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Collective Bargaining

Collective bargaining in Croatia currently takes place at industry and company/organisation level, with company bargaining growing in importance. New legislation, determining which unions are entitled to negotiate, was passed in 2012. This is likely to reduce the influence of smaller trade unions in the workplace, although the situation will be affected by further legislation being introduced in 2014.

The framework

Collective bargaining currently takes place at both industry and company/organisation level. There are now no economy-wide agreements, although there is a tripartite economic and social council, bringing together unions, employers and government, which plays an important role.

There is no automatic hierarchy governing the relationship between company/organisation agreements and industry level agreements, which can cover the same employees. (There is an industry agreement and a large number of company agreements in the construction industry, for example.)

However, the 2010 Labour Act states that if there are differences between terms and conditions in different agreements or arrangements or in individual employment contracts, it is the position most favourable to the employee that applies. (The unions consider that this right for the most favourable treatment to apply has been violated for public service workers as recent legislation, eliminating their Christmas and summer bonuses, was not in line with their valid collective agreements.)1

There are no official statistics on the coverage of collective bargaining, in part because agreements reached in companies and organisations, now the dominant level for collective bargaining, are generally not recorded centrally. However, a survey published in 2010 estimated that 61% of employees were covered by collective agreements, with 44% coverage in the private sector and almost 100% coverage in the public.2

The main rules on collective bargaining and collective agreements are set out in the 2010 Labour Act, although key elements, covering which unions are entitled to bargain and conclude collective agreements, were revised in later legislation on the representativeness of unions, passed in July 2012 , and are set to be revised further in legislation being introduced in 2014.3

The main rules are that a collective agreement must be in writing, that it must define its area of application, that it must be published, and that it is legally binding on those who have signed it, although in practice agreements cover all employees, not just union members, as to fail to do so could be seen as discrimination. There are also precise rules on which unions are entitled to negotiate (see section: Who negotiates and when?).

Collective agreements covering the whole country or more than one of Croatia’s 21 counties (including the capital Zagreb) must be registered centrally with what is now the Ministry of Labour and Pensions. Agreements covering employees in just a single county must be registered in that county. The survey published in 2010 found that then only 160 out of 845 valid agreements were registered nationally; the remaining 81% only covered employees in a single county and were registered at that level.

The main rules are essentially the same, whether the collective agreement covers an industry or a single company or organisation. However, industry level agreements can be extended beyond the signatory parties to all employers and employees in the industry, if the minister decides to do so. This can only be done, however, if one of the signatories requests it, if the unions and employers’ associations signing the agreement are those which represent or employ the largest number in the industry and if an assessment by the tripartite economic and social council indicates that there is a public interest in extending the agreement.

A report for the Friedrich Ebert Stiftung by a social policy adviser at the SSSH union confederation listed 11 industry-level agreements that were in force at the end of 2013. Many of these were in the public sector, such as the agreements for civil servants, for those employed in health care and health insurance, and for those employed in cultural institutions financed by the state4 . There were also some in the private sector, and four of these had been extended to the whole industry. As at 15 March 2014, the agreements extended in this way covered catering, construction, travel agencies and the wood and paper industries. 5 However, there are a number of industries, including agriculture, food, energy, chemicals and pharmaceuticals, IT and communications and finance and insurance, where there are no industry-level agreements.

As well as industry-level agreements, the study for the Friedrich Ebert Stiftung estimates that there are between 800 and 850 agreements at company/organisation level, although 80% only cover a single county.6 Many of the agreements with wider coverage relate to state-owned companies, such as the national lottery, the motorway system, the national electricity company HEP and several linked to the railways.

In addition to collective bargaining between the employers and unions, there is also a tripartite economic and social council, the GSV, composed of an equal number of members from unions, employers and the government. Initially set up in 1994, the GSV’s role is set out in the 2010 Labour Act, and it includes monitoring the effects of economic and social policy and making proposals to the government, employers and unions on a “coordinated price and salary policy”, as well as commenting on draft legislation in the area of social and labour policy. It also has a role in identifying mediators for dispute resolution.

There are five sub-committees of the GSV, covering wage policy, taxes and living standards, social policy, education and the labour market, collective bargaining and employment rights and sustainable development. There are also local economic and social councils at county level. The work of the GSV, at both national and local level, is supported by a department for social partnership within the Ministry of Labour and Pensions.

In general tripartite consultations have played an important role in developing social and employment policy in Croatia, including the industrial relations structure, although there have certainly been tensions, particularly since the economic and financial crisis. 7

However, in recent years it has not led to any formal social pacts.

