Agreement on sectoral social dialogue and strategic partnership (Zagreb, 1 December 2005)

As there is an urgent need to:
– Carry out socially responsible strategic repositioning of entities operating in the Croatian fashion industry so that new business models are applied providing products and services with higher value added,
– Support the definition of industry and trade policy that will result in socially responsible development,
– Encourage the process of knowledge creation in organizations with the objective to increase their efficiency and effectiveness,
– Increase the security of jobs curently available and explore the possibility of new employment,
– Establish and institutionally strengthen sectoral social dialogue,
– Use the sectoral social dialogue as a learning process for all the social partners and other stakeholders,
– Create prerequisites for social peace and development of mutual trust and partner relations and
– Provide support for all other activities that will enable entities operating in the Croatian fashion industry to become successful business entities and good employers providing adequate working conditions and labor relations,

Croatian Textile and Leather Industry Employers' Association (hereafter: Employers' association), represented by the Executive Committee President Ms Marija Šutina

and

Croatian Trade Union in Textile, Footwear, Leather and Rubber (hereafter: TOKG Trade Union), represented by its President Mr Josip Zidanić,

While taking into consideration:
– The current situation (instituons, processes and outcomes) of social partners in those EU member countries where sectoral social dialogue has been taking place for decades,
– Communication of the EC Commission: Opinion on the application of the Republic of Croatia for membership of the European Union, COM(2004) 257, final text of 20 April 2004,
– Declaration on knowledge: Croatia based on knowledge and application of knowledge by the Croatian Academy for Arts and Sciences from 2004,
– Study by the Academy for Educational Development from Zagreb (AED) "Review of Social Responsibility of Companies" from 2004,
– 55 policy recommendation made in January 2004 by the National Competitiveness Council aimed at raising Croatian competitiveness and the Annual report on Croatian competitiveness in 2004 from May 2005,
– National program of the Republic of Croatia to join the EU, for the year 2005,
– Key activities of the Association of textile and leather industry in Croatia for the year 2005, as well as
– The chronology of relevant sectoral activities carried out by Croatian social partners and other interested parties, including:
 The first tripartite meeting held in Zagreb on 6 June 2002, organized by the TOKG Trade Union, where the decisions were taken to initiate changes aimed at increasing competitiveness of entities operating in the textile, clothing, footwear and leather industries,
 tripartite workshops held in the first half of 2003 on strategic social dialogue regarding the industry competitiveness, organized in cooperation between the TOKG Trade Union and the Croatian Society for Organizational Learning, where the participants were employers, trade union representatives and representatives of the Croatian Employment Office. The outcome was the study prepared by the Croatian Society for Organizational Learning and social partners entitled "Croatian Fashion Industry Strategy until 2013" from June 2003,
 Tripartite round table with international participation on sectoral industrial policy, held in Dubrovnik on 29 and 30 September 2004, organized by
International Federation of Textile and Clothing from Gent, ACV Textura from Gent and the TOKG Trade Union,
 1st Congress of textile and leather industry workers, held in Zagreb on 10 December 2004, following the initiative of and in the organization of the Employers' Association,
 Tripartite international conference on sectoral social dialogue, held in Šibenik on 4 and 5 October 2005, organized by International Federation of Textile and Clothing from Gent, ACV Textura from Gent, Employers' Association and TOKG Trade Union, where the proposal was made to initiate the procedure to establish a sectoral committee,
 Bipartite workshop " Key success factors in new business models in the textile, clothing, leather and footwear industry in Croatia", held on 3 November 2005 in Stubičke Toplice, in the organization of the Employers’ Association,

Entered in Zagreb on 1 December 2005 the following

AGREEMENT
on sectoral social dialogue
and strategic partnership

I GENERAL PROVISIONS:
Article 1
This Agreement shall be binding on and implemented by the parties to the Agreement and by all their members in the following industries (NKD chapters):
– Textile manufacturing,
– Clothing manufacturing, garment make-up and and fur dying,
– Leather processing, manufacturing of luggage and bags, saddles and belts and footwear,
– Production of rubber and plastics products.
This agreement shall be binding on and implemented by all parties that may subsequently
become members of the parties to the agreement, by all the parties that may subsequently join the Agreement, and all the parties that may subsequently become members of the associations that have subsequently joined the Agreement.
Legal provisions set in the Agreement shall have to be applied directly and mandatorily by all the parties that the Agreement is binding on.
If an employer leaves the Employers' association or another association that has subsequently joined the Agreement, the Agreement shall be binding on the said party until the new agreement is made, and not longer than a year since the party left the Employers' association or another association that had joined the Agreement after it had been signed.

