Employment features increasingly in company-level collective agreements

Download article in original language : ES9809280FES.DOC

There has been a trend over 1997-8 in Spain for the conversion of temporary into secure employment in large companies with a trade union presence, according to recent figures. At the same time, the access of new employees to the improvements in terms and conditions laid down in collective agreements is being hampered or restricted.

In recent years, clauses on employment have become increasingly important in collective bargaining in large companies in Spain such as La Caixa (ES9712138N) Repsol (see below), Mercedes Benz (ES9711232N), Stockauto (ES9703107N), Roca Radiadores, Airtel, Iveco-Pegaso and Insalud. The distinctive feature of these agreements is that they convert temporary contracts into permanent contracts, following the line laid down in the intersectoral agreement on employment security signed by trade unions and employers in April 1997 (ES9706211F). According to recently published figures, clauses on employment feature in only 7% of agreements but affect 18% of the workers subject to company-level collective agreements ("Memoria sobre la situación socioeconómica y laboral", Consejo Económico y Social, Madrid (1998)). There are also clauses on the conversion of temporary contracts into "permanent-discontinuous" contracts to fill vacancies in the workforce or when temporary contracts have reached their expiry date. This trend represents attempts to improve employment.

There has, however, been a parallel process consisting of the negotiation of early retirement, phased retirement and voluntary redundancy - for example, in the case of Telefónica (ES9806266N) and Fecsa, where early retirement at the age of 52 was negotiated - in exchange for recruiting young people on permanent contracts, which is sometimes justified in terms of "rejuvenating the workforce".

This process seems to stimulate the proliferation of "special clauses" (ES9711231F) on employment, which now cover 71% of the workers subject to company agreements (as, for example, at the BBK savings bank - ES9710229N). Nevertheless, these clauses are of very diverse types. There are few clauses on net creation of employment: they affect only 4.1% of workers at company level. Clauses on conversion of contracts at company level, however, affect 11% of workers and those on maintaining employment 17%. Other special clauses linked to employment, such as those on functional mobility and geographical mobility, are even more widespread, affecting 26% and 25% of workers subject to company agreements respectively.

Repsol agreement

An agreement that reflects these trends is the first framework agreement signed in the Repsol group - a major public oil and gas concern - in summer 1997. The sectoral trade unions FITECA-CC.OO and FIA-UGT signed an agreement in which mandatory early retirement for 390 workers between the ages of 58 and 60 was offered in exchange for 250 new permanent contracts. Also, 100 casual work contracts were converted into permanent contracts, although on condition of geographical mobility to relocate them in different companies within the Repsol group. Furthermore, the company agreed to limit the use of subcontracting through temporary employment agencies and to use less overtime to fill vacancies.

Although the unions and the government are in favour of promoting job creation and employment security, the strategy of Repsol is aimed at reducing and rejuvenating the workforce. This is to be achieved by including social benefits, such as incentives for early retirement, in the company agreement. Clauses of this type are also found in 64% of collective agreements at company level. Indeed, for the employers the policy of early retirement is aimed at reducing the bonuses and social benefits that are paid to the longer-serving workers - that is, as a way of reducing labour costs.

Pay policy: a dual scale

The "dual pay scale", whereby new entrants are paid less than existing workers (ES9705209F), is associated with the policy of replacing longer-serving workers with younger ones. No precise statistical data are available on this aspect but it is believed that under such schemes the wages of the young people recruited as replacements, or those whose contracts are converted into permanent ones, may be 20%-25% lower than those of the workers with longer service. In some cases, there may be a wage freeze for periods of two to five years, according to the situation of the company.

Nevertheless, it does not seem that this tendency to introduce dual pay scales will be consolidated in the medium and long term because it is a significant source of labour conflict (ES9809181F).

Other forms of pay discrimination against new workers or permanent part-time workers are found in the conditions for eligibility to certain social benefits. For example, the agreement at the Repsol group restricts access to the company pension fund for new recruits. Another case is that of Pryca, which has taken out private life insurance and permanent disability policies of a lesser amount for permanent part-time employees. However, this discrimination is another source of conflict. A recent Supreme Court ruling found that Pryca was discriminating against part-time workers. This ruling seems to be important since it establishes the principle of equality in the application of the agreement for all workers.

Reinforcement of collective rights?

An apparent anomaly is found in the trend towards reinforcing the institutionalised presence of trade unions in companies. Thus, clauses on collective rights are included in 64% of company agreements, though in many cases these clauses do no more than repeat what is already regulated in the legal framework (the Workers' Statute and the Trade Union Freedom Act).

Trade unions or the workers' representatives are also becoming more involved in areas such as vocational training and employee health. For example, in the Repsol agreement the union strategy consisted of ensuring their own control and monitoring of risk prevention for the workers of subcontracted companies, thus reducing pressures to destroy or decentralise permanent employment. This union strategy is found across the whole chemicals sector and in the agreements of companies such as Solvay, another of the large firms in the sector.

Another type of clause that reinforces the role of the unions or workers' representatives in companies concerns the control, reduction and elimination of overtime. Clauses of this type are found in 40% of collective agreements.

This spread of "special clauses" is associated with the process of decentralisation of collective bargaining and the tendency to reinforce the bargaining freedom of the social partners that began to take root after the labour market reforms of 1994 and 1997. However, this could also be seen as a move to decentralise labour relations and trade union activity towards the company level, which is precisely the aim of the employers' human resource policies.


More permanent contracts are now being offered, the quality of employment is improving and longer-serving, low-skilled workers are being replaced by better qualified younger workers. This is especially noticeable in large companies. However, at the same time it is becoming more difficult to earn certain bonuses, labour rights are slowly being eroded and the social benefits laid down in collective agreements are often being lost.

Meanwhile there is an increasing trend to include clauses on collective rights, consultation, control of overtime, trade union guarantees and the involvement of trade unions in continuing training and health and safety. That is, trade unions or workers' representatives are achieving a greater degree of involvement in large companies, which is supported by labour legislation and by the tendency to reinforce the bargaining freedom of the social partners. In short, labour relations seem to be moving towards the company level and "traditional trade union activity is at the crossroads" (the title of a book that examines the changes in the content of collective bargaining and the tendency to introduce new clauses in agreements - "El sindicalismo en la encrucijada", Véase Falguera and López Bulla, Barcelona, Columna CONC (1997).) (Martín Artiles, QUIT-UAB)

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Lisa kommentaar