Michelin takes the lead in negotiating working time flexibility

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Worker representatives and the management of Michelin in Spain have used collective bargaining to adapt prevailing legislation to their own circumstances, by creating a contractual formula half way between the full-time and the part-time employment contract. The result, agreed in June 1998, is a permanent contract that allows full-time workers to be switched to part-time work in line with production requirements. The agreement stresses the participation of worker representatives in this process. The agreement permitted 400 new permanent contracts to be signed by June 1999.

Michelin, the French-owned tyre manufacturer, has four plants in Spain, today employing around 9,000 people, of whom 7,500 are on permanent full-time contracts, 400 are on permanent full-time contracts that can be converted into part-time and 1,000 are on temporary contracts. The workforce has a long tradition of trade union membership and worker participation (80% participation in workforce elections and 60% attendance at meetings). CC.OO is the majority trade union, but other trade unions such as UGT, CSI-CSIF, CGT, USO, ESK-CUIS, ELA-STV and LAB also have representation. Michelin is a large, economically successful company, although its production is highly dependent on that of automobile companies. These characteristics arguably make it an ideal company for taking a lead in collective bargaining.

Contents of agreement

Negotiations over a new form of employment contract at Michelin began from a perception that the different types of temporary contract used widely in Spain do not meet the objectives of either workers' representatives (security and guaranteed employment) or companies (continuous adaptation of an experienced workforce to changes in production levels). After nine months of intense negotiations, worker representatives and management reached an agreement in June 1998 that seeks "a balance allowing the majority of the temporary staff to be given a permanent post (...) and establishes mechanisms for flexible adaptation to variations in production" on the basis of non-discrimination. The company agreed to convert a minimum number of temporary contracts into permanent ones (originally 80 in six months). In exchange, worker representatives have accepted a new form of flexibility in working hours: workers on temporary contracts converted into permanent ones may have their working hours and wages reduced by up to 30% if this is justified on grounds of production or organisation. By June 1999, a year after conclusion of the agreement, the number of new permanent contracts had risen to 400.

In principle, these new permanent workers are hired to work full time with the same work schedules, wages, bonuses, supplements, benefits and other rights as other workers. However, they must accept the possibility of being moved into part-time work with an irregular distribution of working hours and a proportional reduction in wages and holidays. The way in which this reduction and irregular distribution of working hours is to be applied is laid down in the agreement and carried out with the participation of the workers' representatives. The reduction in working hours is calculated on a monthly basis, cannot be accumulated and cannot be greater than 30% a month. It must take the form of complete working days (of eight hours each) and be linked to periods of rest whenever possible. It cannot be used in jobs for which overtime is performed and it must be distributed in rotation amongst the workers who have this type of contract.

Before applying the reduction, the company must give those affected and their representatives at least a fortnight's notice. Over this period, the company must justify the alleged causes for the reduction in working hours to the central workers' committee, and negotiate with it the possibility of adopting other measures to ensure that the reduction in production does not affect exclusively the workers on the new permanent contracts. However, if no agreement is reached, or if the measure is considered unjustified, the workers' representatives are entitled to submit the matter to mediation and arbitration. A joint monitoring commission has been set up and will meet every three months, or at 72 hours' notice if necessary.

In the new company collective agreement signed in April 1999, the parties have introduced a limit on the number of staff hired on these contracts (25% of the workforce). The company has also increased its commitment to convert temporary jobs into permanent ones (400 contracts in two years, provided that production remains at current levels). Moreover, it has been agreed to carry out a six-monthly review of employment trends in relation to the level of production.

Controversy

Although all the members of the workers' committee signed both the agreement on employment and the new collective agreement, this new form of flexible working hours has not been free from problems.

One of the trade unions represented at Michelin, CGT, challenged the agreement on employment and the clauses in the collective agreement on the new form of flexibility in the courts, because it feels that it is discriminatory. CGT maintains that the new flexibility formula threatens the right to equality by discriminating on the basis of employees' date of entry into the company, and that the new workers on fixed contracts do not have - nor will they have - the same rights as those recruited previously. In fact, during the negotiations on the specific agreement, CGT had presented an alternative proposal in which flexibility was accepted as a transitory situation: permanent contracts with variable working hours would be converted into permanent full-time contracts whenever a vacancy arose in the workforce. This would involve the creation of another permanent contract with variable working hours. However, in May 1999, the National Court issued a ruling favourable to the agreement. It found the new type of flexibility to be legal because it is voluntary, and it is not discriminatory because it improves the labour conditions of the workers who obtain a permanent contract. CGT intends to appeal against this ruling.

The legal basis used to create these new permanent posts at Michelin has been interpreted in different ways. Certain labour law experts argue that it is a new type of contract (which would make the Michelin agreement a pioneering one in creating new types of contract through collective bargaining - a legal possibility since the 1994 reforms). Others, however, consider that it merely represents a substantial modification of working conditions.

Commentary

The contents of the Michelin agreement reflect certain characteristic concerns of Spanish collective bargaining in the second half of the 1990s: job creation and improvements in exchange for a more flexible use of the workforce. However, this agreement has its special features. On the one hand, it allows the opportunity to reorganise working time and reduce working hours and wages. On the other hand, although the employer gains greater discretionary powers, the application of these powers is subject to control by the workers' representatives. In this respect, contrary to recent practice, it is a model agreement involving worker participation in controlling flexibility - an agreement that collective bargaining in the next few years should take as an example. Compared with the alternatives - such as temporary contracts or part-time contracts usually accompanied by insecure working conditions imposed by the employer - it is the best option. It must also be taken into account that one year after the agreement the possibility of reducing working hours has not yet been used, so at the moment, de facto, the workers on the new contracts have the same conditions as the rest of the workforce.

There are, however, some further background points. The Michelin agreement introduces a new segmentation into the workforce that may call solidarity into question - a principle that may challenge the trade unions. At difficult times of falling demand, only the workers on permanent contracts with variable working hours will suffer the effects. If there is no alternative, because Spanish workers have no choice but to pay part of the cost during times of economic hardship in companies, it would perhaps be more appropriate to seek formulae that involve an equal allocation amongst the entire workforce. The Michelin agreement leaves the door open to that but with little clarity. An alternative would be a pool of working hours (a formula already used in other companies, though in other circumstances) involving a reduction of less than 30% in working hours, since it would be shared by all the workers. (Clara Llorens Serrano, QUIT-UAB)

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