Sectoral bargaining provides important test on hours, flexibility and bargaining structure

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According to recent estimates, in 1999 around 9 million Italian workers will be involved in the round of renewals of sectoral collective agreements. These are especially important negotiations because they come immediately after December 1998's confirmation of the July 1993 national tripartite agreement and will represent an important test of its robustness. There are numerous issues on the agenda, including pay increases, work flexibility, reduced working hours, and the relative importance to be attributed to sectoral and company-level bargaining.

According to figures relating to collective agreements that cover some 11.5 million workers, issued in January 1999 by the Istat national statistical institute, at the end of December 1998 there were 37 industry-level collective agreements awaiting renewal, covering a total of 4.3 million employees and around 42% of Italy's overall paybill regulated by bargaining. To these agreements should be added those that expired at the end of 1998 - among them the metalworking agreement which alone concerns almost 1.7 million workers - and those that will do so in 1999 - including the agreements for the food industry and the construction industry. By the middle of 1999, the sectoral agreements due for renewal will concern more than three-quarters of the overall paybill regulated by bargaining. If the industry-level agreements which expire at the end of 1999 a! re c onsidered as well, as they are in estimates made by Monitor lavoro (a research institute close to the Cgil trade union confederation), the number of workers involved in sectoral renewals in the course of 1999 will amount to around 9 million.

Table 1 below examines the volume of industry-level agreements which are in force or have expired, in terms of the percentage they represent of the total paybill regulated by bargaining. It presents Istat's figures for the collective agreements which were in force at the end of 1998 and in January 1999, and which will still be in force in June 1999, and also figures for the agreements which had expired more than three months previously at the end of 1998, and those which it is predicted will have done so by June 1999.

* Assuming that no renewals take place in the meantime. For example, this already no longer applies to the tourism agreement.

** Figures include preliminary agreements already signed in 1998 which cover some 1 million public employees.

Source: Istat.

As Table 1 indicates, the two main sets of negotiations which were opened at the end of 1998 concerned the banking sector and public administration, where almost all workers had been without a sectoral agreement for more than three months, and indeed since 31 December 1997. The beginning of 1999 saw important developments in public administration, with the signing of a preliminary agreement for the health sector on 20 January (concerning more than 600,000 workers), while concrete progress was made in the negotiations over the state school agreement (covering about 1 million workers). The same could not be said about the banking sector, however, since differences between the parties were marked and the unions called a strike for 5 March 1999.

1999 will also be extremely important in terms of the renewal of agreements in industry. First, as mentioned above, the metalworkers' agreement officially expired on 31 December 1998, even though talks on the demands presented by the trade unions had been in progress for some time (IT9809234F). Also due to expire in the course of 1999 are the agreements for food industry workers (May), for building workers (June) and, at the end of the year, for textiles workers. As regards services, the agreement for tourism, which expired on 30 June 1998, has been renewed with the signing of the agreement by the sectoral unions and the Confesercenti and Confcommercio employers' associations in January 1999, while the agreement with Confindustria was later reached in February (IT9902100N).

Current negotiations: difficulties and main issues

It is possible to identify various reasons for the delays and difficulties that beset the three main sectors where negotiations continue in early 1999 - public administration, banking and metalworking - as well as a number of specific issues.

• Of great importance in the case of the public administration are: (a) the reorganisation and reform of the public administration and of employment relations in the public sector, and (b) the need for rationalisation and restructuring, including economic, of public bodies. Emblematic in this regard are the cases of the post office, where the agreement for around 200,000 workers expired on March 1997, or the state school sector, where the resources allocated by the state budget for schools are of crucial importance. These issues and difficulties are connected with definition of the specific forms that reorganisation should assume in each case, and the limits on the financial resources allocated by the state
• The difficulties hampering negotiations on the banking sector agreement are connected to the current crucial stage in the restructuring of the Italian banking system. The parties find it very hard to agree on the application of a framework agreement signed in February 1998 (IT9803321F), which set out measures to handle redundancies and contained a joint pledge to reduce costs through pay restraint and increased labour flexibility (functional, wage, contractual and to some extent numerical flexibility in recruitment), backed by a strategic commitment to continuing training. At present, the Italian Banking Association (Associazione bancaria italiana, Abi), the major employers' organisation for the sector, has rejected the union platform of demands on the grounds that it is not consistent with the parties' undertaking to align the cost of labour with the European average.
• The main problems in the negotiation of the metalworking agreement are wage increases and work flexibility. The most serious disagreements centre on the unions' demands for reduced working hours - which the employers regard as entailing excessive costs for firms - and for stricter control of overtime, which should lead to new recruitment, including on fixed-term contracts, when working hours in excess of the normal schedule are necessary for meeting production needs. For their part, the unions have accepted neither the request of the Federmeccanica employers' organisation for greater flexibility in working hours (both in daily schedules and over a period of some weeks), nor the wage increases proposed (3%, comprising all components, including the indirect ones, of labour costs), nor the proposal for a form of control over company-level bargaining in order to assure that it "conforms with" incomes policy objec! tives. Moreover, according to Fe dermeccanica, performance-related pay bargained at company level should be completely variable and tied to company profitability (rather than to other performance indicators like productivity, for instance).

