Metalworking collective agreement signed after nine months of negotiations

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On 4 February, following a mediation proposal by the Government, the national metalworking collective agreement was signed. Negotiations had lasted for nine months and were marked by moments of breakdown and conflict which resulted in strikes. The metalworking settlement, which covers some 1.5 million workers, is Italy's most important industry-wide agreement. It will strongly influence both the forthcoming renewals of contracts in other sectors and the evaluation of the July 1993 tripartite central agreement on incomes policy and collective bargaining structure, planned for June 1997.

Bargaining process and conflict

The main stages of the negotiations were as follows.

  • May-July 1996: during the first meeting between Fiom-Cgil, Fim-Cisl and Uilm-Uil (the metalworkers' organisations of the three Italian trade union confederations) and Federmeccanica (the employers' federation for metalworking) the trade unions put forward a request for an average monthly pay rise of ITL 262,000 , of which ITL 165,000 would relate to the period 1996-8, in line with the expected inflation rate and ITL 97,000 would compensate for the loss of purchasing power arising from the difference between the expected inflation rate and the actual rate over 1994-6. Federmeccanica considered this demand to be incompatible with the incomes policy defined in the July 1993 central agreement between the government and the social partners. On 19 July, having acknowledged the opposing views of the trade unions and the employers, negotiations were postponed until September.
  • September-November 1996: a period of unrest began, involving strikes at regional and provincial level, plus a national strike with a rally in Rome. The Minister of Labour,Tiziano Treu, met the trade unions and the employers' associations to explore their positions, but during this phase no mediation of any sort occurred.
  • December-January 1997: while the unrest continued, the Minister began a period of separate consultation with unions and employers. The trade unions pressed for a Government proposal which could contribute to the re-opening of negotiations. Federmeccanica, on the other hand, said that it was more willing to seek a direct agreement between the parties. On 21 December, the Minister, encouraged by the trade unions, decided to intervene directly in negotiations by putting forward a proposal for pay rises amounting to ITL 200,000 per month. Neither Federmeccanica nor Confindustria (the employers' main umbrella organisation, to which Federmeccanica is affiliated) accepted the proposal. The Prime Minister, Romano Prodi, also met with the employers' associations and the trade unions.

The agreement

On 4 February, an agreement between the social partners was reached thanks to the direct intervention of the Prime Minister, who formulated a mediation proposal divided into five points:

  1. a six-month extension of the duration of the agreement, ie until 31 December 1998;
  2. an average monthly pay increase of ITL 200,000 divided into three instalments (ITL 100,000 from 1 January 1997, ITL 80,000 from 1 March 1998 and ITL 20,000 from 1 October 1998);
  3. a lump-sum payment of ITL 512,000 in two instalments (ITL 312,000 in February 1997 and ITL 200,000 in July 1997);
  4. reconfirmation that company-level bargaining with an economic content (ie, involving pay-related matters) should exclusively concern company results in terms of variable elements such as productivity, profitability and competitiveness; and
  5. the creation of an industry-level supplementary pensions fund, facilitated by a series of tax deductions. If employees opt to enter the scheme, they and their employer make equal contributions, with a further contribution coming from the sector's severance pay fund.

The agreement also states that bargaining cycles at different levels (national and company level) cannot overlap, and that the pay rises established at these different contractual levels cannot be granted simultaneously. In addition to the content of the agreement, the Prime Minister also undertook, by means of a letter to the president of Confindustria.Giorgio Fossa, to bring about a reduction in companies' tax burdens, and promised not to suspend support for economic initiatives in Southern Italy.

The government proposal was presented as non-negotiable to the social partners, which accepted it as a compromise. Fiom, more than others, demonstrated internal divisions about its acceptance of the deal: its secretary general, Claudio Sabattini, defined Fiom's agreement to the government's proposal as a "critical acceptance", while its central committee approved the agreement by 67 votes for, 37 against and 24 abstentions. Fiom's dissatisfaction was basically attributable to the issue of the non-overlapping of bargaining levels, which was interpreted as an unconditional concession to the employers' requests.

Confindustria has maintained that the agreement is very onerous, especially for small businesses and those located in Southern Italy. Nevertheless, it appreciates the spreading-out of costs thanks to the extension of the agreement's duration, and the staggering of pay rises. The employers are satisfied, in particular, with reaffirmation of the principle by which company-level bargaining should concern only increases in profitability and competitiveness, and the stipulation of the fact that the initial payment of the wage increases arising from the industry-wide agreement should not be made at the same time as those granted by company agreements.

Comment

The debate following the conclusion of the metalworking contract opened up discussions on the evaluation of the July 1993 tripartite agreement. The 1993 agreement stated that the parties would assess its implementation and outcomes within four years, and consider the need for modifications. In the debate, the issue that most frequently arose stemmed from the "bipolar" nature of Italian collective bargaining structure, and the compatibility between the industry-wide agreement and company-level agreements. In the current context of decreasing inflation, tending towards zero, there is less room for an overlapping of pay rises established by the two contractual levels.

The July 1993 agreement gave company agreements the right to determine pay increases linked to corporate results in terms of profitability, productivity and competitiveness. In reality, however, this principle proved to be difficult to implement, since many businesses continued to grant flat-rate increases only minimally linked to corporate results. The decline in inflation and the revaluation of the Italian Lira drastically reduced the margins of negotiation for companies, which had to deal with a renewal of the national agreement just after signing company-level agreements during a period marked by expansion of production and sales volumes. The issue that the renewal of the metalworking collective agreement has put on the agenda is the search for a new equilibrium between the industry-wide agreement and complementary company agreements. A possible future development has been mentioned by the Minister of Labour Mr. Treu in an interview in the newspaper La Stampa: "It is necessary to save industry-wide bargaining, but by making it less complex. It should become lighter and no longer be the pachyderm that it currently is."

It is no coincidence that this problem proved to be particularly acute in the case of the metalworking agreement. Despite a certain reduction in the numbers employed, the metalworkers' decisions and the results that they obtain always hold a high emblematic value for the entire Italian system of industrial relations. It is therefore to be expected that the way in which the metalworking contract was concluded will influence the evolution of the system as a whole. (Simonetta Carpo, IRES Lombardia, and Roberto Pedersini, Fondazione Regionale Pietro Seveso)

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