2004 Annual Review for Luxembourg

This record reviews the main industrial relations developments in Luxembourg during 2004.

Political data

Parliamentary elections were held in June 2004, resulting in a new coalition government of the Social Christian Party (Chrëschlech Sozial Vollekspartei, CSV) and the Socialist Party (Parti socialiste, LSAP) taking office on 1 August. It replaced the previous coalition of the CSV and the Democratic Party (Demokratesch Partei, DP), which had been in office since 1999.

Collective bargaining

It is thought that around 100 collective agreements are negotiated or renegotiated each year, almost all at company level.

Pay

Collective bargaining addressed traditional issues during 2004, notably pay (in the context of an economy with an unemployment rate of approximately 4.3%). Agreements provided for wage rises of between 1% and 1.5%. In addition, Luxembourg has an automatic pay indexation scheme. As from 1 October 2004, all wages, pensions and benefits were increased by 2.5% under this scheme .

Following a report presented in November 2004, the government decided to increases the minimum wage by 2% from 1 January 2005. This increase was based on movements in real wages during 2002 and 2003. Thus, the full minimum wage for employees aged 18 and above rises from EUR 1,438.01 per month in 2004 to EUR 1,466.77 from 1 January 2005.

Pay was the cause of a number of disputes in 2004. For example, in the hospital sector, 2,000 employees of the Association of Luxembourg Hospitals (Entente des Hôpitaux Luxembourgeois, EHL) demonstrated on 5 February to underline a threat to go on strike over pay. One week later, the employers accepted a proposal from the National Conciliation Office (Office National de Conciliation, ONC). The settlement provides for: a 4.88% increase for all the sector’s 6,000 employees from 1 January 2004; a one-off bonus of 1.6% of pay in respect of 2003; 'qualitative' measures such as a gradual shift to part-time working for employees over the age of 50; and the application of a guaranteed wage increase based on the public sector.

In the banking sector, the Luxembourg Bankers’ Association (Association des Banques et Banquiers du Luxembourg, ABBL) aimed at zero growth in wage costs. After eight months of open dispute with the employers - a period punctuated by demonstrations, protest pickets, and three conciliation meetings that did not lead to agreement - the National Conciliation Office proposed a collective basic wage increase of 0.4% for 2005 and 2006, while at the same time preserving the June bonus, given that abandonment of the performance-related pay system, which had been demanded by the trade unions, was not agreed, . The Independent Trade Union Confederation of Luxembourg (Onofhängege Gewerkschaftsbond Lëtzebuerg, OGB-L) and the Luxembourg Banking and Insurance Employees' Union (Association Luxembourgeoise des Employés de Banques et d'Assurances, ALEBA) accepted the proposal 'without much enthusiasm', but the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschaftsbond, LCGB) rejected it, and the agreement was signed without the latter’s participation.

Working time

There were no notable bargaining developments in the area of working time during 2004. The average collectively agreed normal weekly working time remained at around 39 hours

In August 1999, the government proposed introducing life-long 'time banking' schemes so as to enable employees to build up paid leave that they can use subsequently for personal reasons without having to rely on unpaid leave, and asked the Economic and Social Council (Conseil économique et social, CES) to look into the matter. In its report published in July 2004, the CES stated that a regulation negotiated by the various parties involved in working time management is the best solution for finding appropriate responses to individual demands. The CES proposes drawing up a framework law that will set out statutory rules whereby the introduction of a system of life-long time banking schemes will have to be carried out on the basis of a national agreement.

Job security

Arcelor, the world’s leading steel producer, which is headquartered in Luxembourg, where it has more than 6,500 employees, has been planning to reduce its workforce since the end of 2003. After a demonstration on 27 April 2004 in which over 2,000 employees took part, and a token strike on 14 May by 95% of the workforce, the social partners (LCGB, OGB-L and Arcelor management) and the new government signed an agreement at a meeting of the iron and steel tripartite committee. The trade unions agreed to the closure of a rolling mill and to the loss of 1,093 jobs; in exchange, the state agreed to the principle of early retirement. The company also undertook to invest EUR 360 million and recruit about 50 new employees a year with a view to rebalancing the age structure within the company. The 222 employees currently concerned will be offered jobs by another member company of the group or by a redeployment unit.

