International: EWCs taking on a bargaining role?

Recent research examines the extent to which EWCs have developed some form of negotiating role, in a context of increasing "Europeanisation" of industrial relations in many multinationals and a continuing wave of cross-border corporate restructuring. It suggests that the negotiation of joint texts by EWCs is a very limited, but growing, trend.

European Works Councils (EWCs) are now a relatively well- established feature of industrial relations in many multinational companies operating in Europe. Of the 700 or so EWCs currently thought to be in existence, around 450 were set up five years ago or earlier, and may be assumed to have built up a fairly substantial body of experience. The question of what EWCs actually do (rather than the circumstances of their creation) is of increasing interest to researchers and practitioners. One area of EWC activity that has received little attention in practical terms - though it has been an issue for considerable speculation - is their potential negotiating role: to what extent have EWCs become the forum for negotiations between management and employee representatives?

Some commentators¹ have suggested that EWCs may develop a form of bargaining role at European level. Increasing coordination and use of cross-border comparisons on both the management and employee sides may lead to the development of a form of "arm's-length bargaining", in which "the parties do not formally negotiate at European level, but … influence and anticipate the reactions of each other", resulting in "a growing convergence in working practice and employment conditions from one European country to another". In these circumstances, it is suggested that "EWCs may become the forum for joint opinions or framework agreements on aspects of employment and industrial relations policy. Such framework agreements would … establish the broad parameters of policy within which negotiations to secure implementation then took place at national or business unit level within the enterprise." Furthermore, the current continuing wave of cross-national corporate restructuring might provide a "natural" issue for such EWC-related negotiations.

Recent research, commissioned by the European Foundation for the Improvement of Living and Working Conditions (EFILWC)², aims to provide an initial exploration of the extent to which EWCs have developed a negotiating role, by collecting and analysing examples of joint texts agreed in the context of EWCs. We set out some of the report's main findings below.

Joint texts rare

The study first examines the existence of provisions for the negotiation of any kind of joint text in the agreements establishing EWCs contained in the EFILWC's database of 386 pre-September 1996 "Article 13" agreements and 71 subsequent "Article 6" agreements. It finds that EWC agreements that mention the negotiation of joint texts are very rare. Article 6 agreements (5%) are more likely than Article 13 agreements (2%) to contain such provisions. In those agreements that do mention a possible negotiating role for the EWC, this is rarely described in any detail, and the terms of the relevant agreements are vague in some cases. In agreements that provide for no negotiating role, the prospects of such a role developing in practice may often be made more remote by provisions explicitly excluding such negotiations or precluding discussion of certain types of issue.

The research looked for joint texts (on matters other than the EWC's constitution or functioning) concluded by the management of a multinational company and either an EWC (or the employee side of a joint management-employee EWC), or some other employee representatives in the context of an EWC (eg where the EWC was involved in the negotiations or the joint text gives the EWC a role in its implementation).

Evidence was found of 22 joint texts that had been concluded in 11 multinationals (including two separate divisions of Philip Morris) - listed in the table below (14 of these are subject to full analysis in the report). Danone alone accounts for six out of 22 (27%) of the joint texts. Philip Morris and Air France each account for a further three texts (14%) and GM and Vivendi for two each (9%). The 11 companies tend to be based in France (five instances) and the USA (four) to a greater extent than the overall body of firms with EWCs, while the utilities, food/drink/tobacco and motor manufacturing sectors are over-represented.

Only at Danone were joint texts signed before 1996. Since that year, around two to three new texts have been concluded each year.

The agreements establishing the EWCs at Air France, Danone and Sara Lee Personal Products provide explicitly for joint texts to be negotiated, but the EWC agreements at the eight other companies make no reference to a negotiating role, restricting the EWC essentially to information and consultation, and making clear that it is not to infringe on existing consulting and bargaining relationships. Only three of the 11 EWCs found by the EFILWC database to be explicitly allowed to negotiate joint texts are known to have done so. It thus appears that in most cases there is no very direct relationship between the contents of EWC agreements in this area and subsequent practice.

The joint texts examined in detail were signed by management and a variety of employee-side parties. The EWC was the sole signatory of joint texts in only a minority of cases and was not a direct signatory in some cases. International trade union organisations played some role in a majority of cases.

The study points out that the small number of joint texts known to have been agreed does not necessarily mean that negotiating activity does not occur in other EWCs. Anecdotal evidence suggests that negotiation does occur in some EWCs, but that it either does not lead to formal written texts or does not lead to texts that are clearly of a joint nature.

