The impact of European Works Councils

This comparative study gives a preliminary assessment of the impact of European Works Councils (EWCs) on industrial relations, both within multinational companies and in Member States' national systems. It also outlines the involvement of social partners in the process of transposition and their views on the operation and possible future development of EWCs.

The EU Directive on European Works Councils (EWC s) is probably the most important legislative initiative that has been taken in the field of industrial relations at European level. Council Directive 94/45/EC of 22 September 1994 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees currently covers all the Member States of the European Economic Area (EEA) except the UK - though, following the adoption of an "extension" Directive in December 1997 (97/74/EC), the UK will in future also be covered. The 1994 Directive came into force on 22 September 1996 (while the UK extension Directive will come into force on 15 December 1999). Although all the Member States were due to transpose the Directive into their national legislation by this deadline (by law or collective agreement), many did not do so, and some have still not done so.

The aim of the Directive is to improve workers' information and consultation rights in multinational groups or companies operating in Europe (whether based in Europe or elsewhere). The Directive defines the "Community-scale undertakings" and "Community-scale groups of undertakings" to which it applies as those which employ a total of at least 1,000 workers across the Member States and with at least 150 workers employed in each of at least two Member States. It has been estimated that the Directive potentially affects over 1,100 multinationals (MNC s), which employ some 15 million workers (according to European Trade Union Institute figures).

The Directive favours a voluntary approach. Under its Article 13, MNCs which had concluded voluntary agreements on the transnational information and consultation of their entire workforce before the 22 September 1996 deadline were exempt from its provisions. Over 400 such "Article 13" agreements were concluded (the first voluntary EWC agreements date from the 1980s). Now the Directive is in force, the emphasis is on the negotiation of agreements - with few restrictions on their contents - between management and employee representatives, via the "special negotiating body" (SNB) procedure. It is only if the negotiations are refused or fail that the Directive's subsidiary requirements - laying down rules for the composition, role and functioning of a statutory "standard" EWC - will apply.

Considerable research has been carried out into the content of Article 13 agreements (EU9803191F), and into the content of the national transposition legislation/agreements. This study does not seek to duplicate this work - rather, its goal is more to examine the actual and potential impact of EWCs on industrial relations in the Member States and in the MNCs concerned, and to outline the role and views of the social partners.

The aims of this comparative study are to:

• identify the social partners' involvement in the implementation of the Directive in the various member states;
• appraise EWCs' impact in the companies concerned and on the different national industrial relations systems; and
• give an account of social partners' assessment of EWCs and comment on possible future developments.

The study draws on the contributions of the national centres of the European Industrial Relations Observatory (EIRO) describing the situation and developments in the 15 EU Member States, plus Norway.

The transposition of the Directive and involvement of the social partners

The EWC Directive has been transposed in almost every EEA country concerned - see table 1 for details. Transposition is still awaited in Luxembourg and Portugal (plus, as far as is known, Iceland and Liechtenstein, though these countries are outside the scope of this study), and the European Commission has commenced legal proceedings for non-transposition against both countries. In Portugal, however, the passage of relevant legislation is reported to be in its final phase. In Italy, the transposition process has not been completed: a collective agreement was reached in November 1996, but back-up legislation is still lacking.

The most common way the Directive has been transposed is law, while agreements are far less widespread. However, even where transposition was effected through legislation, the involvement of social partners has been significant.

Table 1. Transposition of Directive 94/45/EC in the EU Member States and Norway, position at July 1998

Country	Transposition measures
Austria	Transposition in part V of Works Constitution Act, through Federal Law No. 601, 17 October 1996.
Belgium	Collective agreement No. 62 concluded within the National Labour Council, 6 February 1996. Additional law for full implementation.
Denmark	Act No. 371 on European Works Councils, 22 May 1996.
Finland	Act amending the Co-determination Act, 9 August 1996.
France	Law No. 96-985 concerning the information and consultation of employees in Community-scale undertakings and groups of undertakings, 12 November 1996.
Germany	Act on European Works Councils, 28 October 1996.
Greece	Presidential Decree No. 40, 20 March 1997 (GR9704111N).
Ireland	Transnational Information and Consultation of Employees Act, 10 July 1996.
Italy	National interconfederal agreement, 6 November 1996. For formal transposition and full implementation, a law must still be enacted.
Luxembourg	Not yet transposed. No draft legislation presented to the Chamber of Deputies.
Netherlands	Act on European Works Councils, 23 January 1997 (NL9706117F).
Norway	Collective agreement between LO and NHO, 30 November 1995, which supplemented the Basic Agreement. Back-up legislation to guarantee full implementation - Act No. 63, 23 August 1996.
Portugal	Draft law under discussion in Parliament.
Spain	Law on the right of employees in Community-scale undertakings and groups of undertakings to information and consultation, 24 April 1997.
Sweden	Act No. 359 on European Works Councils, 9 May 1996.
UK	Draft regulations planned before 1999 summer parliamentary recess.

