Collective Bargaining (Wage fixing)

1. Collective Bargaining(Wage fixing) ILO (ITC) + EMF Social Dialogue Course Bukarest 15th April 2008

2. Collective BargainingCore competence of Trade Unions • Collective Bargaining is the centrepiece of Trade Union policy • Pay negotiations (and working time regulations) are the centrepiece of collective bargaining

3. Collective Bargaining in Germany Legal Basis §§§§§§§§§ German Constitution article 9, section 3 – Right of Association;and Collective Agreements Act (1949)

4. Collective Bargaining Autonomy means that trade unions have the right to independently negotiate collective agreements with the employers‘ associations without interference of the government.

5. Who is entitled to conclude collective agreements? ????? trade unions and employers‘ associations (EA) or single employers

6. What is a collective agreement? • A written contract • Concluded between trade unions and employers‘ associations (predominant) or single employers • Regulates certain conditions of labour contract (e.g.: pay, working time, holidays, right to training etc.)

7. Germany as a whole geographic regions Validity of Collective Agreements areas sector employees • metal-electro • steel • IT-sector • textile • garment • wood processing • Plastic processing • craftsmen • all union members (blue-collar workers, white-collar workers) • employer • All employer of a sector/area - who are members of EA • Single Employer (sometimes)

8. Collective Bargaining Areas in the Metal Industry

9. Type of collective bargaining system... • A system of sectoral collective bargaining is predominant in Germany • „multi-employer bargaining“ (MEB) • Distinct from a single-employer bargaining • Generally: Most EU-countries have MEB – in new member states: company agreements are dominant (exception: Slovenia, Slovakia)

10. Categories of Collective Agreements • Non-wage agreements • Agreements on pay systems • Agreements on pay rise • Agreements on specific issues

11. Non-wage agreements regulate general working conditions: • weekly working hours - (since 1995: 35 hours) • break regulation, particularly for repetitive jobs (assembly line etc.) • Job enrichment • Right to training • length of holiday • terms of notice - (e.g.: depending on how long s.o. works already for the same company) • Early retirement They are usually valid for several years.

12. Agreement on pay systems(IGM settled a single pay system recently • how blue-collar and white-collar workers are classified on the pay scale according to specific job descriptions (like: skills, experience, hardship, responsibility etc.) • the proportion of the different pay groups to one another • principles of remuneration such as piecework, incentive bonus payments, etc. • Regulation of premium pay for overtime, shift work, night or week-end work They are usually valid for several years.

13. Agreements on pay rise • pay increases: - in percentage or sometimes one-off payments • the amount of extra payments and bonuses They are usually agreed for 12 months.

14. Example: Agreement on pay in the Metalindustry 2007 • Pay increase: • For the period: 1st of April 2007 until 31st of May 2008:4.1 % beginning with 1st of June 2007 until 31st of May 2008. • One-off payment of 400 € for the months April, May 2007; • apprentices get a lump sum payment of 125 €. • (Notice: inflation rate 2.3 %; productivity 0.8 % (whole economy) - metalindustry 5,3 % productivity; 1,8 % producer price)

15. Agreements on specific issues regulate: • the payment of Christmas bonuses (55 %) and • additional holiday pay (50 %) • Extra-payment for special saving funds (for pensions etc.) • the guarantee of the wages and salaries of older employees They are usually valid for several years.

16. Pay components

17. Pay scale (blue collar and white collar are integrated)

18. Collective Bargaining Procedure - Role of the Bargaining Commission? • It consists of union members working in the area the agreement is valid for, and of local union officers. • Its members are elected at local level and confirmed by the regional conference. • It prepares collective bargaining rounds. • It decides on the claims. • It decides on rejection or approval of the bargaining results.

19. IG Metall discusses the economic/political situation IG Metall delivers an expertise the Executive Committee sets the framework of the claims union members in the companies discuss the Bargaining Commission decides on the claims the Executive Committeee authorizes the claims Development of union claims the claims are transmitted to the employers‘ association

20. Economic Criteria for demands re-destribution (aim to get higher share of profits/value added) Cost of livingproductivity increase (at least a compensation (hourly productivity of employees) for inflation rate)

21. Example:IG Metal demand in 2007 • IG Metall demanded 6.5 % pay increase

22. the agreement in force is terminated with proper notice the claims are sent to the employers‘ association four weeks prior to the expiry of the terminated agreement the Bargaining Commission sets up a negotiating body Collective Bargaining Procedurefirst steps before the negotiations start the negotiations usually start two weeks prior to the expiry of the terminated agreement

