Unions reject agreement on Fiat restructuring

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In December 2002, the management of Fiat and the Italian government reached a 'programme agreement' on the reorganisation of the company's troubled automobile division. The trade unions have sharply criticised the deal and taken industrial action in protest, since they believe that the impact on employment is excessive and that the guarantees provided for the company's revival are insufficient.

The long-drawn-out negotiations over the restructuring of Fiat, which began immediately after presentation of a new industrial plan for its automobile division on 9 October 2002 (IT0210303F), were interrupted on 5 December 2002 when the government and Fiat management reached a programme agreement on reorganisation of the company. The metalworkers' trade unions - the Italian Metal-Mechanical Federation (Federazione italiana metalmeccanici, Fim), affiliated to the Italian Confederation of Workers’ Union (Confederazione italiana sindacali lavoratori, Cisl), the Italian Federation of Metalworkers (Federazione impiegati operai metallurgici, Fiom), affiliated to the General Confederation of Italian Workers (Confederazione generale italiana del lavoro, Cgil) and the Union of Italian Metal-Mechanical Workers (Unione italiana lavoratori metalmeccanici, Uilm), affiliated to the Union of Italian Workers (Unione italiana del lavoro, Uil) - harshly criticised the agreement’s contents and methods, walked out of the negotiations and announced further strike action.

On 9 December, around 5,600 Fiat workers were placed on the Wages Guarantee Fund (Cassa integrazione guadagni) - one of the 'social shock absorber' measures that cushion the effects of restructuring and redundancies (IT9802319F). In line with the plan announced on 9 October 2002, use of the Wages Guarantee Fund was set at 'zero hours'- ie the workers involved will stop working completely - and will last for one year. This affects 1,350 workers at the Mirafiori plant - with a further 2,000 workers planned to be added from July onwards - 1,000 at Arese, 1,200 at Cassino, 1,800 at Termini Imerese, and 350 at other plants.

Background

2002 was a particularly difficult year for Fiat, as regards not only its economic performance and financial situation but also its relations with the trade unions. The crisis that has hit the car industry has been especially damaging to Fiat, which has suffered major losses and seen its market shares eroded by its main competitors (IT0201107N and IT0206101N).

The crisis led to an agreement to relaunch the company signed in July 2002 on the trade union side by Fim and Uilm, but not by Fiom (IT0208102N). The agreement stated that the parties would meet in October 2002 to discuss the application of the measures set out in it. However, at the beginning of October, Fiat announced a new industrial plan which aims to redress the economic situation and to revitalise the company through an investment programme of around EUR 2.6 billion per year from 2003 to 2005. The industrial plan was considered unacceptable by all the unions because, according to Fim, Fiom and Uil, it envisaged the closure of a number of Fiat plants and the shedding of more than 8,000 employees (IT0210303F).

Negotiations and industrial action

The negotiations that have taken place during the approximately two months since the presentation of the new industrial plan have been particularly tough. They have been marked by a strong confrontation between the company and the unions and the significant involvement of the government. Indeed, the debate on revitalising Fiat has assumed major political significance because of: the seriousness of the company’s economic and financial crisis; its impact on employment, especially in certain areas of the country, such as Termini Imerese in Sicily, and Arese near Milan; and the prospects of a substantial reduction of Italy’s presence in a sector, that of motor manufacturing, which is regarded as crucial in the international industrial system.

The government’s intervention and possible initiatives to relaunch Fiat have also sparked debate between the parliamentary majority and the opposition. The unions have called on the government to make a determined effort to resolve the crisis, and they have also suggested that it might acquire a share in the ownership of the company. The government for its part has asked the company to make a series of changes to the industrial plan in order to prevent job losses and ensure the continuing operation of its plants, especially those located in the South.

While the negotiations have been in progress, various strikes have been held and spontaneous local protests have been staged, particularly at the plants involved in the restructuring plan. Moreover, the Fiat dispute was a key issue in the national strike held by the metalworking trade unions on 15 November 2002 (IT0212106N). The agreement reached by the company and the government on 5 December, and the breakdown of the negotiations with the unions, led to the announcement of an eight-hour strike throughout the entire Fiat group as well as in its subcontractors and outsourced activities. Furthermore the European Metalworkers’ Federation (EMF), at the behest of the Italian unions and of the Fiat group European Works Council, organised a European day of action (calling for 'A future for Fiat') which involved a two-hour mobilisation at all the European plants of the Fiat group on 16 December. The demands behind this action were to avert job losses and to maintain production and employment levels in the Fiat group.

