Trends in collective bargaining since 1994

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The major labour market reform legislation of 1994 made important changes to the framework for collective bargaining in Spain. This feature examines bargaining trends since 1994, and analyses the positions of the parties involved and the results of the reform.

The institutional framework

As a consequence of the 1994 labour market reform, collective bargaining in Spain has entered a new phase that began in 1995 and was generally consolidated in 1996.

One of the aims of the reform was to force the social partners, and in particular the trade unions, to develop their autonomy and attain a certain degree of self-regulation. It was also a historic opportunity to introduce changes into the structure of bargaining by bridging the gap between bargaining at sectoral level, which had been largely ineffective in small enterprises, and at company level, which had undergone a great deal of modification over recent years. Collective bargaining was therefore a possible means for implementing the objectives of the reform law and for adapting it to current circumstances.

The economic situation

Changes to the institutional framework were not the only new development. For the past two years the economic situation has been quite different from previous years, though it has been complex and difficult to interpret. It has been a period of great economic growth, even higher than that of some other countries of the European Union. Exports have increased, the public sector deficit has been reduced and inflation has fallen considerably. However, the low level of domestic consumption remains the central weakness in the economy.

The causes of this low level of domestic consumption are mainly high unemployment (though there are wide regional variations) and the insecurity of the employment of many wage-earners (around 35% have insecure jobs). The capacity of unemployed people to consume is of course very low (especially since there have been cuts in unemployment benefits), whereas those in insecure jobs are very reluctant to enter into certain types of expenditure as they tend to shun long-term commitments. Low domestic consumption is also a major factor contributing to the high level of unemployment.

Trade union proposals

The main reaction to the 1994 reform came from the trade unions, which have used collective bargaining to put right what they used to claim was their inferior status with respect to employers.

The first demand on the collective bargaining agenda was employment. It was felt that bargaining should tend to increase the amount and quality of employment. In other words, it should stimulate the creation of new jobs and the conversion of insecure jobs into secure ones. The unions were therefore predisposed to offer wage moderation and flexibility in exchange for this objective. Three other related points were also of great importance: control over types of employment contract, which often fail to comply with regulations; intervention in the organisation of work; and limiting the expansion of temporary employment agencies by making medium and large-sized enterprises agree not to use their services.

The second principal demand focuses on the structure of bargaining, which, though absent from bargaining agendas, has been one of the main lines of trade union action. The aim is for agreements to be reached at nationwide sectoral level to prevent agreements at a company, provincial or regional level from establishing worse conditions. Sectoral agreements at a level lower than nationwide must be complementary but in no case offer worse conditions. However, agreements at company level could stimulate and be the driving force for higher-level agreements if firmer links between the two could be established.

A further fundamental demand has, of course, been for higher wages. The trade unions are not totally opposed to a certain wage moderation, but they set several conditions: the minimum wages set by agreements must be applied to all workers; the purchasing power of wages must be maintained; and companies making profits should distribute a certain proportion of them to the workers. However, they have been prepared to accept the "opting out" of companies which are able to demonstrate poor economic circumstances (that is, that companies facing economic difficulties should not be obliged to pay the minimum wages laid down in the agreement).

Also important has been the demand to reduce and reorganise working hours, above all through the reduction of overtime. The basic objective of this demand is to improve working conditions and increase employment.

Lastly, trade union agendas are also placing great emphasis on matters such as training and worker participation.

Employers' concerns

The main employers' confederation, CEOE, has expressed concern about the competitiveness of enterprises in an increasingly global economy. In order to achieve competitiveness it stresses labour costs, hours of work, the wages structure and the duration of agreements as key aspects in bargaining:

  • with regard to wage costs, CEOE is once again insisting on moderation, linking it to the creation of employment and stressing that domestic consumption will be expanded by an increase in employment rather than an increase in wages. It also points out that wage increases must be related to productivity and to increases in other countries in the EU;
  • CEOE also expresses its opposition to reductions in hours of work, because the increase in costs and the reduction in competitiveness would make companies create less employment - the opposite of what is normally claimed. It is also demanding greater flexibility in working hours in order to adapt to changing demands and to maximise technological performance;
  • in its guidelines, the employers' organisation insists on wage restructuring, giving greater importance to variable wages than to fixed wages. This would increase competitiveness and improve pay flexibility; and
  • lastly, the employers argue for long-term agreements without limitations on flexibility and for company control over strategic aspects of bargaining.

The results of bargaining

The statements issued by the two sides involved indicate that the agreements signed in 1996 reveal a greater range of outcomes than those of 1995. However, agreements that reflect new developments are often ambivalent. Certain aspects of these agreements contain little more than a declaration of intent on issues such as health and safety or overtime that, though positive, seems doomed to have little influence in actual practice. Moderation and a certain degree of flexibility have predominated in wage bargaining. For example, there is a tendency to: base the projected increase on the price index; increase variable wages; introduce a dual pay scale in some companies (lower pay for new contracts in exchange for a commitment to greater employment security in the future); and conclude company "pacts" which lie outside the protection reserved for other agreements in the 1980 Workers' Statute and are therefore less binding. These company "pacts" are an area of great interest since they generally indicate an agreement between social partners in the company on issues that diverge from the agreement or prevailing regulation.

There are few agreements that modify the regulations on employment contracts, though some improve the situation of apprentices or regulate more precisely part-time employment or certain types of temporary contract.

Little bargaining has taken place on functional or geographic mobility or "opting out". However, in some areas bargaining has placed limits on the action of temporary employment agencies or has improved the wages and conditions of apprentices.

The dynamics of bargaining

The main trade unions, particularly CC.OO and UGT, have consolidated a practice that was already common in the early 1990s: unity of action. This is expressed through common agendas and agreed interpretation of issues arising in the bargaining process, and in the types of pressure used. The CEOE employers' confederation has also managed to maintain unity amongst its most important members in comparison with confrontational experiences in previous years. However, direct action at local level - in particular by trade unions - is still weak. In other words, worker participation in the bargaining process shows a certain distancing of the trade unions.

With the exception of certain public companies, the feeling that there is an employment crisis has kept the level of open conflict low, particularly with regard to strikes. This has been a common tendency in Spain now for some years.

Commentary

The process of modernising collective bargaining over recent years has made it a more effective and adaptable means of self-regulation.

Some new developments have been introduced into pay determination, training and the resolution of disputes, though they have not yet become widespread. In my opinion, collective bargaining, particularly at sectoral level, still shows some limitations: it is not very effective or flexible; it is very weak in monitoring results; and it fails to protect certain groups of workers.

Lack of effectiveness and flexibility mean that general agreements may have little impact on companies and be insufficiently adaptable to changing needs during the period that they are in force. The weakness of trade unions in many sectors and in small enterprises hinders the monitoring of agreements and the correction of any deviations. On this point, the trade unions have for some time insisted on having workers' delegates with a regional rather than a sectoral base. The employers' demand for flexibility will be far more effective if it is included in bargaining and if the internal circumstances of the company are linked to the sector and to the region.

Lastly, significant changes in employment patterns are leaving out of the bargaining framework important groups of workers such as part-time workers, many temporary workers, those engaged in the hidden economy and the self-employed. (Faustino Miguélez Lobo, QUIT)

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