2.1 The basis of the labour market system Working life is mainly regulated by legislation and collective agreements. Most trade unions support the concept of strong labour legislation providing a solid basis for collective bargaining. In this respect the dissidents in Europe are represented by the Danes, who think that legislation should generally be kept out of the sphere of operations of labour market organisations. The Danes seem to rely on the strength of the trade union movement and the employers’ interest in preserving collective bargaining. It may be held in general that labour legislation has established a solid basis for collective bargaining especially in the systems in Finland, Sweden, France and Italy. By contrast the statute book of favourable labour legislation remains very thin in Great Britain. Two decades of Conservative rule provided much more legislation seeking to hamper the work of trade unions. Norway remains somewhere between the extremes: there is some affinity with Denmark in the form of a fairly thin basis in statute, but there is also a broad and strong safety net based on agreements. In highly generalised terms the relative weights of the statutory system and the agreed system in the featured countries may be described as follows:
Union level is strongly emphasised in collective bargaining. Except for Britain, all of the countries covered in this study establish the principal normative basis at union level with national, industry-specific agreements. In Britain there is a national collective agreement only in the paper industry. In the chemical industry and energy sector there are hundreds of enterprise-level and workplace level agreements, the renegotiation of which is a full-time and continuous occupation for hundreds of union officials. In Germany collective agreements are formally State-wide within the Federal Republic. In practise, however, unions copy one and the same agreement from State to State, with only minor differences. Differences remain between the Western and the Eastern States in terms of wage rates and working hours, but these differentials will be phased out by 2009. Local bargaining is common, but constitutes the main agreement level only in Britain. The main rule is for local agreements to concern pay rises and better benefits. Impairments may normally be agreed only when the national collective agreement allows the local parties to do so. Local agreements are generally separate, and do not become part of the national agreement. Trade unions and their local shop stewards have kept a firm grip on local agreements. The most vulnerable system is in Germany, where works councils (Betriebsrat) that are separate from trade union structures enjoy broad bargaining mandates. In all countries concrete pay agreements in particular are mainly negotiated at enterprise level. In Sweden and Norway national collective agreements often no longer even define the pay system. Such agreement has devolved to workplace level. The following table describes the relative weight of various agreement levels in the featured countries, and especially in the industries covered by the study. The colour of local bargaining could be darker in all countries, and the general trend is clearly towards local bargaining.
We shall now examine the structures of statute and bargaining systems by country, and their forms in the chemical, paper and energy industries. 2.1.1 Legislation and collective agreements, Finland, Sweden and Norway The systems in Finland, Sweden and Norway are similar. All three countries have strong labour legislation that underpins the collective bargaining system and employee rights. Particularly in Finland and Norway, comprehensive general agreements concluded at confederation level cover and supplement issues that were settled in Sweden by labour legislation in the 1970s. Legislation stipulates that the parties to a collective agreement may be one or more employers or employers' federations, and one or more associations of wage and salary earners. Both labour confederations and sectoral trade unions conclude collective agreements, but the emphasis has shifted to union level. The economic recession of the early 1990s helped the labour confederations to preserve their bargaining power, especially in Finland. These three countries mainly apply the industry line principle. There are separate agreements for blue and white collar employees. Senior salaried staff in Finland have no collective agreement proper in the paper and chemical industries. An agreement in the energy sector covers part of the industry. In Sweden salaried employees and senior salaried employees have a common agreement in the chemical industry. In the paper industry all staff groups have negotiated a common agreement on the general terms of employment (allmänna anställningsvillkor). This agreement covers such matters as working hours, overtime pay, holidays and job security. It is supplemented by separate pay agreements for blue collar workers and salaried employees. The most progressive of these agreements known as medarbetareavtal (co-worker agreement) is in the energy sector. Most of this industry is covered by two collective agreements that apply to all staff classes. The issue of pay has been settled by defining local and individual pay scales. The municipal energy sector agreement defines only the minimum pay. In Norway employees have their own agreements, and there are separate agreements for their supervisors, represented by FLT. The engineers union NITO is also a party to several agreements, but not in the chemical industry. Basically a collective agreement is an exchange of industrial peace in return for pay and other employment-related benefits. The regulations governing industrial peace vary to some extent from country to country (this will be discussed below). Sectoral collective agreements define the framework for local bargaining. These agreements specify the matters that may be agreed locally in a manner deviating from the sectoral agreement and the local bargaining mechanism to be used. As the organising rate is high, local negotiators also represent the national union in practice, and it is unusual for any conflict to arise between the national and local levels. Collective agreements in Finland specify that wage and salary earners are to be represented in local negotiations by a shop steward. The paper industry agreement allows the Paperworkers’ Union representative to take part in local negotiations. Under the Co-determination Act (MBL) in Sweden, wage and salary earners are represented in practice by a union section (avdelning), or by a smaller unit thereof operating at the workplace (verkstadsklubb). This is how the matter is stipulated in collective agreements. Only a trade union may conclude a valid agreement. the agreement willl apply to all employees at the work place, and not only to the organised employees. In Norway the confederations, and especially LO, have strongly positioned in collective bargaining. LO negotiates the important main agreement with the business life association NHO. The confederations also often sign sectoral agreements in addition to industry-specific collective bargaining at trade union level. Local organisations are authorised to bargain for better but not worse conditions than those in the national collective agreement. These negotiatioons are conducted by shop stewards. In practice local bargaining focuses on remuneration arrangements and on sectoral pay increases exceeding those nationally agreed across the board. Germany The German labour confederation DGB does not engage in collective bargaining. Its main role is to lobby the government, Parliament, public authorities and the employers' confederation on behalf of the trade union movement. The right to collective bargaining and action is divided rather clearly, but sometimes problematically, into two elements: the right of trade unions, employers' federations and individual employers to collective bargaining, and local relations between individual employers and their employees. The German constitution gives the trade unions and employers' federations the right to negotiate without State intervention (Tarifautonomie) on pay and working conditions. During the term of an agreement it is forbidden to take industrial action in support of new claims concerning the working conditions regulated by the agreement. A collective agreement applies if the employer belongs to the employers' federation and the employee is organised, or if the agreement is declared to be of generally binding character. Sectoral collective agreements are negotiated between trade unions and employers' federations in various industries. The framework is defined in the Collective Agreements Act (Tarifvertragsgesetz). The parties usually begin in one State, and then the resulting State-level agreement (Flächentarifvertrag) is copied in the other States. Since German reunification the parties have made their own industry-specific agreements for the States in former East-Germany, where terms of employment were less favourable to employees than in the States of former West-Germany. However, by a more or less systematic programme the trade unions have narrowed this differential. In the chemical industry the new States will attain the Western level by 2009. In each industry and region there are usually two agreements. A framework agreement (Manteltarifvertrag), often continuing for many years, covers working hours, annual holidays and the other general conditions. The pay agreement (Entgeltvertrag), on the other hand, is negotiated for only one or two years. Most agreements cover both blue and white collar employees. One German speciality is the broad mandate of works councils (Betriebrat) in collective bargaining. All employees, whether organised or not, are eligible to take part in works council elections. The works councils were established after World War II, and were given broad powers at the behest of the Allies. Two theories have been advances as to their motive for this requirement. The most common explanation is that the Allies believed that complex arrangements, including strong staff representation in the administration of steel and coal enterprises, would retard the reconstruction of German industry and offer a certain controlling element. The alternative theory is that in the post-war anti-Western atmosphere the Allies also feared a slide towards communism in Germany’s Western regions. Thus, investing in workplace democracy would represent parallel thinking with the comprehensive socio-political reforms initiated in the 1870s during the administration of Chancellor Bismarck. Besides negotiating local agreements, works councils supervise compliance with legislation, labour protection regulations and collective agreements. Their mandate also includes social arrangements, personnel matters and financial issues. Works council have comprehensive rights of access to information, the right to be consulted and, on certain questions, also to co-determine. These rights are discussed in greater detail in the chapter on participatory systems and co-operation procedures. Local bargaining is based on legislation (Betriebsverfassungsgesetz). The Act lists the matters that must be negotiated locally. The parties may also choose to agree voluntarily on other matters. If the works council and the employer representatives cannot agree, then the dispute is submitted to a special conciliation committee (Einigungstelle). This committee includes an equal number of employer and works council representatives and an impartial chair. The committee’s decision is appealable to the Labour Court. 20 per cent of chemical industry workplaces have a local agreement on pay or on other conditions. Under the sectoral collective agreement, the parties may agree locally on improved but not impaired conditions. IGBCE reports that it has managed to keep these negotiation groups (Tarifkommissionen) under the control of its own representatives, even though the union branch is not officially a party to the negotiations. The State level collective agreements and local bargaining are based on different legislation and different institutions. This causes a multitude of difficulties. Legislation does give priority to collective agreements concluded by the unions if the parties locally have agreed otherwise on matters upon which the law does not require local bargaining. German employers would prefer to devolve more matters to negotiation at enterprise level. This would undermine the position of the unions in view of the strong basis and rights guaranteed by law to works councils. Although the law requires a works council to be set up in all enterprises with more than five employees, the obligation is not sanctioned, and few small and medium-size enterprises have works councils. Moreover, the organising rate is very low in such businesses. In matters upon which the legislation requires local bargaining a collective agreement concluded by the unions may supplant an agreement made by a works council only when the employer is bound to the collective agreement and the agreement proscribes local derogation. Regulations supplementing and specifying the agreement may be agreed locally. To avoid conflicts the collective agreements concluded by unions increasingly include opportunities to agree on such regulations locally. France The right of collective bargaining is stated both in the French constitution and in labour legislation (code du travail). The parties to the process are one or more trade unions and one or more employers' federations or employers. The French tend to describe their system of collective agreements in terms of at least six levels of bargaining: 1. Confederation level (interprofessionnel) The main function of the confederations is to lobby the government. Occasionally they manage to agree with the government on such issues as pension reform or vocational training principles. The confederations do not conclude pay agreements proper. National collective agreements are negotiated at union level between trade unions and employers' federations, both of which are organised according to the industry line principle. Such agreements are in force in the chemical, oil, glass, rubber and paper industries. They are of generally binding character. The parties must meet once a year for negotiations on wages and salaries, and once every five years to review remuneration scales and training. At the level of large corporations, the parties may conclude not only comprehensive collective agreements, but also corporate group level agreements on co-operation organs, shop steward rights, and so on. Public sector enterprises and privatised enterprises in particular have their own agreements. A special system applies in the government’s electricity and gas enterprises Electricité de France (EdF) and Gaz de France (GdF). At the time of the 1946 nationalisation they were given "work rules" (statut national) defining the pay system and conditions of employment as in a collective agreement, but without the bargaining process. Over the decades these rules have been updated, paragraph by paragraph, and agreement on wages and salaries has slowly evolved in the direction of collective bargaining. Transformation of the statute into a collective agreement for the electricity and gas industry is currently under way. This is a direct consequence of European Union energy market Directives which, despite French opposition, give foreign enterprises gradual access to the closed French electricity and gas markets. The number of domestic energy enterprises has already risen to 150. Trade unions have sought to ensure that the generous working conditions of EdF and GdF gain comprehensive application as the entire business sector is restructured. At enterprise and local level the parties are allowed to agree on conditions that are better than those of the national agreement fromt he employee's point of view. By law the parties must negotiate annually in enterprises on wages and salaries, working hours and work organisation if one or more trade unions are represented at local level. There is no requirement to reach a settlement. However, the French unions report that employers have sought to push collective bargaining increasingly onto the enterprise level. If there is no union representation at the workplace, then local negotiations with representatives elected by the personnel may take place only where the national collective agreement so allows. There are problems in supervising compliance at businesses with fewer than 50 employees. 70 per cent of all wage and salary earners work in such businesses. Rather little regional collective bargaining goes on nowadays. This may concern the organisation of vocational training or the employment of young employees. There are five labour confederations in France, all of which have industry-specific unions that have been deemed "representative". This means that their right to collective bargaining has been recognised. The pluralism of the French trade union movement complicates the processes of collective bargaining, formulation of common points of view and settlement. Under law a collective agreement becomes binding when signed by at least one of the five unions. As the unions represent typically altogether some 10 to 15 per cent of the employees, the legitimacy of such agreements sometimes remains questionable. The CFDT has concluded the highest number of agreements. CGT has typically taken part in the negotiations but then failed to sign the eventual settlement, especially in chemical and energy industries. When this union signed the first agreement in its history on arrangements for shorter working hours, the conservative members raised a furious internal storm. Even the re-election of the union’s leaders became uncertain. Trade union activity and collective bargaining are strongly politicized. The impacts of a collective agreement concluded by representative parties are comparable to those of legislation. An employer must apply an agreement that it has signed, or that its employers' federation has signed. An agreement that has been declared to have generally binding character must also be applied (see below for further details of the requirements for this. Italy While the confederations in Italy do not engage in regular collective bargaining, they play a visible role as organisations supervising specific interests. They take a vocal stand in favour of and against various matters, and succeeded last Spring in organising a massive general strike in protest at the labour reform planned by the Berlusconi government. The three confederations do not conclude agreements on pay, and they seldom sign common statements with the employers' confederation Confindustria. However, in 1993 the confederations CGIL, CISL and UIL joined the employers and the State in a tripartite social agreement (Patto Sociale) that included a framework for collective bargaining at national and local levels. Collective bargaining is the domain of trade unions. Reflecting the existence of three confederations, most industries have three unions. These negotiate together. "Normative" matters, such as working hours, annual holiday, labour protection etc., are negotiated in four year cycles. Minimum wage increases are negotiated for two years on the basis of the inflation estimate. Local union representatives have a local level mandate to negotiate. This local bargaining covers about 50 per cent of employees. Its framework has been defined in a national agreement. Typically, the parties agree on such matters as a 3,5 to 5 per cent pay rise based on productivity and performance. Reductions in working hours have been agreed nationally, but their practical application has been a matter for local bargaining. Regional bargaining takes place only in the handicrafts sector, where regional trade union organs are parties to the negotiations. Great Britain The TUC labour confederation in the United Kingdom is not a party to collective agreements. There are also few sectoral agreements remaining at national level. The paper industry collective agreement is one of these rarities. Collective bargaining has devolved to enterprise and workplace level, partly as a result of collaboration between the business community and a Conservative government that held office for many years. One outcome of this is that thousands of union functionaries spend the entire year tied up in negotiations on new pay and working hour regulations for collective agreements. The Employment Relation Act, ERA, in force since 2000, is one the current Labour government’s rare accomplishments to improve the position of the trade union movement after two decades of maltreatment under Conservative rule. The Conservatives succeeded in cutting the organising rate by about twenty percentage points and depriving unions of bargaining rights in hundreds of enterprises. At the time of entry into force of the ERA there were no longer any significant collective agreements for oil refineries. The British unions report that the ERA has changed the situation. The law obliges an employer with at least 21 employees to recognise the union if the majority of the employees so desire. An employer may, of course, voluntarily recognise the union, but this is not common. This