Since the social partners' participation in the transposition of the Directive has generally been extensive, it is not easy to find clear-cut differences among Member States. However, at the cost of some simplification, it seems possible to identify three main groups of countries, depending on the role played by collective bargaining in the implementation process:

1. those countries where a clear preference for a transposition by collective bargaining emerged and was put into effect, even though some sort of back-up legislation was required afterwards to guarantee the full effectiveness and extension of the agreement's provisions;
2. countries where tripartite talks were held initially in order to prepare transposition, but implementation via law became necessary because the social partners could not reach an agreement; and
3. those countries where law was the preferred choice from the very beginning.

In the first group can be included Belgium, Italy, and Norway:

• In Belgium a national intersectoral collective agreement over the transposition of the Directive was concluded within the bipartite National Labour Council (NAR/CNT). Initially, the Government intended to draft a bill on the subject and thus submitted its proposal to the NAR/CNT. The debate over this proposal became, however, the occasion for the conclusion of a far-reaching agreement between the social partners, which had only to be supplemented by a law covering a number of specific details.
• In Italy a national interconfederal agreement was reached on 6 November 1996, though formal transposition has not yet taken place. For this agreement to take full effect, back-up legislation is required, but this is still lacking.
• In Norway it was the social partners that, as early as the autumn of 1994, informed the Government of their intention of negotiating an agreement rather than having the Directive incorporated directly into Norwegian law. During the subsequent bargaining process between the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) and the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO), the parties occasionally consulted with the Department of Local Government and Labour. It was recognised that the agreement needed legal back-up in order to comply with the requirements of the Directive, and the Department was consulted on the legal aspects concerning the extension of the agreement.

The second group comprises countries where, despite a long tradition of tripartite concertation among the social partners, transposition by law (rather than by agreement) became a necessity due to different opinions on the matter under discussion. This happened in Denmark and Sweden.

• In Denmark, the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) and the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) tried to reach an agreement on the transposition of the Directive, but ultimately had to ask for the introduction of a law, since they could not reach a common understanding on the subject. The Ministry of Labour had appointed a tripartite committee to discuss the Directive, but although all participants agreed to the implementation model presented by the Government, they could not reach a compromise on some specific aspects, such as the selection of SNB and statutory EWC members and the participation of experts. Therefore, the intervention of law became a necessity.
• In Sweden, the Government set up a committee with the participation of social partners' representatives in order to examine, among other items, whether the Directive could be transposed by means of sectoral agreements. Since the private employers within the Swedish Employers' Association (Svenska Arbetsgivareföreningen, SAF) opposed such a solution, the result was that a select committee of the tripartite body presented proposals to the Government, which eventually drafted the law.

The third group includes Austria, Finland, France, Germany, Greece, Ireland, the Netherlands, Portugal and Spain. In this group we can further distinguish between countries where the involvement of social partners was of a tripartite nature (Austria, Finland, France, Greece, Portugal, Spain) and those where mainly bilateral talks were held (Germany, Ireland and the Netherlands).

• In Austria, the social partners were fully and formally consulted over the transposition of the Directive, as is always the case in such matters. The use of law was preferred since this is more in line with the binding nature of existing Austrian representation rules, which usually derive from legal obligations, rather than from voluntary agreement between management and employees.
• In Finland, the law on EWCs was extensively prepared through tripartite consultations.
• In France, the social partners were consulted before and after the preparation of the draft bill. However, none of the social partners made any attempt to seek transposition by agreement. It was in fact widely agreed that the EWC issue is a matter of "social public order" and therefore required transposition by law.
• In Germany, there were a few attempts to reach agreement on EWCs at a sectoral level. Before the Directive was passed, the social partners in the chemicals industry agreed in 1991 to support the voluntary introduction of EWCs in the sector. After the Directive's approval, talks over the implementation of the Directive were held in the metalworking sector, but this attempt failed after only a couple of meetings. The Directive was therefore transposed by means of law, with the Government holding both bilateral and tripartite sessions with the social partners. Nevertheless, the implementation of the Directive into German law was not much influenced by these contacts, since the legislation reproduced almost entirely the text of the Directive, with only a few exceptions.
• In Greece, an existing tripartite committee was instrumental in the transposition process, but no clear agreement on the subject was reached.
• In Ireland, the social partners' involvement took place mainly through lobbying and bilateral contacts. In fact, the trade unions' and employers' positions were at such variance from one another that this arrangement was the preferred option.
• In the Netherlands, the Directive was transposed by law, but within a context of extensive bilateral consultations with the social partners.
• In Portugal, under the current 1996-9 tripartite economic and social agreement, the Strategic Concertation Pact, the transposition of the Directive became an issue to be dealt with through concertation. It was therefore discussed within the tripartite Economic and Social Council, where the social partners have presented their positions on the government bill which has been put to Parliament for discussion.
• In Spain, the preparation of the law took place through bilateral consultations between government and the social partners. At the end of the process, an agreement on the proposed law was reached within the Economic and Social Committee.

