EVOLUTION AND DECONSTRUCTION OF SPANISH TRADE UNIONISM IN THE CONSTITUTIONAL ERA AND IN THE ECONOMIC CRISIS.

EVOLUTION AND DECONSTRUCTION OF SPANISH TRADE UNIONISM IN THE CONSTITUTIONAL ERA AND IN THE ECONOMIC CRISIS. Prof. Dr. José Manuel Gómez Muñoz Professor of Labour Law and Social Security. University of Seville. Advocate Milan, may 21, 2014. Bocconi University. 1. With what methods, procedures or practices the trade unions do contact with the political level? To understand the relationship between trade unions in Spain and political power we must start with the text of our Constitution of 1978 (CE), that places political parties and trade unions and employers organizations in the same plane of organizational equality. Article 7 CE determines that unions are free and must be democratically organized and operate to defend the interests of their own. Article 6 EC sets the organization of political parties on the same terms, establishing a relationship of democratic and representative functioning identical to that of the unions. Therefore, the construction of democratic institutions at the political level is based on the exercise of representation in the same terms as the operation of the system of labour relations in Spain. Is the electoral audience criteria that determines the representativeness of the parties and trade unions, which produces a critical institutional dysfunction in both types of organizations, because the fact of political or union affiliation is irrelevant. Unions and political parties with few members can accumulate a large institutional power through electoral representation, resulting in organizations with a huge functional structure but with little human support. We can affirm that this model, promoted by The Free Trade Unionism Act, August 2, 1985 (LOLS), which has not been changed even once since then, has created "giants with feet of clay" that could not withstand the rigors of labour reforms imposed by the Troika in Spain since May 2010. Along with this representation of trade unions in the field of industrial relations system, we find the institutional participation governed by Article 129.1 EC and developed, only for the most representative unions, Article 6.3.a) LOLS, which allows unions and 1/10

employers organizations join those colleges of general government and State and Autonomous Communities agencies in which they are provided. These agencies include the Economic and Social Councils, at state and regional level, as a consultative organ of the government. They are also involved in the managing bodies of the Social Security (unemployment and other benefits) and, especially, in the extrajudicial mechanisms of labour disputes, from the state level in the SIMA (Foundation for Mediation and Arbitration) and from the regional level. In these bodies, unions have the power to participate in the development of performance standards for resolution of such systems and the appointment of mediators and arbitrators in labour disputes. In the private legal sphere, the Law 26/2013, December 27, on Savings Banks and Bank Foundations, has severely limited the direct union involvement in governing boards of these entities, foreseeing that only the representatives of the workers can have participation in such bodies on the basis of Article 68 of the Statute of Workers (ET). Institutional participation of trade unions in these financial institutions has been seriously questioned following the banking reform imposed by the European economic authorities. The economic and financial crisis in Spain has had the effect of deconstruct the stabilizing role of unions and business organizations in the industrial relations system. During the decade of the 80's there were strong institutional relations between the General Union of Workers (UGT) and the Socialist Party (founded in 1887 and 1888 by Pablo Iglesias) and between The Workers' Commissions (CCOO) and the Communist Party, today United Left, sharing prominent trade union leaders the status of deputies of the Congress. Three major general strikes in 1988, 1992 and 1994, finally broke the transfer of leaders between parties and unions, so they began to operate completely independent of political power since 1995. Labour reforms of the past four years, started with president Zapatero's Socialist government Law 35/2010, September 17, on urgent measures for labour reform, has been taken without the agreement of the Spanish Confederation of Employers Organizations (CEOE) and The Spanish Confederation of Small and Medium Companies (CEPYME) nor with the agreement of the trade unions UGT and CCOO, opening a new stage of closing the communication channels between the government and these organizations, and breaking a tradition of more than thirty years of social partnership. Subsequently, not agreed reforms of Royal Decree Law 3/2011, February 18, on the employment policies, of Royal Decree Law 7/2011, June 10, on collective bargaining, and of Royal Decree Law 20/2012, July 13, on budgetary 2/10

