2001 Annual Review for Luxembourg

This record reviews 2001's main developments in industrial relations in Luxembourg.

Political developments

Luxembourg has been governed since August 1999 by a coalition government composed of the Social Christian Party (Chrëschtlech Sozial Vollekspartei, CSV) and the Democratic Party (Demokratesch Partei, DP). There were no elections in 2001.

Collective bargaining

Collective bargaining in Luxembourg is conducted mainly at company level, with a few sectoral agreements, and there was no change in this area in 2001. A total of approximately 250-300 collective agreements, mainly at company level, are currently in force in Luxembourg, with some 100 agreements renewed each year. One recent development is that the duration of collective agreements has been tending to increase to around two years, after a period during which the average duration was around one year.

Pay

Collective bargaining concentrated mostly on pay rises in 2001. Pay increased by between 1.5% and 2% in 2001. Luxembourg has an automatic pay indexation system, resulting in additional increases of 2.5% in 2001.

Working time

There was little change in collectively-agreed working time in 2001, with the exception of a few collective agreements (for example atSiemens) that provided for a reduction in the working week from 40 hours to 39 (the norm in Luxembourg agreements).

Job security

Very few collective agreements deal with the issue of job security (the unemployment rate in Luxembourg stands at around 3%). However, a new agreement signed in the hospital sector in 2001 provides employees with specific protection in the case of a merger, or in the event of an enterprise or service being taken over, or of collaboration between two or more members of the Luxembourg Hospitals Alliance (Entente des Hôpitaux Luxembourgeois, EHL) (LU0103161N). Under the deal, in the event of such developments, collective or individual dismissals of employees in post at the time of the change for reasons not related to misconduct are not permitted for a period of 10 years starting on that date, and all employees' contractual and collectively agreed rights are protected. In the event of a service being closed down, and its activities being taken over by an external firm, no workers may be dismissed in establishments employing more than 100 people .

Training and skills development

The new collective agreement in the hospital sector (see above under'Job security') also deals with another issue that is rarely addressed in Luxembourg collective bargaining: continuing vocational training. Under the agreement, competence for decision-making on the organisation of training at the level of each establishment will now lie with the company joint committee (comité mixte d'entreprise) or, if no such body exists, with the joint training committee (commission paritaire pour la formation). It was also decided to set up a foundation for continuing vocational training in the hospitals sector, bringing together EHL and the signatory trade unions. The foundation will be responsible for promoting and coordinating employees' continuing training in EHL member establishments.

Further, the 2001 collective agreement for the vehicle sales and maintenance sector gives each employee one hour off a month for continuing training. (along with eight hours' compassionate leave per year for dealing with unforeseeable events).

Pay inequalities

There were no developments during 2001 which directly addressed the issue of pay inequalities. However, more generally in the area of gender equality, for the first time in Luxembourg a collective agreement - at theBRAM retail company - introduced measures designed to combat sexual harassment (LU0105166N).

Legislative developments

A law dated 28 June 2001 that came into effect on 1 September 2001 transposed into Luxembourg lawEU Directive (97/80/EC) on the burden of proof in cases of discrimination based on sex (LU0109171N). The law:

• for the first time in Luxembourg defines indirect discrimination, stating that:'indirect discrimination shall exist where an apparently neutral provision, criterion or practice disadvantages a substantially higher proportion of the members of one sex unless that provision, criterion or practice is appropriate and necessary and can be justified by objective factors unrelated to sex';

• in terms of its scope, does not follow the Directive (a specific list of the legal situations to which is applies), but states more broadly that it:'applies to any proceedings in the framework of a civil or administrative procedure in the public or private sector relating to access to employment, pay, opportunities for promotion and vocational training, access to a self-employed profession, terms and conditions of employment, and occupational social security schemes'; and

• does not take up the opportunity provided by the Directive to lay down rules of evidence which are more favourable to plaintiffs in sex discrimination cases, and confines itself to the burden of proof principles laid down by the Directive, as follows:'when persons who consider themselves wronged because the principle of equal treatment has not been applied to them establish, before a court or other competent authority, facts from which it may be presumed that there has been direct or indirect discrimination, it shall be for the respondent to prove that there has been no breach of the principle of equal treatment.'

A law of 1 August 2001 introduced a few amendments to existing regulations protecting pregnant workers and new and and nursing mothers, improving their protection against dismissal for serious misconduct and abolishing the previous absolute ban on night working (LU0110108F).

In July , the government presented a bill regulating working time in the hotels and catering sector, following the failure of the social partners to reach an agreement on the issue. When the law is adopted, there will be a statutory 40-hour week in the sector, which may be varied if the 40-hour average is respected over a reference period (LU0108172N).

