Widening the options: aims of the autumn pay round

The official trade union demands arguably do not make spectacular reading. They include:

• increases in minimum wages and salaries;

• increases in actual wages and salaries;

• increases in allowances and supplements;

• increases in apprenticeship remuneration;

• further reductions in the differentials between wage earners and salary earners in entitlements; and

• the introduction of 1 November 1998 as the date on which the new agreement comes into force.

The trade unions ruled out a simple lump-sum payment instead of a consolidated wage increase, as mooted by some employers in the run-up to bargaining, although they would be willing to consider it as an element in a mixed settlement, as they did during the last economic upturn in 1994 and 1995. In addition it was agreed with the employers to deal with a renewal of the "distribution option" introduced last year (AT9801155F) - see below - along with working time questions and with a reduction in gross wage costs (or "more net, less gross", as the employers' negotiators put it). Also on the agenda at the first meeting was a proposal by employers in industry to allocate some of the pay increases for private pension provision. Due to its complex nature, however, it was decided to postpone negotiations on this issue.

Negotiations with industry representatives were to be continued on 19 October 1998 and a conclusion was expected on 21 October 1998. The date for negotiations in the craft sectors was set as 22 October 1998. Until then, joint expert groups were to meet.

The new distribution clause

The "distribution option" in the metalworking sector in 1997 allowed companies a choice. They could either pay a 2.1% increase across the board or else only 1.9%, provided that they allocated a further 0.5% of the pay bill to certain groups or categories of workers, to be agreed at workplace level. Works agreements on distribution of this 0.5% had to be settled by 20 December 1997, though the deadline slipped in some cases because works councils sometimes took time to understand and apply the provision.

In 1998, the context is rather different. Employers have ruled out a general working time reduction from the current 38.5 hours per week. They have been warning that the employment results of working time reductions in France were less than expected or hoped for. In their opinion, working time reductions generate employment only in highly automated manufacturing sectors where it does not matter how often shifts switch. Speculation is rife, however, that a new version of the distribution option would aim at the distribution not of additional income but of additional time off. The GPA wants to make extra time available for training and further education. About one-third of metalworking plants had recourse in 1997 to the distribution clause. This is regarded as a very favourable response. There is some inclination this year to enlarge the room for distribution.

Commentary

Once again the negotiators have decided not to publicise their views on what the wage increase should be. In 1997, basic pay rates were raised by 2.7% and actual pay by 2.1%. However, companies had the option of increasing actual wages by only 1.9% and allocating a further 0.5% of their wage bill to particular groups of employees, preferably the young, women and high performers. In 1998, projected real economic growth is 3.0%, compared with 2.5% in the previous year, and a similar rate of growth is expected in 1999, although there is some uncertainty owing to the crises in Southeast Asia, Latin America and in Eastern Europe. Inflation is more or less steady at 1.3% in 1997 1.2% in 1998 and 1.5% projected for 1999. Productivity increases measured in real Gross Domestic Product per employee are running at between 2.0% and 2.2% (but exceed 5% in manufacturing). The GMBE is said to favour reserving two-thirds of these increases for employees. Together with inflation, this would require increases in nominal wages of between 2.5% and 3.0%. Economists think it unlikely that wages can garner more than half of the productivity increases. All this leads to expectations that actual wages will be raised by about 2.5% and minimum wages by around 3%. All the more so, since measures introduced in 1997 to reduce overtime may have cost some employees "several thousand Austrian schillings", although nobody is able (or willing) to calculate a convincing estimate. A creative combination of lump-sum payments, percentage increases and working time reductions tailored to the current economic situation appears very likely.

How much employment and working time will really figure in the negotiations and the outcomes is hard to guess. In 1998, for the first time in the 1990s, employment in manufacturing is increasing. The pressure to support this trend is not really there, given that robust growth is forecast for 1999. However, the trade unions may wish to use a good year to lay the foundations for working time and employment concessions in years to come. Employment bargaining has next to no tradition in Austria (TN9710201S), and a shift in that direction would amount to some sort of culture change. It needs to be started at a time when the pressure for results is not yet too great.

It would be surprising if much dispute accompanied the negotiations. Over the last couple of years, problems arose less between employers and workers and rather more amongst the employers themselves (AT9704110N). On the trade union side, the close cooperation between the GPA's important industry section and the GMBE led to some misgivings within the GPA in spring 1998 (AT9806192F). (August Gächter, IHS)