Joint texts concluded by EWCs (or in the context of EWCs)
Company	Home country/sector	Date of text	Nature of text	Subject
Air France	France, transport	-	Joint opinion	Staff mobility
		-	Joint opinion	Position of sales staff
		2001	Social charter and code of ethics	Human rights and workers' rights, and principles of company's personnel policy
Club Mediterranée	France, leisure	2001	Joint declaration	Subcontracting
Danone	France, food and drink	1988	Common viewpoint	Basic principles and plan for joint work
		1989	Plan	Economic and social information for workers and their representatives
		1989	Action programme and plan	Promotion of equality of men and women at the workplace
		1992	Framework agreement	Skills training
		1994	Joint declaration	Trade union rights
		1997	Joint understanding	Changes in business activities affecting employment or working conditions
Deutsche Bank	Germany, banking	1999	Joint position	New structures, job security and employability
ENI	Italy, energy	1996	Agreement	Health and safety
Ford/Visteon	USA, motor manufacturing	2000	Agreement	Consequences of Ford's spin-off of Visteon for employees' status, employee representation and sourcing.
General Motors	USA, motor manufacturing	2000	Framework	Consequences of alliance between GM and FIAT for employees' status and employee representation
		2001	Framework agreement	Current restructuring initiatives
Kraft Jacobs (Philip Morris)	USA, food	1999	Code of conduct	Unknown
Philip Morris Tobacco	USA, tobacco	1998	Guideline	Accommodation of smokers and non-smokers
		-	Principles	Introduction of European single currency
Sara Lee Personal Products	USA, textiles	-	Unknown	Health and safety
Suez Lyonnaise des Eaux	France, utilities and communications	1998	International social charter	Fundamental rights and principles for human resources policy
Vivendi	France, utilities and communications	1996	Joint declaration on charter of fundamental social rights	Fundamental social rights
		1999	Charter	Safety at the workplace

Frameworks

Although they have a wide range of titles, the majority of the joint texts examined in the research are found essentially to be frameworks, in that they contain a set of principles, policies or rules agreed by the signatories which are to be implemented in some way by these parties and/or at lower levels within the multinational concerned. However, there is much variation in the nature of the agreed principles, policies and rules, and in the way in which they are put into effect.

The joint texts may contain one or more of the following: broad, general principles and rights; principles that guide the company's actions in general or in a specific area; agreed policies on particular issues, with varying degrees of detail; a jointly agreed plan of action on a specific issue; or a concrete set of rules to be applied in specific circumstances.

The frameworks provided by the joint texts vary considerably in their scope and in the extent to which they are binding. They may involve one or more of the following: general frameworks for company policy; frameworks for the signatories' actions; and (most commonly) frameworks for lower-level actions. Frameworks for lower-level actions are essentially voluntary in a minority of cases and essentially obligatory in a majority. Where they are obligatory, these frameworks allow varying degrees of freedom for lower-level parties to implement them in detail.

Issues dealt with

The most common central themes addressed by the joint texts are company restructuring and social rights (including trade union rights).

Company restructuring is the basic theme of the 1997 Danone joint understanding, the Deutsche Bank joint opinion, the Ford agreement and the two GM frameworks. Social rights, including trade union rights, are the central topic of the Danone 1994 joint declaration and the Air France, Suez Lyonnaise des Eaux, and Vivendi social charters. Health and safety is the main theme of two texts - ENI and the 1999 Vivendi charter. No other subject is the main theme of more than one text.

Within their overall themes, however, the joint texts deal with or touch on (if only briefly) a wider range of subjects. In broad order of frequency, these are: the information, consultation or participation of employee or trade union representatives; training; company restructuring; trade union rights; equal opportunities; the company's employment levels or employment policy; collective bargaining; working time arrangements; and employment status or contracts.

The central themes and specific issues mentioned in the joint texts analysed for the most part fall clearly within the normal areas dealt with by EWCs - ie those set out in the EWCs Directive's subsidiary requirements and in many agreements. This is the case for company restructuring, employment levels/ policy, training, equal opportunities and health and safety. Furthermore, the themes and issues of the joint texts mostly reflect the specific lists of topics for information and consultation set out in the particular EWC agreements of the companies concerned. The report thus argues that negotiating activity in these EWCs may largely represent a continuation of their information and consultation activity.

However, there are significant exceptions: the representation/ participation and social rights issues dealt with in the joint texts are not mentioned in the subsidiary requirements, nor in all but a handful of EWC agreements; and the issues relating to employment conditions and status dealt with in some of the texts examined in the report (eg those at Air France, Danone (1997), Deutsche Bank, Suez Lyonnaise des Eaux and especially Ford and GM) are covered by neither the Directive, nor any appreciable number of EWC agreements, nor the specific EWC agreements of the companies concerned. The report states that in setting out detailed, specific provisions on aspects of employment conditions, the joint texts at Ford and GM come closest to what is normally regarded as a collective agreement in most national industrial relations systems.

A minority of the joint texts examined in detail in the report do not contain any explicit provisions on how their implementation is to be followed up and monitored. The remainder involve the EWC in this process in various ways.

Why negotiate joint texts?

