Draft Emergency Ordinance to Amend Law 62/2011 on Social Dialogue

Draft Emergency Ordinance to Amend Law 62/2011 on Social Dialogue Joint Comments of European Commission and IMF Staff October 12^th, 2012

General Comments

We received a revised draft Emergency Ordinance (version: August 28, 2012) that aims to amend Law 62/2011 on social dialogue. We understand that the present draft was prepared by trade union confederations that are representative at the national level and by only four employer confederations. Given the importance of Law 62/2011 for labor relations in Romania, which embodies a key reform, we think it is inappropriate to amend this law through an emergency ordinance and consider it of the utmost importance to go through the normal legislative process which ensures a thorough preparation and proper consultation of all social partners, including all employer organizations representative at the national level.
Based on the existing agreements with the European Commission and IMF staff and in line with the in-depth discussions on a previous draft of the Emergency Ordinance that were held during the IFI mission to Romania in August 2012, we strongly urge the authorities to limit any amendments to Law 62/2011 to revisions necessary to bring the law into compliance with core ILO conventions.

Comments on collective bargaining critical to ensure compliance with the programme

National collective agreements: The re-introduction of national collective labor agreements with automatic erga-omnes extension risks resulting in a misalignment of wages and productivity developments across firms, sectors and occupations. We strongly urge the authorities to ensure that national collective agreements do not contain elements related to wages and/or reverse the progress achieved with the Labor Code adopted in May 2011 (e.g. on working time regulation).
Sectoral collective agreements: The draft legislation repeals the existing numerical criteria for the registration of collective labor contracts and replaces them with numerical criteria for their extension (Art. 133). We strongly urge the authorities to ensure that the threshold of 50% of the total number of employees in the sector refers either to employers' associations only or to both trade unions and employers' associations.
Collective wage bargaining in the public sector: If changes are made to Chapter 4 regulating collective bargaining in the public sector, appropriate safeguards need to ensure that public sector wage developments are aligned with productivity and budgetary prudence.
Annual obligatory bargaining: The obligation to conduct collective bargaining annually, as well as the pre-defined subject of bargaining, leads to unnecessary transaction costs, especially for small firms (Art. 129). We strongly urge the authorities to abolish the obligation to bargain annually and replace it with an obligation to start collective bargaining before the expiration of collective labor agreements.

Other Comments

Labour conflict: We are concerned about loosening procedures in the existing legislation that are intended to avoid the proliferation of strikes (Art. 183, 186, 195, 197, 203 and 205).
Union representatives: We recommend to limit the number of elected and appointed representatives to be protected under Art. 10 to an appropriate number and timeframe.
Contributions to unions and employer associations: If an obligation for employers to withhold trade union members’ contribution from payroll is introduced, we strongly advise the authorities to make it conditional upon the employee’s written approval (Art 24). In addition, we highlight the risks that the provision to make dues paid to employer organizations deductible from income tax (Art 68) would impose an unnecessary fiscal burden on society.

Positive Evaluation

Firm level collective agreements: We welcome measures that are conducive to unblocking collective bargaining at the firm level such as looser criteria for their establishment (5 instead of 15 employees; Art. 3) and their representativeness (35 percent instead of 50 percent; Art. 51). We also welcome the withdrawal of the requirement that all parties entitled to attend negotiations have to sign a collective agreement, notably those that do not reach representativeness criteria (Art. 146).

Clarifications

To avoid confusion, it would be useful to clarify the terminology at the beginning of the proposed draft legislation as done in the current legislation in Chapter 1.
Please provide a more detailed description of Article 129(5a-k): can social partners that are representative at national level set basic wages and/or wage coefficients?
Do sectoral collective agreements, in case the criteria for extension in Art. 133 are not met, apply only to companies that are affiliated to signatory employers' organizations or also to companies which are not affiliated to signatory employers' organizations but employ workers who are trade union members?
Article 143 in the existing law stipulates that enforcement of collective labor contracts registered at sector level may be extended by order issued by the minister, subject to the approval of the national tripartite council, at the request of all signatory parties. In the draft ordinance, Art. 133 regulates under which conditions collective contracts at sectoral level can be extended to non-signatory parties. Please clarify whether this extension continues to be at the order issued by the minister, subject to the approval of the national tripartite council.
We observe that Chapter 4 on collective bargaining parties and their representation in the public sector in the existing law is entirely repealed in the draft ordinance. However, some of Chapter 4’s provisions can now be found in other parts of the draft ordinance including in Art. 128 and Art. 133. Please elaborate on the reasons why Chapter 4 has been repealed and whether the intention is to make changes to the provision that salaries in the public sector can only be subject to collective bargaining within limits established by law (see Art. 138 in the existing law).
The draft ordinance does not refer to Art. 180 of the current legislation, thus suggesting that the article remains unchanged; however, given that its content appears in Art. 182 of the draft, it seems that Art. 180 was repealed. Similar issues exist for articles 165-174, 178-180, 187, 189 and 191.
The English translation of the proposed Article 92 seems to suggest that the size of the CES is reduced to 30 participants which may not have been intended.