New pay agreement signed in civil service

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A new pay agreement was signed in the Luxembourg civil service in late May 2000. It provides for pay increases of almost 6% over two years and introduces part-time working in the civil service. The outcome could have repercussions for pay bargaining in the private sector, with many seeing it as signalling a break with pay moderation.

On 29 May 2000, a new pay agreement for the civil service was signed by the government and the General Public Sector Confederation (Confédération générale de la fonction publique, CGFP), after seven months of negotiations (LU0001125N) that included eight face-to-face bargaining sessions. The agreement has a duration of two years, backdated to 1 January 2000, assuming that it is endorsed by the Chamber of Deputies when it is presented with a draft law before the summer recess.

According to the Minister of Public Sector and Administrative Reform, the agreement was negotiated "in the spirit of tripartism", that is to say in a context of "respect for the other parties". CGFP stressed the favourable climate in which the negotiations had taken place, "thanks to open and constructive dialogue in which one felt that confidence was reasserting itself". This is the first agreement of this type since 1992 - according to CGFP, "after a period of incomprehension, tension and confrontation (LU9808173F), [CGFP] was able to renew a tradition – that of collective bargaining, with the finishing touches supplied by a proper collective agreement."

Three main issues influenced the bargaining over the new agreement: economic growth (7% in 1999, and likely to be same in 2000 according to figures from the STATEC statistical office); collective agreements concluded in the private sector; and the August 1999 government coalition agreement (LU9909111N).

The main provisions of the agreement are set out below.

Pay and benefits

The deal provides for the a pay rise of almost 6% over two years, made up as follows:

• basic pay for civil servants has been increased by 2.5% with effect from 1 January 2000;

• a further rise of 1% will take effect from 1 January 2001; and

• the so-called "biennial increases", whereby civil servants have received an automatic pay rise every two years, has been changed to an "annual increase" system with effect from 1 January 2000.

The following improvements have been made to various benefits:

• the monthly meal allowance has been increased from LUF 2,800 to LUF 4,400 with effect from 1 January 2000;

• the travel allowance for staff employed away from their normal place of work has been increased from LUF 10.5 per kilometre to LUF 15, irrespective of car engine capacity;

• allowances for travelling and overnight expenses have been raised; and

• from 1 January 2000, the ceiling beyond which public sector employees are entitled to interest subsidy on housing loans has been raised from LUF 4 million to LUF 6 million.

Introduction of part-time working

One of the most interesting new features of the agreement is the introduction of part-time working in the civil service. Two options will now be available, while bearing in mind the public-service element of the employees' work:

• part-time working of 25%, 50% or 75% of normal working time; and

• a possibility for civil servants to apply to work part time from the age of 55.

Furthermore, with the agreement of the Government Council, and taking the public-service element of the work into account, it will also be possible for a retired employee to carry on working full time or part time until the age of 68.

Increased holiday entitlement

Annual holiday entitlement for civil servants is increased by one day from 2000. Employees who have reached the age of 55 will have two days added to their annual leave entitlement.

Special commission

The agreement provides for the establishment of a working group charged with examining the possibility of setting up a complementary pension scheme for staff recruited after 31 December 1998, that is to say those who are covered by the new salary system. This working group will also look into the possibility of reimbursing legal fees where a civil servant wins a case against the state linked to his or her employment status.

Both sides also agreed to acknowledge the need to pursue all necessary considerations and actions with a view to better defining the future role of the state, and thereby reforming the public administration, particularly by recourse to new technology.

Reactions

The measures introduced by the new agreement are likely to cost the state some LUF 1,634 million in 2000, and LUF 2,018 million in 2001.

CGFP was "generally pleased with the outcome of negotiations which will resume a tradition of regular agreements" with the government (the previous one having been concluded in 1992). CGFP's main objectives of avoiding the "dismantling of social rights", and of ensuring that public sector employees enjoy the fruits of growth, have been achieved. However, the union conceded that it had not managed to have the transitional pensions scheme withdrawn: this was introduced by the previous government, and forced CGFP to take the government to court (LU0004131N).

The the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB) congratulated CGFP on a "remarkable outcome" that will not only have repercussions for the 16,000 civil servants and state employees, but will also directly or indirectly affect another 24,000 "assimilated" employees. For this reason, LCGB believes that nationally representative trade unions (essentially LCGB and the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschafts-Bond Lëtzebuerg, OGB-L)) should be involved in civil service negotiations. LCGB also announced that it will be guided in future pay bargaining by the pay increases agreed in the civil service.

OGB-L described the outcome of the civil service talks, which it calculates to involve a rise of almost 6%, as important and sees it as confirmation of its pay claims over the past few months. It believes that the pay restraint advocated by the government would appear to have been finally "demystified".

The civil service pay agreement is also likely to trigger an increase in pensions of all kinds in the private sector.

The largest opposition party, the Luxembourg Socialist Party (Lëtzebuergesch Sozialistesch Arbechterpartei, LSAP), gave the agreement a warm welcome, and said that that it should lead to an increase in the minimum wage and initiate discussion in the direction of a sixth week of annual holiday entitlement.

Commentary

In the end, the 2000 pay negotiations established a new partnership that augurs well for more constructive collaboration between the government and its employees, both in the general interest and in that of the staff concerned.

However, the outcome prompted a view among all parties concerned that the idea of pay restraint has been abandoned, or at least that its content has changed. The provisions of the civil service agreement might have repercussions for future pay negotiations and pension levels in the private sector. (Marc Feyereisen)