Italy: Chemicals deal sparks row over decentralisation of bargaining
Trade unions and employers’ organisations in the chemicals sector recently concluded a ground-breaking accord that allows, under certain conditions, company-level deviations from the terms of the industry-wide collective agreement. The deal, welcomed by employers, has caused a major controversy within the trade union movement, with some leading officials fearing that Italy’s industry-based collective bargaining system could be undermined.
On this page:
Agreed guidelines
Major innovation
Positive reactions
Trade union controversy
Wider implications
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Key points
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The current national sectoral collective agreement for the chemicals and pharmaceuticals industry was concluded in May 2006 (EER 389 p.9) and runs until the end of 2009. It was signed by the Federchimica and Farmindustria employers’ associations and the chemicals sector trade unions affiliated to the three main union confederations - Filcem-Cgil, Femca-Cisl and Uilcem-Uil.
The 2006-09 sectoral agreement provided for general pay rises and introduced new provisions on issues such as overtime compensation and training leave. More unusually, it also introduced the principle that, in a context of low productivity and poor competitiveness in some firms in the sector, it should be possible for them to opt out temporarily from applying some aspects of the national collective agreement in certain circumstances.
On 9 July 2007, the chemicals social partners agreed a set of guidelines for putting into practice these company-level deviations from the terms of the industry-wide collective agreement.
Agreed guidelines
The July 2007 accord underlines the key role of the national industry-wide collective agreement, but highlights a perceived need to “modernise” it and to add value to company-level bargaining, in order to make both bargaining levels more able to meet the changing needs of firms and employees. As part of this approach, the signatories believe that it should be possible for the bargaining parties at company level to agree to deviate, on a temporary basis, from some of the rules in the sectoral agreement, in order to maintain or improve company competitiveness and employment levels in particularly difficult financial circumstances.
The guidelines provide that such deviations must be based on a company-level agreement and approved unanimously by the chemicals sector national bargaining commission (made up of the signatories of the industry-level agreement). In deciding whether or not to approve these company “derogation” agreements, the national social partners will take into account the following main factors (and the relationship between these factors):
- the situation and prospects of the firm concerned. A derogation agreement must contribute to dealing with especially difficult financial circumstances and safeguarding or developing the company and its job levels. Alternatively, the agreement must promote new investment that can help save or develop the company and its workforce;
- the contents of the agreement. Derogation agreements may deviate from the pay and non-pay (eg leave and training rules) provisions of the national agreement. However, they may not undercut the basic pay rates set by the latter, nor the “inalienable” individual rights it guarantees; and
- the duration of the agreement. Derogation agreements must be temporary, with their duration linked to their stated objectives and to the company circumstances that they aim to tackle.
Major innovation
The chemicals agreement introduces a form of “opening clause” - a scheme that has existed for a number of years in some German sectoral collective agreements and allows company-level deviations from industry-wide norms where firms are facing financial difficulties. In the Italian context, this is a major innovation.
The Italian collective bargaining system, based on a tripartite intersectoral agreement concluded in 1993, gives a leading role to national industry-wide agreements, which are estimated to cover 80%-90% of the workforce. “Second-level” bargaining, conducted at company or sometimes local level, is limited to building on the provisions of sectoral agreements in specified areas or to dealing with matters not covered by the higher level of bargaining. For example, in the area of pay, industry-wide agreements lay down basic minimum rates and provide for general pay increases that take account of inflation, while second-level agreements may provide for additional increases linked to company performance. A reform of this system has been under debate for some years, but has made little progress owing to disagreements among the trade unions and between unions and employers.
Chemicals and pharmaceuticals is an important sector, employing nearly 200,000 workers, and its new derogation scheme, which allows - if only in a limited way - for a change in the relationship between industry-wide and second-level bargaining, has caused major controversy in trade union circles. A number of leading trade union officials, mainly in the left-leaning Cgil and smaller independent unions, have strongly criticised the accord, arguing that it involves serious disadvantages for workers and undermines the primary role of the national collective agreement.
Positive reactions
The signatories welcomed the chemicals agreement and highlighted its ground-breaking nature. Sergio Gigli, the general secretary of Femca-Cisl, said that “the accord is important for the development of industrial relations and clearly demonstrates that it is possible to face jointly difficult periods of crisis and the issue of productivity and competitiveness.”