The study examines the partial data that are available from various primary and secondary sources on the circumstances in which the joint texts were reached in eight of the firms, in an attempt to explore why these particular companies and EWCs have concluded such accords. On this basis, it very tentatively identifies a number of common factors which seem to play a part in promoting the negotiation of joint texts by EWCs. These can be grouped, in order of apparent importance across the companies, as:

"company development factors" relating to company change - restructuring of various types, and expansion into new countries and "globalisation". It appears that a general restructuring process, potentially threatening jobs, was a strong factor behind the conclusion of the Danone 1997 joint understanding and the Deutsche Bank joint position. Specific changes in the company's structure - the spin-off of a division and an alliance with another company - were clearly the central issue behind the conclusion of the joint texts at Ford and GM (2000). The fact that the company was expanding, especially into the developing world, seems to have been a strong factor in creating a perceived need for the social rights charters at Suez Lyonnaise des Eaux and especially Vivendi;

• "company policy factors" referring to employers' principles, culture, attitudes and policies, either general or specific. It appears that the companies' notable and well-publicised overall commitment to social dialogue and social "responsibility" was a strong factor influencing the conclusion of the joint texts at Danone, Suez Lyonnaise des Eaux and Vivendi. It was also a factor, although perhaps to a lesser extent, at Deutsche Bank and ENI. Phillip Morris Tobacco's specific company policy on promoting the accommodation of smokers and non-smokers seems to have been a strong factor behind its conclusion of a joint text on this issue, while ENI's corporate emphasis on health and safety may have played a part in its agreement to set up an observatory on this subject, as Vivendi's similar emphasis may have contributed to its 1999 safety charter;
• "employee-side factors", considered to be present where there is clear evidence of particularly strong cross-border cooperation between employee representatives and/or trade unions over the issues covered by the joint text, or where the EWC is known actively to have sought joint texts on these issues. A high level of transnational coordination among employee representatives and unions, aimed at achieving deals providing employees with guarantees on the Visteon spin-off and FIAT alliance, was a strong factor in the conclusion of the Ford and GM agreements. In both cases, the EWC also made strong demands for the conclusion of the joint texts, as did the Deutsche Bank EWC over the joint position on job security; and
• "formal EWC factors" linking the joint text to the agreement establishing the EWC. The provisions of the Danone EWC agreement on the consultation of the EWC on questions affecting employment and working conditions, along with the fact that the agreement gives the EWC a negotiating role, was a strong factor in the conclusion of the 1997 joint understanding. The fact that the Philip Morris Tobacco EWC agreement allows for the parties to reach mutual understandings seems to have played a part in the negotiation of the guideline on smoking policy. The early establishment of an EWC - defined in the research as pre-1996 - might be seen as a factor, if not a strong one, in that such early agreements will have allowed for a lengthier experience of joint EWC work and also arguably demonstrated a particular openness on the part of the company to European-level dialogue in some cases.

It appears that a number of these factors are in play at each company, suggesting that the dynamics within each firm that lead to the conclusion of a joint text are complex, and involve the interplay of a range of factors of varying strengths. However, two basic scenarios are tentatively postulated by the report, which seem to fit the majority of cases to varying extents: joint texts driven mainly by employee concerns over change; and joint texts driven mainly by management willingness to negotiate.

Conclusions

The report states that the very specific and complex nature of the factors that seem to promote joint texts makes it difficult to assess the extent to which the conclusion of such texts is likely to become widespread. Key factors include the willingness of the parties to negotiate. While employers generally appear unwilling, their view may be influenced by the appearance of issues that it makes sense to deal with at European level, and by persistent pressure from the employee side to do so. The increasing levels of restructuring, the growing tendency for multinationals to adopt a code of corporate conduct, and the adoption of more Europe-wide management policies may create more such situations. On the employee side, the willingness to negotiate joint texts varies, with some EWCs and international union organisations apparently keen (along with many EWC representatives), but some national unions thought to be more reluctant. However, when the appropriate circumstances arise, national unions may see an advantage in an EWC joint text. Further "Europeanisation" of industrial relations may make this more likely.

Negotiating activity in EWCs, finds the study, does not very closely resemble what is generally thought of as collective bargaining at national level. It is largely concerned with principles and policies rather than substantive issues, and with providing a framework for future action (which is not always obligatory) rather than having a direct effect in itself. The issues on which it focuses are very rarely the core pay and conditions matters that are the mainstay of much national bargaining.

However, the EWC joint texts at GM and especially Ford more closely resemble collective agreements, in that they are far more concrete in their contents and effects, allow for little latitude within their frameworks and deal with core employment conditions and industrial relations arrangements.

The negotiation of joint texts by EWCs is a very restricted, if growing, phenomenon. However, the issues that it raises are of considerable importance, and further research would be valuable, the report concludes.

¹Marginson P and Sisson K, "EWCs - opening the door to European bargaining?", in European Works Councils Bulletin, Issue 1, January/February 1996 and Marginson P and Sisson K, "European collective bargaining: A virtual prospect" in Journal of Common Market Studies, December 1998.

²Carley M (forthcoming), Joint texts negotiated by European Works Councils, EFILWC, Dublin.