New round of metalworking pay bargaining opens

On 17 September 1997, the social partners officially exchanged their lists of issues for this year's round of collective wage bargaining for industrial enterprises in Austria's metalworking sector. Protracted negotiations are expected.

The opening shots in the autumn round of wage bargaining for industrial enterprises in metalworking were fired in July 1997. Austria's "lead" agreements every year are for about 162,000 waged and 92,000 salaried employees in 1,600 industrial enterprises in the metalworking sector. Also included are about 47,000 salaried employees in six other branches of industry: chemicals, paper making, glass, paper and cardboard processing, food and tobacco, stone and ceramics. Furthermore, there are about 100,000 employees in trades and crafts enterprises in the metalworking sector with a separate collective agreement. The wage round brings together close to 100 negotiators and covers in sum about 400,000 employees, this being 13% of all employees in Austria. The social partners usually agree to increase both minimum wages and actual wages. Minimum wages are set for all skill grades and all seniority levels. This year, negotiations were formally opened on 17 September with an exchange of basic positions, and are due to start in earnest on 7 October

This years' issues

The Metals Mining and Energy Trade Union (Gewerkschaft Metall-Bergbau-Energie, GMBE) has put five issues on the table:

  • an increase in minimum wages;
  • an increase in actual wages;
  • an equivalent increase in all premia;
  • an equivalent increase in apprentices' remuneration; and
  • further harmonisation of contracts for waged employees with those for salaried employees.

As a sixth point, GMBE wants the new collective agreement to come into force on 1 November 1997 for industrial enterprises and 1 January 1998 for trades and crafts enterprises.

The Private Sector Salaried Employees' Trade Union (Gewerkschaft der Privatangestellten, GPA) raises eight points for its so-called "global round" of negotiations on wages in industry:

  • an increase in minimum salaries, especially for the lower grades;
  • an increase in actual salaries, especially for those on lower incomes;
  • an increase in apprentices' remuneration
  • regulation of trainees' vacation-time remuneration;
  • increases, improvements and clarifications regarding allowances for expenses incurred, premia etc;
  • continuation of the stalled negotiations on working time flexibilisation;
  • modernisation of skill grade classifications; and
  • facilitation of mobility.

Here too, the date at which the new agreement is meant to come into in force is 1 November 1997. Neither the GMBE nor the GPA have put any concrete figures on their wage demands. The general aim is, however, to achieve an increase in salaries and wages in real terms. Inflation is forecast to be about 1.5% in 1998.

The employers wish to focus on reducing indirect wage costs. Public statements appear to indicate that a strong faction within the ranks of the employers would like to hold real wages steady.

The unresolved issue of working time flexibilisation in the metalworking sector (AT9704110N) is mentioned only in the GPA's list of issues. The GMBE's position seems to be that the point was negotiated and agreed in spring 1997, and that the group of employers which opposed a settlement on this issue should be brought in line by the majority. A group of, for the most part, smaller employers have been blocking the proposed deal as offering too little in the way of cost reduction. The trade union has repeatedly issued statements putting savings from the proposed working time model at 1.5% of current costs of production. This figure is not being disputed by employers.

The favourable profit statements issued by a number of enterprises and the need to maintain levels of living standards are cited for a need to raise both minimum and actual wages. Employer organisations seem likely to emphasise competitiveness. Economists have been allowing some room for wage raises, but tend to emphasise the difference between enterprises profiting from export growth and those suffering from the sluggish internal market. They also tend to come down in favour of a tight rein on costs of whatever kind.

Wage agreements of recent years

The increases agreed for minimum as well as actual wages are only a rough guide to how entitlements and incomes will change in the next 12 months. Since employees move within the system of skill grades, or leave employment and enter it, their average minimum wage entitlement does not move in perfect accordance with the collective agreement. The same is true of the actual wage. Premia and bonuses also affect average earnings. The table below shows for the metalworking sector and the year most affected by each agreement: the percentage change in minimum wages agreed to and the resultant movement of minimum wage entitlements on average; the percentage increase in actual wages agreed to and their resultant average increase; the increase in average earnings; and, since all these increases are nominal, the consumer prices index (CPI) for comparison. The two "Agreed" columns refer to periods from 1 November of the previous year to 31 October of the given year; the three "Average" columns refer to late September of the previous to late September of the given year; and the CPI column to the calendar year.

Collective agreement Average earnings (%) Consumer prices index (%)
Minimum wages (%) Actual wages (%)
Agreed Average Agreed Average
1993 5.2 5.6 3.9 5.3 5.0 3.6
1994 3.8 3.4 2.8 2.1 2.3 3.0
1995 3.8 3.5 3.5 3.6 3.6 2.2
1996 3.8 3.8 3.5 4.8 4.4 1.9
1997 2.6 n.a. 2.0 n.a. n.a. 1.4

The agreements covering 1993, 1995 and 1996 also included one-off payments of ATS 2,000, ATS 2,000, and ATS 2,500, respectively. These are not reflected in any of the columns.

As can be seen, minimum wages, in percentage terms, have consistently been raised faster than actual wages in an explicit effort to narrow income differentials. Average minimum wage entitlements and average wages do not reliably rise faster than agreed increases. The same is true of average earnings. Agreed provisions and averages have usually, but not always, kept abreast of inflation.

Sectoral wage differentials

The emphasis during the early 1990s on raising the very lowest minimum wages remains an issue, although it has lost some of the attention it formerly received. It is tightly bound up with wage differences between industries. If the lowest minimum wage rates agreed upon in the best-paying branch - mineral oils - and the lowest-paying branch - shoemaking - of industrial manufacturing are compared, mineral oils exceeded shoemaking by 71.2% at the end of 1992, but the difference has now narrowed to 44.6%. Metalworking industrial manufacturing minimum wages exceeded those of shoemaking by 37.1% at the end of 1992 but by only 29.8% now, and were in turn exceeded by mineral oils by 24.9% then but only 11.3% now. Clearly wage differentials between sectors have narrowed under the impact of collective bargaining in industry. It is expected that all trade unions will continue to press for a further narrowing.

Commentary

Future prospects, as in the past, depend substantially on rising productivity. However, Karl Pichelmann, a labour market expert at the Institute for Advanced Studies (Institut für Höhere Studien, IHS) in Vienna, earlier this year was quoted in the press as saying that: "in the 1980s the general tendency was to transfer productivity advances in full to wages. In the 1990s this only half-happened. In the next five years wages will only be able to appropriate one-third of the gains from rising productivity."

If this prediction holds true, a moderate real increase in wages should be expected. What remains in doubt at this point is the ability of the negotiators not only to agree within three weeks after 7 October, but also to maintain consensus within each camp. This appears less than ever to be guaranteed. If they do not succeed, the whole ability of the social partners to make agreements at a national level will be thrown in doubt again. (August Gächter, IHS)

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