Negotiations on working time in metalworking industry terminated

In April 2010, the negotiations on working time flexibility in Austria’s metalworking industry were terminated by employers. While organised business demanded an extension of the reference period for paying overtime, which would have allowed companies more flexibility in times of economic uncertainty, the trade unions firmly refused, arguing that such a move would involve a loss of income for employees. In their turn, the unions called for a reduction in working hours.

On 12 April 2010, the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich, WKO) called off negotiations on working time flexibility for the metalworking and mining industry with the Manufacturing Union (Produktionsgewerkschaft, PRO-GE) and the Union of Salaried Employees, Graphical Workers and Journalists (Gewerkschaft der Privatangestellten – Druck, Journalismus, Papier, GPA-djp). The unilateral termination of the negotiations came as a surprise to the unions. In an ad hoc conference of 700 works council members on 13 April 2010, a further course of action was agreed (see position paper (in German)).

Metalworking collective agreement concluded in November

In November 2009, the social partners reached a new collective agreement providing for minimum and actual pay increases of 1.5% and 1.45% respectively (AT1002029I). The negotiations proved to be difficult and a conclusion was reached only after the trade unions had threatened to take industrial action. The major point of controversy was WKO’s request for a more flexible working time scheme. When it was apparent that no quick resolution would be found, it was agreed to postpone the negotiations on working time until the end of March 2010, giving both sides more time to work on proposals. The aim was to finalise negotiations shortly afterwards so that new measures could be implemented in May 2010.

Negotiations terminated by WKO

Despite a series of new negotiating sessions in the spring, however, no solution could be agreed upon. Manfred Engelmann, managing director of the WKO industry section (WKO Bundessparte Industrie), called off the negotiations with PRO-GE and GPA-djp on 12 April 2010. He said the employer side perceived no desire on the part of the trade unions to move towards an agreement. Instead, the unions were making new counter-claims, especially regarding the shortening of working time. The trade unions were surprised by this unexpected move on the part of the employers.

Demands not compatible

The metalworking industry has been hit particularly hard by the economic crisis – the number of employees has decreased by 10,000 and the sector’s production value has fallen by 22.7 percentage points. As a result, the employers argue that due to the decline in the number and predictability of orders, improved flexibility is necessary to secure employment. As other means of reducing working hours have in most cases been fully exploited, such as using up remaining holidays or working time credits, the employers insist that new working time schemes and measures should be implemented. In particular, organised business is calling for an extension of the reference period for calculating overtime pay to two years (instead of one year, as it is at present) and for paying overtime premiums only after the 45th weekly working hour, and only when 150 hours of the annual time credit have been exceeded. The Chair of the WKO Industry Division, Wolfgang Welser, argues that this measure would give companies more flexibility. As well as securing employment, it would help maintain the competitiveness of Austrian industry.

The trade unions, on the other hand, have criticised this approach. They argue that the measures proposed by the employers are detrimental to employees because they would suffer a fall in income. Instead, PRO-GE and GPA-djp prefer a more even distribution of work among all employees by shortening overall working hours and reducing overtime. They also demand increased employee participation in all decisions concerning the amount and distribution of working time. The unions argue that flexibility in the organisation of working time should be used to secure jobs instead of replacing regular employees with temporary workers.

For their part, the employers have turned down the unions’ demands, arguing that a reduction in working hours would decrease Austria’s competitiveness and impede employment in the long run. Markus Beyrer, General Secretary of the Federation of Austrian Industry (Industriellenvereinigung, IV), Austria’s second largest central employers’ association after WKO, has suggested that a reduction of working time could not be seen as an instrument to combat unemployment, but would instead lead eventually to job losses.

Working time flexibility as a recurrent topic

Employer organisations have frequently called for more flexible working time in recent years. In 2004, when Veit Sorger was elected new President of IV, he launched a broad debate on longer working hours and the possible reduction of the number of public holidays. This was harshly criticised by the employee representatives (AT0407201N). In 2007, the Working Time Act (Arbeitszeitgesetz, AZG), which sets out Austria’s general working time regulations, was last amended after a joint social partner proposal, allowing for more flexible working time rules (AT0708019I). Due to the noticeable effects of the economic crisis on the metalworking industry, the topic came up again in the course of last autumn’s collective bargaining round.

Social partner reactions

The employer side has blamed the trade unions for the failure of the negotiations on working time flexibility. The main negotiator on the employer side, Hermann Haslauer, indicated that the outcome of the collective bargaining round in November 2009 had included an advance payment increase of 0.6 to 0.8 percentage points which had been granted in exchange of the anticipated introduction of flexibility measures in spring 2010. However, this position is contradicted by the unions, which stress that those two questions have never been linked. Mr Haslauer has now identified three possibilities for future action: keeping the status quo until the next collective bargaining round in the autumn, delegating the issue to the higher social partners, or laying off workers and increasing the number of temporary workers instead. The trade unions have refused to involve the higher level social partner organisations. They are planning to determine the further course of action in cooperation with the works councils. This includes the possibility of taking industrial action. The unions’ chief negotiator and Chair of PRO-GE, Rainer Wimmer, stated that they have never before been confronted with such threats from the employer side. The unions fear that the companies might fire permanent staff and rehire them again as temporary workers.

In a works council meeting attended by 700 works council representatives held immediately after the termination of the negotiations, the metalworkers agreed to make themselves available for further negotiations with the employers. The working time scheme they seek to have implemented is modelled on the electronics industry, where overtime is calculated and paid after 18 months. Furthermore, they aim to conclude works agreements that stipulate the maximum share of temporary staff. Karl Proyer, GPA-djp’s Deputy Director, hinted that the unions would now check more carefully whether labour law is being adhered to in the companies concerned, since infringements are alleged to be widespread.

The next annual collective bargaining round in autumn 2010 will again include negotiations about wage increases and flexible working time. A pay freeze for the trend-setting metalworking industry is, however, unthinkable, even for employers.

Bernadette Allinger, Working Life Research Centre (FORBA)

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