National unique collective agreement ended by law
The Romanian government has passed legislation that changes the way collective agreements work at all levels, from individual company up to national level. These are the first substantive changes for 20 years. The new legislation also affects the representativeness criteria for social partners. Collective bargaining has effectively come to a standstill, as social partners are having difficulty in getting reorganised at sector level and obtaining representative status.
New rules governing collective agreements
In Romania, the practice of collective bargaining dates back to 1991 and the collective agreement Act 13/1991, which was subsequently amended under Act 130/1996. Apart from a few minor amendments, it remained in effect until May 2011.
For two decades, collective agreements could be made at four different levels: company/unit, groups of companies/units, branch and national level.
The national collective agreement stipulated minimum rights and obligations applicable to all employees in Romania, irrespective of whether or not lower levels were covered by collective agreements.
The national unique collective agreement was mandatory and set terms of reference for the national minimum wage, length of working time and working conditions.
Government repeals legislation
The social dialogue Act 62/2011, enacted by the government’s without going through the parliamentary procedure, repealed legislation which had been used to govern collective bargaining. Such negotiations are now covered by a law that also regulates trade unions, employer organisations, the Economic and Social Council (CES), social dialogue committees and labour conflicts.
What the changes involve
The new legislation has abolished the national unique collective agreement as a reference point for collective bargaining at all levels.
Collective agreements, which could previously be negotiated for each branch of the national economy (there are 32 branches listed in an appendix to the national unique collective agreement), have been replaced by sectoral collective agreements. However the government has yet to decide on how to define the economic sectors.
Previous collective agreements governing an economic branch were applicable to all workers, and all businesses, in that particular branch, irrespective of whether there were other agreements at company level or group of companies level. However the new legislation stipulates that collective agreements bargained and entered into at sector level will apply only to companies that are members of employer organisations that are signatories to the agreement.
Duration of agreements
Under the previous legislation, collective bargaining was conducted annually, and covered at least salaries, working time and working conditions. A collective agreement could be made for at least 12 months.
As a rule, a national unique collective agreement was made for a period of four years, but there was room for an annual renegotiation of the minimum wage.
The new legislation no longer provides a compulsory agenda for negotiations, or the frequency with which the parties should meet for renegotiation; it only sets out the minimum (12 months) and maximum (24 months) duration of a collective agreement.
New criteria for representativeness of social partners
The traditional parties to negotiations are employers and employees, with the latter being represented by trade unions or employee representatives.
Representativeness criteria are set out for social partners at all levels: company, company groups, economic sectors and national.
At company level, the employer was and continues to have the right to be representative.
As for trade unions, the conditions regulating their creation have changed substantively. Under the previous law, 15 people working in the same economic branch or profession, albeit in different companies, were required to set up a trade union. Now, it takes 15 employees in the same company to establish a trade union.
As 90% of Romanian companies have up to nine employees, representation of workers’ interests by trade union will be out of the question.
From now on, if a trade union is to be representative and allowed to negotiate a single-employer collective agreement, then at least half plus one of the company’s workers have to be affiliated to it (compared to one third under the old law).
Consequently, only one trade union may be deemed representative in a company, whereas under the previous legislation it was possible to have three such trade unions in one company.
Under the new law, employer organisations are recognised as representative at sector level only if they account for at least 10% of all employees in that sector, not including workers in the public sector. Previously, the condition was the same, but it included employees in the public sector.
For trade unions to be representative, the minimum ratio of 7% of all employees in the sector continues to apply.
The new law sets out conditions that a collective agreement must meet before it can be enforced at sector level.
It has to be negotiated and signed by social partners that are recognised as representative for the economic sector. It can then be registered with the competent authorities. However, it can only be enforced at sector level if more than 50% of all employees in the sector work for companies that are members of the signatory employer organisations. If not, the agreement can still be registered but will be effective only at a group of units level.
Previous legislation stipulated that social partner members should include federations that were representative in at least 25% of all branches of the economy. This no longer applies.
Although the concept of a national unique collective agreement has been abolished, national representativeness of social partners is still required, because only employer organisations and trade unions recognised as nationally representative may appoint representatives to the National Tripartite Council for Social Dialogue (CNTDS), to the CES, and to the social dialogue committees operating in central and county public administration bodies.
The national unique collective agreement covering the period 2007–2010 expired in December 2010.
Since then, collective bargaining at sector level has not even started, because the government has not established the sectors in which agreements may be signed.
The collective agreements that are still in place in various economic branches will be effective until they expire.
Collective bargaining in Romania has effectively come to a standstill. This situation partly reflects the difficulty social partners are having in getting reorganised at sector level and obtaining representative status. But it also reflects disagreement between employers, government and trade unions over whether salaries should be raised in line with inflation.
The longer the situation persists, the higher and more uncontrollable social tension may become.
Constantin Ciutacu, Institute of National Economy, Romanian Academy