New metalworking collective agreement signed despite Cgil opposition

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In July 2001, Italian trade union unity was seriously breached due to a dispute over the renewal of the pay terms of the national collective agreement for the metalworking sector. After 35 years of united activity, the metalworkers' trade unions, Fim-Cisl, Fiom-Cgil and Uilm-Uil, held separate strikes. Next, Fim-Cisl and Uilm-Uil decided to sign an agreement with the Federmeccanica employers' organisation while Fiom-Cgil decided to continue the dispute. Fiom is proposing that a referendum be held among the sector's workers to approve or refuse the agreement signed by the other unions. The affair may have significant repercussions for the future development of the Italian trade union movement.

Metalworking, which employs more than 1.5 million people, is one of the most important sectors of Italian industry. It contributes to the national balance of payments in a significant way, because about 50% of the goods it produces are for export.

The three metalworkers' federations affiliated to the three main trade union confederations have a total of more than half a million members - Fiom-Cgil has 363,272 members, Fim-Cisl 188,000 and Uilm-Uil 99,000. The metalworkers' unions have a strong "unitary" tradition. The Flm metalworkers' federation, which was created by the three unions at the beginning of the 1970s, promoted genuine trade union unity, even if it was in conflict with the positions of the three main confederations. The 1984 crisis in relations between Cgil, Cisl and Uil on the occasion of negotiations with the government on incomes policy put an end to the Flm federation.

Despite their strong unitary tradition, the metalworkers' unions have taken different positions during the past few years, for example over the negotiations on "on-call" jobs at Zanussi (IT0007159F) in 2000 and the agreement signed at the Fiat Cassino plant (IT0104180N) in 2001.

Recently Cgil, Cisl and Uil have attempted to revive the debate on unity. During the Cisl congress in June 2001 (IT0107191N), the general secretaries of the three confederations relaunched the quest for consensus among them. Also in early summer 2002, some important sectoral federations jointly signed new national collective agreements - such as those in the food industry (IT0107189N) and commerce. Furthermore, the strike organised jointly by the three metalworkers' federations on 18 May 2001 (IT0106187N), aimed at putting pressure on deadlocked negotiations over a new collective agreement (see below), was seen as an important occasion to relaunch union unity.

However, subsequent events in the metalworking negotiations led to a severe difference of opinions between the sectoral unions, with disagreement over signing a new agreement and a unilateral strike held by Fiom-Cgil. These problems have a wider significance for the relations between the three union confederations and for their relations with the new centre-right government, with which they are currently involved in difficult discussions on the country's economic and development policy (IT0107190N)

Background to the dispute

The differences between the metalworkers' union federation surfaced when they were drawing up their platform of demands for the renewal of the national sectoral agreement signed in 1999 (IT9907249F). The negotiations concerned the financial aspects of the agreement, which have to be renewed two years after the accord's conclusion.

According to the July 1993 national intersectoral agreement, which regulates the Italian collective bargaining system (IT9803223F), sectoral wage negotiations which occur two-years after the renewal of a national collective agreement are aimed at adjusting wages to the real increase of the cost of living. Therefore, the wage increases agreed at this stage should be equal to the difference between predicted inflation and real inflation over the past two-year period, plus predicted inflation over the coming two years.

Fim-Cisl and Uilm-Uil agreed with this approach, which is shared by almost all sectoral unions affiliated to the three main confederations, which have renewed the financial part of their own national sectoral collective agreements in a united fashion. Fiom-Cgil, by contrast, asserted that the new national wage agreement should include a portion of the increase in the metalworking sector's productivity over the past two years. The other two unions believed that the distribution among workers and companies of the benefits arising from productivity gains should be entrusted to company, rather than sectoral, bargaining.

Fiom-Cgil, Fim-Cisl and Uilm-Uil each had a different definition of the wage increase to be demanded, and only thanks to the mediation of the general secretaries of the three confederations did they reach a compromise on a single demand for a wage increase equal to ITL 135,000 (EUR 70) per month. According to the unions, such an amount would correspond to an increase of 4.65% in the national minimum rate, and was composed in the following way: predicted inflation for the two-year period 2001-2 (2.9%); plus recovery of the difference between predicted and real inflation for the previous two-year period 1999-2000 (1.1%); plus (an element added after mediation) a 0.6% increase, representing a share for workers in the improved economic situation of the sector.

