a country with no actual minimum wage law, accomplish such a feat?

A Danish McDonald's employee makes at minimum 20$/hour. This is stunning, compared to the mere average wage of 8.90$ for an American McDonald's worker (Source: NY Times). What is even more surprising, is that there is no official minimum wage law in Denmark.

How is this possible?

In Denmark, employers and employees meet and negotiate work conditions and agree on a base wage. This is done without intervention from the government. This is called “Den Danske Model” (The Danish Model), and has its roots in “Septemberforliget” in 1899, which was a deal between the union coalition (LO) and the employers coalition (DA).

The Danish Way

The deal lead to the following rules in the Danish labor market (Source: Den Store Danske):

That the employers recognised the right of employees to organise themselves in unions, and that employees adversely recognised the right of employers to lead and distribute labor.

This meant that employees were guaranteed a strong voice in negotiations and a great part of the work force were…