The involvement of employees and collective bargaining in company restructuring

Continuous and pervasive company restructuring is a fact of life in today's economy. Its effects are also a cause of increasing concern to trade unions and many public authorities - as evinced by recent European Union initiatives aimed at improving the management of industrial change. In this comparative study, we examine the extent to which employees and collective bargaining are involved in managing and responding to the restructuring process. We outline the extent and character of restructuring, before considering the statutory and collectively agreed provisions on employee participation in the process and the way in which collective bargaining at various levels plays a role.

Europe, along with the rest of the industrialised world, is currently in an era of rapid industrial change and restructuring. Such restructuring has been defined by the International Labour Organisation (ILO) as "the adjustment or conversion of production and services to cope with non-transitory, primarily qualitative changes in capital, goods and labour markets. It refers, in other words, to the adaptation of an economic unit to its environment ? The term restructuring emphasises the 'process' character of structural change. While change is more or less a continuous activity, there may be periods of both intensified and pervasive transformation of industrial activities and this is in fact the sense which the term 'restructuring' has assumed over the past decade. Thus, it is widely recognised that we are living through an era of large-scale, if not global, comprehensive adjustment in the system of production" (The role of labour standards in industrial restructuring: Participation, protection and promotion, ILO),

More specifically, according to the 1998 report of the European Union's "Gyllenhammar group" (see below): "There are economic and social forces that induce change - the development of new technologies, globalisation, changing consumer demand and new expectations from workers. These changes create challenges and opportunities. Sectors like the steel industry, car manufacturing, and electrical and electronic components are in a process of fast transformation and internationalisation. In the field of financial services, mergers have occurred or are being prepared. On the other hand, new sectors are developing, creating new jobs whose nature, location, and skill requirements are quite different."

This current process of restructuring arguably most often comes to public attention in "crisis situations", when there are major collective redundancies, plant closures etc. However, change is often continuous and less obviously dramatic, involving gradual or rapid changes in the organisation of production or service provision, employment levels, employment types, work organisation, skills requirements etc. The aim of this European Industrial Relations Observatory (EIRO) comparative study - based on the contributions of the EIRO national centres in the 15 EU Member States, plus Norway- is to examine the extent to which employees and collective bargaining are involved in the process of managing such continuous (rather than "crisis") restructuring and change, at a time when such restructuring and change is pervasive (for an examination of some aspects of "crisis" situations, see TN0102401S). Though the distinction between continuous change and crisis is not always clear-cut, and some consideration of both is unavoidable, our aim is to focus primarily on the former. Our interest is also in pervasive change, rather than every minor organisational and production change. The study examines:

the European Union context;
the extent and character of company restructuring;
the statutory and collectively agreed provisions on employee participation in restructuring, through information, consultation and other means;
the role of collective bargaining in the regulation of restructuring;
the viewpoints of trade unions;
the viewpoints of employers; and
the main points of the public and academic debates on restructuring.

EU-level concerns

EU legislation and other initiatives have addressed the issue of employee involvement in restructuring for many years - for example, going back to the 1970s, the 1977 EU Directive on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses (revised in 1998 and now consolidated in Directive 2001/23/EC) and the 1975 Directive on the approximation of the laws of the Member States relating to collective redundancies (revised and consolidated inDirective 98/59/EC), provide for information and consultation rights for employees and their representatives. However, these Directives refer to specific types of restructuring event, rather than to ongoing restructuring processes.

One of the key aims of Council Directive 94/45/EC on the establishment of a European Works Council (EWC) or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees, is to provide for the European-level information and consultation of employee representatives by multinationals on restructuring issues. The issues listed by the Directive's subsidiary requirements on which statutory EWCs - ie those set up where no agreement is reached - are to be informed and consulted are "the structure, economic and financial situation, the probable development of the business and of production and sales, the situation and probable trend of employment, investments, and substantial changes concerning organisation, introduction of new working methods or production processes, transfers of production, mergers, cutbacks or closures of undertakings, establishments or important parts thereof, and collective redundancies." These issues are largely reflected in the provisions of the 600-700 EWC agreements so far signed in multinational companies.

However, a prominent specific focus on restructuring itself, and its economic and social consequences, is arguably a more recent phenomenon. EU-level concern about the issue prompted the European Commission to establish a high-level group on the economic and social implications of industrial change (the "Gyllenhammar group") in 1998 (EU9805106N). The final report of this group, Managing change, issued in November 1998, contained a range of recommendations to the EU institutions, national governments and social partners. These included:

setting up a European observatory on industrial change;
promoting social dialogue on industrial change and its effects (including the information and consultation of employee representatives);
encouraging large companies to produce annual "managing change reports" on their employment policies, providing information on what structural changes are foreseen and how they will be managed, describing the company's policies and programmes for training employees to maintain their employability and adaptability to new demands, and outlining what progress is being made towards equal opportunities; and
ensuring that closures and collective redundancies are accompanied by joint efforts by companies, employee representatives and public authorities to agree social plans, modernisation programmes and "mobilisation strategies".

The intention to create an observatory on industrial change, which was supported by the social partners, was taken up in the Commission's June 2000 five-year social policy agenda (EU0007266F) and confirmed in the December 2000 Nice European Council conclusions (EU0012288F). The observatory, now named the European Monitoring Centre on Change has been entrusted to the European Foundation for the Improvement of Living and Working Conditions in Dublin.

A current legislative initiative of relevance to employee involvement in restructuring is the proposed Directive on the information and consultation of workers at national level, issued by the Commission in November 1998 (EU9812135F). The Council of Ministers reached political agreement on a common position of the draft Directive on 11 June 2001 (EU0106219F) and there are hopes of adoption by the end of 2001. This Directive would require all undertakings with at least 50 employees, or undertakings with at least 20 employees (Member States may choose between the two criteria), to inform and consult employee representatives about a range of business, employment and work organisation issues. This information and/or consultation requirement would include: the recent and probable development of the undertaking's or the establishment's activities and economic situation; the situation, structure and probable development of employment within the undertaking and any anticipatory measures envisaged, in particular where there is a threat to employment; and decisions likely to lead to substantial changes in work organisation or in contractual relations. These matters are clearly central to the issue of restructuring.