Finally we find quite different situations in Luxembourg and the UK.

• Luxembourg is the only EU country covered by the Directive which still lacks either a collective agreement, or even firm draft legislation on EWCs. It has been speculated that the delay is due to the fact that worker representation is highly developed at enterprise level, and that neither the government nor the social partners have yet evinced any strong desire to have the Directive transposed.
• The UK, as is well known, is in a totally different situation, as the Directive has been extended to it only since December 1997, with transposition due by December 1999. According to the Minister of State at the Department of Trade and Industry, Ian McCartney, implementation will be carried out by means of regulations, and the Government aims to lay draft regulations before parliament before its 1999 summer recess. The Department of Trade and Industry is expected to issue towards the end of 1998 a consultation document, seeking the views of the social partners and other relevant actors on how best to implement the Directive.

Continuities and changes in the transposition of the Directive

In general, in the transposition of the Directive (or in the proposed/expected transposition legislation) a clear tendency can be observed towards harmonising EWC rules, in particular those on the definition/selection of members of the SNB and of the statutory EWC based on the subsidiary requirements, with established national practices. According to our survey, the most sensitive issues in transposition related to the character of the new representative bodies and the role to be played by trade unions. On such issues, however, the prevailing tendency was to interfere as little as possible with the existing arrangements of national industrial relations systems, which therefore came, in a way, to be "protected" from external challenges.

In other words, the direct influence of the implementation of the Directive on industrial relations systems was probably kept to a minimum, since EWCs were generally fitted into existing arrangements - for more details, see below under "The impact of EWCs on national industrial relations". Pressures for change derived sometimes from attempts by trade unions to seize the opportunity of the transposition process to obtain significant improvements in workers' rights, and sometimes from attempts by employers' organisations to keep transposition as close as possible to the Directive's provisions, avoiding the extension to the EWC of the information and consultation rights or specific facilities granted to the home-country national works council (or similar structure).

The impact of EWCs on industrial relations in multinationals

Since the transposition of the Directive only a few EWC agreements have been signed by SNBs under its "Article 6", while many more "Article 13" agreements had been reached before 22 September 1996 on a voluntary basis. Table 2 sets out the estimated number of Article 13 and Article 6 agreements in MNCs based in the EU Member States and Norway.

Table 2. EWC agreements in multinationals based in the EU and Norway, position as at July 1998

Country	Article 13 agreements*	Article 6 agreements**
Austria	7	(2 under negotiation)
Belgium	17	1
Denmark	6	-
Finland	14	3
France	42	1
Germany	89	7
Greece	-	-
Ireland	3	Several
Italy	14	2
Luxembourg	2	-
Netherlands	18	8
Norway	7	None
Portugal	-	-
Spain	3	2 (1 still under negotiation)
Sweden	22	About 20
UK	58	7
Total	302	Around 50

* Source: "Negotiating European Works Councils: an analysis of agreements under Article 13", Paul Marginson, Mark Gilman, Otto Jacobi and Hubert Krieger, Interim Report, European Foundation for the Improvement of Living and Working Conditions, March 1998 .

** Source: Reports from EIRO National Centres.

The effects of the introduction of EWCs on industrial relations in multinationals are still difficult to identify, not least because the experience of EWCs has been quite short in most cases (of the Article 13 agreements, around three-quarters were signed in the year up to September 1996). In general, however, it is possible to say that EWCs seen to meet the Directive's key objective of providing employees and their representatives with information over crucial transnational issues such as investment and reorganisations. Nevertheless, only in relatively few cases does it appear that EWCs are known to have actually been involved in genuine consultation processes over sensitive topics such as reorganisation (indeed, in some cases, even information appears to have been provided only after the decisions have been taken).

According to the results of a current research project on the development of European Works Councils in eight European MNCs (Development of European Works Councils. From information committee to social actor, State University of Fulda and WSI of the Hans-Böckler Foundation), employee representatives have generally tried to expand EWCs' field of action beyond mere information. This has embraced, most notably, improving the provision of information (quality, quantity, availability in writing and timeliness), opening up new areas of influence over corporate policy and practice (such as relocation of production, outsourcing and occupational safety) and enlarging the EWC's resources (starting with the right to hold pre- and post-meetings, the establishment of a steering committee and acquiring a budget).

However the results of these efforts to expand the scope of EWC activity are more difficult to assess than their achievements in terms of information rights. A point which is often stressed by existing research and which is often emphasised by employees' representatives relates to the low level of influence that EWCs can exercise over decision-making processes. Sometimes the EWCs are not consulted on strategic issues and the annual ordinary meeting which is the norm in agreements does not seem to respond to the needs of prompt information and discussion.

