New collective agreement signed in metalworking

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After almost 13 months of negotiations, on 19 January 2006 a deal was reached on the pay-related part of the sectoral collective agreement for the Italian metalworking industry. The agreement provides for average pay increases of 6%, regulates apprenticeship contracts and extends to the whole sector aspects of working time flexibility that previously applied only in certain specific cases. With around 1.5 million workers, metalworking - despite its current recession - is a key sector of the Italian economy and its collective agreement has always provided a lead for industrial relations in other sectors. The new deal may thus have a significant influence on both agreement renewals in other sectors (especially as regards apprenticeship contracts) and current negotiations on reforming the Italian bargaining system.

On 19 January 2006, a deal was struck to renew the pay part of the national sectoral collective agreement for metalworking, after more than a year of negotiations. The parties to the agreement are: on the employers' side, the Metalworking Employers’ Federation (Federazione Sindacale dell’Industria Metalmeccanica, Federmeccanica) and the National Association of Plant Constructors (Associazione Nazionale dei Costruttori di Impianti, Assistal), both of which belong to Italy’s largest employers’ association, Confindustria; and on the trade union side, the sectoral organisations affiliated to the three main confederations - the Italian Federation of Metalworkers (Federazione impiegati operai metallurgici, Fiom-Cgil), the Italian Metal-Mechanical Federation (Federazione italiana metalmeccanici, Fim-Cisl) and the Union of Italian Metal-Mechanical Workers (Unione italiana lavoratori metalmeccanici, Uilm-Uil). The talks were characterised by recurrent tensions that often jeopardised the chances of a joint solution being found.

Around 1.5 million workers are covered by the agreement. It has already been approved by a national assembly of 500 union delegates, set up by Fiom, Fim and Uilm specifically for the negotiations, and will now be submitted to workplace assemblies for approval.

On 24 January, Fiom, Fim and Uilm, and the National Union of Small and Medium-Sized Firms (Unione Nazionale delle Piccole e Medie Imprese, Unionmeccanica) - which belongs to the Italian Confederation of Small and Medium-Sized Industry (Confederazione Italiana della Piccola e Media Industria, Confapi) - agreed on renewal of the pay-related part of the national agreement for small and medium-sized metalworking firms, which is based on the pattern of the one signed by the unions and Federmeccanica.

The negotiations

After the metalworking negotiations began in February 2005, the parties assumed uncompromising positions and dialogue was difficult. On the unions’ side, the formulation of a single platform of demands (IT0412205F) after years of disputes and separate agreements (IT0107193F and IT0305204F) - the last agreement signed by all three unions dated back to 1999 (IT9907249F) - strengthened their bargaining power, although on several occasions their unity was in danger of breaking down. On the employers’ side, the current economic recession in the sector induced firms constantly to maintain a stance very distant from the unions’ demands, which they deemed unsustainable in terms of competitiveness.

The incompatibility between the employers’ proposals and the unions’ demands with regard to pay - for many months, Federmeccanica refused to budge from its offer of a monthly increase of EUR 59.58, and the unions from their initial claim for a EUR 130.00 rise - led the two sides to shift negotiations to other issues. These included flexibility in work organisation (especially as regards working hours schedules), reform of the job classification system, and reform of certain types of contract introduced by a 2003 law reforming the Italian labour market (IT0307204F).

A total of 62 hours of strike action were called during the year of negotiations (IT0509205F). The most critical moments came in the last month of the talks, when the exasperation of workers whose agreement had expired more than a year ago gave rise to a series of strikes and protests (road and railway blockades) designed to heighten public awareness of their situation. On 16 December 2005, moreover, Fim-Cisl reacted to an employers' pay offer that it deemed entirely unacceptable by abandoning the talks. As a consequence, Federmeccanica claimed that it was unable to continue with the talks owing to the unions’ refusal to negotiate on certain issues. In return for higher pay increases, the employers asked for greater freedom in the management of the 64 hours of working time flexibility introduced by the sector's 1999 agreement. Under the terms of this agreement, firms with seasonal production may - following prior agreement with the unitary workplace union structures (Rsus) (IT0309304T) - establish a schedules of eight weeks a year in which 48 hours are worked, and eight weeks in which 32 hours are worked (ie the equivalent of eight days, or 64 hours, of flexibility per year). The employers asked for this provision to be extended to include non-seasonal production as well, and for the obligatory prior agreement with the Rsus to be eliminated.

After these difficulties, agreement was finally reached when Federmeccanica agreed to pay increases amounting to EUR 100 per month, to the regulation of 'training apprenticeships', and to other measures concerning working time and flexibility.

The agreement

The main points of the agreement are the following.

• Pay. An increase of EUR 100 per month before taxes has been agreed for workers on grade five of the job classification system. The rise will be paid in three instalments - EUR 60 from 1 January 2006, EUR 25 from 1 October and EUR 15 from 1 March 2007. According to the parties, this amount is equivalent to a 6% increase. To cover the collective agreement gap (the period between the expiry of the old agreement and the conclusion of the new one) workers will receive a one-off payment of EUR 320, divided into instalments (the first in February 2006, the second in July 2006). Also envisaged - on an experimental basis - is an 'equalising' payment of EUR 130 for workers whose wages in 2006 consisted only of wage tariff minima and who are not covered by decentralised, second-level bargaining.

• Duration. The agreement - which according to the rules laid down by Italy's tripartite intersectoral agreement of 23 July 1993 (IT9709212F) should remain in effect until 31 December 2006 - has been extended to run over the first six months of 2007. It will therefore expire, and this applies to the non-pay 'normative' part as well, on 30 June 2007.

