International: Survey examines company flexibility and dialogue practices

A survey published in December 2009 examines flexibility practices and workplace social dialogue at over 27,000 establishments across Europe, looking at issues such as working time, temporary employment, variable pay and employee representation.

On this page:
European company survey
Working time flexibility
Contractual flexibility
Functional flexibility
Pay flexibility
Workplace social dialogue
Limitations of workplace dialogue
Other findings on dialogue
HR challenges.

European company survey

In spring 2009, the European Foundation for the Improvement of Living and Working Conditions (Eurofound), a specialised EU agency, conducted a representative survey of managers and employee representatives in 27,160 establishments (both private and public sector) with 10 or more employees, in the 27 EU member states, plus three candidate counties for EU membership (Croatia, Turkey and the Former Yugoslav Republic of Macedonia).

This was the second "European company survey" carried out by Eurofound, following an initial exercise in 2004-05, which covered only 21 countries. The 2009 survey (on the Eurofound website) focuses on establishment-level flexibility - in areas such as working time, contract type, job roles and pay - and on workplace social dialogue and employee representation. It represents a valuable source of comparative Europe-wide data on a range of HR and employment relations practices. In this article, we highlight a number of the initial findings of the survey, published in December 2009.

Working time flexibility

According to Eurofound, working time flexibility is the most common type of flexibility practised in European companies. Of the EU establishments surveyed, 56% used some type of flexitime arrangement - that is, a scheme that allows employees to vary the start and end of daily work according to their own needs and wishes, usually within certain limits. This represents a substantial increase compared with the figure of 48% found in the first European company survey (though this covered only 21 countries). Flexitime was most common in 2009 in Finland (83% of establishments), Denmark and the UK (both 70%).

Basic flexitime arrangements allow only for a variation of the start and end times, without changes in the duration of the working day. More complex time-banking systems allow for the accumulation of credit (or debit) hours in some type of working time account. Almost four out of 10 establishments surveyed in the EU had such accounts (which are most common in the Nordic countries, Germany, the Czech Republic and Austria). The majority of these schemes (around three-quarters) include the possibility to use the accumulated time credits to take whole days off. The possibility to accumulate credit hours for more than a year in "long-term" accounts is considerably less widespread, existing in only 6% of establishments (though as high as 30% in Denmark). In the UK, of establishments with flexitime arrangements, 44% permitted only variation of start and end times and 56% provided for accumulation of hours, although only 16% allowed the use of accumulated credits to take whole days off.

Part-time employment was present in over two-thirds (67%) of EU establishments surveyed, a slight increase on the 64% recorded in 2004-05. However, part-time work is unevenly spread across Europe. In the Netherlands, 91% of establishments surveyed had part-time workers, and the figure was around 80% in Belgium, Germany, Sweden and the UK. By contrast, 20% or fewer of establishments in Bulgaria, Portugal and the three candidate countries used part-time work.

The organisation of part-time work is becoming more diversified, according to Eurofound, with an increasing number of establishments practising types other than the "traditional" form of working some hours on each day of the week. Forms that are gaining popularity include full days of work alternating with full days off, and flexible part-time work on short notice, determined by the employer.

The employment of part-time workers in highly skilled positions remains uncommon in most countries, with the exception of the Netherlands. Only a quarter of all establishments surveyed with both part-time employment and highly skilled workers had any part-time workers in highly skilled positions.

The share of establishments reporting night, weekend or shift work remained relatively stable between 2004-05 and 2009, apart from a slight increase in Saturday work. In the EU in 2009, around four out of 10 establishments used Saturday work, three out of 10 used shift work, a quarter used Sunday work, and one-sixth used night work. All types of work at "non-standard" times were most common in the hotels/restaurants and health sectors.

Eurofound notes that the increased use and diversity of time-banking systems has made it difficult to measure overtime, especially at the establishment level. However, the survey found that (as in 2004-05) the countries with the highest share of establishments using overtime in 2009 were Germany, the Netherlands and the Nordic countries. In most southern, eastern and central European countries, overtime was much less widespread, except in the Czech Republic and Italy, where the proportion of establishments with overtime work was above the EU average.

In 35% of EU establishments surveyed (53% of UK establishments), overtime was compensated financially, while in 23% of cases (11% of UK establishments) time off was granted in lieu of payment, and 37% of establishments (28% of UK establishments) used both forms of compensation. In only 4% of establishments were overtime hours not compensated at all (the UK figure was also 4%).

