New agreement under negotiation for insurance office staff

The framework collective agreement for insurance office employees in Austria is undergoing an upheaval in the course of painstaking negotiations. Tenure was reformed in 1996, and it is hoped that totally revised pay scales will be concluded by July 1998. Further incremental reform plans extend until 2001.

The insurance industry employs about 30,000 white-collar employees. Of these about half are office staff and half are sales representatives. The Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) and the Money, Credit and Insurance Section of the Austrian Chamber of Commerce (Österreichische Wirtschaftskammer, WKÖ) are getting close to completing another stage in their quest to revise the industry's framework agreement (Rahmenkollektivvertrag). This time, it is office staff pay scales that are being revised.

Rationale for new agreement

According to one estimate, over 80% of the content of the current framework sectoral agreement for insurance office staff dates from 1921, as amended in 1951. It contains a very poorly differentiated pay scale which distinguishes between only skilled and unskilled staff. Of the latter there are now only about 150 in the entire sector. Within each skill grade the collectively agreed pay scale rises strictly in line with length of service. The other defining feature is the so-called "definitive employment" provision: after five years' employment, provided that they are at least 24 years old, insurance office staff obtain tenure. No other group of white-collar employees operates under even remotely similar conditions.

As a result, a number of problems developed over time. Tenure became increasingly burdensome to management as the industry began to incorporate new technologies and had to face increasingly international competition; the undifferentiated pay scale offered next-to-no incentive for employees to seek better qualifications; and, last but not least, the collective agreement became more and more irrelevant in relation to the salaries actually paid.

End of tenure

The insurance companies issued a warning in March 1996 that if tenure were not ended for new recruits they would not negotiate the annual pay increase. So, after 16 negotiating sessions, changes to the sectoral agreement were concluded on 26 November 1996. Staff recruited after 1 January 1997 now have to wait for 20 years and at least until the age of 45 before employment becomes "definitive". At the same time, a host of smaller improvements in working time regulations, overtime bonuses, sick leave compensation, vacation days, severance pay and so on were agreed, many of them by removing "bits and pieces" from the framework agreement rather than by adding new language. In a protocol it was also agreed at the time eventually to remove the difference between old and new employees, to start negotiations on more flexible working time no more than six months after the May 1997 reform of the Working Time Act (AT9702102F) and fundamentally to revise the pay scale.

So far only a few hundred new office staff have been hired, because the insurance companies are seeking to raise productivity. This can also be seen in the age distribution of employees: a third, the largest group, is between 30 and 40 years old.

New pay scale

Work on the reform of the formal pay scale was begun almost immediately after the agreement on tenure. The goal was to conclude negotiations before the end of 1997, though this was not achieved. The target now is 1 July 1998 and to have the agreement in force by 1 January 1999. Once before, in the mid-1980s, the social partners had come very close to agreeing a new skill and pay scale but failed to agree at the last moment.

In March 1997, the GPA proposed classifying jobs in eight "functional groups" with six pay levels each. The groups differ by skill. The first three levels are passed at fixed intervals of two years while levels 4 and 5 take three years each so that top level 6 is reached after 14 years. By July 1997, the social partners had agreed to hire a consultant and to assess a number of key functions in terms of the eight job groups. This task was completed by November 1997 and led to the definition of nine (rather than eight) skill groups. Negotiators met 18 times in the process.

The GPA has publicized its intention to propose minimum pay ranging from ATS 210,000 gross per year for the bottom group, bottom level, to ATS 812,000 for the top level in the top group. Employers favour a scale starting from the same bottom level to a top minimum salary of ATS 630,000. The issue has not yet been negotiated. A compromise of about ATS 700,000 or slightly more is expected.

The hitch at present is not the pay scale but the trade union's wish that the industry, which sells private pensions insurance, should provide some extra coverage to its own employees. There is an existing guideline for pension funds issued by the Austrian Association of Insurers (Verband der Versicherungsunternehmen Österreichs), the industry body grouping all insurers with offices in Austria, but it is non-binding. The trade union wants eventually to include some sort of commitment in the framework sectoral agreement for office staff. For the moment it is seeking only a commitment from employers to negotiate the point later in 1998. However, the employers' chief negotiator told the press that such a mandate is unlikely to come forth from his constituency. He cited cost as the reason, since operating costs were already high in Austria.

Next steps

Apart from the pensions issue, there are a number of other difficult topics that remain for the future nothing has yet been done about working time flexibility; the harmonisation of conditions for old and new employees is a matter of anxiety for most works councils, but it will be difficult to get this on to the agenda; and there is the wish expressed recently by the union to end another industry anomaly and to merge the framework collective agreements for office staff and for sales representatives - it hopes to achieve this by June 2001 when the GPA's Insurance Section will celebrate its centennial.


Facing international competition, the insurance industry is undergoing rapid concentration. Further mergers and alliances are expected. The introduction of the euro will put additional pressure on insurance premiums. The industry is in the process of reducing the number of office staff in favour of better representation in the field. It is also facing a market that may have a reached a level of saturation. New products will be needed to re-ignite industry growth. At the same time insurers appear to harbour substantial excess capacity that, if realized, may lead to a further shedding of office staff in particular, though mostly by natural wastage. All of this is likely to advance rather than hinder the recasting of the industry agreement, although there are many points of resistance in the copious detail of regulations. Diligent tactical work is required of both sides to overcome the looming trouble spots. So far they have shown themselves extremely capable of mastering the issues in hand. (August Gächter, IHS)

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