New competitiveness agreement safeguards jobs at car plant

Bosses at northern French car factory Sevelnord, a subsidiary of PSA Peugeot-Citroën, signed an agreement with three trade unions on 26 July 2012. It is hoped the agreement will secure the future of the plant by ‘adapting working conditions, maintaining jobs and the future development’ of the site. Workers have agreed to a two-year pay freeze and the loss of four days’ annual leave to increase the plant’s competitiveness. The accord is being closely scrutinised by social partners.

Background

The future of the Sevelnord car plant in northern France, a subsidiary of manufacturer PSA Peugeot-Citroën, was at risk on two fronts. Its output had reduced to 76,000 vehicles in 2012, compared with 150,000 in 2008, and Italian car maker Fiat had decided to end its partnership with the PSA group to manufacture vehicles at the site.

To ensure its survival, the Sevelnord management needed PSA’s commitment to build a new car model there. This involved the formation of a new industrial alliance – finally sealed with Toyota in September – and improving the site’s competitiveness. Sevelnord also had to persuade PSA not to take work to its plant in Vigo in Spain.

Rare ‘competitiveness and employment’ agreement

An agreement to safeguard the plant’s future was signed by management and three trade unions on 26 July 2012. The three unions were the joint French Confederation of Management and General Confederation of Executives (CFE-CGC), Force Ouvrière (FO), and the independent SPI-GSEA.

The new agreement ranks alongside the 2004 deal to save the Bosch facility at Vénissieux (FR0408101N) as one of the rare ‘competitiveness and employment’ agreements signed in France. Such agreements are intended to increase an industrial location’s competitiveness. This is usually achieved through employee concessions in return for investment which will safeguard jobs.

With this agreement, the Sevelnord management has pledged not to make any redundancies for three years. The deal, which can be extended by a further two years, is wide-ranging in content. Its key aspects focus on concessions on pay and working hours, and on greater flexibility over how work is organised.

Wage moderation

The text of the agreement includes ‘temporary and exceptional’ measures, which provide for wage moderation ‘without a reduction in pay’. The agreement includes:

  • a pay freeze in 2013 and 2014. However, this freeze can be re-examined in the event of an undue rise in inflation;
  • negotiations in 2015 and 2016 to determine which criteria will be considered in order to arrive at a general pay increase;
  • wage negotiations from 2017 onwards which will compensate for the pay freeze, taking into account general increases implemented since 2013 within the PSA group and the metal-working industry;
  • a commitment by management to increase bonuses paid under the French voluntary profit-sharing scheme.

If profit-sharing linked to the site’s results does not permit an incentive to be awarded, the management has undertaken to pay two bonuses of €350 in 2013 and €400 in 2014.

Flexibility on the organisation of work and working hours

Competitiveness is expected to be improved by greater flexibility in how work is organised at the Sevelnord plant. Among the changes are:

  • reduced periods of notice for disbanding or creating production teams, down from two months to one month for their establishment or an adjustment of their working hours, and down to three weeks for their dissolution;
  • starting from 2013, arrangements allowing for financial compensation or time off in lieu, in particular for working on Saturdays, will cease;
  • if daily output has not been met, management can organise a joint production catch-up the same day by extending a shift by a maximum of 21 minutes – these additional minutes will be paid as overtime;
  • a reduction in the working week from 38 hours 50 minutes to 37 hours 50 minutes, in exchange for the loss of four days’ annual leave.

Employee mobility

The agreement also puts in place new rules on employee mobility. It states that any employee assigned to a post in a trade that is described in the agreement as ‘sensitive’ or ‘in the balance’ cannot refuse a change of job unless refusal is justified by his or her family situation. The new posting will mean no reduction in pay, and a transfer to a less-qualified post for more than one year can only be temporary and requires the employee’s written consent.

The agreement also supports arrangements which allows employees to be ‘loaned’ to other companies. It sees this as ‘an instrument of flexibility, allowing lay-offs for economic reasons to be avoided and limiting the use of short-time working’.

Reaction of social partners

Trade union FO has refused to accept the description of the document as a ‘competitiveness agreement’ because it does not include wage reduction. FO emphasised that the loss of annual leave was more than compensated for by the reduction in the weekly working hours. In addition, FO said the accord did not depart from national agreements within the metal working industry and was intended to be in place only for a limited period.

The CFE-CGC, meanwhile, said it was pleased with the job safeguards contained in the agreement.

The General Confederation of Labour (CGT), however, refused to sign the agreement. It rejected the deal, which it considered to be ‘the result of blackmail’, and feared that it may become a model for the industry.

Commentary

This agreement is important first of all for the employees at the plant. It offers them the strong prospect of maintaining their jobs against a background of rising unemployment.

Beyond that, it puts in place a type of agreement which is at stake in current interprofessional negotiations about safeguarding jobs.

It remains to be clarified, within the framework of this deal, how the measures envisaged by such agreements will be applied to employees, how employers can be sanctioned if they fail to meet their commitments, and how the employees’ social rights (in particular unemployment compensation) can be fully protected if the employer is forced to make redundancies.

Frédéric Turlan, IR Share

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