Finally, on 10 May 2001, the European Commission announced a package of Community initiatives to help companies and workers to adapt successfully to business change. The package, which focuses especially on advance preparation and management of corporate restructuring operations, commits the Commission to:

finalising its amended proposal for a Directive on national information and consultation rules;
seeking to raise awareness through a checklist summarising companies' obligations in Community law with regard to information and consultation of employees, as well as good company practice in corporate restructuring;
examining the interaction between Community competition law on mergers and acquisitions and the social consequences of such operations;
consulting the social partners on how to develop further the notion of corporate responsibility for facilitating change, including social accompanying measures in the case of corporate restructuring;
launching a review of the EWCs Directive in the near future, plus pressing for the adoption of the European Company Statute and its accompanying rules on worker involvement (EU0101290N);
issuing a Communication on corporate social responsibility, developing the notion of company responsibility in the context of corporate restructuring
accelerating the creation and activation of the observatory on industrial change in order better to anticipate and manage industrial change and corporate restructuring;
promoting the use of all active labour market measures, including those financed by the European Social Fund, in addressing the social consequences of restructuring decisions. This could entail the earmarking of available funds to depressed regions and sectors; and
examining the possibilities of establishing mechanisms for conciliation, mediation and arbitration at Community level.

Extent and character of company restructuring

In all 15 EU countries and Norway, company restructuring as a result of global industrial change is widespread and dynamic and has been going on in both the private and public sector over recent decades. Above company level, overall economic restructuring has brought widespread trends across western Europe - notably a decline in manufacturing industry (and agriculture) and the rise of the services sector (eg telecommunications, finance etc). Within industries, massive waves of restructuring have first hit traditional heavy industry (eg iron and steel) and manufacturing (eg motor manufacturing) and now increasingly the services sector (notably finance and retail). In the public sector, privatisation and liberalisation have been common themes. Specific impulses towards restructuring have also resulted from particular developments in some countries - such as joining the EU in the 1990s in the cases of Austria, Finland and Sweden- while the introduction of the euro single currency is also playing a major part in certain Member States (see below).

At company level, restructuring is a continuous process, and takes many forms. However, the predominant basic types of corporate restructuring are broadly similar across all the countries considered here. At one level, restructuring occurs in terms of company ownership and form - eg through mergers and acquisitions (which also have the effect of making large companies larger) or through privatisation in the case of formerly publicly-owned organisations. At the same time, there is some tendency for larger companies to "demerge" or spin off parts of their operations.

At another level, within companies, restructuring may relate to production - or service provision - levels, both overall and in terms of their distribution between different locations. Market conditions may lead a company to increase or decrease overall production/service provision, and also to relocate production/service provision - leading to increased activity in some locations or the opening of new locations, and the reduction of activity or closure of operations elsewhere. Within multinational companies, such relocation of production increasingly occurs across borders, with a tendency for companies in some sectors to shift production/service provision outside the EU. Market conditions may also result in increasingly rapid change in the products and services produced, with old ones revised or terminated and new ones introduced. A further widespread trend is for companies or public sector bodies to outsource or contract out to external parties activities and functions formerly performed internally. This can form part of a process of companies concentrating on their "core" activities.

The abovementioned forms of corporate restructuring relate to changes in company structure and the organisation and level of production and service provision. They then in turn have an impact on organisational restructuring at workplace level, through, for example, the introduction of new technology or new forms of work organisation. Such workplace restructuring may also be the result of the introduction of new systems of production, also aimed at facing up to increasingly competitive global markets, such as "lean" production, "just-in-time" production, "total quality management", "world-class manufacturing" and "business process re-engineering".

The key motive of employers in undertaking such organisational restructuring is shared across all countries covered by this study: a strong wish for increased flexibility - in working time, pay and work organisation - as a consequence of increased competition.

A useful summary of the corporate restructuring process (developed by the Swedish trade unions SIF and Svenska Metall) is provided in a recent report from the International Metalworkers' Federation (Enterprise restructuring and work organisation, IMF research paper, April 2001). External pressures - notably global competition, technological developments, an increased focus on "shareholder value", overcapacity and political demands - force companies to seek to improve their competitiveness. They do this by focusing on three areas:

profitability. Firms seek to obtain shareholders? approval and to meet their demands for high returns. Unprofitable operations are likely to be sold off and many products or services obtained from outside the company (through outsourcing);
customers. Companies seek to meet their customers' requirements more closely, improving their products and services and bringing them closer to customers; and
costs. This lead to mergers and takeovers (seeking cost reductions by means of "synergy effects"), "rationalisation" and "downsizing", and a focus on core activities.

As a result of these developments, new flexibility requirements are placed on employees. This affects:

employment. Companies move away from relying on workers on open-ended, full-time contracts and increasingly use part-time, temporary, "contingent" and contract workers;
jobs. The content of jobs is expanded to encompass a greater variety of tasks;
skills. New work practices raise skill levels and requirements, and workers thus have to upgrade their skills so as to be able to cope;
the workplace. Home- and teleworking is growing thanks to new information and communication technologies. On the other hand, as a result of outsourcing, there may now be a number of enterprises on the site where the old "workplace" used to be;
working time. Increases in demand are met by overtime work or by "a more flexible approach as to when and how to work", so as to extend operating hours without having to pay overtime rates;
remuneration. Profit-sharing and various types of bonuses are becoming more and more common;
management. "A more flexible world demands a different kind of management and philosophy"; and
organisation. There is a trend towards flatter organisational structures.

Extent of company restructuring

It is clear that corporate restructuring is a deep and pervasive phenomenon across the 16 countries covered by this study. However, it is very difficult to measure restructuring in all its forms, and the data available cover only some aspects of the issues. Mergers and acquisitions are one of the clearest and most readily measurable manifestations of restructuring and there is considerable evidence that they are on the increase. According to the European Commission, there were 12,800 mergers and acquisitions involving an EU-based enterprise in 1999, up 28% on the previous year. In 1998-9, domestic transactions accounted for 56% of all mergers and acquisition operations involving EU companies, intra-Community operations accounted for 15% and international (ie also involving non-EU countries) transactions for 29% (European Economy, Supplement A. Economic trends. No. 5/6 2000).

