Unions present proposals for bargaining in 2003

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In late 2002, the Spanish social partners are seeking to negotiate a central agreement to provide a framework for lower-level collective bargaining in 2003, as they did for 2002. The two main trade union confederations, CC.OO and UGT, presented their proposals for a new agreement in December. It appears that a major issue in 2003's collective bargaining will be wage revision clauses, which link pay increases to inflation. The government (supported by the Bank of Spain and the IMF) wants to abolish these clauses, on the grounds that they cause inflation, but the unions see them as essential for maintaining workers' purchasing power and domestic consumption.

In December 2002, Spain's two main trade union confederations - the Trade Union Confederation of Workers’ Commissions (Comisiones Obreras, CC.OO) and the General Workers’ Confederation (Unión General de Trabajadores, UGT) - presented their joint proposals for negotiations with the Spanish Confederation of Employers’ Organisations-Spanish Confederation of Small and Medium-Sized Enterprises (Confederación Española de Organizaciones Empresariales-Confederación Española de la Pequeña y Mediana Empresa, CEOE-CEPYME) over a central agreement providing guidelines for lower-level collective bargaining in 2003 (ES0209108N). The unions's document also provides an assessment of collective bargaining in 2002.

Assessment of bargaining in 2002

CC.OO and UGT's assessment of collective bargaining in 2002 highlights both positive and negative points.

Positive points

The two union confederations have a positive view of the wage moderation achieved in the December 2001 central agreement which laid down guidelines for lower-level collective bargaining in 2002 (ES0201207F). This agreement facilitated the process of bargaining in some sectors, and promoted relations with employers' associations. It was, for the unions, necessary due to the uncertainty of the economic situation and the introduction of the euro. The agreement was also intended to reflect a commitment to a specific model of economic growth. The aim of this model was to compete on the basis of added value, which involves improving the competitive capacity of the Spanish economy through better professional qualifications and a commitment to employment stability. Therefore, the aims of the 2002 agreement were to: achieve a balance between flexibility and security in order to defend employment and avoid traumatic workforce adjustments; develop vocational training; invest in new technologies; increase the quality of products; and improve employment through greater competitiveness. In other words, the agreement was based on the concept of a 'knowledge economy' developed in high-technology sectors, and a high level of education and knowledge.

Negative points

In theory, the 2002 central agreement provided for moderate pay increases and the maintenance of purchasing power, in order to contribute to economic growth and more employment by improving domestic consumption. However, according to CC.OO and UGT, the sharp increase in inflation has led to a loss of purchasing power - see table 1 below - which may have limited consumption and job creation. Furthermore, the restructuring of certain sectors and companies, and the transfer of some firms' operations to central and eastern Europe where pay is lower, has eroded employment (ES0210204F and ES0211202N).

In this context, the trade unions consider that it is essential to maintain wage revision clauses (cláusulas de revisión salarial) - the provisions in many collective agreements which provide for additional pay rises when inflation exceeds certain limits (ES0001170N). The People's Party (Partido Popular, PP) government considers that wage revision clauses have contributed to the increase in inflation, and the Ministry of the Economy and Inland Revenue has proposed that they should be abolished. A similar position is taken by the Bank of Spain (Banco de España) and International Monetary Fund (IMF). The trade unions, on the other hand, state that these clauses should be maintained in order to maintain consumption and the objective of employment, and claim that the 2% inflation target set by the Ministry of the Economy and Inland Revenue for 2003 is not credible.

Table 1. Inflation and pay increases laid down in collective agreements, 1990-2002
Year Average agreed pay increase (including 'get-out' clauses) Real average annual increase in RPI RPI target Gain in purchasing power (agreed pay increase minus real RPI increase)
1990 8.3 6.7 5.7 1.6
1991 8.0 5.9 5.0 2.1
1992 7.3 5.9 5.0 1.4
1993 5.5 4.6 4.5 0.9
1994 3.6 4.7 3.5 -1.1
1995 3.9 4.7 3.5 - 0.8
1996 3.8 3.6 3.5 - 0.2
1997 2.9 2.0 2.2 0.9
1998 2.6 1.8 2.1 0.8
1999 2.7 2.3 1.8 0.4
2000 3.7 3.4 2.0 0.3
2001 3.6 3.6 2.8 0.0
2002 2.9* 4.0** 2.0*** -1.1

Notes: RPI = retail prices index; * provisional figures from Ministry of Labour and Social Affairs for collective agreements registered in first eight months of year; ** estimate from National Statistics Institute; *** forecast by Ministry of the Economy and Inland Revenue.