The president of Federchimica, Giorgio Squinzi, stated: “We have been talking for 10 years about the need to reform the Italian bargaining system, giving more importance to second-level agreements. With this accord we now have the possibility to introduce a new system whereby national collective bargaining sets a framework and not a cage, and second-level bargaining becomes a flexible tool to be used on the basis of companies’ requirements.” He added: “This accord clearly shows that a positive and constructive interaction between the national collective agreement and second-level agreements is possible, and not only in our sector.”
The leading business daily Il Sole 24 Ore - which is owned by Confindustria, the main employers’ confederation - stressed the importance of the chemicals sector agreement for the future development of industrial relations in Italy and specifically for the interaction between national and second-level bargaining. It argued that “while there has been an ongoing and unproductive debate in Italy over the reform of the 1993 agreement, employers and trade unions in the chemicals sector have decided to tackle the issue in a pragmatic way and have jointly overhauled a system that had become inadequate.”
Trade union controversy
The enthusiastic response of employers and the suggestion that the derogation system could be extended to other sectors intensified the criticism from Cgil-affiliated unions in other industries, especially those where negotiations over new industry-level collective agreements are in progress.
Gianni Rinaldini, the general secretary of the Fiom-Cgil metalworkers’ union, stated: “I have never commented on an agreement signed by other unions, but on this occasion the accord signed in the chemicals sector is clearly dangerous because it substantially modifies the role and the function of the national collective agreement and represents a radical change in the industrial relations system. We cannot accept this accord, not least because it does not respect the guidelines on bargaining agreed during the latest national Cgil congress.”
Another critical voice was Franco Chiriaco, the general secretary of the Flai-Cgil agricultural workers’ union and a former Filcem-Cgil official. He said: “The role of [national] agreements is to set rules. If we allow deviations, such as those agreed in the chemicals sector, workers will no longer be protected. I think that we should stop any attempts aimed at introducing deviations from the provisions of the national collective agreement. At this point, Cgil should intervene because it cannot permit individual unions to deviate autonomously from the guidelines on bargaining established at the national congress in March 2006.”
Alberto Morselli, the general secretary of Filcem-Cgil, strongly defended the accord he had signed: “Any deviation an employer proposes must be approved by the trade unions in the company and unanimously by a national joint committee made up of representatives of both unions and employers. This procedure will prevent any attempt to put at risk the rights and conditions of workers. Further, we agreed that only temporary deviations aimed at safeguarding or improving employment levels will be accepted. Frankly, I do not understand the criticisms regarding the rights and protection of employees because the deviations cannot affect key elements of the national collective agreement such as the minimum wage rates and workers’ individual rights.”
Other important Cgil figures also defended the chemicals agreement. Fabrizio Solari, the general secretary of the Filt-Cgil transport workers’ union, argued that: “The accord does not undermine the key role of the national collective agreement. It is a positive deal because it brings second-level bargaining closer to the needs of workers and companies and that is a positive breakthrough for the future of industrial relations.” Agostino Megale, the president of the Cgil-linked Institute for Economic and Social Research (Ires), stated that: “The accord does not permit deviations regarding minimum wage rates and individual rights, which represent the main framework of the national collective agreement.”
Even within Filcem-Cgil, the derogation scheme has caused controversy. Two national secretaries, Francesco Fontanelli and Giancarlo Straini, issued a note criticising the scheme and arguing that it represents a dangerous precedent for the future of industrial relations. They claim that their stance is supported by many members of the union, and indeed a number of Filcem-Cgil local officials have expressed some doubts about the agreement, stating that it is a success only for the employers.
Wider implications
Despite several officials calling for the national leadership of the Cgil confederation to intervene, its general secretary, Guglielmo Epifani, decided not to comment on the chemicals agreement. Some commentators have interpreted this silence as a tacit approval that could influence Cgil’s stance in the debate over reform of the collective bargaining system.
The other two main trade union confederations, Cisl and Uil, have been proposing a reform that gives a more important role to second-level bargaining, but so far have not received support from Cgil. The Cisl general secretary, Raffaele Bonanni, has recently argued that “some recent innovations, such as the accord over the possibility to deviate from the provisions of the collective agreement in the chemicals sector, have strengthened the goal of modernising the current industrial relations system, a necessity that even Cgil now recognises.” However, commentators believe that only the “reformist” wing of Cgil is now ready to agree a reform giving more weight to second-level bargaining. The resistance of the “leftist” wing is still strong and, in the coming months, this internal conflict in Italy’s largest union confederation could have important repercussions, such as damaging the delicate relationship with Cisl and Uil.
This article is based on material submitted by Antonio
Deruda, European Employment Review correspondent for Italy.
European Employment Review 405 (EER 405)
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