Social dialogue is back… now what?

Labour unions this week wrangled a concession from the government to keep their collective bargaining monopoly, but it is less clear what compromises they are willing to make on other disputed reforms, such as flexible opening hours and pensions.

It was anyone’s guess how many people would turn out for the OGBL and LCGB’s joint protest on 28 June, but perhaps even union leaders themselves did not anticipate quite the crowd that flocked into the city that sunny Saturday.

Police estimates put the figure at 12,000 to 14,000 people. Unions claimed more than 25,000. The truth probably lies somewhere in between. It was an impressive showing, allowing unions to enter government talks in combative mood.

In a marathon 11-hour meeting on Monday, the government agreed to scrap plans, which would have allowed non-unionised workers to negotiate collective work agreements with their employers. Unions will keep a firm hand on this right, but to whose benefit is less clear.

The decision could have benefitted workers especially at smaller businesses who do not have union representation but elected staff delegations. Around 60% of employees in Luxembourg work under a collective agreement, which in general provides more security and better working conditions for staff.

That number is well below an 80% EU target. Opening up the right to collective bargaining to non-unionised companies could have seen that number rise.

Trade unions are meant to act in the best interests of workers but clinging onto the collective bargaining monopoly sees them defend their own best interests first. The move largely would have risked jeopardising union power.

Withdrawing the plan probably suits employers quite well (they face fewer tenuous talks in smaller companies), and it is not one of the points that the UEL business lobby is fighting unions on.

Allowing for longer and more flexible opening hours is likely going to be one of the sticking points. With the government having conceded on collective bargaining, it is unclear, however, how far unions are going to be willing to budge when talks continue on Monday.

If social dialogue between the three parties has been re-established, it would appear that unions largely want nothing to change and the scale of the protest turnout is likely to have emboldened them to compromise very little. Having taken such a strong stand off the bat, leaders now also risk losing face if they give too much ground.

Luxembourg has a knack for stubbornly resisting change. The unofficial national motto is “Mir wëlle bleiwe wat mir sinn” (We want to remain who we are).

But no change is simply not an option. Business bankruptcies rose in the first quarter of this year compared to last year, with more shops and retail businesses shutting their doors. High streets are emptying out.

A peculiarity of Luxembourg City especially is that people don’t actually live in the city centre. Office workers grab lunch at one of the many restaurants but they are working when shops are open and swiftly make their way home to beat traffic after hours. The country’s 200,000 cross-border workers won’t be headed back to Luxembourg for a weekend getaway either.

And for workers, like me, who live outside of the capital, it is much more convenient to head to one of the many shopping centres on the periphery on a Saturday morning where you can run your weekly errands at the same time and find many of the same brands (or even more) than in the city.

Frieden is right when he says that people’s lives and habits have changed. And if unions stubbornly refuse to acknowledge this, more shops will close and jobs will be lost.

Let’s look at Dublin, Luxembourg’s rival in many ways: shops are usually open 9:00 to 18:00 Monday to Saturday, with extended hours until 20:00 on Thursdays. Does that sound so bad? The crux of these negotiations should be the “how” – ensuring reasonable and fair conditions – not the “if”.

After all, how many of the 15,000+ people who marched that June day went to do their shopping the following Sunday morning, ate at a restaurant or café, went to a museum or cinema, visited a doctor or hospital, took a bus, refilled their car at a service station, or in any other way interacted with one of the many people who already work on Sundays without great fanfare?

The head in the sand mentality also won’t change the pension problem.

The maths is clear – starting next year, the pension system is forecast to start paying out more than workers pay in. By 2045 (I will be not yet 60 and very much still working), the reserves of more than €26 billion will be exhausted.

Luxembourg is not alone in this. Look around Europe and you will see countries all over confronted with ageing populations trying to fix a system that has become unsustainable, even with the inflow of foreign workers (which EU nations are in the process of curbing with ever stricter rules in response to populist anti-immigration narratives).

If unions do not budge, they are simply delaying an unavoidable (and huge) problem coming at us on the horizon. Kind of like climate change, it is easy to ignore and simply push action away into the future since largely the impact isn’t yet felt. But it will come. Better act now.