Industry-wide collective agreements under increasing pressure

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The 1999 Dutch collective bargaining round has seen moves by employers in sectors like construction, healthcare and banking towards replacing their relatively detailed sector-level collective agreements with either a framework agreement or a series of company agreements. By contrast, trade unions are seeking a single agreement for the entire social security sector in 1999, but the success of this proposal remains to be seen.

Industrial relations in the Netherlands have been traditionally characterised by a large number of industry-wide collective agreements. In many cases, compliance with these agreements has been declared mandatory on the grounds of the 1937 "Order declaring collective labour Agreements binding and non-binding Act" (Wet op het algemeen verbindend en onverbindend verklaren van collectieve arbeidsovereenkomsten, Wet AVV). The terms and conditions of employment negotiated in the particular agreement then apply not only to the companies involved in concluding the agreement, but also to every employer in the industry concerned. At the request of one or more employers or employers' associations or trade unions, the minister of social affairs and employment will sign the order declaring an agreement binding, on condition that the signatory parties sufficiently represent the industry. However, this classic industry-wide collective agreement (collectieve arbeidsovereenkomst, CAO) is now truly under a great deal of pressure, as developments in healthcare, banking, construction and social security illustrate.

Continuing decentralisation in healthcare?

Until recently, the healthcare employers' umbrella organisation (Nederlandse Zorgfederatie) negotiated terms and conditions of employment for 370,000 employees across hospitals, nursing homes and institutions. At the end of 1998, however, hospitals decided to negotiate their own collective agreement and nursing homes soon followed their example (NL9811105F).

Negotiations have now begun on a new collective agreement for hospitals. The trade unions' reaction to the employers' initial offer was overwhelmingly negative. One of the unresolved structural hurdles is whether a detailed agreement should be reached or if a framework-style agreement would be more appropriate as it would allow each hospital to elaborate individually on its needs. Employers wish to abandon a sectoral agreement that fails to take regional differences into account or fails to recognise the differences between smaller and larger hospitals. For the time being, the unions have expressed a lack of enthusiasm for a framework agreement.

The last industry-wide agreement in banking?

The banking industry eventually reached an agreement on a new collective agreement at the end of April 1999, following six months of difficult negotiations. The deal is effective for 17 months and covers 120,000 employees. Before reaching agreement, the banks increased their "final offer" in the middle of March, which caused dissension amongst the four unions involved (NL9903130N). A spokesperson for the employers explained that the offer had been increased for the purpose of signing an agreement with all four unions. According to the employers, this will mean a healthy future for the industry.

However, the agreement now reached for the entire industry could very well be the last of its kind. The most fervent supporters of a different bargaining structure are the larger firms in the financial services sector (NL9811105F). An earlier proposal to steer towards a single agreement for the financial services sector met opposition from both insurers and smaller banking institutions. This indicated a strong possibility that the larger firms would make the transition to separate company agreements, leaving the industry-wide deal in force for the remaining small-scale banks and insurers. The financial conglomerate Achmea has already reached a group-level agreement. Other major financial institutions, including ABN Amro, Fortis-Amev, ING and Rabo, also seem poised to abandon the industry-wide agreement. Nowadays, these companies are striving to increase flexibility in terms and conditions of employment. One reason is to remove higher-level personnel from the coverage of the sectoral agreement. In addition, a group-level agreement offers greater potential to integrate privatised social insurance organisations such as Gak and Cadans. The Allied Unions (FNV Bondgenoten), representing a relatively high proportion of employees with lower levels of education, are most opposed to splitting up the industry-wide agreement.

Construction: maintain and decentralise industry-wide agreement?

On 17 April 1999, as the threat of strikes loomed, an agreement was reached for the 160,000 employees in the construction industry. However, shortly after the agreement was successfully signed, a negotiator from the employers' side indicated that this settlement would be the last of its kind for the construction industry. Employers want a less uniform arrangement to reflect what has become an extremely diversified sector. The existing agreement, which is very comprehensive and detailed, should be replaced by one with a triple-layer structure. The foundations of the scheme would encompass everything directly related to costs: salaries, pensions, education, social security and so on. The second layer would address provisions for specialised companies and the third would offer options for individual construction workers.

Swimming upstream: one agreement for social security?

At the end of April 1999, AbvaKabo, the largest civil service trade union, proposed consolidating the various agreements that currently apply to the social security sector into one comprehensive agreement. The impetus for this is the large-scale reorganisation set to take place in the sector over the coming years. Within a few years, about 200 Centres for Employment and Income (Centra voor Werk en Inkomen,CWI) will be in operation, staffed by employees who are presently employed by social security agencies such as Gak and the social services and employment offices. Currently, each branch of the social security sector has its own agreement with the Lisv coordinating agency - social services, executive organisations responsible for social security, health and safety services and employment services, amongst others. According to AbvaKabo, a single agreement would offer two significant advantages: relative calm in terms of employee relations and the promotion of labour mobility within the sector.

The question is whether the AbvaKabo proposal can be realised. Not only does it clash with the overall trend towards decentralising terms and conditions of employment formation, but it has also provoked criticism from De Unie, another trade union. In this organisation's opinion, a collective agreement of such magnitude would serve to diminish the degree of influence enjoyed by unions within the organisations concerned. However, this does not detract from the general consensus, shared by De Unie, that the current situation cannot be maintained. With respect to executive organisations in the social security field, De Unie foresees either a merger with or takeover by large financial institutions such as Achmea (the merger mentioned above with Gak) and ING (in collaboration with Sfb). Terms and conditions of employment will then be established in the group-level agreements mentioned above for the financial institutions involved.

Commentary

The tendency towards decentralisation in the area of terms and conditions of employment continues. The developments addressed above, namely the splitting up of industry-wide agreements and the rise of framework agreements, are but a manifestation of this tendency. The legislature contributes by passing framework acts on working conditions, employee participation and working hours. On top of this, there is the relatively new appearance of competing collective agreements: some industries now have two agreements, one reached by the established employers' and employee organisations, and another by fairly new competing organisations. Although these trends will continue for some time, they are not likely to result in a total fragmentation of terms and conditions of employment. Various employers' organisation spokespersons regularly emphasise their belief in the need for a certain degree of structure. In that sense, they pay tribute to their forerunners in the 1930s who witnessed the legalisation of the system of declaring agreements binding. At the same time, a spokesperson for the Allied Unions, the largest union in the Netherlands, recently admitted that the time is ripe to simplify collective agreements. Therefore, the possibility that the social partners will meet somewhere halfway does not at first sight appear unlikely. (Robbert van het Kaar, HSI)

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