means that the unions must regularly engage in a complex process, beginning with a formal written request by the union for recognition from the employer. The union must furnish evidence that at least 10 per cent of the employees in the unit that the union seeks to represent have joined the union. If the subsequent negotiation fails to result in a voluntary recognition agreement, then the union must submit an official application to the central mediation board CAC. If the CAC finds that the union has organised more than half of the employees, then it can immediately admit the recognition. In other cases a ballot is organised. This may be postal or it may take place at the work place. For recognition the union must secure a majority of the votes cast (50 per cent plus one) and the support of at least 40 per cent of those entitled to vote. The unions are critical of this counting regulation, as it appears to consider abstainers as opposed to union recognition. If the union wins a majority, then it must seek to agree with the employer on the formalities of collective bargaining, assisted by the mediation board where needed. There is no obligation to conclude a collective agreement, either at national or at local level. According to the unions, the Act has brought results despite these tremendously complex procedures, as employers have understood that co-operation is the wisest long term policy. If several unions seek the right to represent, then they must submit a joint application, thereby demonstrating their ability to co-operate. If the unit already has a recognised union, then no other union may enter the same territory. In 2001 the unions achieved 470 new recognition agreements. This broadened the number of employees benefiting from security agreements by 120,000 men and women. The number is a threefold increase over the previous year. Local negotiations are led by shop stewards (Committee of shop stewards), assisted by union functionaries. Negotiations regularly take place around one and the same table. As there are several unions in the chemical, paper and energy sectors, representatives of three to five unions regularly participate in the negotiations. Local bargaining concentrates on wage and salary increases. A popular model is "RPI+X" where RPI (retail price index) refers to the rise in consumer prices and X is the pay increase proper. The most common justification cited for pay increases is increased productivity. Agreements are increasingly concluded for three years. Such long validity periods are also in the interest of union functionaries, who then have time for duties other than running from one negotiating table to another. Some enterprises, such as the chemical industry giant ICI, have maintained a tradition of national bargaining. Thus, all ICI unions negotiate together with the Directors of personnel administration. In any case, the local agreements are very similar, for example in respect of regulations on working hours and annual leave. Unions use the existing agreements as springboards in their negotiations, and seek to accelerate the progress of any who would otherwise be left behind. In contrast to Finland, collective agreements in the UK have no automatic legal impact. An agreement becomes binding only when it includes sanctions for non-compliance (this is not the case in the paper industry agreement) or when the individual employment contract refers to the collective agreement. The latter method is the most common approach. 2.1.2 The generally binding character of collective agreements In the mid-1990s debate on labour reform in Finland proposals were made to end the generally binding character of the collective agreements. It was argued that small businesses suffer unduly when they are not allowed to pay their employees less than the minimum tariffs and to make them work longer or shorter hours according to the needs of the business. These discussion peterd out rather quickly when it was noticed that most European States have some kind of generally binding system, based either on legislation or custom. Finland A collective agreement is confirmed as generally binding if it is considered to be representative of the industry in which it is applied. The industry concerned is defined in the clause governing the scope of the collective agreement. The issue of representativeness is then assessed within that industry. The representativeness governing generally binding character is assessed according to three factors. These are (1) statistics indicating how commonly the collective agreement is applied, (2) data on how established collective bargaining is in the industry, and (3) the organising rate of the parties to the agreement. In practise it has been required that the collective agreement covers about half of the industry’s employees. Consideration is also given to the objective of securing broadly applicable minimum conditions through the generally binding system. The generally binding character of a collective agreement is confirmed by a Board appointed especially for this purpose at the Ministry of Social Affairs and Health. The Board is required to examine the generally binding character of all national collective agreements. Decisions of the Board are appealable to the Labour Court. By the end of June 2002 the Board had examined over 40 per cent of the approximately 300 national collective agreements negotiated in Finland. 107 agreements have been declared generally binding by either the Board or the Labour Court, including the national collective agreements in the chemical, paper and energy industries. Only 12 agreements failed to achieve generally binding character. One of these was an agreement covering 250 energy sector employees organised in the Metalworkers’ Union. A decision on the generally binding character of a collective agreement is effective until further notice. Should any fundamental shift in the frequency of a collective agreement’s application take place after the decision has been taken, then the Board may take up the matter either ex officio or on application. The obligation to comply with collective agreements of generally binding character primarily applies to unorganised employers. An employer that, on the basis of the Collective Agreements Act, is bound by a collective agreement concluded by a national employee union is not obliged to comply with a collective agreement of generally binding character in its sector. The provisions of collective agreements of generally binding character that must be observed are those governing the conditions of employment relationships (known as labour norms) and regulations on working conditions (known as working condition norms). Regulations on implementation of the collective agreement itself (such as regulations on the negotiating procedure and access by shop stewards to information) are not applicable on the basis of its generally binding character. According to Dublin Foundation statistics, collective agreements of generally binding character cover 90 per cent of Finnish employees. This figure is among the highest in Europe. Sweden There is no official system of generally binding character in Sweden. Collective agreements bind employers and employees who are members in an organisation that has signed the agreement, or members of branches of such a union. In practise this means that trade unions in Swedish industry for ce unorganised employers to sign a reference agreement (hängavtal). This specifies the collective agreement conditions that are applicable in the enterprise and establishes legally binding character. The system is vulnerable but has worked to date. The unions report that, with a couple of minor exceptions, employers have not dared to reject the reference agreement. Unorganised employees remain a problem. There are very few such employees in the
industries covered by this study. The courts have been helpful in compensating for the
lack of legislation. They have adopted the following line: unless the collective agreement
clearly stipulates otherwise, an employer must comply with the custom and practise
prevailing at the work place, and may not pay unorganised employees less than organised employees. This establishes the principle that an employer must apply to all employees the collective agreement that covers the work done at the workplace. This creates a de facto generally binding character system in Sweden, even though this is not enshrined in legislation. Collective agreements cover as much as 94 per cent of wage and salary earners. Norway In Norway, as in Sweden, the generally binding character system is not defined in legislation. The unions must therefore procure compliance with reference agreements (hengavtale) from unorganised employers. According to the unions , there have been no problems in the industries studied, as enterprises have lacked the courage to rebel. Enterprises must apply the same regulations to unorganised employees as to organised employees. Employees may not be treated differently depending on union membership. The OECD estimates that collective agreements cover 74 per cent of employees in Norway, which is clearly less than in Finland and Sweden. Germany The German Ministry of Labour and Social Affairs may, pursuant to the Collective Agreements Act, declare an agreement generally binding (allgemeinverbindlich) after it has been considered by a Board. Employer and employee unions are represented on this Board. The Ministry of Labour may also mandate the State labour authorities to declare agreements generally binding. An agreement that has been declared generally binding then covers all employers and employees in the industry concerned. When a collective agreement expires the generally binding character system also ends. Fresh consideration must then be sought for a new agreement. This creates no major problems in practice. The framework agreement that includes most of the norms has been in force for many years, and only the pay agreements are renewed at annual or biennial intervals. In April 2002 the Ministry of Labour register listed 57,600 collective agreements. 516 of these had been declared generally binding. The small number is explained by the practise of not submitting all agreements to the Board or the Ministry. Thus, for example, the agreements of the chemical, paper and energy industries are not on the list of agreements of generally binding character. Most of the agreements on the list are from the service, construction and textile industries. When agreements lack generally binding character the unions rely on fairly good organising. In fact the system is vulnerable. Normative regulations such as participatory systems and social benefits cover all employees, but only in enterprises belonging to the employers' federation. With respect to monetary benefits, such as pay and working hours, the law permits application of regulations to unorganised employees that differ from those of the collective agreement. In practise, however, enterprises do not use this opportunity. IGBCE has used reference agreements in the same way as the Swedish unions. This involves procuring the signatures of unorganised employers on a copy of the main agreement. According to the latest statistics, collective agreements cover 67 per cent of employees in Germany as a whole. Just a few years ago the coverage figure claimed was over 90 per cent. The coverage of collective agreements has fallen, however, throughout the transition period of the 1990s. In industry as a whole, industry-specific collective agreements bind 65 per cent of enterprises in Western Germany and 35 per cent in Eastern Germany. Enterprise-specific agreements exist in 7 per cent of Western and 10 per cent of Eastern businesses. The rest are bound by no agreement, but even here more than half of businesses in the East and two thirds in the West comply with industry-specific agreements. In the energy sector up to 80 per cent of enterprises are directly bound by collective agreements. The principal explanation for the fall in coverage is incorporation/privatisation and the fragmentation of enterprise structure. Trade unions have largely failed to organise small and medium size enterprises. Thus, they simply have not had time or enjoyed success in procuring signatures on reference agreements when the industry-specific agreements have not been taken through the machinery that confirms generally binding character. France The French Ministry of Labour may declare an agreement generally binding on application by a signatory union (the law refers to extension, extension). The generally binding character then covers all employers and employees in the industry concerned. The Ministry may even extend an agreement of generally binding character to cover another industry (élargissement) if no collective agreement has been negotiated in that industry for lack of trade unions or for other reasons. The chemical and paper industry agreements are of generally binding character. The energy sector is, for the reasons described above, undergoing transition, as there has been one dominant, State-owned electricity enterprise in France. The electricity and gas industry agreement under negotiation is sure to be of generally binding character. Despite the low organising rate, collective agreements cover as much as 90 per cent of French wage and salary earners. Italy There is no generally binding character system based on law or custom in Italy. Even so, the coverage of collective agreements is estimated to be 82 per cent of wage and salary earners, although the organising rate is at the European average level of 35 per cent. Partly this is explained by the tradition of large public sector and State enterprises. This tradition is rapidly eroding as the privatisation programme is implemented and enterprise structure changes. Despite the lack of generally binding character, the courts regularly apply collective agreement pay regulations as a frame of reference when assessing the pay conditions in contracts of employment in the light of the Constitutional right to decent pay. In the same way the pay regulations of collective agreements are considered in public procurement tendering to eliminate unusually low tenders based on pay dumping. Great Britain UK legislation includes no regulations on the generally binding character of collective agreements. As the bargaining level is in most cases local, collective agreements now cover only 36 per cent of wage and salary earners. As recently as the mid 1990s the coverage was almost 50 per cent. Many collective agreements previously included a closed shop clause that required trade union membership as a condition of employment. In the late 1980s, however, such clauses were restricted by law. The law forbids discrimination in hiring on the basis of union membership. The same applies to dismissal. Industrial action to maintain a 100 per cent organising rate is also illegal. 2.1.3 The organising rate and collective agreement coverage A comparison of organising rates alone fails to provide an accurate picture of the
influence of the trade unions and the scale of their collective bargaining. The diagram
below, compiled by the Dublin Foundation, compares the general organising rate and the
coverage of collective agreements for all wage and salary earners. These data describe the
situation in 2000. Organising rate and collective agreement covererage in 2000
Source: European Foundation for the Improvement
The organising rate in industry is higher than the average. It is especially high in the chemical, paper and energy industries, where rather large production units prevail. The diagram below is based on data provided by the trade unions. Where estimates vary I have used the most reliable one or the average of the figures supplied. With certain adjustments the Finnish figures originate from the reports submitted to the Board that confirms the generally binding character of collective agreements. The collective agreement coverage has not been included in the figure as, according to
all unions concerned, the coverage is close to 100 per cent in all three industries. Organising rate in the chemical, paper and energy industries
The rather high organising rates are not only based on large production units but also, especially in the energy sectors of Germany, France, Great Britain and Italy, on the long domination of government and local authority plants and enterprises. In Britain the energy industry was privatised in the early 1990s. Germany and Italy have, in the last few years, moved strongly towards the private sector. This has been a by-product of electricity market deregulation. In France both the government enterprise EdF and its employees have resisted the privatisation of EdF and the struggle over privatisation is only just beginning. 2.1.4 Collective agreements covered by the study The subject materials selected for the study are the most representative collective agreements in the chemical, paper and energy industries in each of the seven countries. The following table summarises the coverage of these agreements. The table shows how many individual members of trade unions that are parties to the agreement are covered by the agreement, and how many employees the agreement covers altogether. Thus, the figures partly reflect organising rates and partly the fact that several unions participated in the bargaining procedure.
Finland The most representative collective agreement in the chemical industry is in the plastics and chemical products sector. This agreement covers 15,000 employees, 12,000 of whom are members of the Chemical Workers' Union. The basic chemical industry agreement differ from this only in respect of its remuneration system and the associated wage scales. In both agreements the employer party is the Chemical Industry Federation of Finland (Kemianteollisuus ry). The current agreement during the study was a two year agreement (01.02.2001 - 31.03.2003) concluded as a consequence of the national comprehensive incomes policy agreement. It was renewed in November-December 2002 for 01.02.2003 - 31.03.2005, also on the basis of an incomes policy agreement. In the paper industry the collective agreement covers almost all of the 30,000 employees at paper, board and pulp mills. The counterpart to the Finnish Paperworkers' Union in collective bargaining is the Finnish Forest Industries Federation (Metsäteollisuus ry). The two-year agreement (01.02.2001 - 31.03.2003) was concluded on the basis of the national comprehensive incomes policy agreement. As with the Chemical Workers' Union, the Paperworkers' Union also renewed its agreement for 01.02.2003 - 31.03.2005 in line with the new incomes policy agreement. There are several collective agreements in the energy sector. The most representative of these is the energy sector collective agreement between the Electrical Workers' Union and the Finnish Energy Industries Federation (Energia-alan Keskusliitto ry). This agreement covers 6,300 employees, of whom 4,600 belong to the Electrical Workers' Union. The agreement is of generally binding character, in contrast to the parallel agreement between the Finnish Energy Industries Federation and the Metalworkers' Union, which covers only 300 employees. There is also an agreement between the Trade Union for the Municipal Sector (KTV) and the employers' federation (Energia-alan Työnantajayhdistys) representing incorporated municipal energy utilities. The 3,000 employees who work for municipal public utilities are covered by the collective agreements for local government officers and employees. The entire energy sector employs about 16,900 workers and salaried employees. The current energy sector agreement for 21.03.2202 - 29.02.2004 was not covered by the national incomes policy agreement. The pay increases of the latter agreement in 2003 were based on the November-December 2002 incomes policy agreements. Sweden The Swedish confederations do not negotiate the fine detail of pay agreements. Such bargaining occurs at individual union level. In the chemical industry the parties are Industrifacket, representing the workers of several industries, and the employers' Almega Industri and Kemiförbundet (affiliated to the highly representative confederation SAF). Industrifacket's two most important agreements are the light chemical industry agreement (allokemisk, covering 26,000 employees in plastics, rubber and pharmaceutical factories) and the chemical process industry agreement (kemiska fabriker, covering nearly 6,000 employees). 