CURRENT DEVELOPMENTS IN COLLECTIVE BARGAINING AND TRADE UNIONS STRATEGIES

IN ITALY

Berlin, 13 May 2013 Workshop WSI/Ver.di

Salvo Leonardi(IRES-CGIL)

“EU in crisis. Where remains the social? Austerity policy and its impact on collective bargaining”

Timeline and changes 2009-20122009 January 22; Framework agreement on

the new industrial relations system, without the CGIL

New system to calculate the inflation rate; longer duration of the 1st level collective agreements; opening clauses and decentralisation; restrictions to strike

2010-2011 Separate agreements at the FIAT plants (and referendum); national agreement for the whole group, out of the metal workers national agreement

Harder working conditions; Closed shop and exclusion of FIOM-CGIL from representation; restriction to the right to strike; NewCo; exit form the national industry-wide agreement;

2011 June 28; New unitary Framework agreement on the industrial relations system

Two-tier system and primacy of the national one; new criteria for representativeness;opening clauses; restrictions to strike

2011 August 3; Letter of the ECB to the Italian Government

Request to decentralise collective bargaining; freezing civil servant pay; pension and labour market reform

2011 September; Law n. 148 on decentalization of collective bargaining (art. 8)

Company agreements can deviate unfavourably nationals and laws, with the only exceptions of those of Constitutional and European origin

2011 December: reform of the age for pension

Prolonged to 66-67 in the next ten yars

2012 Springtime: reform bill of labour market and redundancy rules

Marginalization of the right to be reinstated if unfairly fired; new crisis shock absorbers.

2012 Autumn: new (separate) agreements on productivity

“The great depression” GDP, investments, productivity, demand

The Italian system of industrial relations• high level of voluntarism and ‘abstention of law’ (except the public sector);

no law on workplace rep; collective bargaining; participation; strikes

• also minimum wage is not fixed by law, but through collective bargaining, as "fair pay”, based on the principles of "sufficiency" and "proportionality" for a dignified quality of life of the workers and his/her family (art. 36 Cost.)

• trade union pluralism of organisations; CGIL, CISL and UIL

• comparatively medium-high level of unions density

• high level of collective bargaining coverage

• strong propensity for social dialogue (bipartite and tripartite concertation)

• comparatively higher levels of industrial actions (freedom of right to strike)

Trade Union Density and Collective Bargaining coverage

The “qualitative” problems of the Italian trade unions

1) The gap between the trade union power and recognition (membership, CB coverage,) and the general quality of social outcomes (wages, inequalities, precariousness, welfare state).

2) The problems between the unions about the models of modern unionism and collective bargaining (de-centralization; democracy, servicing, crisis management), only now improved in a sort of emergency convergence

3) The crisis of traditional voluntarism in the field of industrial relations, provoking juridical uncertainty and conflicts

4) The recent unprecedented marginalization before the new State interventionism and deep reforms on the main social issues, collective bargaining included

High cost of labor and taxes Low wages (OECD, 2012)

Wages: the lost decade

More precariousness, more inequalities

The “converging divergencies” of collective bargaining in Europe

• Concession bargaining• Decentralisation• Individualization

The Italian ways to collective bargaining decentralisation

1. Centralised decentralisation (Protocol 23/7/1993)

2. Weakly decentralised (separate framework agreement 22/1/2009)

3. Totally decentralised (Fiat and art. 8, law no. 148/2011)

4. Coordinate decentralisation (framework agreement 28/6/2011)

The Protocol of July 1993:a two-tier system of collective bargaining

Employer/management

Territorial employers association

CGIL, CISL, UIL, (3) + others

Confindustria, Confapi, Confartigianato, Legacoop

(>10)

Sectoral Federations(12-18)

metal

Employers Federations

(> 200)

National sectoral

collective agreements

(>400)

2° Level

• enterprise/firm/group (medium-large)

• territorial(small units)

Workplace Reps/

TerritorialFederations

Government

Inter-confederate agreements

Decentralized bargaining involves 40% of workers and 10% of thecompanies. But only 4% in the South and ranging from 4% to 8%in the companies under 20 employees, inclusive of the territorialbargaining (construction; retail; tourism; agricolture).

> 50 employees

where there’s the unions

higher productivity

higher wagesEmployee added value: 53.440 euro

Gross income: 24.690 euro

< 20 employees SMEs,

where there aren’t union,

lower productivity

lower wagesEmployee added value: 28.770 euro

Gross income: 16.510 euro

Weakly coordinated decentralisation:the framework agreement of 22/1/2009

Signatory parties: CGIL didn’t agree and didn’t sign it

Reform of the collective bargaining machinery

1) First level (National)

Duration: 3 years, incorporating and uniting either the normative and economic parts

Salary and cost of living: new method to calculate increases- a new indicator “Harmonised Consumer Prices Index” (HCPI), calculated by a neutral institutional agency, replaces the old “Planned Inflation Rate”, fixed through tripartite concertation - the restore of the purchasing power will be not programmatically full, since the new indicator excludes the imported energy costs

2) Second level (company)To enhance a decentralisation through:a) opening clauses from sectoral agreements at company level, b) incentivation through fiscal and social contributions reductions linked to productivity c) minimum wage guarantees for the small firms, short of decentralised agreements

15

The FIAT “American” model

1. Workplace union representation: for the signatory organisations only (no matter their votes and members)

2) Exit from the employers’ association and its system of agreements

3) A “national first level agreement” de-linked from a sectoral agreement

4) New Company: all workers must be hired again from the New Company (no FIOM members hired still)

5) Right to strike: sanctions for unions and for individual workers (until dismissal)

