Failure of Tripartite Coordination Committee talks

On 27 April 2010, the Tripartite Coordination Committee announced the failure of discussions about the competitiveness of Luxembourg’s economy, employment policies and public finances. The government reported that talks had broken down mainly over the controversial issue of index-linked salaries and the need to reform this system of automatic wage rises. Such a deadlock in tripartite talks has occurred only once before, leading then to the general strike in 1982.

Talks reach breaking point

The tripartite talks of March and April 2010 focused on three topics: employment, the competitiveness of the economy and public finances. Although the social partners welcomed the government’s initiatives on unemployment, they did not support proposals for the reform of index-linked salaries.

Recent reports dealing with Luxembourg’s economic issues (LU1002029I) have suggested that the automatic indexation of salaries is a stumbling block to the country’s competitiveness. In the light of recommendations made in these reports, the government took the opportunity of the scheduled tripartite talks to present two possible ways of reforming the current framework:

  • altering the ‘basket’ used to calculate the index by withdrawing petroleum products, tobacco and alcohol from it, and providing free public transportation in compensation;
  • exclusion from the scope of automatic indexation those who earn more than twice the minimum wage – as stipulated in the Labour Code (in French).

The Luxembourg Confederation of Independent Trade Unions (OGB-L) and the Luxembourg Christian Trade Union Confederation (LCGB) flatly rejected both possibilities, and OGB-L argued in a press release (in French, 92Kb PDF) that automatic indexation was the most fundamental part of Luxembourg’s social model.

Even the government coalition faced internal tensions. In an interview in Le Quotidien (in French), the Luxembourg Socialist Workers’ Party (LSAP) described indexation as a guarantee of social peace that should not be tampered with to stabilise the economy

However, in May 2010, Prime Minister Jean-Claude Juncker confirmed in a speech on the national situation (in French) that reform of the index would be discussed again during the tripartite talks planned for autumn 2010.

Union concerns over conditions for cross-border workers

Family and tax policies were also targeted by the government during the talks. Parental leave, introduced in 1999 (LU9903195F), will probably be restricted in 2012 after its effect on the labour market is assessed.

But trade unions interpreted certain measures as a form of discrimination against cross-border workers.

  • New provisions on family allowances limit their payment to parents and carers with children under the age of 18 years. The State financial aid for higher education Act (in French, 404Kb PDF) of 26 July 2010 compensates for this with a right to loans and scholarships for over-18s in education, but only for resident students.
  • It is proposed to halve the tax allowance for travel expenses.

The unions say that these measures will have most impact on cross-border workers’ incomes and, as a result, infringe the principle of ‘equal pay for equal work’.

As a result, OGB-L has launched a petition (in French) and lodged a complaint with the European Commission, and a decision is expected shortly on the admissibility of the complaint. Both OGB-L and LCGB, supported by the political party Déi Lenk, have called for a major protest demonstration in mid September.

Tripartite model under threat

Given the situation, the Union of Luxembourg Enterprises (UEL), the employers’ umbrella organisation, asked for a meeting with the Prime Minister in July to put forward a number of suggestions about how to modernise the current social dialogue system. UEL’s proposals are intended to deal with what it sees as the limits and failures of the Tripartite Coordination Committee which were highlighted by the failure of the spring 2010 talks.

UEL wants to see a reform of the way the committee works, and wants current labour legislation adjusted to take account of the current economic climate. As yet, the full content of their proposals has not been made public.

Finally, UEL warns that unless there is a real possibility of reform, it will have to question its participation in future tripartite meetings.

Guy Castegnaro and Ariane Claverie, Castegnaro Cabinet d'Avocats

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