Besides corporate information, another important opportunity for employee representatives often mentioned by the actors involved is the possibility to have direct contacts and exchange of views with employee representatives from other countries. However, this novel opportunity is generally hampered by language problems. Indeed, some national reports stress the importance of supporting the acquisition of language skills on the part of EWC members.

Some recent research on EWCs in Finland (conducted by the EWC Coordination Group) depicts a relatively encouraging picture of their operation. The positive outcomes mentioned include the ability of employee representatives to influence decisions (eg in the field of health and safety) and the possibility of a better dialogue, both between the social partners and between employees across different countries. The EWC members also felt that they had influence on issues concerning reorganisation of production and relocations.

An interesting trend is reported from Ireland (based on research from Industrial Relations News). Although employers' organisations at both the national and European level have shown a degree of hostility towards the new institutions, the reaction of some individual employers has been more enthusiastic. EWCs have not proved as threatening to employers as many thought. Indeed, some employers now see EWCs as a useful way of keeping workers in touch with the international business environment, providing an increased awareness of how a particular plant is doing in comparison with others. They also provide employee representatives with some useful information and international contacts.

Other positive features of EWCs have been identified by a Dutch research project (conducted by the Hugo Sinzheimer Institute on behalf of and in cooperation with the AWVN employers' organisation), which included interviews with company management and employee representatives. According to the project, EWCs may: a) become a company-wide vehicle for uniform and simultaneous information and communication; b) offer a direct platform to improve mutual understanding and communication on strategy and transnational issues between group management and European employee representatives; and c) promote social cohesion or corporate identity within the different parts of the company.

A major problem emphasised in the Greek national report relates to the fact that, when the parent company is based in another country, adequate information is often lacking and the decision-making process appears to be too distant. At the same time, however, the establishment of an EWC is seen by the trade unions as an important step towards the reduction of this distance, which otherwise would be even greater, and a necessary tool which secures the right to information, even if in some cases such information could be poor.

According to research conducted in France for the Ministry of Labour, problems for the efficiency of EWCs may also derive from the lack of mutual confidence among trade union representatives from different countries and from the open fight for dominance that, it is claimed, may sometimes develop between them. Another potential negative outcome of imbalances between members from different countries is the emergence of "passive attitudes" on the part of minority representatives who can decide to concentrate on "national action" instead of "transnational coordination".

At least initially, it seems, representatives from the multinational company's home country will naturally tend to dominate and shape EWCs because of their built-in advantages. Only through interaction continued over time can this imbalance be reduced, leaving room for the creation of a real European body. This seems to be happening in a number of cases at present, according to the abovementioned European-level research by the State University of Fulda and WSI on qualitative aspects of communication and interactions within EWCs.

Research conducted in UK multinationals (The experience and implications of European Works Councils in the UK, Jane Wills, University of Southampton) seeks to illustrate the ways in which EWCs are fostering new forms of relationships between managers and employee representatives, and stimulating new types of employee representation (especially "dual-channel" systems). Expectations of EWC-fostered transnational labour solidarity and cooperation are found to be wanting, and in many cases the experience of EWC meetings is perceived to have heightened employee fears of international competition. EWCs, it is claimed, are rather "abstract" affairs, largely unconnected to other levels of corporate life and industrial relations. Without more regular exchanges, more widespread communication and more concrete outcomes, it is argued that EWCs are unlikely to have any significant impact on UK industrial relations.

It appears from the national centres' reports that a number of difficulties also derive from the differences in national industrial relations systems among Member States. Such differences are likely to be reflected in the participants' specific background and approach to problems and in their limited understanding of how representation and bargaining work in other countries. The latter difficulty may be particularly evident when trade union representatives come together with employee representatives without previous sound experience in negotiations and industrial relations. Not surprisingly, specific training for EWC members appears to be increasingly perceived as necessary, and not only by the trade unions.

Success stories

EWCs could be accounted "success stories" for a number of reasons. The agreement on which they are based might be particularly innovatory or influential, or their operation might have proved particularly satisfactory - for example by helping reach a satisfactory solution to a restructuring crisis.

National reports suggest a number of such success stories, though the evidence is patchy. It could be said that the pioneering pre-Directive agreements of the 1980s in French MNCs such as BSN-Danone were success stories in the sense that they helped to demonstrate that EWCs are not harmful to the economic competitiveness of MNCs. At the level of the EWC's fit into existing structures, a notable example of a success story is Aer Lingus, the Irish airline. The Aer Lingus EWC is based on a voluntary agreement concluded just before the 22 September 1996 deadline. The EWC was built on to the existing participation, information and consultation structures. A consequence of this is that there are dense participatory structures underpinning the EWC and the people involved also have prior experience of works council-type institutions. Furthermore, a novel feature of the agreement itself was that the company included employees in the UK, USA and Switzerland, who would have been excluded under the strict terms of the Directive.