Contractual flexibility

About two-thirds of establishments surveyed reported that they used some form of temporary contractual arrangements, such as temporary agency workers, fixed-term contracts or self-employed contractors/freelancers. In all sectors of activity, more than half of establishments used such arrangements. The survey found that:

• there was at least one employee with a fixed-term contract in 54% of all establishments, although the incidence of fixed-term employment varied considerably across countries;
• 21% of all establishments used at least one freelancer;
• slightly more than a fifth of establishments in the EU used temporary agency workers (a similar proportion to that found in 2004-05) but temporary agency work accounted for only 2% of total employment in EU establishments; and
• while around 20% of all establishments reported having employed temporary agency workers in the previous 12 months, only half of these establishments employed a temporary agency worker at the time of the survey - Eurofound suggests that this is likely to be a consequence of the economic crisis, which was already having a major impact at the time of the survey.

Functional flexibility

To assess the flexibility of employees to work in a range of roles and tasks ("internal adaptability"), the survey looked at establishments' training efforts and the use of "autonomous" teamwork.

Three-quarters of establishments reported that the need for further staff training was periodically checked in a systematic way. Regular analysis of the need for further training was more common in large establishments than in smaller ones. Not all groups of employees were equally covered by further training activities. For example:

• almost all establishments where systematic checks took place applied these to their staff on open-ended contracts, whereas less than half applied them employees with fixed-term contracts;
• employees on open-ended contracts in skilled or highly skilled positions were included in checks more often than open-ended employees in low-skilled or unskilled positions; and
• the training needs of older workers were checked less than those of younger workers.

The proportion of establishments that gave time off to their employees to undergo training was smaller than the share of establishments systematically checking training needs.

The survey examined the incidence of teamwork in which team members have autonomy to make decisions about their work and tasks. It found that such autonomous or "self-directed" teamwork was practiced in 22% of establishments surveyed, and was most widespread in the Nordic countries and the Netherlands.

Pay flexibility

The survey asked about the use of two broad forms of variable or flexible pay:

• performance-related elements of pay, measured against specific targets, set for either the individual or the team, work group or department; and
• financial participation in the performance of the firm, usually without any financial risk to the employees, in the form of profit-sharing and share-ownership schemes (which sometimes overlap).

Just over one-third of establishments surveyed had performance-related pay elements for some or all employees. On average, around half of employees received some kind of performance-related pay in the establishments where it existed. Two-thirds of the profit-sharing schemes applied in private sector establishments in the EU were open to all employees of the "regular" workforce.

Pay elements related to individual performance were more widespread (33% of employees) than elements related to group, team or department performance (19%). Performance-related pay was most widespread in the finance sector, with close to half of establishments applying schemes based on individual performance and three out of 10 applying schemes based on team, group or department performance. The health and social work sector made least use of performance-related pay, with only 20% of establishments applying schemes related to individual performance and 10% applying schemes related to group performance.

Profit-sharing schemes were less widespread, with only 14% of private sector establishments using them, and they were most common in Finland, France, the Netherlands and Sweden. They were also more frequent in large establishments, being present in 27% of those with 200 or more employees. Irrespective of size, establishments with employee representation were more likely to have profit sharing than those without.

Most profit-sharing schemes (63%) in the private sector were determined by management only and not negotiated with employee representatives. A majority of managers stated that they had introduced profit-sharing schemes for reasons related to employee motivation and productivity. The possibility to reduce wage costs in times of low orders played a much smaller role in managers' considerations.

Share-ownership schemes were found to be the least widespread form of variable pay. Only 5% of private sector establishments operated them (half of these were broad-based schemes, open to all regular employees).

Both profit-sharing and share-ownership schemes were found to be most widespread in the finance sector.

Workplace social dialogue

The survey examined views on, and experiences of, workplace social dialogue, defined as those industrial relations processes whereby recognised employee representatives are to some degree involved in decisions concerning the employment relationship. This involvement may be limited to being informed by management, or may extend to consultation, negotiation or joint participation in decision-making.

