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Collective Bargaining

The key levels of bargaining are at industry and company level, and the relative balance between the two varies from industry to industry. There are precise rules on what must be included in agreements and who can sign them, although in practice not all the agreements include all the issues. There is also pressure to reach a settlement without conflict, with conciliation built in.

The framework

The most important levels for negotiations in Luxembourg are at industry and company level. Industry level agreements initially apply only to those companies, which belong to the employers’ associations which have signed the agreement but are often extended by the government to the entire sector – around 25 are currently extended in this way. Company level agreements apply only to the company concerned.

There are many more company than industry level agreements: 69 company agreements were registered with the ministry of labour in 2011, compared with only six industry level agreements.1 However, the relative importance of the two levels of agreement varies from industry to industry. In banking and insurance for example, there is a single industry agreement for the banks and another for insurance. However, in the retail sector, each of the main groups, such as Auchan, Match or Monopol has its own company agreement. (The six industry level agreements signed or amended in 2011 covered banking, construction and civil engineering, temporary work agencies (two), pharmacies and garages.) Many industries have no industry level agreements.

Overall, a study by the national statistics office Statec indicates that 50.1% of employees in the private sector were covered by collective agreements in 2008, although there were substantial differences between industries. For example, in construction, where there is a national agreement, 73.0% of employees were covered, and in finance the figure was 68.2%. However, in hotels and restaurants it was only 1.2%.2

There are no national level pay negotiations for the whole economy, although legislation introduced in 2004 allows for national level agreements in the area of social dialogue for the first time.

The system is designed to encourage consensus and agreement. Employers are obliged to begin negotiations if asked, either individually or through their employers’ associations. If they refuse to do so or if the negotiations break down without agreement, the issue is referred to the national conciliation machinery, which in some cases involves arbitration. This means that before industrial action can be taken both sides must first have tried to negotiate a settlement and if that has failed to have sought external conciliation.

Who negotiates and when

Legislation introduced in 2004 has formalised the situation to ensure that only representative unions can negotiate and sign collective agreements (see section on unions for definition of representativeness). It provides for a negotiating committee on the union side, made up of unions who are nationally representative, plus unions who are representative in that particular sector. These unions must be part of the negotiating committee, as must any other union which has got the support in elections for employee representatives of at least 50% of the employees covered by the collective agreement under negotiation. Unions who do not meet these conditions can be admitted into the negotiating committee, but only if the unions already present unanimously agree to do so.

Ideally all the unions involved should sign the agreement. However, if this is not possible, the agreement can be signed by one or more of the unions, provided that they also invite the other unions to sign. If the other unions are unwilling to sign, the unions wanting to do so can go ahead, provided that individually or together they have the support of at least 50% of the employees covered by the agreement, as shown in the most recent election for employee representatives.

On the employers’ side agreements, which must be in writing and must be registered with the labour ministry, can be reached by individual employers and employers’ associations.

Collective agreements can last between six months and three years. Typically they are for two to three years.

The subject of negotiations

The agreements cover the whole range of industrial relations issues, including both pay and working conditions. The 2004 legislation sets out a range of issues which must be included in the agreement and as well as pay, working time and holidays, agreements must cover the level of premia for night work, additional payments for particularly difficult or unpleasant work, the mechanisms for ensuring equal pay and the way that sexual harassment and bullying will be tackled.

Pay in Luxembourg, as in neighbouring Belgium, is indexed: it rises in line with prices. In the past, there was an automatic increase in all salaries and wages in the month following an increase in the consumer price index by 2.5%, although in periods of economic crisis it was possible to postpone the increase, if a tripartite committee made up of the unions, employers and the government agree that this should be done. However, following a failure to reach agreement in the tripartite committee at the end of 2011, the government changed the rules. It introduced legislation under which the increase to match inflation would only be paid once a year, in October, for at least three years – 2012, 2013 and 2014 – in addition, alcohol and tobacco were removed from the calculation.3

As well as the topics, which are dealt with at industry or company level, the legislation allows for social dialogue agreements at national level. The specific examples listed in the legislation include the organisation of working time, training and the implementation of European level agreements and directives. The European agreement on teleworking was implemented in Luxembourg in this way in February 2006.

Luxembourg also has a national minimum wage, which as well as setting a basic minimum rate, also provides a 20% higher rate for more highly skilled workers. The minimum wage is linked to the price index in the same way as other agreements and the level of the national minimum wage must also be reviewed at least every two years.

L. Fulton (2013) 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.