Country	Legislation	Agreement
Finland
Sweden
Norway
Germany
France
Italy
Great Britain

Very great significance
Rather great significance
Very little significance

The primary basis of collective bargaining concerns the parties to the process. In Britain and Germany the confederations have no special mandate to conclude agreements, and are primarily lobbying organisations. In France and Italy the trade union confederations have achieved a few significant agreements with the authorities and employers, but they cannot be regarded as real collective bargaining organisations. The confederations in Sweden have a somewhat stronger status with sound general agreements, but they do not negotiate percentages with the employers. The strongest role, as collective bargaining parties, is enjoyed by the trade union confederations in Finland and Norway, where they have negotiated major framework agreements and several comprehensive incomes policy agreements.

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.

Country	Confe- deration	Union level	Local level
Finland
Sweden
Norway
Germany
France
Italy
Great Britain

The most important level
Strong influence
Some significance
No role or mandates

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,
bargaining level and participants

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)
2. Union level (professionel, convention de banche)
3. Large corporations
4. Enterprise level (entreprise)
5. Workplace level
6. Regional

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.

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.

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.

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.

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.

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.

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.

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.

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.

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
of Living and Working Conditions 2000

As the figures indicate, either legislation or custom based on a generally binding character arrangement provides agreement security on a regular basis to between 70 and 100 per cent of wage and salary earners. Clear exceptions to this arise in Great Britain and in the EU accession States of Poland and Estonia, where the local level is emphasised in collective bargaining. Of the applicant countries only Slovenia reaches almost 100 per cent coverage, while in the others the coverage is below 50 per cent. Collective bargaining is undergoing transition in all of the applicant countries. Efforts are being made to implement tripartite and bilateral negotiation structures with the support of the EU and its established Member States. 

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 figures provided by sister unions must be read with a certain reservation, as in several countries there is fierce competition between the unions and a need to exaggerate membership rates.

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.

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.

Collective agreement coverage by trade union

The following collective bargaining calendar summarises the validity periods of the current collective agreements, and the estimated time when the next collective bargaining round is due to begin.

The European bargaining calendar
in the chemical, paper and energy industries

No concise bargaining calendar can be presented for the United Kingdom, as agreements are made almost exclusively at enterprise level, normally for one to three years, and collective bargaining continues throughout the year.

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).