www.clr-news.org European Institute for Construction Labour Research CLR

No 1/2015

CLR News Wages and employment, disintegration or transformation

Contents Note from the Editor ························································································ 4 Subject articles ·································································································· 7 Jörn Janssen: Instead of an introduction: the transformation of employment in construction. ···················································································································7 Phillip Toner, Mike Rafferty: Financialisation of the construction industry and collective bargaining. ···································································································12 Ernst-Ludwig Laux: Statutory minimum wage in Germany. ·······································23 Thorsten Schulten: On the expansion of minimum wages in Europe.·······················31 Hans Baumann, Andreas Rieger: The struggle for Swiss minimum wages goes on. ·37 Discussion: ······································································································· 41 Vasco Pedrina: Equal rights and wages for migrant workers: the example of the battles in Switzerland. ·································································································41 Reports: ············································································································ 54 Holcim-Lafarge merger. (Rolf Beyeler) ·······································································54 Social identity cards in the European construction industry. (Werner Buelen) ·········55 Employment law after the elections in Great Britain. IER 11/02/20115. (Jörn Janssen) ················································································································56 Building with 3-D printers in Amsterdam. (Ernst-Ludwig Laux) ································57 Reviews: ··········································································································· 58 Olivier Fahrni (2014) Heavy metal. (Hans Baumann) ··················································58 Jeremy Rifkin (2014) The zero marginal cost society: the Internet of things, the collaborative (Ernst-Ludwig Laux) ···············································································60 ILO Wage Report 2015/15. (Hans Baumann) ·······························································61 New Projects: ··································································································· 64 University of Westminster: Thames Tideway, Women in Construction. ····················64 York University of Toronto and University of Westminster: Climate change and work. ·····························································································································65 Events: ·············································································································· 68 CLR AGM and Seminar. ································································································68

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In this editorial I have to talk about a topical issue related to a ruling of the European Court of Justice. In my 4-2014 editorial I wrote: ’The basic principle of the European social model as formulated by the founders of the European Economic Community was the respect for the well-balanced regulatory framework for social policy, including social security and labour standards that existed in the member states’. I added that this was also the guiding principle for the rules that were formulated in the Posting of Workers Directive (PWD). But, already in our 2004 book The free movement of workers in the European Union (CLR-Studies 4 by Cremers & Donders) we had to conclude that the possibility to verify, legally and in practice, whether a worker was correctly posted and fell under the scope of the PWD was one of the Achilles' heels of the enforcement of the correct use of cross-border recruited labour in the frame of the provision of services. The competence to decide about liability in cases of fake self-

employment and/or fake posting was blurred by ECJ-rulings about home versus host country responsibilities. The ECJ tended to describe mandatory basic control in a host country as a barrier ‘for the free provision of services’. Along the same lines, and again referring to the primacy of economic freedom, the competence to define who was deemed to be the real and genuine employer and who could be held liable in cases of fake posting by letter-box companies was located by the ECJ with the (often non-existing) home country of these establishments. Thus, the correlation with economic freedom, notably the freedom of establishment and the free provision of services, obstructed fundamental legal and political solutions. As mentioned before, after the launch of the Internal Market project, the Commission and the ECJ, not hindered by EU member states, often gave primacy to the free provision of services over the lex loci laboris principles of the posting rules. It took quite some time before the member states

Jan Cremers, clr@mjcpro.nl 10-03-2015

Note from the editor

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reacted; even those member states envisaged by the different ECJ-cases refrained from pushing forward the problems in the EPSCO Council that brings together ministers responsible for employment, social affairs, health and consumer policy from all EU member states. In this Council - in fact the principal legislator - the advocates of a liberalised labour market characterised by deliberate competition in the field of working conditions and pay clashed with representatives from countries that were in favour of the creation of a level-playing-field based on the existing national regulatory framework (the Rhineland or social model). The main driver for change was the European Parliament, which forced the EC president Barroso during the debates for his second term to come up with the promise of an initiative for the enforcement of the PWD-principles. We will certainly come back to the resulting Enforcement Directive in the very near future and assess the enforcement principles formulated in that Directive. In recent months not only the European legislator but also the ECJ seem to have realised what negative effects blunt economic reasoning can have on the functioning of the PWD. In a Finnish case of Polish workers being underpaid (C-396/13),

the ECJ underlines that the terms and conditions of employment guaranteed to posted workers are to be defined by the law of the host member state (as long as these conditions are declared ‘universally applicable, binding and transparent’). In this case the foreign subcontractor contested that the trade unions in the host country had standing to bring proceedings to the court, given that the employment relationship was based on the law of the home country. Thus, the ECJ had to decide on the question of whether the right to an effective remedy, as laid down by the Charter of Fundamental Rights, of claims assigned by the PWD could be blocked by the rule of the home country (that prohibited the assignment of claims arising from the employment relationship). The ECJ ruled that the trade union in the host country was eligible, as its standing was governed by Finnish procedural law and as the PWD makes it clear that questions concerning minimum rates of pay are governed, whatever the law applicable to the employment relationship, by the law of the host country. This new issue of CLR-News does not focus on this item, but some of the contributions can be read from

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Note from the editor

this perspective. The sub-editors Hans Baumann and Jörn Janssen have collected analyses of wage bargaining perspectives for the construction industry. The contributions range from two specific country reports on minimum wages to a broader European overview and two articles that examine the transformation of the building industries (in Europe and Australia). The included reports and reviews partially deal with the same subject, partially are taken on board for topical reasons. We trust that the issue will find resonance among our readers.

BATTLE-SITES - A call for funding by Jakob Mathiassen The book Battle-sites (Kamppladser) was published in Denmark in March 2014. The book tells the story of the labour movement's struggle against social dumping in the Danish construction sector from 2004 to 2014. Accompanied by analyses and statistics, the book describes the most spectacular struggles that took place on six specific construction sites. We, the authors of Battle-sites are not impartial historians, but on the contrary, active participants in the struggles. I am a concrete worker and rank and file member of the trade union 3F, and I have been taking part in the struggle since 2004. My co-writer, Klaus Buster Jensen, is a journalist for 3F's trade journal, where he has exposed and reported on social dumping in Denmark's construction trade. Today, one year after the publication, we are trying to get the book translated into English and German. The goal in translating the book is, first and foremost, to share the Danish experience with the EU's eastern expansion and the struggle against social dumping. We hope that the Danish experience, successes and failures, will be useful to those involved in the fight against social dumping in other countries. Translating and publishing a book is an expensive project. So we have put the project on a crowed funding page. We hope that all interested parties together can finance the project. Support the translation directly on: www.indiegogo.com/projects/battle-sites Reed more about the book and the translation on: www.facebook.com/battle-sites/

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Note from the editor

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INSTEAD OF AN INTRODUCTION: THE TRANSFORMATION OF EMPLOYMENT IN CONSTRUCTION Dedicated to my international umbrella organisation, the Building and Woodworkers’ International (BWI) ‘Standard’ or ‘typical’ – as opposed to ‘precarious’ ‘non-standard’ or ‘atypical’ – employment relationships tend to be referred to as a desirable option, with the assumption that everybody knows which ‘standard’ or ‘type’ is invoked and often unspecific of national or occupational peculiarities. Usually, in this context it is also taken for granted that the ‘standard’ ought to be maintained for the future. In reality such a ‘standard’ is almost always a fiction made up in hindsight and covering a multiplicity of widely varying relationships in a permanent process of transformation. We ought to keep in mind as well that employees and their capacity of labour power tend to push for improvements in their working conditions. They were and are the core agents of change, not always successful but never simply defending existing ‘standard’ conditions. We should, therefore, direct our attention to this process of change and regard the future as an object of strategic thinking. Moreover, referring to a ‘standard’ raises an unavoidable obstacle to any attempt to grasp a process of transformation at present. Inevitably, our categories of perception have been formed through experience from the past and, therefore, tend to misrepresent things in the present. For instance, have we adjusted to the normality that the owner of a large company is an anonymous financial entity in a permanent process of transformation? Shouldn’t we call this property relationship ‘precarious’? And after all, who is the employer of wage earners? These questions demonstrate that we are still far from having adopted adequate categories for the common discourse and scientific analysis of the present reality.

Subject articles

Jörn Janssen, 08-02-2015

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Another problem in any analysis of transformation is the choice of the time span in which it is perceived. The changes in the object of observation, in this case the form of the employment of labour, appears substantially different whether we relate the present day to, for instance, the 2008 financial crisis, to the rise of the ‘neo-liberal’ economic regime in the 1970s, or to early capitalism associated with the French Revolution of 1789. The post-crisis state austerity regime has been a blow to

the low-wage strata of workers and exacerbated social disparities.

Under ‘neo-liberalism’ wage growth has been lagging behind productivity development whilst social provisions have been relatively improved.

Looking at capitalism from its beginnings, one might assess financialisation as the last breath of a dying regime of labour exploitation through property.

Thus, changes which come to the fore from a longer-term perspective may not be distinguishable in a short-term study and vice versa. It needs also to be kept in mind that social transformation is in no way a linear or uniform process according to an abstract logic. Different stages may coexist side by side and development may take place in leaps and bounds. Given these uncertainties and dynamics of changing social relationships, it is not surprising that ‘standards’ are perceived as an anchor of safety preferably identified with generally valued past achievements. From the present point of view, within the long-term transformation of wage-labour employment relations, this past was the stage of widely accepted collective bargaining between employee and employer organisations concluding agreements on dominant wages and working conditions in Western Europe. Wages were raised ideally in step with labour productivity gains, employment contracts were open-ended, and a great majority

Subject articles

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of employees were covered by collective rates backed up by social benefits for unemployment, sickness and old age. This regime, variably, culminated around 1970 and started disintegrating substantially at the latest after the collapse of the Warsaw Pact states. Fixed-term labour contracts, bogus-self-employment, agency labour and more recently zero-hour contracts are typically associated with this process which was embedded in a number of conditions: Membership rates declined consistently in employee as well as employer organisations; the integrity of corporations became increasingly unstable as a result of more frequent adaptations of enterprise structures to productive segments with a general tendency of dispersion; ownership of corporations became increasingly anonymous and volatile with the financialisation of capital1. Generally speaking, the framework of that ‘standard’ employment disintegrated on both sides, of labour as well as of property. In a newly ‘typical’ employment relation, employees are faced with employers represented by employees of different status. In the construction industry this transformation is particularly evident and advanced. Project contracts are often awarded to management contractors who subcontract productive work to a tree network of subcontractors, labour agencies and self-employed workers. In this network work contracts, piece-work, self-employment and all forms of ‘informal’ or illegal labour relations are almost indistinguishable. Under these conditions the borderline between contracting and employing as well as employer and employee is inherently blurred. In this productive interaction property relations are consistently being replaced by contract relations at all levels. As a result, in the productive construction process the ‘standard’ employment relationship becomes marginalised. The case of the scandalous conditions on the building sites for the world football championship in Qatar has demonstrated how this evolution is a global phenomenon. This is not

Subject articles

1. See Dick Bryan, Michael Rafferty, Phil Toner and Sally Wright in this issue.

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surprising as the large management contractors of the construction industry are acting world-wide. How should the employment of labour be developed for the future? The classical capitalist wage relationship confronted labour with property. In the centre of the dispute between these opposed components of the production process was the distribution of the social product generally and of the surplus in production between profit for property and wages/salaries for labour in particular. Since property is hardly represented any more in the environment of production, the distribution of the social product between profit and wages is in limbo. The distribution of the social product has shifted into the world of financial transaction. This is how, outside the reach of ‘social partners’, the inequality of wealth has reached astronomical dimensions whilst no institution for regulating or forum for negotiating the distribution of the social product exists any more. As a result, collective wage negotiations are excluded from their object of dispute and cover only a shrinking segment of wage earners. In this vacuum of former collective wage regulation, the statutory minimum wage has gradually been introduced as a means to fill the gap, covering those workers who lack any form of collective protection2. Another way to replace or complement collectively agreed wages are statutory social benefits. Both minimum wages and social benefits under statutory regulation represent a growing share of income or means of subsistence and serve as replacement or underpinning of collective rates. Thus we are witnessing a secular shift from collectively agreed wages to statutory income regulation. Taking into account this transformation in employment relations, what might be conceived as a labour strategy for the future? Is it possible under prevailing wider socio-economic conditions to restore forms of traditional employment relations? These questions will not be answered

Subject articles

2. See Ernst-Ludwig Laux, ‘Statutory Minimum Wages in Germany’ in this issue.

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in this paper. But the disintegration of the ‘standard’ employment relationship may have been just the organic concomitant of a process of transformation. If we examine its position in a wider historical context, this process may show quite different and even positive aspects. Initially the submission of labour under capital was a liberation of the unfree peasant from bondage, hence the term ‘free wage labour’ as a relationship between legally equal partners. The collective organisation of wage earners was a step to contain the continuing economic inequality between capital and labour, then between ‘employers’ and ‘employees’3. Statutory underpinning and extension of wages through social benefits was another step in the liberation of ‘employees’ from economic dependence on employers. In fact wage earning has gradually turned into a civil status rather than employment relationship4. Looking at the transformation process through different glasses made for short-, medium- and long-term distances may help our understanding of the dynamics at work at the present day: Since the recent – and continuing - financial crisis,

private property has lost its grip on productive assets. The rise of the ‘neo-liberal’ regime has dismantled

capital’s direct command over the employment of labour.

