Playing the concession game to save jobs

A report released recently by the European Union found that some 1.9 million jobs were lost in the first quarter, the worst drop since figures were first collected starting in 1995. The unemployment rate was 8.6 per cent in April, up from 6.8 per cent a year earlier.

But analysts and labour experts say the figures would have been  even starker without some of the job-saving measures used to combat the worst recession in decades.
“Collectively, workers and employers are finding some other solutions” to job cuts, said Andrew Watts, a Senior Researcher at the European Trade Union Institute,  a body based in Brussels financed by unions to research labor  issues.

Many countries have short-time compensation programmes, tailored for the manufacturing sector, under which employers can apply for temporary assistance to lift the wages of workers working reduced hours.

France has a publicly financed partial unemployment plan,  allowing companies experiencing difficulties to temporarily lay off workers and draw on state money to pay them during those periods.

Several companies have applied for the funds, many in the auto and auto supply sectors.
The automaker PSA Peugeot Citroën is in the process of a voluntary layoff plan for 3,500 of its 108,000 workers in addition to cutting workers’ hours. Laurent Cicolella, a spokesman, could not provide an exact figure for those affected by partial unemployment as it “changes week to week,” but he added that the number had been falling since last fall.

In the Netherlands, 223 companies had used a similar programme by mid-January.
Germany also has several measures to reduce working time,  many of which are specifically framed as employment-saving measures.

The federal “Kurzarbeit” system, which translates as “short work,” provides a state-supported backup for companies resorting to short-time working outside the provisions of collective agreements.

German unions have also shown some flexibility.

In a contract through April 2010, the most powerful union, IG Metall, representing 3.6 million workers, reached a 4.2 percent wage deal in November, via two pay increases each of 2.1 percent. The first increase was Feb. 1.

The second was scheduled to take effect May 1, but many companies, in agreement with unions, are deferring it. A survey released this month by IG Metall in Baden-Württemberg state, home to Daimler and Porsche, found that 20 per cent of responding members in the region had postponed the second increase until December, and a further 15 per cent delayed the raise for a shorter period. In France, as in other European  countries, employers are not normally allowed to lower contracted salaries without employee consent.

But if a business with operations in France has “serious grounds” to think that its economic  viability is in danger, and employees refuse a reduced salary, then a company could proceed to layoffs.

To avoid this kind of situation, some companies have tried to negotiate salary reductions. The auto rental company Hertz, owned by a consortium of private equity firms, asked French management last month to swallow a pay cut of around 5 per cent over three months, without offsetting time off. Slightly more than two-thirds of the 150 managers offered the deal agreed, according to the Confédération Générale du Travail union.
HP, the computer giant, confirmed that it was engaged in similar negotiations to cut the salaries of its 6,000 workers in France, ranging from 2.5 to 15 per  cent.

Finnair announced in December that it plans to temporarily lay off 1,700 members on a staggered basis this year to cut costs. The layoffs will last two to three weeks a worker.