Troubled relations in key tourism industry

Employers and trade unions have not been able to agree on a new collective agreement for Austria's tourism sector, which was due to be concluded by 1 May 1997. A backlog of complex and intertwined issues make negotiations difficult in this important but ailing industry.

Tourism is one of Austria's major industries, contributing an estimated 10% of the GDP. There are about 70,000 businesses with a turnover that has recently stabilised at about ATS 180,000 million. Employment is about 142,000 on annual average, or roughly 5% of the national total. In the peak season, in mid-summer, the industry employs about 160,000 people. Neither employment figure includes the employers themselves, who are an important part of the workforce in the industry. The median gross income for a complete full-time working month of 30 days in 1995 was ATS 15,980, as against ATS 22,600 for all industries together. The low incomes correlate with a large share of female employees. In 1995, the number of people employed for at least one day stood at 221,127. Of these, 134,614 were women, of whom 119,865 were employed on a waged basis and only 14,749 on salaries. Such a small share of salaried employees, both among men and women is unusual. At the same time, the profitability of large parts of the industry is repeatedly cast in doubt by commentators.

Industrial relations in tourism, as a result of these factors, stand apart from those in other industries. Their development has reflected the industry's fate, and future progress will depend on a reshaping of the sector. Relations now seem to have arrived at a crossroads: on 7-8 April 1997, when bargaining opened, employers and trade unions confronted each other with demands that bespeak fundamentally different approaches to the problems of the industry. From this, an impasse developed which made it impossible to conclude a collective agreement, as planned, by 1 May, or indeed since then. Below we outline the prominent industrial relations issues: remuneration, remuneration systems, working time, and "seasonality".

Remuneration

Regarding pay, the Hotel, Restaurant, Personal Services Workers' Trade Union (Gewerkschaft Hotel, Gastgewerbe, Persönlicher Dienst, HGPD) essentially made three demands:

• full-time minimum wages to be increased from ATS 160,160 gross annually to ATS 168,000 - a rise of 4.9%. Net hourly wages would rise by ATS 2.18 (although the union refers to ATS 2.30, a figure arrived at by rounding before making the divisions in calculating the hourly rate);
• vacation and Christmas payments, as in all other industries, to be based on actual wages instead of minimum wages. In Austria, these payments function as deferred parts of the annual income which, in effect, consists of 14 monthly wage or salary payments; and
• introduction of a premium for Sunday work, as exists in all other industries. In tourism, there is currently only a 100% premium for hours worked on public holidays, of which there are 12 per year in Austria.

The Federal Section, Tourism and Leisure Industry (Bundessektion Tourismus und Freizeitwirtschaft) of the Austrian Chamber of the Economy (Wirtschaftskammer Österreich') is not willing to concede any wage increase unless other cost-related issues are resolved simultaneously. The HGPD insists especially on the first of its three demands, and is not willing to discuss any other issues before this has been granted. The employers have also stated that, if there were to be a wage increase, it should not be the same across the board. They are pondering the option of a "wage matrix" consisting of around 20 positions, and of setting a different increase for each of them.

Remuneration systems

The employers, in return for a wage increase, primarily want changes in the remuneration system. They particularly seek the removal of the obligation to employ workers for at least four hours on each day of employment. Four hours at the gross minimum wage of ATS 70.00 per hour results in a daily wage just above the threshold triggering social security contributions. The employers would like to be able to employ workers for fewer hours in order not to have to pay social security contributions on top of the gross wage.

The employers further want a complete transfer of hotel room attendants from the "guarantee wage system" to the "fixed wage system". In the guarantee wage system employees receive a share of company turnover but regardless of turnover they receive at least a guaranteed minimum. The share is set by collective agreement. In the fixed wage system, incomes are a fixed amount per hour. The system to apply is fixed by collective agreement. In two of Austria's nine provinces there is now a pure fixed wage system (though with different wage levels). In four provinces, the original guarantee system for waiters, bar tenders, receptionists and hotel room attendants was retained, but hotels have the option of agreeing at establishment level to switch to a fixed wage system. In two other provinces, this option exists for all establishments. In the remaining province, there is a fixed wage system, with an option for management to switch waiters, bar tenders, receptionists and hotel room attendants to guarantee wages.

In practice, no two provinces have identical remuneration systems. The employers originally had a preference for fixed wages but have in recent months developed a taste for fixed wages with an option for management to switch. The HGPD also has a preference for fixed wages, albeit at a higher level, but wants curbs on management's freedom to switch. This could be achieved by putting an obligation on employers to stick to a chosen system for at least one year. On this point, the two sides seem essentially agreed.

