It isn’t an obligation; rather, a recommendation. Still, in a directive published in October 2022--a text addressing the “adequacy” of minimum wages in the EU--the EU parliament and EU council stated that, ideally, at least 80% of employees should be covered by one or more collective agreements. Countries falling below this figure are invited to, via an action plan, “adopt measures to improve collective bargaining.” Said countries have until 15 November to complete their work and submit their plans.
Luxembourg is directly in the firing line, with a coverage rate of 59%, according to Statec data. This figure dates from 2010, the last time such a study was done, but it is unlikely to have changed much: in 2023, just 12 collective agreements were filed with the Labour and Mines Inspectorate (ITM), all of them company collective agreements (versus 70 in 2022 and 63 in 2021).
Interestingly, the rate changes drastically based on company size: only 30% of companies with 10-49 employees have a collective agreement, rising to 79% for companies with over 1,000.
We have long been calling for a reform.
Discrepancies also appear along sector lines: coverage rates are “relatively low” in the hotel and catering sector (13%) and in specialised, scientific and technical activities (13%), says the Statec report. Best-covered, meanwhile, are health and social work (87%) and administrative “support” services (security, cleaning) (78%).
Also, notably, if you omit public administration (100%) and public education (almost 90%), the overall average countrywide rate falls from 59% to 55%.
On the trade union side, better coverage of employees is a long-standing demand. “We have a law in the Labour Code governing collective bargaining. But this law is too old and no longer corresponds to the reality of Luxembourg's economic fabric,” says , president of the OGBL labour union and the Chamber of Employees (CSL). “Today, we have a multitude of small and medium-sized companies, and we need to have more resources to negotiate sectoral agreements. We have long been calling for a reform of this law. It was promised in the coalition programme of the previous government, but never materialised because of covid.”
There is no mention of the European directive in the government coalition agreement signed a few weeks ago between the CSV and the DP. Neither was the subject ignored, however: “the legal provisions relating to collective agreements will be revised, among other things, to allow work to be reorganised and working conditions to be improved, particularly with regard to the reconciliation of private and professional life,” the new government states. “The aim will be to facilitate agreements between employers and employees while ensuring that these discussions take place on an equal footing. With this in mind, the instruments of social dialogue will be reformed and improved.”
It’s a “no” from Horesca
For Back, two sectors in particular are high priorities. One is retail. “There are lots of small retail businesses where people work in difficult conditions. We [the unions] can’t go into 3,000 shops; it’s not possible. Admittedly, there’s nothing in common between H&M and a small shop with three employees, but there is a way of having, firstly, a collective agreement--and then company-level agreements. This exists in other sectors like healthcare, cleaning and construction.”
The other priority is hotels and catering. “It’s complicated for us, because you need at least 15 employees to have a staff delegation. And without a delegation, it’s difficult to negotiate. And these are employees who change employers frequently. Owners have been complaining about high turnover since covid--[collective agreements] are also in their interests.”
I won’t be signing.
“I understand that other sectors do it, but an agreement is not possible in ours,” comments Alain Rix, head of Horesca, the hospitality sector trade group. “It’s a European project, it’s on the doorstep--unless we have a lobbyist there [within the European institutions] who stops it. But if it does happen, we’ll fight it. Personally, I won’t be signing. It’s going to cost us even more, and the customer doesn’t want to pay.”
The UEL wants a quid pro quo
“Luxembourg has the best collective agreement: its labour law is already very rigid and very favourable to employees, with a minimum wage much higher than in other countries,” argues , director of the employers’ association, the UEL. In his opinion, the dice are loaded. “A collective agreement is a compromise: you give something and you get something in return. For example, you give more money [to employees] and, in return, as a company, you get more flexibility in terms of working hours. But in Luxembourg, that’s not possible: no clause in a collective agreement can be less favourable [to employees] than what the law already provides. As a result, the company has nothing to gain, it can only bid higher: give more, but receive nothing. If we want to open up collective agreements, we also need to create the conditions for negotiations where the employer can expect something on flexible working hours or Sunday working.”
Luxembourg “has nothing to be ashamed of in terms of its performance” said the UEL in reaction to the directive, arguing that “there is no reason to artificially promote a model that does not meet local needs and expectations.” On the contrary: “account should be taken of Luxembourg’s economic structure, which is based on relatively intellectual professions and small companies (98% with fewer than 50 employees),” says Olinger, adding: “it’s not easy to discuss a collective agreement when you have seven or eight employees.”
Incidentally, the text presented to the 27 member states bears the signature of a Luxembourger, (LSAP), European commissioner for employment and social rights since 2019 and former labour minister (2013-2018) under (DP).
Attractiveness
“A person working in a company without a collective agreement can stay at the social minimum wage for the rest of his or her life. There will be no other advancement than the index,” says Back, for whom this is an “attractiveness factor” for the nation and its economy. “If wages and working conditions are not attractive, cross-border commuters will no longer be interested in coming to work here.”
On this issue, Statec points to differences in coverage between residents (62%) and others, but these are not so marked: 58% of French employees in the grand duchy are covered by a collective agreement, as are 54% of Germans and 51% of Belgians. Subtract (once again) public sector and education and, at an overall rate of 55%, the difference is even less.
“Every effort will be made”
The labour ministry, says minister (CSV), “can only welcome a text that aims to combat in-work poverty, promote good living and working conditions, encourage social dialogue and increase the rate of coverage of collective agreements.” For him, the 80% threshold is “an indicator” that entails a certain number of obligations. “It is certain that every effort will be made [at the government level] to get closer to this ambitious objective,” he says.
“It is important for us to create a framework that provides conditions conducive to collective bargaining,” adds the minister, “which we intend to promote by all means. It goes without saying that, as part of the transposition of the directive into national law, the social partners will be consulted and will have the opportunity to share their respective experiences and expectations in this area. They will therefore play an important role in the implementation of the objectives pursued by the directive.”
The European directive provides for a progress report every five years.
This article in Paperjam. It has been translated and edited for Delano.