Working more in order to preserve jobs? Works councils in the Swiss mechanical and electrical engineering industry and the ‘Swiss franc shock’ in 2015

• Date: 01 November 2018
• Published date: 01 November 2018
• DOI: http://doi.org/10.1111/irj.12236
• Author: Heinz Gabathuler,Patrick Ziltener

Working more in order to preserve jobs?

Works councils in the Swiss mechanical and

electrical engineering industry and the

‘Swiss franc shock’in 2015

Patrick Ziltener and Heinz Gabathuler

ABSTRACT

The Collective Agreement in the Swiss metalworking industry contains a derogation

clause widely applied after the appreciation of the Swiss currency in 2015. Manage-

ment and works council can conclude agreements on a temporary extension of stan-

dard working time. This may be a bargaining chip for employees, if works councils

are aware about and make use of their negotiating power.

1 INTRODUCTION

‘For us, every job was important, and it was less important whether we were working

a few hours more …’ (interview former vice president works council, company C).

1

On 15 January 2015, the Swiss National Bank announced the discontinuation of

the cap of 1.20 CHF per Euro, which the central bank had defended since September

2011 in order to strengthen the competitiveness of Swiss exports. This announcement

caused major turbulences in stock and currency markets around the globe. The Swiss

franc drastically gained value against all other major currencies. Both business and

trade union representatives saw the prospects for the export industries endangered,

as domestic costs, such as salaries, immediately rose in relation to the currencies of

the target markets. The mechanical and electrical engineering (MEM) industry was

expected to be hit particularly harshly, as, in contrast to other major exporters, such

as the pharmaceutical and the watchmaking industries, it operates in highly compet-

itive markets. Statistical data covering the two years following the ‘Swiss franc shock’

suggest that the decrease in order intake, revenues and employment in the MEM

industry was indeed higher than average compared with the manufacturing industry

in general (Jaeger and Trütsch, 2017; Swissmem, 2017). A recent study shows that

employment, however, declined in most branches of Swiss manufacturing industry

in 2015 and 2016, mainly because of the unfavourable development of exchange rates.

Companies reduced employment rather through natural fluctuation than through

dismissals (Kaufmann and Renkin, 2017).

❒Patrick Ziltener and Heinz Gabathuler, Soziologisches Institut der Universität Zürich, Zürich,

Switzerland. Correspondence should be addressed to Heinz Gabathuler, lic. phil., Soziologisches Institut

der Universität Zürich, Andreasstrasse 15, Zürich CH-8050, UK; email: gabathuler.heinz@gmail.com

1

All interview quotes have been translated from either Swiss German dialect or German.

Industrial Relations Journal 49:5-6, 534–553

ISSN 0019-8692

© 2018 Brian Towers (BRITOW) and John Wiley & Sons Ltd

Even though less than one third of the total workforce in the MEM industry are

covered by the branch collective agreement, the employers’association Swissmem

had concluded in 2013 with five trade unions (hereafter ‘MEM CA’), it is nevertheless

one of the most important collective agreements for the Swiss private sector.

2

Since

1993, it contains a clause (currently Article 57, hereafter ‘Art. 57’) that under certain

circumstances allows companies to derogate temporarily from some working condi-

tions defined in the CA, notably to extend standard working time from 40 hours

per week to up to 45 hours. Works councils have to agree to such a step. Art. 57

was applied in many companies after the ‘Swiss franc shock’. This attracted media

attention (Müller, 2015; Jannsen, 2015)—which is remarkable, as it is very rare that

media in Switzerland are reporting events in which works councils are involved in.

There has been no systematic research undertaken on the application of this deroga-

tion clause so far. Our article sheds light on the application of the clause in four com-

panies that differ from each other in terms of ownership structure, size, products,

economic situation and trade union influence. It attempts at answering the question

to which extent Art. 57 is a tool in the hands of employers that tends to undermine

the CA, as suspected by some trade unionists (Unia, 2013b: 16), and to which extent

it is a bargaining chip to works councils with which they may obtain concessions from

management, such as temporary job guarantees. From a trade unions’perspective, at

first sight, there is nothing to gain from a derogation provision, because they may par-

tially lose control over the application of the CA. But do connections between works

councils and unions influence the negotiating process? We also ask for the economic

success of the measure in each case: Is it true that Art. 57 helps companies to adapt to

new challenges with the consent of their employees, as was suggested by economist

George Sheldon (Jannsen, 2015)? And last but not least: Does the conclusion of an

agreement for a temporary extension of standard working time affect the overall

patterns of industrial relations in the respective company? The four case studies were

undertaken in 2017, two years after the events under question. In the MEM industry,

application of the derogation clause had been identified as one of the main issues

works councils had been dealing with in the past five years. Exploratory interviews

had been made with nine works council presidents in companies covered by the

MEM CA.

3

In six out of these nine cases, Art. 57 had been applied in 2015. In addi-

tion to a detailed analysis of the respective Art. 57 agreements, the main focus of our

case studies was on the company-specific reasons for the derogation, the negotiation

process between works councils and management, the extent to which works councils

2

According to Swissmem, in 2013, 96,000 workers were covered by the agreement that is not generally

binding (information obtained by email from Unia, July 2017). The overall number of staff employed in

the industry in 2013 was 330,115 (Swissmem, 2016: 8). The union with the most members among workers

covered by the CA is Angestellte Schweiz that is traditionally strong among white-collar staff and often

takes rather ‘moderate’positions. Second comes Unia, Switzerland’s largest union that is part of the left-

wing peak-level Swiss Trade Union Confederation (SGB/USS) and is considered to be the most radical

among the signatories. Number three is Syna that is part of the peak-level organisation Travail.Suisse

and situated in the Christian tradition. The other two (Kaufmännischer Verband and Schweizerische

Kader-Organisation) are white-collar unions of minor importance in the sector.

3

One of the works councils represented a site in the French speaking, six in the German-speaking part of

Switzerland and two works councils covered plants in two, respectively three linguistic regions simulta-

neously. Four of the interviewed presidents were members of Angestellte Schweiz, three were members of

Unia, one was a member of Syna and one was not unionised. Contacts were made either through the respec-

tive union or through pre-existing contacts within the respective company. The exploratory interviews were

made between September 2016 and February 2017.

535Working more in order to preserve jobs?

© 2018 Brian Towers (BRITOW) and John Wiley & Sons Ltd