Unions push for further pay rise in the wake of agreement in catering and tourism

In early September 2007, the social partners in the catering and tourism sector concluded an annex to the pay-related part of the sectoral collective agreement. Initially, strong disagreements over the pay rise emerged among the negotiating parties. However, in September 2007, the parties agreed on a basic pay rise of 2.5% starting from 1 August 2007. Nevertheless, negotiations on a further pay rise began at the end of October 2007 without any outcome.

On 3 September 2007, the social partners in the catering and tourism sector concluded an annex to the pay-related part of the collective agreement for this sector. The negotiations began in February 2007. At the outset, strong disagreements emerged among the negotiating parties over the pay rise. The trade unions demanded a basic pay rise of 2.5% from 1 July 2007, but the employers rejected this request.

In response, on 28 July 2007, the trade unions took the initiative to inform citizens and foreign tourists in the three main Slovenian tourist resorts about the low pay and poor working conditions of their members. Moreover, they threatened to repeat this initiative in all major tourist resorts in the country and to also take strike action.

Trade union demands

The trade unions based their demands on the fact that the turnover in the catering and tourism sector is increasing every year and that the 2007 tourist season will be a record season in Slovenia. In addition, they argue that Slovenian companies invest substantially in this sector. For example, new hotels, congress centres and tourist attractions have been built and the existing ones are undergoing renovations. Therefore, the unions consider that it is only fair that workers, who contributed considerably to the good performance of the sector and to the country’s strong economic growth, should get a fair share of the rewards. At the same time, inflation is higher than expected mainly because of the rising food prices; thus, the trade unions are demanding some form of compensation for the workers.

Pay agreement reached

At the beginning of September 2007, the parties agreed on a basic pay rise of 2.5% starting from 1 August 2007. However, in September of each year, the negotiations usually continue after an analysis of the tourist season is carried out and after the possibilities for a further pay rise are examined. This year, the negotiations on a further pay rise only started at the end of October, but without any outcome being reached.

Problems in catering and tourism

The trade unions argue that employment in this sector is not attractive because pay is extremely low. According to the Statistical Office of the Republic of Slovenia (Statistični urad Republike Slovenije, SURS), the average monthly net earnings of workers in Slovenia for July 2007 totalled €822.68, while average gross earnings amounted to €1,262.95. However, in the hotels and restaurants sector, the average monthly net pay was €621.64, with average gross pay reaching only €919.79, which is the lowest pay of all sectors. At present, the gross monthly minimum wage in Slovenia amounts to €538.53.

The sector is currently experiencing a shortage of labour, especially of qualified workers, and educational institutions educating young people for jobs in this sector are registering fewer students. Another reason for the lack of interest in working in this sector is the unsocial working hours, such as night work, work at weekends and on public holidays, as well as no annual leave provisions during the summer.

Large companies are therefore employing workers from eastern European countries, resulting in a substantial level of undeclared work and employment, particularly in the restaurant sector – for example, in small bars (SI0609019I, SI0401102F, SI0406205T). At the same time, Austrian employers are eagerly trying to recruit workers from Slovenia to work in their country’s tourism and catering sector, offering them higher pay than companies in Slovenia.

The trade unions claim that a pay rise would help to alleviate these problems.

Rising inflation leads to threat of strike action

According to the recent forecast of the Institute of Macroeconomic Analysis and Development (Urad RS za makroekonomske analize in razvoj, UMAR), gross domestic product (GDP) growth in Slovenia will reach 5.8% in 2007.

At the same time, according to SURS, the inflation rate in September 2007 was 3.5% (based on the annual index) mainly due to rising food prices. In the same period last year, the inflation rate was 2.5%.

Due to the rise in inflation, the problem of low pay is becoming increasingly acute and is not only limited to the catering and tourism sector.

The social partners are currently negotiating the changes on the pay adjustment method included in the private sector intersectoral collective agreement, which was concluded on 23 June 2006 (SI0607039I). This agreement covers mainly private sector employers not covered by an adequate sectoral collective agreement.

Above all, the trade unions are demanding a pay rise for the workers with the lowest pay, as this is the group most affected by the rising inflation. The unions argue that these workers should also get a fair share of the rising profits of companies. As the employers did not respond to these proposals, the trade unions planned to organise a mass rally in Ljubljana on 17 November 2007 and threatened to take strike action.

Štefan Skledar, Institute of Macroeconomic Analysis and Development

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