The survey findings that Eurofound identifies as pointing to a positive and "robust" picture of workplace social dialogue include the following:

• The most common way of determining pay in Europe is through collective bargaining. Two-thirds of workers at the establishments surveyed were covered by a collective agreement on pay, at company or higher level. The bargaining coverage rate was very slightly lower in the private sector. Coverage rates of 90% or more were found in Italy, Finland, Spain, Slovenia and Sweden. The lowest rates, at under 30%, were in Bulgaria, Estonia, Lithuania and Turkey, and central and eastern European countries generally had lower coverage. The UK rate was the lowest in western Europe, at a little over one-third.
• More than 60% of employees of the establishments surveyed were covered by a recognised employee representation institution. Of these representation structures, 86% had a trade union link, and 63% had a majority of trade union representatives among their members.
• Some 85% of employee representation structures received information on the financial, economic and employment situation of the establishment at least once a year. Two out of three representatives stated that the information was usually timely, and three out of four that it was, in general, sufficiently detailed.
• Around 72% of representatives received training on a regular basis, and three-quarters regarded the amount of paid time off they received as normally sufficient to carry out their representative duties.
• Nearly two-thirds of employee representatives surveyed stated that they were involved in setting the rules and procedures on working time issues.
• Employee representatives generally thought that a cooperative climate of interaction existed between them and the management of the establishment.
• Eight out of 10 employee representatives believed that their work was supported by employees.
• Around 70% of managers surveyed were generally positive about the effect of social dialogue and employee representation at the workplace. The same proportion agreed with the statement that consulting employee representatives on important changes leads to more staff commitment in implementing these changes.

Limitations of workplace dialogue

Findings that Eurofound believes highlight the limitations of workplace social dialogue include the following:

• In "a range of establishments" (no figures are given), employee representation was limited to health and safety issues or was organised in an informal way.
• One-third of employee representatives reported receiving infrequent information on the establishment's economic and financial situation.
• Some 17% of representatives indicated that they were not entitled to take any paid time off to carry out their duties.
• Involvement in decisions on contractual flexibility was more limited than involvement in flexible working time arrangements - in companies where contractual flexibility was used, less than half of the representatives reported involvement.
• The strategic influence of employee representatives was quite limited. Of nine areas examined, the degree of influence was greatest for health and safety matters, followed by: changes in working time rules; disciplinary or "hierarchical" problems; changes in the organisation of work processes or flowchart; equal opportunities and diversity management; pay determination; structural changes (such as restructuring, relocations or takeovers); career management (selection, appraisal and training); and employment and HR planning.
• While most managers considered that workplace social dialogue has positive impacts, 60% reported a preference for direct consultation with employees.
• Three out of 10 managers thought that involving employee representatives leads to considerable delays in important management decisions.

Other findings on dialogue

Conclusions drawn by Eurofound from the survey data on workplace dialogue include the following:

• While there are exceptions, workplace social dialogue in northern Europe is generally more strongly implemented in institutional terms than is the case in southern Europe, where implementation is less developed and the process of statutory employee representation is more confrontational.
• There are many differences between small and larger establishments. The incidence of employee representation is higher in large establishments. In smaller establishments, there is less distance between management and representatives, which can stimulate an "intense, cooperative" social dialogue. However, resources and statutory channels are less available in smaller establishments, which hampers further development of dialogue. The relationship between establishment size and the quality of dialogue is thus not a simple one.
• The coverage of institutions and procedures for information and consultation varies between countries. Alhough a framework for employee representation generally exists, in some countries these channels are not used as much as in others. The differences between countries are relatively minor with regard to the strategic consultation of employee representatives on personnel matters. However, the survey highlights the importance of resources in this area: involvement in, and influence on, managerial decisions go hand-in-hand with the facilities employee representatives have in terms of high-quality information provision, regular training and sufficient time off. Such resources are more likely to be available where there are works councils and a strong trade union presence.

HR challenges

Managers were asked about the HR challenges they faced. In EU establishments:

• 36% of managers reported problems in finding skilled staff;
• 10% had problems in finding low-skilled staff;
• 10% stated that they had problems in retaining staff;
• 16% reported problems in motivating employees; and
• 14% indicated that they had problems with absenteeism.

The proportion of managers reporting any of these problems remained stable overall between 2004-05 and 2009. The only notable difference was that the share reporting problems in finding low-skilled employees fell from 14% to 10%, while the share reporting problems in finding skilled staff increased from 14% to 16%.

This article was written by Mark Carley, European editor, HR & Compliance Centre.

European employment policy, practice and law, February 2010