stability and promoting competitiveness, came to question the role of unions as actors in the management of employment policies and collective bargaining system in Spain. The predominant role of trade unions in the industrial relations system has been knockout by the Law 3/2012, July 6, from the president Rajoy s government, which imposed from the absolute majority of the People s Party, has broken the bases of protection of unions on labour rights, adapting the employment contract to the needs of business competitiveness and limiting the general or "erga omnes effectiveness of the collective agreement, which is the cornerstone on which unions power is based in the productive sectors and within companies. In Spain, we have gone in less than five years from a system of negotiated labour legislation to a system of "diktat" legislation (Royal Decree Law has legal force, but it is approved by the government, not by parliament) that has completely defaced the role of business and labour organizations as managers of the industrial relations system. In the period 1977-1986, the great State Pacts and Interconfederal Agreements, which designed the modern system of industrial relations in Spain, were signed. On October 25, 1977 the Moncloas Pacts were signed, and they were essential for the consolidation of democracy and recognition of social organizations. On October 9, 1984, is signed the Economic and Social Agreement in force until 1986, which laid the basis for the legal recognition of freedom of trade unionism. Between these two agreements are signed other four, the Basic Interconfederal Agreement (ABI) in 1979, the Framework Interconfederal Agreement (AMI ) in force in 1980 and 1981, the National Employment Agreement ( NSA ) current in 1982, and The Interconfederal Agreement (AI) in force in 1983. In a second phase characterized by strong economic growth and low social conflict (1986-1991) there were no major political and trade union agreements, but after the 1993 crisis contacts at the highest level were resumed, approving the April 6, 1995 Toledo s Pact, which led to the reform of Social Security system to ensure its future sustainability. On April 8, 1997 the National Agreement for Employment Stability (AIEE) was signed by UGT, CCOO, CEOE and CEPYME, and accepted by the first popular government of president Aznar, entering the first major reforms on the Workers' Statute and the collective bargaining system. The spectacular economic growth experienced in Spain during 1998-2004, that caused the great bubble in the construction 3/10

sector (housing bubble), particularly the origin of our current economic crisis, did not produce any significant social or economic agreement, and that allowed trade unions and employers organizations diversify their activities in the field of professional training, especially. In the third phase of social partnership, was signed on July 8, 2004, the Declaration for Social Dialogue, promoted by the government and signing UGT, CCOO, CEOE and CEPYME, which introduced important changes in labour matters related to immigrant workers (4.5 million in the period 1997-2005), improving safety and health, improvement in the minimum wage, professional training, upgrading of minimum pensions and extrajudicial means of settling labour disputes. This stage ends with the signing of the Agreement for Improved Growth and Employment of May 9, 2006. In the fourth and final phase, characterized by a deep economic and social crisis that has led Spain to move from an unemployment rate of 8.4 % in 2007 to a rate of 26.5 % in 2014, can only stand the Agreement on Employment and collective Bargaining (AENC 2010-2012) that can be considered breached by the government after the reform of collective bargaining imposed by Law 3/2012. But there have been agreements at Autonomous Communities level, particularly those governed by the Socialist Party, where was signed in 2010 the VII Social Partnership Agreement for Andalusia, still in force. Trade unions and employer organizations have lived in this phase one of its worst moments of dialogue with political power. Harassed by the crisis, have had to make procedures of employment regulations (ERE) to collectively dismiss thousands of workers of their own organizations. Various financial scandals have forced remodeling confederal domes, particularly in the UGT and the CEOE employers' organization. Their current position facing the government is the weakest of the last thirty five years, being in a process of internal restructuring and liquidation of its assets, with many of its leaders investigated by the justice and subjected to a serious process of public institutional challenge. 2. In the country of reference, at what levels, in what form and through which rules is the trade union representation organized? In particular, which form do trade unions 4/10

assume at company level and what are the organic connections with the higher territorial levels of the same union? The Spanish system of labour organization has a basic legal regulation in Articles 4 and 5 of the LOLS, requiring a method of deposit and public registration of union statutes. This legal condition allows them to acquire legal personality and the possibility of holding (promote) union elections, collective bargaining and collective action call. So they can operate legally, and must prove their representativeness in union elections held at company level every four years. Union statutes determine the internal organization of trade unions, that should be democratic as required by the CE, and the LOLS. The typical structure of Spanish class union is formed on the basis of a Congress, a Committee, a Confederal Executive Committee, a Confederal Council and Commissions of Control and Guarantees. The professional trade unions (public sector, qualified professionals, white collars) adopt multiple internal organizational forms, depending on its scope. The two major national class unions have experienced significant organizational restructuring for the period 2007-2014. Thus, the CCOO union has reduced from 23 to 12 federations (sector unions) and the UGT has gone from 20 to 11. Among these federations they include the Public Sector Federation, Metal and Construction, Education, Agricultural Workers and the Self-Employed, Pensioners, Trade, Restaurants and Hotels, or Transport. The territorial structure is adapted to the number of Autonomous Communities (regions) and Autonomous Cities (Ceuta and Melilla), which consists of a total of 19 regional federations. In Spain there is a dual channel for union representation which is based on the enterprise level. The first channel is the elective representation. The unions with legal personality may nominate candidates for election to set up enterprise committees (companies with 50 or more employees) or staff representatives (companies between 6 and 49 employees). The number of elected representatives set union representativeness, which is measured in percentages and certified every time the union needs to exercise union action. The total number of representatives elected at national, Autonomous Community (regional) or in a smaller geographic or functional level, determines the existence of most representative trade unions (10% of representatives at national level, 5/10