Equal opportunities and diversity issues

Although collective agreements have been legally obliged since 1999 to deal with the employer’s implementation of the principle of equal treatment between men and women, in practice none of these matters have been addressed. By and large, the social partners have simply relied on legal provisions and formulated clauses setting out principles.

Training and skills development

Although collective agreements are, by law, supposed to contain provisions relating to a company’s training policy and continuing training packages, this is in practice rarely the case.

Legislative developments

The right to strike has been more clearly defined by the law of 30 June 2004 on employee relations. From now on, labour disputes deriving from collective agreements and those occurring outside collective agreements must be presented to the National Conciliation Office before any strike action or lock-out takes place.

The law of 30 June 2004 will also permit 'intersectoral social dialogue agreements' on matters such as the transposition of agreements reached by the social partners at European level, the implementation of EU Directives that allow for transposition at national level through an agreement between the national social partners, and agreements on matters on which the social partners have agreed - eg the organisation and reduction of working hours, further vocational training, access to training, individual educational leave, 'atypical' forms of work, measures for implementing the principle of non-discrimination, measures to be taken against moral and sexual harassment at the workplace, and the treatment of work-related stress.

A law passed on 26 May 2004 introduced amendments to the law of 30 July 1999 on the status of independent professional artists and occasional entertainment workers, now including creative artists, directors, and stage and studio technicians. These workers now qualify for social assistance for four years instead of two, while in future they will be able to hold a second job outside the arts without losing their entitlement to social assistance as long as the annual income they derive from this work is below 12 times the minimum wage.

The organisation and role of the social partners

The Minister of Labour and Employment officially presented a government bill on the collective employment relationship in October 2002 (LU0211102F). This finally resulted in the law of 30 June 2004, which deals with three basic trade union issues:

• a trade union that wishes to be involved in drawing up collective agreements must be an occupational grouping with an internal organisation. Its objectives must be the defence of professional interests and the collective representation of its members, together with the improvement of their living and working conditions;

• the union must be independent of fellow contracting parties when negotiating collective agreements, and must demonstrate organisational ability and independence as well as financial skill and autonomy; and

• to be representative at a general national level, the trade union must, at the previous two elections to the chambers of labour and trade and social security institutions, have won an average of 20% of the vote among blue-collar and white-collar workers, and an average of 15% of the vote in each of the two categories. A trade union claiming nationally representative status must also be functionally active in most branches of economic activity.

The law also introduces the notion of 'sectoral representativeness in an important sector of the economy', whereby such trade unions must have achieved at least half the votes for the chamber of labour and trade group and half of the votes at the previous elections for employee committee members, and represent at least a 10th of employees in Luxembourg.

A negotiating committee must be set up when a collective agreement is being negotiated, and membership of the committee must be offered to trade unions with general national, or sectoral, representative status. The latter may decide unanimously to allow other trade unions to take part in the negotiations.

An outcome of this legislation is that the Minister of Labour has confirmed recognition of LCGB and OGB-L as representative trade unions at national level.

The trade union federation that acts as an umbrella body for the ALEBA, the Neutral Union of Luxembourg Workers (Neutral Gewerkschaft Luxembourg, NGL) and the National Union of Private Sector White-Collar Employees (Syndicat national des employés privés-Rénovateurs, SNEP) (LU0311103N), and within which Aleba has been granted national representative status by the administrative courts (LU0011152F), has not yet submitted any claim for its general national representative status to be recognised.

Industrial action

After a plane belonging to Luxair SA, the national airline, crashed on 6 November 2002 causing the death of 28 people, on 8 January 2004 management dismissed six pilots for serious misconduct  'that would be identified in a technical report'. After the adoption of a number of judicial procedures and the announcement of a strike starting on 2 April 2004 by LCGB, OGB-L and the Luxembourg Airline Pilots’ Association (Association luxembourgeoise des pilotes de ligne, ALPL), the Prime Minister, together with two other ministers, called an 11th-hour meeting at which five of the six dismissals were withdrawn, and the strike was accordingly called off.

2004 also saw strike action at the steel producer Arcelor, over a restructuring plan (see above).