95 per cent of employees have joined Industrifacket. For the sake of clarity, we shall examine the most representative agreement: the light chemical industry agreement. This is broadly similar to the chemical process industry agreement. The latest signed agreement dates from Winter 2001 and is in force for as long as 38 months: until April 30th 2004. Its total cost impact is 8.45 per cent. The union explains the long validity period with referfence to decent pay rises in an insecure economic situation and a reduction in working hours through one extra day off in 2002, 2003 and 2004, making three additional days off in all. There are two important collective agreements in the paper industry. The four unions that represent various employee groups have succeeded in agreeing on the general conditions of work (allmänna anställningvillkor) with the employer and industry association Föreningen Svenska Skogsindustrierna. Almost all enterprises belong to this federation. The agreement defines working hours, allowances, annual leave, periods of notice etc. The pay agreements are separate from this. The present pay agreement is in force, as in the chemical industry, for 38 months. It was signed in Winter 2001 by the paperworkers' union Svenska Pappers and the employers' federation. The agreement expires on 31 March 2004. It covers 23,000 paperworkers, of whom 99 per cent are members of Pappers. The wage increase is 7 per cent, as in the chemical industry. Labour costs are also rising because of an annual reduction in working time of 9 hours. In the energy sector the parties have four collective agreements. The municipal sector agreement has the largest coverage. This was signed by the employers' federation KFS, the trade union SEKO, the municipal employees' union SKAF and the salaried employee trade unions, including the union for academic employees. Other employers (Vattenfall, Fortum/Birka, Sydkraft etc.) have their own employer association Energiföretagens Arbetsgivareförening (EFA). This has signed two separate agreements. The agreement (Kraftverkavtalet) with the electrical workers' union SEF covers more than 2,000 employees. The other agreement (Energiavtalet) covers about 5,000 employees who are members of the trade union SEKO and the salaried employee unions. The study analyses these three collective agreements. The fourth agreement concerns subcontractors (Entreprenadsavtalet) and was concluded by EFA, SEKO and SEF. There is a commentary on this agreement in the chapter on subcontracted labour. Norway In Norway the study focuses on one confederation level and three industry-specific collective agreements. All industry-specific collective agreements must be approved by a majority of rank and file members in order to become binding. As a rule there is always a clear majority of votes in favour, but sometimes agreements have been rejected and the parties have been forced to resume the negotiations. The main agreement for 2002-2005 (hovedavtalen), signed by the trade union confederation LO and the employers' confederation NHO is an important one. It includes regulations on industrial peace, disputes, shop stewards, safety representatives, works councils, participatory systems, lay-offs and several appended agreements on such matters as European Works Councils and gender equality. The main agreement has been adopted as an integral part of the collective agreements in the chemical and paper industries. The collective agreement for the chemical-technical industry is the largest in the chemicals sector. The parties to this agreement are the Norwegian Chemical Workers' Union NKIF and the process industry association PIL. The previous agreement was also signed by LO and NHO. The new agreement deals mainly with pay rises that are effective for less than a year. In the second year of the agreement LO and NHO agree on pay increases. The agreement is in force until 31 March 2004. It covers only 4,800 rank and file trade union members and a total of 6,500 employees working in such sectors as the plastics, paint and rubber industries. NKIF also has significant agreements in the electro-chemical industry and with Norsk Hydro. Both of these cover 5,600 employees. Agreements covering fewer employees include those in the pharmaceutical, glass and laundry industries. In a ballot 81 per cent of rank and file trade union members accepted the agreement. A similar proportion of employers' federation member enterprises voted in favour of the agreement. The parties in the forest industry collective agreement are the trade union Fellesforbundet and the association of process industry enterprises PIL. The 2000-2002 agreement is, as in the chemical industry, also signed by the confederations LO and NHO. The agreement covers 5,800 rank and file members of Fellesforbundet working in the forest industry. A total of 8,500 employees work in this industry's various personnel groups. Besides the paperworkers proper, Fellesforbundet also organises electricians and metalworkers in paper mills. The most important enterprises are Norske Skog and Peterson-Walki. Norway's forest industry comprises some 20 enterprises. As in the chemical industry, the agreement is valid for two years and is due to expire on 30 April 2004. The agreement was established with the assistance of the mediator and approved by 84 per cent of the union's rank and file members. LO and NHO will negotiate on pay rises for the second year in the light of inflation and economic progress. There are two collective agreements in the energy sector. In both of these the employees are represented by the electrical and tele workers' union EL & IT. The agreement in the municipalities covers 3,000 rank and file members and the bargaining counterpart is the municipalities' federation KS. The union has about 5,000 rank and file members in the private energy sector. Negotiations on behalf of 50 enterprises are conducted by the energy utilities' association EBL. LO and NHO are also signatories to the latter agreement. The energy sector as a whole employs 20,000 men and women. The municipal and private sector agreements were concluded for two years, and expire on 31 May 2004. The parties will negotiate in late winter 2003 on wages and salaries for the second year. The municipal agreement received over 72 per cent of the votes cast in the ballot of rank and file members and the private sector agreement gained 77 per cent of the poll. The agreement with the EBL was first concluded in June 2002 only after difficult negotiations, mediation and industrial action. Germany In the German collective agreement system the central trade confederation DGB has no mandate to conclude agreements. The bargaining parties are industry-specific trade unions and employer associations. Typically an agreement is first negotiated at the level of a single State (Land). From there the agreement is almost precisely reduplicated in the other States. German reunification changed some basic matters. As pay and productivity in the East German States fell some way below that of West German States, working conditions could not be unified immediately. Wages and salaries in the East have therefore been raised and working hours shortened gradually. Finally, in the 2002 collective bargaining round, the parties agreed on unifying the chemical and paper industry pay scales by 2009. This will put an end to the present two-agreement (West and Ost) system. Here we mainly examine the more developed Western agreement, with references to regulations in the Eastern parts of Germany. In the chemical industry the parties are IGBCE and the chemical industry employer association BAVC (Bundesarbeitgeberverband Chemie). The basic conditions of the employment relationship, such as working hours and annual leave, are defined in the framework agreement (Manteltarifvertrag). This dates from 1993, but is updated as necessary during the bargaining rounds. The pay agreements governing pay increases were made last Spring in each State for thirteen months. These remained in force, depending on the State, until some time between 31 March 2003 and 31 May 2003. The previous round in 2000 led to two year agreements. In the spring bargaining round the pay classification system of the federal pay agreement (Bundesentgelttarifvertrag) was modified. The chemical industry agreements cover most of the industry's 580,000 employees. According to IGBCE, roughly half of these are IGBCE members. As the field covered by the agreements is heterogeneous, the parties added considerable scope for derogation from the agreements at the local level in the 1990s. These opportunities have also been used. The bargaining board accepted the agreement unanimously. In the paper industry IGBCE negotiates collective agreements with the German paper industry employer unions' association VAP (Vereinigung der Arbeitgeberverbände de Deutschen Papierindustrie). The paper industry employers are well organised, with VAP's 187 member enterprises representing over 53,000 employees. According to IGBCE statistics, papermaking employs 46,000 persons, of which the union claims to represent 77 per cent. The bargaining board accepted the agreement unanimously. In the energy sector the situation is more complex, and the negotiation structure is in a state of transition. In the municipal energy utilities (Stadtwerke) employees have been represented by the private and public sector trade union ver.di (previously municipal employees were organised in the public sector union ÖTV). This has traditionally negotiated the municipal sector agreements covering the energy utilities. In 2000 ver.di and the municipal employers' associatation VKA agreed on a separate collective agreement for energy and water utilities. Together these employed 110,000 persons. Utility after utility is now falling under this TV-V-agreement. We shall therefore partially examine its regulations, as the leading agreement in the industry, even though IGBCE is not a party to this agreement. The revised version of the agreement has been in force since 1 April 2002, and most of its regulations will remain in force until as late as 31 December 2007, although the pay regulations can be withdrawn from 31 October 2002 in the Western States and from 31 December 2002 in Eastern Germany. Besides the municipal utilities and the regional enterprises created by merging them, the German energy markets are dominated by private giants, such as E.ON and RWE. IGBCE and ver.di negotiate their agreements together. As the unions consider that the E.ON Energie agreement, covering 22,000 employees and in force since 1 January 2002, will be a model for the others, I shall mainly focus on this agreement. The agreement is open-ended, but the pay regulations are mainly in force until 31 March 2003. The third pillar in this complex and shifting negotiation structure is the former East-Germany. In the years after the German reunification the economy of the new States was rapidly privatised. This gave rise to the energy and water enterprises' employer association AVEU (Arbeitgeberverband Energie- und Versorgungswirtschaftlicher Unternehmen). IGBCE and ver.di together negotiate the collective agreement for AVEU's energy sector, consisting of 33,000 employees. The present pay agreement is valid from 1 September 2001 to 31 October 2002. Fewer than 140,000 employees may work in the entire German energy sector. The impact of deregulation has been dramatic, as even in the early 1990s the industry employed over 200,000 persons. France The chemical industry collective agreement is a weighty tome dating back to 1952. It has incorporated all the changes made in 50 years. The latest adjustments are from 2000. The basic agreement remains in force until further notice and is supplemented annually with regulations on pay rises in particular. Both in 2001 and in 2002 the employer union UIC (Union des Industries Chimiques) refused to agree on wages and salaries. Instead it issued a unilateral pay recommendation. The basic agreement covers 230,000 employees from all personnel groups, from workers to upper salaried employees. All five chemical workers' unions - FCE-CFDT, FNIC-CGT, Fédéchimie-FO, CFTC and CFE-CGC are signatories to the basic agreement. However, regularly from year to year one or more unions have abstained from signing the revision and pay agreement. Most often the abstaining party has been the communist-led FNIC-CGT. The agreement has generally binding character, based on a decision by public authorities. The paper industry collective agreement dates from 1988. As in the case of the chemical industry agreement, all changes made after this have been additions, with the result that the agreement is now a large volume. The employers' federation is called UNIPAS (Union des Industries Papétieres pour les Affaires Sociales). The employees are represented by five unions: FILPAC-CGT, FCE-CFDT, FO, CFTC and CFE-CGC. The largest of these, Filpac, has not signed the latest pay agreement that supplements the basic agreement. The pay agreement dates from 2001. Since autumn 2002 the parties have sought to conclude a new agreement. The unions have presented significant demands on shift work. There are separate collective agreements for the paper industry and the paper processing industry. These are almost identical, and both have generally binding character despite an organising rate of less than 20 per cent. The paper industry agreement covers about 24,000 employees and the paper processing industry agreement 35,000 employees. The entire agreement model for the energy sector is due to be reformed because of the EU Directive seeking to liberalise the electricity markets. The French electricity market has been dominated since WW II by one of the world's largest energy enterprises, Electricité de France (EdF). This is still owned by the State. Conditions of employment relationships were defined in a special statute (statut) in 1946. Over the decades this instrument has grown to the thickness of two Bibles. When the government, EdF and trade unions could no longer obstruct deregulation of the electricity market, the parties decided to secure the agreement situation by enlarging the statute into a national collective agreement for the electricity and gas industry. The enlargement would be implemented by means of new legislation and then by negotiating how to apply the legislation. The employers established two federations, Union Française de l'Electricité (UFE) and the corresponding gas industry employers' federation. The employees are, in turn, represented by five unions: the communist-led FNME-CGT (representing the majority), together with FCE-CFDT, FO, CFTC and CFE-CGC. The energy sector has about 120,000 employees, of which these well-supported unions claim to represent 70 per cent. The conversion of the statute into a collective agreement is still pending. Italy In Italy the trade union confederations have political and economic influence. This is based on their rather large membership and the unions' ability to mobilise people. During the term of the Berlusconi government the unions have organised major rallies and general strikes in an effort to prevent erosion of the country's undoubtedly good labour legislation. The negotiating mandate of the confederations is somewhat haphazard. The 1993 agreement on labour market principles is chiefly an exception to this situation. No real agreements on pay increases and other working conditions are concluded at confederation level. Instead these agreements are made at union level. The emphasis in collective bargaining is shifting towards the local level, but comprehensive union-level agreements continue to regulate fundamental aspects of employment relationships. The focus here will therefore be on union level agreements in each industry. In the chemical industry collective agreement the parties are the employer association Federchimica and the employee side's joint organisation FULC. The latter represents all three chemical workers' trade unions: Filcea-CGIL, FEMCA-CISL and UILCEM. The latest agreement dates from winter 2002. Its normative regulations continue in force for four years and its pay regulations for two years. The agreement covers the industry's 220,000 employees. About 100,000 to 120,000 employees work in the paper industry. They are organised in three graphical industry unions: SLC-CGIL, FISTEL-CISL and UILSIC-UIL. According to these unions, they represent less than half of the industry's employees. The paper industry is only part of the organising field of these three unions, which are clearly dominated by the graphical and telecommunication industry activity. In the paper and paper processing industry there are two collective agreements. The more significant of these is concluded with two industry and employer associations representing large enterprises (Associazione Nazionale Italiene Industrie Grafiche Cartotechniche e Transformatrici and Associazione Italiana fra gli Industriali della Carta, Cartoni e Paste per Carta). The other is concluded with Confapi (Confederazione Italiana della Piccola e Media Industria), which unites small and medium-size enterprises. The latest two year collective agreement was accepted in winter 2001. The energy sector made history in summer 2001 when over two years of bargaining resulted in the first national collective agreement covering the entire electricity industry. This was sorely needed, as the structure of the industry, employing 85,000 people, was rapidly changing as a consequence of the electricity market deregulatation pursuant to the EU Directive, and of the gradual privatisation and splitting up of the government owned ENEL. For the employers the agreement was signed by ENEL, the municipal sector Fedelelettrica, and the young organisation Assoelettrica that represents the private sector. As employee representatives all three unions FNLE-CGIL, FLAEI-CISL and UILCEM signed the agreement. The agreement was made more specific in spring 2002 when the parties also agreed on pay rises for following two years. The normative regulations remain in force until summer 2005, but wages and salaries are due to be revised checked in late 2003. Great Britain National collective agreements are rare in British industry. The agreement in the paper industry is one of these rarities, but even this resembles a short-period framework agreement. It is supplemented by several local agreements. The parties to the paper industry agreement of 1999 are the employers' Paper Federation of Great Britain and four trade unions. In order of representativeness these are GPMU, AEEU (now Amicus), T&G and GMB. The agreement covers 20,000 employees, among which the unions estimate a 50 per cent unionisation rate. Shop stewards lead local negotiation. They are assisted by functionaries from the unions' regional or central offices. As there are several general unions in the industry organising narrow slices in several industries, the collective bargaining process may involve four or five unions. Their mutual relations are generally favourable, and so they negotiate around a single table. A few agreements cover several staff groups, but agreements for workers and salaried employees are negotiated separately, even though the unions may be almost identical. Paper industry collective bargaining regularly involves GPMU, Amicus, T&G and GMB, while in the chemical industry the employee negotiators are from GMB and T&G. The energy sector previously involved bargaining within one centralised system. After the privatisation of the 1990s the enterprise structure became decentralised. Nowadays Amicus, Prospect (representing salaried employees and senior salaried employees), GMB, Unison and still sometimes T&G must negotiate with dozens of energy enterprises. The validity periods of the agreements vary, but nowadays the most common period seems to be three years, which gives the functionaries some breathing time. There are also plenty of one and two-year agreements. Most of the clauses accumulated from previous agreements remain untouched, but the parties have focused on pay increases and lately also on questions of working hours, such as flexitime. For pay rise demands the employee representatives argue with reference to inflation and productivity growth. The "RPI + X" -model (consumer prise rise plus something) is popular. Efforts are also made to supplement the modest State pension. The British unions report that despite the heterogeneousity of the bargaining field, there is much common ground in the agreements, and an achievement in one agreement spreads quickly to other enterprises. Thus, for example, 80 to 90 per cent of employees in the chemical industry enjoy a 37.5 hour working week and 25 days of annual leave. ICI is one of the rare chemical industry enterprises that have retained the tradition of concluding a national collective agreement with all unions represented within the enterprise (known as the joint industry council, JIC). 2.1.5 Industrial peace and conflicts Finland, Sweden, Norway and Germany have a similar industrial peace obligation that forbids industrial action targeting a currently valid collective agreement. In France the right to strike is essentially more extensive, and collective agreements include no effective industrial peace obligation. The right to strike is the most restricted in the United Kingdom, where there are complex regulations governing its application. Moreover, even a legally striking employee may be freely dismissed after eight weeks. The UK is the only country in which participation in lawful industrial action can justify termination of employment. By contrast, unlawful industrial action justifies dismissal if the strike lasts for a long time, or if the neglect of duty can be deemed serious for other reasons. The following table summarises the content of the industrial peace obligation in
various countries. The content of legislation and the agreements is then examined more
closely. Juri Aaltonen's 1998 study Kansainväliset myötätuntotaistelut EU:n
jäsenvaltioissa (International solidarity industrial actions in the EU Member States)
has been of great help in preparing this chapter.
