Definition

Negotiated – or occupational – welfare refers to worker benefits that complement statutory or state-provided schemes and that are negotiated through collective agreements. These voluntary schemes or benefits are provided by employers at company, sectoral or occupational level in collaboration with trade unions and/or works councils.

Negotiated welfare schemes can be in the domain of pensions and healthcare, as well as unemployment protection and family mediation. In principle, such schemes are meant to supplement (not replace) existing welfare arrangements.

Background and status

There are many reasons why trade unions and employers might take the step of negotiating these schemes, the most important one being to improve the welfare of all or certain groups of workers. In some cases, negotiations can also serve to address new social risks that are specific to certain workers. Another significant motivation for the introduction of negotiated welfare schemes is to compensate for government reforms that result in reduced welfare provision; this has been the case in some EU Member States in the context of tight budget constraints and austerity policies since the 2007–2008 global financial crisis. For example, the landmark welfare scheme introduced at Italian luxury eyewear company, Luxottica, first negotiated in 2009, provides extra income support, education support, health benefits and public transport aid for some 8,000 employees of its seven Italian manufacturing plants and Milan office.

Negotiated welfare schemes can, at least to some degree, constitute a ‘social wage’ and compensate for wage moderation. Where there is strong pressure to cut wages, trade unions may find negotiated welfare schemes a viable form of non-wage compensation. Finally, from a trade union perspective, negotiated welfare can help attract new members or retain existing ones.

• Luxottica (2013): Trade union agreement for the company welfare system has been renewed

Commentary

The impact of negotiated welfare largely depends on its characteristics and the existing level of statutory welfare provision in a given context. There is a general consensus that it can have both positive and negative outcomes: when it is wide-reaching, negotiated welfare can be a functional equivalent to statutory public welfare; however, when voluntary schemes are limited to certain occupations or sectors – for example those characterised by high skills and productivity levels – these voluntary schemes can cause a fragmentation of social protection. Furthermore, when some groups of workers (including self-employed or non-standard workers) are excluded or only partially covered by compulsory schemes, voluntary schemes can be an alternative mechanism to statutory public welfare, as pointed out in a European Commission report.

• European Commission (2018): Access to social protection for all forms of employment: Assessing the options for a possible EU initiative

Related dictionary terms

Social protection; Social security