In terms of operational success stories, the Netherlands seems to be a particularly rich source of examples. The European Works Council (or, more accurately, its coordinating committee) at the Anglo-Dutch Unilever group has been consulted and intervened in two cases of transnational restructuring. With respect to the closure of a Danish subsidiary, it consulted local employees and, in line with their wishes, subsequently advised Unilever management to prolong the period set for closure from a few weeks to several months. Subsequently, Unilever did indeed prolong the term so as to grant the employees involved more time to find a good job elsewhere. In the case of another closure (relocation of production from the Netherlands to Belgium), Unilever agreed to take measures to find alternative employment for the employees involved.

At KNP BT, the Dutch-owned paper and chemicals group, there has been a "demerger" operation over the past two years and two international business units - KNP Leykam and KNP BT Packaging- each with its own EWC have been sold. In both cases, the central management of KNP BT Holding consulted the EWC on the selection of the purchaser (its market position and strategy in relation to guaranteeing employment at KNP). In the case of KNP Leykam, the first to be sold, the EWC is seen to have had a real dialogue with central management and according to management the consultation process showed an effective cooperation between the EWC, the national works councils involved and the Dutch central works council of KNP BT Holding. The Dutch central works council had to advise on the sale and the disinvestment and, as continued employment was guaranteed by the chosen purchaser, it insisted on the continuance of the EWC. When KNP Leykam was sold to the South African multinational Sappi, the Leykam EWC became the European information and consultation structure in the new concern.

Other Dutch success stories cited include: the role of the EWC and Dutch works council at DAF Trucks during its sale to the US multinational, Paccar Inc; the involvement of and cooperation between the EWC and the central works council in the case of the takeover of Banque Brussel Lambert by ING Group; the granting to the Hoogovens EWC of a role in the development of an international human resources strategy; and the reported contribution of the Shell European Forum, during a restructuring process, to a new vision for the development of Shell Europe Oil Products.

The EWC at Schmalbach-Lubeca, a metalworking concern, has been held up as a German success story. A 1996 agreement which put the existing EWC on a formal footing went beyond the Directive in many respects, such as granting the EWC information rights vis-à-vis national management outside formal meetings. The initial phase of the EWC?s operation was reportedly marked by some tensions, in particular between German and Dutch employee representatives. A change in the occupancy of the chair of the German group works council, who is also president of the EWC, apparently led to a change in the approach of the whole EWC. Non-German employees were more strongly drawn into the EWC's work, allowing for an improvement in relations between members. The EWC has reportedly become less focused on the joint meeting with management and has developed into an independent body, which has already been able to register a number of successes. For example, a decision by group management to relocate some production from Germany to Italy was partially reversed following intervention by the EWC, with advantages for both the Italian and the German employees (fewer job losses for the latter, and the avoidance of worse working conditions for the former).

Failures

EWCs could be accounted failures where they have proved to be ineffective in some way - for example, by failing to influence events or decision-making or by becoming split. Among the relatively few negative experiences reported by EIRO national centres is one from Austria. At the Semperit tyre company, a subsidiary of the German-owned Continental, it is reported that the EWC played no role in conflicts over the relocation of production during 1997 and in fact more or less "disintegrated" in the conflict. According to observers, the EWC had practically existed only on paper and it remains unable today to mediate in the competition management has allegedly been able to foster between its European subsidiaries by threatening them with closure of the least efficient plant.

In France, the Renault-Vilvoorde case (EU9703108F) presents interesting aspects and can be interpreted as a negative experience with mixed results. The Renault EWC brought a court case claiming that the management's announcement in early 1997 of the planned closure of the Renault plant in Vilvoorde (Belgium) without prior information and consultation of the EWC was unlawful (FR9703122F). The ruling issued by the Versailles appeals court quoted the terms of the Community Charter of Fundamental Social Rights of Workers, to which the Directive makes an explicit reference, which states that information must be provided in "due time". On this basis, the court considered that any decision "having a significant effect on the interests of employees" must lead to information and consultation of the EWC. Changing the earlier first instance ruling of the Nanterre court, the Versailles court stipulated that this consultation need not necessarily be prior to the decision, but must at least have "useful effects", which means that consultation must leave scope for "observations, contention and criticism", in a way that the initial decision might eventually be modified. Following these facts, in a March 1998 amendment to the existing 1995 EWC agreement, Renault and the signatory trade unions introduced a right of consultation "in the event of a planned exceptional decision which has transnational consequences and is of a nature such as to affect significantly employees' interests". In this case, the EWC is consulted "in due time", so that "the elements of the discussion can still be taken into account in the decision-making process" (FR9803195N).

Renault can thus be seen as both a "failure", in that management did not consult the EWC on the closure of their Belgian plant, and a "success story" because the EWC coordinated a pioneering Euro-strike, won two court cases and obtained a modification of the agreement.