In the days following 5 December, a major crisis erupted in Fiat’s top management, with persistent rumours that the chair, Paolo Fresco, and the managing director, Gabriele Galateri, were about to be replaced - Mr Galateri, in fact, resigned on 9 December - and that the group would be restructured, with the hiving-off or sale of significant parts of it. The repercussions of these rumours and the reactions of the banks, which have financed the Fiat industrial plan by injecting capital amounting to EUR 3 billion, led to a resolution of the crisis, with confirmation of Paolo Fresco as chair of the Fiat group, and the appointment as managing director of Alessandro Barberis, the Fiat general director who conducted the long negotiations on the new industrial plan. In the end, Mr Galateri has remained on the Fiat board of directors.

Programme agreement between Fiat and the government

The programme agreement reached between Fiat management and the government on 5 December sets out a series of commitments by each of the parties. Specifically, the government makes the following commitments:

  • it recognises the strategic importance of the presence in Italy of a strong and competitive car industry, given its importance in terms of contribution to GDP, employment and innovation, and gives equal importance to the goal of the maximum safeguarding of jobs;
  • it deems it necessary, in keeping with EU policies, to undertake initiatives to
    1. support innovation, research and development,
    2. improve the professional quality and skills of the workforce, and
    3. revitalise the automobile market;
  • it considers the Fiat industrial plan to be viable, providing that it ensures potential for future development, safeguards production capacity by resuming production by Fiat Auto at Termini Imerese, and guarantees the growth of overall productivity through a greater utilisation of plants and improved company competitiveness;
  • as regards redundant workers, it believes that the plan should reduce the use of the 'zero hour' Wages Guarantee Fund, evaluating all possibilities for early re-entry to work, rotation, training and outplacement; and
  • it undertakes to
    1. introduce a law which enables redundant personnel to fulfil their pension requirements by means of so-called 'long mobility'- ie a 'social shock absorber' which provides income support until the redundant worker reaches retirement age (which Fiat has requested for at least 2,400 workers),
    2. allocate adequate funding (foreseen at around EUR 60 million) for worker training at certain Fiat plants, in order to favour their outplacement, also by involving outplacement agencies,
    3. propose the creation of a permanent discussion forum for the Arese area involving local governments and trade unions, the purpose being to favour the outplacement of around 550 employees,
    4. monitor implementation of the programme by means of three-monthly meetings, and
    5. issue a law to support research and innovation in the automobile sector, in particular as regards energy and environmental sustainability and active and passive safety, and the development of specific research projects.

Fiat, for its part:

  • confirms the 'productive mission' of the plants at Cassino, Mirafiori and Termini Imerese;
  • states that Arese will remain a design and experimentation centre employing around 500 highly qualified personnel, and pledges to take part in the permanent discussion forum proposed by the government; and
  • as regards the workers placed on the 'zero-hour' Wages Guarantee Fund, provides assurances that
    1. re-entry to work by workers at the Cassino plant will take place from the spring of 2003 onwards and will be concluded by July 2003. The possibility of rotating workers on the Wages Guarantee Fund may be examined with the trade unions,
    2. as regards the Mirafiori plant, the company is willing to verify in June 2003 whether workers on the Wages Guarantee Fund can return to their jobs, and to examine whether it is actually necessary, as envisaged by the plan, to place a further 2,000 employees on the Fund. The rotation of workers on the Wages Guarantee Fund on certain production lines may be examined with the unions. Moreover, certain redundant workers could be redeployed thanks to a different organisation of work, and
    3. production at the Termini Imerese will resume in September 2003. This will be preceded by training programmes intended to introduce a new organisation of work at Termini Imerese (patterned on the model used at the Melfi plant), which enables it to achieve greater productivity, also in consideration of the infrastructural deficiencies of the area. Implementation of the plan will be monitored jointly with the unions.

