Negotiations resume on renewal of metalworking agreement

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Following two years of downward economic trends in the Italian metalworking industry, in February 2005 negotiations began between the social partners on renewal of the pay part of the sectoral collective agreement, which had expired at the end of 2004. After this first meeting, the metalworking social partners met a further five times between February and July, but without reaching agreement. The three main sectoral trade unions did not modify their initial demand for a EUR 130 monthly pay increase, while the Federmeccanica employers’ association stuck to its offer of an EUR 60 rise. In order to move the negotiations forward, both sides made proposals on matters besides pay, but without concrete results. After the summer break, the difficult negotiations resumed in early September, and the unions announced an eight-hour strike to be held on 29 September.

The Italian metalworking sector - excluding crafts firms - consists of 59,894 firms and employs 1,624,661 workers (figures from Istituto nazionale di statistica, Istat). Employment in the sector represents around 9% of the entire Italian working population and 40% of the labour force in the manufacturing sector (Federmeccanica calculations, based on Istat data). Between 1991 and 2001, the number of firms operating in the metalworking sector increased considerably ( 11.9%), while the number of workers remained almost constant (-0.8%). By contrast, between 2001 and 2004 growth in the number of firms practically halted ( 0.5%). However, negative trends in the sector are more evident if one looks at indicators relative to production. Between 2000 and 2004, average levels of output fell by 10 percentage points, and productivity by 6 percentage points, while the cost of labour per unit of output rose by around 20%. In the same period, moreover, the hours of recourse to the Wages Guarantee Fund (to support workers temporarily laid off because of their employers' financial problems) increased ( 10.5% - according to the Fourth Report on Italian Metalworking Industry). This recessive tendency is confirmed by data collected by the Employers’ Association of the Italian Metal-Mechanical Industry (Federazione sindacale dell’industria metalmeccanica italiana, Federmeccanica) in its quarterly economic analysis for the first quarter of 2005: firms declaring that they had increased production represented 22% of the sample, while 30% reported downturns in production. As regards employment, 20% of the firms interviewed predicted that the would lay off workers during the first six months of 2005, while only 10% foresaw increases in their workforces during the same period.

Against this economic background, in February 2005 negotiations began between the social partners on renewal of the pay part of the industry-wide collective agreement, which had expired at the end of 2004. According to the rules laid down by the national tripartite agreement of 23 July 1993 (IT9709212F), negotiations on wage increases in all sectors should take account of predicted inflation for the next two years, since this is the reference point for negotiations on wage increases under the incomes policy framework introduced by the July 1993 agreement, as well as gaps between predicted and actual inflation in the previous period, so as to 'recover' the erosion of actual wages.

Conditions imposed by the social partners

Previous renewals of the national agreement for the metalworking sector have caused rifts among the main sectoral trade unions. In the summer of 2001, the Italian Federation of Metalworkers (Federazione impiegati operai metallurgici, Fiom), affiliated to the General Confederation of Italian Workers (Confederazione generale italiana del lavoro, Cgil), refused to sign the deal for renewal of the pay part of the national-level agreement (IT0107193F). Again, in 2003, the Italian Metal-Mechanical Federation (Federazione italiana metalmeccanici, Fim), affiliated to the Italian Confederation of Workers’ Unions (Confederazione italiana sindacati lavoratori, Cisl), and the Union of Italian Metal-Mechanical Workers (Unione italiana lavoratori metalmeccanici, Uilm), affiliated to the Union of Italian Workers (Unione italiana del lavoro, Uil), signed an agreement with Federmeccanica on renewal of the industry-wide agreement for the period 2003-6, but Fiom-Cgil did not (IT0305204F). Despite these previous divisions, in February 2005 the three main sectoral trade unions presented a single platform for renewal of the two-year pay agreement (2005-6) for metalworkers, which was subsequently approved by the majority of workers in a referendum (IT0412205F). The union’s bargaining platform has three parts.

  • Pay demands. The three unions decided to ask for wage increases which would 'recover' at least part of the purchasing power lost in the past two years, and protect it for the next two-year period. The pay demand is divided into two parts. The first is a fixed increase (of EUR 105 a month), which covers predicted inflation for the next two years plus the difference between real and predicted inflation over the past two years. This should be paid to all employees in the sector. The second part of the demanded increase (EUR 25 a month) is meant to distribute at national level the benefits deriving from (average) productivity gains in the sector. This element would be paid by the end of 2005 to workers not covered by company-level bargaining, and then to all other workers. This part of the increase would be 'absorbed' into second-level bargaining from the next four-year agreement period onwards.
  • Rules on bargaining. Fim-Cisl, Fiom-Cgil and Uilm-Uil agreed on procedures to regulate relations among the three trade unions, and between them and workers, while negotiations are in progress. At provincial level, the three unions would draw up a list - seeking to achieve the maximum coverage possible - of firms, with the relevant workforce size, at which assemblies would be held so that workers could be informed about the bargaining platform, the progress of negotiations, and the possible outcomes, and where the final workforce referendum would be organised. This list could be used to calculate the number of workers involved in the consultation for approval of the bargaining platform, and consequently the quorum required for the referendum to be valid. The trade unions also set up a national assembly consisting of 500 delegates. This has consultative functions both during negotiations and if agreement is reached. Any deal must be put to a referendum among all the workers employed at the firms previously identified. This referendum may be requested by all three trade unions or by only one. In the former case, approval is by simply majority (ie for one or other option), although a quorum of 50% plus one of those entitled to vote is required. If the referendum is instead called by only one trade union, its result will be binding provided that one or other option is selected by at least 50% plus one of the participants in the referendum that have approved the platform of demands.
  • Policy document. In the third part of the platform, the trade unions undertook to begin discussions on issues deemed crucial for the sector’s economic recovery: industrial policy; regulation through collective bargaining of the new types of contract introduced by the 2003 law reforming the labour market (IT0307204F); and change to the personnel classification.

