Agreement sets framework for collective bargaining in 2003

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In January 2003, Spain's central trade union confederations and employers' organisations concluded an intersectoral agreement laying down guidelines and criteria for lower-level collective bargaining in 2003, following a similar deal for 2002 (which received a positive assessment). The agreement puts pay at the centre of bargaining, reinforcing the coordination of wage bargaining in the framework of EMU. The deal also promotes increased employment stability in exchange for more flexible working time.

On 30 January 2003, an 'interconfederal agreement for collective bargaining' in 2003 (Acuerdo Interconfederal para la Negociación Colectiva, ANC 2003), was signed by the main employers' organisations - the Spanish Confederation of Employers' Organisations (Confederación Española de Organizaciones Empresariales, CEOE) and the Confederation of Employers of Small and Medium-Sized Enterprises (Confederación Española de la Pequeña y Mediana Empresa, CEPYME) - and the most representative trade union confederations - the Trade Union Confederation of Workers' Commissions (Comisiones Obreras, CC.OO) and the General Workers' Confederation (Unión General de Trabajadores, UGT). The accord lays down guidelines and criteria for lower-level collective bargaining in 2003, and follows a similar central deal reached for 2002 (ES0201207F).

Assessment of 2002 agreement

In the first chapter of the 2003 agreement, the social partners make an assessment of its predecessor, the 2002 ANC (ES0201207F), which they consider to be positive in comparison with previous similar agreements. The 2002 ANC linked pay increases to inflation and productivity gains and focused on employment and health and safety.

According to the assessment, the most innovative aspect of the 2002 ANC was that it involved 'dialogue and social concertation on criteria and content applicable at the different levels of collective bargaining'. The agreement was binding on the signatories and attempted to promote bargaining on particular issues, providing guidelines for the content of agreements at sectoral and company level. It was negotiated and signed at a time of economic uncertainty, and dealt with the challenge of maintaining and generating employment, thus helping to generate confidence in the economic situation. The assessment states that results achieved in the new framework of EU Economic and Monetary Union (EMU) show that this situation requires 'a new, more continuous, durable and stable working method' in the relations between social partners.

In general, a large part of collective bargaining in 2002 followed the agreed guidelines, but there is a new awareness by the signatories that the full application of such agreements requires a longer period.

The 2003 agreement

The new ANC agreement runs for a period of one year, with the possibility of renewal or extension, which will be considered by the signatories in the last quarter of 2003 The agreement provides for the creation of a Monitoring Commission (Comisión de Seguimiento) whose functions will be to: promote social dialogue; gather and disseminate good practices related to equal opportunities, promote the European-level social partners' July 2002 framework agreement on telework (which is to be implemented by the national social partners in the Member States) (EU0207204F); and foster the promotion of 'observatories' at national sectoral level.

The new agreement covers several subjects, such as the need for greater employment stability in view of Spain's persistently high temporary employment rate. It stresses the need to promote internal and 'qualitative' labour flexibility, rather than external and quantitative flexibility which has been the habitual practice of many companies. The agreement reflects the spirit of various EU Directives in calling for 'a suitable balance between flexibility and security, establishing frameworks that allow companies to adapt internally to changing circumstances'. Also in line with EU Directives, the 2003 ANC calls for equal treatment and non-discrimination on grounds of gender, ethnic group or race, while it promotes the content of the European declaration on the employment of people with disabilities signed in May 1999 by the EU-level social partners.

However, the central issue in the 2003 ANC is pay, and its contents on this issue are dealt with in more detail below.

Pay is major topic of bargaining

The 2003 ANC attempts to deal with the sharp rise in prices during the last year. The government’s inflation target for 2002 was 2%, whereas the real inflation rate was 4%. This was one of the main obstacles to bargaining in 2002, and also to achieving the new intersectoral agreement. During the long process of bargaining over the 2003 ANC (during the last quarter of 2002 and until the end of January 2003), discussions focused on the trade unions’ desire (ES0212204F) to maintain wage revision clauses (cláusulas de revisión salarial) - the provisions in many collective agreements which provide for additional pay rises when inflation exceeds certain limits (ES0001170N). The trade unions feel that this mechanism allows the recovery of the purchasing power lost due to the difference between the real development of the Retail Prices Index (RPI) and the government target. Between 70% and 75% of employees covered by a collective agreement (5.5 to 5.8 million persons) benefit from wage revision clauses that help avoid further deterioration in real pay. Workers covered by agreements without wage revision clauses have lost purchasing power since 1999, and this affects particularly around 2 million public sector employees - see the table below.

Source: UGT technical bureau based on data from INE statistical institute and Ministry of Labour and Social Affairs, quoted in El País, 15 January 2003.

During the bargaining process, the CEOE and CEPYME employers' confederations proposed several alternatives to wage revision clauses. These include giving up such wage guarantees in exchange for pay increases higher than the government's RPI target. However, the trade unions rejected these proposals because of the great difference between real inflation and the targets. Finally, the employers accepted the wage revision clauses, against the opinion of the government. In exchange, the trade unions have accepted a guideline setting pay rises below 3%.

Prices rose in Spain in 2002 despite a fall in consumer demand, a lower increase in labour costs than in the previous year and lower financial costs. In the new agreement the signatories are aware that the gap between Spanish inflation and the (lower) European average has increased, which they see as a cause for concern because it will affect the ability of Spanish firms to compete, and therefore affect investments and job creation. The reasons for Spain's inflation seem to be an increase in the price of energy and raw foodstuffs, and rises in a series of indirect taxes, fees and public prices, in addition to the 'rounding effect' of the introduction of the euro.

The new agreement recommends a moderate pay policy in the framework of the 'crisis of expectations' of the international economy (ES0211202N). The criteria accepted by both parties for guiding collective bargaining on pay in 2003 are based on four elements:

1. pay bargaining must take as a reference the government’s inflation target;
2. increases in productivity must be taken into account;
3. a wage revision clause must be incorporated; and
4. other elements of flexibility must be taken into account, such as the diversity of situations of companies and sectors.

The pay formula can be summarised as follows: 'RPI productivity wage revision clause other elements'. The 2003 ANC also stresses the need to take as a reference unit labour costs, so that the 'resulting figure allows companies, in particular those exposed to international competition, to maintain at least their current position and not be prejudiced in comparison with their competitors'.

Commentary

The 2003 ANC makes pay rather than employment the central topic of collective bargaining, marking a major change in comparison with the 1990s. It seems that EMU has led to three new requirements for collective bargaining:

• greater transparency on pay accentuates the possibility of making cross-border comparisons, which is particularly relevant in the sectors open to international competition, but also in other sectors;
• there seems to be a greater need for coordination and centralisation in both the guidelines for collective bargaining and in its content; and
• a new methodology seems to be emerging, which requires a more continuous effort of coordination and a more thorough effort to monitor the development of pay in application of the ANC. This tendency could be described as a greater 'decentralised coordination' of bargaining, involving centralised coordination at national level to harmonise and moderate pay behaviour in relation to unit costs and the requirements of competitiveness, and a decentralised and flexible coordination in the application of criteria and contents in accordance with the specific situation of companies and sectors. A comparative approach is more necessary than before

On employment, the ANC mentions the trade-off of flexibility for security, which is reflected in the commitment to limit temporary recruitment and stabilise employment in exchange for more flexible working time. Working time seems to be becoming a 'soft adjustment variable' for companies in order to avoid more harmful effects on employment, such as non-renewal of temporary contracts or dismissal. In fact, this is one of the proposals put forward by UGT in response to the increase in unemployment during the last year. (Antonio Martín Artiles, QUIT-UAB)