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Collective Bargaining

The system has been fundamentally changed by legislation passed in 2011 and collective bargaining at national level, which previously set minimum pay and conditions for the whole economy, has been abolished. There are also new rules for bargaining at industry and company level, which have weakened the position of unions.

The framework

 

The present situation is that collective agreements can be negotiated at industry level, at company/organisation level and for groups of companies. In the past, legislation also used to provide for negotiations to take place at national, level.  However, the ability to negotiate a national level agreement, which set minimum terms and conditions and covered all Romanian employees, was abolished in the Social Dialogue Act (Legea dialogului social 62/2011) passed in 2011.[1]

 

Large parts of the economy also used to be covered by industry agreements, and, at this level too, the Social Dialogue Act made major changes. First, under its terms, industry agreements are only binding on the whole industry if the employers’ associations that sign them employ more than half the employees in the industry concerned and the extension has been requested by the signatories and approved by the national tripartite council. If this is not the case, they are treated as agreements for a group of companies and only cover companies belonging to the organisations that have signed them.

 

Second, the way industries are defined was changed, with the new arrangements failing to match with existing structures of bargaining. Both union federations and employers’ associations must show that they are representative before they can sign agreements at industry level. Unions must demonstrate that they represent at least 7% of the employees in that industry to be representative, and employers’ associations must show that they represent employers employing at least 10% of the industry’s workforce to gain this status.

 

As a recent ETUI report on collective bargaining on Romania points out, while most union federations regained their representative status this was not the case for the employers’ associations. And many individual employers left their employers’ associations at this point.

 

The result has been a fall in the number of industry agreements signed, from eight in 2010, before the change, to two in 2019.[2] And while the industry-level agreements signed in 2010 were spread across agriculture, manufacturing and private services, the two signed in 2019 were both in the public sector – in health and in pre-university education.

 

At the level of groups of companies, where the Social Dialogue Act made less difference, the number of agreements reached both before and after 2011 has been broadly similar. For example there were nine in 2019 and five in 2018 compared with four in 2010 and 10 in 2009.[3] However, as a recent study has indicated, the majority of the agreements for groups of companies are now in the public sector.[4] One important exception is the agreement for finance and insurance companies signed in 2018. As the study points out, this agreement could not be made binding on the whole finance and insurance industry because the employers’ association concerned did not represent companies employing more than 50% of the workforce.

 

At company level, there is a legal obligation to negotiate – although not to reach agreement – where the company has 21 or more employees. (This obligation predates the Social Dialogue Act.) Companies with fewer than 21 employees – a substantial proportion in Romania – are not obliged to negotiate and generally do not do so.

 

Although the Social Dialogue Act eliminated the national level agreement and has reduced the number and coverage of industry-level agreements, the number of  company level agreements has not increased to compensate for this. Figures from the regular bulletins of the Ministry of Labour and Social Protection show that, in the years since 2011, the number of company level agreements has been slightly lower than in the years before the Social Dialogue Act was introduced, although the economic crisis from 2008 onwards will also have had an impact.

 

The first year when the number of agreements returned to the level regularly seen before the crisis and the Social Dialogue Act, was 2018, when 10,708 collective agreements and additional agreements were signed.[5] The most recent figure, for 2019, shows the numbers falling back again to 8,233.

 

In many ways the more significant impact of the Social Dialogue Act at the level of company agreements has been a change in who is able to negotiate. Before 2011, unions at company level were able to negotiate agreements provided they were affiliated to a federation that was representative for that industry – had more than 7% of that industry’s workforce in membership. The Social Dialogue Act initially changed that to require that the union in the company must have a majority of the company’s workforce in membership to be able to sign agreements.