Article 2
Terms used in the Agreement in the masculine gender shall apply equaly to parties of both genders encompassed by the Agreement, unless the text of the Agreement explicitly states otherwise.

II STRATEGIC PLANNING AND COMPETITIVENESS

Article 3
Signatories of the Agreement shall from time to time update the Strategy of Croatian fashion industry, and especially the SWOT analysis, future scenarios and goals, in order to adjust these to the long-term vision and mission, and the procedure shall be carried out with the participation of all their interested members.
First update shall take place before the end of March 2006, to be then repeated semi-annually, unless pace of change in the environment makes it urgently necessary to revisit the strategy more frequently.

Article 4
Based on the stipulations from Article 3 of this Agreement, the signatories shall define, in cooperation with their members and in accordance with their needs and priorities, before the end of 2005, the areas of cooperation with Government bodies, non-governmental organizations and other interested institutions, with the aim to promote the concept of socially responsible competitiveness.
Priorities set for the period 2006 – 2007 are annexed to this Agreement and are an integral part of it.

III SECTOR STRATEGY COMMITTEE

Article 5
Signatories of the Agreement shall establish a tripartite Sector strategy committee (hereafter: Strategy committee), before the end of 2005, in order to focus on the following:
– Developing the capability of anticipating and managing the change relevant to socially responsible business operations in all the sectors of fashion indutry in Croatia,
– Monitoring the situation in the sectors and providing counselling on issues such as sectoral plans to increase competitiveness, employment policy (active policy measures, illegal employment, work at home, professional training and education and other), industrial policy (for ex. Implications of EU industrial policy for the economy of the Republic of Croatia), trade policy (position of the Republic of Croatia in the Euro-Mediterranean region and participation of Croatian representatives in working groups already established in the region), protection of intellectual property, control and certification of quality of imported goods (encompassing a product and all its components, labels showing environmentally friendly products, social repsonsibility and ethical business practices of all suppliers in the value chain etc.) as well as on all other important issues,
– Assessing the effectiveness of public sector institutions established to provide services to businesses in the private sector, in order to propose measures to improve the quality of services provided,
– Cooperating with the National Competitiveness Council and the Economic and Social Council,
– Participating in the creation of educational programs and institutions needed by employers and validating the forms of training which will help bridge the period needed for the restructuring of the public sector educational institutions,
– Establishing institutions that can provide an entity's management with data on the competitive position of the organization (on competitive strengths and weaknesses, suppliers, markets, main trends in science, technology, politics and business) and that would also be capable of providing analytical services in order to increase the capabilities of social partners and their members.

Article 6
In order to meet the needs and interests of the Croatian fashion industry, the Croatian Strategy Committee shall focus on performing the following activities:
– monitoring, studying and assessing the impact of economic policy and its measures on the economic and social stability and development achieved in the industry,
– submitting proposals to persons responsible on key short-term and long-term measures, which should support projects and activities and the parties responsible, for the purpose of executing the goals planned in order to achieve the fashion industry strategic turnaround, consolidation and development,
– defining current and new future position of the Croatian fashion industry organizations within the EU as well as the position within the global market for fashion industry products,
– encouraging research and development projects and cooperation between industry and scientific institutions,
– contributing to the adjustment of the educational system to the needs of fashion industry and cooperation of educational institutions with fashion industry organizations,
– monitoring developments in the field of employment, education, pension and health insurance for the purpose of protecting the interests of the sectors as well as local communities where Croatian fashion industry businesses operate,
– providing opinion on draft laws and their expected impact on the operations of fashion industry organizations in Croatia,
– monitoring restructuring processes in organizations operating in Croatian fashion industry,
– promoting ideas of cooperation between social partners who have signed this Agreement and other interested parties in the business sector and civil society,
– monitoring implementation of employment rights and social security rights and proposing mesures to improve them,
– adopting the rulebook on its own operations.
Signatories of this Agreement shall make sure that the Committee members understand the
basics of strategic planning, industrial and trade policy, national and global market situation, and operations of most organizations active in the Croatian fashion industry.

