Fiat increases wages in advance of renewal of collective agreement

As of October 2007, the Fiat Group has decided to pay its employees an advance of €30 a month on future wage increases. Other large metalworking companies have followed this example. As a result, negotiations have restarted on the renewal of the metalworkers’ national collective agreement, which had been in deadlock for months. Overall, the government and social partners have welcomed the Fiat initiative.

Fiat Group decision

The good economic performance of the Fiat Group has prompted a decision by the company, formalised by the board of directors on 24 October 2007, to pay its employees an advance on future wage increases from October 2007 onwards. For the 11th consecutive quarter, Fiat has recorded an improvement in its balance sheet indicators, so that its growth forecasts for 2007 have been revised upwards, with a now expected net profit of between €1.8 and €1.9 billion.

The Managing Director, Sergio Marchionne, and the CEO of the Group, Luca Cordero di Montezemolo – who is also the current President of the Confederation of Italian Industry (Confederazione Generale dell’Industria Italiana, Confindustria) – announced the unilateral increase. The decision will cost Fiat about €3 million a month, including social security contributions, and will apply to the Group’s 75,000 Italian employees. Each worker will receive a pay rise of €30 a month, which is equivalent to just under one third of the amount – between €100 and €107 – requested by the trade unions in the bargaining round for the renewal of the national sectoral collective agreement (IT0704019I).

Mr Marchionne wanted ‘to send out a positive signal to employees, reflecting, at least to some extent, expectations of economic improvement and seeking to reduce the negative impact of the possible prolongation of negotiations on renewal of the agreement’. In fact, negotiations on renewal of the metalworkers’ collective agreement, which expired on 30 October 2007, have been deadlocked for months due to disagreement on certain normative issues, rather than on the pay part.

Furthermore, the decision by top management reflects the new style of industrial relations introduced by Mr Marchionne and characterised by closer dialogue with the trade unions and recognition of the workforce’s contribution to the company’s good performance. It was in this climate that in 2006 the trade unions and management were able to sign the supplementary company-level agreement for the first time in 10 years (IT0607049I).

Reactions to the initiative

Reactions to the decision by Fiat, which is the largest manufacturing multinational corporation in Italy, have not been long in coming. Other metalworking companies have followed Fiat’s example: among them large enterprises like the air conditioning and heating appliances manufacturer Riello, which on 30 November paid an advance of €30 a month to its employees, and the manufacturer of automotive brake systems Brembo, which has decided to advance €42 a month.

The President of the Federation of Metalworking Industries (Federazione Sindacale dell’Industria Metalmeccanica, Federmeccanica), Massimo Calearo, has emphasised the positive outcome of the initiative – namely, Fiat’s advanced pay increase, and the others that have followed its example – for companies with good economic performance. However, he called attention to the need to reform the collective bargaining system, which has been the principal cause of the delay in renewing the sectoral agreement (IT0412306F).

The reactions of the general secretaries of the sectoral trade unions have been more cautious; the three unions involved comprise the Federation of White and Blue-collar Metalworkers (Federazione Impiegati Operai Metallurgici, Fiom), affiliated to the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil); the Italian Metalworkers’ Federation (Federazione Italiana Metalmeccanici, Fim), affiliated to the Italian Confederation of Workers’ Trade Unions (Confederazione Italiana Sindacati Lavoratori, Cisl); and the Italian Metalworkers Union (Unione Italiana Lavoratori Metalmeccanici, Uilm), affiliated to the Union of Italian Workers (Unione Italiana del Lavoro, Uil). According to the General Secretary of Fiom-Cgil, Gianni Rinaldini, ‘whether the nature of Fiat’s initiative is positive or negative will become plain during the negotiations on renewal of the national agreement, where the company is well represented’. The sectoral trade unions therefore hope that Fiat’s initiative is the prelude for renewal of the agreement.

On behalf of the government, the Minister of Employment and Social Security, Cesare Damiano, and the Minister of Economic Development, Pierluigi Bersani, have applauded Fiat’s decision and hope that it will accelerate conclusion of the agreement.

Commentary

The Fiat Group’s conciliatory signals to the trade unions did not, however, prevent a general strike by metalworkers, which took place on 30 October 2007, to urge renewal of the national sectoral agreement. Difficulties in negotiations seem to derive more from divergent views on work organisation – primarily the use of flexible employment contracts – than on pay increases. Moreover, some observers have interpreted Mr Marchionne’s gesture as a signal to Federmeccanica, which is deemed responsible for the stalling of negotiations.

Cristina Tajani, Ires Lombardia

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