 

However, these new rules were changed by legislation which came into effect in January 2016. This allowed a representative industry federation to negotiate company-level agreements, where a union belonging to that federation was present in the company but did not have representative status at company level. In all other cases, negotiations must be undertaken by elected employee representatives, and even where the industry federation is negotiating it must work with these representatives. The result is that the vast majority of company-level agreements are negotiated by employee representatives rather than unions. In 2017, 85.5% of company level agreements were signed by employee representatives (92.4% in the private sector), and figures for earlier years are similar.[6] It is not clear how much difference, the change in 2016 has made.

 

Agreements at a lower level cannot contain clauses providing for worse conditions than those negotiated at a higher level, and the Social Dialogue Act did not alter this, although it abolished the national agreement, which provided a basis for local negotiations in the past.

 

Collective agreements, by law, must be in writing and should be registered with the appropriate authorities – at county level in the case of company agreements and at national level for industry agreements. There can only be one collective agreement for each bargaining group – in other words there cannot be competing agreements at industry level nor can there be separate agreements for different groups of employees in the same company.

 

As well as collective bargaining between employers and unions, there are also structures at national level, in which unions are represented. The 2011 Social Dialogue Act changed the composition of the economic and social council, the CES, which previously was a tripartite body including the unions, employers and government. It now includes representatives of civil society rather than government and it must be consulted on financial, economic, social and health legislation. The new tripartite body is the National Tripartite Council, for Social Dialogue, the CNTDS, whose role includes consulting about the minimum wage and feeding in to the development of government programmes and strategies. There are also social dialogue committees in many national ministries and at the level of Romania’s counties.

 

The changes introduced through the 2011 Social Dialogue Act have severely affected collective bargaining, leading to a dramatic fall in bargaining coverage, which was almost 100% when the (now abolished) national agreement covered all employees. There are no official figures but the 2019 ETUI study, quoting OECD date, puts coverage at 35% in 2013 [7]. This view is shared by an ILO report on the impact of legislative changes in Romania, which concluded that collective bargaining covered “less than a third of Romanian workers”.[8] The 2019 Eurofound report quotes figures from the Labour Inspectorate, which indicates than in 2017 only 952,911 employees (15% of the total) were covered by company-level collective agreements.[9]

 

There have been a number of attempts to reverse more of the changes introduced by the Social Dialogue Act and a legislative proposal to this effect has been under discussion in the Romania parliament since June 2018.[10] Among other things this would reduce the threshold for a union to be representative (and able to negotiate an agreement) at company level from the current 50% plus one to 35% plus one. It would also again give union members the right to negotiate at company level if their federation was representative at industry level. However, there is opposition to these plans, and they have not yet been approved.

Who negotiates and when?

 

At industry level, unions must represent at least 7% of the employees in the industry, and employers’ associations must represent 10% to be able to negotiate at this level.

 

At company level unions must represent at least 50% plus one of the employees of the company, in order to be representative and entitled to negotiate.

 

Where there is no representative union, because the union present does not have enough members, company level negotiations can be undertaken by the union federation with members there, provided it itself is representative within that industry, although it must work with elected employee representatives. If this is not the case, either because there is no union or the union federation is not representative, negotiations are undertaken by elected employee representatives.

 

Similarly, in negotiations involving groups of companies, unions are entitled to negotiate provided they have a majority of employees in membership. As in individual companies, union federations can take on the negotiating role, if they are representative at industry level (have more than 7% of the industry’s employees in membership).

 

The legal minimum period that a collective agreement can last is 12 months and the legal maximum is two years, although this can be extended by a further 12 months by mutual agreement. Employers at company level should begin negotiations at least 45 days before the existing agreement expires and they should not last longer than 60 days, except where agreed. Negotiations typically take place at the end of one calendar year and the start of the next.

 

The subject of the negotiations

 

Rules setting out what a collective agreement should cover and requiring employers to negotiate on issues such as job classification were abolished by the Social Dialogue Act. However, a survey of union negotiators carried out in February to April 2018 found that the pay-linked issues most commonly included in collective agreements covered vouchers, overtime payments, social benefits, end-of-year bonuses, reimbursement of training costs, reimbursement of travel costs and holiday pay. The non-pay issues most frequently included in agreements were working conditions, the length of individual employment contracts, work schedules, dismissal compensation and occupational training.[11] Where an employer wishes to introduce working time arrangements which go beyond the standard limits set out in the Labour Code, this must be done through a collective agreement.

