A trend reversal in collective bargaining?

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28 Oktober 2015

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Since the beginning of 2015 a number of major collective agreements at national, sectoral and cross-sectoral level have been renewed, renegotiated, or have come under discussion. Several of the examples presented here are from the countries that have been hit hardest during the crisis and/or in which collective bargaining has been most affected, such as Croatia, Ireland, Slovenia, Spain or Greece. It is too early to speak about a reversal of the trend in  collective bargaining in general; however, some tentative optimism may be justified.

About six out of 10 workers in Europe in the private sector are covered by some kind of collective agreement, considerably more than in some other regions of the world. However, the long-term decline in collective bargaining coverage rates is clear, and this has trend has accelerated in some countries – especially in the years following the crisis. Collective bargaining systems in many Member States have experienced substantial ‘fine-tuning’, such as extension mechanisms, opportunities for derogation from the terms of the agreements and reductions in periods of validity. There has also been an accelerated trend towards more decentralised bargaining, or no bargaining at all, as has been noted in the Eurofound reports Impact of the crisis on industrial relations and Changes to wage-setting mechanisms in the context of the crisis and the EU’s new economic governance regime. (As part of its ongoing research into the area, Eurofound is set to publish an extensive report on 15 years of collective bargaining processes and outcomes.)

Recent data on collective bargaining coverage are scarce

While national data on collective bargaining coverage are hard to obtain, some do exist.

On the other hand, more recent evidence from Spain and Portugal – countries that had experienced a substantial fall in collective bargaining coverage – suggest that the situation is stabilising. In Spain, 926 new collective agreements were registered during the first five months of 2015 (372 KB PDF, in Spanish) ( (up to May 2015), affecting more than 2.5 million workers.

The number of employees covered has changed markedly in recent years. In 2012, some 2,705,436 employees were covered. This decreased significantly in 2013, to 1,705,188 employees but soared in 2014 to 3,500,320 employees. In 2015, it then declined, back to almost 2012 levels, at 2,707,559. (Figures are up to May each year). 

Portugal has experienced the greatest fall in collective bargaining coverage. The most recent figures from the branch/company level for 2014 suggest that the drop in collective bargaining coverage has stopped, but coverage remains at an extremely low level. In Greece, research based on more than 500 collective agreements made in 2013 provides evidence for a predominance of company level wage bargaining, and a substantial fall in collectively agreed wages. It also finds a change in the content of the collective agreements – from wage regulation to maintaining non-wage working conditions, such as job retention, severance pay, and working time arrangements.

Lack of recent data and time series in many Member States is certainly an obstacle in monitoring collective bargaining developments. This article therefore looks into the latest developments in collective bargaining since the beginning of 2015, drawing mainly on evidence from major (cross)-sectoral or central-level agreements.

Several of the examples presented here are from the countries that have been hit hardest during the crisis, such as Croatia, Greece, Ireland, Slovenia and Spain. There are further examples of recent major collective agreements in the public sector (in Lithuania and Ireland, for example). Does this suggest a trend reversal in collective bargaining?

Restoring collective bargaining

While collective bargaining is a process that lies within the autonomy of social partners, governments can and do shape the rules of the game. In the first half of 2015, EurWORK’s reporting captured three cases of countries where a reinforcing of collective bargaining has happened or is likely to happen in due course. Each of these countries is part of that group of countries that had experienced the greatest crisis-related impacts on collective bargaining and industrial relations.

In Ireland, the long-awaited Bill on collective bargaining was published in May 2015. Once passed, it will give effect to a long-standing commitment by the government to allow for collective bargaining rights in firms where these are currently absent.

In Spain, in May 2015, the Spanish Supreme Court passed sentence concerning the validity of expired collective agreements. This is with regard to the 2012 Labour Reform (Royal Decree Act 3/2012), which established a limit of one year for the renegotiation of expired collective agreements. However, the Supreme Court has passed sentence against this clause of the Labour Reform for specific cases. In particular, those collective agreements that have clauses of automatic termination, and as approved by the Supreme Court, should be automatically extended, regardless of the state of the discussion process of the agreement and its duration.

In Greece, the Ministry of Labour in March 2015 released the labour relations draft bill entitled Amendment of the provisions of Law 1876/1990 – Restoration and reform of the framework for collective bargaining, mediation and arbitration and other provisions. This was subject to social dialogue during the first half of the year and was submitted to the Economic Social Committee (ESC), which issued an opinion on it on 12 May. In general, all the national social partners (SETE, ESEE, GSEE, GSEVEE, SEV) took a positive view of the new bill, with some divergence of opinion on the part of the employers' bodies regarding the methodology of increasing the minimum wage and against compulsory arbitration. The International Labour Organization (ILO) also took a positive view of the bill, commenting that the law was moving in the direction of restoring 'normality' to collective bargaining. In June, however, the tabling of the bill by the Minister of Labour and its passage through Parliament was at a standstill. After the new loan agreement of 12 July 2015 between Greece and its creditors, the tabling of the bill by the Minister of Labour and its passage through Parliament were postponed. The delay and the postponement in tabling the new labour bill provoked strong objections from the General Confederation of Greek Workers (GSEE), according to whom collective bargaining had also been held up. The national social partners have called for a start to negotiations.

