Pay structure and collective bargaining examined

With tripartite discussions underway on a reform of Spanish collective bargaining structures during the second half of 2001, this feature examines the relationship between bargaining structure and the structure of pay.

Collective agreements in Spain are concluded at three different levels of bargaining: national sectoral agreements; sectoral agreements at the level of individual regions (or 'autonomous communities') or provinces; and company agreements. This structure of bargaining may in some cases lead to a repetition of subjects at the different levels, particularly because the areas to be dealt with at each level are not clearly defined.

In April 1997, the main employers' organisations - the Spanish Confederation of Employers' Organisations (Confederación Española de Organizaciones Empresariales, CEOE) and the Confederation of Employers of Small and Medium-Sized Enterprises (Confederación Española de la Pequeña y Mediana Empresa, CEPYME) - and the most representative trade unions - the Trade Union Confederation of Workers' Commissions (Comisiones Obreras, CC.OO) and the General Workers' Confederation (Unión General de Trabajadores, UGT) - signed an intersectoral agreement on collective bargaining. This was one of the three agreements that formed the April 1997 labour reform (ES9706211F), and brought significant changes to Spanish legislation.

The aim of this agreement was to help to create a new system of collective bargaining based on the principle of autonomy of the parties, in order to improve on the previous system. It was intended that the new system should help to rationalise the structure of bargaining and overcome the situation of 'atomisation'. It was therefore decided to establish a suitable articulation between the different levels, reserving certain subjects for national sectoral collective agreements, whereas others could be developed at lower levels (regional and company).

With regard to pay structure, the agreement stated as follows:

Collective agreements have so far established a pay structure polarised around few concepts: basic pay, agreed bonuses and supplements. The supplements include personal ones, supplements for type of job, quality and quantity, incentives to production etc. Collective agreements may use different pay models. However, it would be desirable for the pay structure of these models to be clearer and more comprehensible, with a correct definition of the different concepts.

In all cases we feel that the national sectoral agreement of the sector should deal thoroughly with all pay criteria. However, an agreement at this level may refer pay questions to lower levels, limiting itself to establishing the concepts or criteria that define the prevailing pay structure in each sector, without establishing any amounts.

Though over four years have gone by since the April 1997 agreement, there has been no great progress in the regulatory development of agreements in order to establish clearly the subjects that should be dealt with at each level of bargaining on pay structure, and to avoid overlapping. At present, a 'social dialogue commission on collective bargaining', established in summer 2001 at national level by the government, employers' organisations and trade unions, is analysing the functioning of the Spanish collective bargaining system and the need for reform with a view to reinforcing its structure (ES0107150N)

Composition of pay and content of bargaining

Collective agreements consider pay, as laid down in Article 26.3 of the Workers' Statute, to be the totality of the economic retributions of workers, in money or in kind, for providing professional services as employees, whether to remunerate effective work through any type of pay or to remunerate periods of rest that are calculated as work.

Trade unions and employers' organisations currently tend to establish their criteria for collective bargaining on pay from two different viewpoints. Whereas the unions wish to focus pay bargaining on protecting and improving the purchasing power of workers and redistributing wealth with increases equal to, or higher than, forecast inflation, the employers consider that the increase in pay must be linked to the average increases in unit labour costs of European Union countries with which Spain competes directly.

Thus, in their criteria or guidelines for collective bargaining in 2001, the employers' organisations recommended pay rises of between 1.3% and 2%, based on the fact that unit labour costs in the EU should rise by 1.3% on average, and the government's inflation target is 2%. They advised negotiators that if they decided to include wage revision clauses to protect purchasing power, they should establish suitable provisos, including 'get-out' clauses to prevent individual price rises from affecting the inflation figures, thus leading to spiralling inflation that would affect competitiveness and employment.

For 2001, the unions proposed guaranteeing the purchasing power of wage earners, with pay increases equal to inflation (with the inclusion in agreements of wage revision clauses including backdating and consolidation in the pay packet). They also felt that part of the gains from increasing productivity should go to additional pay rises, with another part devoted to improving 'qualitative' aspects of work. The unions called for an average pay rise of 4%, based on several factors: the Retail Prices Index (RPI) forecasts; wage revision clauses; and using the margin of productivity. This target could be adapted and developed according to the specific situation of sectors and companies.

Studies carried out by CC.OO and UGT indicate that the average pay rise provided for in agreements signed in 2000 was between 3.3% and 3.6% (ES0107152F).

The procedure most commonly used for bargaining on pay has been to take as a reference the government's inflation forecast for the corresponding financial year — with or without wage revision clauses. The bargaining deals mainly with the pay scale tariff s (tariffs listing all pay levels and pay components in the area covered by the agreement), especially in the case of national sectoral agreements.

In recent years, other variables are beginning to appear in bargaining on pay rises, particularly at company level. It is becoming common to find references to productivity, business results, commitments to stable recruitment or job creation, and - to a lesser extent - participation of workers' representatives in the organisational or technical decisions of companies

The unions seek the consolidation through agreements of pay structures that are applicable to all workers concerned and based on clearly identified concepts, with definitions and criteria that should be established in the national sectoral agreements (both fixed and variable concepts) and adapted to the reality of each sector. The lower bargaining levels should be left to develop the other elements of the pay structure. There has, in fact, been an increase in the number of workers covered by a minimum agreed wage.

With regard to variable pay, the trade unions state that it should be a limited percentage of total pay, based on objective and collective systems, with no use of discretionary powers by the company. This should be achieved through the mechanism of a right to information and control by trade union representatives.

The employers' organisations (ES0001170N) consider that it is important to link pay more closely to productivity. It is therefore essential to promote the variable part of pay linked to the aptitude and performance of each worker, the evolution of productivity and the meeting of targets in the company. In other words, the employers' organisations wish to transfer greater importance to the company level in collective bargaining on pay. Thus, different types of variable pay are appearing at company level. They are mostly not reflected in the collective agreements but in non-statutory company pacts or individual agreements based on particular criteria in each company.

Commentary

The tendency to diversify the pay structure of agreements at company level is leading to division between the trade unions and the employers' organisations in the current discussions on the reform of the structure of collective bargaining in Spain. This is a central question for the development of the social dialogue after the labour reform introduced by the government in March 2001 (ES0103237F) and for the start of a new bargaining round over a large number of collective agreements. (M Cruz Elvira, Fundació CIREM)