Sectoral collective bargaining develops

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Changes to Bulgarian labour law made in March 2001 promoted bipartite cooperation between the social partners at sector level, and especially collective bargaining. This has led to the development of sectoral bargaining, with 63 new collective agreements signed at this level in 2002-3, covering an estimated 40% of the workforce. This article reviews the situation at the end of 2003, looking at the main trends in areas such as the content of agreements, as well as the continuing problems and shortcomings of sectoral bargaining.

During recent years, the European Commission's regular reports on Bulgaria’s progress towards EU accession (expected in 2007) have pointed to a number of weaknesses in industrial relations, and specifically to inadequate dialogue at sector level. It is against this background that both parties in the bipartite social dialogue - employers and trade unions - have been aiming to develop sectoral dialogue and collective bargaining. Trends have been observed towards the implementation of the leading EU standards and principles in this area, and towards the development of better labour and social conditions for workers. It is expected that this will compensate for some of the negative socio-economic effects of Bulgaria's transition process.

New processes involving sectoral dialogue and collective bargaining have arisen as a result of the changing economic and social environment in the country. Several groups of factors have influenced these processes:

  • political- during the past 10-12 years, the state has gradually withdrawn as a regulator of economic relations. As a result, the public sector is narrowing and the private sector has become dominant in all economic sectors, branches and activities, producing about two-thirds of Gross Domestic Product (GDP);
  • legislative- changes in labour legislation made in March 2001 defined the sector and branch levels of collective bargaining and outlined the responsibilities of the partners more clearly (BG0307204F). It also introduced fixed durations (of one to two years) and expiry dates for collective agreements, as well as terminating agreements at all levels signed before March 2003;
  • socio-economic- relevant factors include the development of the market economy, currency changes introduced in 1997, the active processes of privatisation and restructuring in all sectors of the economy, the high level of unemployment and low living standards, including formation of a group of 'working poor' (BG0310202F);
  • integration- the irreversible integration of the country into European structures has inevitably imposed conformity with international standards (such as International Labour Organisation Conventions and EU Directives) and best practices in the industrial relations and bargaining fields; and
  • social partners- the rising authority of the social partners and specifically an increase in trade unions’ bargaining abilities.

The period since the March 2001 labour law amendments has seen the development of bipartite cooperation at sector level and notably its main form, collective bargaining - though the European Commission's 2003 regular report points out various shortcomings and weaknesses in the sectoral social dialogue. Examination of the sector/branch collective agreements newly signed in 2001 and 2002, as well as those renewed because of their enforced expiry in 2003, allows the main characteristics and tendencies to be highlighted and some conclusions to be drawn for the future.

First, it appears that the parties to the bargaining process - the representative organisations of employers and trade unions - have managed to maintain collective bargaining in almost all the sectors during the transition period. A total of 56 sector/branch collective agreements were signed in 2001-2, rising by 12% to 63 (nine sector and 54 branch agreements) in 2002-3 - covering an estimated 40% of all employees. Sector/branch collective agreements are now absent only in the chemicals and machine-building sectors. In over 75% of cases, the bargaining parties have agreed on the maximum two-year duration for collective agreements permitted by the law, which is seen as corresponding to a tendency towards longer-lasting agreements observed in other countries in Europe and elsewhere.

A second important development in sector/branch social dialogue has been the creation and launch during 2003 of a new bipartite mechanism for mediation and voluntarily arbitration in disputes. The new system was established by two government acts in April 2003, implementing procedures for the out-of-court settlement of collective disputes. The system creates prerequisites for improving the effectiveness of the sector/branch dialogue and the implementation of collective agreements.

Third, a number of provisions agreed by the social partners in collective agreements are becoming more and more effective in setting common minimum sectoral standards on some of the most important aspects of work and industrial relations. The main such issues are outlined below.

Employment

In the context of labour market problems (BG0311203F), one of the main items on the bargaining agenda is employment - see the table below. All sector/branch collective agreements refer to the development of sectoral policies aiming at preserving existing jobs and creating new ones. Over 80% of agreements contain clauses determining criteria/priorities for selecting personnel as well as concrete procedures for workforce reductions. In 52.4% of agreements, there is a provision that the employer should inform trade unions in advance about forthcoming privatisation or restructuring and its effects on employment. In 35% of cases, there should be prior negotiations with trade unions, while under 54% of agreements the employer should coordinate its actions with the unions. Some 31.7% of agreements stipulate that there should be consultations over employment in sectoral and branch councils and commissions for social cooperation. The development of trade union positions on employment is provided for in 39.7% of agreements, and the development of new employment structures and programmes in 22.2% of cases.

Provisions on employment in sectoral/branch collective agreements (% of all such agreements)
Procedures for termination of employment contracts 82
Selection criteria 80
Coordination with trade unions 54
Information of trade unions 52
Trade union statement 40
Prior negotiation 35
Discussion in sectoral councils for tripartite cooperation 32
New programmes 22

Source: Confederation of Independent Trade Unions in Bulgaria (CITUB).

Pay

The low level of labour costs in Bulgaria - an average of EUR 1.35 per hour in Bulgaria, compared with an EU average of EUR 23 (ie 17 times higher) - means that considerable priority is given in sector/branch agreements to setting standards in the area of remuneration. All sectors negotiate minimum and starting wages. Some 52.4% of agreements provide for minima higher than those determined by law, with the agreed minimum rates being between 10% and 80% higher than the national minimum. The highest agreed minimum rate is in tobacco production, at 80% over the national minimum, followed by: energy and construction (60%); metalworking, electrical machinery, water supply and tourism (50%); and mining, quarrying and trade (40%).