Since the French Revolution – early capitalism – wage earning has developed to become the universal form of social status. Private property has been pushed out of productive relations surviving on a lifeline in a fictitious world of financial constructs.

Subject articles

3. According to the Oxford Dictionary the term ‘employee’ emerged in 1854. 4. On the civil status of labour see Bernard Friot (2014) Émanciper le travail. La Dispute,

Paris.

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Strategies for the regulation of working conditions and the distribution of the social product, based on these - admittedly simplified - pictures of the dynamics we are living in, will necessarily have to envisage the future as a space of freedom under civil rights rather than depending on ‘employers’. In hindsight, from a not too distant future, the status of ‘employee’ may already now be outdated. The universal development of minimum wages may be a first step towards internationally coordinated statutory wage scales. This is a perspective situated in the framework of universal human rights, which should not stop anybody from pursuing it simultaneously at national level and within the existing bodies of labour organisation. The construction industry may be at the frontline within this process of transformation.

RISKING IT ALL - FINANCIALISATION AND LABOUR IN THE CONSTRUCTION INDUSTRY1 Introduction “The concept of profit within the building industry context is inextricably linked to the notion of risk …building contracts in all their forms have been designed with the specific purpose of identifying, allocating and pricing risk between the various parties”. John Crittall, Master Builder’s Association of Australia The growth over three decades of several Australian construction companies (notably Multiplex, Lend Lease, Grocon, and Leighton Holdings) from specialist regional builders to national and then (parts of) global property services firms has been nothing short of astonishing. Over the same period, we have also seen a number of important changes to the construction labour process and forms of

Subject articles

Dick Bryan, Michael Raffer-ty, Phil Toner and Sally Wright

1. This is an abbreviated version of a paper on risk and finance in construction under preparation, ‘Financialisation and Labour in the Australian Construction Industry’.

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contracting, such that workers are now increasingly treated as (often a sham) small business operators. One link between the two developments is the notion of financial risk. While financialisation and financial risk have become the latest buzzwords, the connections (if any) between finance and labour are not very well developed analytically, or empirically. This article develops the proposition that we can see finance and risk playing out in construction both institutionally and in increasingly explicit modes of financial calculation organising the building value chain. We find that financial innovation in construction and property services is at the frontier of financialisation. In addressing the institutional and calculative embedded dimensions of finance and construction, we seek to open up the politics of labour in a financialised construction industry. Institutionally, finance and the construction industry in Australia became integrated through the expansion of building companies across the construction value chain – that is, via the integration of formerly specialist builders into development, financing and property management. This transformation has been blurring boundaries between construction, financing and property services, formerly discrete functions within the value chain. With these changing institutional relations the industry is also seeing the logic and language of finance (notably the calculative techniques and methods of risk management) as a driving force in the building process in the way that main contractors organize building sites. One of those calculative dimensions is the process of risk shifting onto labour. Extensive sub-contracting relationships have always been partly about allocating risk in the construction industry in Australia, as elsewhere. But with new financial and organisational models, the industry has developed techniques including a much more extensive contractual pyramid to transfer risks down towards individual workers, who are

Subject articles

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increasingly expected to manage a range of risks themselves, including income protection, superannuation, workers compensation and the provision of tools and equipment. Builders become property and financial services companies Thirty years ago in Australia head contractor companies in commercial construction (building offices, hotels, shopping centres and large residential buildings) were largely specialist, regionally-based organisations. Multiplex, for instance, was a commercial head contracting company that grew to dominate this sector in the Western Australian capital city of Perth, partly on the basis of its special relations with unions and state governments there. Its move to the eastern states was initially mainly an attempt to extend that business to the larger states in Australia. Grollo Construction, likewise, was a dominant head contractor in the Victorian capital city of Melbourne, a city defined again by distinct union-management relations. Its expansion outside of Melbourne was also largely initially an attempt to spread its head contracting business to other states. Until the early 1990s, therefore, these head contracting companies were defined largely by their role within the increasingly nationally organised construction value chain. The business of head contractor was managing labour and sub-contractors on-site and ensuring the timely supply of buildings on a range of contractual terms. These companies typically undertook work commissioned by governments, large corporations and insurance companies (who typically bought and owned the buildings for direct occupancy or as an investment for long term ownership). But a number of global and sectoral transformations in the last thirty years have changed the relations between property development and head contracting, between head contractors and sub-contractors, and between property development and financing. One of the most important developments here is that several head contractors have not

Subject articles

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only become national and then international in their scope (Multiplex famously nearly risked and lost it all when they built the new Wembley Stadium, but since then, and along with Lend Lease, Leightons and Grocon, they have established significant operations in Western Europe and the Americas). Just as significantly, they have also extended their activities directly into property development, property management and even financing. When we look at these modern construction companies, two things stand out: 1. Increasingly what construction companies do off-site (and

outside of supervising the actual building work per se) is as important to their success and thinking as what happens on-site.

2. Construction companies today are as much about investment banking and risk trading as putting up buildings.

We will consider each of these developments in turn. Before doing so, it is important to note one of the key global developments in capital markets and financial institutions that has produced a growing separation between tenants and property ownership – the evolution of commercial property into an asset class. The cityscape becomes an asset class From the 1980s, an increasing determinant of what buildings were put up and where (and the pricing of those developments) could be found in the decisions made in global capital markets. Part of that process involved a reorientation of corporations and governments away from commissioning buildings to own and occupy, and for financial institutions to develop securitised investment vehicles like Real Estate Investment Trusts (REITs) to become the owners of property developments. This financial innovation meant that investors could buy into the income streams on buildings without the need to own the bricks and mortar. It gave property a new globalized liquidity and helped make commercial property into an asset class for global investors.

Subject articles

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Further, financial institutions found ways of profiting from providing financial services to the property sector, rather than necessarily owning the property itself, and as governments looked to reduce the book value of their debts by selling fixed assets like buildings, new opportunities opened up for property developers. As this process grew, there was less need for former large owners like governments and insurance companies to be part of the construction process as managing clients. As the then Property Council of Australia CEO Peter Verwer astutely noted, it was not just that asset ownership was separated from occupancy: “The...property sector has been very much integrated into the capital markets sector over the past decade. It thinks like the capital markets sector, and the main questions it asks itself are: where should we invest this money, and what risks are attached to it? The clients (owners) in the property sector have a different role than they did even a few years ago, and it is a more distant role from the construction sector than had previously existed … in the past the clients used to be part of the manufacturing process that was the construction industry-they were deeply embedded in the food chain… (and) all had chief engineers, big construction departments and all the rest of it. They do not do that anymore; in fact, those positions do not exist at all” Verwer (cited in Coates and Toner 2006). In a strange way this meant that, with property developers increasingly interested in building developments to sell into securitised vehicles, the balance of power between client and the head contractor tilted toward head contractors, if for no other reason than the fact that, in a highly contractual environment, technical knowledge about the qualities, capacities and applications of a building, and its likely revenue-generating capacity is effectively financial power. This was occurring just as head contractors realised that in such an environment of property-as-asset class they too could become property developers.

Subject articles

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Construction companies become risk traders As property development and finance merged in new ways, forms and spaces, there were opportunities for head contractors to transform themselves into players in financial markets as well. They not only build, they started also to organize finance, manage financial risks, and to manage the property trusts that were becoming the ultimate owners of the buildings. Gradually, head contractors started to develop their own buildings, organise the financing for such developments and to manage the property trusts that became the ultimate owners of these buildings. It was not, of course, pre-ordained that it would be those firms that provided the most direct institutional expression of the growing integration between construction and finance. Indeed, Multiplex was later bought out by a property service conglomerate. But, as the John Crittall epigraph emphasises, it was perhaps because the head contractors were at the intersection of so many points of contractual negotiation and risk management that their capacities for negotiating around and managing risk had already become a key to profitable head contracting. Indeed, it might be conjectured that, in dealing with the militant and organised workplaces in Australia that confronted them over the last thirty years, head contractors were educated by labour in managing risks on-site. We know this militancy meant that Australian construction sites were innovative (the tower crane), safer than their counterparts in Britain and the US, and productive. Militant and organised labour put a premium on managerial expertise. Out of these processes head contractors now began increasingly to deploy those capacities in novel ways. One was to use their advantage in risk calculation and its relocation to profit from (in financial terms to ‘arbitrage’) their position against both clients and sub-contractors. Using financial risk terms, here is how a former senior manager at one of the

Subject articles

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leading construction companies put it: “…I believe there’s an arbitrage of knowledge between clients and head contractors, and head contractors and sub-contractors, and the arbitrage is unreasonably leveraged to the benefit of the head contractors almost all the time” (cited in Rafferty et.al 2011) This statement identifies sub-contractors as a key target for arbitrage within the building process, and we know that mid-tier sub-contractors have to regularly confront very competitive tendering and re-tendering in ways that often pre-determine shifting risk further down the contracting hierarchy. We will have more to say about the critical role of labour in that risk shifting shortly. But for now we emphasise that the head contractor use of intensive contracting to shift risk extends also to the offsite service providers like architects and engineers. In a report on commercial construction here is how one professional engineering association noted its experience of contractual risk shifting: “Relationships between client and consultant have become more contractual and adversarial, rather than co-operative. Most clients select a consultant on the low bid … The low-bid environment corrodes professional ethics and professional standards among those operating in that environment. Compromising ethics and standards allows underprizing of the necessary work to win the job. The consultant’s input is then limited by price, with an increasing likelihood of searching documents for ‘loophole’ opportunities …“ Queensland Engineers Association (cited in Rafferty et.al. 2010) In summary, a clear change in corporate organisation and logic is that key skills of senior management now lie not just in engineering and building but in finance and financial risk management. In organisations that think in terms of risk management and trading senior management in the modern construction company comes less from on-site project management and engineering and increasingly from financial markets. This can be seen explicitly in the expertise and careers of the corporate boards of the companies of which

Subject articles

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the head contractors have become part. Having established one of the key institutional expressions of finance in construction in the vertical integration of head contractors, and the increasing role of finance and risk in organising in their activities, we have set the scene for the role of labour in this process. Financialisation and labour We have already noted how contractualism has been the leading embedded form in which financial risk shifting occurs in construction. The form in which workers are engaged in the construction industry is also increasingly via contractual forms like those of sub-contractors. Thirty years ago, head contractors engaged a part of the on-site workforce directly, and had a small number of sub-contracting packages on any build. Today, head contractors employ very few onsite workers and instead manage a growing range of sub-contracting packages, which are often then re-contracted downward all the way often to individual workers. This means that workers are now usually engaged on contracts and paid for work based on task and output rather than time (metreage rates for plastering is one example). These contracts also often specifically allocate many risks previously borne by head and sub-contractors (as employers) onto labour (the requirement to self-insure around income security, workers compensation etc.). They often shift attributes of the employment relationship between several parties (such as labour hire arrangements). And they often re-situate workers from employees to de facto small businesses (so-called self-employed, labour-only sub-contractors). Despite the fact that many people are working in virtually the same labour process as wage workers, their contractual status, while often varied, generally contrives them legally to be a separate, arm’s length business. This process can be seen as a form of regulatory arbitrage: using legal re-framings to shift risks (and hence costs) without a substantive change in role.