Source: collective agreed pay increases - Ministry of Labour and Social Security; RPI figures - National Statistics Institute. Quoted in the Report on the Socio-Economic and Labour Situation, Economic and Social Council, Madrid 2002.

Unions' bargaining priorities

In early December 2002, negotiations started between CCOO, UGT and CEOE-CEPYME on concluding a new central agreement setting a framework for collective bargaining in 2003. In principle, CEOE-CEPYME is not against wage revision clauses, providing that their aim is to maintain purchasing power and that they do not lead to inflation. Some employers even feel that without these clauses the trade unions' demands would be far higher, so it could be useful to maintain them in combination with moderate pay increases. Any change in this area would requires time, since most agreements are concluded for periods of two or more years.

At the start of the negotiations, the trade unions presented their joint document setting out their objectives and priorities for collective bargaining in 2003, as follows:

  1. the 2003 central accord must be defined as an agreement for employment. The guidelines for collective bargaining must promote the creation of employment, employment stability, training and professional qualifications, equal treatment and health and safety at work. In other words, as in the 2002 deal, the growth and competitiveness of companies are the necessary conditions for improving employment;
  2. the unions support a model of wage bargaining that combines a moderate increase in real pay, the contribution of unit labour costs to the control of inflation, and the defence of the competitiveness of companies and of the economy as a whole. The unions are thus reasserting the role of three essential elements of wage bargaining - inflation forecasts, wage revision clauses and an increase in real pay based on productivity;
  3. the 2003 agreement must deal with the question of health and safety at work, and provide a suitable response to the high industrial accident rate (ES0211103N). This is associated with subcontracting and temporary employment;
  4. the new agreement must find a balance between flexibility and job security. Job security is a necessary condition for training and improving professional qualifications, and for improving competitiveness on the basis of knowledge and quality; and
  5. equal treatment for men and women is a priority, as it was in 2002.

Achieving these objectives and priorities may expand the content of collective bargaining, as has happened in previous years. The central agreement's provisions on these issues must, say the unions, allow considerable leeway in order to avoid limiting the autonomy and bargaining capacity of the sectoral federations, and to allow them to establish the most suitable channels for applying the provisions and adapting them to their situations.

Detailed objectives

CC.OO and UGT break down the above priorities into more detailed objectives.

First, in terms of employment, the intersectoral agreement must contain objectives and clauses related to equal treatment for different groups, such as men and women, people with disabilities, young people, immigrant workers and temporary workers. Employment stability is another important objective, and collective bargaining must thus promote the establishment of limits on temporary recruitment and the improvement of the conditions applying to the least stable and regulated forms of recruitment. The increasing phenomena of outsourcing and subcontracting have a significant influence on industrial relations. Bargaining in this latter area should thus deal with the rights to information laid down in Article 42 of the Workers' Statute, identify the activities that may be subcontracted and limit successive subcontracting. Another objective is to achieve a balance between flexibility and security in order to defend employment, and bargaining must thus, according to the unions, provide alternatives to the destruction of employment through systems of flexibility, which involves dealing with questions such as working time. Reductions in working hours, annualisation of working time and hand-over contract s (contratos de relevo) - whereby employees take early etirement and are replaced by younger ones - are identified as some of the useful measures to safeguard employment.

Table 2 below indicates the development of specific clauses relating to employment in collective agreements over 1996-2000.

