Social partners sign new metalworking agreement

At the beginning of November 2006, the social partners in the metalworking industry concluded a new collective agreement covering about 180,000 employees. The agreement provides for a pay increase of 2.6% and an additional one-off payment which depends, however, on profitability at individual company level. Both sides in the bargaining process were satisfied with the outcome of the negotiations; the trade unions achieved a relatively significant pay increase in return for an innovative, flexible profit-sharing scheme as demanded by the employers.

During the night from 2 to 3 November 2006 – when the social partners in the metalworking industry met for the fourth bargaining round – the Union of Salaried Employees, Printing, Journalism and Paper (Gewerkschaft der Privatangestellten, Druck, Journalismus, Papier, GPA-DJP) and the Metalworking, Textiles and Food-Processing Union (Gewerkschaft Metall, Textil, Nahrung, GMTN) on the employees’ side and the various branch subunits of the Chamber of the Economy (Wirtschaftskammer Österreich, WKO) on the employers’ side signed a new collective agreement covering about 180,000 metalworking employees.

The negotiations in the metalworking industry proved difficult and were at breaking point when talks were interrupted for about two weeks. During that period, the trade unions representing the industry held a series of meetings at more than 500 metalworking companies to inform the workforce about the state of affairs, which was harshly criticised by the employers. The point of controversy was the employers’ intention to introduce a form of profit-sharing scheme based on the individual companies’ profitability instead of the sector’s overall productivity as a key pay-setting criterion. The sector unions strongly opposed the demands of the employers (AT0606019I). On the other hand, the employers rejected the unions’ call for collectively establishing an employee entitlement to a one-week training leave period per year.

Provisions of agreement

The social partners eventually reached a complex compromise. It is based on the traditional ‘wage formula’, according to which wages are calculated on the basis of the national inflation rate and productivity, but also contains flexible wage elements. In more detail, the new agreement includes the following provisions:

• Both minimum and actual wages and salaries (including the apprentices’ remuneration) will increase by 2.6%, beginning on 1 November 2006. At a first glance, this pay increase seems lower than that reached in 2005 of 3.1% (AT0510201N). However, since the prospective inflation rate of 1.6% in 2006 is considerably lower than that of 2005 (2.3%), the increase in real wages achieved in 2006 will be slightly higher than that in 2005, amounting to 1% compared with 0.8%. Thus, this year’s bargaining results mirror the continuing favourable economic situation of both the sector and the overall economy.
• As a form of flexible wage element, an extra one-off payment of €100 has been introduced, to come into effect in March 2007. Notably, this amount is payable only for those companies that yielded a profit in the business year previous to 1 August 2006. The burden of proof of any losses, which relieve the employer of providing additional pay for employees, lies with the employer.
• Any additional allowances will increase by 1.5%, which will – according to estimates – increase incomes by an additional 0.3% on average.
• In contrast to previous years, a ‘distribution option’ has been concluded. According to this, the individual employer is not obliged to increase the workers’ pay by 2.6% across the board but is entitled to distribute flexibly part of the pay increase among certain employee groups, given that an average pay increase of 2.9% instead of 2.6% and a minimum pay increase of 2.4% for the individual employee is then observed.
• The employees’ claim for training leave as demanded by the trade unions has not been realised due to employer objections. However, some framework regulations regarding the termination of the employment relationship have been improved for the employees.

Response of social partners

The two sides of industry were satisfied with the agreement’s provisions. The Deputy General Secretary of WKO, Reinhold Mitterlehner, praised the flexible pay element, which depends on profitability at individual company level, as ‘a first structural change’ of the country’s ‘rigid’ collective bargaining system. The chief negotiator for the employers’ side, Hermann Haslauer, emphasised that this agreement may pave the way for other, more flexible wage bargaining schemes in years to come.

In contrast, the trade unions have approved the pay increases which could be reached in exchange for the flexible pay scheme at company level. In addition, the unions expressed their satisfaction that they could avert any significant dilution of the existing sectoral-level bargaining system by refusing the employers’ demand to introduce company-level arrangements. From the unions’ point of view, this is of utmost importance because the metalworking sector, which traditionally opens the Austrian autumn bargaining round (AT0410202F), sets the pace for subsequent negotiations in other sectors of the economy (AT0412201N). This means that major amendments to the metalworking agreement would most probably have a subsequent effect on the overall bargaining process.

Georg Adam, Institute of Industrial Sociology, University of Vienna