Working time

A second set of conditions attached by employers to any wage increase affects working time. The collective agreement now in force stipulates a five-day week. Any work on a sixth day, whether it involves overtime or not, bears a 50% premium, while the seventh day has to be free. It is up to the employer to determine which days shall be the sixth and the seventh, though they do not have to be in succession. These days have to be fixed at least one week in advance. In accordance with the Leisure Time Act (Arbeitsruhegesetz, ARG) the day off (effectively the weekly rest period) has to last at least 36 hours. The normal working week is 40 hours. On each day, according to the Working Time Act (Arbeitszeitgesetz, AZG) working time including overtime must not exceed 10 hours. At least for peak periods - and many establishments are open only during peak periods - the employers have repeatedly asked since March 1997 for four exceptions from the legal requirements:

• an increase of the normal working day to 12 hours;
• a reduction of the required minimum time off between shifts to eight hours;
• a reduction of the weekly rest period to 24 hours; and
• an extension of the latest time that young people and apprentices can work from 22.00 to 23.00.

Obviously the four points are not within the power of the trade union to concede, being legal norms which cannot be overruled by a collective agreement. However, if the trade union and employers' association were unanimous on the need for legal change, such change would be forthcoming. The last of the four points - which would require a change to the Children and Youth Employment Act (Kinder- und Jugendbeschäftigungsgesetz, KJBG) - is particularly high on the agenda.

Seasonality of employment

There are a number of other issues which are no less important. The most persistent among them is the seasonal nature of employment in tourism. The Government is beginning to put more pressure on the social partners to take measures leading to longer annual employment and shorter unemployment periods. At a net cost of ATS 3,000 million in 1996, the tourism industry is a massive drain on the unemployment insurance system. This deficit is now paid for by other industries, whose willingness to continue to do so is declining. For years a conflict has been simmering over who within the tourism industry should pay for it, the employers or the employees, and in what way. Amendments to the AZG in force since 1 May 1997 aim to reduce overtime working and to distribute these hours either to more employees, or more evenly over the year. In tourism, employees work between 200 and 300 overtime hours per season. The danger is that these hours will in fact be distributed to more employees, thus creating a larger pool of seasonally unemployed people.

The employers are suggesting more legal change as a remedy. First, if they were permitted to employ workers for fewer than four hours per day, this would create a class of employees without benefit entitlement. Second, part of the seasonal employment could involve short-term seasonal migrants who might never be employed long enough - 12 months within the last 24 months - to acquire a benefit entitlement. Third, employees' holiday entitlement should be tied to their previous period of employment, instead of the present situation whereby they have no entitlement during the first six months of employment and full entitlement thereafter. The current arrangement, employers argue, literally forces them to lay off workers the day before the six months are up.

The trade union has, for several years, been arguing for a wholly different approach to the problem. It wants the creation of a severance pay fund - as in construction, the other large seasonal industry. This would entitle employees to severance payments after they have accumulated a certain number of months of employment in the industry (rather than merely a single enterprise). The cost of the fund would have to be borne by all enterprises in the industry. The union argues that this would induce employers to think twice before laying off experienced employees, and would make them think harder about ways of avoiding the seasonal slack.

Other issues

The HGPD, in the April negotiations, raised two further issues:

• an extension of the period within which employees can claim back-pay; and
• payment of apprentices' boarding costs during attendance at vocational school

The first demand poses no problems but the latter is opposed by the employers, partly because of the cost, but partly because they want the vocational school requirement reformed to allow for more flexible timing tailored to the needs of enterprises.

Commentary

Ultimately the conflict in the tourism industry is about how to make it more economically viable, but neither the employers nor the trade union are able to say so. The former have to try and keep all their members' businesses in operation and profitable, the latter has to try to preserve the number of employees and their incomes. Thus both sides, at first glance, seem to share an incentive to maintain the industry structure, while clashing over how it should be paid for - from profits or incomes. At a second glance it becomes clear, however, that the real fault line does not run between employers and employees but between viable enterprises and endangered ones. The result are divisive conflicts within both the employers' association and the trade union. The viable segment is now, as it were, clustering in the cities, particularly Vienna, where seasonality is less pronounced and where it is easier to offer a satisfying package of services to customers. Other profitable establishments tend to cluster in areas of the country with two tourist seasons. Therefore conflicts are partly between regions rather than between the social partners. However, the problem does not rest with the annual duration of the productive period alone. The other element is insufficient productivity during the productive period. While, in principle, this pitches more entrepreneurially-oriented undertakings against less entrepreneurial ones, there is also a regional component since enterprises tend to emulate each other.

It seems likely therefore that the current conflict will at first be resolved by "regionalising" the collective agreement more than previously. Obviously though, this is only a short-term political solution and no long-term economic cure for the less viable parts of the industry. A more viable industry overall will depend on raising productivity and on lengthening the annual productive period. Part of achieving this will be to reduce overcapacity, to increase the average size of establishments, and to increase turnover per employee. In this, government programmes, bank lending policies, and consultancy services play at least as important a role as industrial relations do. There will, however, be no solution without a contribution from industrial relations. (August Gächter, IHS)