The impact of EWCs on national industrial relations

The effects of EWCs on national industrial relations systems are quite varied and depend mainly on the pre-existing institutional framework and especially on whether representation bodies similar to works councils already existed. Table 3 below summarises experience in each of the 16 countries.

Table 3. Impact of EWCs on national industrial relations

Country	Impact
Austria	EWCs are considered a natural (and minor) extension of the wider and highly developed system of co-determination and worker representation, into which they have been fitted tightly: only previously elected works council members can be delegated onto an SNB or statutory EWC. Thus, the Austrian legislation does not permit the direct election of EWC members and there cannot be a representative from a plant or enterprise that does not already have a works council. No evident effect on Austrian industrial relations can therefore be detected. Trade unions are very keen to preserve the existing model and the role of union representatives in representation bodies.
Belgium	The EWC representation system is linked to the existing system of employee representation. Representatives on SNBs and statutory EWCs are picked by the representatives in the works council: if no agreement can be reached, the representatives are elected by a majority vote. Where no works council exists, they are chosen by the workplace health and safety committee, and where there is no committee, by the union delegation. Only if there is no such representative structure in the firm is a direct election of the representatives organised. An interesting possible development resulting from the introduction of EWCs might be the establishment of "umbrella" or group works councils - ie representation bodies bringing together representatives from all national subsidiaries of a single parent company (as exist in, for example, France, Germany and the Netherlands). This issue was discussed during the negotiation of the transposition agreement and some companies have already introduced such a structure on a voluntary basis. The structure would allow all Belgian operations of a company to meet before and after EWC meetings to elaborate common points of view and common reactions. Trade unions have not ruled out regulation of this issue as a consequence of EWCs.
Denmark	The picture is differentiated and displays substantial variations from the national industrial relations tradition. A significant number of voluntary Article 13 agreements set up representative bodies which are quite different from the traditional Danish model. These EWCs are employee-only (instead of joint) committees, their members are elected directly by employees, instead of being members of "cooperation committees" and the involvement of trade unions is highly restricted. According to trade unions and observers, such agreements can be interpreted as reflecting management's reluctance to extend the Danish traditions of information and consultation. However, the transposition legislation gives priority to existing works council-type bodies in the selection of representatives on SNBs and statutory EWCs.
Finland	The Directive has been implemented by adding a new "transnational group cooperation" layer onto existing cooperation legislation (through works council-type bodies). Generally, EWCs are seen as fitting quite well into the national industrial relations system, which is characterised both by increasing numbers of MNCs and an increasing role for local agreements.
France	The Directive fits rather well into the French system - unsurprisingly, as it was largely inspired by the early practice of EWCs in French-based MNCs, which were themselves inspired by the 1982 French legislation on national group-level works council structures (group committees or comités de groupe). In the first phase of voluntary EWCs, the nationalisation of major industrial companies helped to create a management milieu in favour of EWCs. The transposition process has remained close to existing French provisions - going so far as to make the statutory EWC a joint management-employee body (rather than the employee-only body outlined in the Directive's subsidiary requirements). French employee representatives in the SNB and statutory EWC are appointed by trade unions, with the distribution in line with the results of the most recent works council elections. They must be chosen from among elected works council members or union delegates (with direct elections as a fall-back method). The model is the same as used for the French group committee.
Germany	The impact of EWCs on industrial relations has so far been marginal. Linkages between EWCs and national representation structures and workforces are still in their infancy, and few EWCs seem to regard it as their task to anchor the EWC in these structures and seek to win the acceptance and interest of ordinary employees. In the past, trade unions have tended to concentrate on establishing as many EWCs as possible - they are only now being increasingly faced with the task of advising and training established EWCs, giving them strategic direction and integrating them with other fields of trade union activity. This presupposes that the unions are taking a major step forward in the direction of Europeanisation. However, it also true that Germany's highly developed system of co-determination and "trustful cooperation" might reduce the status of EWCs and limit their independence. Where the parent company is in Germany, then, this may also lead to a clear leadership of German representatives, which could make the EWC less of a supranational body. In legislative terms, the German representatives on SNBs and statutory EWCs are appointed by existing works council structures.
Greece	EWCs can be considered an extension of existing works councils, but are likely to result in an important innovation both from an institutional point of view, and from a cultural perspective. First, although works councils are statutory in Greece, in many cases they have been ignored and it has often not been deemed necessary to set them up, because of the presence of unions at enterprise level. Second, in Greece there is a low diffusion of participatory bodies and a lack of information and consultation procedures. Although these features might hamper the development of EWCs, with time their presence could help create a "participatory climate", at least in transnational companies, which could be conducive to important changes in social partners' attitudes.
