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President vetoes collective bargaining law

CRITICS of the controversial Smer-designed revision to the law on collective bargaining scored a small victory after President Ivan Gašparovič vetoed the legislation, which would empower unions and employee groups to enforce pay hikes even in firms that have not agreed to such salaries. The legislation, which sailed through parliament on October 29, angered foreign chambers of commerce, employers and the political opposition.

(Source: TASR)

CRITICS of the controversial Smer-designed revision to the law on collective bargaining scored a small victory after President Ivan Gašparovič vetoed the legislation, which would empower unions and employee groups to enforce pay hikes even in firms that have not agreed to such salaries. The legislation, which sailed through parliament on October 29, angered foreign chambers of commerce, employers and the political opposition.

Though Gašparovič proposed some changes to the vetoed law, critics said even these changes would not ease all their concerns and insist the law would contradict the constitution, weakens competitiveness and lead to layoffs. Unions and workers groups were surprised by the veto and continue to push for the existing version of the law. Should they so desire, parliament is easily able to override the presidential veto, given the dominance of the ruling Smer party in parliament.

“I see it as a responsible decision, which takes into consideration main risks of flat extension of higher level collective agreements namely the limitation of the freedom of business, reducing the competitiveness of businesses and unnecessary endangerment of jobs in companies, which did not participate in negotiations on collective agreements in any way but still should have been bound by these agreements,” Robert Kičina, the executive president of the Business Alliance of Slovakia (PAS) told The Slovak Spectator in response to the president’s decision.

The disputed law automatically extends the binding nature of higher level collective agreements to any firm employing more than 20 people in a given sector. Those firms need not have consented to those salaries previously. A so-called tripartite commission, composed of representatives from unions, employers and the state and set up by the Labour Ministry, will have a final say on proposals for the extension of collective agreements as well as objections from employers, according to the SITA newswire.

Gašparovič is proposing that a wider group of employees be made exempt from the law and has suggested applying the new law to firms which employ more than 50 people. He argues that based on European Union regulations a company which employees fewer than 50 people is considered a small or medium sized enterprise, as reported by SITA newswire.

The president argues that the revision approved by the parliament negates results of collective bargaining at the company level, which aim for a consensus agreement. He objected that the law does not define further conditions for extending the collective agreement nor does it set criteria for defining the “general interest” for extending its binding-nature.

“It is not enough to bind the extension of the binding nature of the collective agreement to the fact that the employers for whom the agreement should become binding are employing a larger number of employees than employers associated in other employer organization, which in the same sector or part of such sector concluded other higher-level collective agreement,” Gašparovič said, according to SITA.

The president has met the objections tabled by AmCham in Slovakia, the National Union of Employers (RÚZ), the Slovak Chamber of Commerce and Industry, the Association of Employer Unions (AZZZ), the German-Slovak Chamber of Commerce (SNOPK) among others.

Chamber opposition remains

The SNOPK and AmCham welcomed the presidential veto, but said they oppose even a revised version that includes the Gašparovič’s proposals.

“The changes proposed by him may cushion the potentially negative effects of this law,” SNOPK spokesman Markus Halt told The Slovak Spectator. “However, regardless of whether companies with less than 50 employees or companies with collective bargaining on corporate level are exempted by the rule it does not change anything about the general concern over the amendment.”

According to Halt, extending a collective bargaining deal of a certain branch to further companies without their consent violates the freedom of collective bargaining. Halt said the change “completely disregards economic disparities within the regions and unsettles the whole corporate sector with medium-sized companies being affected the most”.

AmCham continues to believe that the revision in a way it is proposed is at odds with the constitution of Slovakia and could lead to “additional financial burden for firms operating in Slovakia and will have negative impact on the competitiveness of Slovak firms and putting Slovakia as destination for foreign investors into disadvantage,” Jake Slegers, the executive director of AmCham told The Slovak Spectator.

Slegers in an earlier interview with The Slovak Spectator also said it could also negatively impact companies from the less traditional sectors with high added value, such as IT as these sectors operate on a different basis. “They do not have trade unions, but as a result of this amendment, collective agreements could be created for their sector and heavily impact decision-making of these companies”, he said.

Unions caught by surprise

The decision of Gašparovič to veto the law has taken aback the unions.

“During the meetings with representatives of employees, Mr. President has always declared his known social inclination but by returning this law [to the parliament] he has not really uphold his quote ‘I think nationally and feel socially’,” Jozef Kollár, president of the Confederation of Trade Unions (KOZ), told a press conference.

Kollár reminded Gašparovič that one year ago he signed an even tougher revision to the law on collective bargaining regulating the extension of the collective agreements without the agreement of the employer, the SITA newswire reported.

Martina Nemethová, spokeswoman of KOZ told The Slovak Spectator that the unions will keep insisting that the revision is passed in its original wording as the legislation was submitted in line with the government’s programme. The extension of collective agreements is a standard tool to balance working conditions, wages and applying conditions of employment within several member states of the European Union, for example France, the Netherlands, Belgium and Luxembourg, Nemethová said.

KOZ board member Emil Machyna noted that if the process of extending the collective agreements did not cover employers who employ up to 50 people, then two-thirds of employees would not be covered by collective agreements.

Machyna however is confident that members of the ruling Smer will override the veto, SITA reported.

Labour Minister Ján Richter told a political talk show broadcast on the public service Slovak Television that he was surprised that the president returned his laws and by reference to an EU regulation, which does not have much to do with the given law. Richter did not say whether Smer would accept the president’s comments.

“Mr President refers to a regulation, which has nothing to do with collective bargaining,” Richter said.

Business bites back

According to Kičina, Gašparovič proposed a compromise solution, which on one hand widens the number of small firms which the law will not apply to at the same time proposes the possibility to avoid the forced extension of collective agreements if the firm have managed to negotiate its own collective agreement.

“I am convinced that the mandatory extension of higher-level collective agreements would lead to the close-down of some companies, namely those which are on the edge of survival and closedown,” Kičina said. “It would be optimal if the extension of higher level collective agreements was voluntary, which means conditioned by the agreement of the affected firm.”

AZZZ spokeswoman Miriam Špániková said that her organisation had appealed to the president via open letter not to sign the law: “It seems that our call was heard and thus we partially welcome the decision.”

Špániková said it still does not mean that the businesses will be breath more easily adding that the AZZZ is still against the law, even with its proposed revisions.

AZZZ in its open letter warned the president that the revision causes an intervention into private ownership and could be abused in a way that for example a firm in one branch would negotiate such conditions that another firm in the same branch might not handle economically and thus eliminate competition.

“This will launch another wave of firings,” Špániková told The Slovak Spectator.

Radka Minarechová contributed to this report

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