Romania – Talks on National Agreement breaks down but Collective Bargaining Rights remain in place

Talks on a new Four Year National Collective agreement in Romania are deadlocked over proposed increases in the Minimum Wage. Employers object that it is too high. What else is new? But for Irish observers the really interesting thing is the way Collective Bargaining Rights are underpinned in one of the EU’s newest accession states, compared with here.

National deadlock over collective agreement

Hopes in Romania that a new four-year national collective agreement would take effect from January 2011 have been dashed. Only four of the 13 national employers’ confederations signed the new agreement on 15 December 2010, meaning that it cannot be registered at the Labour Ministry, and thus cannot be put into practice. Some of the employers’ opposition stems from the government’s intention to start public debates over amending the Social Dialogue Code and the Labour Code.

Background

The previous four-year agreement, signed by all parties, expired at the end of 2010. All five of the national union confederations signed the new agreement, but employers affiliated to the Alliance of Romanian Employers’ Confederations (ACPR) refused, although they took part in the negotiations.

Current legislation governing collective bargaining

Collective bargaining is subject to the provisions of the Labour Code (adopted under the Labour Code Law no. 53/2003) and of the Collective Agreement Law (Law no. 130/1996).

The Labour Code, as organic law, provides, in Title VIII, ‘Collective Agreements’, that:

collective bargaining is compulsory for any corporate entity of 21 or more employees;
the collective agreement shall determine the working conditions, salary rights, as well as any other rights and obligations arising from labour relationships;
collective agreements may not provide for rights that are less than those set out in a higher level collective agreement;
no individual employment contract may assign lesser rights than those set out in the applicable collective agreement;
the legal provisions regulating the rights of the employees shall have a minimal character;
collective agreements may be concluded at company level, at groups of employers level, at sectoral level, and at national level;
the provisions of a collective agreement shall cover all employees affected, according to the level at which the collective agreement was concluded.
The Collective Agreement Law also provides that collective bargaining meetings must be held annually, at least 30 days in advance of the expiry date of the current agreement. The onus is on the employer to organise the negotiations. If the employer fails to comply, the trade union or the employees’ representative may summon the employer to a collective bargaining meeting within 15 days.

Collective bargaining for 2011–2014

The national unique collective agreement runs for four years. With the previous national agreement negotiated in 2006 and expiring in 2010, all 13 employer organisations represented at national level and all five national trade union confederations met in the last months of 2010 to negotiate a new agreement.

On 15 December 2010, only four of the employer organisations represented at national level and the five trade union confederations signed the national unique collective agreement for 2011–2014, at the headquarters of the Economic and Social Council (CES).

Employers under the umbrella of the ACPR refused to sign the agreement. In these conditions, the agreement cannot be registered at the Ministry of Labour Family and Social Protection, and therefore cannot be put into practice.

Proposed provisions of new national collective agreement

The new collective agreement as it currently stands does not broadly differ from the previous one.

In detail, the minimum wage at national level agreed upon by the signatory parties was raised from a monthly gross of RON 600 to RON 700 (€145 to €169 as at 1 April 2011).

Such national agreements use the minimum national wage as the basis for calculating extra pay for workers who have additional qualifications. These scales are, however, applied to the minimum wage set at company level which, as a rule, is higher than the minimum wage set by the collective agreement.

The scale set in this national agreement was as follows:

1.0 – using the minimum wage as the base coefficient – for unskilled workers;
1.1 for skilled workers and for high school graduates holding positions that require secondary education (as against 1.2 in the previous agreement);
1.15 for graduates of post-high-school training courses;
1.3 for graduates of foremen schools (post-secondary level, offering on-the-job training for jobs in industry and technology), and for holders of bachelor’s degrees;
1.72 for staff holding positions that require a master’s degree.
In 2012, skilled workers will again be paid starting from a base of 1.2, as before, on a par with high-school graduates. The base coefficients will again grow to 1.25 for graduates of post-high-school courses, to 1.5 for holders of bachelor’s degrees, and to 2.0 for holders of a master’s degree.

The provisions regulating working time, overtime, weekend work, night work, working conditions, redundancy and termination of employment are, in general terms, the same as those in the previous national collective agreement.

Commentary

ACPR had only one objection to the minimum wage at national level, saying that this ‘should take into consideration both the legitimate demands of the trade unions, and the government’s actual financial resources to pay it’.

By Decision no. 1193/2010, the government decreed that the minimum wage for the year 2011 shall be RON 670 (€162) per month.

In recent years, the minimum wage determined by the government has been below the minimum wage set out in the national collective agreement, and lower than the salaries negotiated at sectoral and single-employer levels.

In accordance with the ‘Tripartite agreement on minimum wage rises for 2008–2014’ (RO0808019I), which is still in effect, the gross minimum wage for the year 2010 should have been RON 730 (€177) and not RON 600 (€145), while for the year 2011 it should have been RON 860 (€208) compared with RON 700 (€169) as negotiated under the national collective agreement, or RON 670 (€162) as decreed by the government).

In fact, the opposition to the new national collective agreement expressed by some of the ACPR members is also the result of the government’s intention to start public debate on the new legislation to create a code of practice for social dialogue (RO1012019I), and to amend the Labour Code (RO1012039I) with the effect of abolishing the national collective agreement and adopting more flexible measures for the labour market.

The five trade union confederations and some members of the national employers’ confederations do not entirely agree with the newly proposed amendments suggested by the Foreign Investors’ Council (FIC), the American Chamber of Commerce in Romania (AmCham), and by other entities that are neither employer organisations nor members of the CES.

Lumini?a Chivu, Institute of National Economy, Romanian Academy