Section 8 of the Finnish Collective Agreements Act forbids industrial action targeting a collective agreement as a whole or any individual provision thereof. The Labour Court has interpreted the notion of targeting broadly. The prohibition concerns trade unions, their branches, employers' federations and their member enterprises that are bound by the agreement. The counterpart and the national conciliator must also be notified two weeks before implementing a work stoppage. Conciliation is mandatory, but there is no obligation to settle. The legislation says nothing about political and sympathetic action. These are lawful in principle if they are genuine, meaning that there is no hidden effort to influence one's own collective agreement. Furthermore, the object of the sympathetic action must also be lawful. As the Collective Agreements Act does not apply to conflicts outside of Finland's borders, it must be concluded that international sympathy struggles are, as a rule, always legal in Finland. A compensatory fine is levied for breaking the industrial peace obligation. This may not exceed 23,500e. The penalty cannot be levied upon the individual employee. Tort liability has arisen in the case law only where the industrial action has also met the conditions for some other proscribed benaviour, such as a criminal offence. In a few cases the Supreme Court has even held such a situation to arise when, contrary to good custom, the employer has been pressured to pay an outstanding account for which the employer was not responsible.Sweden In Sweden the industrial peace obligation is laid down by law. It binds the employers' federation and the trade union that have signed the agreement. The union's individual members and the employer members of the federation are likewise bound by the obligation. Industrial action that seeks to change the agreement or to improve its benefits is prohibited. All industrial action must be notified seven days in advance to the national conciliator's office, which then organises the conciliation process. Participation in this process is mandatory.As in Finland, political and sympathetic action is considered to be legal if it is genuine and the supported conflict is lawful. In international sympathetic action the requirement is that the supported conflict is lawful according to the national law of the country concerned, unless the said law is in clear conflict with Swedish labour law (ordre public). Thanks to the so-called Lex Britannia, in force since 1991, the Swedish unions need not respect a foreign collective agreement if it has no sufficient fixed point in the Swedish labour market. Thus, generally, a ship that has arrived at a Swedish port can be legally blockaded, even though the crew are subject to a poor foreign collective agreement. Under the Codetermination Act, violation of the industrial peace obligation results in tort liability that also applies to intangible damage. There is no upper limit to this. In practise the Labour Court has adhered to a very conservative line, and typical claims (allmänt skadestånd) have been only a few thousand Swedish crowns, though fines of 150,000 crowns have been seen. Employees have also been ordered to pay a few hundred Swedish crowns in compensation for wildcat strikes. Norway In Norway the industrial peace obligation has been confirmed in the Labour Disputes Act, that has been supplemented with collective agreements. According to the main agreement between LO and NHO, work stoppages and other industrial actions are forbidden during the term of a collective agreement. By contrast it is quite common for a union to issue a strike warning at the time of collective bargaining and after the previous agreement has expired. Industrial actions associated with conflicts of interest are expressly delared legal. Actions arising from judicial disputes are forbidden. There are no references to sympathetic or political strikes in legislation. These are accepted in case law if they are genuine, short, and the supported industrial action is legal. In the main agreement between LO and NHO political and sympathetic strikes are accepted. The agreement defines the negotiation and conciliation procedure for trying to avoid conflicts as far as possible. If the conciliation fails, then industrial action may begin after four days. At other times a period of 14 days' notice is observed. The Norwegian Parliament may interrupt a strike and order that the industrial conflict is to be resolved by mandatory settlement of the mediation board. Under the Labour Disputes Act, both the signatory parties and individual employees may become obliged to compensate for the damage caused by an unlawful industrial action. The starting point is the financial damage caused. However, the Labour Court has extensive discretionary powers in this area. While the typical damage compensation awards that unions and their branches have been ordered to pay have been tens of thousands of Norwegian crowns, six-figure awards have occurred in some cases. Germany In Germany a statutory industrial peace obligation covers the unions, employers and wage and salary earners that are bound to the agreement as parties thereto. During the term of an agreement there must be no industrial action targeting the regulations of the agreement. Lawful industrial action may be organised only by a trade union, and only then when the goal is to agree on a new collective agreement, or to secure benefits that cannot be regulated by the agreement. There is no mandatory conciliation procedure, but the parties to collective agreements have agreed on voluntary conciliation arrangements. Thus, the chemical workers' union IGBCE and employer organisation BAVC have created an almost absolute industrial peace obligation. In a special agreement on the conciliation procedure (Schlichtungsregelung) a mandatory conciliation is ordered for all national and State level conflicts. Both the employers and the IGBCE elect three representatives to the conciliation board. The chairmanship rotates. The board votes on the solutions and the majority's point of view prevails. During the proceedings industrial action or even balloting thereupon are forbidden. Industrial action may begin only if the conciliation effort fails. This has not happened, and over the last two decades most of the IGBCE collective agreements have been reached through a mandatory settlement imposed by the conciliation board. There has been no major industrial action in the chemical and paper industries for many years, which affords a peaceful image to the IGBCE. In contrast, the trade union ver.di, which is successor to the public sector union ÖTV and others, has customarily arranged short work stoppages to apply collective bargaining pressure on its counterpart. IG Metall has the reputation of the most strike-prone organisation at the time of collective bargaining rounds. Its rotating "flexible strike" in spring 2002 was an innovation that saved the union's costs and badly disrupted the finely-tuned logistical arrangements of automobile manufacturers in particular. Sympathy struggles are legal provided that they do not concern one's own interests, the action is fair and moderate, and it supports a legal conflict. They same applies to a foreign conflict, but the object must be legal according to the foreign legislation. As in Sweden, there is an exception of this if the target country's legislation is contrary to the basic principles of the German legal system (ordre public). A trade union may be held liable for the damage caused by an illegal industrial action. No upper limit has been set on this liability. The starting point is the principle of full compensation. Employers have, however, submitted no compensation demands in the Labour Courts. The strike-prone IG Metall has prepared itself for lawsuits by negotiating a compensation maximum of 500,000e in its collective agreement. France In France the constitution and case law give an individual employee the right to industrial action, but this must be associated with a collective movement seeking to improve working conditions. Political strikes are forbidden in principle but this has, in practice, been by-passed by adding "allowed" demands emphasising terms of employment and social issues. Short national and international sympathy strikes are legal if they support employees working for the same employer, or if the strikers and those supported otherwise have sufficiently common interests. Jurisprudential literature is slightly uncertain on this point and there is no case law. The targeted conflict must be legal, but it is uncertain which law should be applied when judging this. The right to strike of an individual employee has meant that absolute industrial peace paragraphs in collective agreements have been declared invalid by the courts. Although the law obliges the parties to apply an agreement "loyally", this has been interpreted to require only a neutral attitude. A trade union need not interrupt a more or less spontaneous strike movement among the rank and file. Thus the French employers cannot successfully purchase effective industrial peace through a collective agreement, even for the period of its validity. For this reason the employers have been satisfied with the procedural regulations of these agreements on conciliation and prior notice. There is no mandatory conciliation procedure and the legislation obliges prior notification only in the public sector. The collective agreements covered by this study include no such procedural regulations. Industrial action means work stoppages or strikes. Retarding production is illegal and can result in legal dismissal if the neglect has been grave enough. There are no regulations on lock-outs (le lock out), and so this has been analysed on the basis of the general law of contracts. Pre-emptive and self-initiated lock-outs mean, as a rule, an offence against the employer's contractual obligations or against the duty to offer work. The case law has allowed lock-outs in force majeure-type situations that are often associated with industrial action already begun by the employees. In the narrow category of unlawful strikes, both the strikers and the union that has supported them can be ordered to pay damages. The compensation may cover both direct damage and lost profits. Usually the employer reliquishes the right to compensation in the settlement that ends the strike. It is small wonder, then, that there are many legal strikes in France. In 2000 the number of industrial action rose by 86 per cent over the previous year. 2,460,200 million working days were lost, 806,860 of them in the private sector and State enterprises. Thus, 33 per cent of lost working days occured in the private sector. In the previous year this proportion was 43 per cent. The increase in the propensity to strike is said to be based on the improved economic situation and the decrease of unemployment. The nature of industrial actions has also changed. They are now longer than before. The average strike lasted four days. Half of the working days were lost in businesses with over 500 employees, in which the industrial action was often part of the bargaining process. One third of the strikes were associated with pay and working conditions. The top strike issues also included working hour flexibility and other conflicts on working hours. CGT was the initiator in one third of the strikes, and CFDT in 12 per cent of strike action. In 35 per cent of the strikes the action resulted from a joint campaign by several unions. The most strike-prone industries were transport and haulage. Italy As in France, the only permitted industrial action in Italy is a total work stoppage. Striking is a fundamental right guaranteed to the individual in the constitution. This means that the industrial peace obligations sometimes included in collective agreements bind the union but not individual employees. If a union does not try to prevent its rank and file from striking, the union may be ordered to pay compensation for the damage arising. However, unions have never been ordered to pay compensation. As in France, this is solely a gesture of good will. Strikes for purely political reasons are, in principle, illegal. However, legal scholars have upheld the legality of short one-day strikes against government policy. Such mass events are very common. In April millions of Italians marched in the streets of the cities in a general strike led by the labour confederations against the labour reform of the Berlusconi government. National and international sympathy strikes are considered legal if there is a sufficient connection between the interests of the supporters and of those supported. Jurisprudential literature suggests that this applies at least to situations where the supporters and the supported work for the same multinational enterprise. The significance of the legality of the supported conflict remains unresolved. Having regard to the scope of the right to strike, it is no wonder that Italy clearly heads the postwar strike statistics. Great Britain United Kingdom legislation does not regulate the right to strike as such. Instead, there are regulations on the immunity protecting an employee from the consequences of a breach of employment contract. If these conditions are met, then the employer may withhold pay but cannot legally dismiss the employee. The 1992 Act on Trade Unions and Labour Relations (TULR) states that industrial action must concern a labour dispute over such matters as working conditions, duties at the workplace or dismissal. The conflict must be between employees and their employer. Thus, a privatised railway company secured an injunction forbidding a strike over safety, as another company was responsible for the faulty railway lines that were the core of the problem. Political strikes are likewise forbidden. For a strike to be legal the union or unions must notify the employer four times and organise a complex postal ballot subject to detailed regulations. It hardly needs mentioning that this Act of 300 sections was introduced by a Conservative government seeking to hamper trade union action. During the first eight weeks of a strike the employee may not be dismissed. Thereafter dismissal is permitted. The International Labour Organisation ILO has condemned this provision, finding that it offends the fundamental Conventions on trade union freedoms. Strike pickets, in particular, may be fined for overzealous efforts to prevent strikebreakers from entering the enterprise's facilities. Unions are frequently targeted by injunction applications whereby the employer seeks to bring industrial action to an end. It is even possible to interrupting a strike despite compliance with all formalities if the court considers the strike to occasion disproportionate damage. Conciliation is voluntary and little used. The legislation stipulates that the immunity principle does not apply to sympathetic industrial action. Protection can be enjoyed only when the supported action directly benefits one's own industrial action, which tends to obscure the character of sympathetic strikes. Industrial action is practically always followed by liability for damages. Discharge from this arises only if the conditions for immunity are met. The duty to compensate may fall on trade unions, their functionaries and any employees who have participated in a strike. So far compensation has seldom been claimed. The compensation maximum depends on the size of the union. For example, the unions corresponding to the Finnish Chemical Workers' Union, the Paperworkers' Union and the Electrical Workers' Union all have more than 100,000 rank and file members, and could therefore be ordered to pay a fine of up to £250,000 (400,000e) Industrial action statistics The statistics of the Dublin Foundation indicate considerable variation in recourse to legal and illegal strikes in various countries. The tables below describe the number of days lost in industrial action and the number of employees that participated in the actions between 1997 and 2001. Days lost through industrial action: 1997-2001
Source: EIRO n/a = no data available Employees involved in industrial action: 1997-2001
Source: EIRO n/a = no data available The exceptionally high figures for Denmark in 1998 reflect the 11 day general strike that took place following failure for the first time in 13 years to secure a settlement in the bargaining round. The agreement rhythm varies, meaning that the statistics regularly show higher figures in the years of bargaining rounds. The business cycle also has an impact on strike figures, as does the character of the national government. This means that the propensity to strike must be observed over the longer term, and the number of lost working days must be related to the size of the workforce. On this basis, European countries can be divided into three categories, reflecting their average figures in the 1990s.
In the countries and industries covered by this study there have been only a couple of significant industrial actions over the last few years, both of them in Finland. These were the chemical workers' and paperworkers' one week strikes at the time of the collective bargaining round in 2000. In the German chemical and paper industries there is an almost absolute industrial peace obligation, even during negotiations. In France and Italy there have been one day political strikes, but it is not part of the Italian and French tradition to strike during collective bargaining. 2.2 Job security Job security comprises protection against dismissal and the associated sanction system, periods of notice, and other financial compensation at the end of employment. I have sought to provide a brief presentation of protection regulations for dismissal based on individual and collective grounds, as these are usually considered in similar and interconnected regulations. The legislation and collective agreements of all of the countries covered by this study afford a measure of protection. The real dismissal threshold would be identified only by a thoroughgoing analysis of case law in all of these countries, but that is beyond the scope of this study. Special consideration has been given to the costs of dismissal, meaning all the charges and compensation that an employer must pay to the employee at the end of the employment. The study will probably inflame the debate on why it is so cheap to close a factory in Finland. The chapter also includes a comparison between dismissal costs in various countries for employees with shorter and longer seniority. 2.2.1 Grounds for individual and collective dismissal, compensatory systems and periods of notice Finland According to the reformed Employment Contracts Act, an employer may give notice to a permanent employee only on proper and pressing grounds. These include:
Where the employee has neglected the duties of the employment relatiuonship, the employee may not be dismissed without a warning and a subsequent opportunity to correct the objectionable behaviour. Furthermore, before the dismissal the employer must consult the employee and examine whether the dismissal could be avoided througvh redeployment. Even when an employee's work has essentially and permanently decreased, the employee may not be given notice, if the employee can be redeployed or trained for other functions corresponding to the work defined in the contract of employment. If there are no such functions, then the employee must be offered other work that corresponds to the employee's education, work skills and experience. In case of reorganisation the dismissal threshold is slightly lower. A contract of employment may be discontinued at two months' notice if this is necessary for successful reorganisation, or if the need for labour ends or substantially decreases. The right to rescind a contract of employment requires especially grave reasons, where the employee has offended in the course of, or neglected the duties of employment in a manner affecting the employment relationship so seriously that the employer cannot reasonably be required to continue the contractual relationship even for a period of notice. Case law has generally reduced the dismissal threshold for economic reasons, especially during the recession of the early 1990s. Time will tell whether this policy will become permanent. In the case of collective dismissals the procedure defined in collective agreements has likewise been interpreted more flexibly than in previous years. In compensation for unfounded termination of employment the court may order the employer to pay a sum of between 3 and 24 months' wages to the employee. The Employment Contracts Act revised the default periods of notice. The parties may agree on a maximum of six months' notice. Unless otherwise agreed, the following periods of notice apply:
The Swedish job security Act (LAS) stipulates a rather high threshold for terminating employment. The Labour Courts have specified this definition. The employer may rescind an employment contract or terminate it with notice if there is a proper reason for so doing. Rescission requires gross misconduct. Commonly a proper reason involves continual defective performance of duties. On the other hand, diminished working ability as such is a sufficient reason only in exceptional cases. As a rule the courts have not accepted illness as grounds for dismissal. In general the long-term view of the Swedish Labour Court has been stricter than that of the Finnish Labour Court. The policy line has been significantly more liberal for collective dismissal. Employment may be terminated if the need for labour has reduced. Even in these cases the grounds must be reasonable, and may be associated with financial or organisational restructuring. The case law has accepted staff reductions implemented broadly within the confines of the right to direct and supervise, even in cases where operations are profitable. As a rule a dismissal is illegal only if it can be shown that the dismissal was not due to financial reasons, but occurred for reasons associated with the individual employee. In both individual and collective dismissals the parties must negotiate in accordance with a prescribed negotiating procedure. If a dismissal is held to be unfounded, then the court may order the employer to pay compensation in an amount between six and 48 months' wages unless the employer agrees to reinstate the employee. The size of the compensation awarded depends on the length of the employment and the age of the employee. The Labour Court has proved quite willing to apply the entire compensatory scale, including awards of high compensation. Collective dismissal follows a "last in - first out" order. Disregard for this order does not make a dismissal unfounded, however, but may result in an order to pay an indemnity only. The regulations on periods of notice were amended in 1997, so details of these regulations are shown in two tables, one applied to employees who have served since before 1 January 1997, and the other for those whose employment began more recently. The periods of notice of employees who have been continuously employed since before 1 January 1997 depend only on the age of the employee as follows:
The periods of notice of persons employed by their present employers since 1 January 1997 or later depend solely on the length of employment.