 

There is a national minimum wage set by the government following discussions with unions and employers in the National Tripartite Council, for Social Dialogue, the CNTDS. With relatively low levels of bargaining coverage the national minimum wage is particularly important in setting pay rates in Romania. In November 2019, the government told a meeting of the CNTDS that 24% of Romania’s employees (1.4 million people) were paid at the level of the minimum wage.[12]

[1] For a detailed analysis of collective bargaining in Romania see Romania: from legal support to frontal assault by Aurora Trif and Valentina Paolucci in Collective bargaining in Europe: towards an endgame, edited by Torsten Müller, Kurt Vandaele and Jeremy Waddington, ETUI, 2019

[2] Ministry of Labour and Social Protection, CCM http://dialogsocial.gov.ro/sector-de-activitate/ (Accessed 03.08.2020)

[3] Ministry of Labour and Social Protection,CCM http://dialogsocial.gov.ro/grup-de-unitati/  (Accessed 03.08.2020)

[4] Situația salariaților din România: 2018-19 by Ștefan Guga, Syndex 2019 https://www.syndex.ro/sites/default/files/files/pdf/2019-06/Situa%C8%9Bia%20salaria%C8%9Bilor%20din%20Rom%C3%A2nia%20%282019%29_0.pdf  (Accessed 03.08.2020)

[5] Buletin statistic în domeniul muncii şi protecţiei sociale Ministry of Labour and Social Protection http://www.mmuncii.ro/j33/index.php/ro/transparenta/statistici/buletin-statistic  (Accessed 03.08.2020)

[6] Situația salariaților din România: 2018 by Ștefan Guga, Syndex 2019 https://www.syndex.ro/sites/default/files/files/pdf/2019-06/Situa%C8%9Bia%20salaria%C8%9Bilor%20din%20Rom%C3%A2nia%20%282018%29.pdf  (Accessed 03.08.2020)

[7] Romania: from legal support to frontal assault by Aurora Trif and Valentina Paolucci in Collective bargaining in Europe: towards an endgame, edited by Torsten Müller, Kurt Vandaele and Jeremy Waddington, ETUI, 2019

[8] The Impact of Legislative Reforms on Industrial Relations in Romania by Luminita Chivu, Constantin Ciutacu, Raluca Dimitriu and Tiberiu Ticlea ILO 2013 http://www.ilo.org/wcmsp5/groups/public/---europe/---ro-geneva/---sro-budapest/documents/publication/wcms_219711.pdf (Accessed 07.04.2015)

[9] Living and workin in Romania: actors and institutions by Victoria Stoiciu, November 2019  https://www.eurofound.europa.eu/country/romania#actors-and-institutions  (Accessed  03.08.2020)

[10] Propunere legislativă privind dialogul social L567/2018 https://www.senat.ro/legis/lista.aspx?nr_cls=L567&an_cls=2018  (Accessed 03.08.2020)

[11] Situația salariaților din România: 2018-19 by Ștefan Guga, Syndex 2019 https://www.syndex.ro/sites/default/files/files/pdf/2019-06/Situa%C8%9Bia%20salaria%C8%9Bilor%20din%20Rom%C3%A2nia%20%282019%29_0.pdf  (Accessed 03.08.2020)

[12] Press statement Minister of Labour and Social Protection, 26 November 2019 http://www.mmuncii.ro/j33/index.php/ro/comunicare/comunicate-de-presa/5679-20191126-dp-ministrul-mmps-cancelarie-pm?highlight=WyJtaW5pbSJd (Accessed 03.08.2020)

L. Fulton (2021) National Industrial Relations, an update (2019-2021). Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.