1998 Annual Review for Luxembourg

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This record reviews 1998's main developments in industrial relations in Luxembourg

Introduction

Luxembourg experienced a good year in economic terms. According to estimates from the STATEC statistical office, GDP grew by some 5.5% in 1998, while the consumer prices index rose by around 1%, and unemployment averaged 3.1% over the year. The state budget for 1999 will register a small surplus, based on a projected increase in GDP of 4.2%, while the public debt is forecast to account for 4.6% of GDP. Employment rose by some 4.5% in 1998, with a greater increase among cross-border commuters than among Luxembourg residents. At the end of 1997, the population stood at 418,300, of whom 142,800 were foreigners, while paid employment stood at 224,000, including 63,200 cross-border workers.

A coalition government of the Christian Social People's Party (Chrëchtlech Sozial Vollekspartei, CSV), and the Luxembourg Socialist Workers' Party (Lëtzebuergesch Sozialistesch Arbechterpartei, LSAP) was in office in 1998. The next elections are due in June 1999.

Key trends in collective bargaining and industrial action

The social partners had agreed to observe wage moderation and by and large it appears that this undertaking was met in 1998

There was no increase in the statutory national minimum wage in 1998 and no automatic indexation-related increase in all pay rates - the most recent such increases had been a 3.3% minimum wage rise from January 1997 and a 2.5% general index-linked rise from February 1997. However, the minimum wage was subsequently raised by 1.3% in January 1999, and automatic indexation could lead to a general 2.5% pay rise during the early months of 1999.

Notable collective bargaining developments during the year included: the conclusion of the first collective agreements for temporary agency workers and the permanent direct staff of temporary work agencies (LU9806167N); and a collective agreement for white-collar workers in the the trend-setting iron and steel industry (which includes a pay increase of 1.85% over two years) (LU9802144N).

The National Conciliation Office (Office National de Conciliation), which handles industrial disputes, enjoyed a fairly quiet year, although 1998 was not without conflict. Notably, the dispute over civil service pensions resulted in industrial action, including a one-day general strike in the public sector (LU9808173F) and a two-day stoppage on the railways (LU9802145N).

Industrial relations, employment creation and work organisation

The year was marked by a full agenda of reform in a number of areas. This contrasted with 1997, when Luxembourg's tenure of the EU Presidency in the second half of the year slowed down the tempo of political life. Employment, and the follow-up to the EU Employment Guidelines, was among the high-profile issues in 1998. However, it should be noted that this topic is perhaps not perceived as being as urgent in the Grand-Duchy as in many other countries, Luxembourg being one of the few nations to have created new jobs at an annual rate of 3%-5% over the past 10 years or so.

In January, the government decided that Luxembourg's National Action Plan (NAP) for employment in response to the Employment Guidelines should be examined by a tripartite forum, including representatives of all the social partners, from February onwards (LU9801138N). After a few meetings, the tripartite talks on employment ground to a halt, having polarised around the question of amending legislation on working time, allowing greater flexibility while gradually reducing working hours, through a "framework law" (LU9804155N).

After resumption of negotiations, the tripartite forum agreed on three main issues:

• it identified the basis on which the legal provisions covering working time would be reviewed. This veered away from a reduction in statutory working hours, and instead provided for greater flexibility ( LU9805157F);

• it agreed to increase the contribution of the Fund for Employment (Fonds pour l’Emploi) to most existing measures aimed at integrating or reintegrating unemployed workers, and at the same time it set up a new measure known as a "back-to-work training" scheme. The social partners agreed to make every effort to achieve the EU objectives within 18 months through the creation of 1,800 new jobs (LU9805158F); and

• it proposed the introduction of six months' parental leave for the father or mother to look after a child under five years of age, and six days' annual family leave (LU9805160N).

Unusually for Luxembourg, the tripartite proposals came in for such heavy criticism from the parties concerned (LU9811174F) that the NAP did not come into effect on 1 January 1999, as had been expected (LU9812182F). However, it seemed very likely that the necessary legislation would be passed in February 1999 following substantial amendments by the Council of State and a special commission of the Chamber of Deputies ( LU9901187F). The new measures, which had not yet been published in full detail at the end of the year, is aimed at introducing a new flexibility, that will also help workers in organising their private lives.