The reform harmonised Swedish regulations with those used elsewhere in Europe. A few collective agreements have differing regulations. The municipal sector energy agreement applies the legislation but employees whose current employment had lasted for at least one year before 1 September 1998 are entitled to six months' notice. The employee msut then give three months' notice. Correspondingly, the period of notice is as much as 12 months if the employment has lasted for 15 years, or if the employee is at least 40 years old and the employment has lasted for 12 years. In such cases termination must arise through reorganisation of work or duties, or through illness. The SEKO-EFA energy sector agreement extends the period of notice to 12 months if an employee who is at least 55 years old is given notice after 10 years of employment on the grounds of a reduced need for labour. The paper industry agreement has applied the statutory notice periods for employers as of 1 January 1998. If an employee who is at least 55 years old is given notice after 10 years of employment on the grounds of a reduced need for labour, then the period of notice is 12 months. The employee must give one month's notice when the employment has lasted for up to 3 years, two months for 3 to 6 years, and 3 months for employment that has continued for more than this. The slightly different periods of notice of the old agreement apply during the transition period. Norway The Norwegian job security regulations are in the work environment Act (arbeidsmiljøloven). An employee may be given notice only if there are proper grounds for this pertaining to the operations of the enterprise and the conditions of the employer and employee. If the employer specifies any downsizing of operations or rationalisation as the grounds for dismissal, then the employer must first endeavour to redeploy the employee in other suitable work. Consideration of the propriety of grounds require an assessment of the needs of the enterprise in relation to the harm caused to the dismissed employee. The employer must also always negotiate in good time with shop stewards in respect of collective dismissals and how to avoid them. Dismissal of an employee in the first six months of an illness or after an accident is prohibited. This protection lasts for 12 months if the employment has lasted for no less than 5 years or in cases of occupational injury. Rescission of employment contract is justified only by serious dereliction of duty or other gross misconduct with respect to the employment contract. If the court holds that a dismissal was unfounded, then it may be declared invalid if the employee so demands. With the employer's consent the court may, under special conditions, consider that it would be evidently immoderate for the parties to continue the employment. In such cases the employer must pay compensation. Moderation is viewed by the court with reference to the financial damage occasioned, the relationship between the employer and the employee, and other conditions. It is permissible to agree on the period of notice in employment contracts and collective agreements. The period of notice that the employee must give cannot then exceed the period prescribed for the employer. Unless otherwise agreed, the following periods of notice are observed:
The municipal sector energy agreement stipulates, as the main rule, a 3 month period of notice for both sides. In other respects the regulations of the work environment Act apply. Germany The dismissal protection act (Kündigungsschutzgesetz) applies in enterprises with more than five employees. The protection applies after employment has continued for six months. According to the Act, notice or rescission is socially equitable and lawful if it is based on the person, qualities, or behaviour of the employee, or on pressing requirements of business finance that prevent continuation of the employment. Employment may be rescinded without notice when it would be unreasonable to require the parties to continue the contractual relationship. The case law has related the employee's qualities, negligence and inadequate performance to the size of the enterprise, the length of the employment, working arrangements, the prospects for redeploying the employee and the impact on other employees. Under the legislation governing part-time and temporary agreements (Teilzeit- und Befristungsgesetz) such employment ends when the term expires. A part-time and temporary employment contract may be terminated before this time only if the possibility of such termination is stipulated in the employment contract or in the collective agreement. Since 2000 termination of employment has required explicit notification to this effect. Employment may be terminated with notice or rescinded for financial reasons. The background must be financial groiunds that are beyond the employer's control. On the other hand, the grounds may also relate to changes in production or to reorganisation falling within the purview of the employer's standard right to direct and supervise the enterprise. Selection of candidates for dismissal must allow for the social point of view. The key factors are the age of the employee, the length of employment, and the employee's marital status, number of dependants and economic status. Exceptions to this only arise in the case of employees who are, for technical, financial or other reasons, indispensible to the enterprise. The case law has given little weight to this, and has confined itself to considering the social point of view. Termination of employment also conflicts with the social point of view when insufficient efforts have been taken to find opportunities to retrain or redeploy the employee. The employer must consult the works council before the decision is made. Failure to do so renders the termination of employment null and void. The works council must announce its views within one week of the said consultation. The position of the council has no binding effect, but may strongly influence the employer's final decision, the number and order of those dismissed, the size of the compensation and the view of the court in the event that litigation follows. In the case of collective termination the employer must negotiate with the works council on the social programme (Sozialplan) described in the chapter on dismissal costs. The employment authorities must be informed of large scale dismissals and the background thereto. An employee seeking to challenge the legality of a rescission or termination with notice must file suit against the employer in the local court within three weeks of receiving notice of the dismissal. The employment then continues until the court decides the matter. If the court considers that the termination of employment was unlawful, then the employment either continues or the employer must pay compensation. The emphasis has been in favour of continuing the employment, and it has been especially difficult for larger enterprises to terminate employment. Under the legislation the maximum compensation is 12 months' pay for successful litigants below 50 years of age. If the employment of a person aged between 50 and 55 years has lasted for 15 years, then the maximum compensation is 15 months' pay. In the case of a 55 year-old employee who has worked for the enterprise for 20 years, the maximum compensation is 20 months' pay. The employee's age and the length of employment influence the size of the compensation awarded. The legal periods of notice in Germany are as follows:
The employment contract may specify longer but not shorter periods of notice. In industry-wide collective agreements the parties may agree on longer or shorter periods of notice. In the chemical industry agreement the parties have agreed on different and in practise shorter periods of notice. These are based on the sum of the employee's age and the length of employment (Messzahl) as well as the length of working service in the following manner: .
The paper industry applies the statutory periods of notice. The agreement structure of the energy sector is undergoing radical change. The most common TV-V-agreement of the municipal utilities includes the following table:
The agreement applied in the Eastern states of Germany has extended
periods of notice in rationalisation situations. Three months' notice applies already
after 2 years of service and six months' notice after 5 years of service. Under French labour legislation the
ground for dismissal or rescission must be real and serious (réelle et sérieuse). The law does not list examples,
but the case law has mostly considered neglect of duty, inability to work and loss of
trust.
The collective agreements covered in this study include no special regulations in this area aside from the energy sector agreement, which gives salaried employees the right to three months' notice while other employees have only one month's notice. Italy Under Italian law, the employer
must have a just cause (giusta causa) or a
justified reason (giustificato motivo) for
dismissing an employee. To terminate employment the employer must present a reason that
can be verified and is especially serious. This may, for example, concern the employee's
behaviour, neglect of duty or organisational factors. The employer must also comply with
certain formalities. United Kingdom The Employment Relation Act (ERA
1996) distinguishes individual dismissal and redundancy, although these two concepts are
sometimes conflated in the text of the Act. The systems of compensation and consequence
are also different. Security against dismissal begins after employment has lasted for one
year.
Specifically, the weekly wages and salaries are
counted separately in each age category. For example, a 50 year-old dismissed employee
receives one and a half weeks' pay per annum as of the age of 41 years and only one week's
pay per year of service for the period before this. A maximum of 20 working years are
allowed in the compensation calculation. In 2002 the maximum weekly pay was GBP 240 (EUR
377). Thus a 45 year-old employee who was given notice after 25 years of service received
only 22 weeks pay at EUR 377 despite higher actual earnings, making a basic award of only
EUR 8,294. If the employee receives statutory redundancy pay (considered in detail in the
chapter on dismissal costs), then this is deducted from the award. In cases of unlawful
rescission the employee is also entitled to pay for the period of notice.
2.2.2 Redundancy costs The closure in winter 2000 of the Fujitsu-Siemens factory in Kilo near Helsinki as part of a centralization process in this enterprise’s European production provoked discussion of the relative costs of factory closures and redundancies in Finland and elsewhere. It was suspected that Fujitsu and some other multinational enterprises had chosen to close their factories in Finland partly because redundancy was so cheap in this country. In his noteworthy 2001 study "Provisions and Procedures Governing Collective Redundancies in Europe" Jari Hellsten concludes that redundancy costs in Finland are clearly below the general European level. He points out that many factors influence the enterprise when deciding the location of an investment, such as the location of markets, functioning infrastructure, production scale factors, productivity, labour costs, questions of image and availability of educated labour. When factories are closed the costs and procedures involved may significantly influence the decision. Employers have to pay for a period of notice in all countries, but the lengths of these periods vary. During this period the employer benefits from the employee’s work, and so notice increases the costs of closure only when, for some reason, the employer neither wants or needs this work. On the other hand, major differences arise from the redundancy payments required in many countries. The notion of "redundancy compensation" may be conflated with sanctions imposed for unlawful termination of employment. Redundancy payments must also regularly be paid in cases where the employer has acted entirely within the law. Hellsten observed an interesting religious and cultural background to country-specific differences in Europe. In countries of Catholic culture and in multicultural countries in which Catholic culture is prevalent employment has been regarded as an individual relationship. This idea is associated with an image of the employer as a good family father (bonus pater familiae) who also takes care of his employees in difficult times. The same notion is also reflected in other areas of Catholic labour law. The Protestant and especially Lutheran culture includes the idea of a welfare state that provides a safety net for employees in difficulty. Both employers and employees help to finance this safety net, and the government also allocates tax revenues to it. On the other hand, it must be noted that the Catholic countries have created a comprehensive unemployment insurance system as part of their social security arrangements without renouncing redundancy payments. Hellsten thereby identifies three categories of European country:
Hellsten gives no attention to the Finnish redundancy compensation system, which is due for abolition, or to the Swedish redundancy payment insurance scheme. These were financed collectively by the employers but their level was relatively modest. The speciality of the Italian (and the changing Austrian) system is that redundancy payment is part of deferred pay. In Italy an employer is obliged to set aside one month’s pay each year. The employee receives this sum with no maximum limit when leaving the enterprise. This in no way depends on the reasons for departure. In other countries the redundancy payment is standardly based on the monthly pay, the duration of employment and the age of the employee. When redundancies occur in Belgium, France, Germany, the Netherlands and Spain the parties are under a statutory obligation to negotiate a social package or plan. Redundancy payments are considered as part of a package standardly incorporating redeployment measures, retraining and early retirement schemes. The EU statistical agency Eurostat has attempted to estimate the
impact of redundancy payments on overall labour costs, computing the following percentages
for 1996.
Source: Eurostat While these statistics are open to scepticism, they illustrate the manifold differences between the costliest and cheapest countries. Of the EU Member States excluded from these statistics, Ireland and the United Kingdom are close to the Belgian level of 0.5 per cent and Denmark is on the level of Finland and Sweden at 0.2 per cent. Italy cannot be compared at all in Eurostat's opinion, as employees receive the redundancy payment at the end of all employment. However, it must be noted that that the pay that is held in reserve by the employer amounts to an additional cost of 13.5 per cent of the employee's annual pay. This probably corresponds to at least 6 per cent of total labour costs. The following discussion focuses only on the countries targeted in this study. The main issues are the conditions and the criteria for reckoning compensation. Finland, Sweden and Norway Statutes and contracts of employment in these Nordic countries require the employer to pay only for the period of notice at the end of an employment relationship. Individual settlements have also been reached at enterprise level. Accustomed to the fact that they have to make redundancy payments elsewhere, multinational enterprises such as Unilever sometimes make payments of between one and six months' wages to their employees when closing a factory. In its 2002 expenditure cuts programme in Sweden Ericsson offered a double period of notice and a personal support programme seeking to find a new job for redundant employees and to make the redundancy process as painless as possible. The outplacement package implemented by other enterprises cost about EUR 5,500 - 11,000 per employee. When implementing redundancies in Finland in the late 1990s Borealis agreed to negotiate a redundancy package based on seniority at its Porvoo plant, reaching a maximum of 24 months' pay. In Summer 2002, as part of a downsizing programme at Birka in Stockholm, Fortum agreed to a package with even higher maximum compensation than at Borealis. 600 salaried employees at Birka Energi were basically offered redundancy compensation amounting to pay for three times the period of notice. Employees between 25 and 29 years of age received four to six months' pay, those between 40 and 50 years of age received up to 18 months' pay, those between 50 and 60 years of age received 24 months' pay and the over-60s received 30 months' pay. Employees redeployed into duties at lower wages were compensated for the drop in pay for two years. The enterprise also compensated for removal and travel costs and for up to 90 per cent of the pay for employees of 58 or more years of age. At the same time Fortum offered 300 redundant Finnish employees one to four months' wages in redundancy compensation, depending on seniority. Eligibility for the maximum required at least 15 years' service. Under certain conditions any employees opting for early retirement received lump sum pension compensation of up to 20 months' pay but no redundancy compensation. Finland and in Sweden have operated redundancy compensation schemes based on the principle of collective employer reponsibility. Ageing employees in Finland were eligible for redundancy pay when losing their jobs for reasons of finance or production, but this system was discontinued at the end of 2002. Under this scheme an employee of between 45 and 64 years of age typically received about one or one and a half months' pay. This arrangement was replaced at the beginning of 2003 with an increased earnings-related unemployment allowance for employees who lose their jobs for reasons of finance or production after a working career of more than 20 years. The earnings-related component of the allowance is financed in the same way as the redundancy compensation scheme, but the beneficiary group is slightly larger. Both schemes are financed through unemployment insurance contributions paid by the employers, thus making enterprises collectively responsible for financing. The increased earnings-related component of the unemployment allowance is 10-12.5 per cent higher than the regular allowance. This increased allowance is paid for a maximum of 150 days. At the average wage level of industrial employees the daily increase is more than EUR 7.00. The total benefit is therefore about EUR 1,100 or half a month's pay, meaning that individual redundant employees lost out in the reform. In Sweden the national labour confederations agreed on a redundancy allowance (avgångsbidrag, AGB) in the 1960s. The conditions for this allowance have gradually improved. It can be received when there is a shortage of work in an industry. Employees who have lost their jobs because of factory closures, those over 50 years of age and people who must find alternative employment for health reasons are eligible for support. The allowance is financed in the manner of an insurance-based benefit. An employee can earn AGB from the age of 28 years. Seven years of employment are required for eligibility. A 40 year-old qualifies for the allowance after three years of employment. The allowance is divided into sums A and B. Sum A depends on the employee's age. The minimum is SEK 5,700 (about EUR 620). Employees between 40 and 54 years of age receive SEK 300 more for each year of age. Employees between 54 and 62 years of age receive an extra SEK 400 per year of age. Sum B depends on the length of unemployment. The minimum of three months gives an allowance of SEK 3,000, while the maximum of 27 months gives an allowance of SEK 27,000. The redundancy allowance is independent of income. The following three examples illustrate the Swedish redundancy
allowance (the length of employment is included although it does not affect the amount of
compensation).
