Industrial Relations

The Group Industrial relations are conducted on the basis of constructive dialogue, fairness and respect of the various roles involved. Guaranteeing and respecting employees’ freedom to engage in union activities has always been one of the company’s core principles.

Relations and negotiations with Trade Unions take place locally, in accordance with the laws, the national and/or company-level collective agreements and the prevailing customs and practices in each country. These are accompanied by the role played by the Central Functions, which intervene to ensure both the coordination of activities and the respect of the abovementioned principles.

In 2007, Industrial Relations activities saw the achievement of significant negotiation results, with the renewal of the collective agreements in the various Group production plants in Spain, Germany, Argentina and Romania.

In Italy, signature of the union agreement on 13 November 2007 for the development of the new Settimo Torinese Technology and Production Centre, which will integrate the current Settimo Vettura and the Settimo Veicoli Industriali sites, was of major significance. This agreement follows on from Pirelli Tyre framework agreement with the Piedmont Regional Authority, the Turin Provincial Authority, and the Municipality of Settimo Torinese, which has strengthened dialogue with local administrative authorities.

European Works Council (EWC)

The Pirelli European Works Council (EWC), set up in 1998, holds an ordinary meeting once a year, following the presentation of the Group’s financial statements, to be updated on economic performance, financial-economic forecasts, investments made and planned, research progress, etc. The agreement establishing the ECW also allows for the possibility of holding other extraordinary meetings to fulfil its obligations to provide information and consult its delegates in view of transnational events involving significant changes to the corporate structure, i.e. new openings, the restructuring or closure of sites and widespread changes in work organisation. EWC Delegates are provided with the IT tools they need to perform their duties and a connection to the corporate Intranet system, for the real time communication of official company press releases. Following Romania’s entry into the European Union, the Council is now made of 12 members.

Compliance with legal and contractual requirements on overtime and time-off

The Pirelli Group policy has always involved compliance with all legal and/or contractual requirements concerning working hours, the use of overtime and the right to regular days of rest. These are often the subject of agreements with both trade unions and individual workers, in line with the many different regulatory contexts.

There are no restrictions to any of the workers’ right to use their total number of holidays, and the holiday period is generally agreed between the worker and the company.

Labour and social security lawsuits

In 2007, the level of conflict continued to remain low, generating a very small number of labour and social security lawsuits.

In Brazil, the level of labour-related lawsuits is traditionally high, representing around 90% of the lawsuits currently being brought against the whole Group. This continues to be a very widespread phenomenon, which also affects other multinationals operating in this country. Labour lawsuits are generally initiated when an employment contract is terminated, and they usually involve the interpretation of regulatory, legal and contractual issues that have long been controversial.

Unionisation Levels and Industrial Action

The Group’s unionisation levels cannot be calculated precisely, as this information is not available in all the countries. We can however estimate that about half the Group’s employees are trade union members.

The percentage of employees covered by collective agreements in 2007 remains unchanged compared to last year, at around 90%. This percentage is the result of the historical and cultural differences in various national frameworks.

Individual contracts are held by approximately 10% of the employee population, such as the executives worldwide, except for Italy, Managers in the UK, Non Tarifs in Germany, Excluidos in Spain, Senior and Esecutivi in Brazil.

The overall conflict rate recorded in 2007 was very low. Industrial actions during the year were only recorded in Italy and Spain. The industrial action in Spain took place in Manresa production during the renewal of the collective company agreement, whereas in the Italian plants it mainly involved operational issues and disputes over salary policies.

All the above disputes were resolved by agreement between the parties.

Occupational pension plans and healthcare schemes

No significant changes were made in this area in 2007, with the majority of affiliates providing supplementary pension schemes for their employees. The Group has adopted a policy involving the abandonment of defined benefit schemes in favour of defined contribution schemes.

Defined benefit schemes are in place in the UK (involving employees who were hired prior to a particular date, whereas those hired later participate in a defined contribution fund), in the USA (these funds were closed some years ago to active employees in favour of defined contribution funds; since then they only involve retired staff and are not affected by wage increases) and in the Tyre Sector in Germany (the scheme was closed to new recruits in 1982). There are also other defined benefit funds within Pirelli Real Estate in Germany and in Holland for the Tyre Sector, which represent a relatively insignificant liability for the Group.

Pension schemes are generally complemented by insurance policies against death and permanent disability. In Italy, the reform of the supplementary pension fund legislation came into force on 1st January 2007, giving employees of private companies the right to participate in supplementary pension funds, open or closed, and allocate them the severance indemnity starting from 1st January 2007.

The Group affiliates still provide healthcare schemes in compliance with local needs. The schemes differ from country to country in terms of allocation levels and types of cover provided. These schemes are managed by insurance companies or specially created Funds. The company participates by paying a fixed rate, as in Italy, or an insurance premium, as in Brazil and in the USA.