Labour Contract Act under negotiation

In March 1999, the Austrian social partners were entrenched in complex negotiations, hosted by the government, over how to harmonise the conditions of wage earners with those of salary earners and broaden severance pay entitlements, without raising labour costs.

In November 1998 the Federal Ministry of Labour, Health and Welfare circulated a draft Labour Contract Act (Arbeitsverhältnisgesetz, AVHG), and in January 1999 the Ministry invited the social partners to negotiations on the points of contention. These negotiations have since proceeded in almost complete secrecy. When or whether they will be concluded is unknown.

The main goal is to harmonise the employment conditions of wage earners (Arbeiter) and of salary earners (Angestellte), where differences still remain. Particular examples concern wage payments during sickness and dismissal notice periods (AT9801160N). Here the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) wants to generalise to all workers the regulations that govern the conditions of salary earners. In a series of sectoral agreements concluded by the Metals, Mining and Energy Trade Union (Gewerkschaft Metall-Bergbau-Energie, GMBE) since October 1998, the conditions of roughly 200,000 wage earners have already been harmonised with those of salary earners. This was achieved through sizeable wage increases which, claims the Austrian Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ), add an effective 0.25% to the paybill, while GMBE maintains that the cost is more like 0.1% at a given wage level (AT9810107F).

The draft act also extends to wage earners the regulations on severance pay as they apply to salary earners. This amounts to little change over the existing situation, but in the ensuing negotiations ÖGB made a key issue out of a reform that it has been demanding (AT9811109F). ÖGB wants severance pay entitlement to accrue continuously rather than in stages and to apply also in cases when the employee resigns, not only when the employer dismisses. This has led to exceedingly protracted negotiations, because the employers, in order to recoup the cost of broadening the entitlement, are pushing for a solution whereby severance payments are linked to pension funds, and for other measures, such as a reform of holiday entitlements. These are difficult issues. GMBE and its WKÖ counterparts, for instance, were unable to solve them when they negotiated the sectoral agreement in October 1998. The sticking point is cost. WKÖ wants to avoid anything that would increase labour costs, a cause to which the government is also in principle committed.

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