Germany When redundancies occur the employer must negotiate a social plan (Sozialplan) with the works council. As part of this the parties agree on a redundancy allowance payable to redundant employees. If the parties cannot agree, then the matter is settled by a mediation committee. There are no statutory regulations on the size of compensation, and
sums vary by industry and individual case. The chemical industry collective
agreement incorporates compensation for employees who lose their jobs through
rationalisation. The amounts are as follows:
An employee over 45 years of age who is made redundant after more than 10 years of employment receives a maximum of one year's pay in redundancy compensation. This amounts to the difference between 90 per cent of previous net pay and the unemployment allowance. In the paper industry redundancy payments are even higher, up
to a maximum of 12 months' pay. The table is as follows:
As in the chemical industry, an employee over 45 years of age who is made redundant after more than 10 years of employment receives a maximum of one year's pay in redundancy compensation. This amounts to the difference between 90 per cent of the previous net pay and the unemployment allowance. However, the redundancy allowance and compensation are lost where retraining or the offer of similarly paid employment in another enterprise are refused, or in the event of retirement. The regulations of the chemical and paper industry agreement stipulate minima and do not cover all cases. Employees under 40 years of age are not covered, and the agreements do not preclude better deals at enterprise level. In these cases the compensation ordered for illegal dismissals are often cited as reference values. The statutory maximum compensation for employees under 50 years of age is 12 months' pay. For those between 50 and 55 years of age the maximum is 15 months' pay after 15 years of employment. The maximum amount is 20 months' pay for employees of 55 years of age after 20 years of employment. As a rule of thumb the courts have awarded two weeks' or half a month's pay per year of employment. The case law may be expressed in the following table:
France When negotiating on redundancies the employer must co-operate with the works council to prepare a plan for conserving employment (plan de sauvegarde d'emploi). This is based on a new law supplanting the former social plan (plan sociale), which was merely a list of redundancy payments. The plan must now include all possible measures to limit the number of dismissals and facilitate redeployment. Aside from employees who have grossly neglected their duties, all redundant employees are entitled to a redundancy allowance (indemnité de licenciement). This compensation is based on 1974 law reinforcing an agreement between the labour market confederations. The law was amended in 1991. The redundancy allowance covers all employees whose employment has lasted for at least two years. If the employment has lasted for less than ten years, then
the redundancy allowance is one tenth of the monthly pay per year of employment. If the
employment has lasted for longer than this, then the allowance is increased by one
fifteenth of the monthly pay for each subsequent year. This gives rise to the following
table:
The calculation is based on the annual pay divided by twelve. This means that pay for a 13th month and other allowances are included in the calculation. As the level of compensation remains rather low, the parties in various industries have concluded collective agreements providing higher compensation. The paper industry collective agreement provides for a higher redundancy allowance and also for compensation payable to employees who retire. The redundancy allowance is one eighth of the monthly pay per year of service if the employment has lasted for between two and five years. If the employment has lasted for more than 5 years, then the allowance is one quarter of the monthly pay per year from the very beginning of the employment. For over 15 years of service an extra one tenth of the monthly pay per each succeeding year is payable. An employee aged between 50 and 55 years receives a 25 per cent increase in the entire amount of compensation and an employee aged between 55and 60 years receives a further 15 per cent. This is illustrated with examples in the following table:
To facilitate retirement the parties have added a special
compensation clause to the paper industry agreement covering employees who retire at the
age of 60 or those who have earned a full pension where the employer takes the initiative.
In such cases the retirement compensation (indemnité de mise ou depart à la retraite)
is as follows:
On retiring at the behest of the employer these sums are increased by ten per cent. If a full pension has not accrued, then termination of employment is regarded as dismissal. In such cases an employee aged between 60 and 62 years receives the entire retirement compensation plus the difference between 60 per cent of the retirement compensation and the redundancy allowance. There are no regulations on redundancy allowance in the
chemical industry agreement, and only statutory provisions apply. On the other hand, the
agreement includes a table governing retirement compensation at the age of 60. This is the
same as the compensation received when retiring normally at the age of 65.
The downsizing programmes of large enterprises often significantly exceed the agreed regulations. Packages of as much as EUR 60,000 80,000 have been negotiated for employees. The statistical average is 17 weeks' or about four months' pay. One famous case in the early 1990s was that of the paper manufacturer Kimberley Clark, which was considered in the European Court of Justice because of a dispute over support for training. The paper industry collective agreement provided a redundancy allowance averaging EUR 21,340 per employee. In the social plan, however, the parties agreed an enlarged package averaging EUR 60,260 per employee. Since the law was amended in 1994 employees over 57 years of age have been entitled to 65 per cent of their previous pay until they reach the age of 60 years if their accrued pension rights at that age suffice to provide a moderate pension. The parties negotiate the details of this with the works council as a part of the social plan. The system is partly financed by the employer and is used controversially in enterprise reorganisation. If an employer dismisses an employee who is more than 55 years old, then the employer must pay to the unemployment insurance fund an additional contribution corresponding to three months' pay. Italy The Italian system is based on different thinking and consists of two elements: the general employment termination allowance and mobility assistance. The employment termination allowance (trattamento di fine rapporto) is paid to all employees at the end of employment for any reason whatsoever. The allowance is one month's pay per year of service with no upper limit. In practise employers are obliged to set aside a sum equal to the employee's total income divided by 13.5 each year. This therefore allows for pay for a 13th or 14th month payable in Italy. The sum must be included in the balance sheet of the enterprise and may be used in investments or transferred to pension funds. In the event of bankruptcy the State social insurance institute, which is mainly financed by employers' social security contributions, covers the payments to the employees. It may, of course, be argued that as the allowance is paid to
everybody, it constitutes deferred pay and should not be considered as a redundancy
allowance. As this element constitutes a substantial labour cost and its payment takes
place at the time of dismissal, however, a table showing the accrual of these sums is
included here in the same way as the other countries:
Mobility assistance is an increased unemployment benefit that takes the form of a re-employment grant for redundant employees seeking a new job. The employee must have served the enterprise for at least one year. The duration of the assistance depends on the employee's age and on the location of the previous job. In Northern Italy an employee under 30 years of age may receive assistance for 12 months, an employee between 30 and 50 years of age for 24 months, and an employee over 50 year of age for 36 months. The corresponding periods in Southern Italy are 24, 36 and 48 months. The assistance is 100 per cent of the pay for the first year, as set in the employing enterprise. Thereafter this falls to 80 per cent for the period of a possible extension. United Kingdom Redundancy pay in the United Kingdom is paid both on the basis of statute and of local agreements. The statutory system dates from 1965, and is referred to in the 1996 Employment Act. It requires employment for at least two years and a minimum 20 years of age. Employees attaining the age of 65 years or their own retirement age are excluded. Redundancy pay is also withheld if the employee, without acceptable cause, declines a similar job offered by the employer, is guilty of misconduct or is on strike at the time of the redundancy announcement. Redundancy pay depends on the employee's age and the length of the employment. It is calculated as follows:
A maximum of 20 working years may be included in the calculation. In 2002 the maximum weekly pay was GBP 240 pounds (about EUR 377). Thus the maximum compensation is EUR 7,540. Both statutory and agreed redundancy pay are tax-exempt up to GBP 30,000 (about EUR 47,000). Using the statutory formula and converting weeks to months at
the rate of 4.28:1 the following table can be constructed:
Enterprise-specific agreements provide for much higher redundancy pay in cases of reorganisation, factory closures and workforce downsizing. Based on a study, the AEEU trade union estimates that the rule of thumb is two weeks' pay per year of service up to a maximum of one year's pay. During the privatisation of the energy sector in the early 1990s thousands of redundant employees received as much as 1-2 years' pay in compensation. This effectively stifled resistance to the changes despite the efforts of the trade unions. Comparison of redundancy compensations The structure of the redundancy pay varies by country. To facilitate comparison of the costs faced by enterprises we may imagine two individuals: Helen and Max. Helen is a 48 year-old chemical industry employee who loses her job after 18 years of employment. Max is a 33 year-old employee in the paper industry who has worked in the enterprise for seven years. The periods of notice and redundancy pay of Helen and Max in
various countries would be as follows:
*In Finland Helen would have received a sum corresponding to approximately 1.4 months' wages in redundancy pay (to be abolished). Max would have received nothing. In Sweden Helen gets AGB compensation worth about 1.4 months' pay, but Max receives only half a month's pay. ** The collective agreement in the German chemical industry
provides only two months' redundancy pay for such a length of employment, but the case law
has often increased this to two weeks' pay per working year. The figures for Finland and Sweden have been presented as footnotes, as these allowances are not paid directly by the enterprise but collectively through the unemployment insurance system. As for Italy, it must be noted that all employees receive the employment termination allowance irrespective of the reason for the termination. During the employment the employer must set aside one month's pay per working year. While periods of notice are similar in short-term employment, in Finland and Sweden employees with long service clearly enjoy longer periods of notice than elsewhere. Redundancy compensation typically varies between 2 and 8 months' pay. This causes significant costs in cases of large-scale redundancy, for which enterprises must budget, and which may have some impact on decisions. It should be noted that in most countries the parties have negotiated clearly higher redundancy compensations at enterprise level.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2.3 Working hours I have picked up examples of most typical shift work schemes in various industries. In conclusion, one can state that the working hour flexibility is increasing. The newest phenomenon is the so-called individual working hour account. Its purpose is to make it easier to follow up working hours when they are leveled in a longer period, up to one year. The accounts may help people organise their working hours with their own needs as the starting point. In the employers' interest, however, are the needs of the enterprise and of production as well as elimination of overtime compensation through the employees' flexibility concerning the need of labour in production. Another observation is that in the last few years working hours around Europe have grown shorter. The way is shown by the 35-hour week act, enacted by the French Socialist government. Thus the average annual working time in day work is about 1,700 hours, and in continuous three-shift work about 1,600 hours. Finland is in the middle, but the differences between countries are considerable. 2.3.1 Laws and collective agreements in various countries Sweden The chemical industry collective agreement defines the annual regular working hours in various working hour forms, the five week annual leave included. When the annual leave is deducted the table becomes as follows:
In the light of these figures the working hours in Sweden seem in European comparison long. The collective agreement does not pay attention to the six-working-day shortening that was conditionally agreed upon in the 1998 and 2001 bargaining rounds and that is to be gradually enforced. If the employee takes the days off, then annual working hours in day work in 2002, the annual leave excluded, would come to 1,780 hours. Still, day work working hours remain the longest among the countries of comparison. The unions say to have focused more in flexibility in organising of working hours. Therefore, in reality, the working hours vary according to the individual wishes. In Spring 2002, the state committee proposed a gradual five-day shortening of working hours to be implemented by degrees in 2004-2007. Also these free days would be implemented individually and flexibly. In the previous bargaining round in 1998, the parties agreed on individual working hour accounts (individuella arbetstidskonton). The opportunity was offered to agree locally on a flexible working hour arrangement within the frame of a calendar year or to transfer the cost impact of the shorter working hours to the insurance fees of additional pension plans. The parties agreed on a three days shortening in 1999-2001 and on three more days more in 2002-2004. An employee may take the shortening either as free days, asa cut in the insurance fee or as cash payment. The cost impact of the shortening is 0.5 per cent per day. Thus in 2002, two per cent of the annual pay (not inclusive of pay for the vacation period) could be used. Days off can be taken as whole days or in shorter periods. The parties are allowed to agree on flexible working hour solutions based on the enterprise's needs and the individual's wishes. If an employee does not want to take days off or transfer the benefit to the pension insurance fee, his or her pay will be raised by 0.48 crowns per hour annually. According to the chemical industry collective agreement there are twelve holidays, the New Year Eve differing from Finnish practise. Allowances are paid in crowns and pennies (here converted to euros by dividing by 9.1), excepting the shift work, where the allowances are paid for all hours.
Optionally, one can agree locally that the evening and night allowance per hour is the monthly pay divided by 480, the Sunday allowance by 300 and the national holiday allowance by 150. The chemical industry agreement allows a maximum of 48 hours of overtime in four weeks or 50 hours in a month, the annual maximum being 200 hours. Overtime allowance is 41 per cent of the hourly pay or the monthly pay divided by 420. Almost 50 per cent of the chemical industry employees work days, 6 per cent work in discontinuous three-shift scheme and almost 40 per cent in continuous three-shift scheme. According to a study compiled in the mid-1990s by the employer association Almega, two thirds of its member enterprises that applied the continuous three-shift scheme applied also a six-shift system. The remaining third applied a five-shift system. Two thirds applied all the while a constant shift length, one third applied other lengths for the weekend, typically 12 hours per shift. The most popular lengths of the cycle were 15 days and 5 weeks. The following examples on the five and six shift systems have been extracted from the study. (m = morning; e = evening; n = night; capital letter for 12 hour shift) Borealis in Stenungsund: m m m m m - - Eka in Alby: m m m n n In the paper industry the general working hour regulations are included in the agreement on the common working conditions of all personnel groups.
As the parties in the chemical industry, the trade union Pappers agreed in 1998 on a flexible working hour shortening (livsarbetstid) and working hour accounts. In 2002 an employee could take two per cent of the annual pay as free days, as pension insurance fee or as cash payment. According to the agreement table this two per cent shortens the annual working hours in day work by 36 hours, in continuous three-shift work by 32 hours. In 2000, according to the employer association's study, 47 per cent of the employees took the shortening as free days, 20 per cent used it in pension insurance fees and 33 chose cash payment. Therefore I have included the shortening in the annual working hour table. The inconvenient working hour allowances per hour are calculated from the monthly pay by various dividers. As it is a bit difficult to summarise them, I have calculated the following table on the allowances' impact in percentages per hour, by applyin divider 175:
An employer is, as a general rule, allowed to assign 50 hours of overtime per month and 200 hours per annum. The compensation is calculated, as the allowances in the previous presentation, by dividing the monthly pay by a divider that depends on the case. This means that the overtime allowance is 84 per cent in weekdays (divider 95), 106 per cent in weekday evenings and nights (divider 85), and 150 per cent in the weekends and on national holidays (divider 70). The agreement lists as the possible systems of the continuous three shift work the 4-, 4.5-, 5-, 5.5- and 6-shift systems. Some instructions are given on how the working hours can be levelled to a 1,616 hour annual working hour. In day work the annual working hours are calculated to stand at 1,807 hours. The agreement introduces a five-shift scheme where Sundays are managed by two twelve-hour shifts (M/N):
According to the trade union Pappers 70 various schemes are applied. All of them are, according to their users, best in the world. Even twelve hour shifts are popular among the rank and file, as they offer less time spent travelling to and from work and long periods off. In the energy sector, the best working hour regulations are found in the municipal sector, where the working hours in the shift work are slightly shorter than in the agreements of the unions SEKO and SEF in the private sector:
The inconvenient working hour allowance (OB-tillägg) is calculated, as in the paper industry, by varying dividers of the monthly pay. As it is a bit difficult to outline them, I have calculated the following table on the allowances' impact in percentages per hour, by using the divider 165:
The trade union SEKO's municipal sector agreement mentions, as do the chemical and paper industry agreements, individual working hour accounts in 1998 and again in 2001. The flexible working hour shortening consists of 36 hours in 2002, 45 hours in 2003 and 54 hours in 2004. The shortenings can be taken as free days, as a cash payment or they can be transfered to the individual pension insurance fees. In the SEKO's and SEF's private sector agreements no working hour shortening has been agreed upon. The annual leave is, according to the law, 25 weekdays or 5 weeks. It is applied in all industries. In case of an employee paid by the hour, pay for the annual leave is, according to the chemical industry agreement, 13.2 per cent of the year's income. In the energy sector (SEF) it is 12.8 per cent. An employee with a monthly salary gets the same salary as he or she would if working, including its variable parts such as the allowances and bonuses. On top of that, all agreements mention as leave allowance 0.8 per cent of the monthly pay per each day on leave and 0.5 or 0.52 per cent for the variable parts. Thus a five week leave awards a 20 per cent leave allowance. In the municipal energy sector agreement, employees of at least 40 years of age are allowed, as a relic from past agreements, 31 leave days and an employee of at least 50 years of age, 32 leave days, if they have been continuously in the service of the same company since before September 1999. Norway The collective agreements in the chemical, paper and energy industries in Norway have identical regulations on weekly working hours, as follows:
The annual leave is, after the two stage extension received in the previous bargaining round, 25 days or 5 weeks. There is no separate leave pay, but the pay for the annual leave is beefed up some also because of progressive taxation. The pay for the annual leave is 12 per cent of the year's income. There are 10 holy days, based on law, In the chemical industry, especially in the plastic, rubber and fish oil industry, some 60 per cent of the personnel work in shifts. In the paper industry, the proportion of three-shift work is 55-60 per cent. In the energy sector, the proportion of shift work is relatively small. The continuous three-shift work is arranged into five shifts. A typical, in average 33.6 hour week scheme, consisting of 168 hours of work in 5 weeks (the last one having up to 7 consecutive work shifts) is, in the mill of a large paper industry enterprise, as follows:
Germany In Germany, working hours are defined in the collective agreements. The starting point is that working hours are equally long in day and in shift work. Until recently, weekly working hours in Germany's Eastern states are 2,5 hours longer than in the Western states.
