First agreements signed in bargaining round

October 2000 saw the opening of Austria's annual autumn bargaining round, with major agreements signed in metalworking and the federal public sector.

In October 2000, after a short period of negotiation, the social partners - on the employers' side, representatives of the various branch subunits of the Chamber of the Economy (Wirtschaftskammer Österreichs, WKÖ) and, on the union side, the (blue-collar) Metalworking and Textiles Union (Gewerkschaft Metall-Textil, GMT) and the Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) - successfully concluded a new collective agreement in metalworking, Austria's pattern-setting sector (AT0010232N). Under the deal, minimum pay rates will increase by 3.7% from January 2001 and the new monthly minimum wage will thus stand at ATS 15,870. Actual pay will increase by 3.4%, with a minimum monthly increase in cash terms of at least ATS 650; this means that low-wage groups will receive a pay increase of 4.3%. These new pay arrangements are valid for both blue- and white-collar workers. Employers estimate the agreement's associated costs at ATS 1 billion for every percentage point of wage increase.

As in previous years (AT9911203N), the metalworking agreement's "distribution option" (Verteilungsoption) was maintained. Individual companies which choose to use this option may distribute 0.5% of the total paybill among certain groups within the company on the basis of a works agreement between management and works council. Actual pay increases by a general 3.2% (rather than 3.4%) if the distribution option is applied. The new metalworking agreement has also brought a variety of changes in non-wage areas. Most importantly, regulations on part-time work for older workers have been included in the collective agreement for the first time, covering issues such as severance payments and bonuses. The social partners have agreed to recommend part-time work for older workers as a means of preventing unemployment among this group.

In parallel with the metalworking deals, pay agreements for 30,000 white-collar employees in several other industrial sectors were concluded. Minimum salaries in the paper, glass, stone and ceramics, and chemicals industries were increased by 2.5%-3.5% and actual salaries by 2%-2.8%. No agreement had been reached in the food industry by early November and negotiations had been deferred.

Also in October, after six negotiating meetings, the social partners in the public sector succeeded in concluding a pay agreement covering employees of the federal state and in formulating an agenda for forthcoming restructuring plans. Substantial differences between the bargaining parties made the negotiations rather difficult. The government had proposed combining the pay talks with other issues, such as job reductions, new working time schemes, privatisation and restructuring. In the government's view, the public employees' pay rise depended on the willingness of the Union of Public Employees (Gewerkschaft Öffentlicher Dienst, GÖD) to reach an agreement over expenditure cuts in the context of proposed reform initiatives. The union rejected many proposals at the beginning of the negotiations, but finally reached an agreement on the disputed issues.

Under the settlement, monthly salaries for federal employees are to be increased by a flat-rate payment of ATS 500 from 1 January 2001, which means a rise of over 2% for lower-paid employees. This form of pay increase had been used in previous years and was preferred by the government, since flat-rate single payments grant a pay rise without increasing the structural level of salaries as percentage increases do (AT0005221F). In 2002, the pay rise will reflect only the inflation rate, which is anticipated to be 0.8% in that year, and will be adjusted afterwards if necessary.

The federal state social partners also agreed on the principles of a reform of the public administration, which should lead to a cut of 11,000 jobs. The union and government representatives agreed that this workforce reduction should be achieved by not filling vacant jobs, and that redundancies should be prevented. Job cuts in the course of privatisations should be accompanied by special social plans. Regarding the introduction of more flexible working time schemes, it was agreed to conduct profession-specific negotiations and implement the new working time arrangements by 2002.

The swift agreement for federal employees was remarkable in the light of the bitter confrontations that had emerged in the preceding months (AT0007225F). In advance of the negotiations, polls conducted by the union signalled a strong willingness among public sector employees to go on strike.

Overall, the negotiations significantly deviated from the usual pattern of joint negotiations for all public sector groups in that – on the initiative of the government – the negotiations for the federal state were conducted separately. By early November, no agreements had been reached for the employees of the regions (Länder) and local government.

The Austrian Institute for Economic Research (Wirtschaftsforschungsinstitut, WIFO) expects lower pay increases than those agreed in metalworking in the forthcoming bargaining in the private services sector, since the metalworking industry has show higher productivity growth. According to economic forecasts, the wage agreements so far will not cause inflationary tendencies.