Sectoral agreements for crafts enterprises under threat

Negotiators in the Austrian metalworking crafts sector managed to conclude a new collective agreement in November 1998, but have had difficulty in securing sufficient consent at the provincial and guild level to initiate procedures to extend the deal to all establishments in the sector. This continues a trend that may eventually result in the demise of the crafts sectoral agreement.

A collective agreement covering the 57,000 salaried employees in craft enterprises in the metalworking sector was concluded on 4 November 1998. Minimum pay rates were raised by 3.7% and actual salaries by 2.5% - the same increases as had previously been agreed for blue-collar workers' wages. The agreement is to take effect from 1 January 1999 and to run for one year. By comparison, from 1 November 1998 increases in wages and salaries in industrial enterprises in the metalworking sector were respectively 3.7% and 2.9% (AT9810108N).

The metalworking crafts agreements were concluded by the industry section of the Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) and the Metals, Mining and Energy Trade Union (Gewerkschaft Metall-Bergbau-Energie, GMBE), respectively, and nine federal guilds of the Austrian Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ). Each federal guild (Innung), in turn, is made up of nine provincial guilds, some of which are again made up of so-called occupational groups. They may all choose whether or not to join in the federally negotiated agreement. In other words, on the employer side, roughly 100 groups have to consent for sectoral coverage to become complete.

Extending an agreement

This fragmentation can mean that some employers' groups join and that others do not. However, sections 18 to 21 of the Labour Constitution Act (Arbeitsverfassungsgesetz, ArbVG) provide for a procedure to extend a collective agreement already covering a majority of employees in a bargaining area to all employees. A number of conditions have to be met:

  1. a valid collective agreement has to exist;
  2. it must already cover more than half the employees it could possibly cover;
  3. the employees to whom it is extended must be employed in basically similar jobs; and
  4. these employees must not already be covered by another valid collective agreement.

The procedure may be initiated only by signatories to the collective agreement. The decision on the extension is taken by the Federal Conciliation Office (Bundeseinigungsamt) which forms part of the Federal Ministry of Labour, Health and Social Affairs (Bundesministerium für Arbeit, Gesundheit und Soziales, BMAGS). The Conciliation Office "jury" is made up of four employer and four employee representatives and chaired by a ministry official. The latter decides the case when the jury is hung. I 1998, up until November, there had so far been eight applications for extensions, against five in 1997. The largest number in the 1990s was 10 in 1992, but there were only two per year in 1993 and 1994. Metalworking crafts have been a regular "customer" since 1995 and had also sought extension in 1992.

Sectoral negotiations in danger of losing grip

In recent years, in the metalworking sector, guilds in the three western provinces have regularly failed to join agreements voluntarily, but have had to be brought in by conciliation. This was easy, as in none of the nine federal guilds do the western provinces account for more than roughly 20% of waged or salaried employment in metalworking crafts enterprises. In 1998, however, employers in the small easternmost province also stalled and, of greater importance, so did those in four guilds in Lower Austria, the large province surrounding Vienna. In one guild, tinsmiths, none of the provinces joined, leaving the federal guild's negotiators out in the cold, while in a second, auto-technicians, coverage of salaried employees was slightly below 50% by mid-November 1998, making extension impossible. In a third, electrical, radio and video technicians, it was just 54%. The situation for wage earners was almost identical. Had it remained unchanged, about one-eighth of employees in metalworking would not have received wage and salary increases in 1999.

This could have forced the social partners to follow the same tack as in hotels and restaurants (AT9809105N). In this sector, for the second year in a row, negotiations at sectoral level failed or could not be started in 1998 - that is, they had to negotiate on a province by province (and guild by guild) basis, more or less throughout the whole year. However, this course of action could be averted. Persuasion by both sides of the social partnership was successful. The trade unions seem to have offered primarily a cooperative attitude towards working time flexibility at company level - often a means of legalising existing flexibility - in exchange for joining the sectoral agreement. By 20 November, enough provincial guilds had signalled their willingness to join to make extension possible after 1 January 1999. It is now expected that by March 1999 all employees in the sector will be covered.


In metalworking crafts, for the first time, it seemed that it might not be possible to extend the agreement concluded to all guilds and provinces. The national social partners are united in an effort to make sure that the agreements they negotiate hold at guild and province level. However, there is very little they have to offer if cooperation is not forthcoming. The trade unions, the GPA in particular, in a first reaction called for legal changes that would bind the lower-level associations to decisions reached at the national level. The WKÖ will no doubt be unable to agree to this. This leaves persuasion as the only avenue. The scope for industrial action, however, is not great, since union density in crafts is low, perhaps no greater than 10%, and works councils are equally few. The GMBE has consistently been showing a pronounced predilection for a unified agreement covering the whole sector. It may therefore be willing to show substantial moderation and compromise over working time, the 1999 pay settlement and a range of other issues in order to salvage the sectoral agreement.

One problem for the social partners is that crafts (and trades) have received very little political or research attention up to now. Data about the enterprises are scarce, and next to nothing is known about unionisation, works councils, productivity, profits, capitalisation, the motivation of employers and so on. There appears to be a growing sentiment among them that legislation and collective agreements place burdens and constraints on enterprises that only the large ones are able to bear. Only the extreme Right is promising them any change, and so their willingness to cast their vote in that direction, whether in Chamber or public elections, seems to increase. (August Gächter, IHS)

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