European Union: Consultation on restructuring and EWCs
The European Commission has issued a communication addressed to the social partners on the issues of industrial restructuring and of the operation of EWCs.
Setting out its own plans for policy reform to help manage restructuring, the commission calls on the social partners to negotiate an agreement on implementing existing guidelines for managing change and on promoting best practice in the operation of EWCs.
ON 5 April 2005, the European Commission issued a communication on restructuring and employment, entitled "Anticipating and accompanying restructuring in order to develop employment: the role of the European Union" (COM(2005)120 final, dated 31 March 2005). The commission states that the aim of this communication is to set out the measures that can be developed or strengthened to anticipate and manage restructuring. The communication also initiates the second phase of EU social partner consultation on restructuring and on European works councils (EWCs), under art. 138(3) of the Treaty establishing the European Community (TEC).
Restructuring
The issue of enterprise restructuring and its potentially negative social consequences, particularly in terms of employment, has been a priority for the commission for some years. Seeking to find a way of putting into place a framework for managing this phenomenon, the commission issued its first phase of EU social partner consultations on restructuring in January 2002 (see EC: Commission consults on restructuring). In this, it asked the social partners to pinpoint and develop instances of good practice in managing restructuring exercises. After holding a series of seminars in 2002 and 2003, the cross-sector social partners - ETUC, UNICE/UEAPME and CEEP - concluded in June 2003 a joint text entitled "Orientations for reference in managing change and its social consequences". This text was signed in October 2003 (see International: Socially responsible enterprise restructuring - part one). The text is not a formal joint social partner agreement and, at the time, was reported to be controversial within ETUC, with its executive committee deciding to "take note" of, rather than give formal approval to, the text.
In its new communication, the commission sets out what it deems to be the main challenges posed by restructuring. It stresses that, although restructuring is often seen as a negative phenomenon, there may be some positive aspects to it: "The disappearance of certain particularly dangerous, arduous or polluting jobs can be seen as something positive if they are offset by new ones." It goes on to state, however, that: "The new jobs that are created are not necessarily taken up by the people who have been made redundant because the location and the skills required are not necessarily the same in the two cases." It expresses particular concern that change disproportionately affects the most vulnerable populations group, especially low-skilled workers. While noting that developments such as the deepening of the internal market and the opening up of the economy to trade are necessary, it stresses that they must be accompanied by measures to cushion negative social effects.
Commission's proposed actions
The commission lists the actions that it intends to take to ensure improved anticipation and management of restructuring, drawing on a broad spectrum of policies, including industrial, competition and external policy. These include focusing the EU's structural funds more on the objectives of the Lisbon strategy over the period from 2007 to 2013.
Further, the commission will lengthen, from five to seven years, the period during which no substantial change, including relocation, can be made after receiving structural and cohesion funds. If changes are made, firms must reimburse the funds.
The commission will also establish a "growth adjustment fund" of an annual €1 billion to provide support to areas affected by restructuring. It also proposes that a reserve of up to 1% of convergence and 3% of competitiveness funding per year and per member state (around €2.6 billion and €1.7 billion, respectively) be created within the structural funds to deal with the consequences of unforeseen restructuring.
The commission will also continue to implement its revamped industrial policy, which it proposed in April 2004. On a sectoral and regional basis, the commission intends to concentrate on sectors likely to experience significant changes in the short term. The focus will be on analysing the development of competitiveness, environmental threats and opportunities, consequences at regional level and measures likely to be taken at EU level to anticipate and accompany change. The details of these measures will be set out in a communication being prepared on the sectoral dimension of industrial policy. During 2005, the commission states that it will concentrate on the textile, shipbuilding and car sectors.
The commission will launch joint technological initiatives to finance programmes for the development of socially useful products or services, to create new markets and jobs. It also intends to use competition policy and external policy to help in the management of change.