15 % with a minimum of 1500 representatives at regional level, or 10% in their specific level) which gives them a unique legal position (Article 6.3 LOLS ) that allows them to negotiate collective agreements, to promote union elections and have institutional representation in all administrative organs of the State or of the Autonomous Communities where the presence of unions is provided. The second channel of representation at the enterprise level is the union channel. In all companies with workers belonging to unions, there are union branches that are corporate bodies with important roles in collective bargaining, since Article 87 ET allows them to directly negotiate collective agreements when those union branches represent the majority of the members of the enterprise committee. Together with the union branches, in companies of 250 or more workers, are union officials (stewards), who are affiliated workers of the union branch with the same powers and representation guarantees than the members of the enterprise committee or staff representatives (Article 10.3 LOLS). This structure is identical to union representation in the private and in the public sector. Therefore, legally constituted unions bring union action directly within companies through their local union affiliates and union delegates (stewards), but so do through elective representation bodies, enterprise committees and staff representatives. In most cases, members of the committees are also stewards, so that one person can represent, at company level, the interest of the workers and the union itself. President Zapatero s reform in Law 35/2010 has also allowed the direct intervention of the union in those micro-enterprises (less than 6 workers) or companies without worker representation through an "ad hoc" committee formed by three members belonging to the most representative unions in the sector to which the company belongs, appointed by the unions themselves, for intervention in the information and consultation procedures need to be implemented for collective transfers (Article 40 ET), substantial changes of working conditions (Article 41.1 ET), collective suspensions of employment contracts (Article 47 ET), collective dismissals (Article 51) or procedures for derogation of the collective agreement (Article 82.3 ET) on the initiative of the employer. Thus, in the absence of collective representation bodies, the union assumes the role of direct representative of workers covered by the procedure for information and consultation. 6/10

In the field of industrial action, union representatives who hold elected positions within the union at the provincial, regional or state level (Article 9 LOLS ) are responsible to conduct collective bargaining on these three levels. They must belong to unions that have the status of most representative or sufficiently representative in the field of bargaining (Articles 6 and 7 LOLS). The regional confederations have a large space of autonomy, controlling collective bargaining at regional and provincial level (sector collective agreements) joining the negotiating committee in medium and large companies. 3. At the company level, how are trade unions perceived by the workers? And by the Employers? Article 8 LOLS provides that the union branches of the most representative trade unions are entitled to have a notice board inside companies to communicate with affiliates. In companies with more than 250 workers, the company has an obligation to provide them with a meeting office where unions can exercise their trade union action. In elections, 85% of applications submitted to elective representative bodies are union candidates. Workers can submit lists to these elections independently, but whether there are collegial candidates they must meet at least a number of signed endorses which represents three times the number of positions to cover in the representative body (Article 69 ET). Union action within companies is widely spread in Spain. The rights of active and passive information of union representatives are fully recognized by Article 64 ET. In the current economic crisis, with a large number of massive dismissals, the direct intervention of the unions has replaced the action of the representative bodies. In conflicts such as the Coca-Cola Company (Madrid, 750 dismissals), Channel 9 (Valencia, 1200 dismissals), Roca (Sevilla, 400 dismissals) or Andalusian Employment Service (700 dismissals) in 2013 and 2014, the direct union mobilization has allowed to reduce the number of redundancies or enhanced severance payments. In this sense, the perception of union action is valued very highly by workers, so it can be said that the economic crisis has led to a reassessment of the role of class unions, which has resulted in sensible increments of affiliation on the period 2011-2014 (UGT, 3%; CCOO, 5%). However, union membership levels remain very low in Spain, about 15'9 % of the total 7/10