The organisation and role of the social partners

The issue of trade union representativeness was again topical in 2001. For a collective agreement to be valid, a 1965 law requires that it must be signed by one or more of the most representative trade unions at national level; it excludes sectoral unions, company unions, and enterprise- and plant-level employee representatives. The most representative trade unions at national level are deemed to be those that identify themselves as such through the size of their membership, their activities and their independence

As the terms of this law are far from precise, two rulings by the Council of State (Conseil d'Etat) - the supreme administrative court in Luxembourg until 1997 - in 1980 and 1988 determined that a trade union's nationally representative status does not derive ipso facto simply from being established in a particular sector; the union also has to provide evidence of substantial membership, and therefore a degree of influence in various sectors of economic life.

However, in the context of an appeal lodged by the Luxembourg Association of Bank and Insurance Employees (Association luxembourgeoise des employés de banques et d'assurances, ALEBA) against the Minister of Labour's blocking of a collective agreement that it had signed, the new administrative courts, the Administrative Tribunal (Tribunal administratif) and then the Administrative Court (Cour administrative) - in a ruling issued on 28 June 2001 - granted national representativeness to ALEBA, a trade union that was clearly only represented in the banking and insurance sectors.

In October 2001, in response to these decisions of the administrative courts to grant a sectoral trade union nationally representative status, the Minister of Labour presented a draft reform aimed at redefining the notion of nationally representative status, and allowing sectoral unions to negotiate collective agreements in certain circumstances (LU0111102F).

Following the legal decisions referred to above, the three representative trade unions in the banking sector - ALEBA, the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB) and the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschafts-Bond Lëtzebuerg, OGB-L) - set up a new collaborative structure, and put in a joint claim for a new collective agreement in banking and insurance. They sought a large pay increase and abolition of the system of paying salaries based on performance-related criteria (LU0110107F).

Also in 2001, a dispute broke out among member organisations of the General Confederation of Labour (Confédération générale du travail, CGT), an umbrella body for a number of unions. The history of this dispute goes back to 1955, when the Association of Luxembourg Drivers (Association des conducteurs d'automobile du grand-duché de Luxembourg, ACAL) concluded a cooperation agreement with the National Federation of Luxembourg Railway and Transport Workers and Civil Servants (Fédération nationale des cheminots, travailleurs du transport, fonctionnaires et employés du Luxembourg, FNCTTFEL), and affiliated to that organisation. ACAL and FNCTTFEL are members of CGT, along with OGB-L and the National Federation of Book Production Workers (Fédération nationale des travailleurs du livre, FNTL). In early 2001, an extraordinary conference of ACAL voted to terminate the cooperation agreement with FNCTTFEL, following internal disputes, and join the ranks of OGB-L. This later occurred.

Industrial action

No strike action was taken in 2001, although a general strike had been planned by the OGB-L union confederation, whose national committee had voted unanimously at a meeting on 21 November 2000 to call such a strike (LU0012154F). The action was planned in protest against government proposals to maintain high employee contribution rates to sickness insurance funds and not to implement an immediate increase in private sector pensions. However, on 10 September 2001, the president of OGB-L announced that the general strike planned for 9 October 2001 would not take place (LU0110101N). This decision followed a round-table meeting on pensions, at which most of the union's claims were met. As a result, private sector pensions were to rise by an average of 7% (LU0108175F).

National Action Plan (NAP) for employment

On 16 May 2001, the Minister of Labour and Employment presented Luxembourg's2001 National Action Plan (NAP) for employment - the first since 1988 - noting that it was'much less spectacular than the 1998 Plan'. The main focuses of the 2001 NAP were to make it easier for long-term unemployed people to find work, and to increase equal opportunities between men and women. The NAP was drawn up by the Luxembourg Standing Committee on Employment (Comité permanent pour l'emploi) and was approved by the Tripartite Coordination Committee (Comité de coordination tripartite) at a meeting on 11 April 2001 (LU0106168N).

Work in the various tripartite committees was conducted behind closed doors and was not publicised. As a result, it was not possible to identify the elements introduced by the individual social partner organisations, or to assess their degree of satisfaction with the final outcome. In general, however, the social partners felt that the final solution had been reached to'general satisfaction'.

