Electricity and gas workers reject agreement on pension reform

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In a referendum held in January 2003, 53.4% of workers and pensioners in the French electricity and gas industries - basically consisting of the state-owned companies EDF and GDF - rejected a deal reached in December 2002 by employers’ associations and four unions (CGT, CFDT, CFE-CGC and CFTC). This agreement provided for the transfer of the industries' special pension scheme to a public fund run jointly by the social partners. It was designed as a precursor to two government plans: privatising EDF and GDF, and bringing special pension schemes into line with the general scheme, as part of an overall reform of pension funding. Despite the referendum's result, the government has announced its willingness to see the December agreement translated into legislation.

The President of the Republic announced on 14 July 2002 that the legal status of the state-owned electricity and gas utilities - Electricité de France (EDF) and Gaz de France (GDF) - was to be changed to that of limited companies (sociétés anonymes), prior to a flotation on the stock market presented as necessary due to the liberalisation of the EU energy market (FR0210105F). A reform of the gas and electricity industry’s special pension scheme was seen as necessary in order to free the accounts of the two companies from the burden of paying pensions. EDF and GDF have a joint personnel management system, with special employee representative bodies (FR0012110N) as well as a special pension scheme that is more advantageous than the general scheme.

Four of the five trade union organisations with representative status - the General Confederation of Labour (Confédération générale du travail, CGT), French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), French Confederation of Professional and Managerial Staff - General Confederation of Professional and Managerial Staff (Confédération française de l'encadrement - Confédération générale des cadres, CFE-CGC) and French Christian Workers’ Confederation (Confédération française des travailleurs chrétiens, CFTC) - agreed to negotiate the reform of the special EDF and GDF pension scheme as part of sector-level bargaining in the electricity and gas industries with two employers’ associations, the French Electricity Industry Employers’ Association (Union française de l'électricité, UFE) and the National Gas Industry Employers’ Association (Union nationale des industries gazières, UNEMIG). In addition to EDF and GDF, these organisations represent a small number of other small companies, not all of them state-owned. The fifth union with representative status, the General Confederation of Labour-Force Ouvrière (Confédération générale du travail-Force Ouvrière, CGT-FO), refused to take part in bargaining to demonstrate its hostility to the privatisation process.

The participation in negotiations of CGT, the majority union at EDF-GDF (with 53% of the votes at the last workplace elections of employee representatives), constituted a strategic turning point for this union, which had previously been reluctant to get involved in collective agreements and had been ostracised by EDF-GDF’s management. It was only after the appointment of François Roussely as president of EDF in 1998 that a thawing of relations was witnessed between the company’s management and CGT's Mining-Energy Federation (Fédération Mines-énergie), and its general secretary, Denis Cohen. The latter agreed to enter into negotiations, with the priority goals being to put the special pension scheme on a permanent footing, to secure it against the government’s plans to privatise EDF and GDF, and thus bring the scheme into line with the general scheme in the light of current plans to reform pension funding.

Agreement reached

Negotiations were time-consuming and arduous, with the unions asking the state for guarantees that the special gas and electricity pensions scheme would not be brought to an end, which the employers’ associations could not grant and the state was reluctant to concede. Ultimately, the following compromise was reached on 9 December 2002 in the form of a 'summary of conclusions' (relevé de conclusions): the gas and electricity industry in-house pension management division will be turned into a social security body, thus having public status, and be jointly managed by the industry’s social partners. The pension scheme will, however, retain its special status, albeit linked into the general scheme.

Within this new framework, the unions agreed to an increase in contributions, which will rise over time for employees from 7.85% to pay to around 11%, which is still lower than the current rate in the general scheme (ie 18.5 %). This increase must be negotiated by the industry’s social partners and be compensated for by pay rises negotiated with the companies. EDF and GDF committed themselves to paying financial compensation into the new scheme, in exchange for which they will no longer have to include their pension obligations in their balance-sheets. The funding of the special scheme will be guaranteed by the state. The benefits will remain unchanged. However, the agreement stipulates that the benefits 'will change in respect of changes in other pension schemes', a clear allusion to the forthcoming changes as part of the government's plans to reform and harmonise the entire pensions system.

Deal rejected in referendum

The government and employers’ negotiators wanted the unions that had agreed to take part in negotiations to sign the agreement reached. However, only CFDT, then CFE-CGC and CFTC, went along with this. CGT made its signature conditional on consultation with the industry’s employees and pensioners. In the end, the signatory unions and the employers agreed to hold such a consultation on 9 January 2003. Due to the number of employees involved (220,000, half of whom are pensioners) this was the largest sector-level consultation exercise in the history of French industrial relations. Some 75% of workers and 46% of pensioners, who voted by post, took part.