Improving ways of measuring restructuring
A relatively new body for monitoring restructuring already exists, in the form of the Dublin-based European Monitoring Centre on Change. The commission will ask this centre to develop its qualitative and quantitative analysis and monitoring resources in order to build a firmer foundation for public debate on restructuring and relocation.
In terms of new measures, the commission intends to issue a communication on corporate social responsibility, focusing on good practice in the area of managing restructuring.
Finally, the commission will put into place in 2005 a restructuring forum, briefed to keep in touch with ongoing changes and to ensure that the various initiatives undertaken are properly dovetailed. It will comprise representatives of the commission, other European institutions, the social partners and external experts.
See box below for an overview of the commission's proposed actions.
European Works Councils
The commission issued its first phase of social partner consultations on the operation of the European Works Councils (EWCs) Directive in April 2004 (see EC: Commission issues consultation on EWCs Directive), seeking views on its operation and linking this process to the management of change by emphasising the positive role that EWCs can play in helping to smooth the process.
After a series of joint social partner seminars, the social dialogue committee approved a joint text on 1 March 2005 in which the social partners set out the lessons learned from nine case studies of the operation of EWCs. These case studies were undertaken as part of the social partners' three-year joint work programme (see European Commission: Social partners set out three-year work programme). For an overview of this joint text, see box.
Second consultation phase
This new communication acts as a second consultation phase to the EU-level social partners on restructuring and on EWCs, with the commission stating that these policy areas are linked.
On restructuring, the commission states that the social partners are "the key players in terms of effective action on the restructuring front" and calls on them to become more involved in the ways and means of anticipating and managing restructuring. Noting that the social partners have already agreed a joint text on guidelines for managing industrial change, the commission nevertheless states its belief that there has been "insufficient" dissemination, development and application of the provisions contained in the text, a factor that has "prompted the commission to pursue its initiative through a second stage consultation". It is also asking the social partners to devise "practical mechanisms to apply the principles they have set out to approach restructuring".
On EWCs, the commission sets out progress so far, making reference to the joint text agreed on 1 March 2005. It also notes that feedback to its first consultation from the social partners indicates that employee representative organisations would like to see a quick revision of the Directive, while employers' organisations would not.
It believes that the issues of restructuring and of EWCs are "closely linked" and therefore encourages the social partners to "intensify ongoing work and to start negotiations with a view to reaching an agreement" on the following themes:
- implementing mechanisms for applying and monitoring existing guidelines on restructuring, and a discussion on the way forward;
- encouraging adoption of the best practices set out in the existing guidelines on restructuring;
- promoting best practice in the way that EWCs operate, with a view to making them more effective, particularly as agents for change; and
- devising a common approach to other points in this communication that are a concern, such as training, mobility, the sectoral dimension and anticipating change.
The commission states that it will follow the work of the social partners and examine the progress made between now and the tripartite social summit that will be held in March 2006.
Reactions
The ETUC has welcomed the commission's communication, stating that: "A coherent EU-wide strategy is vital, given that badly managed restructuring is a threat to many of the Lisbon objectives, including full employment, better jobs and social and territorial cohesion." The ETUC adds that it is not opposed to change, but stresses that change must be planned, well managed and followed up in a way that "removes the fear and insecurity felt by many workers in Europe, who now worry that their livelihoods are going to disappear overseas." It lists its own priorities for action in managing restructuring in a responsible way:
- better use of existing mechanisms for managing change, including political, financial, legislative and contractual instruments;
- prior advance notification and consultation with the social partners before restructuring begins, to allow a framework of measures to be set up to support workers;
- personalised solutions for workers made redundant as a result of restructuring. This could include counselling, support in seeking alternative employment, work placements in other firms, professional retraining and access to credit for setting up small businesses;
- good quality training and lifelong learning for all employees;
- adequate social benefits to provide a safety net for workers confronted by a period of unemployment;
- strong partnerships between actors at regional and local levels; and
- more research into the long-term prospects of European industrial sectors, to enable advance warning to be given of areas where jobs may be at risk in the future.