Article 7
The Committee shall adopt resolutions and recommendations and shall decide who to send them to, i.e. who are the partners it intends to promote and implement them with.
The Committee shall give priority to decision-making based on unanimous opinions i.e. on consensus against decision-making based on the majority of votes cast.

Article 8
Each social partner shall be independent in appointing and recalling its representatives and their deputies to and from the Strategy Committee .
When appointing representatives, each social partner shall guarantee adequate representation.
Strategy Committee shall have a President and two Vice-Presidents, elected among the members of the Committee by a majority of votes for a term of office of a year, while ensuring that all social partners are represented in turn.
Strategy Committee shall be chaired by a President, who has the right to represent it, convene its meetings, propose the agenda, supervise execution of its conclusions and perform all other duties entrusted with him by the Strategy Committee.
In the case of absence of the President, Vice-Presidents shall perform his duties.
The activities of the Strategy Committee may also involve external experts from various fields as standing counsellors with no voting rights.
Strategy Committee members have a term of office of three years, and Presidents and Vice-Presidents are elected for a year.
Members may be recalled before their term of office expires if they act in violation of the law and this Agreement.
Strategy Committee membership rights of social partners who have subsequently joined the Agreement shall be agreed between these social partners and the signatories to the Agreement, who are the founders of the Strategy Committee.
Each social partner shall cover its costs of participation in the activities of the Strategy Committee.

Article 9
Signatories to the Agreement shall inform the relevant Minister on their membership in the Strategy Committee and shall ask him to appoint a representative of the Ministry as a member of the Committee so that the Committee membership is complete and it can start operating in January 2006, in accordance with the provisions of the rulebook accepted by the parties.

The request submitted to the Minister shall specify that the appointed representative should have the authority to make decisions and take over liabilities.

IV SECTORAL DIALOGUE AND KNOWLEDGE CREATION

Article 10
Signatories to the Agreement undertake to establish an on-going sectoral social dialogue in April 2006 at the latest, both at the national level and at the county level, in order to foster knowledge creation.
Topics, pace and participants in the dialogue thus established shall be based on priorities and needs that have been mutually agreed upon.
Signatories to the Agreement shall lobby the Government of the Republic of Croatia in order to obtain funding needed to maintain the dialogue (to cover such costs as those for lecturers/moderators engaged, premises used, documents needed, sources of information used and other training requirements), which should serve as a model of activities to be carried out by social partners with the aim of creating knowledge needed by organizations and enabling them to participate in socially responsible development and competitiveness inprovement.

Article 11
Activities carried out at the level of counties shall take priority in the regions of Croatia where:
– there is high concentration of entities and jobs in fashion industry and their suppliers in the value chain,
– socially irresponsible restructuring measures could have serious social impact to be felt by the local community and the region as a whole,
– business entities are interested in establishing strategic alliances (clusters).

V SOCIAL RESPONSIBILITY AND COOPERATION
WITH CIVIL SOCIETY INSTITUTIONS

Article 12
Signatories to the Agreement shall in the course of the year 2006 expand their cooperation to include non-governmental organizations and other civil-society institutions in order to raise the awareness of consumers of the need to examine product labels specifying their ecological, health and general social acceptability (following foreign examples such as: made in dignity, fair trade, eco label and the like) as well as social responsibility of organizations operating in the fashion industry.

