CBA in Switzerland: Employers disagree about collective agreements

In Switzerland, a good 40 percent of employees are subject to a collective agreement (GAV), and the trend is rising. That now amounts to more than two million employed people, as figures from the Federal Statistical Office (BfS) show. 25 years ago, there were only around 1.25 million, although the working population was also smaller back then. The most recent figures published by the BfS relate to 2021; more recent data are not available. However, the trend is likely to have continued.

This development contains more explosive potential than one might think at first glance.

Not everyone wants to be part of the club

The trend is right for the unions. Collective bargaining agreements usually stipulate minimum wages and working conditions. The more companies are subject to a collective bargaining agreement, the more employees are part of the package. The agreements are negotiated in a social partnership with the employers’ associations.

In principle, employers also have an interest in collective agreements. During the term of the agreement, there is a duty of peace; the company may not go on strike. This is in the interests of employers; in this respect, they see the collective agreement as an important component of social peace.

The matter becomes more delicate with the so-called collective agreements that have been declared generally binding (ave GAV). These do not only apply to companies that have voluntarily joined the industry association or the GAV, but are mandatory for all companies in the industry in a region. This means that companies must meet the conditions negotiated in the GAV, even if they are not members of the “club”.

Employers’ camp is divided

At this point, employers are divided into two camps. A large part supports collective labor agreements (ave GAV) that have been declared generally binding. Those who voluntarily join a collective labor agreement are happy if their competitors are forced into the same construct and have to pay the same minimum wage. This reduces the likelihood of being knocked out by them in tenders.

From a Swiss perspective, the beauty of the system is that the conditions also apply to foreign companies. The latter must pay their employees the same wages as local Swiss companies. This serves to protect wages in Switzerland.

Critics complain that organized employers and unions form a cartel that keeps foreign competitors at bay. The result is that consumers pay unnecessarily higher prices. Supporters of the system, on the other hand, emphasize that this way the high Swiss wage level is secured despite the freedom of movement for people.

The second camp within the employers’ community – the critics – also complain that generally binding collective agreements offer less flexibility than in-house solutions.

There is another point – and this is where money comes into play. Once a collective agreement has been negotiated, it must also be ensured that it is adhered to. Implementation is monitored and violations are punished. For this reason, employers and employees pay contributions to the so-called joint commissions. These are made up of half employer and half employee representatives. They monitor compliance with the contractual provisions. This is usually organized or commissioned by the union representatives. It is controversial whether these controls are efficient or excessive.

The funds must be used for the intended purpose. Some entrepreneurs doubt that this is always the case. The think tank Avenir Suisse called for more transparency about the inflow and use of the funds that flow to the joint commissions as part of their control functions.

Even today, some of the industry associations are criticizing the lack of transparency in the use of the funds. They fear that the money flows could be used to finance anti-business campaigns. The Swiss Association of Master Builders recently made no secret of its opinion. Millions in wage deductions are being diverted by the unions diverting funds intended for wage protection and education to their own organization, the association complained in a statement.

Confrontation between the social partners

The unions, for their part, see the criticism as a “dangerous attempt to weaken the collective agreements”. Unfortunately, some Swiss employers and the bourgeois parties are increasingly questioning the control system or the generally binding collective agreements, wrote the largest Swiss union, Unia, in a recent press release. One example of this is the ongoing campaign in parliament against the general binding nature of the collective agreements, according to the union.

The previous unity of the social partners is thus giving way to greater confrontation.

But while some industry associations criticize the system, the Swiss Employers’ Association (SAV) is deliberately keeping a low profile. It clearly rejects an extension of the collective agreement, which has been declared generally binding. But it also sees no need for a dismantling. Collective labor agreements serve to protect wages and maintain social peace, argues association director Roland Müller. The system has been questioned time and again, but he does not see a convincing alternative.