Ireland	Ireland is a very interesting case, since EWCs seem to be quite an important innovation in the national industrial relations systems. Ireland differs from many other European countries, because there are no provisions for works council structures at national, regional or local level, while the Irish model of "partnership" is rather narrow, being largely confined to tripartite negotiation and consultation at a national level. Therefore, EWCs have an important potential in the process of diffusing social partnership from national to local level, though they apply to quite a small number of companies.
Italy	EWCs are linked to the existing system of representation via the procedure of appointing employee representatives on SNBs and statutory EWCs: these are appointed by works council-type "unitary union representative bodies"(Rsu s) and nationally representative trade unions. There is no specific research on the impact of EWCs in Italy, but their limited spread together with the existing widespread presence of information and consultation rights have resulted in no evident effects on the Italian industrial relations system.
Luxembourg	The lack of any transposition legislation and the small number of Luxembourg companies with EWCs makes any impact impossible to assess.
Netherlands	As in Germany, EWCs have been introduced in a context where co-determination rights are quite highly developed - and include group works council structures. Existing works council structures appoint employee representatives on SNBs and statutory EWCs (with direct elections as a fall-back). Employers' sources have stated that, because EWCs have an essentially different role from that of national works councils, the EWC should not be seen as a natural extension of existing consultation structures. Union sources, however see employee-side-only EWCs (but not joint bodies) as a natural extension of the national works council structure to the European level. Given the strict traditional separations between bargaining, assigned to trade unions, and co-determination, attributed to works councils, the fact that negotiations for the creation of EWCs are carried out by employee representatives and that trade union officials might sit in the SNB could be considered minor innovations.
Norway	There is no research available on the issue of EWCs' impact on national industrial relations, and taking into account their relatively short lifespan, they have yet to make an impression within the Norwegian system. However, some general comments can be made. The most common view among the social partners is that the EWC is a natural extension of existing consultation and information arrangements in the Norwegian system. There is a long tradition of consultation and information exchange in Norwegian employee/employer relations, which has been enshrined in collective agreements and legal statutes over the years. As such, the EWC cannot be seen as an innovation. However, as an extension to the European level, it can be seen to bring in new elements, although building on the traditional arrangements.
Portugal	The limited number of companies to which the EWCs Directive is applicable has probably reduced the relevance of EWCs for national industrial relations. In fact, a 1996 study identified only four Portuguese-owned enterprises that would be eligible to set up an EWC. Furthermore, the lack of participatory practices at company level has probably hampered to some extent both the transposition process - not yet completed - and the impact on the national industrial relations system. As in the case of Greece, however, the creation of EWCs may, in the future, help increase the diffusion of participatory practices.
Spain	The EWC, both as a legal institution and as a representative body, is seen as fitting very easily and "naturally" into the Spanish industrial relations system, mirroring quite closely the legal position of Spanish works councils. Existing union delegations play the key role in appointing members of SNBs and statutory EWCs. EWCs are seemingly having two main effects on Spanish industrial relations. First, there is a significant change in industrial relations culture in that trade unions more fully recognise the importance of the European, and indeed global, field of operations, and are increasingly taking steps to improve their skills in this new area. Second, the move to create EWCs is stimulating, as in the case of Belgium, the setting up of group-level union committees in companies where previously these did not exist, or, more commonly, facilitating the creation of communication channels between workers in the different plants across the country.
Sweden	In the appointment of members of SNB and statutory EWCs, priority is given to local trade unions which have signed agreements in force in the company - a provision which harmonises well with the way that the Swedish system is constructed. Another reason for the lack of evident major effects of EWCs is that EU rules are not as far-reaching as the national ones, as they provide the right to information and consultation only, and not the right to negotiations and influence.
UK	Even if the UK was not covered by the Directive until 1997 and will not transpose it until 1999, it is arguably the country where the impact on the national industrial relations system is greatest. First, at least 58 Article 13 agreements were reached in UK-based MNCs, making it the European country with the second-largest number of Article 13 EWCs (after Germany). Second, UK relies traditionally on a "single-channel" system of industrial relations, based on trade union representatives. EWCs have introduced a form of "dual-channel" representation, as non-union representatives have supplemented trade union-based representation within EWCs. Third, since in many large UK-based organisations there are no group-wide industrial relations structures, the key level of industrial relations being at site or establishment level, the establishment of EWCs is likely to encourage greater group-wide liaison between employee representatives in such companies.