Differentiated remuneration in accordance with employees' education level is provided for in 17.46% of sector/branch collective agreements. Additional remuneration is often provided for factors such as: length of service (95.23% of agreements); night work (76.2%); overtime (60.03%); and unhealthy working conditions (74.6%).

Since 2002, at the behest of the government, the social partners have been negotiating minimum pay rates for various activities and personnel categories, divided into nine groups by qualification, which act as minimum social insurance thresholds. These thresholds set the minimum amount of pay on which employers are obliged to pay social insurance contributions in respect of their employees (with the aim of stopping the practice of employers paying contributions on the basis not of the employees' actual wage but of the much lower national minimum wage) (BG0307101F). During 2003, some of the agreements on this issue became part of the sector/branch collective agreements (this applied to 16% of such agreements) - including in the trade, tourism, energy and food sectors.

Education, qualification and development

With the aim of improving the 'quality' of the workforce, some sector/branch collective agreements include provisions on the education, qualification and development of employees. These include:

  • the elaboration of sectoral programmes, plans or systems in this area, and their prior discussion, coordination or joint elaboration with trade unions;
  • the creation of commissions, including trade union representatives, on qualification and vocational retraining (covered by about a fifth of collective agreements). These focus on vocational training and retraining in the event of restructuring, bankruptcy and liquidation;
  • measures for prior vocational training - ie high school programmes aimed at the qualification of the labour force in advance;
  • provisions on vocational life-long learning during the whole career, as in the light industry sector;
  • the establishment on a bipartite basis of branch ('buffer') funds for training and retraining - as in metalworking, textiles, leather and cotton; and
  • the participation of trade union representatives in examination and contest commissions etc.

Leave, breaks and working time

There is a tendency towards the negotiation in sector/branch agreements of longer leave periods and breaks than laid down in the Labour Code. Notably:

  • all sectoral collective agreements and 96% of branch agreements provide for more paid annual leave than the 20 days determined by law. In 70% of agreements, the length of annual leave varies between occupational groups and/or depends on the length of service. Length of service in the same company, sector or branch is taken into account in leave entitlement in 11% of cases;
  • many agreements provide for additional paid annual leave for workers with non-fixed working time (79.4% of agreements), or with unhealthy or special working conditions (73%); and
  • agreements may also provide for extra paid time off for workers with two or more children, people with disabilities and minors, or for the performance of civic or community duties (eg for trade union work).

Agreements often provide for mechanisms of consultation to regulate: the length of working time; the introduction of longer or part-time work; shifts; breaks; and working time schedules and changes to them.

Health and safety

Agreements have been reached on safe and healthy working conditions in all branches/sectors. The bargaining agenda in this area includes the elaboration of programmes jointly by employers and trade unions, and matters such as:

  • programmes for improving working conditions;
  • education on health and safety at work;
  • trade union participation in analyses of work-related illnesses and accidents and in risk assessment;
  • periodic measurement of work environment parameters (provided for in 40% of agreements);
  • programmes for the activity of working conditions groups and committees;
  • the establishment of works medicine bureaus (60% of agreements),
  • trade union monitoring of the safety of working conditions and of the implementation of employers' obligations (65% of agreements); and
  • provisions on the strict observation of health and safety at work regulations as an obligation on workers (a quarter of agreements).

Social benefits

Given the low level of remuneration (see above), agreement on new and higher social benefits is seen as a key role for sectoral bargaining. There has been a tendency for cutbacks in previously agreed provisions on benefits such as organised canteens, workers' transport and medical services, while some new provisions have been introduced, such as social security schemes, insurance schemes, and additional health and pension insurance.

Commentary

Collective bargaining at the level of sectors and branches is facing a number of difficulties that affect the quality of both the process of negotiations and the agreements signed. Notably:

  • there is no clear definition of the terms 'branch' and 'sector'. The established national classification of industries serves statistical needs and hampers the structuring and development of sectoral dialogue and its institutionalised structures;
  • the government, and specifically the Minister of Labour, does not implement the provisions of the Labour Code which allows collective agreements or specific provisions of them to be extended to all companies in a sector, even where this is demanded by the social partners. This shows a lack of will;
  • the poorly structured and organised employers' organisations at branch and sectoral level are hindering the social dialogue (BG0310103F). Employers often prefer not to become members of any employers’ organisation in order to stay out of the collective bargaining process, as they wish to avoid the burden represented by the provisions of collective agreements. There is also a persistent problem of firms having double membership in different employers’ organisations, while some branch structures have low coverage and there is a lack of participation by small and medium-sized enterprises. Last but not least, some employers implement anti-trade union measures, considering the social dialogue and collective bargaining as being outdated;
  • in 2003, for the second year in succession, the employers failed to sign a prepared national agreement concerning the procedural framework for sector and branch agreements;
  • one of the main problems of trade unions at sector and branch level lies in gathering information on their industries' economic and financial situation and perspectives; and
  • the lack of a legislative obligation to sign collective agreements sometimes prolongs the bargaining process and makes it ineffective.

There is a tendency towards greater publicity and transparency for the social partners' discussions, with a number of examples of the largest representative organisations defending their positions in national discussions, round tables, sectoral conferences etc where there is an open public debate. Together with decentralisation of the dialogue to company level, this is a positive step. (Emilia Markova, Institute for Social and Trade Union Research)

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