The chemical industry agreement allows for a lot of flexibility. The maximum period to level the working hours is 12 months. Within that frame, daily working hours may run up to 10 hours. The parties can agree locally on a maximum of 2.5 hours longer or shorter weekly working hours. Thus it can vary from 35 to 40 hours in the frame of the so called working hour corridor (Arbeitszeitkorridor). In continuous three-shift work one can agree locally on 12-hour shifts of work. Also the shift work schemes are fixed locally. In the paper industry, the weekly working hours can vary upon agreement from 35 to 39 hours. The maximum period of time in which to level the working hours is 12 months. In continuous three-shift work the parties can locally agree on 12 hour shifts for Sundays and holy days. According to the chemical industry agreement, employees of 57 years of age and more enjoy a 35-hour working week, shift work employees already at the age of 55. In the paper industry, employees of that age have a 36-hour working week and two extra days off work. In the chemical industry, 15 years in continuous three-shift work and at least 55 years of age justify a 34-hour working week. According to the municipal TV-V agreement in the energy sector, the parties can agree locally on the usage of the working-hour corridor (Arbeitszeitkorridor). Within it the weekly working hours can be extended up to 45 hours. Between 6 a.m. and 8 p.m. 12-hour shifts can be introduced. To the flexible instruments belongs also the working hour account (Arbeitszeitkonto) that enables a maximum of 40-hour deviation in a locally fixed levelling period. In the agreement of the energy sector in Eastern Germany employees in continuous three-shift work receive three extra free shifts. Employees over the age of 50 working in nights receive three or four free shifts. In order to increase flexibility local agreements on working hour accounts (Arbeitszeitkonten) where the working hours must level in 12 months to an average of 38 hours per week are permitted. In the energy sector agreement, a new flexible system was negotiated for E.ON, to be in force from the beginning of 2002. The trade union ver.di believes the practise will spread out to the whole energy sector. The average weekly working hours are 36 hours shared between five days from Monday to Saturday. As above, the parties can agree locally also on working hour accounts, the levelling period being a maximum of 12 months. The maximum deviation is 150 hours, but an employee can demand compensation for deviation exceeding 50 hours. Between 6 a.m. and 8 p.m. 12-hour shifts can be assigned. In local agreements, working hours can be shortened to 30 hours per week. Overtime is compensated in case the hours of work exceed the work schedule, created in advance. The trade union IG BCE is proud, and for a reason, of the 1996 agreement on older employees' part-time work (Altersteilzeit). It guarantees, with certain conditions, employees 55 years of age and older the right to halve their working hours and retain 85 per cent of their net income. The costs are covered partly by the employers, partly by the society. An employee can thus cool off to the pension age of 65 or retire earlier and receive a slightly reduced pension. For example retiring at the age of 61 cuts the monthly pension by 14.4 per cent. In the chemical industry overtime work consists of working time that exceeds the weekly 37.5 hours or the weekly working hours agreed to increase the working hour flexibility, for example 40 weekly hours. The main rule is to exchange within a month the overtime hours into free time. If that fails the employee receives a 25 per cent over time compensation, but the hours must, however, be exchanged within two months into free time. In the chemical industry, allowances connected to the working hours are calculated as percentage of the monthly pay as follows:
The three work allowances are paid for all hours worked in the given working hour form. The paper industry allowances differ slightly from the chemical industry allowances.
In the energy sector there are varying systems. The TV-V agreement covering all municipal facilities in the country has following regulations:
In the private energy sector in the Eastern states the allowances are as follows:
According to the German law, the annual leave is 24 working days. However, in all significant collective agreements, including those covered by this study, the annual leave has been extended to 30 working days or six weeks. In the chemical industry agreement, the employees in continuous three-shift work get three extra days of leave, in the paper industry, two extra days. The municipal energy sector and the E.ON agreements award shift employees six extra free days (though they are at work on the Christmas Eve and on the New Year Eve), likewise, employees who work at night receive two extra free days after 40 night shifts. For the period of the annual leave one is paid the same amount as if having worked. The chemical industry agreement gives, in addition to that leave pay, around 20e per leave day. It makes more than 13 per cent extra for the days of leave, calculated according to an monthly average income of 3,200e. In the paper industry agreement, the leave pay is a bit smaller, 18.41e per day of leave. Most energy sector agreements do not mention any leave pay. There are nine holy days, based on law. On top of that there are usually 0-5 state-specific holy days. Together, these make 9-14 holy days. At least according to the collective agreement, production at paper mills is interrupted for Easter, May 1, Whitsun, Christmas and New Year, but other regulations may be negotiated locally. Almost 40 per cent of IG BCE's rank and file do some kind of shift work. Therefore, the union says to invest in finding the best shift systems for continuous three-shift work. In that IG BCE uses the assistance of occupational health and safety experts. The paper industry seems mostly to trust a four-shift system, but the union tries to sell also five shifts. In the 2001 Congress document the schemes of a four-shift and of a five-shift system were presented as follows:
If the purpose has been to attract rank and file from four-shift to five-shift work, the systems are not in this form directly comparable. The above four-shift scheme ends up to in an average a 42 hour working week while the five-shift system means a 33.6 hour working week. Thus to follow the agreement one has to level the working hours to 37.5 or 40 hours per week, depending on one's location either in the Western or in the Eastern part of Germany. France In France, the working hour situation changed radically as a consequence of the 1996 law ("loi Aubry") that shortened the general working week to 35 hours, despite employers' fierce opposition. According to the unions this translates 1,536-1,589 hours per annum. The working week shortening does not occur automatically. The parties have to agree on the company level on its implementation following a certain timetable. Thus there are enterprises where daily working hours have been shortened. Elsewhere whole free days and, in shift work, free shifts have been adding up. According to the study published in December 2002 by the statistical centre of France, the working hour shortening created 300,000 new jobs in 1997-2001. Productivity has risen by 4-5 per cent when one has reorganised work in enterprises and the pace of work has become more hurried. On the other hand, pay rises have remained smaller than in enterprises where working hours have not yet been shortened. Employment was eased by the incentive award that an enterprise received based on the Aubry law if the enterprise shortened working hours and simultaneously committed to increasing jobs by 6-10 per cent. The government formed in 2002 by the political right watered down the working hour act, almost at first opportunity, on the request of the employer association Medef. The overtime maximum was raised from 130 to 180 hours per annum. Thus a four hour extension per week is possible by covering a small additional cost, the 25 per cent overtime compensation. The hotel and catering industry won a two year adjournment. In the chemical industry, 66 per cent of the employees work days and 16 per cent in continuous three-shift work. The rest are engaged in other working hour forms. In day work, the starting point is 1,589 hours of work per annum. In continuous three-shift work one has agreed in enterprises on shorter working hours, even to lengths close to 1,500 hours. Overtime compensation is 25 per cent for the first eight overtime hours in a week, 50 per cent after that. The night shift allowance is 20 per cent. In addition at least 450 hours work in night shift entitle one to an extra free day. On the other hand, an employee in continuous three-shift work receives an extra free day per each quarter of the year or four days per annum. This shortens the annual working hours to 1,557 hours. On the enterprise level one has agreed on clearly larger reductions. The Sunday work allowance is 100 per cent. In the paper industry the working hour shortening has been implemented to the effect that an employee works 198 shifts per annum. This makes 1,584 hours annually. The trade union Filpac demands the amount to be reduced to 168 shifts. In a few enterprises one has reached 190 shifts per annum, which means 1,520 hours of work per annum. In the paper industry 18,000 employees out of 24,000 have continuous three-shift work. The night work allowance is 17 per cent, however, at least 4e per hour. At the current bargaining round unions demand the allowance be raised to 50 per cent and for other improvements in the conditions of continuous three-shift work. The Sunday work allowance is 50 per cent. Overtime compensation is 25 per cent for the first seven overtime hours in a week, after that, 50 per cent. The schemes of continuous three-shift work vary largely. The most common seem, however, to be models where six or seven consecutive work shifts (for example two mornings, two evenings, two or three nights) are followed by four or five days off. This kind of schemes are used, among others, by International Paper (Maresquel), UPM Kymmene (Stracel), Stora Enso (Corbehem) and Ahlstrom (Sibille Rottersac). The working hour reduction act is followed also in the energy sector, although the sector was in the pioneer role already in 1994 when the parties agreed on flexible shortening. For the overtime work one receives by day a 50 per cent, on Sundays a 75 per cent, at night a 100 per cent and on Sunday nights a 125 per cent increase in pay. The annual leave is in all industries 25 days or 5 weeks. The regulation is based on the law. In the energy sector one has 26 days of annual leave. In the agreements there is no leave pay, but on company level one has often agreed on 50 per cent leave pay. There are altogether 11 holy days, May 1, based on law and 10 others based on the collective agreements. Italy In the chemical industry 2002 collective agreement, working hours were shortened by one day in all working hour forms. It is part of a longer programme that decreased the hours of daytime work in just a few years from 39 hours per week to 37 hours 45 minutes. The new amount equals with 247.5 days of work per annum of which an average 11 holy days and 20-25 days of annual leave are deducted. Thus the annual working hours are 211.5 or 216.5 days of work or 1,692-1,732 hours in day work and discontinuous three-shift work. In continuous three-shift work, an employee has 232.5 shifts per annum which makes after deduction of holy days and annual leaves 1,580-1,620 hours per annum. The innovation of the 1998 collective agreement was the individual working hour account (conto ore individuale). The working hour bank makes it possible to exchange half of overtime hours into free time. The shop stewards have access to quarterly statistics and can thus control the amount of overtime. The system is not in use in all enteprises but the first experiences are rather positive.
About 30 per cent of the employees have shift work, in large enterprises, 50 per cent. According to the trade union Femca, the following scheme is typical in continuous three-shift work although in their opinion it does not function well. Reserves are needed.
In the paper industry the weekly working hours are in day work 40 hours, but the annual working hours have been reduced a couple of times by 64 hours altogether. Thus the average weekly working hours are over 38 hours, which makes 1,758 hours annually. In continuous three-shift work, the weekly working hours are 37 hours 20 minutes or 1,692 hours annually. Allowances are paid as follows:
According to the trade union Fistel, employees doing continuous three-shift work mainly use 4-2- and 6-3-systems. The new industry-specific agreement in the energy sector gives the day workers a 38 hour working week. In enterprises where 39- or 40-hour working weeks are applied the weekly working hours will be shortened to 38 hours by June 2005. The annual working hours of the shift workers are still 160 hours shorter. Thus the annual working hours in day work is 1,745 hours and in continuous shift work 1,585 hours. The chemical industry agreement awards as annual leave 20 days or four weeks for service having lasted less than ten and 25 days or five weeks for service having lasted longer than ten years. There is no separate leave payment. The pay is calculated as if the employee had been working. The employee, however, receives 13th month's pay. In the paper industry the annual leave covers 22 days. In the energy sector annual leave is 20 days or four weeks during the first eight years of employement relation and 25 days or five weeks after that. There are twelve holy days based on law, but the chemical and paper industry agreements list only eleven of them. Britain The modest British labour legislation has as its starting point 48 hours' maximum working week, eight holy days (bank holidays) and 20 days or four weeks of annual leave. There are only eight holy days, but the unions have been able to negotiate better conditions for the local agreements. According to the semi-official research institute IDS most weekly working hours in the chemical and paper industries vary between 37 and 38 hours, the average being 37.5 hours. The average annual leave is 25 days or five weeks in the chemical industry and 26 days in the paper industry. In both industries the annual leave extends to 26-30 days when the employment relation becomes longer. For the days of annual leave one receives the regular pay but no extra leave payments. In the energy sector the working week is, in most enterprises, 37 hours. The annual leave is in most cases first 26 days and is extended to 30-32 days after 15-25 years of service. Although the working hours are defined on the basis of weekly working hours, there is a tendency to increasingly focus on the annual working hours, which allows for more flexibility. At the moment the annual working hour base is applied to seven per cent of the energy sector employees and to five per cent of the industrial employees, but the employers bargain for more flexibility and long levelling period. Shift allowances vary. In the industry, the average allowance in the discontinuous shift work is 22 per cent, in the continuous three-shift work 34 per cent. In the paper industry Sunday and the preceding night bring a 100 per cent allowance, Saturday and the night following Sunday a 50 per cent allowance. In the chemical industry the practise is generally identical. Overtime allowance is 50 per cent. For work on Sunday and the preceding night the allowance is 100 per cent. The allowance for a 12 hour shift is 60 pence per hour (0.9e). The paper industry collective agreement includes the following, seemingly heavy, five shift system scheme where the weekend shifts are 12 hours.
