Wage increase agreed in metalworking despite economic crisis

In January 2009, the social partners in the metalworking sector concluded a new collective agreement for 2009–2010. The sector has been one of the hardest hit by the global economic and regional gas crises. However, the social partners are willing to increase production and employment in the sector, while also guaranteeing and respecting workers’ rights. They negotiated a minimum wage increase, additional compensations if inflation reaches more than 8% and a range of social benefits.

Background to negotiation process

On 20 January 2009, after four months of negotiations, the social partners in the metalworking industry signed a new sectoral collective agreement (in Bulgarian, 178Kb MS Word doc) for a two-year term. Signatories on the trade union side included Vasil Yanachkov, President of the Trade Union Federation ‘Metalicy’ (Синдикална федерация ‘Металици’), affiliated to the Confederation of Independent Trade Unions in Bulgaria (Конфедерация на независимите синдикати в България, CITUB), and Lyudmil Pavlov, President of the National Federation ‘Metallurgy’ (Национална Федерация ‘Металургия’), affiliated to the Confederation of Labour ‘Podkrepa’ (Страница на КТ Подкрепа, CL ‘Podkrepa’). Representing the employer side was Anton Petrov, Chair of the Branch Chamber of Ferrous and Non-Ferrous Metallurgy (Българската асоциация на металургичната индустрия, BCM), which is a member of the Bulgarian Industrial Association (Българска стопанска камара, BIA).

After negotiations started in September 2008, several rounds of talks took place without any agreement being reached. Metalworking in Bulgaria has been one of the sectors hit hardest by the global economic and regional gas crises, which have both impacted on the bargaining round in the sector. As a result, a certain number of workers in the metalworking companies have been laid off or have had to take unpaid leave (BG0812019I).

Against this background, several options regarding the collective bargaining round have been considered: to postpone negotiations until the economy recovers and the crisis has passed; to negotiate a new collective agreement in a crisis situation with lower provisions; or to consider the draft agreement proposed by the trade unions. Trade unions managed to defend the proposed draft. The spirit of cooperation and mutual concessions allowed for a consensus to be finally reached. The new agreement contains better provisions than those contained in the previous sectoral collective agreement (in Bulgarian), which expired in November 2008, and covers about 18,000 workers in metalworking.

Main provisions of agreement

Pay increases

In terms of pay, the agreement provides for:

  • a minimum monthly wage rate of BGN 350 (€180). This is significantly higher than the national minimum wage of BGN 240 (€123) and minimum rate of BGN 250 (€128) set by the previous collective agreement in metalworking;
  • an increase in the daily allowance for free food for those working in a harmful environment from BGN 3 (€1.50) to BGN 4 (€2);
  • an hourly minimum night work supplement set at BGN 0.50 (€0.25).

Originally, the trade unions’ demands were higher; for example, they asked for a minimum monthly wage of BGN 400 (€205) and a minimum supplement for night work at the rate of BGN 1 (€0.50), but both parties made some concessions. Part of the compromise deal is a commitment by the employers to start negotiations for compensations in the case of inflation reaching 8% or more. Initially, the employers’ proposal was to start such negotiations at an inflation rate of 10%.

Further provisions

The social partners also agreed on extra compensations at the level of the monthly minimum wage of BGN 350 (€180), in addition to those provided for in the Labour Code. These compensations are related to the termination of an employment contract in the case of an employee’s sickness, decreasing production volume, reducing staff numbers, as well as production stoppages for more than 15 days.

In addition, the following provisions were agreed:

  • an extra one-off payment of €250 for employees at retirement;
  • enterprise union leaders are to be given at least 64 paid hours annually to perform their duties;
  • financial support in the case of sickness or accidents at work.

Reactions of social partners

The President of CITUB, Zhelizko Hristov, emphasised the importance of the sectoral agreement. He underlined that the improved provisions of the agreement despite the current economic crisis proved the industry’s employers’ willingness to take responsibility for their labour force. CITUB will argue for the agreement to be extended to all metalworking companies, like the Labour Code. The president of the Metalicy trade union highlighted the importance of the new agreement for the future of the metalworking sector and acknowledged the employers commitment and spirit of cooperation during the negotiations.

In a press statement (in Bulgarian, 581Kb PDF), the employer association referred to the agreement as a success under the current circumstances. In light of the increasingly unfavourable economic conditions, the social partners nevertheless managed to reach a settlement, providing for pay increases of 40% in the sector. This figure is well beyond the record high inflation rate of 12.3% in 2008. Employers also emphasised the feeling of mutual trust and respect for the interests of both negotiating parties which allowed for a consensus on conflicting issues to be reached.

Commentary

The deal is one of the first sectoral collective agreements to be reached in 2009 under the new economic circumstances and is seen as a major success for autonomous bipartite social dialogue. Moreover, the new agreement also sets a good example for other sectors, showing that the cooperative and constructive social partnership made it possible to reach agreement in the interests of both parties even in a period of high uncertainty for the Bulgarian economy. The agreement follows the framework for improvement of social dialogue agreed in the 2004 collective agreement (BG0406201N).

Nadezhda Daskalova, Institute for Social and Trade Union Research (ISTUR)

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