Employee participation

There were no notable developments in 2004 in the field of worker participation, although on 21 January 2005, after receiving opinions from the Union of Luxembourg Enterprises (Union des entreprises luxembourgeoises, UEL) and the joint European secretariat of the OGB-L and LCGB trade unions, the government lodged a bill implementing the European Company Statute. The social partners’ comments, which did not involve fundamental opposition and dissent, were all taken into account. The bill is seen as a follow-up to the law of 28 July 2000 on the establishment of European Works Councils, and it accordingly includes solutions that were agreed as relevant and helpful when that law was passed (LU0101157F).

Absence from work

In November 2003, the Luxembourg government and social partners agreed on five structural measures aimed at tackling deficits in the budget of the country's sickness funds, which are expected from 2005 onwards. Most of the measures agreed are designed to stop employees taking sick leave without justification (LU0312101N). In particular, it was decided that in order to halt the large number of cases of unjustified sickness absence generally, a profile of doctors’ records in this area would be drawn up with the involvement of health professionals with a view to detecting abuses in staying away from work on grounds of ill health. An analogous procedure would also be conducted in respect of insured workers. No outcomes of these actions had been reported by the end of 2004.

With the next deficit already on the horizon, the November 2004 meeting of the general meeting of the Union of Sickness Funds raised the contribution rate from 5.1% to 5.4% from 2005 onwards.

Luxembourg has an absence rate of 6%, but according to unofficial figures provided by a member of the UEL, absence among French workers from the frontier zone stands at 25%.

Partly in order to deal with absence from work, some collective agreements, particularly those in sectors that employ blue-collar workers, have introduced attendance allowances. These include the construction sector agreement, which pays an end-of-year bonus of 5% of annual salary based on the worker’s actual presence at the workplace. The bonus is paid at the rate of 100% with one period of absence, 75% with two, 50% with three, and 25% with four; it is withdrawn after the fourth period of absence.Unjustified absence results in the bonus being totally withdrawn. Periods of hospitalisation and of incapacity for work due to a work-related accident do not count as absence under the terms of these rules.

Psychological harassment

The issue of 'moral harassment' was first identified by LCGB which, since 1999, has been offering help and support to workers who are victims of such harassment, including personalised, confidential interviews, seminars and a detailed leaflet on behaviour and on self defence in a harassment situation.

A collective agreement concluded in April 2001 at the 'Bram' retail company introduced measures aimed at combating moral harassment for the first time in Luxembourg (LU0105166N).

On 30 March 2004, a non-government bill aimed at specifically and rigorously combating moral harassment was discussed in the Chamber of Deputies. The Minister of Labour, although stating that the problem is spreading, did not agree with the proposed legislation. He is in favour of a four-stage action plan: awareness raising ('sensitising' at enterprise level); prevention (as part of companies’ social responsibility); mediation (a duty on the enterprise’s managing director); and, if necessary, measures to stop the problem.

New forms of work

Luxembourg has little experience of 'atypical' work as the standard employment relationship involves full-time contracts of indefinite duration. The only event of any importance in this field in 2004 was the renewal of the temporary agency work sector collective agreement in April 2004 for three years.

Significantly, it has been agreed to introduce training and employment integration measures for temporary workers in the construction sector. The new collective agreement signed in 2004 lays down the rules to be applied when a temporary worker is posted abroad, or in the event of a transfer of undertakings.

According to a study of temporary employment in Luxembourg during 1999-2003, this kind of work accounts for 1.6% of the country's total employment. It is dominated by French workers (70%) from the frontier zone; Luxembourg nationals account for only 1.7%.

The number of casual employees has risen from 3,737 in 1999 to 7,665 in June 2003; 77.3% of them are men.

Outlook

The first six months of 2005 are unlikely to be marked by events of any major industrial relations importance as both the government and the social partners will be occupied with the EU Presidency.

If, as predicted, the world economic cycle slowly picks up speed, the financial year will probably pass without any major problems, although the issue of the automatic indexation of all pay to the cost of living will probably cause unrest sooner or later.

Another issues that may become relevant is that the rate of unemployment has been rising steadily for about 10 years - now standing at 4.5% - despite a constant increase in the number of newly-created jobs. It is also necessary to address the annual problem of the imbalance of sickness and maternity insurance funds by means of a structural review.

Lastly, it cannot be ruled out that 2005 will see the adoption of a genuine Labour Code, which has been in the process of being drafted for the past half-dozen years. (Marc Feyereisen)