Cross-border mergers and acquisitions worldwide have risen at an annual rate of 42% over the past 20 years, according to the United Nations Conference on Trade and Development (UNCTAD) (World Investment Report 2000: Cross-border mergers and acquisitions and development, UNCTAD, October 2000). The value of completed cross-border mergers and acquisitions rose from USD 100 billion in 1987 to USD 720 billion in 1999, when there were about 6,000 transactions, with 109 "mega-deals" (worth more than USD 1 billion) accounting for more than 60% of the total value. In Europe, the value of cross-border merger and acquisition-related sales and purchases increased in 1999 by 83% and 75%, reaching USD 345 billion and USD 498 billion respectively. The EU accounted for almost half of global cross-border merger and acquisition-related sales and 70% of purchases, and EU companies were involved in all but one of 1999's 10 largest cross-border mergers and acquisitions. These trends in Europe are, according to UNCTAD, "partly a response to the ongoing integration and liberalisation affecting much of European industry". Although it is difficult to assess the full impact of the euro in this area, "the current reshaping of European industry is likely to be affected by the single currency. The single currency will also contribute to greater price transparency and increased competition in Europe, putting more pressure on firms to restructure and consolidate their operations".

Only a few countries appear to have statistical data concerning the scope of company restructuring more broadly, or the extent of different types of restructuring. Exceptions are, to a certain extent, France and Germany. In France, a distinction is made in law between two types of restructuring: financial and productive. Over 1998-9, a total of 1,051 large industrial companies (those with more than 250 employees, or a turnover of more than FRF 260 million, or total assets in excess of FRF 175 million) underwent financial restructuring - ie mergers, acquisitions, spin-offs and demergers. The number falls to 853 firms, if account is taken of the fact that some companies were involved in more than one restructuring operation over the two-year period. Some 70% of the restructuring operations were mergers and acquisitions. In terms of productive restructuring (establishment or closure of companies, changes in staffing levels, technological developments and subcontracting), where this leads to redundancies the companies and employees concerned have access to various state retraining and redeployment schemes. Data on the number of employees covered by these schemes gives an indication of the scale of restructuring, and in 1999 over 110,000 employees participated.

According to a 1997/8 study by Germany's Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI), 70% of all works councils surveyed reported incidents of restructuring within their company: 58.2% reported restructuring within the establishment; 55.3% reported contracting out; and 61.1% reported outsourcing. In addition, 18.7% of companies had reportedly moved parts of the establishment's operations to a different location (8.9% of works councils also reported that such relocated operations had been returned to the original establishment), while 19.2% of companies had purchased other businesses and 25.7% of works councils reported that parts of the company had been closed.

Effects on employment patterns

Patterns of employment have changed radically over recent decades in all 16 countries covered by this study. The abovementioned changes in the overall structure of the economy have led to changes in employment patterns, with increasing employment in services and falling employment in manufacturing industry. These broad changes are clearly discernible in most countries, as the following examples indicate:

as mentioned above, in France employees made redundant due to restructuring are often covered by various state retraining and redeployment schemes. Statistics indicate that the companies most affected by such schemes are predominantly those in industry (and also those with 20-100 workers);
in Greece, as a result of the replacement of labour by machinery and the restructuring of unprofitable companies, employment in industry is currently down 25% compared with the early 1980s, while agricultural employment has also fallen following restructuring in the the 1990s. However, increases in service sector employment have more than made up for these falls;
Portugal has seen a major decrease in employment in manufacturing (particularly textiles, chemicals and metalworking) and increased employment in services (notably retail, hotels and restaurants, and finance); and
the UK has experienced a continuing decline in manufacturing employment, falling from 18% of all employment in 1991 to 16% in 1998. Business and miscellaneous services are the main growth areas, growing from 20% to 24% of all employment. Since 1990, the main reductions in employment have been in mining and utilities, clothing and textiles, engineering and wholesale.

However, despite this overall shift from manufacturing towards services, corporate restructuring has affected employment in the latter as well as the former. Typically, shake-outs of jobs in heavy industry and then manufacturing more widely in the 1970s and 1980s (eg 30% of jobs in Belgian manufacturing were lost between 1960 and 1992) were followed by restructuring in services from the 1990s. The intensity of restructuring (and consequently changes in employment levels and work practices) is in some cases (eg Greece and Italy) considerably greater in export-oriented firms which are most exposed to the increasing pace of international competition.

Privatisation and liberalisation, along with public expenditure cuts, have led to job losses in the public sector in many countries. For example, in Belgium, there have been many continuing restructuring exercises and accompanying workforce reductions in the public sector (often in preparation for future liberalisation), including the post office, police, hospitals, electricity, telecommunications and civil service. A further example is the Swedish postal service, which is planning to focus totally on logistics, with the result that 5,000 post office clerks will lose their jobs.

The employment effects of mergers and acquisitions is variable. Large-scale redundancies following such transactions are common in some countries, notably the UK and sectors (eg finance), but this is not widespread. However, there is in many cases a significant impact on jobs - not least because of duplication (ie the existence of identical jobs in each of the formerly separate companies) - which takes place over time, often in the form of early retirement, voluntary redundancies etc.

Regional differences in the employment effects of restructuring are reported from several countries. Whereas companies in the south of Germany, especially Bavaria and Baden Württemberg enjoy remarkably low levels of unemployment and are even facing shortages of qualified labour, unemployment levels in the northern federal states are much higher. While unemployment has fallen in west German states, it is still high in east Germany. In Austria, while restructuring contributed significantly to a rise in unemployment during the 1990s, this mostly affected formerly strong industrial areas (though these have since recovered). In Portugal, the increase in employment in commerce, hotels and construction has particularly benefited the regions of Braga and Aveiro. Similarly, in the UK, employment in services has expanded more rapidly in the South-East than in the traditional manufacturing locations of South Wales, the North and the Midlands.

