Czech Republic: Survey points to rise in collective agreements on commitment to raise wages

According to the 2015 Information on Working Conditions survey, there has been a significant increase in the number of collective agreements in the Czech Republic containing commitments on overall wage increases and commitments to increase salary tariff. However, the number of agreements dealing with bonuses and benefits remained practically the same.

Background

The Working Conditions Information System (ISPP) was first conducted in 1993. Renamed the Information on Working Conditions (IPP) Survey in 2015, it monitors, on an annual basis, agreements between social partners within companies and, in selected years, sectoral collective agreements covering the following areas:

  • cooperation between the various parties (social partners), including the conditions under which trade unions operate;
  • employee remuneration, bonuses, benefits, social funds, catering, allowances for work clothes, accommodation;
  • working hours, holiday entitlement, paid time off;
  • employment and the professional development of employees;
  • occupational health and safety, and equal treatment.

The survey is conducted by human resource consulting company, TREXIMA, under the auspices of the Czech Ministry of Labour and Social Affairs (MPSV).

In 2015, the survey analysed selected data on salaries and working conditions from a total of 1,627 company collective agreements concluded by 26 different trade unions, representing a total of nearly 817,000 employees.

Of the total number of collective agreements, 1,288 contracts concerned the private sector, with the remaining 339 covering the public service and administration sector. The input data are collected electronically by means of a procurement programme or via the direct gathering of information from collective agreements by the respective trade unions. The survey is voluntary and the record of figures is organised by the trade unions between their member associations, especially by the Czech-Moravian Confederation of Trade Unions (ČMKOS).

The purpose of the survey is to provide the State and other institutions with an overview of trends in collective bargaining. In addition, it aims to give social partners information to help in bargaining at company and sectoral levels.

This article focuses on the most frequent commitments made in collective agreements. However, the information discussed here is restricted to the private sector since data extracted from collective agreements in the public services and administration sector is, due to the nature of remuneration in this sector, significantly limited and therefore difficult to compare with commitments made by the business community.

Wage rates, salaries and bonuses

In 2015, negotiations took place on monthly wage rates and hourly tariffs in, respectively, 52.5% and 40.2% of business sector company collective agreements.

The annual increase in tariff remuneration, in 2014, ranged from 0.9% to 2.4%. However, in 2015, there was a significant acceleration in the growth of tariff salaries reaching a level of 3.0% to 4.8%. This growth trend was recorded at almost all tariff levels; only at the very high levels, where employees receive the highest incomes, was a lower growth in wages recorded.

No fewer than 61.2% of the company collective agreements monitored include various forms of commitment on salary development within the company. Some 58.5% of the collective agreements include some form of commitment to increasing salaries, which represents an increase of 3.6 percentage points in such company collective agreements, compared with those in 2014. At the same time, 2.7% of contracts contain the commitment to at least maintain average wages. Commitments to salary developments are concluded in company collective agreements in several different forms. They can be seen, for example, as:

  • an increase in average nominal wages (23.3% of agreements);
  • an increase in wage tariffs (25.9% of agreements);
  • an increase in the total amount of wages (6.1% of agreements);
  • an increase in average real wages (1.5% of agreements);
  • maintaining real wages (12.9% of agreements).

A closer look at payroll commitments reveals that in 2015, company collective agreements that included the regulation of wage growth in the form of increasing the average nominal wage, committed to an overall increase of 2.6%. With respect to agreements in which the social partners regulate the development of wages by means of increasing wage tariffs, the average agreed wage increase was also 2.6%. In 2015, the growth in negotiated wage tariffs and average nominal wages was maintained at around the same level as in 2014, and there was an average agreed increase of 1.9% in those agreements in which wage development was negotiated through increasing the average real wage.

Another important part of company collective agreements is the salary bonus. Most take the form of extra remuneration for:

  • overtime work;
  • night work;
  • working on Saturdays and Sundays;
  • working on public holidays;
  • compensation for poor working conditions.

The number of contracts and the average agreed amount of extra remuneration in 2015 remained roughly the same as in 2014.

A commitment to provide extra remuneration for overtime work was included in 85% of company collective agreements. With respect to the private sector, the average agreed amount of extra remuneration for overtime work performed on a weekday was 26.2% of average earnings (average gross salary paid to the respective employee for the contractually prescribed period) and the average amount of extra pay for overtime work performed on Saturdays and Sundays consisted of 48% of average earnings.

A commitment to provide extra remuneration for night work was included in 82.3% of company collective agreements. The minimum amount of extra pay for night work, according to §116 of the Labour Code No. 262/2006 Coll.,consists of 10% of average earnings. In 2015, the average agreed amount of the night work supplement in 43.1% of collective agreements consisted of 11.4% of average earnings.

