Rapid conclusion to bargaining round in construction

In April 1999, a series of pay agreements was concluded in the Austrian construction industry and related areas. They all run for 24 months, which is unusual for Austria. Increases in basic pay vary between 2.0% and 2.2% a year, whilst actual pay rises by up to 2% a year.

On 21 April 1999, employers and trade unions concluded pay agreements for construction sector wage earners which have an unusually lengthy duration of 24 months. The signatories were the Union of Construction and Wood Workers (Gewerkschaft Bau-Holz, GBH) and the Association of Industrial Employers and Guild of Crafts Employers, both of the latter being formal groupings within the Austrian Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ). The agreement was reached in the first formal negotiating session. From 1 May 1999, wages rise by 2.1%, and by another 0.5% from 1 January 2000. On 1 May 2000, the sector's roughly 120,000 wage earners will receive another increase of 2.0%. These increases apply to basic rates and to apprentices' remuneration. Actual wages will rise by the same absolute amounts as basic rates. The 0.5% increase at the beginning of 2000 is a one-off compensation for a permanent change to the way that the Christmas bonus is calculated.

One day later, an agreement was concluded by GBH to raise the basic wage rates of the 15,000 workers in the stone and ceramics industry by 2.2% from 1 May 1999 and again from 1 May 2000. Actual wages are being raised by 1.9% and 2.0% respectively. The social partners agreed to form a working group to reform the wage system in the industry and to work together in promoting the industry's interests.

Another two days later, the 1999 wage agreement for the 35,000 workers in crafts and ancillary construction trades was concluded. This is a diverse group of firms that in the past has not always found it easy to negotiate collectively. Basic pay increases of, on average, 2.0% were agreed for 1 May 1999 and again for 1 May 2000. Actual wages will be raised by the same absolute amounts as basic rates. For the larger segment of the ancillary construction trades subsector, a nationally unified wage scale was agreed. The existing wages of employees recruited before 1 May 1999 must not be reduced if they exceed the new scale. A working group was formed to reach agreement for the remainder of the subsector by October 1999.

On 28 April, an increase in the basic wage rates for the 8,000 sawmill workers was agreed - they will rise by 2.1% from 1 May 1999 and by the same amount again from 1 May 2000. Actual wages are being raised by 1.9% and 2.0% respectively.

For the roughly 20,000 salary earners in construction, 1 May 1999 was the date when an entirely new pay scale agreement came into effect, emulating the one agreed for manufacturing two years previously (AT9705112F). A transitional period until 2005 was agreed, during which the changeover to the new system will take place. Combined with the 1999 increases, entry salaries are being raised by up to 8%, while top salaries rise by less than 2%. The Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) estimates that the average pay rise is about 2.6%.

In 1998, the construction industry's turnover grew by 3.1%, and further growth of 2% or 3% is expected for 1999.

Struggling with unemployment

Since 1990, employment across the Austrian construction industry has grown by 16% to 265,000 on annual average. Simultaneously, unemployment has grown by 56% to 40,000. Seasonal unemployment at the end of January 1999 stood at a record 99,000. Employment, however, also stood at a January record of nearly 164,000, up 22,000 over the previous January. Employers' spokespersons attributed this improvement exclusively to the new working time rules agreed in 1996 (AT9801156F). Under certain conditions, these permit crediting any weekly hours worked over 39 up to a limit of 45 to be taken as paid leave after the building season. If the limit were extended to 50 hours per week, winter unemployment could be eradicated, claim employers. In some cases, they say, this is already being done, although perhaps not quite legally. However, given that summer unemployment has also been rising - to nearly 22,000 at its lowest level in 1998, 10% more than in 1997 - a redistribution of formal working time over the year will not suffice.

In Vienna, as part of measures accompanying the city's EU-sponsored territorial employment pact (TEP), the city government and the social partners agreed in February and March 1999 to implement administrative measures that would help to complete tendering procedures for contracts in time before the spring building season starts. They also agreed to explore ways of keeping construction sites going during the winter by covering and heating them as is common in Scandinavia and Switzerland.

GBH has repeatedly called for the creation of a so-called "structure and labour market fund" to finance further qualifications and retraining for construction workers. It has suggested using a proportion of pay increases for the purpose. Employers have since warned against training workers for non-construction occupations. They argue that employment and unemployment in the industry will unavoidably grow in tandem, and that workers will be needed to take advantage of the expected opportunities for growth.


The rapid conclusion of this whole series of agreements is probably the result of a joint wish by the union and employers to prevent a further deterioration of the industry's public image. For more than a year it has been providing the media with a continuous stream of allegations and convictions in court and of record-breaking bad news on unemployment. It seems that this was a powerful incentive to avoid the public posturing (AT9804177F, AT9804179N) around the 1998 pay round. Perhaps the 24-month duration of all the agreements needs to be seen in the same light.

Past initiatives to change working time rules in favour of reducing reliance on unemployment benefits have had, it is claimed, some success, but given the many influences on construction employment this is hard to ascertain. There appears to be virtually no willingness on the part of GBH to go further. The main reason is likely to be resistance from the chairs of works councils who feel unable to support another partial loss of overtime payments. Instead, technological and administrative solutions are being sought to help start the building season earlier and continue some projects over the winter.

The industry, over the last few years, has spent much time complaining about its dire economic prospects, but each time it has again performed better than predicted by its representatives. In several ways the industry is changing. Mergers and acquisitions are leading to larger enterprises striving for competitiveness on a European scale. This follows in part from a similar process in banking, since the banks are major shareholders. Prices have come under pressure since construction companies from other EU countries, primarily Germany and Italy, have begun to offer their services in Austria. There were 860 bankruptcies in crafts and construction trades in 1998. (August Gächter, IHS)

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