Social partners debate bargaining framework for 2005

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In late 2004, the Spanish social partners were considering a renewed intersectoral agreement providing guidelines for lower-level collective bargaining in 2005, similar to those concluded in the three previous years. Both sides have stated their criteria for bargaining in 2005 - though employers and trade unions agree that competitiveness and productivity should be improved, their on views how to achieve this differ.

In recent years, the main employers' organisations - the Spanish Confederation of Employers’ Associations, (Confederación Española de Organizaciones Empresariales, CEOE) and Spanish Confederation of Small and Medium-Sized Enterprises (Confederación Española de la Pequeña y Mediana Empresa, CEPYME) - and the main trade union confederations - the Trade Union Confederation of Workers’ Commissions (Comisiones Obreras, CC.OO) and the General Workers’ Confederation (Unión General de Trabajadores, UGT) - have signed three national intersectoral agreements laying down guidelines for lower-level collective bargaining, covering 2002 (ES0201207F), 2003 (ES0302204F) and 2004. While these have largely worked to the satisfaction of all parties (ES0408101F), and they agree that the competitiveness of the Spanish economy and the productivity of work must be improved, they have different opinions on how to achieve this and on the results of collective bargaining to date.

CEOE position

CEOE has agreed to offer CC.OO and UGT the possibility of drawing up 'common criteria' in order to reach a new pact on bargaining for 2005. However, some sectoral organisations of the CEOE are not in favour of renewing the intersectoral framework agreement for lower-level collective bargaining, and the confederation's leadership has not yet authorised its negotiators to start contacts with the trade unions (as of December 2004).

Wage moderation and flexibility are the 'priority' criteria for the employers for an agreement that meets the needs of Spanish economic competitiveness (ES0403210F). Their concerns focus on the increase in prices caused by the rising price of oil, and they call for improvements aimed at fostering investment and creating employment. CEOE rejects the wage revision clauses in collective agreements that force pay rises to be revised if real inflation is higher than the forecasts. In 2004, the rise in the retail prices index (RPI) to December may be about 3.5%, compared with the forecast of 2%, so the clauses will come into effect. The table below gives labour costs figures for previous years.

Average labour cost per effective hour per worker per month, by cost components
. Absolute values Variation on previous year
EUR Absolute EUR %
2002 2003 2001 2002 2003 2001 2002 2003
Total average labour cost 13.73 14.37 0.56 0.61 0.65 4.5 4.6 4.7
Total average wage cost 10.24 10.68 0.36 0.41 0.44 3.8 4.1 4.3
'Ordinary' wage cost 8.96 9.26 0.31 0.36 0.31 3.7 4.2 3.4
Other non-wage costs 3.49 3.7 0.2 0.2 0.21 6.4 6.2 5.9

Source: 'Anuario de Estadísticas Laborales y de Asuntos Sociales'. Ministerio de Trabajo y Asuntos Sociales (MTAS).

Collective agreements signed for 2004 (according to figures reported in the El País newspaper) cover more than 7 million workers and provide for an average pay increase of 2.9%. Of these workers, 78.59% (5.5 million) are covered by a wage revision clause that is triggered if inflation rises above 2.11%.

The executive committee of CEOE is considering whether the non-renewal of the intersectoral agreement might lead to fewer wage revision clauses and whether, as some large employers state, the overall accord limits their bargaining capacity at sectoral and company level.

Unions' bargaining criteria

UGT and CC.OO, which are satisfied with the results of the intersectoral bargaining agreements (ES0411102N), would agree to a renewal, 'whether through an extension or a new, improved agreement'. In their opinion, the agreements have helped to reduce the consequences of workforce reductions during the lower part of the economic cycle, and to protect wages from inflationary tendencies.

The trade unions, like the employers, consider the problem of the Spanish 'production model' to be a lack of competitiveness. They think that it is feasible to combine: moderate wage growth; productive investment in technology and in qualification of workers; a higher employment rate; better-quality employment; internal flexibility in companies; and good social protection. In short, they are in favour of a more 'solid' production model that improves the comparative advantages and specialisation of the Spanish economy at international level, above all in the face of new competitors such as eastern European countries, China and India. They disagree, however, with seeking competitiveness based on temporary employment or reducing wage costs.