23. no-strike obligation terminates four weeks after the expiry of the terminated agreement negotiations continue and warning strikes and demonstrations are carried out a result is reached Collective Bargaining Procedure the negotiations are successful the Bargaining Commis- sion accepts the result

24. one of the two parties officially declares the failure a conciliation procedure is now possible submision of strike ballot/strike to the Executive Committee strike ballot: if 75% agree, a strike is carried out resume negotiations another ballot (25% approval needed) result no result Collective Bargaining Procedure the negotiations are not successful newagreement conciliation procedure possible

25. Employees covered by Collective Agreements in Manufacturing Ind. source: IAB 2006

26. Control of the application of collective agreements • Works council has to monitor the implementation of collective agreement. (German Works Constitution Act, § 80) • Trade union shop stewards

27. Single Market but fragmented wage bargaining policy • European single market (1993) and European monetary union (1999) created a single economic area. – Growing number of trans-national companies (mergers/acquisitons). • But the concrete collective bargaining policy still takes place at national level. • To prevent downward spirals and „wage dumping“: the respective national wage policy must be embedded in an joint approach of all EMF-member unions.

28. EMF-coordination formula for collective bargaining • Most important is the commitment to a common target in order to avoid an intentional undercutting of wage costs. • 1998, EMF-affiliates concluded a common coordination formula:

29. Coordination by a common target • The key point of reference for trade union wage policy in all countries must be to offset the rate of inflation and to ensure that workers´ incomes retain a balanced participation in productivity gains. • The commitment to safeguard purchasing power and to reach a balanced participation in productivity gains is the new European co-ordination rule for the metal sector all over Europe. (source:3rd EMF Collective Bargaining Conference, Dec. 1998, Frankfurt)

30. Coordination rule -EMF Increase of agreed wages At least covering inflation rate and A balanced portion of the productivity increase Cost effect of all elements of the collective agreement concluded: Should equal the sum of inflation rate plus productivity in- crease Inflation rate Productivity (hourly) Improvement of qualitative Elements, like reduction of working time, training, pension etc. Other criteria (e.g.:redistribution)

31. EUCOBA = European Collective Bargaining Information System • eucoba Annual Report Reporting System All Trade Unions affiliated with the EMF

32. Eucoba: Information System to create Transparency • Annual Report - description of main contents of collective agreements concluded - evaluation of co-ordination rule for each country (affiliated trade union) • Reporting System - Network of national correspondents responsible for the respective trade union - Quick information on collective bargaining affairs - day-to-day archive (web-site EMF: www.emf-fem.org)

33. Thank you ... !

34. Coordination rule • According to EUCOBA-report: no indication for deliberate social dumping in cases where the agreements fall short of the coordination rule • Where unions have not succeeded in getting what the wanted: it was due to economic and political situation • In most cases only short term deviations • But: due to the economic pressure, recent developments show that unions fall back to a mere national attitude

35. Company Agreements regulate:(unless there are legal or negotiated regulations, § 87(1) Works Constitution Act) • company rules • work schedules • payment of remuneration • holiday planning • health and safety at work • social facilities (e.g. canteens) • determination and modification of remuneration levels

36. Basis: German Constitution Article 9 and Collective Agreements Act Are negotiated between employers‘ associations or individual employers and the trade unions Are valid for all employers afiliated to the employers‘ associacion and to all union members Determine general rules regarding working time, wages, vacation, etc. Set a minimum standard Basis: Works Constitution Act Are negotiated between a particular company and its works council Are valid for all employees of this particular company Are concluded according to the principle of advantage Can only be negotiated if the collective agreement explicitly permits it Can only regulate issues the collective agreement does not regulate Collective Agreements Company Agreements Collective Agreements and Company AgreementsWhat is the difference?

37. Company Agreements may not regulate: Remunerations and other working conditions which are already or usually regulated by collective agreements. This does not apply if a collective agreement explicitly allows the conclusion of additional agreements on the plant level. (§77(3) Works Constitution Act)

38. Collective Bargaining ProcedureAnd what is the role of the Executive Committee? • It defines the scope of the claims, which then are decided on by the Bargaining Commission. • It approves of the claims decided on by the Bargaining Commission. • It terminates the agreement in force with proper notice. • It approves of strike ballots. • It approves of the results that have been accepted by the Bargaining Commission.

39. What does „generally binding“ mean? The Ministry of Labour has the right to declare a collective agreement „generally binding“ if this particular agreement is in the „public interest“. In this case, the collective agreement is valid for all employers and for all employees, even if they do not belong to an employers‘ association or to a trade union.