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This arbitraging of labour law is now pervasive, and includes a significant proportion of construction workers engaged under what has been described as ‘sham contracts’: contracts for labour only services deliberately constructed to avoid the obligations of employment law. While there are debates about the exact size of sham contracting, few doubt its scale or its cost significance for building construction. Not only is the construction industry the largest sector for independent contracting, it is the largest sector for sham contracting as well. According to one of Australia’s leading labour law academics, this process is becoming standard practice: “The reality…is that any competent lawyer can take almost any form of employment relationship and reconstruct it as something that the common law would treat as a relationship between principal and contractor (or contractor and subcontractor), thereby avoiding the effect of much industrial legislation. Establishing or reviewing the terms for such arrangements is routine work in any commercial practice.” (Andrew Stewart 2005) What is clear, then, is that pyramid contracting and the financial logic of risk shifting and arbitrage have, in combination, given head contractors the incentive and opportunity to drive risks down the contracting pyramid, with direct implications for labour, but not only labour. In cases where labour is organised or powerful, and can resist these pressures, it is often mid and lower tier subcontractors that are squeezed. But the whole process of risk shifting in construction is ubiquitous, contractualism is an important form it is taking, and that process is conflict-laden. Indeed, one of Australia’s leading building management academics refers to this as an: “All pervasive subcontracting model, which has fragmented the construction industry, leading to a multitude of problems which include abuses of human rights, corruption, under-investments in people and knowledge development and a confrontational culture of risk transfer where there is little incentive to innovate and where risk is passed to the point of least resistance and lowest capability (Loosemore 2015f).

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Summary This contribution has attempted to engage with the twin issues of finance and construction, and finance and construction labour. It has established that we can see finance and construction’s growing integration, both institutionally in, for instance, the vertical integration of the property value chain, and in a growing risk calculus organising the construction labour process. While there has been considerable and justifiable concern about the deleterious effects of the growing scale of sham contracting in the industry, we have sought to show that it is a development that cannot be addressed in isolation. It is directly tied into broader and deeper developments in construction and the property services industry. As Toner and Coates noted several years ago “...what appears on the surface as simply short-term competitive advantage through the use of non-standard labour… has foundations in a deeper competitive process, as labour markets, firms and financial assets are thrown together into constant competition across industries and locations.” (Toner and Coates 2006:106) Since 2006, we can see an acceleration in these dynamics. The construction companies are increasingly global in their scope, either directly by expanding their offshore activities, or indirectly by being absorbed into larger corporate groups, notably Multiplex’s takeover by the global asset management group Brookfields. The link to labour here is the increasingly explicit discipline of globally-competitive rates of return entering building. So we have the ultimate liquidity (i.e. global mobility of investment) confronting the ultimate fixity (buildings are erected in a specific location), so that the risks of fixity have to be shifted, especially onto labour. But not just onto labour, but also onto security buyers, who of course include workers too as superannuation savers. This puts the construction industry as a leading industry in finance, risk, labour and securitization.

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The issue of ‘sham contracting’ therefore needs to be understood as just one (albeit important) aspect of a significant and wider process of risk shifting occurring up and down the construction contracting supply chain (and beyond). To extend the risk/finance metaphor, ‘sham contracting’ of labour can be thought of as exploiting (or arbitraging) the regulatory gaps between ‘contracts of’ and ‘contracts for’ service present everywhere but especially in pyramid contracting production systems. This raises the issue of how labour at the point of production can challenge and perhaps change the momentum of these developments? This contribution suggests that the processes driving downward pressure at the site level are occurring not so much, or just, from dodgy sub-contractors, but as systematic processes of risk shifting. There are unlikely to be easy answers to the question, but identifying and naming the new ways that firms in construction think and organise is an important first step in that process. —————————— References Crittall, J (1997), ‘Industrial relations risk in the construction industry - a

contractual perspective’, in T Bramble, B Harley, R Hall & G Whitehouse (eds.) (1997), Research in Industrial Relations: Proceedings of the 11th AIRAANZ Conference, Brisbane, 30 January-1 February, Association of Industrial Relations Academics of Australia and New Zealand: Brisbane, 432-37

Loosemore M (2015f) Innovation, Strategy and Risk in Construction Turning Serendipity into Capability, Routledge, London

Rafferty, M., Wright, S., Chan, S., Fattore, T. and Schutz, H. (2011) Contracting arrangements in the Queensland Construction Industry: Exploring Factors That May Give Rise to ‘Sham Contracting’, commissioned report to Industry Reference Group on Sham Contracting, 2011, Workplace Health and Safety, Queensland, Brisbane, August.

Stewart, A (2005) ‘Submission on Independent Contracting and Labour Hire’, to the House of Representatives Standing Committee on Employment Workplace Relations and Workforce Participation, Canberra, April.

Toner, P and Coates, N (2006) ‘Competition and the Growth of Non-Standard Employment: The Case of the Australian Construction Industry’, Labour and Industry, Vol. 17, No. 2, December, 99-118.

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STATUTORY MINIMUM WAGE IN GERMANY, A CRITICAL ACCOUNT AND EVENTUAL IMPACTS ON THE CONSTRUCTION INDUSTRY Since 1st January 2015 a statutory minimum wage of €8.50 per working hour has been in force. If everything is carried out in good order, about 5 million employees will receive substantially higher wages. If, however, all the many breaches occur to the minimum wage, about which in recent weeks much information has been published in the German media, it will be fewer who benefit from increases up to the minimum wage. The law is in force now. Some specific exceptions have been formulated - young people, trainees, long-term unemployed, newspaper-deliverers – but a number of open questions remain, probably until a legal clarification at the court of justice. Direct effects on employees need to be kept under observation. The minimum wage law is a great achievement for employees on mini wages. But the law may also be a challenge for the autonomy of collective bargaining and the many agreements concluded with trade unions. Many questions are still open that can be assessed only through developments and careful observation. The discussion in recent years For nearly 20 years there has been a debate in Germany in all political parties, trade unions and employers’ federations, as well as churches and social institutions, about the introduction of a statutory minimum wage or a generally binding minimum wage to be negotiated for individual sectors between trade unions and employers’ federations. In this debate different stages can be discerned in recent years. Over decennia the ‘statutory minimum wage’ was not a

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Ernst-Ludwig Laux

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great subject in the environment of collective bargaining, in trade unions and social policy. Collectively agreed and paid rates were recognised in companies and governments as minimum wages. Since the fall of the Wall and the removal of the borders between East and West Germany in 1989, however, the subject of wage and social dumping in Germany has been increasingly on the political agenda. Through the freedom of movement of workers as well as services in Europe and the permanently rising number of people working across the borders predominantly from low-wage to high-wage countries, the subject has taken a new explosive force. As a consequence, the European as well as German legislators enacted the Posting Directive in 1996 – in particular for the construction industry – which regulates that collective agreements and legal regulations at the place of work are in force also for employees from low-wage countries. Since 1997 the industrial partners of the construction industry have concluded agreements for East and West Germany which have subsequently been declared generally binding. Since the enactment of the legal regulations of the so-called ‘Agenda 2010’ by the red-green Federal Government in 2003, the subject of a statutory minimum wage has been permanently high up in the socio-political discussion as the flexibilisation of working conditions and the increase in precarious employment wage dumping have become great problems in the country. The governing (CDU/CSU and FDP, Christian and Liberal) parties decided in their coalition agreement that existing minimum wage agreements were to be scientifically examined in order to obtain a basis for deciding whether regional or additional sectoral minimum wages could be introduced. The results of various studies were partly contradictory. At any rate, up to 2013 no legal decisions were made by the coalition government. Following the demands of the Social Democrats, the new large coalition between Christian and Social Democrats (CDU/CSU and SPD) wrote the introduction of a statutory minimum wage of €8.50 into the coalition agreement. The law was enacted by

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Parliament and came into force from 1st January 2015. It is worth noting that the majority of all European states have had regulated statutory minimum wages and conditions for many years and Germany has been rather the exception to date. Wage policy and minimum wages Since 1949, when the autonomy of collective wage bargaining for all sectors was enacted by the German Constitution, sectoral trade unions and the respective employers’ federations have concluded wage, framework and special agreements which were binding for a defined space of time. Wage agreements have been normally concluded for 12 months, sometimes also 2 years, framework agreements on working time, holidays, extra-pay, time of notification, etc. often for 4 years. The negotiations have been held autonomously. Diverse industrial actions, strikes and lockouts could be applied to achieve a result. The state has not been allowed to intervene in these autonomous negotiations. It is only within a process of conciliation that politicians function as mediators. According to the Act on Collective Agreements (‘Tarifvertragsgesetz’), working conditions regulated by collective agreement are directly binding for the trade union as well as employers federation memberships and can be claimed at labour courts. Thus for decennia the collective rate has been at the same time the minimum wage in firms that has to be paid to employees according to their respective level of qualification. Almost all employers have been paying collective rates in order not to drive unorganised employees into the arms of the trade unions. The Act on Collective Agreements also regulates that individual sectors, if they are organised above 50% in their respective employers federation, can apply for generally binding terms to the Federal Government, which means that the existing collective agreements can be extended to all employers and companies that are not organised. This has been used by only a few sectors over the

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last 65 years. Wages and salaries have only minimally been under generally binding terms, working time, holidays, extra-pay and hard-work bonus however very frequently. Collective bargaining policy in the construction sector Very early on, from 1954, the construction industry has been using generally binding terms in particular in order to conclude special agreements for work dependent on weather conditions, seasonal changes, for holiday pay and supplementary pensions in the whole sector and to make them applicable to all companies. As a consequence, based on these collective agreements, social funds for the construction industry have been set up in order to guarantee the implementation of collective agreements. In both the main and secondary construction industry there exist some special conditions, such as a small-firm structure, mobile workplaces as well as weather dependency, to mention only a few specificities, which also made generally-binding terms attractive already at an early stage to the construction trade union. Almost all other sectoral trade unions have rejected this instrument for decennia and called it an expression of weakness in social conflict and collective bargaining policy. Trade unions in public administration and services, in the metal and chemical industries as well as mining managed to build up trade union pressure to achieve good collective agreements and to enforce the implementation of collective regulations, also and above all through organised works councillors at the workplace. In particular through the opening of the border 1989 in Germany and the freedom of movement in the European Union in 1993, wage and social dumping at the workplace was increasingly observed in the small-enterprise segment of the construction industry. Construction enterprises of the new federal states in East Germany, of southern Europe and also Great Britain took advantage of low wages in these regions in order to obtain

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construction contracts at dumping conditions in West Germany. Construction workers from all those so-called ‘low-wage regions’ brought their wage and working conditions so-to-speak in their rucksacks onto German sites and formed ‘islands of foreign rights’, as it was often called by lawyers. The stipulation of trade unions since the mid-19th century, ‘equal wage for equal work at the same place’ was evaded by social dumping and new regulations needed to be developed. After active lobbying of the European construction unions, the Posting of Workers Directive was enacted for the European Union and the Posting Act was passed in Germany by a conservative-liberal government. This Act regulated that national minimum wages could be agreed by the industrial partners and all the other generally binding regulations were enforceable also upon foreign enterprises. This was the hour of birth of a sectoral minimum wage by agreement in Germany, which was enforceable and also controlled by the legislator upon all employees irrespective of the country of origin. Unfortunately, in this Posting Act only the construction industry and construction-related services are cited. Why was it that other sectors were not also included in this Act? According to my opinion, this fact ought to be explored thoroughly, but I think that other sectors and above all also the respective trade unions could not or did not want to think that at one time also their sector might be affected by wage and social dumping. In many consultations with wage experts of the individual unions of the trade union federation (DGB) and above all in the wage policy committee, this opinion was dominant. In hindsight from the present day, it may be that since those days (1995) the environment of collective bargaining has changed enormously. Wage and working conditions for employees have deteriorated.