The trade unions also want to: conduct a forward-looking policy to prevent relocations from Spain (ES0411101F); reinforce collective bargaining and extend its coverage; better regulate workers' rights; and reinforce the means of trade union intervention.

According to UGT and CC.OO, a renewal of the intersectoral agreement should include the possibility of certain improvements, such as the following.

  • The obligatory nature of the intersectoral accord should be reinforced.
  • Employment stability should be increased by: encouraging open-ended contracts as a way into employment; restricting temporary recruitment, through the use of maximum percentages and limitation of the number of types of such contracts (ES0409104F); establishing quantified commitments for converting temporary jobs into open-ended ones; using partial retirement and 'hand-over contracts'; and promoting a correct use of training contracts.
  • Subcontracting and the transfer of workers to new employers (ES0405107F) should be controlled by: limiting activities that may be outsourced or contracted out; establishing mechanisms of coordination between companies and trade union representatives; establishing a right of previous consultation for trade union representatives, including receiving a copy of subcontracting/outsourcing contracts before they are entered into; and establishing the responsibility of the main company for the pay of subcontracted workers.
  • Pay should be improved and protected by; improving purchasing power moderately, taking into account the target inflation rate and increases in productivity, and including wage revision clauses that protect workers from inflation; defining a pay structure applicable to the whole workforce that facilitates trade union monitoring and eliminates discrimination; raising the national minimum wage to reach EUR 600 a month in the coming years (ES0406204N); establishing maximum limits for variable pay and objective assessment systems for such schemes; providing temporary workers with seniority rights related to pay; avoiding age-linked pay differences; and guaranteeing supplementary social welfare benefits.
  • Working time should be cut (ES0404205F). Trade unions should be able to participate in the organisation of working time, and the adjustment of real working time to that laid down in collective agreements. Restrictive definitions of overtime should be introduced.

The unions also propose a set of measures in the areas of health and safety at work, environmental protection, equal opportunities (ES0410204F) and equal treatment (above all with regard to women), the right to training and promotion, the reinforcement of collective bargaining and participation rights.

Commentary

The trade unions and the employers have initiated discussions over a new intersectoral agreement. Some tensions have arisen from the political context - CEOE is less at ease with the Socialist Party (Partido Socialista Obrero Español, PSOE) government than with its conservative predecessor - but the prospects seem good.

All the social partners wish to defend national competitiveness, though employers place the emphasis on reducing costs and trade unions on the quality of the production process. It can be argued that they both accept the context of competitiveness between countries and market rules with little international regulation. Thus, the reduction of wage costs, taxes and other aspects will be a constant temptation, or at least a pressure (given the threat of relocations) that will inhibit the improvement of industrial relations.

A referendum will be held in Spain in February 2005 on the EU Constitutional Treaty (EU0406204F). The social partners are mainly in favour though with some criticism, notably from the trade unions. However, there has been little debate on the possibility of harmonising and guaranteeing labour rights or taxes, the movement of capital, a clearer inter-regional policy of solidarity, greater collaboration in production, coordinated technological investment, or the development of powerful public services. Spanish critics argue that the Constitutional Treaty offers no real convergence, beyond the integration of trade, which in fact will be made more difficult due to certain clauses of the Treaty.

It can be argued that a more competitive economy is not equivalent to a better economy. For example, the resources that a company may use in order to be more 'competitive' (eg spending on advertising and image rather than on quality of service, price fixing or hindering the functioning of competitors) do not always coincide with a strategy for improving the capacity of the economy as a whole.

The trade unions may finally accept many of the employers' proposals if they continue to accept the 'rule of competitiveness' as an untouchable law, because (with few exceptions) they will be restricted by national limits. (Daniel Albarracín, CIREM Foundation)

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