New collective agreement signed in tourism sector

The social partners in the Austrian tourism sector succeeded in concluding a national pay agreement rapidly in April 1999. However, the most pressing issue - reduction of the burden that employment practices in the sector place on the national unemployment insurance system - is being left unresolved.

On 22 April 1999, the Hotel, Restaurant and Personal Services Trade Union (Gewerkschaft Hotel, Gastgewerbe, Persönlicher Dienst, HGPD) and the Tourism Section of the Austrian Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ) succeeded in concluding a sectoral agreement for the 122,000 wage earners in hotels and restaurants. From 1 May 1999, wage rates and apprentices' remuneration rose by 2.1% and salaries - covering some 20,000 employees - were raised by the same percentages. This compares with a 1.8% increase in 1998. The full-time minimum monthly gross wage or salary is now ATS 12,360, 11% short of the EUR 1,000 target HGPD has set for 1 January 2002. Wages and salaries are payable 14 times a year. There are roughly 23,000 firms in the sector.

Complex unemployment patterns

Employment in the tourism sector in 1998 was up by 1.1% in comparison with 1997. At the same time unemployment rose by 3.8%. In eastern Austria, particularly in Vienna, it grew by much more. Much of the short-term unemployment in the sector is attributed to suspending employees during slack periods, at the expense of the national unemployment insurance system. In 1997, 236,189 recruitments occurred in the industry, of which 87,536 or 37.1% were workers returning to their previous employer. In absolute terms, more recruitments occur every year in tourism than in any other sector. However, in percentage terms relative to the average annual number of employees in the sector, the number of recruitments is less impressive. Tourism ranks only fifth, with agriculture, mining, construction and basic manufacturing ahead.

A first step taken to counter the growth of short-term unemployment is the compulsory training that benefit claimants have to undergo if they have been unemployed more than three times during the previous 12 months and have always been re-employed by the same firm (AT9903136N). On various occasions in 1998, HGPD was instrumental in taking unemployed cooks and waiters by bus from eastern Austria to western locations. It has been repeatedly stressed by the trade union and the Public Employment Service (Arbeitsmarktservice, AMS) that winter-season employees in the mountains could be employed in other parts of the country during the summer and vice versa. Whilst bussing may not be repeated, so-called "placement exchanges" - that is, organised occasions for employers and prospective employees to meet face-to-face - may be continued. Unemployed tourism personnel will be invited to attend such meetings by the AMS, which will pay participants' fares.

On 7 May 1999, the WKÖ Tourism Section and HGPD agreed on the number of seasonal workers from countries outside the European Economic Area to be employed during summer 1999. In view of the high level of bookings, the number was raised by 7.4% to 1,079, among them 159 entertainers. The government subsequently issued a directive to this effect. In early February 1999, when the 1998 unemployment data first became known, HGPD suggested cutting seasonal migrant employment by 50% and bussing in domestic unemployed workers. By 2002, HGPD claimed that seasonal migrant labour could be reduced to zero.

Benefit dependence

In a bid to reduce seasonal "benefit dependence", the social partners have been in negotiations over crediting overtime hours to extending the length of regular employment. HGPD believes that overtime is on average in excess of 200 hours per worker per season. In late March 1999, it suggested converting 80 of these hours to paid leave after the end of the tourist season. This would lengthen employment periods by two weeks in the winter and by another two weeks in the autumn. Since the average duration of tourism employment is nine months per year - if all employees in the industry are taken into account, including those employed all-year round - periods out of employment could thus be reduced by one-third.

The social partners have to come to terms with two main problems with such a scheme. One is that employees would lose income in the process. Some of the loss could be offset over a lifetime since any increase in the number of employment days, in whichever way achieved, would have the added benefit of contributing to subsequent pension entitlement. However, no enthusiasm is expected on the part of employees. The other problem is that, by law, during the first six months of employment, holiday entitlement grows in proportion to the duration of employment, whilst after six months and one day the employee is entitled to the full five weeks of paid holiday. Deferring overtime to be added to regular working time could easily result in a prolongation of employment over this six months threshold. WKÖ has been demanding for a long time that proportionality should not cease after six months, and has in fact threatened to challenge the differentiation in court on the grounds that it may be unconstitutional. HGPD keeps demanding in return that all employment periods within the industry should be added up towards an employee's holiday entitlement, and that an industry fund should be created from which wages during holiday periods are paid.

Commentary

This is the first time since 1996 that a sectoral agreement has been concluded in tourism. In 1997 and 1998 negotiations broke down and were subsequently pursued on a province by province basis. In 1997 agreements were concluded in only four of the nine provinces (AT9802167N). The 1998 round of negotiations, begun in April (AT9805186N), eventually led to identical agreements being concluded in all nine provinces, but this took until November 1998 to be achieved (AT9809105N). The rapid conclusion of the settlement in 1999 is being credited to a whole range of changed circumstances. The industry had a very good 1998-9 winter season, after the two preceding winters were marked by stagnation or even contraction. HGPD focused on the pay increase and decided to leave other issues to separate negotiations. Nobody wanted to repeat the tiresome and counterproductive exercise of concluding deals on a province-by-province basis, when the same result could be achieved in one swipe. Unlike in 1998, neither side was facing internal elections, but there was a joint interest in keeping the industry out of the national general election campaign in the autumn.

It seems unlikely that the sector's social partners will ever solve the costly issue of benefit dependence. After all, the bill is being paid by the rest of the economy, not by them. The government exerted some pressure in 1998, but pressure will not suffice. If it wants a solution, the government will have to take the initiative. But as the current government is close to the end of its term, and the new one after 3 October 1999 will have other pressing matters to attend to - much is being left unresolved in 1999 - the issue will be left to slumber for a while longer. The trade unions' wish for a government initiative on severance pay (AT9811109F) - to which tourism employees are less likely than others to gain access because of the requirement for three years' employment with the firm - is bound for the same fate.

Meanwhile further trouble is brewing for the sector. The Kosovo war has resulted in some cancellations, and the tax authorities have begun targeting the industry after discovering from the breweries that substantial deliveries have been made to fake addresses, helping to avoid VAT payments. (August Gächter, IHS)