Limited implementation of annual working time model in construction

In mid-1996, a collective agreement was signed in the Austrian construction industry aimed at spreading paid employment more evenly over the year. Up to 90 excess hours worked during the summer are not paid for until the winter, and then attract a premium of 10%. Implementation so far has had limited results, which may partly be due to the slack in the industry. Employers are now asking for a more far-reaching scheme.

A collective agreement on working time was concluded in the construction industry on 9 August 1996. Although it became effective retroactively from 1 July 1996, its first impact was felt only in 1997. The main aim was to reduce the industry's reliance on the national unemployment insurance system though workers being laid off during the winter, and to distribute the cost of doing so between enterprises and employees. It is now possible to make a first assessment of the deal's effects.

The collective agreement

The Association of Industrial Construction Enterprises (Fachverband der Bauindustrie) and the Federal Guild of Construction Enterprises (Bundesinnung der Baugewerbe) - both of them units of the Austrian Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ) - agreed with the Union of Construction and Timber Workers (Gewerkschaft Bau-Holz, GBH) to permit two new working time schemes, that result in a greater average number of hours worked per week during the summer. The first is the combination of a long and a short week - of 43-45 hours and 35-36 hours respectively, with the average length of the two weeks varying between 39 and 40.5 hours. The second scheme is made up of two long weeks and one short one, and is permissible only for a maximum of 30 calendar weeks between 1 April and 30 November of each year. In short weeks, hours have to be worked between Monday and Thursday, and in long weeks between Monday and Friday.

Enterprises must decide between the two schemes. Only every 52 weeks can they switch from one to the other, unless there is mutual agreement by employer and employees. Workers have to be informed of the scheme to be used at least two weeks before the start of a 52-week period. The hours in excess of the 39-hour normal working week set by the collective agreement must be compensated with time off in full days taken between each 1 November and 15 February. There can only be 90 such excess hours arising from the schemes within a one-year period starting from 15 February. Payment for these hours is deferred until the workers take time off to compensate for them - ie they are not paid at the time they are actually worked. When the time is taken off, the worker receives either a 10% wage premium or 10% extra time off. Any hours in addition to the 90 excess hours have to be recognised as overtime and paid as such. If time off is not granted within the stated period, and if there is no works agreement or individual agreement permitting the carrying-over of excess hours from one 52-week period to the next, then on 15 February the excess hours become regarded as overtime.

The collective agreement covers about 130,000 workers. The new working time schemes are applicable only to wage earners (rather than salaried staff). In companies with a works council there has to be a works agreement to implement the schemes. Where there is no works council, a written contract has to be made with every employee included in the scheme.

In mid-January 1998, employers suggested lengthening working days in the summer to up to 11 hours and the working week to up to 60 hours, but the trade union is definitely opposed to any arrangement exceeding 45 hours per week.

Implementation

Data on the implementation of working time flexibility are scarce. When the collective agreement was publicised, model forms were attached for the respective works agreements and individual contracts, but it is not known in how many cases they were used. In June 1997 the Federal Guild of Construction Enterprises sent a questionnaire to all its 8,000 members, of whom only 307 answered. Of these, 192 or 63% had implemented the new working time schemes, and in 80% of cases had used the two-week rather than the three-week version. On average there were 60 accumulated excess hours per worker. In only a small number of companies had the 90-hour limit been reached. No survey has been conducted among industrial enterprises in the construction sector. The GBH trade union reckons that as a result of the agreement about 8,000 workers remained formally employed over Christmas 1996 who would otherwise have been on the dole.

Companies that had not introduced the new working time regulations claimed resistance from the workforce as the most important reason. Another important reason was that the new schemes were too complicated. Its own sceptical attitude was only the third most important reason named by management, closely followed by resistance from the works council and by a perceived dearth of information. Still less important were possible difficulties in taking the time off. Among the companies without flexible working time, 29% thought it likely they would introduce it in the future. Companies seem to want a collective agreement that would bring similar working time arrangements to salaried employees.

Commentary

The major problem in assessing the collective agreement's viability is the lack of data, another is the criteria to be employed. The trade union likes to point to a claimed favourable effect on unemployment data at the end of December. It must be recognised, however, that this effect is purely statistical and does not reflect an actual change in the seasonality of the construction industry or its level of employment. Hours worked in the industry in the course of a year and the number of workers employed to work them remain the same. On the other hand, the formal employment period becomes longer by one or two weeks, which translates into a greater number of workers with renewed access to unemployment benefits during the off-season. From an income perspective, workers now receive a 10% premium for up to 90 hours on which they would have earned a 50% premium before, plus the unemployment benefit later in the year. This may improve the competitiveness of Austrian construction companies and could be a factor in preserving jobs in the industry.

The benefits of the scheme should accrue mostly to the unemployment insurance system. The most widely cited figure for the net losses it incurred in the construction sector before the new working time models were introduced is roughly ATS 1 billion per year (although other estimates are as low as ATS 70 million). In practice, its savings from the new models are not likely to exceed ATS 50 million per year - ie 5% of the likely net losses. Overall, therefore, the mixed public reception the scheme continues to have is hardly surprising. (August Gächter, IHS)

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