Specific employment effects on particular groups of workers can be seen in some countries. In Belgium, restructuring has often been linked with the use of early retirement schemes to cushion resulting redundancies - with the affect that older workers (aged 50 and over) are targeted in restructuring. Norwegian research indicates that restructuring may have negative effects on the situation of groups such as women, older employees and unskilled workers. Restructuring may force companies to revert back to old gender patterns, and as such women suffer, especially in cases that involve workforce reductions or reallocation of responsibilities and posts. Older employees often encounter difficulties in restructuring, for example with regard to their perceived inability to adapt and change. Unskilled workers may face problems in restructuring that involves the introduction of new technology. In Spain, restructuring has meant reductions in the number of manual and unskilled workers in favour of younger and often female workers with higher level of qualifications but with more precarious employment conditions (in terms of contracts, working time and pay). In the UK, the decline in manual occupations in manufacturing and the increase in service sector work has been associated with a loss of full-time jobs for men and a growth in part-time work, particularly for women.

Concrete data on the effects of corporate restructuring on employment levels seem to be rare. An exception is a Dutch study comparing employment levels in the country's 30 largest listed companies in the periods 1990-5 and 1985-90. Between 1985 and 1990, gross profits amounted to NLG 304.4 billion and employment increased by 26,057. Over 1990-5, gross profits rose to NLG 402.3 billion, but employment decreased by 43,907. These figures suggest that restructuring to make companies more financially successful takes place at the expense of employment.

The question of whether corporate restructuring has led overall to a decrease or increase in employment levels across the whole economy is beyond the scope of this study. However, it is reported from Denmark, for example, that restructuring has not caused any significant drop in employment levels (linked to the fact that most Danish companies are SMEs) but, on the other hand, restructuring has not created new jobs for unemployed people, as hoped by the government.

Employee participation

Representational employee participation - generally information and consultation of employee representatives - occurs over various aspects of company restructuring in all the countries considered here, but there are major variations. Table 1 below sets out the key details of employee participation on issues relating to company restructuring, indicating: the legal or collectively agreed basis for the rights; the identity of the employee representatives involved; the nature of the participation (information, consultation or other); and the main issues concerned. Our concern here is with the national level, and participation involving EWCs (based essentially on the contents of the agreements establishing them) is not considered (see TN9807201S)

**Table 1. Main employee participation rights in company restructuring, as provided for by law and general collective agreements**
Country	Basis	Representatives involved	Nature	Issues
Austria	Law	Works council	Information, consultation, negotiation (changes causing considerable disadvantages for employees only).	Business situation/prospects, cutbacks/closures, outsourcing, mergers, work organisation changes, new working methods, new technology, change of purpose, changes causing considerable disadvantages for employees, collective redundancies, transfers of undertakings.
Belgium	Law and intersectoral agreement (on new technology)	Works council (where none, other representatives in some cases)	Information and consultation	Business situation/prospects, employment situation/prospects, events/decisions with important consequences for enterprise, restructuring plans, new technology (with consequences for employment, work organisation or working conditions), collective redundancies, transfers of undertakings.
Denmark	Intersectoral agreements and law (on collective redundancies and transfers of undertakings).	Works council (cooperation committee)	Information and consultation	Changes affecting organisation of work - including production methods, technology, employment levels and company structure - collective redundancies, transfers of undertakings.
Finland	Law and intersectoral agreements	Local union representatives and employees	Information, consultation and negotiations (where any changes affect employees)	Business situation/prospects and changes affecting employees in areas of working methods, work organisation, new machinery, workplace, products/services, closures, major expansion/cutbacks, collective redundancies, transfers of undertakings.
France	Law	Works council	Information and consultation	Business situation/prospects, employment situation/prospects, mergers, acquisitions, sell-offs, changes in production facilities, closures, new operations, subcontracting, new technology (with consequences for employment levels, qualifications, pay, training and working conditions), collective redundancies, transfers of undertakings.
Germany	Law	Works council	Information, consultation and co-determination (on various structural and production issues)	Business situation/prospects, alteration of production facilities, new machinery, new production processes, new work organisation, alteration of workplaces, new work methods/production systems, changes in equipment, closures/cutbacks, mergers, structural changes, collective redundancies, transfers of undertakings.
Greece	Law	Works council	Information, consultation and co-decision (only on awareness-raising on new organisation methods and use of new technology, and training/retaining plans)	Expansion/contraction of operations, new technology, change in employment structure and levels, awareness-raising on the organisation methods and use of new technology, training/retaining plans, collective redundancies (and short-time work), transfers of undertakings.
Ireland	Law	Trade union representatives (or elected employee representatives where unions not recognised)	Information and consultation	Collective redundancies, transfers of undertakings.
Italy	Intersectoral and sectoral agreements and law	Unitary union workplace structure (Rsu)	Information and consultation	Employment situation/prospects, technological, organisational and productive changes, redeployment, collective redundancies, transfers of undertakings.
Luxembourg	Law	Company joint committee and employee committee/works council	Information and consultation	Business situation/prospects, employment situation/prospects, new or changed sites or machinery, new or changed working and production methods, all economic and financial decisions with decisive impact on structure of enterprise or employment levels (notably on production, mergers, acquisitions, decrease/increase in activity, organisational change), collective redundancies, transfers of undertakings.
Netherlands	Law	Works council	Information, consultation and veto ("social" decisions - eg changes to occupational profiles, skill requirements etc - only)	Important strategic decisions, including production levels and methods, work organisation, new technology, new investments, company structure, employment levels, changes to occupational profiles, skill requirements, working conditions and organisation of working time, collective redundancies, transfers of undertakings.
Norway	Intersectoral agreements and law (on changes of material significance for work environment)	Works council, trade union representatives and working environment committee (changes of material significance for work environment only)	Information and consultation	Activities of enterprise, substantial investments, changes in production systems and methods, product development, expansions/reductions or restructuring, training, reorganisation of importance for employees and working conditions, employment matters (including plans for expansion or reduction), plans of material significance for working environment (planning and organisation of work), acquisitions, collective redundancies, transfers of undertakings.
Portugal	Law	Workers commission	Information and consultation	Business situation/prospects, organisation of production units and implications for employment, equipment, plans for company restructuring, closures/cutbacks, measures resulting in reductions of employment or working conditions, changes in work schedules and classification systems, changes in company location, training/retraining, skills, collective redundancies, transfers of undertakings.
Spain	Law	Workers committee	Information and consultation	Business situation/prospects, employment situation/prospects, production, subcontracting, reorganisation of production affecting workers (substantial modification of working conditions, redeployment, functional mobility etc), changes in the legal status of company (eg mergers and acquisitions), employment restructuring/changes, reductions in working hours, transfer of facilities, training plans, new or changed work organisation, collective redundancies, transfers of undertakings.
Sweden	Law and intersectoral agreements	Trade union representatives	Information, consultation and negotiation (on important alterations to activity, work or employment conditions and collective redundancies)	Business situation/prospects, employment policy, changes to organisation and working conditions, important alterations to activity, work or employment conditions, collective redundancies, transfers of undertakings.
UK	Law	Trade union representatives (or elected employee representatives where unions not recognised)	Information and consultation	Collective redundancies, transfers of undertakings.

