Industrial relations in private adult education sector examined

A first collective agreement was concluded in Austria’s private adult education sector in February 2005. However, it appears that the sector’s overall employment conditions have not improved. This is thought to be partly due to the agreement’s limited coverage, but also a result of a legal framework that critics see as stimulating unfair competition. In particular, the widespread practice among many training institutions of replacing standard employment relationships with 'free service contracts' or 'contracts for work' reportedly tends to damage the sector’s labour market in terms of pay and minimum quality standards.

In February 2005, the first-ever collective agreement for private training institutions was concluded after several years of negotiations (AT0504202N). We take this as an opportunity to look at the system of industrial relations in this sector in general.

Definition and legal framework

In Austria, no other learning sector is as heterogeneous as adult learning, which makes basic definitions a key problem for all questions concerning adult education. In general, the term 'adult learning' comprises two types of adult education: so-called 'education for the people' (Volksbildung), which was once widespread in Austria; and job-related adult education. The former concept has been gradually replaced by the latter over the last two or three decades, a development that has been induced by two interrelated trends: an increasing oversupply of (unskilled) labour; and the necessity perceived by policy-makers to focus adult learning expenditure mainly on job-related further and continuing education and training schemes. By far the most important agency for providing measures to improve the skills of both job-seekers and (poorly skilled) employees in the context of 'active labour market policy' is the public-law Labour Market Service (Arbeitsmarktservice, AMS). The AMS does not provide training itself, but can commission suitable institutions to organise training measures. The basic purpose of vocational or job-related continuing adult education and training is the deepening and expansion of skills as a qualification for vocational activities, mobility and personal development. Its main task is to secure jobs, reduce unemployment, allow the re-entry into the labour market and facilitate career advancement (see Thematic review on adult learning: Austria. Background report, OECD, 2003).

With regard to the legal regulation of the area of general adult education as well as its funding, there is a lack of a nationwide legal framework. A central feature of Austria’s adult education and training sector is its structural fragmentation and segmentation, which arguably corresponds to a lack of clear political responsibility at federal and regional (Land) level (see Lifelong Learning. Österreich im Kontext internationaler Strategien und Forschungen, Lorenz Lassnigg, Vienna, 2000). The most important laws governing the funding of vocational and job-related continuing training measures (in the context of active labour market policy) are the 1968 Labour Market Promotion Act (Arbeitsmarktförderungsgesetz, AFG) and the 1994 Labour Market Service Act (Arbeitsmarktservicegesetz, AMSG). With the latter, the former Department of Employment (Arbeitsmarktverwaltung, AMV) was taken out of the scope of state administration and set up as a service agency under public law.

Recent developments in the market

In 2003, AMS expenditure for training measures amounted to EUR 222 million. AMS-supported measures reached more than 210,000 people. As a public-law company, the AMS is covered by the Federal Placement Act (Bundesvergabegesetz, BVergG) when it comes to inviting applications for training measures. According to a 2002 amendment to the BVergG, training measures commissioned by the AMS, even though they are classified as 'non-priority services' (as defined by EU Directive 92/50/EEC on the coordination of procedures for the award of public service contracts), have to be based on tenders called for by the AMS. This obligation for the AMS to invite tenders when commissioning institutions for training measures has strongly challenged the sector’s commissioning system. In the past, usually well-proved private training institutions in the non-profit sector were commissioned for the execution of the measures. Since the introduction of the tender procedure, more and more private profit-oriented training institutions have tendered for the training contracts, which has led to a significant diversification of the 'new' offers market. As a result, the share of non-profit providers of AMS-supported training measures, albeit still prevalent, has declined to the benefit of profit-oriented institutions, which have gained a notable market share. Hence, with the introduction of tender obligations as a precondition for commissioning providers for training measures the competition in the job-related adult training market has notably sharpened. This has had a positive effect for the AMS, since a higher number of providers tendering for training contracts and thus a sharper competitive situation has immediately resulted in an overall reduction of prices for training courses. As a consequence, the AMS has become able to pay for a higher number of training measures in total.