The main employers’ association in the metalworking sector, Federmeccanica, offered an average monthly wage increase of EUR 59.58. According to Federmeccanica, the criteria used to calculate this sum complies with the rules established by the national agreement of 23 July 1993. On the basis of that agreement, wage negotiations in respect of the two-year period subsequent to the renewal of an industry-wide agreement should adjust wages to the real inflation rate. The increase agreed should therefore take account of the difference between predicted and real inflation in the previous two-year period, as well as the predicted inflation for the next two years.

The considerable gap between the unions’ wage demand and the offer made by Federmeccanica induced both sides, during the first six months of negotiations, to seek agreement on issues other than those strictly related to pay.

Progress of the negotiations

Federmeccanica claimed that the trade unions’ pay demand was in breach of the rules laid down by the agreement of July 1993. For talks to be held on wage increases greater than EUR 60, Federmeccanica proposed that new rules be negotiated which enabled firms to manage working time more flexibly. In particular, the employers’ association requested that the 64 annual hours of flexible work additional to the weekly hours schedule - introduced by the national sectoral agreement signed in 1999 (IT9907249F) and which firms can use to meet production peaks, after prior agreement with the unitary workplace union structures (Rsus) - should be managed unilaterally by the firm. The employers also asked that overtime work on Saturdays, which is now possible only on agreement with the unions, be allowed on the basis of individual agreements with workers. According to Federmeccanica, the need to establish national rules on the use of working hours in individual firms derives from the fact that 'company-level negotiations are generally too time-consuming and give rise to additional costs. These two effects hamper attempts by firms to increase their competitiveness on international markets'.

Following meetings of the central committees of the three main sectoral trade unions, their executives, and the 500-delegate national assembly, Fim-Cisl, Fiom-Cgil and Uilm-Uil rejected Federmeccanica’s proposal to exchange a wage increase for greater flexibility in working time management. They announced that they would protest against the employers’ behaviour by holding a series of strikes at both regional and national level. During talks held in June and July, the unions also rejected a proposal that discussions should be extended to include additional issues raised by Fim-Cisl. The latter union proposed that a single negotiating agenda should be drawn up which included not only the pay increase but also the following items: reform of the job classification system; introduction of the new types of contract envisaged by Law 30 (implemented by legislative decree 276/03) reforming the labour market; regulation of the new types of contract which will replace apprenticeships; and improvement of training provision for workers in the sector. These issues are currently being discussed by special committees and observatories jointly created by the social partners in accordance with the industry-wide agreement signed in 2003 (IT0305204F). These bodies are working in parallel with negotiations for renewal of the pay part of the industry-wide agreement. Given the importance of the issues, and therefore in expectation that negotiations will be very lengthy, Fim-Cisl has proposed that renewal of the 'normative' (non-pay) part of the national-level agreement (which expires in 2006) should be brought forward, shortening the duration of the industry-wide agreement from four to three years, and eliminating the two-yearly renewal of its pay part. Moreover, so that workers do not remain a whole year without wage increases, Fim-Cisl also proposed that a 'wage advance' consistent with the demands in the unions’ platform should be rapidly negotiated.

Before the summer break, on 28 July the national secretaries of Fim-Cisl, Fiom-Cgil and Uilm-Uil issued a joint statement which stressed the 'grave crisis of the negotiations on renewal of the national agreement'. The document accused the employers not only of refusing to consider the union's single platform but also of stalling the talks by proposing 'impracticable trade-offs and a restrictive interpretation of the room for possible wage increases'. The unions also indicated three specific areas on which negotiations should resume in September:

  • wage increases to protect the purchasing power of workers and enable them to share at national level the benefits deriving from (average) productivity gains in the sector, as set out in the platform;
  • regulation of the labour market in order to counter the growing risks of job precariousness and to increase access to training; and
  • resumption of the reform of the personnel classification, with completion of the special committee’s work and adoption of a joint position.

Finally, the unions stressed that industrial action must continue in order to break the deadlock in the negotiations. They confirmed the previously announced strike over overtime and work flexibility, and called on all Rsus to intensify their efforts to ensure its success.

Accordingly, on 5 September the three trade unions announced an eight-hour general strike for 29 September: 'abstention from work'- the unions statement declared - 'will be part of a national day of mobilisation culminating in a series of local and regional demonstrations organised in order to give greater visibility to the struggle on renewal of the agreement'.