workforce, with an OCDE average of 17.8 % in 2012. Only France, Poland and Estonia are located in a lower position. 57.1% of workplaces have collective bodies representing workers, which is a high figure in the European context (Spain occupies the fifth place in the EU-28). 98% of companies with more than 250 workers have union representation, with the rate of 52.1 % in companies with 10 to 49 workers, and 85% in companies between 50 and 250 workers. The number of elected representatives in Spain in 2013 stood at 303.662, of which 37.4 % belongs to CCOO and 35.4% to UGT. Generally, employers maintain a strong relationship contact and interaction with trade unions within companies through collective representatives. There are clear legal obligations to inform and consult in the ET, and a regime of strict sanctions in Articles 6 and 10 of Royal Decree Law 5/2000, August 4, on Offences and Penalties in the Social Order, and a recent reform Law 10/2011, May 19, on information and consultation in undertakings and European Union scale groups. The years of social partnership and mechanisms of extrajudicial settlement of collective disputes, have created a climate of understanding quite appropriate for the normalization of relations between employers and unions. Only in certain groups of domestic companies in the field of trade and supermarkets has been proved the existence of yellow unions (yellow dog contract) indirectly controlled by the corporation. In collective bargaining above the enterprise level, Article 88 ET set negotiating committees where unions negotiate directly through their provincial or regional representatives (maximum of 15 members per side), which means a certain distance with the employers performance through their representative organizations. But at the enterprise level, usually the stewards, members of the union branches, made the collective agreements, so the degree of relationship with the employer is much more direct. The economic crisis has had the effect of prolonging the period of negotiation of the agreement, which has gone from an average of three months in 2007 to one year in 2013. Negotiations have become especially difficult, because the period 2010-2014 has produced an average wage devaluation of -8.4 % in Spain, near -18% in the Public Sector. In addition, about 160.000 workers were affected in this period by the derogations of enterprise agreements on wages. 8/10

4. Where it exists, what are the main fields of the collective bargaining at company level and which concrete role do they play in driving business decisions? The Rajoy s labour reform with Law 3/2012, has profoundly changed the general effectiveness ("erga omnes") of the collective agreement in Spain. By law, Article 3 ET, the collective agreement is negotiated with general (overall) effectiveness, Article 82.3 ET, which means that the collective agreement applies to all employees and employers of its functional and territorial scope regardless of membership to signer organizations. This is one of the main causes of low union membership rates in Spain, it is not necessary to be affiliated to a particular union to be on the scope of the general effectiveness of the collective agreement. The Rajoy s reform has set a new mechanism for derogation of the general effectiveness of the collective agreement which allows companies facing economic, productive, organizational or technical crisis, after an information and consultation procedure provided in Article 41.4 ET, do not implement (take down) working conditions relating to working hours, time and distribution of working time, shift work system, payment system and rate of pay, work system and performance improvements and voluntary functions of the protective action of the Social Security (Art. 82.3 ET). Only in 2013 there have been 2512 collective agreement derogations that have affected 159.550 workers, of which 70 % were from companies with more than 250 employees. Large companies have been the most affected. Along with this, it has established a mechanism of applicative priority of enterprise agreements over higher-level agreements (national, regional or provincial agreements) in several issues like amount of base salary and allowances, overtime hours, working time distribution and shift work system, job classification of employees, methods of recruitment, measures to reconcile work and family life and other matters (Article 86.2 ET) These measures have succeeded remarkably strengthen collective bargaining at the enterprise level and deal a deathblow to the role of collective sector agreements at provincial, regional or state level. In 2011, before the reform, 708 enterprise agreements affecting 185.571 workers were registered. In 2013, the number of company agreements registered was 1361, with 272.466 workers affected. The higher-level agreements possessed a stabilization function and equalization of working conditions and provided 9/10

the company collective bargaining in companies with fewer than 10 workers, who constitute 90 % of all companies in Spain. As a result, companies have begun to compete with each other on the basis of the reduction of levels of social protection in their collective agreements. The wages has become the key factor in the reduction of labour costs. We also highlight the reform of collective agreements ultraactivity (period of extraordinary force) operated by article 86 ET. This reform has established that after a period of one year without an agreement to renew the previous collective agreement, the collective agreement disappears and a higher level agreement, if it exists, rules the working relationship. This legal reform has greatly complicated the negotiation process, it has forced the union and enterprises representatives to find arrangements for renewal on an appraised term, with the threat of the disappearance of the regulatory framework of labour relations in the company or sector. Only in 2013, there has been the disappearance of more than 1300 agreements that have affected about 1.500.000 workers. Unions have returned to demonstrations and strikes, which has been a marked increase in labour unrest in the past year. Finally, we note that the reform of Article 41 ET has sparked extraordinary flexible labour conditions agreed in the contract. The management powers has now new and broader capacities for the unilateral modification of the individual conditions of the workers in those same subjects possessing applicative priority in company collective agreements. In this sense, it is producing a significant increase in procedures of substantial change of individual and collective working conditions on the basis of collective negotiations where the end result is imposed by the employer. Workers who do not agree with such changes, have the option to terminate their contracts of employment with compensation of 20 days' pay per year of service, with a maximum of 9 months. It can be said without fear of contradiction, that recent labour reforms in Spain have reinforced the direct power of the employer on the individual employment relationship thereby that unions will have to completely rethink their strategies of industrial action at the company level. To show this, it suffices to note that in 2007, 337.364 lawsuits were filed in the social jurisdiction, which were 463.810 in 2012, with annual average increases of 6% from the start of the economic crisis. 10/10