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Statutory Minimum wage for all from 1st January 2015 Since the mid-1990s, working relations and therefore working conditions have been eroded; precarious employment and low-wage work have increased substantially. Neo-liberal economic political thinking has substantially contributed to this. The employers’ federations have changed and ceased to regard wage policy as an important issue. Their rate of organisation has dropped noticeably. Through the ‘Agenda 2010’ of the red-green Federal Government from 2003, the deregulation of the labour market was initiated, leading to a noticeable weakening of the trade unions. In some sectors collective agreement were not respected and new ones could no longer be concluded. Self-employment, bogus self-employment, illegal employment, task work, black work, part-time work, under-employment, work without counting working hours, many other examples can be mentioned, are increasing more and more, even immoral wages of €2.50 – according to some court

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Minimum wages agreed for 2015 with the construction union (IG BAU):

Main Trades West Germany unskilled 11.15 €

Main Trades West Germany semi-skilled 14.20 €

Main Trades East Germany unskilled 10.75 €

Roofer Germany 11.85 €

Scaffolder Germany 10.25 €

Mason West Germany 11.25 €

Mason East Germany 10.66 €

Painter West Germany 9.90 €

Painter East Germany 9.90 €

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decisions – are not even a rare occurrence in some regions and sectors. The coverage rate of collective agreements has also dropped to an historic low for Germany of under 60 percent. The Social-democratic Party (SPD), under whose co-responsibility many of these developments have taken place, have come to an agreement with the Christian-Democrats (CDU/CSU) after long and heated discussions. Of course there are many exceptions and every day since 1st January new exceptions are being demanded. This will certainly continue in the future, but more important will be the observation on the spot: how will the minimum wage be implemented in reality and will the employees receive at least €8.50 per hour? Only in a few months’ time will we be able to take stock because a basic understanding of a statutory minimum wage has first of all to take root in Germany. In other European countries this has lasted for years, sometimes even decennia, if we think back to, for example the ‘SMIC’ in France. Non-profit institutions, charities and sports clubs are already arguing so fiercely against the minimum wage that further exceptions cannot be excluded. Repercussions of the statutory minimum wage on sectoral minimum wages and collective agreements What will be the impact of the new minimum wage in Germany on collective bargaining, collective wages, the income of employees, and on the strategy of trade unions and employers’ federations? This question has hardly been raised yet and is also difficult to answer at the present time. Research results from other European countries are also hardly available because there statutory minimum wages were introduced many years ago and are part of an uncontested practice in the work environment. Anyway, in many European neighbouring states, collective agreements are generally binding and have the same effect as a statutory minimum wage. At present the general pleasure about the minimum wage is great among employees, trade unions and

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the Social-Democrats, but, as a construction trade unionist who in a position of responsibility has observed the problems on construction sites, I know that control, especially also of working time, is the essential condition for compliance. According to the Posting Act, besides the minimum wages all other core components of generally binding collective agreements have to be respected, including working time, holiday pay, regulations on travelling time, hard-work bonus etc. This is not regulated by the Minimum Wage Act and I fear that employers will try to pay the minimum wage but include other income components, in the short or middle term, which is hardly controllable by outsiders. However, if the minimum wage is implemented in all sectors, this may produce the effect that collective rates have to be raised in order to make the distance between the minimum and the wage for qualified work again noticeable. From a trade union point of view, this has to be assessed positively as leading to a rise in the wage level. But if, like in the construction industry, minimum wages are relatively high, the question arises, if and how they can be improved in future collective bargaining. Statutory minimum wage: chances and risks As the statutory minimum wage in Germany has been in force for only a few weeks, possible positive and negative effects shall be highlighted through a few scenarios: Chance: The present basic morale is very good and has to

be taken advantage of. Payment of less than €8.50 is denounced as illegal and immoral. This enforces a certain social control.

Risk: After two months, reports in the media and networks are increasingly frequent that wages of e.g. €6.50 have not been raised to €8.50.

Chance: Some positive examples are publicly presented and trigger collective trade union activities in enterprises in which the minimum wage is not paid.

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Risk: The minimum wage of €8.50 is being paid but x-mas or additional holiday pay is being scrapped. Afraid to lose their jobs, those affected do not defend themselves.

Chance: State control is reinforced and works more efficiently.

Risk: The control institutions keep being short of staff and work as before without a satisfactory success rate.

Chance: From 2017 the minimum wage will be considerably raised.

Risk: The economic development worsens; the minimum wage is not raised over years or even cut, such as happened in Greece, Spain and Portugal.

Chance: Collective wage rates above the statutory minimum wage can be raised by trade unions in order to restore the differential between simple and qualified labour.

Risk: Hitherto existing higher sectoral minimum wages in the construction industry are not raised any further because the employers argue that there can only be one minimum wage for all.

Many more examples could be presented, but I shall leave it for the time being. In succeeding CLR-News there will be more information about the ‘social experiment of the statutory minimum wage in Germany’.

CURRENT STATUS OF MINIMUM WAGES IN EUROPE 2015 With the introduction of a statutory minimum wage in Germany in January 2015, there are now 22 out 28 EU member states that have a legally binding national wage floor. The six remaining countries with no national minimum wages are the Nordic states - Denmark, Finland and Sweden - plus Austria, Cyprus and Italy. Austria and the Nordic states,

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Thorsten Schulten

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however, still have rather high collective bargaining coverage, so that minimum wages are largely guaranteed by collective agreements (Schulten 2014a, 2014b). Italy is now heavily debating the issue and might become the next country in Europe to introduce a national minimum wage1. Absolute minimum wage levels Considering the absolute minimum wage levels measured in Euro, there are huge differences between the EU countries (Figure 1). In principle, one can distinguish three different groups: the first, with relatively high minimum wages, encompasses seven states from western Europe, headed by Luxembourg, with a minimum wage of 11.12 Euro per hour, followed by three countries with minimum wages above 9 Euro including France (9.61 Euro), the Netherlands (9.21 Euro) and Belgium (9.10 Euro) and three further countries with minimum wages between 8 and 9 Euros, including Ireland (8.56 Euro), Germany (8.50 Euro) and the UK (8.06 Euro). In the case of the UK the minimum wage level measured in Euro is somewhat misleading since it is heavily influenced by the current exchange rate between the Pound and the Euro. Taking into consideration the exchange rate of the year 1999 when the UK minimum wage was introduced, the level would today stand at 9,87 Euro per hour (Schulten 2015). A second group comprises mainly countries from Southern Europe plus Slovenia. Here the absolute minimum wage levels vary between 4.57 Euro in Slovenia and 3.04 Euro in Portugal. Finally, a third group, where minimum wages are below 3 Euros, is composed of ten countries coming exclusively from Central and Eastern Europe. Here the range is from 2.42 Euro in Poland down to 1.06 Euro in Bulgaria. Because of the lack of national minimum wages, the minimum wage level in countries with sectoral minimum wage regimes can be determined only by analysing the lowest

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1. On the Italian debate see the various contributions in Quaderni rassegna sindacale No. 4/2014

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wages laid down in collective agreements. The few recent studies on this indicate that two groups of countries have to be distinguished (Eldring and Alsos 2012; Kampelmann et al. 2014). On the one hand, there are the Nordic countries as well as Italy, whose minimum wages laid down in collective agreements are substantially above national minimum wages in the other EU states. On the other hand there are countries, such as Austria and Cyprus, in which collective agreements sometimes include rather low wage grades which might be below national minimum wages in comparable western European countries. Figure 1: National Minimum Wages in the EU 2015*(per hour, in Euro)

*Effective: 1 January 2015, calculation in Euro with the average exchange rate of 2014 - Source: WSI Minimum Wage Database, Online available under http://www.boeckler.de/wsi-tarifarchiv_44064.htm

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Relative minimum wage levels A comparison of minimum wage levels in Euro, however, has its limitations as it neither considers the different cost of living nor the different wage levels between the various countries. The latter is considered by the so-called ‘Kaitz index’, which determines the relative minimum wage level measured by the minimum wage as a percentage of the national median wage2. The available data on this, which are published regularly by the OECD, are based, however, on non-harmonised national data sources and can thus be regarded only as approximate values. According to OECD figures, the relative minimum wages in 2013 varied between 61 per cent in France and Slovenia and 36 per cent in the Czech Republic with the majority of countries having a value of between 40 and 50 per cent (Figure 2). In Germany, a minimum wage of 8.50 euros per hour in 2013 would have represented 50 per cent of the German median wage. In the Scandinavian countries, which have a strong tradition of a solidary wage policy with particular support for low wage groups, as well as in Italy, the Kaitz index for minimum wages laid down in collective agreements is generally over 60 per cent and thus well above the level of countries with universal minimum wage regimes (Eldring and Alsos 2012; Kampelmann et al. 2014). Measured in terms of respective national wage structures, statutory minimum wages in Europe are often at a relatively low level. All of them lie below the so-called low-wage threshold, which by international convention stands at two-thirds of the median wage. In conformity with the poverty threshold used in international poverty research, one can call a wage that lies below 50 per cent of the median wage a ‘poverty wage’. In many EU countries, accordingly, the statutory minimum wages are not above the poverty wage level.

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2. The median wage is the wage between that half of all employees who earn more and that half of all employees who earn less. It must be distinguished from the average wage, which is calculated as the arithmetical mean of all wages.

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Figure 2: Minimum wage as a percentage of the median wage for full-time employees, 2013

* On the basis of a fictive minimum wage of 8.50 Euro per hour - Source: OECD, for Germany: calculations of the WSI based on data from the Federal Employment Agency. A European minimum wage standard? After the new President of the European Commission, Jean-Claude Juncker, repeatedly announcing his sympathy for a European approach on minimum wages, the debate on a possible European minimum wage standard returned to both the political as well as the trade union agenda (Brischoux et.al. 2014; ETUC 2014; Schulten 2014b). There are both normative and economic arguments to justify a European minimum wage policy. It can first of all be seen as an approach to tackle the often rather low levels of minimum

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wages in Europe, which do not fulfil the criteria of ‘fair’ or ‘equitable’ wages as laid down, for example, in the Council of Europe’s European Social Charter (Schulten 2014b). Moreover, as minimum wages have a strong influence on overall wage developments in many European countries, they are an important instrument to prevent downward wage competition with its negative effects for growth and employment. Considering the large economic differences within Europe, it is obvious that a European minimum wage standard could not be based on the absolute but only on the relative minimum wage level. A broadly-debated suggestion is, for example, to increase all minimum wages up to 60 per cent of the respective national median wages. According to a study by Eurofound, such a European minimum wage standard would benefit about 28 million workers, representing about 16 per cent of all workers in the EU (Aumayr -Pintar et.al. 2014). —————————— References: Aumayr-Pintar, C., J. Cabrita, E. Fernández-Macías and C. Vacas-Soriano.

2014. Pay in Europe in the 21st century, Dublin: Eurofound. Brischoux, M., A. Jaubertie, C. Gouardo, P. Lossot, T. Lellouch and A.