Other labour market developments in 2001 included a parliamentary debate on illegal immigrants - people'without documents' ('sans papiers') - in March, in the course of which deputies voted on a motion calling on the government to regularise their situation. Following this, the government decided to give the people concerned two months in which to regularise their situation. The government opted for an exercise in'regularisation through work', granting work permits to those people meeting certain criteria (LU0112140F). Three employers' associations - the Federation of Craft Workers (Fédération des artisans), the Chamber of Agriculture (Chambre d'agriculture) andHoresca (representing hotels, catering and cafés) - were closely involved in the regularisation exercise, but it did not have the results anticipated. as the expectation that the Luxembourg labour market would easily absorb people without documentation turned out to be incorrect, particularly because of problems related to skills and language.

Company restructuring

The most prominent example of company restructuring during 2001 was in the iron and steel industry, where the outcome proved positive for employees. In February 2001, three iron and steel companies -Arbed (Luxembourg),Usinor (France) andAceralia (Spain) - announced their intention to merge (BE0104344F), and thereby establish the largest iron and steel enterprise in the world with 45 million tonnes of steel produced a year, a turnover of EUR 30 billion, and a workforce of 110,000 worldwide. After theEuropean Commission gave its agreement with certain conditions, the new giant group, known as Arcelor, was introduced to the international press in December 2001.

The trade unions followed developments in the merger process very closely. Various informal and tripartite meetings culminated in an'action day on steel' on 20 November 2001 organised by OGB-L, LCGB, SESM and the Neutral Union of Luxembourg Workers (Neutral Gewerkschaft Lëtzebuerg, NGL). The unions called for: iron and steel production sites in Luxembourg to be maintained; employees' status and pay to be preserved in the merged group; the Luxembourg state to continue playing its role in the future group; and the social dialogue and special tripartite structures in the Luxembourg iron and steel industry to be maintained. On 3 December 2001, the unions announced that a general sectoral strike would be held on 1 February 2002 if they were not satisfied with developments.

A tripartite meeting held on 9 January 2002 led to the matter being completely resolved, and as a result, the planned strike was cancelled (LU0201191F). It was agreed that tripartite meetings will be held quarterly after the establishment of Arcelor, while the government confirmed its intention to remain a stable shareholder in Arcelor in the long term. The current co-determination model will be retained for Arcelor iron and steel enterprises in Luxembourg, and also in companies where this is not required by law. Arbed SA will continue to be run by its own board of directors, on which representatives of the trade unions and the Luxembourg state will have seats.

An innovative feature of the deal is that, if one of the partners so wishes, the situation in the Arcelor group's non-iron and steel enterprises in Luxembourg (iePaul Wurth,Circuit Foil andIEE) may be placed on the agenda of meetings between the employers, the trade unions and the government. This broadening of the boundaries of tripartite dialogue was a trade union demand. However, these companies will not be administered by a system of co-determination.

The Prime Minister and the unions also support the view that Arcelor should cease to be a public limited-liability company, and rapidly acquire the status of a European Company, as provided for in the recently adopted European Company Statute (EU0110203N).

Employee participation

There were no significant developments in the area of employee participation in 2001. TheEU Directive (94/45/EC) on European Works Councils was not transposed in Luxembourg until 28 July 2000, making it the last EU Member State to do so (LU0101157F). The law has so far not been widely discussed since it was introduced.

New forms of work

The normal type of employment contract in Luxembourg is open-ended. Any other forms of contract are deemed to be'atypical' and there were no significant developments in this area in 2001.

Other relevant developments

A range of tripartite meetings held throughout the year had a good deal of success. At a meeting of the Tripartite Coordination Committee chaired by the Ministers of Social Security and Labour on 25 June 2001, the social partners finally managed to reach an agreement on a new partial disability pension, in addition to the existing full disability pension. It will be incumbent on employers in the first instance to offer internal redeployment to employees in receipt of the partial disability pension. In the event of non-compliance, the employer will be liable to pay a compensatory tax of 50% of the minimum wage for up to 24 months. (LU0107169F).

In September , the iron and steel industry tripartite committee agreed that blue- and white-collar workers at the Arbed company born in 1945, 1946 and 1947 may apply for early retirement on their 57th birthday. (LU0110102N).

In July, at a wide-ranging round-table meeting on the issue of private sector pensions, the government, the political parties and trade unions agreed, against the employers' wishes, on substantial increases in private sector pensions (see above under'Industrial action'). These increases were accompanied by family policy measures supporting women who have brought up children (LU0109171N).

Outlook

It is expected that 2002 will be a relatively calm year in terms of industrial relations and social policy events, as long as the economic situation does not become critical. The main issues dominating the debate during the year are likely to including finding a solution to problems linked to working time legislation and adapting a new law on collective agreements, incorporating a more appropriate definition of the notion of the national representativeness of trade unions (see above under'The organisation and role of the social partners'). Further, a national'observatory on industrial relations' is expected to be set up during the year.