Banks make record profits

2023 was an exceptionally profitable year for banks, and 2022 and 2021 were also highly profitable. Forecasts for the coming year are also promising.

The need for structural reforms

Pay negotiations are crucial to future labour market policy and the attractiveness of Luxembourg’s financial sector. There is an urgent need for structural reforms to the pay scales in the banks’ collective bargaining agreements (CBAs). However, the myth of the trickle-down effect, according to which pay rises would reach all employees if management had the discretion to decide, has long since been disbelieved in the banking sector. All too often, the reality has been and still is different.

It’s a different story: “The good guys in the small pot, the bad guys in the big pot”.

Perspectives

Between 2018 and 2020, long-standing pay scales were replaced by progressive index-linked loyalty bonuses and vague promises of pay rises. However, the reality was different: pay scales were reduced to a minimum and most employees received a one-off increase as a result of this change. However, they received nothing afterwards, and only found out later.

Then, in 2021, there was the scandal, due in particular to Aleba’s solitary approach with the employers’ associations. This led to a complaint and the subsequent loss of Aleba’s sectoral representativeness, which ultimately worked in favour of the employees, thanks to the commitment of the OGBL. In addition, the resilience of the financial sector during the Covid-19 pandemic, which can largely be attributed to employees, led to a one-off linear increase of 1.2% over three years.

Current situation and perspectives for 2024

2023 and today, when the banking sector is making record profits, there is dogmatic opposition to any form of linear pay rise, which is very regrettable. But this is precisely what is ultimately leading to the reintroduction of pay scales: real pay scales and a correction of the pay structure.

This is reflected in concrete measures in the collective bargaining agreement:

• Reintroduction of real pay scales
• Improvement and extension of pay scales, which have been stagnating for years, from eight to ten years.
• Substantial improvement in the loyalty bonus from the tenth year onwards

The right to further training and job security

Ongoing training remains an essential element of security in tomorrow’s financial sector. Additional guarantees have been negotiated in the event of a reduction in the workforce, as well as measures for continuing training within the company. What is new is that each employee has an “individual training allowance” of 16 hours per year. These hours are entirely at the employee’s disposal for training, regardless of compulsory training or future retraining.

Conclusion

The recent reforms of the Luxembourg financial sector mark a decisive step towards ensuring its attractiveness and long-term stability.

It is important to properly recognise and reward the crucial role played by employees, over and above the company’s profits. The reintroduction and improvement of salary structures and the significant increase in loyalty bonuses are significant steps forward. They ensure fairer and more appropriate recognition of employees’ performance and strengthen their financial security, while fostering motivation, interest and commitment to collective bargaining agreements. These are important elements. Extending rights to training and job security are also crucial. In a rapidly changing financial sector, it is essential for employees to be able to undergo continuous training and broaden their skills. The OGBL’s determined action in these negotiations and reforms deserves particular recognition. By defending the interests of employees, the OGBL has played a key role in the introduction of fairer and more sustainable pay structures.

The article was published in the “Aktuell” (3/2024)