Luxembourg: Efforts to return to tripartism

After signing a bilateral agreement with employer representatives, and another with unions, the Luxembourg government has been encouraging the social partners to return to the country’s former tradition of tripartite consultation. At the same time, tripartite meetings have been held as part of the framework process of organising the national response to the European Semester.

Background

The ‘Luxembourg social model‘ is characterised by tripartite consultation, which brings together the government, representatives of employers and of workers.

It was introduced in the 1970s, at a time when it was necessary to reorganise the iron and steel industry and deal with social problems. This tripartite model kept thousands of steel workers from becoming redundant, made the steel industry fit for the global economy and introduced social policy measures aimed at keeping the unemployment rate very low. Since 1977, the ‘Tripartite Coordination Committee‘ has been used several times by the government to get consensus on crucial reforms (for example, the first National Action Plan on Employment in the framework of the European Employment Strategy in 1998, and the introduction of the unique working status in 2006).

The Luxembourg social model not only seeks consensus, but also shares burdens. Each partner – the state, employers and workers – has to commit to taking on one third of any cost involved in solutions to problems. The economic and financial crisis of 2008 altered the tripartite model fundamentally, because the deterioration of public finances implied that employers and employees had to take more of the burden. Moreover, trade unions and employer organisations disagreed on the causes of the crisis and wanted different solutions. Employers wanted to reinforce competitiveness by reducing costs, whereas trade unions wanted to strengthen economic demand. The failure of tripartite dialogue in 2010 was mainly due to the government’s proposal to freeze the automatic indexation of wages until 2014.

Effort to restore tripartite dialogue

When Luxembourg’s coalition government, made up of the Democratic Party, the Greens and the Socialist Workers Party, came to power in December 2013, it promised to restore tripartite dialogue.

However, in October 2014, when the Government issued its 2015 budget proposals which included ‘a package for the future’, trade unions responded by calling a general strike. On 28 November 2014, the government reached agreement with the Independent Trade Union of Luxembourg (OGB-L), the Luxembourg Confederation of Christian Trade Unions (LCGB)  and the General Confederation of Public Service (CGFP). This limited the negative social impact of 13 of the government's budget proposals on:

  • family policy;
  • employment policy;
  • taxes;
  • social security contributions and benefits;
  • civil servants.

The trade unions insisted that their agreement had to be seen as a compromise and not as support for the government’s budgetary policy nor as acceptance of its ‘package for the future’ as a whole.

Separate bipartite agreements

The Government also met employer representatives in December 2014 and concluded a ‘partnership for employment’ on 14 January 2015. Its aim was to combat unemployment, and included measures on:

  • work-life balance;
  • taxes;
  • administrative simplification;
  • social security;
  • national education policy.

The government also promised to organise tripartite meetings soon. However, the unions opposed proposals in this agreement on working time flexibility and on the social minimum wage for skilled workers.

Tripartite meeting to implement two agreements

On 3 February 2015, the government organised a tripartite meeting with the social partners to try to draw up a programme for the implementation of the two agreements. Three main decisions were made.

  • Issues such as employment, training and work would be discussed in the Permanent Committee for Labour and Employment (CPTE), a tripartite body.
  • Reform on taxes would be discussed under the auspices of the tripartite Economic and Social Council (CES).
  • Issues such as parental leave, working time flexibility, early retirement, competitiveness and the simplification of bureaucracy would be discussed in special tripartite working groups.

A second tripartite meeting was organised on 24 April 2015, during which the Government’s final proposal on parental leave was accepted by the social partners.

Involvement of the Economic and Social Council

The government also entrusted the organisation of the framework meetings for the European Semester to the Economic and Social Council (CES). Employers had withdrawn from this when tripartite dialogue failed in 2010. However, on 3 October 2014, the social partners wrote to the Prime Minister proposing the CES as a basis for social dialogue, setting up three meetings corresponding to three different stages of the process of the European Semester. The social partners promised also to establish a new working programme for the CES for 2015–2016.

The first tripartite meeting organised under the new government was held on 26 January 2015. Government representatives presented information about:

  • the European Semester;
  • challenges for Luxembourg;
  • recommendations for 2011–2015;
  • national objectives.

The employer organisation, the Union of Luxembourg Companies (UEL)  and the unions gave their views. At the second meeting, on 30 March, unions and employers gave their reaction to the government’s framework memorandum on the National Reform Programme and on the Stability and Growth Pact. The third tripartite meeting will be in October 2015.

Commentary

The social partners have not changed their views about the causes of the crisis and how best to solve them. However, while they do not share a common vision they are making efforts to communicate. This can be seen clearly in terms of the tripartite meetings organised in relation to the European Semester.

European economic governance and the Juncker Commission’s revival of European and national social dialogue have been used to boost tripartite dialogue in Luxembourg. The government, after concluding two bipartite agreements, has tried to implement the measures with the participation of the social partners. Tripartite bodies will be used to prepare reforms on employment, training, work, social protection and taxes. It could be argued that the historical sense of tripartite dialogue is probably dead, but that efforts are being made by all parties to create a new one under pressure from the European Union.

 

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