Recent collective bargaining outcomes

The reporting from EurWORK's national-level correspondents in the first half of 2015 showed that several breakthroughs have been achieved in major collective agreements throughout Europe. This article focuses mainly on those related to the private sector. A more detailed overview of recent developments in the public sector at national level can be found in the EurWORK article Public sector pay and collective bargaining: Pay restoration or new perspectives?

Slovenia: First national agreement concluded since 2009

In January 2015, social partners in Slovenia concluded a new social agreement that stablises industrial relations for 2015 and 2016. The document, the first social agreement concluded since 2009, sets out 140 measures in key areas except for the minimum wage, which will be tackled separately. However, in 2014 one of the employer organisations, the Chamber of Commerce and Industry of Slovenia, pulled out of negotiations about the agreement, protesting proposals for additional corporate taxes and refusing to sign the agreement.

Spain: Prolonged discussions over pay extending to 2015

In Spain, the agreement for employment and social dialogue 2015–2017 was expected to be renewed by the end of 2014, but social partners did not reach agreement until mid-May 2015, and signed the agreement on June 8. The biggest hurdle was the level of pay increases, finally set at 1% for 2015 and 1.5% for 2016. The agreement also contains a mechanism for an automatic pay review should inflation rise above 2.5% between 2015 and 2016. The bipartite agreement is binding on the members of the trade unions and employers’ organisations that signed it. The pay increases are guidelines that can be adapted in line with companies' circumstances.

Greece: National agreement extended during reform of collective bargaining legislation

In Greece, the National General Collective Agreement 2014 expired in March 2015. Initially, the Ministry of Labour and Social Solidarity extended it until the end of June. The government wants to give social partners extra time to restore the possibility of negotiating wages. Since 2012, the minimum wage has been determined by the Minister of Labour, according to Cabinet Act No 6/2012. In September, the draft bill had not yet been passed. On 29 September, the social partners agreed to the extension of the national collective agreement until December 2015, providing that if there is any change in the collective bargaining legislation, they will come back for social dialogue and negotiation. 

Netherlands: Breakthrough in several large agreements

After period of difficult and protracted bargaining, there has been a breakthrough in several large agreements in the Netherlands. The agreement in the public sector for 800,000 employees, for instance, has been renewed after four years of negotiations; however FNV, the largest union, does not want to sign the agreement, its main criticism being that these increases are largely paid for by the employees themselves, after a change in the pension system.

In other agreements, negotiations remain tough. A major example is the metal and engineering sector, with two agreements covering 300,000 and 150,000 employees respectively. In May 2015, the unions organised a series of 24-hour strikes in companies such as DAF, Cofely, Imtech and Vopa. Similarly, in the printing and media sector, no agreement has been reached: in June 2015, the unions threatened to start industrial action.

Belgium: Government intervention causes strain

In Belgium, collective bargaining at national level has been recently been come under strain: the government has been intervening in social bargaining, contrary to the usual Belgian practice. This has given rise to a lot of unrest among both trade unions and employers’ organisations. In particular, the government's abolition of the automatic wage index mechanism (in Dutch) has caused controversy. For the first time since 1996, the government voted for a wage indexation freeze when the reference index reaches 2%. The measure will allow for only very low pay increases, and employers who choose to compensate staff for the freeze may well be sanctioned. The agreement also provides for the following:

  • raising the retirement age from 65 to 67;
  • more flexible working time;
  • rethinking wage structures by giving more importance to the expertise of workers rather than to their seniority;
  • altering the time-credit scheme by toughening up the rules on ‘unjustified’ career breaks.

The trade unions reacted angrily and the agreement continued to be a source of unrest, especially at the beginning of 2015. On 27 April, however, social partners concluded eight new cross-sectoral agreements applicable for 2015 and 2016. In this sectoral bargaining, each sector will negotiate working conditions and pay agreements according to the bargaining framework defined by the governmental agreement as well as by the cross-sectoral agreements. Whereas some sectors such as the chemical sector are close to reaching an agreement, bargaining is more difficult and contentious in others, such as metalworking, textile and food.

Norway: Moderate pay rises agreed 

2015 marks the mid-term of the biannual collective agreements in Norway, with only wage rates negotiated in intermediary negotiations. An initial agreement between the largest social partners – the Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Enterprise (NHO) – was reached on 26 March 2015, while most wage rates in nationwide collective agreements were renegotiated during the second quarter of the year. The agreement gave low-wage collective agreements a wage increase of NOK 1.75 an hour (€0.19 as at 29 October 2015), but gave nothing to other agreements. The value of the pay rise, including wage drift and effects of wage increases given in 2014, is calculated by the parties to be 2.7% for union members covered by the LO–NHO agreement. Other social partners were due to start their negotiations in April. 

