First strikes in 25 years mark start of pay round

Austria’s autumn collective bargaining round got off to a bad start when negotiations stalled in the metalworking industry, which traditionally sets the pattern for the rest of the economy. About 100,000 workers in 200 companies took part in warning strikes. The issue was resolved only after secret meetings between the leaders of both sides, with both now saying they are happy with their agreement to increase average wages by 4.2%, setting the gross minimum wage at €1,583 a month.

Background

Collective bargaining in the metalworking sector got off to a bad start when the demands of both sides were made public. This action was highly unusual, as demands are normally kept secret and exchanged only at the first meeting of the negotiations. However, in the weeks before the meeting the employers’ side had stated that they would offer a wage increase roughly compensating for the inflation rate. After the first, unsuccessful bargaining round, union representatives held a press conference announcing their aim of securing a 5.5% pay rise. This was seen by some experts as being highly ambitious.

Public announcement of wage increase demands

In the first negotiating round, union chief negotiators Rainer Wimmer, Chair of the manufacturing union (PRO-GE) and Wolfgang Katzian, Chair of the Union of Salaried Employees, Graphical Workers and Journalists (GPA-djp), said they were demanding a wage increase of 5.5% due to high productivity, high profits and full order books in the metalworking industry. They backed their request with the ‘Benya formula’ (named after the former president of the Austrian Trade Union Federation ÖGB), according to which wage increases should fully compensate workers for inflation and grant them a significant share (half) of any productivity growth.

However, the employers’ negotiators, Christoph Hinteregger and Alfred Hintringer representing the industry section of the Federal Economic Chamber (WKÖ), offered compensation for inflation (3.1%) plus a one-off payment of €200 for the rise in productivity, arguing that the uncertain economic situation would not allow for higher increases. Negotiations were broken off after the first round. The unions then held 400 works council meetings with about 2,000 works council representatives to tell them about the negotiations and the employers’ offer. These meetings decided what steps, including industrial action, workers would take depending on what happened next. The second negotiating round also ended in deadlock, with the employers making a final offer of a wage increase of 3.65% plus the one-off payment of €200. The unions, however, rejected the offer of one-time payments, saying they wanted sustainable increases.

Warning strikes held as negotiations reached a standstill

Two-day warning strikes involving 100,000 workers in about 200 companies were then held with the unions threatening to strike indefinitely. While preparations were being made for a full strike in the following week, the Presidents of the two social partner umbrella organisations involved, Erich Foglar of ÖGB and Christoph Leitl of WKÖ, met to try to prevent further escalation. Following this, a third round of negotiations was scheduled during which a result was reached.

Wage agreement in detail

The social partners agreed an average wage increase of 4.2% (with higher increases for low income groups and lower increases for high income groups) for the 165,000 workers in the metalworking industry. This is the highest wage settlement for many years. The two lowest income groups (unskilled workers) receive a wage increase of 4.4% with a minimum increase of €80, thus raising wages by as much as 5.3% in some cases. The highest income groups receive an increase of 3.8%. The minimum collectively agreed wage is €1,583 gross a month. As the forecast inflation rate in 2012 stands at 2%, the expected real wage increase stands at 2.2%. For companies which have made losses during the crisis, a so-called location clause was negotiated: companies which, in the last three years, have not been in profit at least twice can split the 4.2% by increasing general wages by 3.8%, reserving the remaining 0.4% of the full increase for individual pay rises. Furthermore, phases of parental leave will be taken into account for salary increases: up to 16 months will be considered for each child, marking an improvement to the former provision of taking only 10 months into account for one child only.

Reactions

Both negotiating partners are content with the settlement. The ÖGB stresses that individuals’ spending power will be strengthened and considers the larger increases for low-wage groups, as well as the crediting of parental leave per child, as positive for female employees whose wages are often lower. Employers consider the agreement to be both socially balanced and economically feasible. Only the Federation of Austrian Industry (IV) has criticised the agreement, saying it will place a big financial burden on companies.

Commentary

As the metalworkers traditionally set the pattern for wage negotiations in other sectors, it will be interesting to see how strongly their comparatively good wage settlement will affect other sectoral collective bargaining rounds. The sudden move from the negotiating table to warning strikes was exceptional in Austria. There have been no strikes in the metalworking industry since 1986, when similar warning strikes were held to demand higher incomes and a reduction in working time, and no strikes in any part of the economy since 2005. The last time a major strike was called in the metalworking industry was in 1962 when 200,000 workers went on strike for four days.

Bernadette Allinger, Working Life Research Centre (FORBA)

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