However, this - at least at a first glance - advantageous situation for the AMS has been counteracted by a series of problems, according to commentators. First, the AMS does not examine whether the tendering training institution actually fulfils its obligations under the training contract. According to experts, this has, in numerous cases, resulted in a dramatic decline in the quality of training courses. Moreover, according to the BVergG, experiences of any kind the AMS has had with a training institution in the past must not be taken into consideration when it comes to a new tender. Although the BVergG stipulates that certain qualitative criteria have to be taken into account in the commissioning procedure, major difficulties with respect to measurement and comparison of quality standards in the area of training services have reportedly given rise to a practice in the AMS of considering exclusively the price of a measure as the core criterion. This has led to competition on price rather than on quality. This intensified pressure on the cost side has, according to observers, had a drastic and immediate impact on the training institutions’ employees and freelance trainers, in that they have been faced with considerable pay cuts (up to 30%) on the one hand and an increasing use of 'bogus' 'free service contracts' (Freier Dienstvertrag) or 'contracts for work' (Werkvertrag) in order to bypass standard employment relationships and labour law commitments on the other.

Employment and working conditions

Owing to a continuously growing number of unemployed people in Austria and thus an increasing need for training measures, the private job-related adult education and training sector is a growing segment of the country’s labour market. However, according to researchers, it is characterised by precarious and inconsistent employment conditions, due to an increasing number of different institutions and establishments that provide quantitatively and qualitatively different training courses. Furthermore, there is no consistent, nationwide legal framework for this sector, in particular with respect to standard training regulations or a consistent description of occupations. Therefore, employees (or 'quasi-employees' on a freelance basis) are confronted with a lack of clear career prospects and a broad variation in (often inferior) working conditions. Although the vast majority of the trainers are highly skilled and many of them have an academic degree, pay (and to some extent social prestige) has remained underdeveloped in this sector.

Although the private adult education and training sector was covered by a minimum pay scale (Mindestlohntarif) fixed and annually revalued by the Federal Arbitration Board (Bundeseinigungsamt, BEA) from 1989 up to April 2005 (when the first collective agreement replaced this arrangement), evidence shows that virtually all training establishments use to pay wages considerably below this minimum pay scale.

That workers most affected by the tendency towards deteriorating working conditions is the group of 'economically dependent self-employed trainers', ie trainers who are formally self-employed but do not employ other people and often work only for a single client (AT0309201N). Their legal employment status is that of a contract for work or a free service contract (AT0404202N), and their working situation actually resembles to a great extent that of standard employees. According to surveys, a clear majority of these workers state that they have been forced to accept such an employment relationship due to the lack of regular jobs. Many of these cases are thought to involve the employer illicitly bypassing labour law commitments, since the arrangements do not grant real freedom regarding scheduling, choice of working place etc (which are prerequisites for real self-employment). Moreover, there is often no actual freedom from employers’ instructions, since most job-related courses/measures are clearly designed in terms of contents and methodology through the AMS tender guidelines. Several training institutions have generally stopped hiring 'standard' employees in order to save on labour costs, in particular social insurance contributions. Moreover, freelance trainers’ working contracts are usually renewed each year or even twice a year, which means that pay may be reduced from one year to the other in case of need. All these recent developments have contributed to a deterioration in the general working conditions of (freelance) adult trainers, in particular in terms of pay and social security.

Employers’ representation

The private adult education and training sector is one of the rare business areas in Austria that do not fall within the representational domain of the Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ). This means that there is no statutory interest representation for the employers in this sector, which explains the lack of any collective agreement in this area up to April 2005. In 1999, however, the Association of Employers of Private Institutions for Training and Further Training (Berufsvereinigung der ArbeitgeberInnen privater Bildungseinrichtungen, BABE) was founded by a few larger institutions employing some 5,000 to 6,000 employees. BABE was recognised as possessing the capacity to conclude collective agreements by the BEA in 2000 and immediately started negotiations with trade unions in order to conclude a collective agreement, which was eventually achieved in February 2005 (see below). However, BABE represents only a relatively small segment of the sector, in particular the few, larger non-profit institutions that are - in terms of funding, organisational structure or multiple office-holding - closely linked with the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) and the Chamber of Labour (Arbeiterkammer, AK). Although BABE has repeatedly attempted to enlarge the narrow circle of its members, negotiations have not proved fruitful so far. This is because most smaller, profit-oriented institutions have hitherto not seen any use in joining an association dominated by large establishments closely related to organised labour. Most of them do not feel represented by BABE, unless its statutes were to grant them a major voice, and they do not want to sign on to a collective agreement which, they argue, is tailor-made for their main competitors.