The following table lists the number of annual leave days in various countries. For unity's sake, the weekdays from Monday to Friday have been used in the table, especially because of the Saturdays being included in the model in Finland which causes frequently misunderstandings in international statistics. The table covers employees in over one year's employment relations. The lenght of the annual leave in the chemical, paper and energy industries in 2002
*In Italy 25 days after 10 years' employment relation, in the energy sector after an eight years' employment relation, in the paper industry for all 22 days The five weeks' annual leave seems to have become the norm in Europe although Italy trails behind. In Germany, the six weeks' annual leave has spread out to the collective agreements in most industries. The British speciality is the extension of the annual leaves according to service years. This kind of regulations are included in the greater part of the collective agreements in the industries covered by this study. 2.3.2
Annual working hours 2002 The concept
of weekly working hours is understood in different ways. In many statistics Many unions
in the comparison countries do not have a clear definition on how annual working hours are
counted. The following statistics on the situation in 2002 have been counted by using
data, received from the unions and from other sources, about weekly working hours, holy
days and annual leaves. Annual
working hours in 2002 in Europe
In each
country differences between the three industries seem rather small. The total of working
hours in France is far below working hours in the other countries discussed. Germany is
below the average thanks to the six weeks' annual leave. Britain fares well because of
enterprise level agreements. Sweden differs from the other comparison countries with the
longest working hours in day work in all three industries. Finland is near the middle. The
average annual working hours in day work in Europe seem to be about 1,700 hours. The
Southern European countries, excluded from the comparison, have, as a main rule, clearly
longer working hours than that. The working
hours in continuous three shift work in various industries are, according to the data
given by the comparison country unions and other sources, as follows: Annual
working hours in continuous three-shift work in 2002 in Europe
In
three-shift work the situation changes. The Swedes move to side the French and the
Norwegians in the forefront of Europe's shortest working hours. The British, for their
part, have not been able to negotiate shortenings leaving shift-work working hours
practically on the same level as in day work. Finns are found in the 1,600-hours-plus
club, which also here represents roughly the average. Below is a
table on all holy days, based on law and collective agreements, in various countries. Holy days
in various countries deriving from legislation and collective agreements
This chapter goes through the regulations on remuneration in the collective agreements, covered by this study, not including the Finnish system. Attention is paid to a possible pay classification that is not included in all agreements by far. Of the allowances, there is data on service year allowances, Christmas payment and 13th month's wages and salaries. The working hour related allowances, such as shift, Sunday and overtime compensations, have been handled in the chapter covering the working hours. Union representatives have been interviewed on the usage of time-, result- and profit-related payments, bonus systems, as well as ownership of shares and options. 2.4.1 Wages systems and allowances in various countries Sweden The chemical industry agreement defines only the minimum pay for adults, new employees and employees under 18 years of age. In 2002, the adult minimum pay was 76.40 crowns per hour (8.40e) or 13,370 crowns per month (1,469e). Thus the monthly pay divider is 175. According to the pay statistics, the average pay is 97 crowns per hour (10.65e) or 16,975 crowns per month (1,865e). The average annual income in the whole chemical industry is about 27,000e. Wages systems can be agreed upon on the local level. The agreement does not rule on this either way. It only states that payment may be fixed, meaning hourly or monthly pay, or varying, which denotes piecework rates. There are no references to possible components of a good wages system. The union, however, tries to guide the union chapters in for example creating bonus systems. Piecework pay is disappearing. The paper industry agreement does not mention figures. The starting point of the agreement is that the parties agree on the wages systems locally. The text decrees that usually the starting point is fixed monthly pay that can be combined with varying elements, such as fees, bonuses and profit-sharing. In the system, one has to pay attention to how demanding and difficult the work is. A looser definition concerns individual qualities, such as the ability to take the initiative, to take responsibility and to collaborate as well as multi-skills and flexibility. The local system may include pay grading and individual allowances. The 15 pages of guidelines clearly contain layers of regulations recorded at different times. According to the trade union Pappers, its officials participate in the signing of the local agreements, which gives an opportunity to follow further the situation. The most common allowances are the productivity bonuses. The bonus payment is a sensitive question. It would be good to restrict the proportion of such a varying factor to a couple of percentages, but in many enterprises as much as one month's pay or 8 to 10 per cent extra is doled out in good years. In Stora Enso, there has been talk about a European-style profit-sharing system. The European Works Council is involved in the discussion. According to pay statistics, the employees' average pay in 2001 was slightly over 250,000 crowns (27,600e). Simultaneously, gross annual income, based on the data provided by employers, was 30,100e. According to the survey conducted by the trade union Pappers, a paper machine operator may receive 41,000e per annum. In the energy sector, the trade union SEKO's agreement defines minimum wages and salaries. In the trade union SEF's agreements, the parties have agreed to define them on the company level. In the municipal and private sector, minimum pay from April 1 2002 is 12,300 crowns (1,352e) per month, from April 1 2003, 12,650 crowns (1,390e). There are no regulations on payment systems. In the SEF's agreement it is stated that the three options are monthly pay, monthly pay depending on results and piecework pay. In the municipal sector agreement it is stated that remuneration is individual and differentiated. The key factors are responsibility, the level of difficulty of a certain task and an individual’s ability to measure up to demands. The description of payment forms is almost identical with the SEF agreement. The agreement appendix defines a five-grade minimum level for jobs that is to be applied in case the parties cannot agree on the payment system. The other agreements do not include such job-specific minimum definitions. A typical monthly income is 20,000 crowns (2,200e), which, together with the overtime, staying in reserve and other allowances may come to 29,000e or more. Norway The collective agreement in the techno-chemical industry is a minimum pay agreement. The agreement does not include a pay grading. Paragraph 4 of the agreement states that the parties can agree on a pay grading on the local level. Otherwise one follows the cursory pay structure description of the paragraph 3. It is based on the minimum pay that in the new agreement amounts 101.50 crowns per hour (13.70e). On top of that come service year, task-specific and examination allowances. The service year allowance is defined cumulatively according to the following table:
On these task-specific allowances the parties may agree locally based on demands and circumstances. The examination allowance is at least six crowns (0.81e), if the parties do not agree in another way locally. If the employee has another vocational diploma that is beneficial to the enterprise, an extra three crowns (0.41e) are added. The general pay and allowance rises are bargained once a year on the national level. In the years between the full bargaining rounds mainly inflation adjustment is negotiated. In that, the confederations play a significant role. The paragraph 4 of the agreement encourages the parties to create local wages systems and refers to bonuses, productivity fees and piecework pay. Productivity fees and bonuses are very common in the chemical industry. Also profit-sharing depending on the enterprise's is in place. The paper industry agreement contains still less pay regulations than the chemical industry agreement. According to paragraph 2.2 of the agreement, the parties agree on the wages system on the local level. The trade union Fellesforbundet claims this to work well, as the industry is very settled and concentrated and new players do not appear. The collective agreement covers only the general pay and allowance rises. According to paragraph 2.2 of the agreement, the wages system must reflect responsibility, decisionmaking and vocational qualifications. The system should encourage employees to acquire extra skills, to be enterprising and to promote production. Locally, the parties bargain every year on pay rises that are based on the enterprise's success, on productivity development, the future outlook and competitiveness. An example of the local payment system is the system agreed upon at a mill of a large paper producer. A structure of the same type can be found also elsewhere. The basis lays on four pay grades. The A and B pay grades are applied for the permanent employees, the other two pay grades for new recruits and vacation replacements. A's annual base pay is 227,000 crowns (30,676e), B's 230,000 crowns (31,081e), which means that there barely is any difference. The base pay includes a 3,500 crown reward for keeping the machines running through the year. Another issue is competence that consists of four factors. Experience awards 1,000, 3,000 or 6,000 crowns depending on the tasks. Three service years give an additional 1,000 crowns, six service years 3,000 crowns and nine service years 6,000 crowns. Vocational competence brings extra pay if the employee has passed an examination or several of them. The paper industry diploma translates into 3,000 crowns, the electrician’s diploma 6,347 crowns and the CE certificate 11,991 crowns. A team leader can be rewarded 12,000 crowns for leadership competence, and a performer of the corresponding examination 3,000 crowns. The fourth element is personal. All the previous amounts refer to extras per annum. This local agreement does not include bonuses or productivity fees. The practise varies. According to the trade union Fellesforbundet, many employees do not want to hear of them because of the variations from one year to another. Employers, however, would like to reduce the weight of fixed pay elements and emphasise elements connected to production, profitability and productivity. In a Norske Skog mill, the shop stewards decided to drop the whole productivity system when the employer refused to negotiate about its basis. In the energy sector, the municipal sector agreement has the table on minimum annual pay for various tasks, although half of them were dropped in this Spring's bargaining round. Thus ten tasks are left. For example, the base pay of a skilled worker is 236,700 crowns (31,986e) per annum, of an employee without vocational training 215,000 crowns (29,054e). The agreement, however, states that in each enterprise one creates a wages system of one's own, based on competence, responsibility and versatility. Acquiring extra skills must influence pay development. Usually companies reserve for local bargaining a sum that is based on the enterprise's success. To produce "surplus", the collective agreement recommends the usage of payment forms bound with the results. After the parties have decided that bonus systems, based on productivity and result, will be used, the local level parties have to agree on their application. The shop steward may make a proposal for such a payment form. However, the matter is new, and not yet many systems are up and running. The trade union EL & IT is of the opinion that one need not to be afraid of result bound payment as the energy sector is in good shape. In the private sector, the EBL agreement defines only three minimum pays: an employee with vocational training, 239,000 crowns, a less educated employee, 210,000 crowns and vacation replacements and employees below 18 years of age, 150,300 crowns. In last Spring's bargaining round the minimums were raised by 9 - 15 per cent. Thus one agrees on the payment systems locally. The collective agreement gives the opportunity to apply various time, piecework and fee payment systems that pay attention to competence, the length of service, psycho-social factors of the work environment, productivity, quality, education, the sphere of responsibility and so on. Germany The chemical industry wages system is based on a uniform 13-grade payment grading. Workers and salaried employees are placed in the grades E1 to E13 on the basis of how demanding the work is and on what kind of schooling or initiating it demands and on the basis of the job descriptions. Grades E1 to E3 are for employees with no schooling or whose initiation period is short. Grades E4 and E5 require two year's vocational schooling, grades E6 to E8 already three or three and a half year's education in college or as long time of a combination of college education and training in an enterprise. Although the definitions lay out much of the demanded schooling the parties emphasise that the work decisive is the work and how demanding it is is decisive, not the schooling the employee has happened to acquire. Workers are usually placed into grades from E1 to E7. Their base wages (Entgelt) since Spring 2002 omwards in the state of Lower Saxon:
The pay tables in the Eastern Germany are at present 84 percent of the tables in the Western part of the country. In the last Spring's bargaining round the parties agreed on annual extra raises to the effect that the 100 per cent level is to be reached both in the chemical and paper industry October 1 2009. The trade union IG BCE's agreement is very limited, concerning for example the pay elements based on productivity or result. This differs clearly from for example the Italian agreements. However, many things happen on company and local level. The 2001 Congress document analysed the directions in the wage frontier as follows:
The Congress document refers as an example of this to Aral's enterprise-specific system, where employees agreed to give up 0.9 per cent of their pay, and the enterprise added an annual 2 per cent to the total sum of the pay to be given to various groups according to result goals. IG BCE makes the following conclusions for the coming years:
The Christmas allowance, or, as the agreement says, "annual
special fee" (Jahressonderzahlung or Jahresleistung), is, aside of the
allowances based on working hours, the only significant allowance, cited in the agreements
of IG BCE and others. Its magnitude varies some between industries and the old and new
states. The following tables summarise the amount of the Christmas allowance as
percentages of the regular monthly pay:
The paper industry pay grading consists of three parts. Workers are paid by the hour and are placed in pay grades I to VIII. Technical staff receive monthly pay and are grouped into grades T1 to T5. Office personnel belong to grades K1 to K5, the master craftmen to grades M1 to M4. The pay grading of the employees and their hourly pay is as follows:
The municipal utilities' TV-V-agreement in the energy sector includes a 15-grade pay grading that is based on rather scant descriptions on how demanding the work is at each grade and what the tasks are. They are followed by a list of examples for specific jobs (meter reader, electrician, supervisor). Workers are placed in grades 1 to 5. Another factor in the pay table is based on the lenght of the service. There are 6
steps. The employee is raised to the next step after 2 to 4 years on the lower step. The
basic pay on the various steps is as follows (in parenthesis is the total number of
service years):
The basic monthly wages and salaries run between 1,347 and 3,768 euros. They are paid 13.4 times a year, including Christmas and leave pays. In the progressive German style, on top of the basic pays come three kinds of allowances.
To make it easier to hire people the enterprise is allowed to pay apprentices and new employees 6.5 per cent below the pay table regulations the first year. Inspired by other enterprise- and industry-specific agreements the negotiators succeeded in getting as a "capital formation fee" (vermögenwirksame Leistungen) a monthly 40-euro allowance for all employees. The fee is cited in legislation, and probably includes some tax benefits. According to the law, the allowance has to be used for share saving, investment funds or buying or constructing a home. In the TV-V-agreement it is smaller, 6.65 euros per month. The trade unions ver.di and IG BCE try to gradually spread the E.ON pay structure model to other agreements. It really is more versatile than the industry-specific agreement of the unions. According to ver.di and the statistical yearbook, the energy sector average income in 2001 was about 40,000e. The average income of employees can be estimated as 37,000e. France The pay table structure in all three industries covered by this study is complicated. The emphasis of pay bargaining is on the ecompany level. This is especially true in the chemical industry, where the employer association has, in two consecutive years, refused to sign the national pay agreement and has restricted its role to recommending a modest 1.5 per cent pay rise. On the other hand, in the same period of time, the working week has been shortened from 39 hours to 35 hours without lowering the income level. Legislation makes it mandatory to negotiate annually on wages and salaries. This has lead into a situation where wages and salaries have gradually grown apart from the national minimums. The employers want to remove all pay negotiations to the enterprise level. Their behaviour on the national level give a proof of this. The pay grading in the chemical industry includes grading, based on tasks and on how demanding they are, from unskilled worker to engineers and other senior salaried employees. The parties have agreed on a coefficient (coefficient de rémunération) for each of the about 50 work descriptions. A skilled worker's coefficient is 125. The supervisor's and accountant's coefficient is 185. Annually, the parties have only to agree on the basic amount of euros (valeur du point). That multiplied by the coefficient gives each employee his or her basic pay. The chemical and paper industry national collective agreements do not mwntion 13th month's pay, but it is common in the local agreements and is paid in almost all large enterprises. About 70 per cent of the paper industry enterprises pay the 13th month's pay, many of them in addition to a 50-per cent leave pay. In the paper industry, there is a rather clear five-grade pay grading (RMAG 1-5), based on how demanding the work is. Each grade has a further three steps. 90 per cent of enterprises have signed local agreements where the pay is essentially higher than in the national agreement. To top all this, the pay table of the energy sector covers all personnel . It consists of 35 levels and 19 service year groups that extend up to 25 years of service. Not all of the table's 665 boxes have wage and salary figures. They are presented in eight clusters named from A to I. Each level has a corresponding coefficient (coefficient de rémunération). The basic euro amount (valeur du point), agreed upon annually, is multiplied by that. According to unions, the structure that has, in the course of decades, become more complicated will be annulled in the reform of the national agreement. One of the most significant allowances of the system is the service year allowance. In the energy sector, it allows the employee, after two years of service, 6 per cent, after six years, 12 per cent, and rises gradually in 25 years to 30 per cent. In the chemical and paper industry agreements, the first 3-percent allowance is awarded after three years of service. Then it rises to 6, 9 and 12 per cent reaching 15 per cent after 15 years of service. The government defines annually the national minimum pay (SMIC). Indexing is forbidden in the collective agreements. The unions have had difficulties in pushing through even raises that would compensate for inflation. Often it has only been possible at the company level. Italy The pay structures of the Italian chemical, energy and paper industry agreements are very similar although the sums vary. They consist of the following components. 1. Pay grading and minimum year income Each agreement has a very detailed pay grading, based on the tasks or jobs. The agreements cover all jobs from employees to middle management. The chemical industry agreement consists of grades A to F, each of them having 2 to 4 subcategories. Bluecollar workers are placed in the grades D, E and F. The energy sector agreement has groups A, B and C, each of them having 3 to 6 subcategories. Employees are placed mainly in group C. The paper industry agreement divides the personnel between groups A to E that consist of a few subcategories. Workers belong to groups D and E. The grading is followed by dozens of pages defining various task profiles and their contents. Therefore, placement in various grades seldom causes major disputes. Mainly the grading is negotiated when an employee removes to other tasks. 2. Fixed allowance The pay tables harbour, as a relic from pay reform of the past, a fixed allowance (contingenza) that is paid in addition to the basic pay. The allowance stays persistently in the table without being included in the basic pay. 3. Service year allowance The structure of the service year allowance is identical in all three agreements. In them, one defines the monthly allowance in various pay grades. The first allowance is paid after two years of employment relation. After that, the allowances is increased by the same sum every second year up to ten years. By that time, the allowance will have grown fivefold. In the chemical industry agreement, the allowance is defined for pay grades A to F. In the energy sector agreement the allowance is, depending on the pay grade, from 17,75 to 49,01 euros per month and each two year’s period of service. The paper industry agreement defines identically the allowances for grades B2 to E. 4. Productivity and result bonuses All three agreements include regulations on productivity and result bonuses. They are considered to be part of the payment system. The chemical industry agreement calls this participation in the enterprise's result (premio di partecipazione). The text has been reformed in the last few years. The purpose is to leave large bargaining mandates to the local parties. Still, the agreement defines some conditions and states that the local system should be checked once in four years and that it should be based on the enterprise's result and on the development of productivity. Enterprises that employ less than 100 people need not to develop systems of their own, but optionally they have to pay productivity bonus (premio di produzione) according to the fixed table included in the agreement. The size of the bonus depends on the pay grade. According to the energy sector agreement, the pay structure includes a result bonus (premio di risultato). The parties agree also on this on the local level. The agreement gives a couple of pages guidelines. The systems have to be based on the enterprise's profitability, productivity and quality. The materialisation of the bonus is checked annually. 5. 13th and 14th month's pay According to the chemical industry agreement the employee is paid right before Christmas the 13th month's pay that is calculated from his or her total yearly income. The energy sector agreement grants both 13th and 14th month's pay. The first extra month is paid in June, the second before Christmas. Acording to the paper industry agreement, salaried employees receive a slightly boosted 13th month's pay. Workers are given a Christmas allowance that corresponds 200 hours' pay or much more than a month's pay. If the employment relation is terminated during the year, the employee receives a corresponding proportion of the 13th month's pay. Britain In the 1990s, it was fashionable in Britain for remuneration to be based on individual performance, but according to the researcher institute IDS, task-bound pay has in the last few years made a strong come-back, not the least in the chemical industry. One may wonder if it is only a coincidence that simultaneously, trade unions have gradually recovered bargaining rights they lost during the conservative rule, thanks to a law decreed by the labour party government. In the chemical and energy industry, enterprise-specific and local agreements list 5 to 10 typical jobs that often are based on national statistical categories. Thus one continuously appearing task description is "operator at a chemical, gas and oil process facility". The grading may give three different pay sums for the same ask category. In Britain, the traditional payment form is weekly pay, but it is becoming more common to agree on an annual basic pay. On top of it come possibly given shift, Sunday or other allowances. The trade union GB reports that allowances based on results are becoming more common. In the paper industry national collective agreement, there is a rough 5-step pay grading, complete with detailed task descriptions. The pay table presents weekly and hourly wages and salaries. They have been calculated for employees working different hours and shifts. The hourly tables for continuous thre | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