VI PARTNERSHIP AND ETHICAL ISSUES

Article 13
Relationships between the signatories to this Agreement and their members shall be based on the following principles of partnership:
– sharing common values, vision and goals that are to be implemented by means of the sectoral social dialogue at the level of each organization,
– preserving the commitment of all members and participants in the dialogue to establish partnership in situations when there are problems, oppositions, or criticisms (criticisms as an impetus to learn and succeed in implementing change),
– recognizing that members and other participants have different types and sources of power (economic power, political power, moral credibility, know-how etc.), but they all can make a valuable contribution to the achievement of common goals,
– recognizing the legitimity of interests (differences in interests and views shall be resolved in an atmosphere of trust and dialogue where both parties are ready to listen to comments and proposals based on arguments presented by the other party, with no consequences to be feared because of criticisms voiced, i.e. without the threat of negative experiences),
– expressing the will and commitment of all participants to invest time and effort in the process of partnership building,
– committing to the success of fashion industry, i.e. the sectors and businesses that operate in it (common understanding of the vision and business strategy and commitment to their realization),
– working on preserving jobs (changes in the organizations shall be carried out with the intention to preserve employment),
– focusing on the quality of working life (improving working conditions and enabling workers to contribute to the descision-making process regarding their work conditions by means of proposals to improve overall working conditions),
– ensuring transparency of labour conditions and information (fair, open and regular exchange of information on operations between management and trade unions and counselling of employers with the trade unions and employees on all issues relevant to the social and economic position of employees and the market position of the organization),
– having a dialogue based on the win-win principle (aim at mutual achievement, i.e. a balance between the required renunciations that have to be made in order to resolve a problem),
– ensuring flexibility and openness when there is a need to change strategies in the face of problems,
– creating and improving mechanisms conducive to creating knowledge and assessing achievement.

Article 14
Each party to the Agreement shall support activities undertaken by the other parties when dealiing with relevant government bodies and other institutions both at home and abroad, where the goal is to develop industrial policy, exporter status, employment policy, educational system catering to the needs of the Croatian fashion industry, development of a local community and other favorable goals that can contribute to the development of socially responsible economy and competitiveness.

Article 15
Signatories to the Agreement shall behave towards one another in an acceptable manner, and shall act in good faith and encourage their members to act in accordance with the partnership principles.
Signatories to the Agreement shall stop their members who act in their capacity of employers and trade unions in ways contrary to the law and this Agreement from taking part in activities and bodies envisaged by the Agreement.

VII TRANSITIONAL AND FINAL PROVISIONS

Article 16
This Agreement has been entered for an indefinite period of time.
This Agreement will become valid when it is signed by the authorized representatives of all the parties to the Agreement.
The Agreement shall come into force on 1 December 2005.

Article 17
Each party to the Agreement has the right to propose changes to it and may initiate a new collective agreement.
The above mentioned procedure shall be started and the proposal delivered to the other party to the Agreement by registered mail where an explanation of the initiative is provided. The other party shall express its opinion on the initiative in the course of thirty days following the receipt of the information when it shall state its decision to accept or reject the initiative to start a new round of negotiations.

Article 18
In the case that one party violates the obligations under this Agreement, the other party is entitled to cancel it.
The cancellation must be in writing, by registered mail, and must contain the reasons for cancellation.
Cancellation period is three months starting with the date of delivery of the relevant decision to the other party.

Article 19
Authorized representatives of the parties to the Agreement state, by signing this Agreement, that they have read the Agreement and its stipulations, that they have understood it, that they consent to them and that they have signed the Agreement in order to testify their acceptance and implementation of it in good faith.

Article 20
This Agreement has been written and signed in six identical copies, of which three shall be given to each party.