6) Referendum: if “no” win, then FIAT close down the establishment (“no” just a bit less than 50% anyway)

• Unions which refuse to sign firm-level agreements are excluded by the representation (closed shop) and by organizational facilities within the workplace

• It’s not the unions’ real representativeness (vote and/or members) to legitimate the collective agreements but – on the contrary –to sign agreements legitimate the signatories unions to be recognized by the company (the employers power to choice who admit and who exclude)

• To guarantee full/complete effectiveness of the agreements and prevent all the possible forms of workers/unions dissent

The coordinated decentralisation:the Confindustria frame agreement of 28/6/2011

The context • Strong external pressures (ECB), internal (Fiat)

and political (right-wing Govern.)• Recovery of collaborative relations among the

trade unions

New eligibility criteria to take part in national negotiation

• Unions admitted at the bargaining tables if they overcome the 5% threshold as average of members and votes

Collective bargaining decentralisation• Two-tier bargaining and primacy of the

industry-wide confirmed • Possibility to adopt “modifying agreements” at

company level, signed by the majority of the work council, under certain limits and circumstances established by the sectoral agreement

• No derogation to the law admitted

Dissent limitations • Strike restrictions clauses are mandatory for

signatories workers' representatives and trade unions only (individual workers excluded).

Criticisms

• It persists a stratification of different framework rules (July 1993; January 1999; June 2011), also according to the areas of application (large industry and banks, public sectors, SMEs and craft, agriculture)

• The Agreement doesn’t establish rules to "close" sectoral agreements, with a democratic validation (new inter-unions agreement 30/4/2013; majority thresold and workers’ consultation)

• The Agreement violated. The (incredible) exclusion of FIOM-CGIL from the negotiation table of the new sectoral agreement of the metal workers

The impact of the new European Governance on wages and collective bargaining in Italy

On 3 August 2011 a (“secret”) ECB letter asked the Italian government:

- to review the rules regulating the hiring and dismissals of employees, with the establishment of an unemployment insurance system and ALMPs

- to adopt further action on the pension system, with more stringent eligibility criteria for senjority pensions and to align the retirment age for women in private as in the public sector

- to reform the collective bargaining system allowing the firm-level agreements to tailor wages and working conditions to the firms’ specific needs, and increasing their relevance with respect to other levels of negotiation

The “homework” and austerity packages: 2011-2012

• Reform of the collective bargaining system (L. 148/2011; art. 8)• Pension reform (L. 135/2012)• Reform of fiscal policies, with the obligation to balance the budget in

the Constitution (done)• The reform of the labour market (L. 92/2012)+• Unilateral freezes of public sectors wages for the last 3 years and

collective bargaining bypassed (cuts for higher pays)• Stop pensions allowances upgrade• Welfare reform, with indiscriminate cuts in social spending and local

administration

All without any proper concertation process

Article 8 of the Law no. 148/2011:the “proximity agreements”

• Aims: why derogate? to enhance occupational levels, to manage occupational and economic crisis, to support quality of employment contracts, the workers’ participation, combating undeclared work, the level of salaries, new investements, the setting up of new activities

• Matters: what derogate? “Specific agreements” can derogate (in pejus) on a long list of matters: new technologies, work organization including classification systems, short term contracts, working time, employment contracts, consequences of dismissal (all except union liberties and pension)

• Scope: how much derogate? Not only from national sectroal agreements and but also from the law, with the only limit of being not in contrast with International or Constitutional fundamental rights/princples

• Procedures: Who? Local or company collective agreements, signed by trade unions which are comparatively more representative at national or local level, or by workplace representatives, are binding erga omnes How? if approved by a majority of the representative unions in the enterprise.

• Retro-active effect: firm-level collective agreements signed before the 2011 framework agreement, still in force, are binding if approved by the majority. The FIAT case

• Impact: still very limited in terms of derogating proximity agreements

New agreements on productivity: 21/11/2012 (and 24/4/2013)

• Aim: to enhance 2° level of collective bargaining, also through possibilities to better fit specific contexts, according to the framework agreements of 2009 and 2011, in order to increase company productivity

• Collective bargaining: a useful tool to achieve a growth of productivity and competitiveness, crucial for the country recovery

• The Government allocates almost 1,6-2,1 billion euro (2013-14) to support de-taxation (tax 10%, max 2.500€) of the collectively agreed “productivity salary” increases, at company level; bonus on gross wage < 40.000€ (1,8mln workers).

• National sectoral agreements still guarantee the certainness of common economic and normative treatments for all wage earners, including the protection of the power of purchasing, “coherently with the general trends of economy, labour market and international comparison..”

• They can 1) “with full autonomy, intervene of matter now ruled by the law” (work tasks, working hours”, and 2) foresee a “clear delegation” to the 2° level on work performance, hours and organization

• Others: representation, participation, employability, inter-generational solidarity

What future for the Italian and European collective bargaining and wage policy?

• (Delating the art. 8 Law 148 and its design of de-construction of labour law and collective bargaining)

• Sectoral and multi-employer agreements: a fundamental tool against social dumping.

• Out of voluntarism: legal rules on employees representation and collective bargaining

• Making collective bargaining more inclusive (atypical workers; very small enterprises) and binding extention (alternative to the minimum wage setting)

• Definition of a platform of non-derogable l rights (employment relations, health and safety, minimum wage, union rights) at firm-level collective agreement

• More union democracy for revitalization, against the decline and anti-politics revolt

• To change the European economic policies and narratives, with alternative approaches also on wage policy and collective bargaining

• To strenghten the attempts towards a European coordination of collective bargaining, in order to prevent downward wage competition (priorities, criteria, syncronisation)

An alternative economic policy:the CGIL’s “Programme for Jobs”