Table 2. Special clauses related to employment in collective agreements, 1996-2000
. Number of workers covered by clauses (% of total workers)
Issues dealt with 1996 1997 1998 1999 2000
Net creation of employment 181,332 (3.0%) 339,775 (4.7%) 380,238 (5.4%) 431,027 (5.5%) 439,435 (5.6%)
Creation of employment through early retirement (hand-over contracts) 781,297 (12.8%) 1,335,582 (18.5) 1,367,221 (19.6%) 2,106,542 (27.1%) 1,891,584 (24.1%)
Maintenance of employment 300,117 (4.9%) 679,935 (9.4%) 717,389 (10.3%) 502,453 (5.5%) 601,315 (7.7%)
Conversion of temporary into permanent employment 527,422 (8.6%) 717,815 (9.9%) 1,285,056 (18.4%) 2,031,445 (26.1%) 1,920,903 (24.4%)
Other clauses on employment 2,083,976 (34.1%) 1,834,528 (25.45%) 1,458.969 (20.9%) 1,242,047 (16%) 952,640 (12.1%)
Maximum number of temporary contracts - - - - 544,552 (6.9%)
Use of temporary agency work - - - - 1,638,352 (20.8%)
Geographical mobility 1,248,158 (20.4%) 1,631,269 (22.6%) 1,566,892 (22.5%) 2,001,691 (25.7%) .
Functional mobility 1,283,520 (21.0%) 1,454,232 (201.1) 1,429,612 (20.5%) 1,504,730 (19.3%) .
Productivity incentives 1,752,468 (29.9%) 2,256,811 (31.9%) 1,794,460 (25.7%) 2,157,736 (27.7%) 2,016,505 (25.7)

Source: Ministry of Labour and Social Security. Figures quoted in Reports on the Socio-Economic and Labour Situation, Economic and Social Council, 1997-2001.

Second, for the unions criteria related to health and safety at work and the environment must form the basis for collective bargaining in 2003. The instruments of intervention and participation must be reinforced, joint health and safety commissions must be set up, and specific training on these subjects must be provided.

Third, pay bargaining must take into account three fundamental elements - the RPI target, wage revision clauses and increases in productivity - state CC.OO and UGT. This model must be applied and specified in each sector and company according to their specific characteristics. In other words, there is an explicit recognition of the diversity of situations, and of the fact that there are no homogeneous responses. Furthermore, the central agreement must refer explicitly to equal pay and to the elimination of any type of pay discrimination. With regard to get-out clauses- whereby companies in financial difficulties may diverge from the terms of a higher-level collective agreement - there must be control by the joint commissions overseeing higher-level agreements in order to ensure that the application of such clauses is justified. This type of clause should include procedures, references, periods, provisions on the competences of the joint commissions and mechanisms for returning to the pay system laid down in the collective agreement.

Finally, the trade unions suggest other general objectives, such as reinforcing the duty to bargain, revising the scope of bargaining (both functional and regional), reinforcing the articulation of the different levels of collective bargaining, and revising its content and scope.

Commentary

Since the labour market reforms of 1994 and 1997 (ES9706211F), the content of collective bargaining has expanded (ES0107152F). The novelty of these changes lies in the increasing formal importance given to clauses on employment, though their real degree of application and effectiveness remains to be seen. Some critical studies state that these clauses have little effect in transforming temporary employment into stable employment or creating new employment (see, for example, Observatorio de la negociación colectiva, R Escudero (coordinator), CC.OO, Madrid, 2002). However, the priority objective of the trade unions is to safeguard employment. The other clauses in this area are therefore demands by the employers that are accepted in exchange. These mainly deal with greater flexibility in working time. The annualisation and irregular distribution of working time and the introduction of 'availability clauses' have played a major role in collective agreements (ES0108157F).

The priority given to employment in bargaining has meant that pay has recently not been such a major concern for the trade unions as it was in the 1980s. This was also due to the lower inflation in the 1990s. However, the increase in inflation in 2002 may bring pay back to the forefront, and the current discussion on the future of wage revision clauses has paved the way for further debate. (Antonio Martín Artiles, QUIT-UAB Group)

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