Apart from the lack of a sector-wide collective agreement, another key feature of the sector is the lack of consistent professional profiles, including uniform training systems, as well as the absence of binding minimum standards in training quality. This results from the specific structure of the sector, since there is a broad variety of institutions and establishments with respect to their size, their ownership structure, their interests, their operating areas, their political influence, their 'respectability' etc. This has so far been the main obstacle to setting up an encompassing interest-representation organisation for employers.

Trade union representation

The white-collar Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) is the most important trade union representing employees in the private adult training sector; in addition, the blue-collar Commerce, Transport and Traffic Workers’ Union (Gewerkschaft Handel, Transport, Verkehr, HTV), at least formally, represents the sector’s manual workers. The sector’s heterogeneous structure in terms of actors/establishments and thus the great variety of working conditions have proved a strong impediment to the unions being able to reach and recruit many employees, which holds true especially of the freelance workers who are only loosely involved at shopfloor level. Therefore this employee group is hard to reach for unions and works councils.

Against the background of the abovementioned tendencies towards deteriorating working conditions in the whole sector, including the replacement of standard employees by 'economically dependent self-employed workers', GPA has developed both internal and external strategies to oppose such trends.

External strategies aim at jointly drafting plans to establish occupational and professional profiles with BABE and other employers. Moreover, GPA calls upon the government to introduce a federal law that regulates (job-related) adult education and training, in particular with respect to access, minimum standards in service quality, further training claims, funding, evaluation etc. In particular, the current lack of clear-cut standards and control of quality is considered by GPA as the main reason for the continuing reduction of prices for training courses. Furthermore, GPA realised early on that certain minimum standards, including minimum pay, for freelance workers can only be achieved if corresponding provisions for 'standard' employees are collectively agreed. Therefore GPA urged BABE to start negotiations as soon as possible.

GPA's internal strategies aimed at setting up an organisational structure that allows not only standard employees but also freelance workers to join the union and to participate actively within the GPA structure. Formally, the internal restructuring process was finalised by the GPA general assembly in 2002 (AT0212202F). According to the new structure, the representation of freelance workers is now addressed by corresponding 'interest groupings' and 'issue platforms' within GPA.

First collective agreement

After several years of negotiations, GPA and HTV on the employees’ side and the BABE on the employers’ side concluded the first collective agreement for private training institutions on 23 February 2005 (AT0504202N). The main feature of the agreement is the industry-wide standardisation of the existing pay and working time regulations. However, it is important to note that it covers only a relatively small segment of the training sector, which employs between 5,000 and 6,000 workers. Nevertheless, the agreement, the parties involved stated, may act as a signal for other employers in the sector that 'social dumping' and unfair competition among training providers is detrimental for both sides of industry. In particular, GPA expressed its hope that other adult education and training institutes will join BABE and thus the collective agreement. Interestingly, the agreement contains a clause whereby the bargaining parties commit themselves to continuing negotiations in order to improve the economic and social situation of 'economically dependent self-employed workers'. Such a clause explicitly addressed to formally self-employed workers is unique in Austria’s long-standing tradition of collective bargaining.

Commentary

Considering Austria’s exacerbating labour market situation with slightly, but continuously growing unemployment, the need for highly skilled employees in the (vocational) adult education sector will increase, in particular in the context of the country’s active labour market policy. In order to ensure continuous recruitment of highly skilled and motivated personnel in this sector, clear-cut regulations in terms of occupations and working conditions are required. The first-ever collective agreement may contribute to partially improving and harmonising working conditions for a segment of the sector. However, as long as a major part of the sector remains uncovered, fragmentation and unfair competition among the private training institutions will be perpetuated. In this case, GPA is expected to examine the chances of applying for an 'extension order' (Satzungserklärung) to the BEA. An extension order issued by the BEA means that a collective agreement is extended to include employment relationships of the same nature which are not covered by an agreement (AT0112250F).

Apart from this, the practice of many institutions increasingly to use freelance workers (by often illicitly bypassing labour law commitments) threatens to damage the sector’s labour market. In order to curb these practices, clear-cut legal regulations are required, since at present there exists a legal loophole for the grey zone of 'bogus' self-employment. A follow-up agreement also the sector’s freelance workers in the wake of the recent collective agreement (which could stop the current downward trend in pay) seems to be unlikely. On the one hand, the introduction of pay schemes for freelance workers would require a clear-cut classification scheme, which is out of sight at present. On the other hand, the legal commitment involved in such an agreement may be questioned, since it has hitherto remained completely unclear whether Austrian labour law acknowledges collective agreements concluded for freelance workers. (Georg Adam, University of Vienna)

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