Very broadly speaking, the countries can be categorised in four groups in terms of the impact of EWCs:

• countries where the impact of the Directive has so far been virtually nil, because of delays in transposition and/or lack of experience of voluntary EWCs. The prime examples are Luxembourg, Greece and Portugal. However, in the latter two cases participatory structures are relatively undeveloped and the future development of EWCs might help spread such practices;
• countries where the impact of the Directive has so far been extremely limited, largely because the tight fit between existing representation and/or information and consultation arrangements and EWCs means that the latter have been added relatively seamlessly to the former. Examples include Austria, Finland, France, Germany, Italy, Norway and Sweden;
• countries where there is a relatively tight fit between existing representation and/or information and consultation arrangements and EWCs, but the introduction of the latter has at least potentially raised new issues for the former - examples are Belgium, Spain and, to a lesser extent the Netherlands; and
• countries where EWCs have a relatively substantial impact, at least potentially, because there is no significant history of similar works council-type structures. The main examples are Ireland and the UK.

This attempt at categorisation is necessarily very broad, and some countries may fall into more than one category or none of them. An example is Denmark, where the EWC legislation fits relatively closely with existing provisions, but some Article 13 agreements differ markedly from these provisions.

Commentary

Even though the influence of EWCs on industrial relations systems has so far probably been quite negligible in most cases, this should not be taken for granted for the future. Some new tendencies can already be identified.

1. A form of "cultural change" on the part of trade unions and employee representatives. A better awareness of the internationalisation of company strategies and more information on industrial relations and working conditions and arrangements in other countries are helping create a new "European mentality".
2. The creation of networks of employee representatives in different countries may support coordination and joint action.
3. The establishment of group-level representative bodies in some countries as a consequence of the creation of EWCs shows a tendency towards the centralisation of company-level industrial relations. This could improve the possibility for employee representatives to gather fuller information and better understand company strategies.

These changes are probably more likely to be significant in countries where works councils have not traditionally been present. However, especially where industrial relations are more developed and trade unions are stronger, an important transformation of union attitudes is needed to go beyond the national context and face the challenges of internationalisation.

The future development of EWCs is difficult to anticipate, but they probably represent a first step towards a new "mentality" which might lead to further transformations and to the construction of the first elements of a European-level industrial relations system. However, it is important to point out that trade unions are ambivalent on such issues: on one hand, they sometimes seek an increased role for EWCs, in order to acquire bargaining rights; while on the other they see the risks of erosion of national systems or the limits of building a system which applies only to transnational companies, or favour a stronger and clearer role for unions than is embodied in the EWC Directive.

In some countries, trade unions are afraid that the development of EWCs could lead to some sort of company trade unionism which might undermine the role of unions, or to the creation of new alliances (eg between more prosperous national operations, or between management and higher-skilled or less-unionised workers) which might reduce wider solidarity among workers. With reference to those countries where relatively few multinationals have their headquarters, other risks or disadvantages are often mentioned: the possibility of being left in a secondary and mostly passive position in the EWCs of MNCs based elsewhere; or the need to bear the "costs" of understanding the industrial relations system of the home country of the parent company. Furthermore, in countries where a "single-channel" model of industrial relations is present, the low importance generally granted to union officials in EWCs is sometimes a source of criticism. In some other cases, unions are fairly sceptical about the real possibilities for the development of EWCs.

Employers' organisations are generally not in favour of extending EWCs rights to include bargaining. They see and often value EWCs as a forum for information and participation of employees, but consider that bargaining at European level could not be useful, since worldwide competition and globalisation make reference to the European level inappropriate. Despite this general scepticism, however, some more positive attitudes may be identified whereby EWCs are considered a useful forum for exchanging information for mutual benefit and for improving the possibility and capacity for the various parties to understand each other.

In general, we can say that even if the impact of EWCs on industrial relations in the Member States is probably marginal so far, it is true that their presence will most likely lead to some important developments. Of course, this takes time since it can be viewed as a learning process in which trade unions, employers' organisations and individual employers must develop new attitudes. Some important insights into this learning process derive from the positive experiences which have been reported where EWC meetings are carefully prepared by select committees which meet several times to have informal discussions and define a clear agenda. This preliminary work may be very useful for developing a better understanding of the role and potential of EWCs and for fully utilising EWC meetings, without incurring the costs and leading to the negligible results that are sometimes mentioned as shortcomings of EWCs.

In conclusion, in the light of social partners' evaluations and of the abovementioned trends, it can be said that the most important future EWC developments EWCs may turn out to be the following:

1. the increasing importance of an attitude which stresses the ability to reach agreements and compromises;
2. a clearer and more distinct role for EWCs with respect to national representation bodies - that is, a move towards an integration between the different representation levels, overcoming the initial difficulties and "fights for dominance" that are sometimes reported; and
3. some sort of collective bargaining entitlements. These will probably not concern pay and conditions of employment, but rather wider aspects that might need a European-wide framework of regulation, such as health and safety norms, or new "participatory" issues.

However, such developments cannot be thought of as automatic: an important effort on the part of the social partners is required. The main condition for these achievements would be training for EWC members: not only in language skills, but also, and more importantly, to provide a deeper understanding of economic mechanisms and organisational dynamics, and to learn about foreign industrial relations systems. This background of training will probably prove essential for the social partners to make the best use of EWCs (Roberto Pedersini, Fondazione Regionale Pietro Seveso).

• ID: TN9807201S
• Author: Roberto Pedersini
• Country: EU Countries
• Language: EN
• Publication date: 28-07-1998