Collective Agreement with 4 Labour Unions, including a Monthly Flexible Pay Structure
Setting
Discussions on the effect of bonuses on productivity are myriad: unions generally believe in the positive effect of them, as long as they come on top of the existing salary structure and as such can only have a positive effect on the take-home pay. It is especially this rather one-sided view of bonuses that make many employers wary of them: they raise costs without raising output.
During my years in Singapore and Malaysia this discussion was very much alive. Even the governments were in favour of a more flexible pay system, however they too tended to prefer the ‘positive bonus’. There was mention, especially in Singapore, of situations where the total annual salary might be restricted in exceptional cases, however unions were aghast.
Challenge
It was in this environment that I joined B. Braun in Malaysia, a group of companies that was not yet unionised. This does not mean that national unions did not try to muscle in, but that the efforts of B. Braun to thwart them had so far been successful. Although I do recognise that some unions can be militant and might severely limit the flexibility in an organisation, I am and was not against unions per se, I believe unions can be very helpful, providing, as it were, a reliable thermometer for the company.
Solution
I convinced the Management Team that we would not, in the long run, be able to keep the union out of all of our companies and that it therefore would be better to promote in-house unions that could in turn ally, but not become part of, national unions. Due to regulatory restrictions we ultimately ended up with one national union (pharmaceutical) and 3 pure in-house unions. Now my real task began:
- 4 unions meant 4 collective agreements (CA) but since we were one Group of Companies all operating from the same premises we could not really have important differences between the agreements
- Every few years a new CA would have to be negotiated where obviously each union wanted to outdo the other and prove its worth to its members
- We had a performance pay scheme that was much hated by unions but had to become part of the CAs. Most important parts of our scheme were:
- Relatively high starting salary (some 10-15% above surrounding companies)
- No seniority scheme, i.e. your starting salary remained (excluding cost-of-living adjustments) your basic salary throughout your tenure in this position (the Malaysian 'standard' was a yearly 5% seniority pay rise)
- Daily Performance bonus based on Efficiency and Quality
- Calculated and published daily
- verifiable by all (when rare errors were made employees were in my office within an hour of publication)
- Paid on a monthly basis
- Average value: 30% of basic salary, but 50-60% wasn’t unheard of
Notwithstanding all the above issues I repeatedly negotiated these CAs successfully
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