7.1. Introduction
In Chapter 4 the legal framework for collective bargaining in Ethiopia and the international experience together with the challenges towards collective bargaining in the global economic order were outlined. In this Chapter we focus on the actual collective bargaining process and contents of the collective agreements signed pre- and post-privatisation in each of the privatised enterprises. The purpose is to determine whether there is evidence that the change of ownership has been accompanied by a change in the content of the collective agreements in terms of the benefits accorded to the employees. Comparison will also be made between collective agreements signed in the enterprises still owned by the State on the one hand and the privatised enterprises on the other to determine whether there is a meaningful variation in the entitlements they accord to their respective employees.
Consistent with the investigation made on union membership density in the preceding chapter, the four privatised enterprises (FT, DT, DL and FL) and the two State-owned enterprises (ST and SL) will be subjected to examination on two levels.
At level one, the contents of the collective agreements operative at the time of the privatisation of the enterprise will be compared with those concluded after privatisation in each enterprise. Whether the collective agreements brought more or less beneficial terms to the employees individually and collectively will be assessed. Consideration will also be given to whether and to what extent such changes in agreements can be associated with the change of ownership or whether there are other factors that have exerted influence.
It must be underlined here that, from the available records, with the exception of one privatised enterprise (FL) where a second collective agreement is signed post-privatisation, the remaining three privatised enterprises have only negotiated one collective agreement each in their post- privatisation period. As a result, there is no adequate longitudinal data to fully appreciate the trend. This is one of the limitations of this part of the analysis.
At level two, the contents of the current collective agreements signed in the privatised enterprises will be compared and contrasted with the contents of the collective agreements signed in the State-owned enterprises. Here also the purpose is to identify whether there exist differences in contents between the different forms of ownership and to what extent any such differences can be explained along the lines of differences in ownership. The fact that the privatised and the State-owned enterprises are in similar lines of business and have a comparable size of labour force provides a suitable basis for comparison because they are generally exposed to similar challenges and endowed with similar opportunities in their day to day business operation.
Although the collective agreements under consideration cover a broad range of issues, the subject matter to be considered here are: profit sharing arrangements, training benefits151 and
151 Data on how many employees have been beneficiaries of training and for how long, has not been made available
as all the enterprises under study and the trade unions have no practice of maintaining systematic records in this regard. Except for FL where the trade union recorded the number of beneficiaries from employer sponsored training for 2011/2012 budget year, none of the enterprises has any record in this respect. This again is one of the limitations of the study.
employees’ participation in management.152 This is not an arbitrary selection of issues. First,
they were selected on the basis of their importance, in the Ethiopian context, to the welfare and well-being of the labour force. Second, the absence in Ethiopia of any law stipulating a ‘floor of rights’ on these subjects made collective agreements the sole regulatory instruments for establishing the presence and extent of these benefits at the workplaces.
With respect to the importance of the subject matter to the Ethiopian situation, the following points should be borne in mind. Ethiopia is not a signatory to the ‘Minimum Wage Convention’ (ILO Convention No 26) nor is there a minimum wage stipulated by law for the profit-making sector employment (Sommer, 2003). Furthermore, there is no practice of adjusting and readjusting of wage so as to conform it to inflation in Ethiopia. There is a legally fixed minimum wage for employees in the civil service but it does not have a mandatory application on the private and State-owned enterprises. Thus, Ethiopian job-seekers in the profit-making sector are left to bargain individually with their employer (s) in fixing their respective wages.
Given the high unemployment,153 and non-availability of unemployment benefit scheme in the country (De Gobbi, 2006:33), employees’ bargaining power has been extremely weak as a result of which they would be compelled to accept the terms of the employer. In order to mitigate the impact of this imbalance in bargaining power it is the practice in Ethiopian industrial relations to include ‘productivity agreements’ in collective bargaining through which the fruits of such productivity, if and when generated, can be shared between the actors in the form of bonuses and/or wage increments to the employees and profit to the employer. Hence, a claim for profit sharing arrangement is basically a demand for a mutually agreed benefit sharing.