Sode (2014): Mapping out the options for a European minimum wage standard, Trésor-Economics No. 133.

Eldring, L. and K. Alsos (2012): European Minimum Wage: A Nordic Outlook, Fafo-Report No.16. Online at: http://www.fafo.no/pub/rapp/20243/20243.pdf.

ETUC (2014): Discussion Note on Minimum wages in Europe, Paper for the ETUC Collective Bargaining Committee Seminar in Warsaw 27- 29 October 2014, http://collective.etuc.org/sites/default/files/DISCUSSION%20NOTE%20WARSAW%20CONFERENCE%20final%20EN_0.pdf

Kampelmann, S., A. Garnero and F. Rycx (2014). Minimum wages in Europe: does the diversity of systems lead to a diversity of outcomes? European Journal of Industrial Relations. DOI: 10.1177/0959680114527034.

Schulten, T. (2014a): Minimum Wage Regimes in Europe … and What Germany Can Learn from Them, Friedrich Ebert-Stiftung. Berlin. Online at http://library.fes.de/pdf-files/id-moe/10558.pdf.

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Schulten, T. (2014a): Contours of a European Minimum Wage Policy, Friedrich Ebert-Stiftung. Berlin. Online at http://library.fes.de/pdf-files/id-moe/11008.pdf

Schulten, T. (2015): WSI Mindestlohnbericht 2014 – stagnierende Mindestlöhne, WSI-Mitteilungen Vol. 68 (2), forthcoming

On the Italian debate see the various contributions in Quaderni rassegna sindacale No. 4/2014.

The median wage is the wage between that half of all employees who earn more and that half of all employees who earn less. It must be distinguished from the average wage, which is calculated as the arithmetical mean of all wages.

THE STRUGGLE FOR SWISS MINIMUM WAGES GOES ON Last year, Swiss voters clearly rejected the popular initiative for the introduction of a statutory national minimum wage of CHF 4000 (3300 euro) per month, respectively CHF 22 (18 euro) per hour1. The initiative was launched by the Swiss Trade Union Confederation (SGB-USS) which collected enough signatures to force the government and parliament to hold a binding popular ballot on its proposal. The proposition was branded, somewhat disingenuously, as a call for the ‘world’s highest minimum wage’. In fact, however, it would have lifted Switzerland’s low income earners only to a level of 60% of the country’s median income. In addition, the proposed amount also appears bigger than it really is, if one considers the exceptional strength of the Swiss Franc as well as the country’s extremely high living costs. Swiss consumer prices are 58% above the EU average, including 55% above the price level of neighbouring Germany. Switzerland’s trade unions were therefore very disappointed about the voters’ rejection of the minimum wage initiative.

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Hans Baumann, Andreas Rieger

1. For the exchange rate CHF/Euro we are using the ‘old’ rate before the January- decision of the Swiss national bank to float the currency. The old exchange rate is closer to the purchasing power.

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The opportunity to abolish low wages in rich Switzerland and put a stop to wage dumping was missed. Thanks to the popular initiative, however, the trade unions have succeeded in setting CHF 4000 as a benchmark for a fair minimum wage. Progress in low wage sectors The proposition for a statutory minimum wage was the peak of a trade union campaign for minimum wages, going on for many years. In the construction sector, collectively agreed minimum wages have a long tradition and have for several years reached a level clearly above the initiative’s level. The actual minimum wage for an unskilled construction worker is more than CHF 4800 (4100 euro) per month. In many other sectors of the economy, this is not the case. Vast low wage sectors with wages clearly below CHF 2500 existed up to the turn of the 21th century. That’s why the Swiss trade unions in 1998 launched a campaign ‘no wages below CHF 3000’. This campaign was supported by large sectors of society and received much sympathy. As a result, the minimum earnings in low wage sectors like the hotel industry or retail increased significantly between 2000 and 2010. While there was significant progress in sectors covered by collective agreements including minimum wages, the problem remains that in many branches and companies collective agreements do not exist. The coverage by collective agreements in Switzerland is comparatively low. The trade unions have succeeded in increasing the coverage rate from about 45 to 50% in the last 10 years. But this still means that half of those employed are not protected by collective wage agreements. Such is the situation, for example, in small and medium retail trade enterprises, in horticulture and in the transport industry. This was one important reason behind the proposition for a statutory national minimum wage. Historical agreement in the machine industry Although the referendum on the statutory minimum wage was lost, the campaign for this project had a positive impact

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on the on-going negotiations on collective wage rates over the past few years. One important example is the collective agreement in the machine, electrical and metal industry2. In this key industry, there has for 75 years been a collective agreement, initially also called ‘peace agreement’, which since first being concluded and despite numerous revisions and improvements, has never contained standard or minimum wage rates. Annual negotiations on raising employee earnings took place at workplace level between the workers’ representatives and the individual employers. The trade unions may be called upon in the event of a dispute. But this ‘Swiss model of social partnership’ seems now to be history. For many years, the trade union Unia has been demanding that pay provisions be included in these agreements. 2013 a historic breakthrough was achieved. The parties agreed on minimum pay rates for qualified and unqualified workers, which vary according to qualifications and regions. For unqualified workers, the minimum wage is just about at the level contained in the minimum wage initiative (CHF 4,000 with 12 monthly wages). Only for some border regions, where wage levels are significantly lower, was a slightly lower minimum wage agreed with longer transition periods. A large number of companies in other sectors have also raised minimum wages to the level demanded by the initiative. They include hard-nosed discounters such as Aldi and Lidl as well as fashion & shoe retail chains (H+M, Bata) and florists’ and bakers’ associations. These increases would not have been possible without the initiative, and thanks to the initiative thousands will enjoy a wage increase. Statutory minimum wages at regional levels Some trade unions and left parties are following the path of minimum wages at the regional level of the Swiss cantons. As a first canton, the canton of Neuchâtel has introduced a

Subject articles

2. With more than 100,000 employees, the machine industry is more important for the Swiss economy than is the financial and banking sector. That applies also to its share of added value.

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statutory minimum wage of CHF 3640 from 1st January 2015, taking in account the lower level of wages in this region. In the canton of Jura the statutory minimum wage has passed parliament and will be introduced soon. Other cantons will probably follow. All trade unions will now continue to do their utmost to fight against low wages and wage dumping through collective agreements. The bone of contention was not so much the entitlement to a minimum wage of CHF 4000, but its enshrinement in national law. So the ‘No’ to the initiative should not be interpreted as a ‘No’ to fair pay per se. During the campaign, representatives of companies, employers’ associations and even the minister of Economics repeatedly sang the praises of the ‘proven social partnership’, citing it as the appropriate channel for fixing minimum wages. The unions will hold them to their word. They will intervene in cases where companies and associations have not yet signed any collective employment agreement and urge them to launch negotiations without delay. In sectors that do not recognise any contractual minimum wage, such as the hospitality, cleaning and industrial sectors, the unions will work to ensure that they raise the minimum wage to CHF 4000 or more. —————————— References: Baumann, Hans (2013): Redistribute! Several people’s initiatives are

responding to unequal distribution in Switzerland. In: CLR News, No 3/2013.

Baumann, Beat, Rieger, Andreas (2014): Gesetzliche Mindestlöhne in der Schweiz – eine junge Idee braucht Zeit. In: Denknetz Jahrbuch 2014.

Fahrni, Oliver (2014: Heavy Metall. Wie sich eine Gewerkschaft in der Industrie neu erfindet. Zürich.

Rieger, Andreas (2014): After the Swiss Minimum Wage Referendum. In: socialeurope.eu/2014/05/swiss-minimum-wage-referendum/

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EQUAL RIGHTS AND WAGES FOR MIGRANT WORKERS: THE EXAMPLE OF THE BATTLES IN SWITZERLAND To understand the Swiss trade union experience of migrant workers’ organising and mobilising, it is first necessary to describe the context. Behind only Luxembourg, Switzerland’s migrant density is the second highest in Europe: 24% of a total population of eight million - that is twice as high as in Germany, Italy and Austria or four times as high as in France. More than a third of the hours worked in the country are performed by migrant workers. Entire branches of the economy could not operate without them. All this is due also to highly restrictive naturalisation policies. Role of migrant workers in the economy and evolution of migration policy At the end of the 19th century, Switzerland was still a country of emigration. But since the end of the Second World War, hardly any Swiss has had to emigrate out of necessity. Thanks to its still intact industry, Switzerland’s growth in the 30 years of post-war-prosperity was such that the country had an ever more massive recourse to immigrant labour. At the end of the war, there were large reserves of job-seeking workers in Southern Europe. As a result, successive waves of hundreds of thousands of Italians, then Spaniards and Turks, and still later, Yugoslavs and Portuguese came to work in Switzerland. The Swiss authorities’ policies to regulate immigration have gone through different phases. After the democratic revolution of 1848 and until the early 20th century, a period marked by the country’s industrial take-off, official

Discussion Vasco Pedrina*

*) Central secretary, then president of the building and wood workers’ union from 1988 to 1992; president of the building and industry union from 1992 to 2004; co- president of the trade union Unia from 2004 to 2006 (www.unia.ch). From 1994 to 1998 he was also co-president of the Swiss Federation of Trade Unions (www.uss.ch), and from 2006 to 2013 vice-president of the Building and Wood Workers’ International. At present, he is a member of the foundation board of the Global Labour Institute.

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immigration policy was characterised by openness. Switzerland was at the time a country of refuge for many of the trade union activists and political refugees who marked the history of the labour movement. The policy of restricting immigration by quotas began during the First World War and continued after it under the influence of unemployment, conservative movements, and Nazism-Fascism. A return to an open immigration policy, at least in relation to the citizens of the European Union (EU), coincided with the entry into force in 2000 of the bilateral agreements between Switzerland and the EU. As a result of a popular initiative launched by the populist and xenophobic right, the Swiss people decided in a vote on 9 February 2014 to call into question the Switzerland-EU agreement on the free movement of persons, not without provoking a crisis in the country’s relations with the EU, whose outcome is still uncertain. In the period of large-scale immigration during the 1950s and 1960s, not only xenophobic forces called on the Swiss authorities to implement a more restrictive immigration policy, but also trade unions, under pressure from their national base. National workers regarded the new labour force from outside the country as a threat to wages and jobs, and were receptive to the lure of xenophobic voices. In any capitalist system, some employers have no qualms about using migrant workers to put downward pressure on wages. There are two ways to resist that pressure: either a common, national-immigrant struggle against wage and social dumping, or a demand for quotas in the hope that the shortage of labour thus created will automatically lead to an upward pressure on wages. History has proven the second path to be a dead end. For one thing, any quota system is inevitably accompanied by a discriminatory status for migrant workers. And discriminatory situations lead to deteriorated wages and working conditions in a wage dumping dynamic. Moreover, in economic booms, employers circumvent the quota system in order to hire undocumented migrant workers under deplorable conditions. Lastly, such discrimination is a

Discussion

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source of division among workers, undermining the capacity for trade union struggle and bargaining. One of the main goals of the quota system, with its discriminatory rules, was to do everything possible to prevent a majority of the migrant workers from staying permanently in the country. The status supposed to best serve the purpose of realising the principle of a constant rotation of migrants was that of the seasonal worker. In its first phase, seasonal workers were throughout their lives unable to acquire even an annual residence permit. From a human rights perspective, the seasonal workers’ status was a disgrace for Switzerland: demeaning ‘border medical examinations’, prohibition to change jobs, inhumane prohibition of family re-unification, tens of thousands of hidden children. In sum, a system that is reminiscent of yesterday’s South African apartheid or the ‘kafala’ system for migrant workers in today’s Qatar! Organising migrant workers into Swiss trade unions in the 1960s … The history of the international trade union movement shows that, more often than not, national unions have missed the boat of integrating migrant workers into their ranks. Yet the Swiss trade union movement was among the forerunners in this endeavour, and among those that have been most successful in it. Among the key factors was the foresight both of a number of open-minded national trade union leaders and of politically mature migrant workers. That foresight lay not just in the conviction that only in unity is there strength, but also in the recognition - against the conventional wisdom - that labour immigration was not a passing phenomenon and that, despite all the discriminatory rules to impose rotation, even seasonal workers would one day be able to stay in the country with their families1.

