1999 Annual Review for Luxembourg

This record reviews 1999's main developments in industrial relations in Luxembourg

Economic developments

According to the Central Statistical and Economic Studies Service (Service Central de la Statistique et des Études Économiques, Statec), GDP grew by 4.5% in 1999. The state budget for 1999 amounted to LUF 180 billion, and registered a surplus of LUF 173 million. The state budget for 2000 is approximately LUF 194 billion, with a surplus of LUF 138 million. This is based on forecast GDP growth of 4.4% in 2000 (5% according to the OECD). The public debt accounted for 4.6% of GDP in 1999, and inflation rose slightly, to 1.89% in the year to November 1999.

According to data based on social security membership figures, there were 231,431 workers employed in Luxembourg at the end of June 1999, an increase of 5.3%, compared with figures for the same time in 1998. This includes cross-border workers, but excludes international civil servants. Compared with the first six months of 1998, the number of cross-border workers rose by 10.5% (to 78,691) to June 1999. The employment of Luxembourg residents also increased, by 2.9%.

The unemployment rate stood at 2.8% at the end of November 1999, with a total of 5,300 job-seekers.

Political developments

Legislative elections on 13 June 1999 resulted in a new coalition government between the Social Christian Party (Chrëschtlech Sozial Vollekspartei, CSV) and the Democratic Party (Demokratesch Partei, DP) (LU9909111N). This government replaced the coalition between the CSV and the Luxembourg Socialist Party (Lëtzebuergesch Sozialistesch Arbechterpartei, LSAP) which had been in office for the past 15 years. In the statement of the new government's programme issued on 12 August, Mr Juncker described the change in government as "a new era".

Commentators believe that the seeds for the change in the coalition may have been sown by the previous government's controversial plans to reduce the pensions of civil servants and state employees, passed in July 1998. This move was followed by a general strike in the public sector which brought the country to a standstill (LU9808173F).

Local authority elections took place on 10 and 17 October 1999, but the results are likely to have little impact on industrial relations.

Collective bargaining

The total number of collective agreements in existence in Luxembourg is between 250 and 300. Each year, around 100 of these are renewed by negotiation.

Pay

The 1999 bargaining round focused largely on pay, with increases averaging between 1% and 2%. Notable settlements in 1999 included: a new collective agreement, signed on 17 March 1999, bringing pay rises for blue-collar workers employed by the Luxembourg state into line with those awarded to civil servants (LU9904101N); and a three-year collective agreement in the banking sector, concluded in April 1999 (LU9905104F). However, on 1 December 1999, the Minister of Labour blocked the registration of this agreement (LU9912117N). The accord was signed by the Association of Luxembourg Banks and Bankers (Association des banques et banquiers du Luxembourg, ABBL) on the employer side and two trade unions - the Luxembourg Association of Bank Staffs (Association luxembourgeoise des employés de banque, ALEBA) and the Union of Private Sector White-Collar Employees (Union des Employés Privés, UEP). The Ministry of Labour blocked registration on the grounds that the unions involved did not have the nationally representative status required for the conclusion of a valid collective agreement (see below under "The organisation and role of the social partners").

Other notable agreements concluded during 1999 included: a two-year deal at the DuPont de Nemours chemicals company, which provides for a 0.8% pay increase for its 1,200 workers in 1999; a two-year deal for the 900 workers at the Villeroy and Boch ceramics firm, providing for a 2% pay increase; a three-year deal at the metalworking company Cerametal (436 workers), awarding a total pay increase of 8.15% over the life of the deal, of which 3.87% is a non-consolidated bonus; and a two-year agreement at the engineering company Paul Wurth, awarding 1999 pay increases of 1.15% for 178 blue-collar workers and 1.95% for 350 white-collar workers (one extra day's leave was provided for all workers, with two days for blue-collar night workers).

In the public sector, the abovementioned two-year deal for the 2,200 blue-collar workers in the state, its institutions and public-sector companies (and usually followed by local authorities) provided for a 2% pay increase.

Working time

Although no collective agreements were reached specifically on the subject of working time in 1999, a number of company-level accords during the year contained provisions related to working time changes.

At national level, the Luxembourg National Action Plan (NAP) on employment (see below) has introduced an element of flexibility into working hours, although fundamental differences of opinion remain between the social partners concerning the issue of working time.