The negotiations

The financial part of the metalworking national collective agreement expired on 31 December 2000. During the negotiations over the renewal, differences between the three unions and the Federmeccancia employers' federation over the criteria used to calculate wage increases sharpened. After the three unions jointly organised a strike on 18 May 2001, the social partners met again on 14 June and from that meeting onwards the divisions among the three unions started to worsen. Federmeccanica - which had previously offered a monthly wage increase of ITL 85,000 (EUR 44) - stated that it was willing to review its wage offer. While it refused the unions' demand to include a productivity-related element, it proposed an additional amount to anticipate in advance the difference between predicted and real inflation over 2001-2, on the basis of the difference already apparent in the first half of 2001.

In the face of this offer, Fim-Cisl and Uilm-Uil were willing to continue negotiations, while Fiom-Cgil rejected the offer and proposed to the other two unions that they should consult the sector's workers. The unions were further divided on this issue. Fiom-Cgil wanted to ask the workers to confirm the joint bargaining platform which had earlier been approved through a referendum - a procedure Fim-Cisl and Uilm-Uil regarded as meaningless, asserting that further consultation of workers would be useful only after a positive conclusion to bargaining agreed by all three unions. Fiom-Cgil then unilaterally called a national strike on 6 July, and this decision ended the last possibilities of managing the whole dispute in a united fashion. Fim-Cisl and Uilm-Uil in turn called a number of coordinated limited strikes in the period up until 5 July, in order to increase pressure for the positive conclusion of the dispute. On 27 June, Fiom-Cgil held an assembly in Bologna, at which Sergio Cofferati, the general secretary of Cgil, expressed his full support for Fiom-Cgil's action, and at which the strike on 6 July was confirmed.

The metalworkers' unions had not known such disunity since 1966. Savino Pezzotta and Luigi Angeletti, the general secretaries of Cisl and Uil respectively, expressed their clear support for their respective sectoral organisations: the rupture between the metalworkers thus also spread to the confederations.

Agreement signed by only two unions

On 3 July 2001, Federmeccanica convened a final round of negotiations, which saw - for the first time in the history of Italian industrial relations - the signature of a national collective agreement by only two of the sectoral federations affiliated to the three main confederations. Fim-Cisl and Uilm-Uil agreed with Federmeccanica an increase in collectively agreed minimum wage rates of ITL 130,000 (EUR 70) per month - ITL 70,000 (EUR 35) to be paid in July 20001 and ITL 60,000 (EUR 30) in March 2002 - as a wage adjustment to inflation, plus a one-off payment of ITL 450,000 (EUR 225) to be paid separately - ITL 300,000 (EUR 150) in July 2001 and ITL 150,000 (EUR 75) in July 2002.

The monthly wage increase of ITL 130,000 is calculated as follows:

• ITL 84,100 (EUR 42) in respect of predicted inflation over 2001-2, which had been projected by the previous centre-left government at 1.7% in 2001 and 1.2% in 2002;

• ITL 27,900 (EUR 14) in respect of the difference between predicted and real inflation over 1999 and 2000, equal to 1% (predicted inflation for 1999 was 1.5% but the real level was 1.6%, while for 2000 predicted inflation was 1.5% and the real rate was 2.6%); and

• ITL 18,000 (EUR 9) in respect of a portion of the difference between predicted inflation and real inflation in 2001, equal to 0.6% (while inflation in 2001 was predicted to be 1.2%, the real inflation rate for the whole year is expected to be between 2.6% and 2.8%).

The agreement thus provides for the recovery of almost the whole of the inflation over 1999 and 2000. This was despite the fact that the employers had sought to exclude "imported" inflation arising from the weakening of the euro single currency - a possibility which was explicitly foreseen in the July 1993 intersectoral agreement on incomes policy (IT0106187N).

