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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. Legislation, determining which unions are entitled to negotiate and strengthening the position of larger unions, was passed in 2012 and revised again 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 has played 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.)

 

2014 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.

 

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 study published in 2016, estimated that 53% of employees were covered by collective agreements, although there were big differences between sectors and industries. While 88% of employees in public services were covered (including 100% in central government), coverage was just 39% in the rest of the economy – 75% in state-owned and  only 33% in privately owned businesses.[1]

 

The main rules on collective bargaining and collective agreements are set out in the 2014 Labour Act, although key elements, covering which unions are entitled to bargain and conclude collective agreements, were revised in two rounds of later legislation on the representativeness of unions in 2012 and 2014.

 

The rules, which are essentially the same for industry-level and company-level agreements, require 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?).

 

In fact, the vast majority of agreements are for single companies or organisations. A survey looking at the situation in 2014 found that, of 570 valid collective agreements, only 16 were at industry level.[2] Of these nine were in the private sector, covering: construction, catering, travel agencies, wood and paper, seafarers (two agreements), private health care, road maintenance and de-mining. This leaves many important industries, including food, agriculture, chemicals, telecommunications and finance, with only company-level agreements.

 

The seven public sector agreements cover civil servants in central government, public employees more generally, as well as separate agreements for health workers, those working in education (separate agreements for primary and secondary schools), employees of social welfare institutions and those working in cultural bodies.   

 

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 all the signatories request 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 number of industry agreements have been extended in this way, including those for construction and catering.

 

Company level agreements are typically local. The survey of the situation in 2014, referred to above, found that of the 570 valid collective agreements, only 139 (24%) covered employees in more than one county, while the remaining 431 only applied in a single county.[3]

 

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 2014 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 21 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.

 

However, the long-term future of the GSV is uncertain as in May 2019 the three union confederations participating in tripartite discussions withdrew from the GSV. They argued that trust between the unions and the government had broken down, particularly in relation to an increase in the retirement age from 65 to 67 and the unions’ campaign against this.

 

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. 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 a number of industries, including railways, tourism, food 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 two sets of legislation on representativeness of unions, passed in 2012 and 2014, 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..

 

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 2012 legislation, 250 unions were officially recorded as being in this situation.)[4]

 

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). This representative status lasts as long as the length of the collective agreement signed (see below).

 

The unions have 30 days to agree the composition of this committee, but, if they fail to do so, each representative union has a right to have one representative. The bargaining committee itself draws 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.

 

At the end of the process the collective agreement is only valid if it is signed by representative unions representing more than 50% of all of the unionised employees.

 

Collective agreements can be either for a set period of time – up to five years – or for an indefinite period. The 2014 study, referred to above, shows that more than half of all agreements – 332 out of 570 (58%) – were indefinite, although with the possibility of being updated through annexes or additions. Among agreements with a shorter period of validity, around half (44%) lasted for two years or less, with 17% lasting three years and 24% lasting four.[5]  

 

The subject of the negotiations

 

Collective agreements can cover a very wide range of topics. There is no specific catalogue of issues, although they frequently cover methods for calculating a wide range of pay additions, such as bonuses or special supplements.

 

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 than the previous year’s figure.

[1] Obilježja kolektivnog pregovaranja u Republici Hrvatskoj: usporedba javnog sektora i gospodarstva, by Dragan Bagić, 2016, quoted in Industrial relations in Croatia and impacts of digitalisation on the labour market, by Višnja Samardžija, Hrvoje Butković and Ivana Skazlić, IMRO, 2017.

[2] Obilježja sustava kolektivnog pregovaranja u Republici Hrvatskoj: što znamo, a što tek trebamo doznati?, by Dragan Bagić http://www.sssh.hr/upload_data/site_files/obiljezja-sustava-kolektivnog-pregovaranja-u-republici-hrvatskoj_final.pdf (Accessed 06.12.2018)

[3] Ibid

[4] See Zakon o kriterijima za sudjelovanje u tripartitnim tijelima i reprezentativnosti za kolektivno pregovaranje, NN 82/12 and Konačni prijedlog zakona o reprezentativnosti udruga poslodavaca i sindikata (Final Bill on the representativeness of employuers associations and trade unions) June 2014

[5] Obilježja sustava kolektivnog pregovaranja u Republici Hrvatskoj: što znamo, a što tek trebamo doznati?, by Dragan Bagić http://www.sssh.hr/upload_data/site_files/obiljezja-sustava-kolektivnog-pregovaranja-u-republici-hrvatskoj_final.pdf (Accessed 06.12.2018)

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.