Collective bargaining in Austria

In Austria, the conclusion of collective agreements is essentially confined to the private sector. These agreements are negotiated, almost without exception, at multi-employer sectoral level. The unions for blue-collar workers and for white-collar workers usually form a bargaining community, so that the wage increases agreed on are, in most cases, the same for both categories of employees. Most of the sectoral collective agreements cover the whole national territory and, in some cases, are also concluded at provincial (Land) level. Collective agreements are legally binding. Since the late 1980s, a tendency towards ‘organised decentralisation’ of collective bargaining has been observed. As a consequence, the works agreement concluded between the two sides of industry at company level has been gaining importance as an instrument for the regulation of terms and conditions of employment. This is a result of the general tendency towards greater flexibility, in particular in terms of working hours and – to a certain degree – pay.

Austria’s collective bargaining coverage rate adjusted for public employees is estimated to be over 95%. The coverage rate is extremely high – by international standards – because almost all agreements are concluded by subunits of the WKÖ, membership of which is obligatory.

In Austria, collective agreements in general and collective wage agreements in particular are negotiated – almost without exception – at multi-employer sectoral level. This is because Austrian labour law confers the right to collective bargaining – with only very few exceptions – on the parties above company level. Collective agreements concluded at company level cover, at most, between 1% and 2% of all employees covered by any agreement (estimate by national correspondent). National cross-sectoral agreements are very rare and almost never regulate pay. Currently, no employee in Austria is covered by a national general pay agreement. Within the last few years, there have been no changes with regard to bargaining coverage.

Collective wage bargaining coverage of employees

Notes : * Percentage of employees working in local units where more than 50% of employees are covered by a collective pay agreement against the total number of employees who participated in the survey. OECD/AIAS ICTWSS, Organisation for Economic Co-operation and Development/Amsterdam Institute for Advanced Labour Studies Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts.

Sources: Eurofound, European Company Survey 2013 and 2019 (including private sector companies with establishments with more than 10 employees (NACE codes B–S); the question in the survey was a multiple choice question and multiple responses were possible); Eurostat [earn_ses10_01], [earn_ses14_01], [earn_ses18_01] (including companies with more than 10 employees (NACE codes B–S, excluding O), with a single response for each local unit); OECD/AIAS ICTWSS database 2021. ** See also Bönisch, 2008; OECD, 2012, p. 136.

In Austria, the most important level of collective wage bargaining by far is multi-employer sectoral bargaining. Only very few company-level agreements are negotiated. The peak social partner organisations have the capacity to conclude intersectoral general collective agreements (Generalkollektivvertrag), but they are extremely rare and of hardly any practical relevance. For example, a general collective agreement on the step-by-step implementation of the 40-hour working week was signed in September 1969, and is formally valid, but came into force with the implementation of the Working Time Act (Arbeitszeitgesetz_,_AZG) soon thereafter. In the face of the COVID-19 pandemic, a general collective agreement on COVID-19 testing in the workplace was concluded, which remained in effect until 31 August 2021.

Levels of collective bargaining, 2022

In Austria, there is a clear division of responsibility between the parties to collective agreements concluded at sectoral level and works agreements concluded at company level. Whereas the core task of fixing the rates of pay and maximum working hours is essentially the remit of the parties to collective agreements, the regulatory competence of the parties to works agreements is almost invariably confined to social matters. These include introducing computerised personnel information systems, fixing the starting and finishing times for daily working hours and scheduling breaks. The only pay-related matters that may fall within the regulatory scope of works agreements are pay entitlements for time spent attending works meetings (Betriebsversammlungen), profit-sharing schemes, occupational pension schemes and the like. This restriction is intended to ensure the precedence of the parties to collective agreements in the system of employment regulation as a whole. In the case of delegation clauses set out in collective agreements, some negotiation capacities in terms of working time and – to a certain extent – pay are delegated to the company-level parties concerned, but solely within the framework set by the sectoral collective agreements.

The major bargaining rounds take place in the autumn. Traditionally, the pattern-setting metalworking sector starts the autumn bargaining round in October. For several years, more and more collective agreements have been negotiated in the spring, for example in the electronics, chemical, textile and paper industries. In addition, more sectoral collective agreements are negotiated between the spring and autumn rounds, giving rise to year-round negotiations.