Discussion

1. In fact a part of seasonal workers could after a few years change their status into a stable resident permit. See V. Alleva, V. Pedrina: Personenfreizügigkeit und sozialer Schutz, in Widerspruch No. 65, 2014.

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Although of moderate Social Democratic outlook, the leaders of the building and wood workers’ union already made the strategic choice to actively organise migrant workers in the mid-1960s, given the huge growth in immigrant labour on building sites. They did that despite the ‘risk’ of there being Italian or Spanish communist party activists among the migrants. For their part, those parties made their contribution by calling on their members to join the Swiss unions. It must be said this was far from being possible in all the country’s unions because, in the midst of the ‘Cold War’, the ‘red, Stalinist scare’ was deeply rooted among some of them. As a result, other unions opened their doors to migrants only 10 to 15 years later than the building workers did. This was not without consequences. Today, immigrants are under-represented in some of those unions. By contrast, 20 years later, the membership of the building workers’ union, thanks to its immigrant members, has exceeded that of the metal workers' union to make it Switzerland’s largest trade union2. The foresight mentioned earlier related also, and especially, to the modalities applied to achieve the organisation of migrant workers and to ensure that the trade union would truly become their organisation, their new homeland! Two key elements of the chosen strategy proved decisive in achieving the desired breakthrough. The first of these was the decision to appoint, as union officials, nationals of the countries of origin for the tasks of member recruitment and worker organising. A great advantage was that in the pool of newcomers there were many socialist and communist party activists with experience in social struggles. The second element was the decision to create within the union special structures for migrant workers, allowing them to organise themselves into ‘interest groups’, either according to nationality, language or on an intercultural basis.

Discussion

2. Schweizerischer Gewerkschaftsbund: Organisationen im Umbruch, Dossier No. 51. Bern 2007

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By recruiting Italian, and then Spanish, Turkish, Portuguese and Yugoslav migrants as union officials, the trade union resolved, first of all, the problem of communicating with the newcomers. Moreover, it was made much easier for the migrant workers to establish relations of confidence and identification with the union. And the creation of the ‘interest groups’ made it possible for the migrants to operate together in their own culture and thereby to articulate their demands without insurmountable obstacles. History has vindicated those who dared to leave the beaten path of ‘structural conservatism’, which is widely rooted in trade union traditions and in other European countries and has to this day often prevented the large-scale organisation of migrant workers. By the end of the 1980s, the building and wood workers’ union had 130,000 members, of whom two-thirds were immigrants3! ... and the organisation of migrant workers in today’s trade union structures Before looking at the trade union policy issues, it is useful to outline the present union organisation of immigrants, on the basis of the example of the country’s largest trade union, Unia. The union was created through the merger in 2004 of four private sector unions, including the building and metal workers’ unions. It organises some 200,000 workers, half of whom are of immigrant origin4. Their nationalities vary according to the successive cycles of immigration, and their total share of the union’s membership increases year by year.

Discussion

3. R. Fluder, H. Ruf, W. Schöni, M. Wicki: Gewerkschaften und Angestelltenverbände in der schweizerischen Privatwirtschaft. Zürich 1991. S. 419 ff. 4. Schweizerischer Gewerkschaftsbund: Organisationen im Umbruch, Dossier No. 51. Bern 2007

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The graph illustrates migrant workers’ organisation into ‘interest groups’ (IGs) within the union:

Language-based IGs now exist only in the German-speaking part of Switzerland on a local basis. Elsewhere, the IGs are structured more regionally and on an intercultural basis, which does not prevent them from occasionally holding special meetings in order to address an issue that concerns a single nationality. The IGs are statutory bodies, with representation rights at the levels of the sectoral, regional and national committees. They naturally have the right to present proposals at assembly and congress meetings. Immigrant union members receive – in addition to the services and benefits offered to all members - a range of specific services. Information is disseminated in several languages. Depending on requirements, leaflets can be translated into seven or eight languages and distributed in workplaces and neighbourhoods, or at meetings of immigrant associations.

Discussion

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Alongside the regular union journals in Italian, French and German published every week or two weeks, a newsletter in Spanish, Portuguese, Serbo-Croatian and Albanian is published every two to three months. Thematic brochures are produced in different languages and adapted to the needs of each nationality. There is a regular use of immigrant media to disseminate trade union messages. Immigrant associations are an important contact channel. But there is close collaboration also with the consular sections of embassies. Finally, increasingly close co-operation with the trade unions in the countries of origin has helped to develop an information system aimed at migrants before they leave their countries. The information for seasonal workers coming to Switzerland for the first time - particularly through meetings before the season starts - has rendered valuable services. In Switzerland’s frontier zones, full-time union services have been set up in the offices of the unions of the countries of origin. As unionised immigrants participate also in Switzerland’s regular union structures, such as the occupational groups, the union is obliged to provide interpretation services at those meetings, which represents a substantial investment. But that is the price to be paid for effectively promoting participation and integration! A large effort is made in training, both in language courses to promote integration and in remedial basic vocational training or professional development. The training courses have allowed thousands of unskilled seasonal workers to acquire basic training, to advance both in their pay and in their professional development, and to become permanently integrated in Switzerland. As regards trade union training, it comprises special courses by language group or on a multi-cultural basis for immigrant trade union members. The big battles for equal rights … In September 1990, the building workers’ union staged a national demonstration for the abolition of the seasonal worker status. The demonstration went into the country’s

Discussion

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labour history not only because of its size (20,000 demonstrators), but also because it marked the beginning of a shift to combative trade unionism, refocusing on workers’ mobilisation. The trade union campaign, which could have succeeded already in 1992 had the Swiss people not narrowly rejected the European Economic Area agreement with the EU, finally led to the abolition of the seasonal worker status, with the entry into force in 2000 of the Switzerland-EU bilateral agreements. This campaign has served as a point of reference for all the campaigns that the unions have carried out in many fields over the past 30 years. These campaigns include ones to address the particular needs of one or the other nationality. Examples include: in the 1990s, equal rights for workers from former Yugoslavia as compared to the treatment of workers from the EU; new eligibility rules for seasonal workers on unemployment benefit in Portugal during the off-season; EU citizens’ pension fund rights; in the 2000s, the long and successful battle to end visa requirements in the Dublin/Schengen area (ensuring free movement within the EU, but imposing an ‘iron curtain’ at its borders) for migrant workers from non-EU member former Yugoslav countries; and the still ongoing battle for the reintroduction of a bilateral social security agreement with Kosovo. Other campaigns have addressed the particular needs of migrant workers within the context of sectoral collective bargaining battles as well as within law-making processes. In that connection, one can refer to the two campaigns, in the 2000s, for a minimum wage of Swiss Francs (CHF) 3,000 and, starting in the 2010s, for a minimum wage of CHF 4,000. Those campaigns opened the way for a significant increase in lower wages, which was especially beneficial to migrant workers – and that despite the Swiss electorate’s rejection of a statutory minimum wage in May 2014.

Discussion

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… and to ensure unity between nationals and immigrants A logic of unity between nationals and immigrants can never be assumed, even in a country where there is a long tradition of fighting for equal rights. It is not even sure to exist between long-time immigrant residents and newly arrived migrants. This effort will always be marked by ups and downs. Even within unions, tensions can run high, especially at times when trade union policy is undergoing change. For example, the decision to fight for the abolition of the seasonal worker status was at the time contested by a conservative tendency among Swiss trade unionists, which saw the move as a threat to the material benefits that the union had gradually acquired during the years through the quotas system. Indeed, the flat-rate contributions paid to the union by the companies for seasonal workers, through the joint fund5 provided by the collective agreement for the construction industry, did in fact bring in quite a lot of money. It was of course used to deliver services to that category of migrant workers, but it also helped to finance trade union structures. Beyond persuasion through information and campaigns, the best antidote against such xenophobic venom remains a united struggle for common objectives. The 1990s and 2000s have been characterised by many political battles and company- and industry-level strikes in which such unity was obviously the key to what has been successfully achieved. In a cycle of actions, which began in 1992 with the one-week strike in the marble and granite sector against the dismantling of the collective agreement and has continued since then with numerous company-level strikes in various other sectors, a climax was reached in 2001-2002, with the construction industry’s first national strike in 50 years. While in the political arena a rise in retirement age was being contemplated, thanks to determined mobilisation and unity actions, in which immigrant workers played a big role, it was

Discussion

5. This joint or ‘paritarian’ fund is administrated by a joint committee, composed of representatives of employers and trade unions.

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possible to win an early retirement scheme that rapidly lowered the retirement age for building workers from 65 to 60 years, with a pension at 90% of their wages6. Integrating migrant workers into trade union structures is not like going on a Sunday stroll. It is not enough to offer them space in their own structures, as in Unia’s interest groups. The biggest challenge is their integration into a union’s ordinary structures and especially into executive committees and bodies at all levels. There is not only the language barrier, but also cultural differences - and the ‘home advantage’ of nationals plays a role too. It is a long process, taking more than just a few years to arrive at a point of balanced representation. And, as in the struggle for gender equality, without lasting promotional measures, there is a permanent danger of regression, the more so since the rotation of migration flows continually raises new integration challenges. That today five of the nine members of Unia’s board are ‘secondos’ (second-generation foreigners), several the sons of former seasonal workers, and that about half the union’s officials are of immigrant origin or of dual nationality nonetheless represents an achievement that the union can legitimately be proud of. The impact of migrant workers’ integration on trade union policy orientations The integration of a large number of migrant workers into our ranks has enabled us not only to avoid the decline in union membership experienced by the unions in Europe that missed the boat. It has also over time changed the union’s culture in the sense of ‘unity in diversity’, and it has, above all, contributed to increasing its combativeness. On the world stage, Swiss trade unionism had for a long time the reputation of being a rather conservative movement in an economically privileged country. Today, although Switzerland

Discussion

6. H. Baumann, D. Zenth: 2002 Breakthrough for Early-retirement Pensions in the Construction Industry. In: CLR News, No. 3/2002.