A commitment to provide extra remuneration for working on Saturdays and Sundays was included in 79.2% of company collective agreements. The average nationally agreed amount of the pay supplement in 71.6% of collective agreements consisted of 23.3% of average earnings – approximately the same value as in 2014. Nearly 76% of company collective agreements included a commitment to extra remuneration for working on public holidays; the average agreed amount of this supplement was 101.8% of average earnings.

In 2015, a commitment to provide extra remuneration for working in poor conditions was included in 60.8% of company collective agreements. In 2015, the average supplement in this case amounted to CZK 7.6 (30c as at 27 June 2016) per hour, agreed in 47.1% of collective agreements.

Benefits

In 2015, the most widespread benefit provided to employees in company collective agreements consisted of an employer contribution to company catering. Entitlement to this allowance in 2015 was included in 95.5% of company collective agreements; an increase of 1.3 percentage points in comparison with 2014.

A further important element of company collective agreements consists of providing contributions to employee supplementary pension schemes or additional pension savings. In 2015, this provision was included in 58.1% of company collective agreements; the average monthly employer contribution slightly increased compared with the previous year, by CZK 23 (84c) to a total of CZK 579 (€21.30).

The provision of contributions to life insurance schemes was included in 22.6% of company collective agreements in 2015, the same percentage of company collective agreements as in 2014. The average monthly contribution provided by the employer increased slightly by CZK 16 (60c) compared with 2014, amounting to CZK 564 (€21) per month.

Working hours

Commitments on the organisation of working time were included in 93.8% of company collective agreements in both 2014 and 2015, of which 65.3% of the agreements stipulated a uniform working time for the whole of the company and 28.5% of agreements stipulated different working times according to the company’s shift work regime.

In 76.1% of company collective agreements that included a uniform working time for the whole company, the working week consisted of 37.5 hours, while a working week of 40 hours was agreed in just 22.6% of company collective agreements.

As for weekly working hours in the context of shift work regimes, companies employing the single-shift model most often require their staff to work 40 hours per week (79.6% of agreements), those with a two-shift model require their staff to work 38.75 hours per week (65.5% of agreements), those with a three-shift model 37.5 hours per week (92.9% of agreements) and those with a continuous model 37.5 hours per week (80.7% of agreements).

Commitments relating to the flexible working time arrangement (where the start and end of a shift is chosen by the employee) are included in 26.1% of agreements and commitments relating to the unequal working time arrangement (the period for this arrangement is 52 weeks and the duration of the shift may not exceed 12 hours) in 41.5% of company collective agreements.

Holiday entitlement

The IPP survey also monitored holiday entitlement over and above the provisions of the Labour Code, which provides for a basic holiday entitlement of at least four weeks a year. Figures for 2014 and 2015 revealed that a greater amount of holiday entitlement than that set out in legislation was concluded in 85.5% and 85.3% of company collective agreements, respectively. The extension of holiday entitlement by one week was included in 75.5% of company collective agreements and only 1.6% of collective agreements extended holiday entitlement by two weeks.

Conclusion

Several changes were noticeable between 2014 and 2015, especially in the area of remuneration. Year-on-year, there was a significant increase in the number of collective agreements containing commitments on overall wage increases and commitments to increase salary tariffs. With respect to salary bonuses and benefits, it can be concluded that the number of agreements governing such supplements and their average amount agreed in 2015 remained practically the same as in 2014 (see table below). Moreover, no significant year-on-year changes were evident with respect to commitments on working hours and holidays contained in collective agreements.

More information on previous periods over which commitments set out in collective agreements were monitored to the same extent can be found in:

 

Commitments in collective agreements in 2014 and 2015

Commitments in collective agreements

2014 number of agreements (%)

2015 number of agreements (%)

Wage rates, salaries and bonuses

Remuneration by monthly wage rates

52.1

52.5

Remuneration by hourly wage tariffs

40.3

40.2

Forms of commitments to increasing salaries

54.9

58.5

Increase of average nominal wage

23.3

23.3

Increase of wage tariffs

20.2

25.9

Increase of total amount of wages

5.7

6.1

Increase of average real wage

1.6

1.5

Maintaining of real wage

13.6

12.9

Maintaining of average wage

2.8

2.7

Extra remuneration for overtime work

83.5

85.0

Extra remuneration for nigh work

81.1

82.3

Extra remuneration for working on Saturdays and Sundays

77.6

79.2

Extra remuneration for working on public holidays

74.9

75.9

Compensation for poor working conditions

62.1

60.8

Benefits

Employer contribution to company catering

94.2

95.5

Employer contribution to employee supplementary pension schemes

58.0

58.1

Employer contribution to life insurance schemes

22.6

22.6

Working hours

Uniform working time for the whole company

64.0

65.3

Different working times according to the shift work regime

29.7

28.5

Flexible working time arrangement

25.0

26.1

Holiday entitlement

Extension of holiday entitlement by one week

76.3

75.5

Extension of holiday entitlement by two weeks

1.7

1.6

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