Collective bargaining: Romania shows the way

Romania’s recent law strengthening collective bargaining offers a way forward for the European Union.

A new law on collective bargaining and social dialogue came into force in Romania on December 25th last. After years of policy-driven decline, it was the result of intense, ground-level work by workers and their unions and clear support from the European Union for democracy at work. It is a prime example of how to implement the 2022 directive on minimum wages and collective bargaining and can offer a template for the EU elsewhere.

Until roughly a decade ago, most people in Romania had working conditions set through negotiations between their unions and employers. That radically changed in 2011.

Still following the neoliberal prayer book, the EU saw collective agreements—particularly sector-wide ones—as a ‘labour-market rigidity’ which had to be eliminated. As part of the ‘troika’ with the International Monetary Fund and the European Central Bank, dealing with member states struggling amid the eurozone crisis, the European Commission successfully pressed the Romanian government to dismantle the system.

Rapid decrease

What followed was a rapid decrease in the power of working people to bargain collectively and a further erosion of trade-union density. In the slipstream, inequality increased—Romania today has one of the highest rates of in-work poverty in Europe.

Nearly a decade on, in 2020 the EU finally shifted its position. The commission president, Ursula von der Leyen, declared herself ‘a strong advocate of collective bargaining’. The European trade union movement, with the European Trade Union Confederation at its helm, seized the opportunity to strengthen EU support for collective bargaining, resulting in the minimum-wages directive.

The directive explicitly aims to strengthen collective bargaining. Member states which do not have 80 per cent bargaining coverage will have to produce national action plans to move towards that target.

The EU also started using the European Semester—albeit very gently and to a limited extent—to encourage some members states to reform their laws on social dialogue. In the case of Romania, changing the social-dialogue legislation was part of the associated country-specific recommendations and was later inserted in the national recovery and resilience plan as a concrete milestone. Even the commission now regards collective bargaining and social dialogue in Romania as insufficient.

New legislation

This paved the way for the Romanian government to adopt new legislation in late 2022. The pressure did not only come from above. On the ground, trade unions in Romania had been actively innovating in their collective-bargaining practices in recent years—the clearest example being the agreement concluded in the banking sector in 2018.

Years after the dismantling of sectoral collective bargaining, the Romanian banking trade-union federation, FSAB, negotiated an agreement with the newly established employer organisation, CPBR. Building on intense organising efforts, supported by the European service workers’ union UNI Europa, banking workers and their union secured major advances in wages, severance pay, on-the-job training, holidays and—last but not least—guaranteed common lunch breaks. Overcoming the legislative obstacles to sectoral agreement demonstrated the willingness of the social partners in Romania (trade unions and employers) to negotiate beyond the company level.

Similar work has been taking place in telecommunications, where the SITT union has had a strong sectoral strategy. At national level, the trade-union confederation, Cartel ALFA, ramped up political pressure in 2021 by organising a six-day social-justice caravan from Bucharest to Brussels. In meetings with EU officials, the confederation clarified how much Romanian workers needed stronger collective bargaining and minimum wages to restrict the out-migration of Romanian citizens.

Hopes high

Hopes are high for the new Romanian law. Key changes are:

• company-level collective bargaining (though not conclusion of an agreement) becomes obligatory for employers with at least ten employees;
• a company-level presence can be established by a trade union when it has at least 15 members;
• a union can win recognition on the company level when 35 per cent of employees are members (previously the threshold was 50 per cent +1);
• unions can secure recognition at the sectoral level if they represent at least 5 per cent of the workers in the sector;
• multi-employer and sector-level bargaining is facilitated and, in some cases, sectoral agreements can be made binding upon the whole sector;
• cross-sectoral collective agreements are legalised once more;
• strike action is made easier and nationwide strikes become legal;
• employers need to provide information to, and consult with, worker representatives on more topics, and
• barriers to workers gaining access to trade unions are lifted.

While certainly not addressing all concerns, this is a significant step forward for Romanian workers and trade unions.

Triple approach

But the importance of this agreement goes beyond the national context of Romania. It shows other European countries that strengthening collective bargaining is possible and it highlights a triple approach to getting there.

First, the EU must encourage the legal changes needed to enable fair bargaining. Romania proves that radical innovation and renovation of social dialogue is feasible and realistic. The EU must hold member states to these high standards, notably through country-specific recommendations, funding conditionality and the upcoming collective-bargaining country action plans.  

Secondly, the EU should contribute to capacity-building for workers’ unions and employers’ organisations alike, with the aim of recreating the dynamic that led to the first multi-employer agreement in Romanian banking. Strengthening the capacity of trade unions through strategic support and organising, with a view to increasing membership, is key.

Thirdly, multinational companies should be rendered responsible for the role they play in collective bargaining. In the Romanian case, they were an enabling factor but this is not guaranteed. The EU has many points of leverage with which to encourage multinationals to engage in sectoral bargaining initiatives, while government bodies can shape their own national context.

This is about enabling workers’ unions and employers’ organisations to play their roles in delivering shared prosperity. The EU has adopted the goal of 80 per cent collective-bargaining coverage but goals are not enough. The EU played a positive role in Romania. The commission must apply the lessons and act to move forward through collective bargaining across all member states.