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remains a country with a high standard of living, its unions – in particular, the inter-industrial union Unia and the Swiss Federation of Trade Unions (SGB/USS) – are considered among the most innovative and combative in the European trade union movement. Much of the credit for that must go to the unionised immigrants. The combination of these new forces with what remained of the combative tradition of the national trade unionists formed during the post-war struggles made it possible, starting in the early 1990s and based on the building workers’ union, to launch a general movement for a re-orientation of trade union strategy towards dynamic and combative trade unionism. The same forces also at last cleared the way for the first steps in a profound re-organisation of trade union structures towards inter-industrial trade unionism, capable of bringing about the envisaged new policy orientations. None too soon, as the decades of post-war growth and of union strategy being increasingly limited to backroom negotiations with the employers (i.e., in the absence of the pressure of collective action) had terribly weakened trade union workplace networks and therefore also the unions’ mobilisation capability on both the collective bargaining and political fields. The long Swiss crisis of the 1990s and the breakthrough of anti-union neo-liberalism dramatically exposed those deficiencies. Consequently, a race against time was launched: regaining the will and power to strike in the social field and building a renewed referendum capacity in the political arena had become a matter of life or death. In the end, the race was won. Owing to successive mergers starting in 1992 - first in the private sector, then in the public sector - within the two main trade union confederations, and owing to a policy of openness at the confederal level to originally professional-type associations, and finally owing to the gradual rediscovery of strike action – also through the anchoring of the right to strike in the Federal Constitution in 2000 - it has been possible to

Discussion

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revive a movement that had almost slipped into political insignificance. That turnaround would almost certainly have been impossible without the input of immigrant activists and officials. Still today, although the new generations of immigrants no longer share the history of the party activists that emerged from the anti-fascist struggles, the immigrant component remains a force for progress and dynamism within the Swiss unions. Crisis in Europe, social dumping, the rise of xenophobia: yet another huge challenge to working class unity On 9 February 2014, the Swiss people said YES – in a very close vote – to a popular initiative, launched by the party of the populist and xenophobic right, demanding the removal of the free movement of persons between Switzerland and the EU, through the reintroduction of a quota system. This amounts to a deep rift, with serious implications for the Swiss economy and labour market, as well as for the trade unions and their strategic stance. A fresh surge in immigration over the past 10 years linked both to the health of the Swiss economy and to the crisis in Europe, has played its role. But there are other reasons for the vote’s result, which, among other things, relate to the refusal of the employers and the political authorities to accept a further reinforcement of the social measures flanking the free movement of persons (see below). The EU’s fading attractiveness as a project for peace and social progress, after five years of brutal austerity policies, was the final straw. But if the new Constitutional article is applied to the letter, it will have the effect of fundamentally calling into question all the agreements and relations between Switzerland and the EU, which with 58% of Swiss exports and 75% of its imports is the country’s principal economic partner, It will also re-introduce, via quotas, a system of discriminatory statuses for immigrants that would sooner or later eliminate most of our equal rights gains in the fields of wages and social benefits, hard-won over three decades of struggle.

Discussion

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As far as the trade unions are concerned, there can be no question of accepting such consequences. That is why, with a view to the negotiations that have become inevitable between Switzerland and the EU, the Swiss Trade Unions have defined three principles that must guide the resolution of the dispute. First of these is the principle of non-discrimination, the basis of the free movement of persons between Switzerland and the EU, must continue to be preserved in the future. As there can be no quota system without discrimination, that means opposing any reintroduction of such a system. Second, there must be more, and not less, protection of wages and working conditions. Those who work in Switzerland, whether they be nationals or immigrants, must receive Swiss wages, and not, for example, Polish wages. Any practice of wage or social dumping must be combated. The statutory instruments for the full application of the principle of ‘for work of equal value, equal pay in the same place’, namely in the country of destination, must be strengthened. Finally, the Switzerland-EU bilateral agreements must be maintained. In exchange for the free movement of persons between Switzerland and the EU, and in preparation for the various direct democracy votes on Switzerland-EU relations, the trade unions have over 15 years managed to build a system of flanking social measures7 to protect wages and working conditions that are among the best in Europe. Neo-liberals and neo-conservatives on the employers' side and in politics are working towards the abolition of this system and, at the same time, towards the country's isolation, in keeping with the nationalist logic of all populist, xenophobic and extreme right-wing forces. To block their advance, UNIA and SGB/USS will draw on the rich experience accumulated in past battles, using the twin levers of mobilisation and alliances.

Discussion

7. Flanking measures to the free movement of persons means a couple of accompanying measures like a tripartite control system for minimum wages. A good overview of the regulatory framework gives: Jan Cremers: In Search of Cheap Labour in Europe. CLR Studies No. 6, Country Report Switzerland. Brussels 2011. See also H. Baumann 2005: Freier Personenverkehr und EU-Erweiterung. Genügen die flankierenden Schutzmassnahmen? In: Widerspruch Nr. 48, Zürich

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MERGER HOLCIM-LAFARGE: A GIANT SOCIAL CHALLENGE! With an estimated 130,000 workers and a turnover of about €35 billion the merger of Holcim and Lafarge will create by far the biggest cement company worldwide. This merger is designed first and foremost to meet the needs of the two group’s main shareholders. The responsible directors of this huge merger expect only an improvement of €1.4 billion in the short term on the common EBITDA (referring to the measure of company's financial performance based on earnings before interest, taxes, depreciation, and amortization). Since the cement market is very local, the new company is improving its market performance above all in the fast growing markets in Asia but as well in both Americas and in Africa. Just in Europe is there a bigger number of redundancies and therefore the two companies have to divest some plants (which will be sold to the Irish building materials company CRH plc). This merger has as well a huge social impact for all employees concerned. In Europe about 15,000 workers will be «sold out» to another company and at the global level about 60% of all the 130,000 workers undertake their jobs in countries where workers’ rights are not guaranteed or are regularly violated. Therefore, the unions have begun very early on to create a global network between all unions and workers representatives concerned, whilst on the European level the two European Works Councils (EWCs) have started to cooperate very closely. The first global conference was held in November 2014 in Belgium with the participation of representatives from all over the world who decided under the slogan ‘no merger without worker’s rights’ on an action plan to defend the interests of workers. In June 2015 there will be a follow up in Switzerland. And at the European level the Restricted Committees of the two EWCs have meetings every month. On Lafarge’s side, there are even monthly EWC

Reports Rolf Beyeler

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meetings, while on Holcim’s side just the Restricted Committee sees the management once a month. Together the two EWCs are trying to get social guarantees for the workers affected by the divestment programme, as well as getting a new EWC which combines ‘the best of both worlds’.

EUROPEAN REPORT ON SOCIAL IDENTITY CARDS IN THE CONSTRUCTION INDUSTRY In January 2015, the European social partners of the construction industry (EFBWW and FIEC) published a European report, which takes a closer look at the different social ID schemes on the European construction labour market. The report assessed the different schemes in Spain, France, Luxembourg, Belgium, the Netherlands, Germany, Italy, Denmark, Finland, Lithuania, Romania and Sweden. The report maps the different social ID card schemes in place and provides an overview of various (ongoing) discussions in the different countries. The social ID cards are either instruments to strengthen the vocational and professional training, improve the health and safety of the workers or instruments to deal with undeclared work. Although each national scheme is completely different, there are some typical characteristics, which can be found in all schemes. The report also looked at future trends and came to the conclusion that in the near future “social ID cards schemes” will be introduced on a larger scale as “smart tools” to create more transparency in the European construction labour market. The texts can be downloaded from: http://www.efbww.org/default.asp?Issue=Social%20ID%20in%20construction&Language=EN

Reports

Werner Buelen

EMPLOYMENT AFTER THE ELECTION: WHAT KIND OF LAWS DO WE WANT? Conference of the Institute of Employment Rights (IER) in association with the Centre for Labour and Social Studies (CLASS) in the UNISON Centre, London, 11/02/2015. As the title suggests, the conference was organised in order to put forward and discuss labour policy for a future UK government under Labour Party majority. The array of speakers could not have been more representative: The chair of the Labour Party’s Policy Forum; The leader of the Green Party of England and Wales; The General Secretary of the Trade Union Council; The General Secretaries of Unite, PSC, CWU, FBU, and NUT; The President, Vice President and Chair of the Institute of

Employment Rights; and more top experts of labour law. The principal aim of the conference was to inform the trade union movement and to put pressure on the Labour Party, hopefully forming the next government perhaps in alliance with the Green Party, to restore collective bargaining as the instrument for setting wages and making them generally binding. A number of associated rights, such as the right to strike, employee representation in corporations, outlawing zero-hour employment contracts, etc., formed a whole package for an improved return to pre-Thatcher employment relations. What was perhaps missing in the presentation and debates, however, was embedding this project into the European context of declining trade union density, coverage by collective agreements and direct employment contracts. How can this erosion of collective labour relations be reversed by legal instruments? Maybe a government of the United Kingdom with a Labour majority will take the lead in the European Union?

Reports

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Jörn Janssen, CLR-Great Britain

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BUILDING WITH 3D PRINTERS: VISION INTO THE FUTURE OR ILLUSION At present (January 2015) a typical house by a canal in the northern part of Amsterdam is being built, not constructed with layers of bricks but with modern technology, plastic material produced by a 3D printer. After 10 bungalows per day already come out of a printer in China, the architects in Amsterdam are trying first to produce elements for historical facades and subsequently to put them together. The printer processes little white plastic balls consisting of about 80% vegetable oil. Similar to a normal ink and paper printer, three-dimensional plastic material is in this case sprayed on a surface, directed by a computer according to the building design. Millimetre after millimetre three-dimensional objects are produced, in particular elements of facades then to be assembled. For improved stability the cavities will afterwards be filled with concrete. Even if the experiment is of most recent date and not yet finished, it is evident that computerisation and 3D printers will also move into the construction industry and the production of buildings. Of course, many technical questions still have to be resolved, stability, thermal insulation, weather resistance, and ecology, but it is a remarkable step. Whether 3D technology will revolutionise the whole building development, as some experts assert, is to be awaited. But if, for instance, this might help providing shelter in areas affected by catastrophes, this path would need to be pursued. CLR will watch and report on the further development of this project.

Reports

Ernst Ludwig Laux

Reviews Oliver Fahrni: Heavy Metall. Wie sich eine Gewerkschaft in der Industrie neu erfindet. (‘Heavy Metal: How an Industrial Trade Union Reinvented Itself.’) Publ. Seismo Verlag Zürich, 2014. 289 pages. ISBN 978-s-03777-152-5. In 2013 the future of the collective employment agreement in the Swiss metal and machine industry was hanging by a thread. The Unia trade union left the negotiating table in a decisive phase, declaring the negotiations a failure. This collective employment agreement is one of the three largest national agreements, alongside those of the construction and hotel industries, and in terms of historical relevance unquestionably the most important. It was first signed in 1937 under the threat of fascism, and is also known as the ‘peace accord’ because the trade unions involved made an unconditional pledge not to use strikes as a weapon to settle grievances. Another special characteristic of the agreement was the regulation of basic conditions of employment such as working hours. But it did not contain any regulations on pay. Since then, salaries in this industry have been negotiated at the company level – between the respective Employee Representative Committee and company management – and generally without the involvement of unions. This is in stark contrast to other industries such as the construction sector for which a national collective employment agreement was first signed as far back as 1938. From the outset, the construction industry's collective employment agreement also covered hourly rates and minimum wages, which were negotiated yearly or twice-yearly between the tariff partners on an industry-wide basis. For several years Unia has been campaigning for a minimum wage for the metal and machine industry, too. Given the accord with the EU on free movement of workers and the increased risk of wage dumping in its wake, this has become an increasingly pressing issue. Right from the start, however, this was regarded as an absolute ‘no go’ by employers in this industry. For them, a minimum wage negotiated centrally

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Hans Baumann

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between the tariff partners has been, and will always be, a taboo. This remained the case in the negotiations on the renewal of the ‘peace accord’ in 2013. Oliver Fahrni, economist and editor of the trade union paper ‘Work’, vividly describes how Unia succeeded in breaking this taboo. First, two additional unions involved in the negotiations (Syna and the Association of Commercial Employees) were brought on board. Then Unia made it clear to employers from the outset that there would be no agreement without a concession for minimum wages. Among the employers, however, the neo-liberal hardliners initially had the upper hand and were gearing up for a confrontation. They were supported in this by ‘Employees Switzerland’, an organisation whose members include the bulk of employees in research and administration. In rejecting the minimum wage, their representatives played a wretched role. Finally, Unia succeeded in persuading the Minister of Economic Affairs to mediate. Himself a scion of a dynasty which owned a large company in the machine industry, he evidently had no desire to risk labour conflicts. He called in a mediator who eventually proposed regionally-graded minimum wages which were not too far off the amounts demanded by the trade unions. The employers were obliged to accept this, thereby abolishing a taboo which had been in force for more than 70 years: a huge success for the trade unions and a milestone in Swiss industrial relations. Fahrni's book is an informative, entertaining and often amusing read. Besides some insider information, it also contains documentary records and an interview with Unia's lead negotiator, Corrado Pardini.