Equal opportunities

There were not many recorded incidences of equal opportunities clauses included in collective agreements in 1999, although an agreement at the retailer Auchan included a provision aimed at combating sexual harassment. At national level, the new legislation relating to parental leave (see below under "Legislative developments") is likely to provide a framework for agreements at sectoral and company level on this issue.

Job security

There were no recorded incidences of job security agreements or provisions concluded in 1999. As unemployment is low in Luxembourg by EU comparison, job security does not appear to be a main issue preoccupying the social partners at present.

Training and skills development

A number of training-related provisions agreed at company level were recorded during 1999. These include a clause in the Auchan agreement aimed at promoting training during working time. The two-year agreement at Villeroy and Boch awards two training days per year to the employees concerned.

Legislative developments

On 1 January 1999, the statutory national minimum wage rose by 1.3%. Every two years, the Luxembourg government submits to the Chamber of Deputies a report on developments in the economy and incomes, accompanied, where necessary, by draft legislation raising the level of the minimum wage. It was this mechanism which triggered the increase of 1.3% from 1 January 1999, bringing the basic monthly rate of the minimum wage up to LUF 46,878 (EUR 1,162) (LU9901190N).

From 1 August 1999, all wages, pensions and benefits in Luxembourg rose by 2.5% under Luxembourg's automatic statutory indexation scheme. Under this system, all wages, pensions and benefits are automatically adjusted one month after the average of the cost-of-living index over the previous six months rises by 2.5% (LU9909112N).

1999 saw the enactment, on 3 February, of legislation providing employees with the right to take parental leave (LU9903195F). This legislation, which forms part of Luxembourg's NAP, states that employees who are parents may take six months' parental leave (or 12 months' part-time leave) in respect of all children born after 1 January 1999. One parent may opt for this leave immediately after the period of maternity leave, while the other parent may take it at any time up to the child's fifth birthday. During parental leave, the employee receives a benefit equivalent to EUR 1,496, paid out by the National Family Allowances Fund. This legislation also provides a right for parents to take up to two days' leave per year per child under a new family leave scheme covering sickness, an accident or other urgent reason involving a child under the age of 15 (LU9903196N). These provisions came into force on 1 March 1999.

Also forming part of the Luxembourg NAP, new legislation on working time was adopted in February 1999 (LU9903197F). While maintaining the principle of a normal eight-hour working day and 40-hour week, the law allows variation around this average within a statutory four-week reference period. A collective agreement may extend or reduce the four-week reference period, as long as it does not exceed a 12-month maximum. In the absence of a collective agreement, the Minister of Employment and Labour may, at the request of an enterprise, authorise a special reference period after seeking the opinion of representative trade unions and employers' associations at national level. A work organisation plan must be negotiated at enterprise level prior to each reference period, if employers wish to vary daily and weekly hours during the period.

The organisation and role of the social partners

The decline of the Federation of Private Sector White-Collar Employees (Fédération des Employés Privés, FEP) became particularly apparent in November 1998, when it failed to win a single seat on the body administrating the pension fund for private sector white-collar staff (LU9812185N). Until that point, this trade union had been regarded as having nationally representative status for private sector white-collar workers. This decline continued throughout 1999, with the new Minister of Labour ceasing to invite the union's representatives to meetings of the Standing Committee on Employment (Comité permanent de l'emploi). This was perceived as tantamount to withdrawing FEP's nationally representative credentials and suggested that there might be only two nationally representative trade unions left in Luxembourg: the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschafts-Bond Lëtzebuerg, OGB-L) and the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB).

However, on 27 April 1999, ALEBA and UEP created a new federation, the ALEBA-UEP Trade Union Federation (Fédération syndicale ALEBA-UEP), stating that white-collar workers in the private sector wanted a new organisation that was independent of the two "big political unions" (LU9905104F). The new organisation claims to represent 24% of private-sector white-collar workers and thus seeks nationally representative status.

On 29 April 1999, this new federation signed a collective agreement in the banking sector with ABBL (see above under Collective bargaining). However, in a Ministerial Decree of 1 December 1999, the new Minister of Labour and Employment blocked the collective agreement's registration on the grounds that the two signatory organisations did not have nationally representative status (LU9912117N). ALEBA appealed against this decision to the Administrative Tribunal (Tribunal Administratif) (which in early 2000 ordered that the measures contained in the agreement should be made provisionally applicable, pending a full judgment on the case - LU0002128F). ALEBA also complained to the International Labour Organisation's Committee on Freedom of Association in Geneva against the state of Luxembourg for "interference in trade union affairs through the creation of monopolies that favour political unions".