Source: EIRO.

Law or agreements?

There are major differences among the countries in the extent to which legislation or widespread collective agreements provide employee representatives with rights or impose duties on company management as regards employee participation in company restructuring.

Legislation plays the key role in Austria, Belgium, Finland, France, Germany, Greece, Ireland, Luxembourg, the Netherlands, Portugal, Spain and Sweden. It is supplemented by intersectoral agreements providing for participation on specific issues in Belgium (new technology), or for additional participation rights in Finland and Sweden. Intersectoral agreements between central social partner organisations play the leading role in Denmark, Italy and Norway. However, in all three cases, legislation also plays a role: while collectively agreed provisions are the basis for employee participation on issues such as working conditions and work organisation, legislation provides for additional measures relating to matters such as the working environment or collective redundancies.

In some cases, the legislation or intersectoral agreement establishes a general framework which is then filled out in different ways at lower level. Notably, in Italy bargaining at sector level sets out specific participation procedures and issues within the overall framework. Sectoral agreements also play a role in countries such as Finland and the Netherlands.

Employee representation

The identity of the representatives involved in employee participation on restructuring topics also varies. In Austria, Belgium, Denmark, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Norway, Portugal and Spain, it is elected employee representatives on works council-type bodies that are involved in the process. In some of these countries - Belgium, Italy and Norway (where working environment committees are also involved in some cases) - trade union representatives also play a role. It is union representatives who play the key part in Finland, Ireland, Sweden and the UK. In Ireland and the UK (where obligatory information and consultation on restructuring matters is restricted to collective redundancies and transfers of undertakings, and any other participation is based on voluntary agreements or practice), employee representatives are involved where trade unions are not recognised by employers. It should also be noted that works council-type bodies may in many cases be made up largely of trade union representatives (as in France, Germany, Italy and Spain for example), though in some sectors and countries unions have weak representation at workplace level and representatives often have no union affiliation.

In a number of countries, employees are entitled to some form of representation on company boards in certain types of enterprise, which may allow them some influence on or input into company decision-making on some aspects of restructuring (TN9809201S). Such board-level representation applies to relatively large numbers of companies in Austria, Denmark, Finland, France, Germany, Luxembourg, the Netherlands, Norway and Sweden.

Issues

Employee participation related to company restructuring occurs in all countries examined, but the scope varies considerably. In terms of major restructuring events, all countries have implemented the employee information and consultation provisions of the EU Directives on collective redundancies and transfers of undertakings - indeed these are the only restructuring-related issues on which there is mandatory employee participation in Ireland and the UK. All 14 other countries provide for participation rights on a wider range of issues, and on forms of restructuring which can be regarded as continuous or less dramatic. The definition of such issues varies, with some countries using broad categories - such as events likely to affect employees significantly - and others providing more detail. In some countries, restructuring issues may fall within a general obligation to inform employee representatives on the company's situation and prospects in terms of its business (eg economic and financial matters) or employment. However, the common specific issues include:

changes or decisions with significant effects for employees, or some similar formulation (eg in Austria, Belgium, Denmark, Luxembourg and Portugal);
mergers and/or acquisitions and/or divestments (eg in Austria, France, Germany, Luxembourg, Norway and Spain);
changes in company structure (eg in Belgium, Denmark, Germany, the Netherlands, Norway and Portugal);
closures and cutbacks in operations and activities (eg in Austria, Finland, France, Germany, Greece, Luxembourg, Norway, Portugal and Sweden);
outsourcing/subcontracting (eg in Austria, France and Spain);
changes in work organisation (eg in Austria, Belgium, Finland, France, Germany, Italy, the Netherlands, Norway, Portugal, Spain and Sweden);
introduction of new technology (eg in Austria, Belgium, Denmark, France, Germany, Greece, Italy and the Netherlands);
introduction of new working or production methods or equipment (eg in Austria, Denmark, Finland, France, Germany, Luxembourg, the Netherlands, Norway and Portugal);
training/retraining and skills (eg in France, Greece, the Netherlands, Norway, Portugal and Spain);
changes with consequences for working conditions (eg in Belgium, Denmark, the Netherlands, Norway, Portugal, Spain and Sweden); and
changes with consequences for employment structure/levels (eg in Belgium, Denmark, France, Greece, Italy, the Netherlands, Norway, Portugal, Spain and Sweden).

Employee representatives thus have some form of participation rights on many aspects of restructuring. While this participation generally relates more to workplace-level restructuring (in terms of the model outlined above, the employment flexibility requirements that employers seek to impose on employees, as they change focus in order to face up to increased competition), it also applies in some countries to some aspects of the structural changes in the company itself (mergers, acquisitions, closures etc). The nature of employee participation often varies, depending on the issue concerned (see next section).

Nature of participation

Information and consultation of employee representatives is the main form of indirect employee participation in company restructuring (specific provisions on collective redundancies and transfers of undertakings, based on EU Directives, are not covered explicitly in this section - see TN0102401S for details).

In many countries, employee representatives (works councils and/or trade union representatives) receive regular and routine information (eg on an annual or quarterly basis) on a range of business and employment issues, which may be implicitly or explicitly of relevance for continuing restructuring. This is the case in countries such as Austria, Belgium, Finland, France, Germany, Luxembourg, the Netherlands, Portugal and Sweden.