Reactions

Since the negotiations began, Federmeccanica has insisted that the unions’ pay demand breaches the rules established by the agreement of 23 July 1993 and does not take account of the crisis afflicting the metalworking sector in recent years. Federmeccanica has therefore made negotiation of wage increases above its offer of EUR 60 per month conditional upon inclusion on the agenda of issues that Federmeccanica believes will improve the competitiveness of metalworking firms. 'Our request for greater working time flexibility is tied to the market and to the need for competitiveness', said Massimo Calearo, president of Federmeccanica: 'This is the central issue to address: the market, not rituals. If the competitiveness needs of firms are not met, the negotiations may conclude without an agreement, with the consequence that firms will act unilaterally in deciding the wage increases to pay their workers.'

Fim-Cisl, Fiom-Cgil and Uilm-Uil instead argue that the industry-wide agreement must protect the purchasing power of workers, and have expressed satisfaction with their agreement on bargaining procedures and worker consultation, since it allows the unions to maintain unity during the difficult negotiations. According to Giorgio Caprioli, general secretary of Fim-Cisl, if the negotiations lead to different positions being taken up by the unions, 'the rules set out in the platform will avert the risk of separate agreement. If positions differ, after a consultative vote by the 500-delegate assembly, a referendum may be held. If the result of the referendum is a vote in favour of the agreement proposal, all the unions will be obliged to sign it. I can therefore rule out separate agreements like those of the past when freely agreed-to rules did not apply. The rules are now in place, and they will be fully respected'. According to Gianni Rinaldini, general secretary of Fiom-Cgil, Federmeccanica’s demand to allow employers unilaterally to manage the working time flexibility envisaged by the national agreement 'is an obvious attempt to undermine the role of the Rsus and to deprive them of the core of bargaining power that they still possess. It is a proposal that challenges the meaning itself of collective bargaining. In fact, one fails to understand what could possibly be negotiated at company level'. For Antonio Regazzi, general secretary of Uilm-Uil, the crisis of the metalworking sector cannot be solved 'by changing the working hours system, because work schedules in the metalworking industry are already flexible, even though they could be improved in some cases. After six months of negotiations we have not received any response except the unsatisfactory proposal of an EUR 60 wage increase. We must therefore start a new phase of negotiations based on new criteria.'

Commentary

Renewal of the pay part of the industry-wide agreement for the metalworking sector has raised a series of issues whose solution may have a major impact on industrial relations in Italy, beyond these specific negotiations.

As regards inter-union relations, the procedures established by Fim-Cisl, Fiom-Cgil and Uilm-Uil for negotiation on this particular agreement renewal introduce consultation and review mechanisms that apparently strengthen the united position of the unions. They diminish the risk that one of the unions may defect and thus reduce the scope for a separate agreement. At the same time, however, the consultation and review mechanisms introduced make it more difficult to gain approval for possible changes in the initial demands advanced in the joint platform, and this consequently increases the rigidity of the unions’ bargaining position. If negotiations are protracted, and if the employers are equally inflexible, a deadlock may arise that prevents renewal of the agreement.

As regards industrial relations, both sides to the negotiations on the agreement renewal have sought - albeit not always in a united manner - to alter the bargaining structure established by the agreement of 23 July 1993. Federmeccanica’s request to manage working time flexibility unilaterally, so that firms can respond rapidly to changes in increasingly volatile markets, reflects the guidelines laid down in July 2005 by the major Italian employers’ association , Confindustria, for reform of the bargaining structure (IT0508206F). The measures proposed by Confindustria address specific issues such as union action and workplace representation, and exercise of the right to strike. The aim is to establish an industrial relations system that assists rather than obstructs firms in their search for instruments - for instance greater organisational flexibility - which will enhance their competitiveness. On the trade union side, their proposed solution of distributing, when the economic part of the national sectoral agreement is renewed, an increase relating to (average) productivity in the sector seems an innovative remedy for an increasingly obvious shortcoming in Italian industrial relations: namely the insufficient diffusion of company-level bargaining, which at present covers less than 40% of all workers. Similarly, the proposal by Fim-Cisl - although it is not yet fully endorsed by Fiom-Cgil and Uilm-Uil - to alter the duration of the industry-wide agreement (from four years to three), eliminating the renewal of its two-years economic part and bringing forward negotiations on both wage increases and other aspects of working conditions, reflects issues now being discussed by the main trade union confederations with a view to reaching a joint position on reform of the bargaining system (IT0412306F and IT0508307F).

This coincidence of timing makes reciprocal influence among the various levels of debate possible. The outcome of the negotiations on the metalworking agreement may influence the discussion on the bargaining structure now ongoing among the trade union confederations and between the social partners. Likewise, sudden changes in the inter-confederation debate may orient negotiations on renewal of the metalworkers’ agreement towards one result rather than another. Whatever the outcome, the metalworking agreement may therefore once again act as the 'pace-setter' for other sectors in the Italian industrial relations system. (Diego Coletto, Fondazione Regionale Pietro Seveso)

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