In Ethiopia, the initial understanding was that as profit belonged to the employer, bonuses and wage increments were considered voluntary grants by the employer that can be unilaterally
152 Literature indicated that there is no consensus at the international level as to the meaning and content of
‘workers’ participation’. As a result, the subject matter, the form and the role through which participation has been accomplished vary considerably from country to country. (For a relatively detailed discussion on this issue; see generally; Johannes Schregle (1993) ‘Collective Bargaining and Workers’ Participation: the Position of the ILO
Comparative Labour Law JournalVol.14, Issue-4. pp.431-444).
Although term ‘employee participation’ may be more appropriate to signify direct forms of workers’ involvement in the managerial enterprise, the utilisation of the term under the present context denotes both direct or indirect (through representation) involvement of the workforce in the enterprise’s management.
153 In Ethiopia, the 1999, 2005, 2009 and 2010 Labour Force Survey showed that the average unemployment rate in
urban areas amounts to 26.4%, 21.2 %, 20.6 and 19.4% respectively. The female unemployment rate fluctuates within 12.7; 8.4; 30.1 and 28.1 per cent respectively. (Source: Central Statistical Authority (CSA):2011)
granted or withheld.154 Overtime, however, these payments were incorporated in collective
agreements in order to make them bilateral and binding, which cannot be unilaterally withdrawn. It is important to note that a bonus is a one-off payment while a wage increment once paid will remain part of the basic wage even when business performance of the enterprise changes subsequently.
With regards to training benefits, generally, it is argued that ‘through education, learning and skill formation, people can become much more productive overtime’ (Sen, 1999:293). By realising the contribution of education and training in raising productivity and competitiveness, employers tend to invest in upgrading the skills of their labour force through an arrangement of tailored training. Equally, employees are also interested in their own career development through which their employment stability might be strengthened by enhancing their employability and mobility (De Gobbi, 2006:43). As a result, both trade unions and employers have shown a keen interest in the provision of training for the labour force. This issue is thus an important item in collective bargaining processes where a provision or more has been included for this issue in all the collective agreements in the case studies.
The third issue that will be considered is that of employee participation in management. Conventionally, the power and responsibility of managing enterprises was within the sole prerogative of employers and seen as derived from the right of ownership of the enterprise. It can be contended, however, that employees who ‘invest their lives’ in an enterprise should have a right to influence at least some decisions just as do shareholders who invest their capital. Aside from the property rights type of argument there is also a practical reason that can be advanced for employee participation based on the proposition that workers can have ideas which may be useful to the success of the enterprise. It has been said these two rationales amongst others have influenced the movement for the introduction of employee participation in management in Ethiopia (Daniel, 1986:123). In terms of duration, the concept of ‘workers’ participation in management’ as an item eligible for collective bargaining155 has had its roots in the labour
154Trade union leaders from FL recalled and traced the origin of bonuses and wage increments in Ethiopia to the
period of the Emperor when many employers (mostly foreigners) were granting such benefits voluntarily on occasions such as the birth-day of the Company owner, New Year or other joyful events.
155 In jurisdictions such as India, the issue of workers’ participation has not been left to collective bargaining, it is
rather provided by law as to the subject matters and the level participation. (For a more detailed presentation of the issue;See, Ratna Sen (2012) Employee Participation in India, Working Paper No.40 (Geneva: ILO).
proclamation of the military government (Proc. No.64/1975; Art. 66 (11)) and since that time it has remained intact within the Ethiopian collective bargaining system.
As regards the absence of a legal framework for these issues, whilst the labour law identifies the three issues as subject matters about which collective bargaining can take place, it does not specify any minimum standard applicable to them.156 A collective agreement therefore remains
the sole regulatory instrument of a collective nature for these issues. As a result, how much to concede and how much to gain from the bargain may be highly dictated, among other things, by the economic power and bargaining skills of the negotiating parties.
Section I. Enterprise Level Comparison: Pre-and Post-privatisation Collective Agreements