The agreement was rejected by 53.4% of the voters (57.7% among workers), though the pensioners voted for the deal by a majority of 57.4%. This result was surprising in that the numerous opinion polls organised by EDF-GDF management had led people to believe that the opposite outcome would occur. Obviously, the efforts deployed in seeking to convince the employees of the agreement’s justification, promising in particular the placing of the benefits available under the present scheme on a permanent footing, did not win over the workforce. According to most observers, those opposing the agreements, among whom was a high proportion of managerial staff, wanted first and foremost to express their anxiety over, and disagreement with the planned privatisation.

This vote was also the result of intra-union dissensions. This partly involved CFDT, a minority of whose members called for a 'no' vote, and most of all CGT's sectoral federation, which practically split in two over whether to accept or reject the agreement. To avoid focusing on its internal divisions, the union gave no official voting recommendation. Its general secretary, Denis Cohen, however, was himself involved in the fray up until the day before the vote, when, in an interview in Le Monde, he said he was 'personally' in favour of the agreement. Reflecting on the consequences of the employees’ 'no' vote, Mr Cohen subsequently announced that his union would not sign up to the agreement and he also put himself up for re-election. However, despite criticisms of his commitment to the agreement, and of a lack of internal democracy within the organisation, he was re-elected to the post of general secretary by 85% of the voters.

Fallout from the referendum

The results of the consultation were naturally welcomed by the unions opposed to the agreement of 9 December 2002, particularly CGT-FO, which had not agreed to take part in negotiations and had called for a 'no' vote. This was also true of the Solidarity, Unity, Democracy (Solidaires unitaires et démocratiques, SUD) union, which did not take part in negotiations either, because it was deemed unrepresentative by management, and also called for the agreement to be rejected. It was also the case for the internal opposition within CGT’s industry federation, especially among engineers, managerial and technical staff. On the other hand, the result placed the main advocates of the agreement in an embarrassing position.

Anxious not to alter the timetable for the privatisation of EDF-GDF and the reform of the pension system, the government, encouraged by some of the agreement’s signatories, especially the employers, but also CFDT, announced its intention to turn the agreement into legislation. The Prime Minister’s aides drew more general lessons from what had happened, advocating a reduction of union involvement in the overall process of pension reform to a mere 'consultation', and avoiding initiating genuine negotiation on the issue.

Commentary

The results of the gas and electricity industry consultation exercise on 9 January 2003 have generated two sets of comments, one on its consequences for the actors’ strategies, and the other on the need for a reform of the criteria for validating collective agreements.

1. The result of the consultation is a disavowal of the agreement’s negotiators, first and foremost the management of EDF-GDF and CGT, but also indirectly, the government, which was expecting a positive result to ease both the privatisation of EDF-GDF and the reform of the general pension scheme. This was undeniably the first failure of the 'Raffarin method'- ie the Prime Minister's attempts to achieve consensus-driven implementation of his planned reforms through social dialogue. Many observers have stressed the negative fallout for the union movement, especially for CGT, whose efforts to build union unity and obtain the consent of employees for the pension reforms were partially repudiated. These events at EDF-GDF have drawn attention to the difficulties for the unions of pursuing a strategy of negotiated reform that runs against the grain of 'company corporatism' which drives employees to defend the status quo of special pension schemes. In spite of these obstacles, the unions, including CGT, have entered into a unified strategy with a view to determining general criteria, common to all employees, to serve as prerequisites for the government's overall pension reform. The signing of a joint platform by seven unions on 6 January 2003, is a first step in this direction.

2. Although signed by only three unions and rejected by a majority of workers, the collective agreement concluded on 9 December 2002 is legally valid. According to French law, the signature of one union deemed 'representative' on the national level is enough to validate an agreement. The Raffarin government can therefore consider the December accord as the legitimate basis for translation into legislation. Its attempt to prove that the agreement signed by three unions is a 'majority' agreement is grounded above all in political motivations. Yet, politically, it has not been convincing, as these three unions combined represent received only 32% of employees' votes at the last workplace elections at EDF-GDF. However, this attempted demonstration has helped highlight the inconsistency of the current system of validating collective agreements. The issue of trade unions' representative status and the criteria for validating agreements has for years been at the heart of a debate on the reform of the French system of collective bargaining (FR0006170F). In a joint statement released on 21 July 2001, the employers’ associations and four union confederations gave their backing to the introduction of 'majority rationale' for collective agreements (FR0108163F) - ie one requiring unions representing a majority of the employees involved to be signatories to an agreement - without this having had much effect in practice. The government has announced that it intends to present its own plan to reform the rules on representative status, but only at the end of 2003, after pensions reform has been dealt with.

In the meantime, there is an observable contradiction between the government’s expressed willingness to comply with the process of social dialogue, and attempts to get round the results of such dialogue. (Udo Rehfeldt, IRES)