As well as the tripartite economic and social council, there are also bipartite social councils between the employers and unions in three areas, railways, tourism and construction.

Who negotiates and when?

For the employers, negotiations are conducted either by an individual employer, for company or organisation agreements, or by an employers’ association, for industry level agreements.

 

For the employees, the legislation on representativeness of unions, passed in 2012, introduced detailed provisions covering which unions are entitled to reach collective agreements. These vary according to the number of unions involved and the extent to which they can reach agreement among themselves. The rules were changed further by new legislation on the representativeness of unions that came into effect in March 2015.

 

Where there is only one union present, either at workplace level (possible) or industry level (unlikely), that union is automatically considered to be representative – no further tests are applied. (In the three months following the introduction of the legislation 250 unions were officially recorded as being in this situation. 8

The situation is the same – that is, no further tests are applied – where there are several unions but they have all signed a written agreement among themselves to follow and be bound by a common bargaining strategy. (This is the position for 78 agreements involving 234 unions.)

 

The position is different where there are several unions and they have not agreed a common position. In this case, only “representative” unions are able to negotiate and sign a deal. A union is only representative if its membership makes up at least 20% of the unionised employees to whom the agreement will apply, either in a single company/organisation or in an industry. The level of membership is determined by an external body, the same commission that also deals with the representativeness of unions at national level (see section on trade unions).

 

These are the rules for unions covering a range of occupations. In cases where unions cover a specific occupation, the membership hurdle is set higher, at 40% of the unionised employees to be covered, and the union can only be considered an occupational union for negotiations if at least 75% of its members work in the same occupation as the group of employees to be covered by the agreement.

 

Once representative status has been granted for a bargaining area – in other words the unions, whether occupational or non-occupational, have passed the membership hurdles – they retain this status for that bargaining area for three years.

 

In the three months following the legislation, the commission on representativeness made 44 rulings, in which 56 unions were determined to be representative for the agreement concerned and 19 were judged not to have the right to this status. 9

Where several unions have representative status to conduct negotiations, a union bargaining committee made up of these representative unions should be set up. This composition of this committee can be agreed by the representative unions, but, if they cannot agree, its composition is determined by the external commission, broadly in line with the proportion of union members in the various representative unions. The only proviso is that all representative unions, whether for all employees, or a specific occupational group, are entitled to have at least one representative in the union bargaining committee.

Irrespective of how it is formed, the union bargaining committee should have between three and 11 members, and it is for the bargaining committee itself to draw up its own rules of procedure and decision-making processes.

Unions that are not representative cannot be part of the bargaining committee. However, they have a right to present their views during the course of the negotiations.

The declared intention of the law was to deal with problems in collective bargaining, in particular disputes and delays in forming bargaining committees, whose composition in the past was determined by the tripartite economic and social council.6 However, the unions warned that the 2012 legislation would produce new problems, and these fears appear to have been confirmed, as the government has introduced new legislation which makes a number of changes to the rules.10

Among other things, the new law tries to deal with the situation where a single representative union, which must have a least 20% of the unionised employees to have this status, signs an agreement, but other representative unions, which have a larger number of employees in membership, oppose it. Under the new arrangements, an agreement can only be valid if it is signed unions representing more than 50% of all the union members in the company or industry covered by the agreement. These changes came into effect on 17 March 2015.

Collective agreements can be either for a set period of time – up to five years – or for an indefinite period. However, the legislation on the representativeness of trade unions has had an impact on agreements’ ongoing validity.

The subject of the negotiations

Collective agreements can cover a very wide range of topics; there is no specific catalogue of issues. In practice, one of the concerns is that agreements often simply reproduce the legal provisions and do not go beyond this.7

Croatia has a national minimum wage and in March 2013 new legislation was passed, changing the basis on which it was uprated. While previously (since 2008) it had been automatically increased in line with a formula linked to average wages and average GDP growth in the previous year, it is now uprated using a more complex formula. This is based on the risk-of-poverty threshold for a single household, average household size, the proportion of the population who are economically active and the change in consumer prices. The increase for each year is decided by the government on the basis of a proposal from the minister of labour, after consulting employers and unions. It cannot be lower that the previous year’s figure.

L. Fulton (2015) Worker representation in Europe. Labour Research Department and ETUI. Produced with the assistance of the SEEurope Network, online publication available at http://www.worker-participation.eu/National-Industrial-Relations.