Commentary

The negotiations on the renewal of the banking and metalworking agreements help highlight what will be the central issues of collective bargaining in a crucial year for sectoral renewals, given that the bargaining round will involve some three-quarters of overall paybill and take place in the aftermath of the December 1998 "social pact for development and employment" (IT9901335F), for which it will constitute an important test. The social partners' attention is focused on two principal themes: labour costs, which are closely connected to the relationship between sectoral and company-level bargaining; and labour flexibility in its various forms, including the important issue of reduced working hours.

As regards labour costs, the July 1993 national tripartite agreement ensured that wage growth would be in line with inflation and introduced an important degree of wage restraint, as indicated by table 2 below.

Source: Istat.

The fact that the December 1998 pact has confirmed the 1993 agreement in very different circumstances - as regards the level of inflation and the start-up of the Economic and Monetary Union (EMU) - may raise problems in linking sectoral and company-level bargaining and may reduce the room for manoeuvre in negotiations at both levels. From this point of view, the positions taken up in banking and metalworking, especially by the employers' associations, seem basically different. Whereas in the case of the banking sector greater importance seems to be given to company-level bargaining tied to corporate performance, in metalworking the priority for Federmeccanica is apparently to keep wage growth under control by means of the national-level agreement. It is difficult to assess which of the two solutions may prove more effective in achieving greater company competitiveness. The former seems more consistent with the provision for an autonomous leve! l of company-level bargaining on wages and with the objectives of providing workers with incentives linked to variable pay; the latter is perhaps more compatible with a system of incomes policy and with the "vertical integration" of the bargaining structure.

Another important benefit of the bargaining round of 1999 will be that emerging forms of labour flexibility (IT9710214F) will be more clearly defined. It will be interesting to see whether the numerical flexibility allowed by temporary agency work and fixed-term contracts will be flanked by forms of functional flexibility, possibly linked to the widespread use of training to upgrade workforce skills, or whether the preferred option will be to increase working hours flexibility. In the latter case, however, assessments may differ as to whether reductions in working hours and a greater use of part-time work contracts should be introduced, or whether the annualisation of working hours and the traditional reliance on overtime work will be the selected choices. Of particular importance from this point of view may be government initiatives on the issue of reducing weekly working hours (IT9803159N), as well as the possible effects of its recent reform of overtime work (IT9812192N). In general, however, the main trend revealed by present and recent bargaining - see, for example, the 1998 chemical industry agreement (IT9806325F) - seems to be towards the greater use of working hours flexibility made possible by multi-period work schedules.

To conclude, what is at stake in the current negotiations is the influence on sectoral industrial relations of the "concertation" (consultation and dialogue) method, which has produced important results at the intersectoral level. The risk is that the divergences between the unions and the employers' associations on the structure of collective bargaining, and on the relative roles of sectoral and company-level agreements, will concentrate at the level of sectoral bargaining, thereby challenging the system confirmed by the December 1998 national agreement. Moreover, disagreement on what forms of labour flexibility are able to enhance the competitiveness of companies, while remaining compatible with an adequate level of trade union protection, only increases the difficulty of the negotiations. From this point of view, the outcome of the negotiations over the metalworking agreement may shed important light on the strength and prospects of the industrial r! elat ions system brought into being since the early 1990s by a series of tripartite agreements (Roberto Pedersini, Fondazione Regionale Pietro Seveso).