New collective agreement signed in banking sector

In October 2010, the social partners within the banking sector met to negotiate the renewal of its collective bargaining agreement. Before discussions began, employers had already announced their desire to alter dramatically some aspects of the agreement that had increasingly been taken for granted by all parties such as automatic salary increases for seniority rather than merit. Discussions were difficult and it took almost six months to conclude a new agreement.

Long road to consensus

Before negotiations for a new collective bargaining agreement in the banking sector began in autumn 2010, the Luxembourg Bankers’ Association (ABBL) announced its intention to introduce profound changes to the philosophy that has governed the sector’s industrial relations for years. One of the ABBL’s key aims was to question automatic salary increases based on seniority and to replace the system with a merit-based policy.

Trade unions in the sector took this proposal as a sign that the employers intended to dismantle the social rights thus far acquired for workers in the sector. With the previous collective bargaining agreement due to end in autumn 2010, the first meeting of the renewal negotiations was held on 26 October 2010.

The first clash between the parties occurred during the second meeting (in French) in November 2010. The trade unions issued a joint press release (in French) where they declared that ABBL’s proposals were unacceptable. According to a comparative table of claims (in French, 1.01Mb PDF) drafted by the Association of Bank and Insurance Employees (ALEBA), the key demands from the ABBL included:

• the removal of the performance related bonus;

• the freezing of wages;

• a reduction in the amount guaranteed by the system of seniority salary increases from €15 to €12 over a period of four years instead of a period of three years as provided by the previous collective bargaining agreement ;

• a reduction in the number of seniority-based paid rest days, over and above the statutory requirements.

The main demands of the trade unions were:

• an increase in rest days from 8.5 days to 10.5 days per year;

• an annual wage increase guaranteeing an increase by the same amount year on year;

• enhanced protection for employees under threat of redundancy by, for example, strengthening protection for employees over 50 years of age being made redundant for economic reasons;

• an obligation for employers to conduct negotiations to create an Employment Safeguard Plan (Plan de maintien dans l’emploi, in French, 266KB PDF).

A second meeting between the social partners was held on 26 November 2010, and on this occasion the ABBL ended the discussions and left the negotiating table. A joint trade union press release (in French, 56Kb PDF) was issued in which unions demanded negotiations on the basis of the previous collective bargaining agreement and refused to relinquish any rights gained for employees in previous bargaining rounds. The ABBL, in an article published on its website on 30 November 2010 (in French), criticised the trade unions for refusing to take into account the current economic situation, and the fact that the sharp reduction in bank income had made automatic seniority salary increases unsustainable. The employers asked for more realistic proposals from the union.

Tensions between the employers and unions were so great that the prospect of an agreement seemed remote. Online magazine PaperJam described the discussions (in French) as a ‘dialogue of the deaf’.

Five months after the start of negotiations, a working group of social partners finally drew up a draft agreement. This was subsequently approved by the ABBL and the trade unions’ respective decision-making bodies in March 2011.

Terms of the 2011–2013 agreement

A collective three-year agreement for the sector was finally concluded on 16 April 2011 by ABBL, ALEBA, the Luxembourg Confederation of Independent Trade Unions (OGB-L/SBA) and the Luxembourg Christian Trade Union Confederation (LCGB-SESF).

The key points of the agreement are:

• an increase for all salary scales of 1% from 1 January 2012;

• an annual individual increase of 1% of wages, including an increase in salary scales, on 1 January 2013;

• an overall package for merit-based increases of 1% in 2012 and in 2013;

• an increase in the severance allowances offered to employees dismissed for economic reasons;

• maintenance of the performance-related bonus, rest days, and the system that guarantees an increase in the basic salary of €15 Euros over the three years of the agreement.

Employers are positive

Ernst Wilhelm Contzen, Chair of ABBL, welcomed the agreement as one that demonstrates that the Luxembourg social model is still ‘operational’, resulting in eventual agreement despite tensions and problems that appeared insurmountable. He added that the new collective agreement will now allow banking businesses to focus on the acquisition of new clients and the development of new business models.

Commentary

Given the serious difficulties that ABBL and the trade unions had in reaching an agreement in this round of negotiations, the long term survival of the sectoral collective agreement could legitimately be questioned. It should nevertheless be noted that such tensions are not new in this sector and have been a regular feature of its industrial relations.

Guy Castegnaro and Ariane Claverie, CASTEGNARO, Ius Laboris for HERA