Trade union reactions

The unions have criticised the programme agreement because they believe that it does not respond adequately to the crisis at Fiat. They have called for a relaunching of the car industry in Italy, also through direct intervention by the government, in order to prevent job losses and plant closures. The unions’ main demands include that no Fiat plants should halt production, and that production continuity should be ensured by the use of 'solidarity contracts ' (contratti di solidarietà) - ie reduced working hours and pay for all workers to avoid redundancies - as an alternative to the 'zero-hour' Wages Guarantee Fund and 'long mobility', utilising the resources allocated for the latter two measures in order to supplement the incomes of personnel working on reduced hours. Accordingly, the unions consider the partial concessions envisaged by the programme agreement as regards the Termini Imerese plant and the rotation of workers on the Wages Guarantee Fund to be entirely inadequate.

The unions have also criticised the way in which the programme agreement was reached. According to the Cgil, Cisl and Uil confederations, which took part in the Fiat negotiations together with the sectoral federations, the contents of the programme agreement were non-negotiable, so that it was impossible to discuss any changes or adjustments. For this reason, too, the unions have declared that they could do no more than take cognisance of the situation and the impossibility of reaching an agreement.

Besides the eight-hour strike announced when the negotiations broke down, Fim, Fiom and Uilm announced a further four hours of strikes in the Fiat group and its subcontractors and outsourced activities, two of them scheduled for 16 December on the occasion of the European day of action called by EMF. Moreover, the national secretariats of Fim, Fiom and Uilm have announced an action day against job losses for the entire metalworking sector in January 2003.

Following episodes that have provoked a number of changes within the Fiat group’s top management (see above), the unions hope that negotiations can now restart and modifications be made to the industrial plan. Indeed, changes to the industrial plan, suspension of the 'zero-hour' Wages Guarantee Fund, and relaunching the car industry in Italy remain the key demands put forward by the unions.

Commentary

The events surrounding the negotiations over the Fiat industrial plan are of great significance, for a number of reasons. First, they concern Italy’s largest manufacturing group, which has a remarkable importance in terms of the economy and employment. Moreover, Fiat occupies a unique place in Italian capitalism, also from a symbolic point of view (especially in car manufacturing), and its crises and decline are often viewed, rightly or wrongly, as indicative of crises and decline in the Italian economic system as a whole.

For these reasons, it is understandable that the Fiat crisis and the industrial plan devised to relaunch the automobile division have been the focus of political attention and demands. The government has consequently been obliged to intervene on a substantial scale by guaranteeing the provision of 'long mobility'- basically a form of early retirement - in order to reduce the social impact of restructuring. It has thus been forced to resort to a measure which is very costly to the state, and which the government had previously pledged to abandon, on grounds including the difficulties of the public pensions system. Even the unions, as well as other observers, have stressed the problems that the Fiat crisis raises for industrial policy, emphasising the importance for the country of a strong car industry, amongst other factors because of its impact in terms of technological innovation. From this point of view, the negotiations on the Fiat industrial plan are of critical importance, with political implications which extend beyond corporate strategies and relations with the trade unions.

The Fiat affair marks an important turning point in industrial relations - at national level as well as at Fiat, given the direct involvement of the trade union confederations and their general secretaries - which also highlights the importance of the question. The feature emphasised by all commentators is the unity of action displayed by the three largest union confederations, which at least in this case have been able to overcome the sometimes profound rifts that marked relations among them in 2002 (IT0207104F). In a sense, it may be argued that so high is the political significance of the Fiat crisis that the unions could not afford any splits in their ranks during this negotiation, lest they should provoke a major disruption in the Italian system of industrial relations. In any case, the negotiations over the Fiat restructuring plan have helped the three confederations to restore a certain amount of unity to their positions. It is significant that this has come about in the metalworking sector, on the eve of a bargaining round where distinct bargaining platforms, rather than the unitary platform of the past, have been put forward by Fim, Fiom and Uilm (IT0209101N). If this unity of action is maintained during the unavoidable further negotiations over the Fiat industrial plan - at least on its implementation - it may help to resolve the impasse in which the unions seem to be trapped, while also favouring a unitary solution for the renewal of the metalworking sectoral agreement. This could also prove important in helping to leave behind the severe divisions and tensions that have recently characterised Italian industrial relations. (Roberto Pedersini, Fondazione Regionale Pietro Seveso)

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