Social partner debate draft bill on single status for workers

Following the decision of the tripartite committee to introduce a single status for blue and white-collar workers in Luxembourg as of January 2009, the ministers for employment and health have been given the task of drawing up a draft bill for its implementation. The government is eager for the planned legislation to go ahead, since the distinction between white and blue-collar workers is outdated. Therefore, it is calling on the social partners to reach a compromise on the issue.

Background to proposal

The tripartite agreements signed in April 2006 (LU0606019I) stipulated that negotiations between the social partners should begin with merging the status of blue and white-collar workers. This is to establish a single worker status effective from 1 January 2009, bringing the current situation up to date.

By doing so, the government aims to put an end to numerous forms of discrimination which no longer have any rationale since, according to the Minister of Labour and Employment, François Biltgen, blue-collar workers today need to possess many different skills. The Minister of Health, Mars Di Bartolomeo, goes even further in his assessment. For him, there is no reason why the net minimum salary of blue-collar workers should be 2% lower than that of white-collar workers in the private sector on the same gross salary. Minister Biltgen thinks that it is a question of doing social justice for these workers.

Both Minister Biltgen and Minister Di Bartolomeo are responsible for drawing up the bill to legally implement this reform. The draft proposal is currently in the negotiation stage. Although the trade unions have responded rather positively to the draft bill, the employers are clearly against it.

Financial neutrality

To maintain competitiveness, the social partners agree that the reforms required for the establishment of a single status for workers must aim for financial neutrality. The government has recently presented its proposal on this topic. However, employer organisations believe that such reforms will be highly expensive for companies, especially those in sectors employing large numbers of blue-collar workers and suffering from high absenteeism levels. The Federation of Luxembourg Industrialists (Fédération des industriels luxembourgeois, FEDIL) explains that, with the single status, companies will have to pay for the first 13 weeks of sick leave for blue-collar workers.

Absenteeism levels

To ensure financial neutrality, the reform relies mainly on achieving a substantial reduction of 50% in absenteeism levels, which employer organisations consider to be unrealistic. If this decrease is not achieved, FEDIL estimates that implementing the single status will cost companies in the region of €56 million a year.

Absenteeism currently accounts for 2.6% of the total wage bill in the private sector. At present, the cost of absenteeism for blue-collar workers is almost four times higher than the amount for white-collar workers. Minister Di Bartolomeo believes that the incidence of absenteeism will decrease by a third. In response, FEDIL has argued that absenteeism levels differ across sectors and between companies, and underlines the higher rates of absenteeism among women and cross-border workers.

In reaction to these allegations, the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschaftsbond Lëtzebuerg, OGB-L) accused the employer representatives of exaggerating the problem of absenteeism, pointing out that employees in Luxembourg have one of the highest productivity levels in Europe. It has also denounced the discriminatory comments put forward by FEDIL in relation to women and cross-border workers, which the trade union believes will cause further dispute in terms of the introduction of the single status for workers.

Cost implications of reform

The reform is complex, and in addition to the provisions on reducing absenteeism, many other factors enter into the equation when it comes to calculating the costs involved, including the calculation of overtime, pay scales for blue-collar workers and performance-related pay for white-collar workers, and the alignment of holidays and severance pay. According to FEDIL, all these changes to labour law will result in additional costs for companies.

Minister Di Bartolomeo perceives that, as soon as the single status is introduced, companies employing only blue-collar workers will save 2% of the supplementary employers’ contributions which currently apply to blue-collar workers. He also points out that the draft legislation includes a five-year transitional period, during which the difference in social security contributions will be reimbursed to employers.

Additional factors to note include the state’s involvement in the creation of a health insurance fund for companies, and the possible reform of accident insurance. However, OBG-L argues that the government’s proposal will only incur an increased cost of 0.28% to the overall economy and that the calculations need to take into account the planned tax measures and government grants. Moreover, OBG-L emphasises that companies will also benefit in other ways, although these are difficult to quantify – namely, the simplification of administrative procedures as a result of the new legislation.

Odette Wlodarski, Prevent