The most critical aspect of the agreement was the 0.6% pay increase representing anticipated recovery of a portion of the difference between predicted and real inflation in 2001. On the basis of the July 1993 intersectoral agreement, such compensation should have been paid only at the end of the two-year period 2001-2. According to Fim-Cisl and Uilm-Uil, the fact of having obtained this compensation in advance represents a concrete way of protecting workers. Fiom-Cgil and Cgil, for their part, have been very critical of this provision, stating that this portion of the wage increase will end up having to be handed back, and risks contributing to inflation.

Fiom-Cgil did not sign the agreement, considering the agreed pay increase to be insufficient to recover the loss of purchasing power of wages due to inflation. The general secretary of Cgil supported Fiom-Cgil's position and added that "Federme2001. Onccanica should take responsibility for having divided the trade unions".

In legal terms, the new agreement is valid and, on the basis of the Italian law in this area, will be applied to all workers in the sector.

Unilateral strike

The refusal of Fiom-Cgil to sign the agreement was followed by its unilateral strike on 6 July 2001. On the same date many demonstrations, organised by Fiom-Cgil and Cgil, took place all over Italy. Figures on the number of participants in the strike and the demonstrations differ greatly. Cgil claimed that about 300,000 took part in the demonstrations, while. the police put the figure at half this level. Fiom-Cgil reported a large number of participants in the strike, while Fim-Cisl and Uilm-Uil called it a failure. Fiom-Cgil declared that the highest levels of participation in the strike were recorded in Tuscany (80% of metalworkers) and Sicily (90%). Tonino Regazzi, the general secretary of Uilm-Uil said that only 15% of workers took part in the strike, while Giorgio Caprioli, the general secretary of Fim-Cisl, said that the "strike did not succeed and that the participants in the demonstrations were mainly retired workers and Cgil officials". Federmeccanica said that the participation rate in the strike was about 26%.

The Fiom-Cgil central committee met on 11 July 2001 and stated that it did not consider the matter to be closed. It thus decided to start collecting signatures calling for a referendum on the metalworking agreement and launched numerous protest actions, such as assemblies and the distribution of leaflets, in both July and in September.

For their part, Fim-Cisl and Uilm-Uil have organised plant-level meetings of their members to approve the agreement signed with Federmeccanica.

Reactions

The fact that the confederal unions have been divided over the conclusion of a collective agreement in such a key sector as metalworking has sent out shock-waves. For example, Aris Accornero, professor of industrial sociology at the "La Sapienza" university in Rome, and an expert on the Italian trade union movement, has described the situation as a "veritable tragedy, because the positions were not very distant".

Luigi Angeletti, the general secretary of Uil, and until 1999 of Uilm-Uil, defined the deal signed as "a good agreement which meets 97% of the requests contained in the trade union platform". Giorgio Caprioli, the general secretary of Fim-Cisl added: "despite the numerous efforts made by Fim and Uilm to involve Fiom, we regret the lack of a unitary agreement but we wanted to give a good result to workers, avoiding the risk of postponing the signature of the agreement till the end of the autumn."

Claudio Sabattini, the general secretary of Fiom-Cgil, declared that Fiom's only opponent is Federmeccanica, and said that "the possible pay increases will be only unilateral grants - the fight goes on to obtain everything demanded in the platform".

Guidalberto Guidi, an industrial relations advisor at the Confindustria employers' confederation, said that the agreement was very onerous for employers, but that was the best that could be achieved

Commentary

The unity of action of the Italian trade union movement has been seriously stricken by the dispute over the renewal of the metalworking national collective agreement. The events which have taken place are very significant because they question 10 years of work on trade union unity. There are at least four key issues behind the division between trade unions over the renewal of the metalworking agreement, which will probably characterise the debate and perhaps the divisions among the unions in the future.