Wage bargaining in Austria is strongly coordinated across the economy. This is because a practice of ‘pattern bargaining’ prevails, in which the metalworking sector takes on a leading role as the first major sector conducting wage negotiations in the annual bargaining process. The results of these negotiations have a considerable signalling effect for other sectors and are taken as a model. In practice, however, they often agree on some of the highest wages of all sectors, due to the strength of the metalworkers’ trade unions. Despite this high degree of bargaining coordination, centralised wage-setting is not a feature of Austria’s collective bargaining system.

The legislature provides for an official procedure called an extension order (Satzungserklärung), whereby a collective agreement (or part of it) can be extended to include employment relationships of essentially the same nature that are not covered by an agreement. An extension order is issued by the BEA on receipt of an application from an employer or employee organisation with the capacity to conclude agreements. In practice, such a procedure is relatively unusual, as there are only a few areas of employment that are not covered by a collective agreement. A prominent example of a collective agreement for which an extension order has been issued annually since 2006 is the agreement for the private health and social care sector. As a result of the extension order, over 120,000 employees are covered by the agreement.

In Austria, it is not possible to derogate from collective wage agreements in order to pay wages below the collectively agreed level. The collective agreement sets the framework for concluding work agreements on company-specific regulations. The ‘distribution option’ entitles the two sides of industry to agree on the redistribution of a certain amount of the total wage bill at company level. This may be distributed flexibly by the employer to certain groups of employees, in line with certain criteria. Such criteria could include, for example: to provide compensation for workers with very low incomes, to reward workers for high performance or to diminish the gender wage gap. With regard to this distribution option, a derogation clause is included in collective agreements stating that, in economically difficult times, the volume to be distributed may be reduced or set to zero.

In Austria, the ArbVG stipulates that a collective agreement remains in force even after it has expired, until a new collective agreement has been concluded (and therefore applies to the employment relationships that were covered by the agreement before its expiration). However, the majority of collective agreements provide for a date on which the agreement becomes valid but not an expiration date, and are valid as long as they have not been cancelled by any of the negotiating parties or replaced by an updated version through the collective bargaining process. Usually, collective bargaining takes place annually and thus the majority of agreements are updated once a year. In principle, it is possible to cancel a collective agreement one year after the conclusion of the agreement, but in practice this rarely happens.

According to the ArbVG (Section 2(2)), collective agreements have two parts, one consisting of provisions regulating the legal relationship between the parties to the agreement (schuldrechtlicher Teil) and the other consisting of provisions regulating the rights and obligations of individual employers and employees arising from the employment contract (normativer Teil). The provisions of the first part relate solely to mutual rights and obligations and implied duties, and include a peace clause. This peace clause states that during the period of validity of a collective agreement no industrial action is to be taken or supported by the signatory parties, if it is targeted towards changing working conditions as set out in the collective agreement.

A change in seniority-based wage schemes was an important issue for employers, as it provided them with the opportunity to reduce the wage gaps between older and younger employees. So far, settlements on this issue have been reached in the banking and insurance sector and in several industrial sectors, but also in the social sector.

One relatively new topic concerns the attention paid to work–life balance in collective agreements in recent years. The most common examples are the recognition of parental leave periods in wage increases (that is, increments within the pay scheme) and the implementation of benefits that are dependent on employees’ length of service (such as holiday claims or service anniversary bonuses) up to two years. In several collective agreements, unpaid ‘subsequent care leave’ is provided for. This allows parents to stay on leave until their child’s third birthday (as this coincides with the maximum period for which childcare benefits can be claimed).

Furthermore, in collective agreements in the social care sector, provisions related to nursing care leave (for example, to take care of older relatives) of a minimum of 2 months and a maximum of 12 months are included because the legislation provides for a maximum duration of leave of 2 weeks (implemented in 2020).

A ‘free time option’ is based on a trade union initiative first implemented in the electronics sector and then in the mining and steel industries, with the explicit aim of improving the work–life balance of workers. It allows them to reduce their working time instead of taking pay increases. Its extent depends directly on the outcomes of the annual wage bargaining process at sectoral level and needs to be negotiated annually.