Reviews

Jeremy Rifkin: The Zero Marginal Cost Society: The Internet of Things, the Collaborate Commons, and the Eclipse of Capitalism. Palgrave Macmillan, New York 2014, 368 pp., ISBN 978-1-137-27846-3, paperback £11.74. In his recent book Rifkin falls back on his old thesis that the use of basic commodities and their access is increasingly important and drives back their ownership. The internet in association with smartphones makes this possibility of participation perfect, so is his thesis. Already now in many spheres of this ‘new economy’ it is noticeable that employment relations are often precarious, bogus-self-employment and self-exploitation dominant, and collective agreements widely evaded, which is why it is important that trade unions take his thesis into account and think about new strategies. Taking the example of the car, the author clarifies what his concern is and how the situation will change in the future because less and less people will want to ‘own’ a car if they have ‘access’ via their mobile phone to a car-sharing-service. They get what they want via GPS-steering and have to pay only for the time of use. This is an example of the diverse possibilities Rifkin describes when he talks about how the digital network is available to everybody and allows nearly everything to be used at very low cost. Through diverse examples he explains that consumers, i.e. almost everybody, more and more turn into ‘prosumers’. This synthetic word includes the ‘producer’ and the ‘consumer’ and he suggests that, in particular through the increasing presence of 3-D-printers in households, many basic commodities may in the future be produced under self-control and save a lot of money. Based on what he calls the ‘Internet of Things’, within a few years the digital electricity meter, heating, refrigerator, washing machine as well as the computer will be acting with each other autonomously in a common network and prepare the necessary decisions such as energy saving work automatically. In conveyor-belt production or in a warehouse many processes will also increasingly be directed and carried

Reviews

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Ernst Ludwig Laux

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out on the basis of the internet and without human intervention. This raises questions about the shape of the workplace for workers but also concerns the transparency of the private sphere because all these processes pass through the internet, the data-cloud and mainframe computer, raising the question of who is in command over this enormous inundation with data. In the years to come it will be important for society and its political representatives to make this a democratic process in order to set limits to Google, Facebook, Twitter, Amazon, YouTube, etc. Also on this subject Rifkin has suggestions which are already a matter of fierce global debate in critical networks. All in all this is a book oriented to the future and well worth reading, though not everything will become reality as he has described it. For European trade unions as well as social-political parties it is important to find answers and to work out perspectives in relation to the future of life in general and working reality in enterprises in order to prevent suffering for employees and to protect large parts of the private sphere. International Labour Office: Global Wage Report 2014/15. Wages and Income Inequality. Geneva 2014. 137 pages . ISBN 978-92-2-128664-6. The ILO Report 2014/15 contains three parts: It shows the major trends in wages and the recent trends in income inequality, including the role of wages and paid employment. The third part contains some policy responses to address wages and inequality. Global real wage growth reached 2.0 per cent from 2012 to 2013; this is slightly less than the year before. Growth rates were much higher in developing and emerging markets than in developed countries, where wages are stagnating or

Reviews

Hans Baumann

increasing very little. China still accounted for much of global wage growth because of its large size and high wage growth. Excluding China cuts global wage growth almost in half, from 2.0 to 1.1 per cent! As a result, the authors of the report identify a slowly converging trend in emerging and developing countries towards average wages in developed countries. Between 2010 and 2013 the growth rate of real wages in developing countries was around zero with negative growth in the countries affected by the Euro crises. From 2007 real wages decreased e.g. in Italy by 5.7 per cent, in Spain by 3.2 per cent and in Greece by almost 25 per cent. But also in the United Kingdom, wages were still declining (-7 per cent since 2007) despite a moderate economic situation with growing output and profits in recent years. The report also shows that labour productivity still outstrips wage growth. As a result, the labour share in national income fell in many countries, particularly in the largest developed economies like US, Japan and Germany, while the trend in France, Italy or the UK was stable or unclear. In emerging markets, the report gives different results, such as a growing labour income share in Russia and a significant decline in China. Countries most affected by the Euro crises - Portugal, Spain and Greece - show a continuously falling labour income share, due not only to the decrease of wages but also the increasing unemployment. Growing income inequality since the 1980 has gained much attention in recent years. Developed economies in particular, like the US or UK, still follow the trend of increasing income inequality. Other developed countries, such as Germany, Norway, Netherlands and Romania, show a clear or slight trend to a less unequal distribution of income during recent years. The reason behind these different results is not always obvious. To take the example of Romania: The reason for a less unequal income distribution between 2006 and 2010 is not rising wages at the bottom but the cut in all salaries particularly in the higher income groups, mainly in the state

Reviews

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sector. This has not improved the situation at all for the mass of wage earners, on the contrary. The situation in developing and emerging countries differs from one country to the other. While the gap between top and bottom incomes is decreasing in Brazil, Argentina and China, inequality is rising in Vietnam, South Africa and India. This means that fast rising incomes and wages are not necessarily leading to a more unequal income distribution. Since in most of the countries wages constitute the biggest part of the income, the ILO experts formulate some principles for a wage policy. They say that minimum wages are an appropriate policy tool for improving living conditions and reducing wage inequality. Promoting jobs is another important tool against inequality, since unemployment is often a factor lowering income. Fighting discrimination in the labour market (women, migrant workers) and fiscal redistribution through taxes and social protection systems are other policy tools mentioned in the report. To sum up, the present ILO report is a useful and necessary source for researchers and policy makers dealing with problems of the labour market, wage development and income distribution.

Reviews

WOMEN IN CONSTRUCTION The Centre for the study of the Production of the Built Environment (ProBE) at the University of Westminster has been working on a research project for the Thames Tideway Tunnel (TTT) Project, intended to help increase the number of women employed. TTT is responsible for building a major new sewer that will help tackle the problem of overflows from the capital’s Victorian sewers and will protect the River Thames from increasing pollution for at least the next 100 years, creating approximately 9,000 indirect and direct job opportunities. The project is underway and is estimated to complete in 2024 at a cost of approximately £4.2billion. Construction activity will affect 14 London boroughs, including 4 main drive sites from which boring machinery will be operated. Three main contracts, notated as West, Central and East, are currently at the tender stage and announcement of awards is scheduled to take place in May 2015 with construction starting around 2016. The London-wide scale of the project and envisaged construction period of seven years allows for a range of innovation practices, with the added opportunity to develop processes and policies which focus on the recruitment and retention of women in order to address acknowledged inequalities in the construction sector in the UK. As a major infrastructure scheme, TTT offers an unparalleled opportunity to set a new gold standard for the employment of women in construction. Previous major projects in London, including the Olympic Stadium site and Crossrail, have made incremental positive changes but TTT aims to ‘raise the bar’ and create a radical shift in employment policy and practice to enable women to participate fully at all levels within the project and present a clear business case for diversity and quality in the workforce. The legacy of these positive changes will be ensured at strategic level via TTT’s legacy committee.

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New projects

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The research project has begun with a literature review, seeking to benchmark different initiatives across the globe including the exemplary Vancouver Highway Project which made a great effort to include more women. A survey of all those currently employed on the project has also now been completed. For more information, contact: Linda Clarke (clarkel@wmin.ac.uk) or Christine Wall (C.Wall@westminster.ac.uk)

ADAPTING CANADIAN WORK AND WORKPLACES: AN INTERNATIONAL PERSPECTIVE. (ACW) ‘Recent research (ILO 2011) has found that work creates as much as 80% of the greenhouse gas emissions produced by human activity in developed countries, and Canada is no exception. Greening work may not guarantee the future, but failing to do so will mortgage the future.’ (ACW research bid, 2014) ACW is a seven year research programme funded by the SSHRC at $2.5M Canadian plus matched funding. It aims to explore the relationships between of work and global warming and the role of organised workers as a force for adaptation. It follows on from the SSHRC funded Work in a Warming World project http://www.workinawarmingworld.yorku.ca/

Adapting Canadian Work and Workplaces asks these questions: How best can Canada’s diverse workplaces adapt work in

order to mitigate greenhouse gases? In Canada’s present economic and social environment,

what changes in law and policy, work design and business models for industry and services, would assist the

New projects

‘greening’ of workplaces and work? What can we learn from other countries to deepen our

understanding of strategic options? This is fundamentally an alignment between Trades Unions, academics and researchers with the support of environmental groups. The list of North American labour organisations includes: Canadian Union of Public Employees, National Union of Public and General Employees, Canadian Union of Postal Workers, United Steelworkers, B.C. Government Employees, B.C. Federation of Labour, B.C. Building Trades, Labor Network for Sustainability. Current expansion includes: United Food and Commercial Workers—Canada, Newfoundland and Labrador Federation of Labour, Ontario Federation of Labor, with membership pending for Public Service Alliance of Canada, Canadian Labour Congress and the Council of Black Trade Unionists. The methodology is based on strategic themes: Law, Policy (Canadian and International) and Work Design which feed into four areas of Industrial Studies: Built Environment, Energy, Public and Private Services, and Manufacturing. The overall aim is to create a “Green Workplace Training Programme” and to set up “Workplace Adaptation Pilot Projects”. The University of Westminster’s Centre for the Study of the Production of the Built Environment (ProBE) which works in association with CLR is a partner to this project. Linda Clarke is on the Steering Committee, leads the “International” strategy workgroup and co-leads the “Built Environment” work group with John Calvert. Colin Gleeson from ProBE is a member of both International and Built Environment work streams.

New projects

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We are developing two project-funded PhDs to explore these two themes, one relating specifically to VET (vocational education and training) for low energy construction in Europe and the other to trade union involvement in low carbon initiatives in Europe. In addition, we are able to apply for small grants (up to $7000) for post graduate students or research assistants to develop research. We are currently waiting for guidance on the financial structure of the funding. If you are interested in becoming involved in this project, contact either Colin Gleeson (C.P.Gleeson@westminster.ac.uk) or Linda Clarke (clarkel@wmin.ac.uk).

New projects

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CLR AGM and Seminar Wednesday 17 June 2015 University of Westminster, 35 Marylebone Road, London NW1 5LS Agenda annual meeting 2014-5 CLR 12.00pm – 3.00 pm. Lunch (12.00-12.30 pm) 1. Introduction of the participants. 2. Annual report 2014-5

CLR-News CLR-Studies Workshops, seminars, research Financial report

3. Ongoing research and projects brief presentation by the participants

4. New projects for discussion to be presented in advance on paper

5. Activities in 2014-5 CLR-News CLR-Studies Workshops, seminars, research.

6. Any other business. Members of the network that want to present a project for discussion (point 4) should mail us a brief outline on paper so that we can distribute it. If you are looking for cooperation with other CLR-participants or have anything else to announce or communicate please let us know.

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Events

Seminar: Changing employment Conditions, 3.30 pm-5.30 pm The AGM will be followed by a seminar on changing global employment conditions in construction, to include the following speakers: Phil Toner (University of Sidney) on Financialisation and

labour in the Australian construction industry Dale Belman (Michigan State University) on

Construction Unionism in the US John Calvert (University of Vancouver) on Construction

labour issues in Canada If you would like to join the AGM and/or seminar and/or be part of the CLR network Contact: Linda Clarke University of Westminster clarkel@wmin.ac.uk Tel.: ++44/203 50 66528 Or clr@mjcpro.nl

Events

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Editor Jan Cremers Phone: +31/20/5257216 Or +31/6/53 43 86 79 clr@mjcpro.nl Subeditors Jörn Janssen Phone: +44/207/7007821 joern.janssen@btinternet.com Hans Baumann Phone: +41/44/8212666 habaumann@bluewin.ch Review editor Jörn Janssen Phone: +44/207/7007821 joern.janssen@btinternet.com Layout and Production Frank Leus Phone: +32/2/2271041 fleus@efbh.be Contact and Orders CLR-News c/o Frank Leus EFBWW Rue de l’hôpital 31, (boîte1) B - 1000 Brussels Phone: +32/2/2271040 Fax: +32/2/2198228

CLR News 1/2015 ISSN 1997-1745