UNICE and CEEP had not made their views on this second consultation public at the time of writing. However, given the fact that UNICE and CEEP have engaged in negotiations and signed joint texts on restructuring and on the operation of EWCs, it would be unlikely that they would be willing to enter into any further discussions on the substance of these issues. Both UNICE and CEEP voiced opposition to a revision of the EWCs Directive in their responses to the commission's first EU social partner consultation. It is therefore most unlikely that either employer organisation would agree to negotiating on substantial changes to the text of the EWCs Directive, as pursued by the ETUC. In any case, a revision of the Directive was not explicitly mentioned by the commission in its latest communication, possibly exactly because of this divergence in the views of the social partners.
|
UNICE/UEAPME (the latter organisation representing small and medium-sized employers), CEEP and ETUC have concluded a joint text on "Lessons learned on European Works Councils", dated 7 April 2005. In this text, the parties state that they decided to discuss the functioning of EWCs in the enlarged EU on the basis of practical case studies, in the context of their three-year work programme (2003-2005, see EC: Social partners set out three-year work programme) and the commission's first consultation of the EU social partners on the EWCs Directive. Accordingly, two social dialogue seminars were held in September and October 2004, at which nine case studies of EWCs were examined. These were:
Lessons learned The signatory parties list the lessons that they have learned from their examination of these case studies. A tool for organising transnational information and consultation The text states that practice shows that EWCs can help management and workers to "build a corporate culture and adapt to change in fast-evolving transnational companies or groups". It stresses that companies and workers in all EU countries are confronted with "continuous and rapid" change in work organisation and production, and a good social dialogue climate and a constructive attitude may contribute to easing the management of change and preventing or limiting any negative social consequences. Mutual trust The establishment of a climate of mutual trust between management and employee representatives in an EWC is important for its functioning. The EWCs studied differ in that some have detailed operational rules while others have broader rules and a restricted steering committee, which will deal with the task of how to handle information and consultation on a particular issue. A pragmatic approach to the operation of the EWC, information relations between management and worker representatives, openness from management on releasing information at an early stage, and a constructive attitude from workers on the search for solutions are listed as important factors. Understanding complex issues The ability to understand complex issues determines the quality of communication in the EWC. Investment in language and technical training is seen as something that will help the functioning of the EWC and reduce costs. Some agreements allow worker representatives to be assisted by experts. Reconciling different cultures The text identifies finding ways of reconciling different national industrial relations practices, occupational traditions and addressing an increasingly diverse workforce as "a constant challenge". To ensure that the EWC plays a positive role in developing a common approach in companies undergoing rapid internationalisation, some agreements have been negotiated and signed by European sectoral federations only. Some agreements used sectoral federation representatives as co-signatories or informal experts. In others, management worked exclusively with designated worker representatives. Ensuring ownership of the EWC by the workforce Ensuring a real sense of ownership of the EWC by the entire workforce was felt to be a "considerable challenge" by all the EWCs studied. The practical issues to be addressed varied between company. Difficulty of identifying worker representatives in the new member states The text states that some companies have anticipated the enlargement of their EWC and have therefore not experienced problems in identifying worker representatives from new countries. However, others report considerable difficulties. Managing multiple layers of information and consultation A difficult issue to address for both management and worker representatives is how to ensure meaningful information and/or consultation without creating undue delays and uncertainties. Issues such as respecting the legislative and contractual framework in the area of information and consultation and confidentiality requirements can influence the information and consultation process. Further tensions can arise from the fact that even if some strategy decisions are taken at EU level, managing their social consequences is a local issue. An evolving process The text states that all the case studies examined show that the smooth functioning of EWCs is "a learning and evolving process through fine tuning over the years". It adds that creating a good working atmosphere and functioning in an EWC takes time, openness and efforts from both sides, particularly to overcome possible misunderstandings and tensions arising from differences in national situations and social dialogue traditions. |