• Incomes policy. Fiom-Cgil's positions marked a departure from the usual procedure that has characterised such mid-term pay reviews of sectoral collective agreements. This was the first time since 1993 that a union had requested that sectoral wage increases should include a component aimed at redistributing the benefits of productivity growth. According to all the other unions, this issue should be dealt with by decentralised bargaining at company or local level, as established by the July 1993 intersectoral agreement. The main concern arises from the fact that Mr Cofferati, the general secretary of the Cgil confederation, approved this position. According to many observers, Italy has a wage problem, in that Italian wages are considered the lowest among its European competitors. Such differences can be only partially explained by the high tax and social contribution charges - among the highest in Europe - which burden work in Italy. Trade unions are divided on how to achieve a non-inflationary high-wage policy. Cgil's idea of using the national sectoral collective agreement rather than company bargaining to improve the purchasing power of Italian workers will influence the predicted inflation rates that the government calculates. The risk is that trade unions could favour an increase in the predicted inflation rate, in order to have more room for wage bargaining at national level, rather than a reduction in the rate.

• The bargaining system. A key issue that trade unions are facing is whether the present two-tier bargaining system - national sectoral agreements and company/local agreements, with a substantial centralisation of wage bargaining - is appropriate for improving workers' purchasing power. Confindustria prefers a simplification of the whole system, because it believes that only the national level should be entrusted with the power of defining wages. Trade unions are divided. Cgil would like to maintain and strengthen the role and the importance in wage setting of national bargaining, entrusting this level of bargaining - as it proposed in the metalworkers' dispute - with the role of redistributing the benefits of productivity growth. Cisl and Uil share a different opinion: while they want to maintain the role of national bargaining in defining minimum wages and conditions, they also want to strengthen the wage-setting function of decentralised bargaining, in order to maintain a more solid link between wages and productivity so as to make possible a non-inflationary high-wage policy.

• Democracy and representation. Cgil has long stressed the necessity of legislation on the issue of trade union representation, regulating the relations between the trade union organisations on the basis of the "majority principle" (IT9804226F). In other words, Cgil believes that there should be a law in the private sector similar to that in the public sector where, in order to reduce the fragmentation of trade union representation between dozens of organisations, it has been decided that the organisations allowed to negotiate and sign agreements must represent over 5% of the relevant workforce (IT9709311F). Agreements are valid only if the signatory organisations represent the majority of the workers. According to Cgil, such a law in the private sector would recognise its predominance over the other unions. Cisl and Uil are against the proposed law, While in the public sector the law has the function of protecting Cgil, Cisl and Uil from competition from "autonomous" trade unions, Cisl and Uil believe that in the private sector such legislation would only destroy possible unity of action. This is because Cgil, which has a majority of union members in some sectors (such as metalworking), could feel itself authorised to act by itself. The impasse on the law on trade union representation has highlighted the rules established by the unions themselves to manage their relations. These rules provide, for example, for the use of referenda among workers in order to approve bargaining platforms and agreements. This is why Fiom-Cgil is calling for a referendum on the new metalworking agreement, believing that workers would reject the agreement and that negotiations would be reopened. Fim-Cisl and Uilm-Uil object because a referendum is foreseen only in the case of agreements signed by all three unions, and non-union members should not be asked to vote to settle political disagreement among the unions.

• The political situation. Despite the goodwill expressed on the occasion of Cisl's recent congress by Mr Cofferati (IT0107191N), Cgil's positions seem, to many observers, to be influenced by a desire to play a role of social opposition towards the new centre-right government (IT0107190N). If this happened, the trade union unity project would be definitively shelved. The attitude of Cisl and Uil is not a priori against the new government, and they want to judge each government decision exclusively on trade union grounds (IT0106188N). The divisions between the unions also have implication for Italy's political alignments. Mr Cofferati, the Cgil general secretary, has declared his intention to take part in the forthcoming congress of the Left Democrats (Democratici di Sinistra, DS) – the political party of reference for the majority of Cgil officials. Margherita, the other component of the centre-left minority in parliament, which groups the "moderate" parties, has entered into contacts with Cisl. A division among the two components of the centre-left political alignment occurred on the occasion of the recent adoption of the legislation transposing into Italian law the EU Directive (1999/70/EC) on fixed-term work. Margherita was favourable to the common opinion on the issue signed by Cisl and Uil and by most employers' organisations, while DS (like Cgil) was opposed (IT0105282F).

The destiny of the Italian trade union movement will be decided during the forthcoming months. There will either be a movement towards regroupment or a tremendous split which will make trade union action ineffective for many years, also resulting in problems on the political plane. (Domenco Paparella, Cesos)