Certain events, plans or proposed decisions trigger further specific information in most countries. This may apply to a general class of developments - eg "whenever events take place that could have important consequences for the enterprise" or "when there are internal decisions that could have important repercussions for the enterprise" in Belgium - or to specific developments. These developments are most commonly workplace-related issues: changes in work organisation; changes with consequences for employment structure/levels; introduction of new working or production methods or equipment; introduction of new technology; and changes with consequences for working conditions. However, in a significant number of countries, wider company restructuring issues are also subject to such information, notably: closures and cutbacks in operations and activities; mergers and/or acquisitions and/or divestments; and changes in company structure.

Information on these issues often leads to consultation, with the relevant employee representatives expressing their opinions on the planned changes, or making alternative proposals. In some cases there are rules on the timing of this information and consultation. These may be general - for example, in Austria, the information has to be provided sufficiently early so that consultation is still possible, while in Norway information and consultation must start as early as possible. There may also be set deadlines - for example, in Belgium, information must be given to the works council three months before the installation of new technology begins, while in Finland and France specific timetables apply in the event of changes involving job losses.

In a number of countries, the consultation procedure is formal, providing for submission of an opinion by the employee representatives in certain cases. For example, in corporate restructuring in Portugal, workers' commissions have the right to: be heard and submit an informed opinion; continue to be informed about reorganisation plans; have access to the final drafts of texts regarding reorganisation and submit an opinion on these texts before they become official; meet with technical bodies responsible for the preparatory work on restructuring; issue a critical assessment; draw up suggestions; and present formal complaints to the company itself and competent outside authorities. In Spain, the workers' representatives are entitled to to issue reports before the employer takes decisions related to the organisation of work and production, including: restructuring and redundancy; changes in the legal status of the company (eg mergers and takeovers); reduced working hours; transfer of facilities; vocational training plans; and the introduction or revision of systems for organising and controlling work. Though these reports are mandatory, they are not binding on the employer. In certain cases, consultation takes the form of bargaining but without the need for agreement in order for the employer's decision to be imposed.

However, beyond giving their opinion, employee representatives have no right to negotiate on the employer's restructuring plans or to have any form of veto over them in the great majority of countries. Nevertheless, there are a number of exceptions:

in Austria, in the event of changes that cause considerable disadvantages for the employees in companies with 20 employees or more, a social plan negotiated between the employer and the works council may be drawn up for the purpose of easing the effects of these changes. Works councils also have the right to object to planned redundancies;
in Belgium, if companies undergoing restructuring are to qualify for access to collectively agreed early retirement schemes, a restructuring plan should be negotiated with employee representatives;
in Finland, negotiations must occur on all important changes in the areas covered by the relevant legislation (eg major changes in duties and working methods or organisation, major acquisitions of machinery and equipment, major rearrangements of working premises, closures, cutbacks, transfers or major expansion or reduction of activities);
in Germany, while the law does not empower the works council to prohibit restructuring, it does force employers to inform works councils and to enter negotiations about potential alternatives. Employers should negotiate a "reconcilement of interests", aimed at reconciling the positions of the employer and the workforce. This involves balancing the respective interests against one another, as well as reaching an agreement on the procedure for change and the necessary human resource planning. Where the employer makes no attempt to arrive at such an agreed reconcilement of interests, or fails to abide by one, employees made redundant may claim compensation for loss of their job;
in Greece, works councils and employers may take joint decisions on certain issues in some circumstances. In the field of restructuring, these issues include designing awareness-raising programmes on new methods of enterprise organisation and the use of new technologies, and planning for staff training and retraining, especially after changes in technology; and
arguably most significantly, in the Netherlands, works councils have the right to give advice on all important strategic decisions, including those relating to production levels and methods, work organisation, introduction of new technologies, new investments, company structure and employment levels. If the employer's decision on these issues is not in accordance with the works council's recommendation, the latter may appeal against this decision in the courts (NL9810102F). Pending the ruling, the employer must delay its decision (if not, the works council can ask the court to intervene). Works councils also have a right to veto "social" decisions, such as changes in occupational profiles, skill requirements, working conditions and the organisation of working time. If the employer wants to overrule a veto, the matter is first taken to a mediation committee. If the mediation fails, the employer can go to court to seek permission for its decision. This permission is not automatically granted: the court gives permission only if the decision is necessary with a view to important economic, social or organisational interests of the employer.

Finally, it should be noted that company size plays a part in the existence and extent of employee participation in restructuring. The works councils and other employee representative structures which are involved exist only in organisations or establishments of a certain size - those with five employees in Germany, 35 in Denmark, 50 in France, 100 in Belgium etc - though fall-back provisions for companies without such bodies exist in some cases. Furthermore, certain types of information and consultation occur only in larger firms in countries such as Austria, Germany and Italy.

Collective bargaining

Table 2 below outlines briefly the extent to which company restructuring and change is an issue in collective bargaining at company and higher levels (eg sectoral and intersectoral) in the 16 countries examined.