Finland: Social partners reach national wage agreement

In mid-June, the Finnish social partners reached an agreement on a general pay raise for 2016 (in Finnish). With a flat-rate increase of €16 per month, and a minimum of 0.43% per month, the raise was widely considered very moderate. The negotiations were conducted within the framework of the central-level agreement Pact for Employment and Growth, which the social partners agreed on in October 2013. The government was satisfied with the results of the pay negotiations. Minister of Finance Alexander Stubb (National Coalition Party) stated that moderation was necessary in order to improve competitiveness in the country.

Selected new sector-level agreements

Croatia: New agreement in the road transport sector

On 14 April 2015, a new collective agreement was signed for road maintenance companies, which are associated in Hrvatski Cestar (Croatian Roadworkers) and in the Croatian Trade Union of Transport and Communications.  According to trade unions, this is a great success, because the collective agreement was signed for four years and applies to all 14 member companies of the association. The total number of employees included in the collective agreement is around 3,400 – a significant number for a Croatian collective agreement.

Greece: Sectoral (and company-level) agreements

By the end of June 2015, two national sectoral agreements had been signed in Greece concerning employees in tobacco companies and foreign airlines, and one occupation-based agreement concerning electricians in hotels. At the company level, the most important collective employment agreements at company level concerned Hellenic Petroleum SA, Alpha Bank, Aluminium of Greece, the Bank of Greece and the Hellenic Electricity Distribution Network Operator (HEDNO). 

The agreed renewal of the two-year collective agreement for the employees in the Piraeus Port Authority S.A.,  was postponed after an objection by its main shareholder, the Hellenic Republic Asset Development Fund (TAIPED), which claimed that this agreement commits the future buyer of the port to honouring it. The Minister of Labour, however, asked urgently that the collective agreement be signed, as the three-month extension period was due to end on 8 July 2015.

Italy: Banking sector agreement after two years of unrest

In March 2015, after nearly two years of unrest, banking unions finally agreed a pay rise with the Italian Banking Association. Beside pay increases, several provisions were made to help support youth employment and reduce the social impact of restructuring processes. The agreement also proposed setting up ENBICREDITO, a bilateral organisation to support labour market matching, and the creation of a bilateral committee to create a more flexible job classification system. The agreement was approved by 96% of voters in assemblies in June, involving about 67,000 workers out of a coverage of about 285,000 sectoral employees.

Slovakia: Metal sector concludes multi-employer agreement

On 19 May 2015, the multi-employer collective agreement in the metal sector for 2015–2016 was concluded between trade union OZ Kovo and the employers' Federation of Mechanical Engineering (ZSP SR), after lengthy negotiations. The agreement covers about 21,000 employees. Recently, OZ Kovo proposed that the agreement be extended, but no decision has yet been taken on this matter.

Commentary 

It is probably too early to speak of a general reversal of the trend in collective bargaining. In particuar, this article deals only with major national cross-sectoral agreements or pacts, and can draw on only very patchy data from sectoral or company-level bargaining. Also, there are Member States (such as Romania or Hungary), where collective bargaining has been strongly impacted as a result of the crisis, but no substantial recent agreements or changes to restore collective bargaining legislation exist that can be reported.

The Irish and the Greek examples suggest that – in Member States where collective bargaining has been strongly affected – a possible return to collective bargaining could be on the agenda. Debates in these countries are, however, still at an early stage; it remains to be seen whether agreements will be reached.

The Slovenian example shows that a return to the pre-crisis system is possible, although with some alterations, even after systemic change. The change of scope is also noteworthy: the current agreement in Slovenia is more in the nature of a social dialogue pact. Minimum wages no longer form part of the national agreement. Equally, in Greece, collective bargaining is now broader in its scope than pay alone. Alteration to wage-setting mechanisms (strongly debated in Belgium, included as an option in the new Irish public sector agreement, and resolved in the Danish public sector) are other examples of the increasing scope of topics regulated in collective agreements.

Despite difficulties and prolonged bargaining processes in several countries (the Netherlands, Spain and Belgium), successful outcomes in terms of social partners' reaching agreements even in a more challenging economic context suggest that collective bargaining remains alive.

About this article

This article is based mainly on contributions from Eurofound’s network of European correspondents. Further resources on collective employment relations and collective bargaining can be obtained from EurWORK's industrial relations country profiles and EurWORK's collective wage bargaining portal.

For further information, contact Christine Aumayr-Pintar: cau@eurofound.europa.eu

 

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    A trend reversal in collective bargaining?

    Since the beginning of 2015 a number of major collective agreements at national, sectoral and cross-sectoral level have been renewed, renegotiated, or under discussion. Several of the examples presented here are from the countries that have been hit hardest during the crisis and/or in which collective bargaining has been most affected, such as Croatia, Ireland, Slovenia, Spain or Greece. It is too early to speak about a reversal of the trend in collective bargaining in general; however, some tentative optimism may be justified.

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