A development in union structures occurring in 1999 was the creation in October 1999, by OGB-L and the National Federation of Luxembourg Railway and Transport Workers and Civil Servants (Fédération nationale des cheminots, travailleurs du transport, fonctionnaires et employés Luxembourg, FNCTTFEL) of a unified union structure in private sector transport, covering road, river, sea and air transport. It is called OGBL-FNCTTFEL Transport, and has about 2,300 members (LU9911114N).

Industrial action

There was not a single day of strike action in either the public sector or the private sector during 1999, although the number of referrals to the National Conciliation Office (Office National de Conciliation) increased to 15 in 1999, compared with three in 1998.

However, it should be pointed out that after the Luxembourg NAP was first introduced in February 1999 (see next section), the industrial relations climate soured somewhat, with the social partners accusing one another of not observing the spirit of the tripartite framework that forms the basis of the NAP (LU9912116N).

National Action Plan (NAP) for employment

Following intensive discussions between the social partners, the law of 3 February 1999 finally transposed Luxembourg's 1998 NAP, which had been the focus of heated debate and heavy criticism from the involved parties throughout 1998. The final version contained 56 amendments that had been drafted at various stages of the legal procedure. It was finally adopted by the Chamber of Deputies on 3 February 1999 (LU9902194N).

The 1998 NAP came into effect on 1 March 1999, an event which was preceded by a government announcement (LU9903199N) that a tripartite meeting would be convened on 31 March 1999 in order to discuss the outlines of the 1999 NAP. The Prime Minister noted that, given the short time span between the two plans, differences between them were likely to be minimal.

The meeting also planned to undertake an analysis of pension systems and their impact on the labour market, taking the opportunity to look at a call from seven trade unions for a structural review of pensions and improvements in the general private sector scheme (LU9812183N). This meeting was expected to draw up a new NAP and take a view on the reform of the general pension insurance scheme. However, no agreement could be reached and instead, the meeting decided simply to await the outcome of the deliberations of other working groups (LU9904102N).

In May 1999, a national conference was held in order to give all those involved in collective bargaining an opportunity to discuss the possibilities for implementing the aims of the NAP through collective agreements (LU9906108N)

The impact of EMU on collective bargaining and industrial relations

The introduction of the single currency is not currently a major issue for the social partners in Luxembourg. However, it is clear that the social partners are now beginning to think about the impact that the euro may have on employment levels, particularly in banking, which is a key sector for Luxembourg.

Employee representation

On 28 January 1999, the Minister of Labour and Employment presented a draft law on the setting up of a procedure for informing and consulting employees in Community-scale undertakings and Community-scale groups of undertakings, in a somewhat tardy endeavour to transpose the EU European Works Councils (EWCs) Directive into national legislation. The occupational chambers (representing the various economic and social interest groups) submitted their opinions on this proposed legislation during the course of 1999 and the bill is likely to become law during 2000. However, despite this progress, the European Court of Justice (ECJ) ruled on 21 October 1999 (in case C-430/98) that Luxembourg had failed to implement the EWCs Directive, rejecting Luxembourg's argument that it has prepared draft legislation and that most of the Luxembourg companies falling within the scope of the Directive already have voluntary EWC agreements in place (EU9911209N).

New forms of work

As mentioned above (under "Working time") the law of 3 February 1999 on the NAP allowed for the variation of working hours around the 40-hour week norm within a reference period of four weeks (or longer by agreement). A work organisation plan must be negotiated at enterprise level prior to each reference period. However, it is becoming clear that the social partners at various levels appear to be finding it difficult to agree on reference periods, largely due to the fact that their views appear to be fundamentally different.

Outlook

There are a number of issues which in 2000 are likely to preoccupy Luxembourg, as a country that has just voted in a new government. First, the process of incorporating flexible working time and reference periods into collective agreements will need to be completed. Second, there is a need for a new definition of the criteria for assessing the nationally representative status of trade unions, enabling them to negotiate and conclude collective agreements. The aim of this is to avoid any future incidents similar to those which occurred in the banking sector in 1999. Third, social dialogue in the Tripartite Coordination Committee (Comité de coordination tripartite) will need to be rethought in order to ensure better consultative arrangements with the Chamber of Deputies. Finally, questions raised by the joint action of seven trade unions around a common platform for improvements to the general pension insurance scheme (LU9812183N) will require responses to be formulated in a more peaceful climate.