**Table 2: Restructuring and change as an issue in collective bargaining at company level and higher levels**
Country	Company level	Higher level
Austria	Major theme in negotiations between works councils and management over works agreements.	Not a significant issue in sectoral bargaining.
Belgium	Some bargaining, typically at union behest over job losses and introduction of less favourable employment conditions. Social plans often negotiated to accompany redundancies.	No bargaining at sector level. Intersectoral agreements provide framework for information and consultation over introduction of new technology.
Denmark	No collective bargaining as such, but negotiations within works councils.	No bargaining at sector level. Intersectoral agreements provide framework for information and consultation over restructuring.
Finland	No collective bargaining as such, but negotiations with trade union representatives and employees governed by cooperation legislation.	No substantive bargaining at sector level, though some agreements (eg for restaurants industry) adapt certain aspects of participation over restructuring. Intersectoral agreements also regulate some aspects of participation.
France	Some bargaining. Obligatory annual bargaining on employment may cover restructuring-related job cuts. Some agreements on employment policy in restructuring (eg at MAAF Assurances in 1996).	Sectoral bargaining often includes preventive measures on employment, by promoting implementation of various statutory schemes (eg retraining and working time cuts) accompanying restructuring. Numerous sectoral agreements establish joint national employment committees. Intersectoral agreements deal with some employment aspects of restructuring - eg retraining following redundancy.
Germany	Major theme in negotiations between works councils and management over works agreements. These frequently take form of "pacts on employment and competitiveness", covering working time, work organisation and remuneration issues	Some sectoral agreements (eg in chemicals, banking and printing), often dating initially from 1980s, seek to mitigate outcomes of restructuring through measures such as redeployment, early/progressive retirement, working time cuts, and increased notice periods or severance pay.
Greece	Bargaining occurs, but details unknown.	No relevant bargaining.
Ireland	A number of agreements deal with major company restructuring and consequences for employees, while, in terms of continuous restructuring and change, there is an increase in workplace union-management "partnership" arrangements, some of which deal with such issues.	The current national intersectoral agreement, the Programme for Prosperity and Fairness (PPF), deals with a number of restructuring-related issues, such as: modernisation of public sector; workplace partnership; and family-friendly work organisation.
Italy	Restructuring is a central issue in company-level bargaining (which notably regulates the instruments used to handle redundancies).	Sectoral bargaining generally regulates framework for dealing with employment consequences of financial crises (eg "social shock absorbers").
Luxembourg	Not a major issue in bargaining. A few agreements (eg at Arbed and DuPont de Nemours) provide guarantees for employees in restructuring.	Not a major issue in sectoral bargaining. A few agreements (eg in care sector, cleaning and banking) cover restructuring-related matters such as redeployment or notice periods.
Netherlands	Restructuring is mainly handled by works councils, but bargaining with unions often deals with consequences - eg social plans to accompany restructuring.	Some sectoral bargaining, dialogue and consultation in industries facing serious restructuring (eg printing, shipbuilding and meat processing). No relevant intersectoral dialogue.
Norway	Major issue in cooperation between management and employee representatives, but few company agreements with trade unions.	Intersectoral basic agreements provide framework for company-level cooperation on restructuring issues, with state sector agreement especially notable in this regard.
Portugal	Restructuring mainly handled by workers commissions, but bargaining with unions may deal with consequences.	Various intersectoral agreements deal with restructuring-related issues (eg seeking to prevent employment crises during change).
Spain	Bargaining (in growing minority of firms) deals with changes in the organisation of work and production, covering matters such as contractual and working time flexibility.	Growing minority of sectoral agreements cover restructuring-related issues, both procedural (eg regulating company-level consultation) and substantive. Intersectoral agreement promotes bargaining on work organisation.
Sweden	Major issue in negotiations between management and unions under terms of co-determination legislation (while not collective agreements strictly speaking, signed minutes from such negotiations have legal status).	No sectoral bargaining (except where company-level negotiations lead to dispute). Intersectoral agreements touch on some restructuring-related issues.
UK	Traditionally limited. However, since mid-1990s there has been a growth in "partnership" deals, involving the negotiation of agreements between unions and employers over issues relating to flexibility and employment security, often in context of industries experiencing substantial change and restructuring.	No bargaining (little sectoral bargaining occurs on any issues).

Source: EIRO.

As table 2 indicates, restructuring as a theme in collective bargaining is primarily a company-level matter. Furthermore, restructuring is in many countries not generally an issue covered by "collective bargaining" as such - understood as bargaining between employers and trade unions taking place at pre-fixed agreed times and according to pre-fixed rules (ie regular bargaining rounds) - but rather local negotiations, based on cooperation and participation provided for in legislation (or widespread agreements) involving works council-type bodies and local trade union representatives. Formal company collective bargaining on restructuring does, however, occur in some countries, where it tends to deal with the consequences of restructuring (with any input into the restructuring itself restricted to works councils etc). At higher level, where collective bargaining does touch on restructuring-related matters, it often provides a framework or deals with procedures, rather than containing substantive provisions. It appears that negotiations over restructuring and change take place predominantly at decentralised level in existing joint bodies and procedures. Indeed, globalisation, industrial change and restructuring can be said to have led to a strengthening of bargaining, consultation and related activities at workplace level. It is difficult to state that the negotiation of restructuring-related issues has been decentralised, as such bargaining has never really been significant at higher levels. In some countries, developments reflect the state of affairs reported from Ireland - a "shift from traditional adversarial methods of collective bargaining to an approach based more on cooperation and partnership".

Company level

The employee participation arrangements relating to corporate restructuring outlined in the previous section are the main basis for company-level negotiations in this area in many countries - this is the case, for example, in Austria, Denmark, Finland, Germany, the Netherlands, Norway, Spain and Sweden. Where negotiations occur as part of such participation, these usually relate to the consequences of the change and restructuring for employees, rather than to the decision over the restructuring itself. However, as noted above, there are, to some extent, negotiations over the restructuring itself in countries such as Finland and the Netherlands. In terms of the consequences for employees, there are negotiations in specified circumstances in a number of countries, for example over a "social plan" or similar measures to accompany major changes and redundancies, as in Austria, Belgium, Germany or Italy. In all countries where some form of negotiations occur as part of the employee participation process, change and restructuring are a central issue in such negotiations.

In some countries bargaining occurs outside the participation process, involving trade unions, either in addition to the negotiations provided for in participation arrangements in some countries (eg Belgium, Germany, Italy, the Netherlands, Norway and Spain) or as the only type of negotiation over restructuring issues (as in France, Ireland, Luxembourg, Portugal and the UK). Like the negotiations within the participation process, this bargaining often focuses on social plans to accompany redundancies and restructuring - as in Belgium, France, the Netherlands and Portugal. In some countries -such as the Netherlands and Portugal - this seems to reflect a division of responsibilities: while statutory or widely agreed participation arrangements focus on the restructuring itself, bargaining with unions deals with the consequences There are major differences in the extent of company-level bargaining with unions over restructuring and change. It appears to be: a relatively widespread practice in Belgium, Italy, the Netherlands and Portugal; a minority but expanding development in Ireland, Spain and the UK; and comparatively rare in France, Germany, Greece, Luxembourg and Norway.