• Training apprenticeships. The 2003 law reforming the labour market (IT0307204F) referred regulation of apprenticeships to regional legislation, but this is still largely incomplete. The metalworking parties have therefore decided that this shortcoming should be remedied by sectoral collective bargaining, with subsequent appraisal of the consistency of sector's scheme with regional laws.

  • General rules. Restrictions have been imposed on the use of apprenticeship contracts, which can now be used only by firms that have hired on a permanent basis at least 70% of the employees whose contracts expired in the 24 previous months.

  • Duration. According to the job grade, the duration of apprenticeships varies from a minimum of 38 months to a maximum of 60. Some reductions are envisaged according to the apprentice’s educational qualifications and their consistency with the work performed.

  • Hiring. The recruitment letter must state the job grade, work-entry category, wage scale and the final category to be attained during the contract.

  • Training. An annual average of 120 hours are allocated to training (as opposed to 160 under the previous agreement) of which 40 are theoretical in content. These hours are distributed across the duration of the contract and may be partly or wholly delivered internally by the firm if it possesses the 'training capacity' specified by the agreement. Each apprentice will be issued with a 'training logbook' in which the skills acquired will be recorded.

  • Job grade and pay. These are divided into three periods whose duration varies according to the duration of the contract. In the first period the job grade is two levels below the final grade, and pay is the contractual minimum provided for that grade. In the second period, the grade and pay move to the next level, ie one level below the final one. In the final period, the job grade is that of the previous period but the pay is that of the final level.

• Experimental agreement. With a view to appraisal and review prior to the next round of negotiations, which will deal with the 'normative' part of the agreement (ie the regulation of work and industrial relations), the parties have introduced the following three schemes on an experimental basis.

  • Working time. The 64 hours of flexibility provided by the 1999 agreement are extended to all firms in the sector, which may use them for production reasons or to adjust to demand.

  • Flexibility. A permanent forum has been established for discussion by the social partners of issues concerning competitiveness, productivity, working time, the market and employment conditions. A specific session will be devoted to the regulation of fixed-term contracts and 'staff leasing' arrangements (formerly temporary agency work), with particular regard to the extent of their use.

  • Monitoring committee. A joint committee (consisting of 12 representatives) will collect and collate information on the above two experimental schemes.

Reactions

All the parties to the negotiations have declared themselves highly satisfied with the agreement. For Gianni Rinaldini, general secretary of Fiom-Cgil, it is 'a satisfactory agreement that goes in the direction that we hoped'; moreover, say Mr Rinaldini, not only have the unions’ pay demands been met, but the agreement excludes Federmeccanica’s proposal that working time flexibility could be used without prior agreement with Rsus. The leader of the Cgil confederation, Guglielmo Epifani, has stressed the importance of the fact that all the unions have signed the agreement, and that on their own - without intervention by the government - the parties have been able to reach an agreement that meets with everyone’s satisfaction.

Fim and Uilm have also reacted positively to the agreement. Giorgio Caprioli, general secretary of Fim-Cisl, has stressed the significant pay rise and the 'importance of the pay award to worse-off workers'. The national secretary of Cisl, Savino Pezzotta, has emphasised a need for reform of the industrial relations system: 'If it has taken 13 months to conclude the negotiations', Mr Pezzotta suggests, 'this means that the bargaining system no longer works and should be reformed'. Tonino Ragazzi, leader of Uilm-Uil, has declared himself 'very satisfied, especially with the EUR 100 increase, which comes after a long period of struggle'.

The employers too have expressed satisfaction with the agreement. Massimo Calearo, president of Federmeccanica, has called the agreement 'an excellent outcome, without winners or losers, which holds out prospects for a long period of social peace. The unions have won a symbolic victory with the pay increases, but we have gained the most substantial success for firms' (a reference being to the normative part of the agreement). For Luca Cordero di Montezemolo, president of Confindustria, 'it is always a positive achievement when an agreement is reached, and it is all the more so at such a difficult time for the country.'

Commentary

The opinion has been widely expressed in the debate among industrial relations actors and in the media that the collective bargaining system established by the July 1993 tripartite agreement is no longer able to regulate industrial relations in Italy satisfactorily. Those who voice this opinion envisage a structure shifted away from the sector towards the 'second level' of company-level or territorial bargaining. Debate on the matter has been ongoing within the three main trade union confederations for some time, but an interconfederal committee charged with drawing up a united position (IT0412306F) has yet to make any concrete recommendations, and talks with Confindustria - which issued a set of proposals some months ago (IT0508206F) - are consequently at a standstill. The positions of Cgil on the one hand, and Cisl and Uil on the other, seem still too distant from each other for a joint union stance to be possible. Moreover, Cgil has made its willingness to discuss the bargaining system conditional on the introduction of shared rules on trade union democracy, while Cisl maintains that discussions on the matter must begin immediately. The restoration of trade union unity - after more than six years of separate agreements, not signed by all unions - in metalworking, the 'key sector' of Italian industrial relations, may give important impetus to reaching a joint position on the wider issues as well. The efforts made in this direction by the three metalworkers’ unions have been of great importance for the effectiveness of union bargaining action.

Another aspect of the metalworking bargaining that should be stressed is the form assumed by the conflict in the final weeks of negotiations. Strikes and the blockading of roads and railways heightened public awareness of the problems in the metalworking sector, and they may have played a decisive role in bringing the negotiations to conclusion. Whilst on the one hand this strategy is important for the unions’ bargaining power, on the other it certainly cannot be taken as indicative that industrial relations are working well.

Finally, the fact that the agreement does not implement the innovations made by the 2003 law reforming the labour market (except for apprenticeship contracts) and postpones decisions to the next bargaining round (June 2007, ie almost four years after the reform law came into force) confirms the difficulties already encountered in other sectors in reaching agreement on these matters. (Edoardo Della Torre, Ires Lombardia)