Autumn bargaining round opens against background of rising unemployment

In October 2002, the pattern-setting metalworking industry opened Austria’s autumn private sector bargaining round . The current economic recession and notable increase in unemployment form the background to the negotiations. Since Austria’s bargaining system is generally relatively responsive to macroeconomic developments, there seems to be very limited leeway for pay increases.

In Austria, collective bargaining is mainly conducted at sectoral level, resulting in more than 400 separate agreements annually. However, the wage bargaining system is strongly coordinated across the economy, based on the leading role of the metalworking industry in the overall bargaining process (AT9912207F). This means that, traditionally, the collective agreements concluded for the metalworking industry set the pace for other bargaining units negotiating subsequently in the course of the annual bargaining rounds, which usually occur in the autumn (ie a system of 'pattern bargaining').

The 2002 bargaining for metalworking, which opened in early October, will affect about 105,000 blue-collar workers and about 95,000 salaried employees. In addition, parallel negotiations are conducted for about 46,000 white-collar workers in six other industrial branches: chemicals; glass; paper and cardboard processing; food and tobacco; stone and ceramics; and paper-making. The bargaining rounds for all these branches, covering almost 260,000 employees, are to a high degree concerted. However, as in 2001, bargaining for about 62,000 employees in the electrical and electronics subsector of the metalworking industry will take place separately, since the branch subunit of the Chamber of the Economy (Wirtschaftskammer Österreichs, WKÖ) withdrew from the employers’ metalworking joint negotiation team in 2001 in order to implement a branch-specific performance-related payment system (AT0110201N). Despite these separate negotiations, the 2001 wage agreement for the electrical and electronics industry differed only marginally from the metalworking agreement.

Current macroeconomic problems

The bargaining parties - the various branch subunits of WKÖ on the employers’ side and the (blue-collar) Metalworking and Textiles Union (Gewerkschaft Metall-Textil, GMT) and Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) on the employees’ side - are both agreed that the coming negotiations in metalworking are difficult due to the current macroeconomic problems: ie the current economic recession and labour market crisis. According to the most recent economic forecasts presented by the Institute of Advanced Studies (Institut für Höhere Studien, IHS) and the Austrian Institute of Economic Research (Österreichisches Institut für Wirtschaftsforschung, WIFO), the real growth of Austria’s economy will be only 0.8% to 0.9% in 2002 and slightly above 2% in 2003. Moreover, the unemployment rate continues to grow significantly: in September 2002, 199,780 people were registered as unemployed, a growth of 13.8% in comparison with the same month in 2001.

The two sides of industry, however, differ in their interpretation of these figures. Hermann Haslauer, the chief negotiator for WKÖ, stated that the economic forecasts of the abovementioned research institutes have not proved to be reliable, since they have repeatedly had to correct their forecasts in 2002, so WKÖ will not accept any other economic data except its own surveys. The prospects for Austria’s economy – at least in some branches of the metalworking industry – are argued by the employers to be gloomy for several reasons, notably the current decline of and pressures on prices, and coming competitive disadvantages in terms of labour costs and taxes due to EU enlargement. Hence, Mr Haslauer insists on a very modest increase in wages and salaries.

In contradiction to the WKÖ’s positions, the unions reject the employers’ line of reasoning, in particular concerning price developments. GMT and GPA argue that companies’ turnovers have grown much faster than the volume of production (ie the number of units produced ), which is only possible when prices are increasing. Apart from this, the unions contend that during the last year, the average real net income of all Austrian employees has not increased at all due to the government's restrictive budgetary policy and tax increases.

Accordingly, on 27 September 2002, the representatives of GMT and GPA presented their joint list of demands to the employers’ side. The list includes the following points:

  • an increase in minimum wages and salaries (without defining any particular percentage rises);
  • an increase in actual wages and salaries (again without defining any particular percentage rises);
  • an equivalent increase in additional payments (Zulagen), if provided for in the relevant collective agreements;
  • an equivalent increase in apprentices’ remuneration;
  • a continuation of discussions on modern forms of remuneration;
  • improvements in the general framework for employment, in particular with regard to
    1. 'all-inclusive' employment contracts. Since forms of flat-rate payment have become widespread, there should be a clear settlement in that the relevant parts of pay should be defined as either basic salary or (overtime) surplus work remuneration,
    2. night work. On 1 August 2002, the legal ban on women’s night work was abolished (AT0207204F). Thus, the old regulations on night work contained in collective agreements have to be adjusted; and
  • a settlement with regard to the statutory severance pay reform of June 2002 (AT0207201N), since the vague legal framework leaves some aspects unspecified – especially the problem of shifting from the 'old' to the 'new' system and the criteria for the selection of the related 'special funds' to manage severance pay (Mitarbeitervorsorgekassen).

Commentary

As Austria’s bargaining system is generally relatively responsive to macroeconomic developments, there seems to be very limited leeway for pay increases. In the face of the current macroeconomic problems, the metalworking sector employers are determined not to accept a pay rise significantly above the inflation rate of 1.8% in 2002. Thus, a pay agreement providing for an increase in minimum wages of 3% and in actual wages of 2.9% or at least EUR 43.6 per month, as concluded in 2001, will probably not be achieved by the unions. However, as Rudolf Nürnberger, the chief negotiator of GMT stressed - in agreement with WIFO experts - there is much evidence that a notable increase in wages and salaries, in particular among those on lower incomes, will raise purchasing power, which in turn tends to stimulate the economy in a period of recession. (Georg Adam, University of Vienna)

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