Unions apply to extend bargained contracts

IN A FIRST since the law was changed last year, the OZ KOVO trade union umbrella group has filed two proposals urging that collectively bargained contracts be extended to include companies that did not originally sign on to such contracts.

Salaries in all bus companies may increaseSalaries in all bus companies may increase (Source: SME)

IN A FIRST since the law was changed last year, the OZ KOVO trade union umbrella group has filed two proposals urging that collectively bargained contracts be extended to include companies that did not originally sign on to such contracts.

The Labour Ministry will have two months to decide whether to extend the contracts. The application comes based on a new law that allows the binding nature of higher-level collective agreements to be extended to any firm employing more than 20 people in a given sector. In this case the application applies to the bus transport and machining industry. Employers were outraged last year when the law was passed, arguing it will saddle their businesses with increased, unplanned costs.

Based on the new contract, bus companies will increase the tariff wages of their employees by 2.7 percent and real wages in case of inflation by an additional 0.5 percent, which means that the salaries in some firms will increase by roughly €20 per month at every tariff level. The salary hike in the machining industry is still being negotiated, but the trade unions expect a 4-percent rise, the SITA newswire reported.

“Altogether this could cover another 900 companies, with the number of employees being between 150,000 and 260,000,” Monika Benedeková, deputy chair of OZ KOVO, told a press conference on March 10, as quoted by SITA.

While the unions insist the impact on companies is minimal and more than outweighed by the benefits to workers, employer groups do not share the optimism of trade unions.

Martin Hošták, secretary of the National Union of Employers (RÚZ), calls the proposal “an unprecedented attack on the labour market”.

Though the trade unions rather than employers will decide on the salary hike, they will not deal with other issues, like the creation of new jobs or the sale of products of the firms on the market, he said.

“Therefore, there is no logical reason to increase their powers and interferences into companies’ operations without businesspeople having the ability to protect their legitimate interests,” Hošták told The Slovak Spectator.

Rastislav Machunka, president of the Federation of Employers’ Associations (AZZZ), argues that the situation in each sector and each company is different, making the blanket application of salary agreements unfair. Moreover, salaries and personal costs of employers are crucial expenses for firms, and amid a still tenuous economic recovery, companies must still be cautious about pay raises, he said.

After the forced extension of the higher-level collective agreements, companies might respond by dismissing their employees either to simply survive or to meet the 20-employee limit and thus be exempt from the current law, Machunka told The Slovak Spectator.

Hošták added that the state might also face lawsuits over compensation for damages accrued by companies harmed by the involuntary salary rise. According to him, this expansion might “cause considerable damages to employers, or even threaten their existence during the crisis”.

The Labour Ministry refutes such criticisms, emphasising “the positive impacts on working and salary conditions of employees, as well as the securing of more balanced competition between businesses”, ministry spokesman Michal Stuška told The Slovak Spectator.

The ministry decision

The law on collective bargaining, which came into effect on January 1, stipulates that the Labour Ministry will decide on the extension of a higher-level collective agreement. Within 10 days after it receives the request, it has to publish the proposal on its website and in the commercial bulletin. The employers then have 30 days to send their comments on the proposal to the ministry.

The Labour Ministry will then set up a so-called tripartite commission, composed of representatives from unions, employers and the government, which will meet within 20 days after deadline for sending the comments. The commission will assess proposals for the extension of collective agreements as well as objections against them. Its stance will not be binding and in the end the Labour Ministry itself will decide about the extension of a higher-level collective agreement.

Small companies, defined as having 20 employees or less, and companies for which 10 percent of their workforce is composed of disabled people, are exempt from any extension. Businesses affected by an exceptional event, in liquidation or bankruptcy, as well as firms doing business for less than 24 months, are exempt from the new rules. According to the Labour Ministry, more than 80 percent of companies in Slovakia employ fewer than 20 people.

Previously, employers had to agree to the collectively bargained higher-level agreement for it to be applied.

Others may follow

Currently, 22 higher-level collective agreements are in force. The number will, however, change as some of the agreements will expire on March 31, Veronika Husárová from the press department of the Labour Ministry, told The Slovak Spectator in February.

OZ KOVO is negotiating four new higher-level collective agreements this year and two appendices to existing agreements. It says it plans to file at least five proposals to extend higher-level collective agreements, as reported by SITA.

So far, the trade unions have definitely agreed on higher-level collective agreements with the Association of Bus Transport; firefighters; the Association of Metallurgy, Mining Industry and Geology in Slovakia; and the Association of Housing Management.

Based on the agreements, the salaries of employees in bus transport will increase by 2.7 percent, an additional 0.5 percent in case of inflation, while the salaries in the metallurgy industry should increase by 2.5 percent in minimum salary tariffs and in housing management by 1.5-3.5 percent, SITA wrote.

The trade unions, however, still have not signed any agreement with the employers in the machining and electrotechnical industries, where salaries should increase by about 4 percent, Benedeková said.

She explained that they could submit a proposal for extending the collective agreements in the engineering sector, as they signed a two-year agreement last year. This time they negotiated only over the appendices to the salary hike, which is updated every year, Benedeková told SITA.

Employers in the machining sector, however, disagree with the proposed salary hike, saying that it might harm subcontractors, the Sme daily wrote.

Adoption problematic

Despite the strong relations between the ruling Smer party and the trade unions, passing the changes met hurdles. Though it sailed through parliament in October 2013, President Ivan Gašparovič vetoed it in November. At the time, he said that the measure runs counter to the principle of collective bargaining at the level of individual companies and disregards EU recommendations that the size of a small company should be set at those with up to 50 employees. He also suggested that the extension of high-level collective agreements should not apply to employers who have already concluded a company-level collective agreement.

By vetoing the law, the president met the objections put forth by the American Chamber of Commerce in Slovakia (AmCham), the RÚZ, the Slovak Chamber of Commerce and Industry, the AZZZ and the German-Slovak Chamber of Commerce (SNOPK), among others. They argue the law contradicts the constitution, weakens competitiveness and will lead to layoffs.

The Smer-dominated parliament however overrode the veto on November 27, without accepting any of the president’s changes. In response to this, the parties sheltered by the People’s Platform, the Slovak Democratic and Christian Union (SDKÚ), the Christian Democratic Movement (KDH) and Most-Híd, submitted the law to the Constitutional Court on December 5. Action on that is still pending.

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