With this national "marathon" going on during 1998, there were few developments on the organisation of working time or job creation at sector level. The social partners at this level were awaiting the legislation before embarking on any bargaining or other initiatives.

The other big industrial relations issue of 1998 was the government's plan to reduce public sector pensions, which was a major topic of public debate until August 1998. The reform proposed by the government pursued the dual objective of halting the increase in the cost of public sector pension schemes, and of harmonising the pension systems of the public and private sectors. The difference between pension schemes in the public and private sectors has long been seen as a very sensitive issue, with private sector trade unions calling for convergence through increasing private sector pensions to public sector levels. Given that the positions adopted by the government and the largest public sector union, the General Public Sector Confederation (Confédération générale de la fonction publique, CGFP), were diametrically opposed, the issue had to be progressed before a conciliator (the president of Luxembourg's civil court of first instance) (LU9804154N). After talks lasting four months, the conciliator presented a proposed solution, which was rejected by a majority of CGFP members (LU9806164F). A subsequent use of the mediation procedure was unsuccessful (LU9807170N), and on 21 July, the Chamber of Deputies voted on a law to reduce the pensions of civil servants and state employees, while a general strike was held in protest in in the public sector (LU9808173F). It may be that the way in which the two governing parties pushed through the law will have an impact on the outcome of the next general election: civil servants have always been seen as one of their "pools of votes".

In October 1997, the government had issued a draft law aimed at reforming private sector pensions; it did not seek to make structural reforms, but restricted itself to small, detailed changes and the introduction of a two-tier system of disability pensions. The government came under pressure in the form of a joint platform of seven trade unions calling for an improved general state pension scheme, and thereafter swiftly abandoned its intentions (LU9811175F). The unions' demands were robustly countered by the employers, and it was agreed that the issue of pensions would be examined as a whole by a tripartite meeting during February-March 1999, as the topic clearly involves employers. The plan to introduce a new half-rate "occupational disability" pension was dropped.

In May 1998, a law was adopted introducing a "dependency insurance" social security scheme, designed to give support to people who can no longer carry out "activities of daily living" on their own (LU9806165F). This new legislation was given a warm welcome, but the funding, and particularly the employers' contribution, is still controversial. The scheme came into force at the beginning of 1999.

Developments in representation and role of the social partners

November 1998 saw important "social elections" of employee representatives, with workers voting for their employee committees/works councils (délégations du personnel), and for representatives in their professional chambers (chambres professionnelles) and on the tripartite bodies which run the various health insurance and pension funds (LU9810172F). The elections for employee committees/works councils covered some 2,500 private sector enterprises with over 15 employees and involved some 145,000 workers. The social elections are important as a gauge of relative trade union strength and in assessing "nationally representative" status, which is important to unions in areas such as bargaining rights and representation on national bodies.

The 1998 elections saw no major surprises (LU9812185N). They confirmed the predominance of the "big two" unions - the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschafts-Bond Lëtzebuerg, OGB-L) and the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB) - and the final demise of the Federation of Private Sector White-Collar Employees (Fédération des Employés Privés, FEP), hitherto considered as representative of private sector non-manual workers. It remains to be seen whether the recently formed Confederation of Private Sector White-Collar Employees (Confédération des Employés Privés, CEP) will now achieve nationally representative status for this group (LU9805162N).

Industrial relations and the impact of EMU

A government reshuffle in February 1998 produced a new minister responsible for the budget and justice, and with "a special mission to monitor and coordinate the introduction of the euro". The introduction of the euro has not been a major issue. However, the social partners are now clearly considering the impact that the introduction of the euro will have on employment levels, especially in banking, one of Luxembourg's key sectors.

Conclusions and outlook

Positive economic and employment trends persisted in Luxembourg in 1998 and the policy of wage moderation remained largely intact. A key concern in 1999 will be the formulation of a new NAP, as well as the reform of the pension system (especially in the context of the general election). (Marc Feyereisen, ITM)