Employers’ Association in textile Trade Union in textile,
and leather industry of Croatia footwear, leather, rubber
industry of Croatia

President of Executive Committee President

Ms Marija Šutina Mr Josip Zidanić

Annex (Article 4 of the Agreement)

Pursuant to Article 4 of the Agreement on the sectoral social dialogue and strategic partnership, a meeting of signatories of this Agreement and other stakeholders was held on 3 November 2005 in Stubičke Toplice, where the following recommendations and priorities regarding the actions of the Sector Strategy Committee were made for the period 2006 – 2007:

I Recommendations regarding the content of the action program – FASHION

No. Priorities Term Persons responsible and other participants Sources of finance Note
Company level
1. Transform companies in a creative community of knowledge and ideas, enabling continued innovation HUP UTKI, TOKG,
MINGORP Participants’ funds
2. Develop ability to establish and recognize emotional values for buyers HUP, Vlada, TOKG Government and EU funds
3. Implement quality management system based on standards ISO 9001:2000 HUP UTKI,
TOKG,
MINGORP Government
4. Form interdisciplinary teams of employees and external collaborators
5. Restructure companies by focusing on „core” processes and products
6. Ensure holistic approach to the development of a new product
Sectoral level (suppliers, buyers, competitors, substitutes)
1. Initiate establishment of business intelligence center and support entry into new markets (outside EU) and establish the capability to recognize emotional values for buyers HUP, Government, trade unions Government and EU funds
2. Form clusters based on identified products having potential and compatible capacities of existing companies HUP (through National program) Funds owned by cluster members and cofinancing by the Government or EU funds Expert support to the execution of the already initiated process
3. Franchise retail trade and establish high standards at point of sale
4. Form educational and training centers for all levels of employees
5. Establish close cooperation with designers and other supporting agencies (for ex. public relations)
6. Establish close cooperation with supporting industries (for ex. culture, tourism)
7. Create/identify trade marks – positioning of Croatian fashion industry
Republic of Croatia macro level
1. Decrease tax burden on labor and overall tax burden
2. Subsidize exporters (consequence of adverse currency impact through lower fiscal burden)
3. Protect product label from copying
4. Subsidize adjustment of the RC legal framework to the EU
5. Combat grey ecoonomy (actions and results based on issues opened)
6. Control quality of imported products
7. Educate consumers on the quality and social acceptance of a product

Employers’ Association in textile Trade Union in textile,
and leather industry of Croatia footwear, leather, rubber
industry of Croatia

President of Executive Committee President

Ms Marija Šutina Mr Josip Zidanić

I Recommendations regarding the content of the action program
– SPECIAL GARMETS AND FOOTWEAR

No. Priorities Term Persons responsible and other participants Sources of finance
Company level
1. Educate and inform about quality requirements and norms to be met by producers of special clothings – STANAG HUP UTKI,
TOKG,
MINGORP Funds owned by participants
2. Transform companies into creative communities of knowledge and ideas while enabling constant innovation HUP UTKI,
TOKG,
MINGORP Funds owned by participants
3. Implement quality management system in line with standard ISO 9001:2000 HUP UTKI,
TOKG,
MINGORP Government
4. Restructure companies by focusing on „core” processes and products
Sectoral level (suppliers, buyers, competitors, substitutes)
1. Initiate establishment of business intelligence center and support entry on new markets (outside EU) and capability to recognize emotional value for buyers HUP, Government, TOKG Government and EU funds
2. Form clusters based on identified products with potential and compatible capacities of existing companies HUP ( National program) Funds owned by cluster members and cofinancing from Government or EU funds
3. Esure systemic pro-active common approach to public procurement process
4. Form educational and training centers for all levels of employees
5. Establish close cooperation with designers and other supporting agencies (for ex. Public relations)
6. Ensure joint presence at fairs
7. Create joint development centers
8. Ensure waste management

Republic of Croatia macro level
1. Decrease tax burden on labor and overall tax burden
2. Subsidize exporters (consequence of adverse currency impact through reduction of fiscal burden)
3. Engage in offset operations in a structured, harmonized and systemic manner
4. Subsidize harmonization of the RC legal framework with the EU
5. Combat grey economy (actions and outcomes based on issues opened)
6. Control quality of goods imported

Employers’ Association in textile Trade Union in textile, and leather industry of Croatia footwear, leather, rubber
industry of Croatia

President of Executive Committee President

Ms Marija Šutina Mr Josip Zidanić