Specific issues dealt with in company-level negotiations over restructuring most commonly include: pay and conditions (eg in Austria, Germany, Ireland, Luxemburg, Portugal and Spain); job security and losses (eg in Austria, Finland, France, Italy, Luxembourg and the UK); working time (eg in Austria, France, Germany, Ireland, Italy, Portugal and Spain); training/retraining (eg in Austria, France, Netherlands, Portugal and the UK); redeployment/re-employment (eg in Belgium, Denmark and Italy); compensation packages (eg in Belgium, Denmark and Germany); job classification (eg in Italy, the Netherlands and Spain); work organisation (eg in Denmark and Germany); early retirement (eg in Austria and Belgium); and worker representation and bargaining arrangements (eg in Austria and the UK).

In a few cases, negotiations at company level have led to the establishment of some type of joint bodies to examine change and restructuring on a continuous basis and draw up solutions and plans, or to oversee particular restructuring initiatives. For example:

under the terms of labour market legislation, Austrian companies proposing large-scale workforce reductions may, by agreement with works councils, establish work foundations (Arbeitsstiftungen), providing collectively agreed employment-related services for the employees concerned. They offer a package of measures which, depending on individual needs, may comprise vocational guidance, active job searches, practical training, (further) qualification and support for proposed business start-ups;
in Ireland, the 1990s saw the establishment of some joint initiatives between employers and unions at local level to deal with restructuring, particularly in the commercial semi-state sector - examples include the gas company, Bord Gais, and airline, Aer Lingus;
at Electrolux-Zanussi in Italy, various joint committees were established during the 1990s, including, at group level, a "supervision board" which has the right to be consulted before major industrial and organisational decisions and a special committee which promotes and supports innovation in work organisation. At plant level, joint structures include a technical committee which examines production organisation and training paths; and
a number of agreements in the UK have established standing joint bodies which are involved in consultation and problem-solving over issues of business restructuring and employment security - eg at Scottish Power.

Agreements concluded within the context of negotiations over corporate restructuring may in some cases fall within the category of those deals identified by researchers (notably the European Foundation for the Improvement of Living and Working Conditions) as "pacts for employment and competitiveness" (PEC s). Such pacts are seen as allowing for the reconciliation of: management wishes to reduce costs, improve flexibility and change organisational culture in the face of increasing competitive pressures; and employee representatives' concerns to minimise job losses and strengthen their role in company decision-making.

With regard to the stage in decision-making process at which restructuring-related negotiations take place, whether or not this refers to proposals or consequences, negotiations essentially occur in a reactive way, as a response to changes in a company and to management initiatives. Joint planning for restructuring in advance seems to be very rare. One of the very few exceptions is a number of agreements on the "forward-looking management of employment" in France.

Higher level

As noted above, where bargaining deals with restructuring and change, it is generally bargaining at company level which plays the key role. In some countries, the role of higher level bargaining - at intersectoral and/or sectoral level - is to provide a framework for employee participation relating to restructuring (either generally or specifically). Intersectoral agreements perform this function, to varying extents, in Belgium, Denmark, Finland (where sectoral bargaining adapts the intersectoral rules in some cases), Norway and Sweden.

Intersectoral agreements in a few countries deal with more substantive issues relating to company restructuring - examples include France (retraining following redundancy), Ireland (workplace partnership and family-friendly work organisation), Portugal (preventing employment crises during times of change) and Spain (promotion of bargaining on work organisation).

Sectoral bargaining is somewhat closer to the realities of corporate restructuring, but most countries report little or no relevant agreements on the issue. Exceptions are

France, where it is estimated that around half of all sectors have agreed preventative employment policies to accompany restructuring. This takes the form of encouraging the implementation of measures such as training programmes, retraining agreements, new recruitment to replace employees taking early retirement and the reduction of working time. Furthermore, numerous sector-level agreements have established joint national employment committees (commissions paritaires nationales de l'emploi, CPNE s). These committees have the task of, first, studying the situation and changes in sector-level employment patterns and, second, promoting the various measures for accompanying redundancies. For example, in the "cultural and artistic businesses" sector, the CPNE provides that in the event of job losses, the employees concerned will be relocated as a priority in similar companies, and that the social partners will do their utmost to avoid redundancies;
Germany, where some sectoral agreements (eg in chemicals, banking and printing), often dating initially from 1980s, seek to mitigate the outcomes of restructuring through measures such as redeployment, early/progressive retirement, working time cuts, and increased notice periods or severance pay. For example, the chemicals industry framework agreement (dating from 1996) provides workers with special protection in the event of restructuring and rationalisation. To avoid redundancies, the agreement gives workers affected priority in transfers within the company and provides for their further training. The agreement obliges employers to seek joint solutions in collaboration with the works council and also provides detailed rules for severance pay;
Italy, where sectoral bargaining generally regulates the framework for dealing with employment consequences of financial crises - for example, through "social shock absorber" mechanisms to mitigate redundancies. For example, bargaining in the banking sector gave central importance to restructuring in the second half of the 1990s, when liberalisation and technological changes necessitated a profound reorganisation of Italian banks, which had hitherto operated in a protected market. Sectoral bargaining sought to regulate restructuring at company level through the creation of a fund to support the incomes of redundant workers, the reform of job classifications and wage restraint;
Luxembourg, where a few agreements cover restructuring-related matters such as redeployment or notice periods. For example, the banking industry agreement provides for increased notice periods and dismissal compensation in the event of rationalisation, reorganisation or cessation of activity, and guarantees the maintenance of employment relationships following takeovers, mergers etc;
the Netherlands, where there are a number of cases where sectors undergoing major changes - including closures, mass redundancies etc - have bargained on restructuring issues. Examples are shipbuilding during the 1980s, the meat processing industry at present (because of BSE) and printing in recent times (because of the substitution of traditional printing jobs by desk-top publishing); and
Spain, where a growing minority of sectoral agreements cover restructuring-related issues, both procedural (eg regulating company-level consultation) and substantive (eg working time flexibility, contractual flexibility, geographical mobility, job classification and vocational training).

Trade union viewpoints

When unions develop strategies in relation to restructuring, the strength of their position varies considerably across the countries examined: some countries and some sectors are characterised by recession, unemployment and/or falling support for trade unions; while others are characterised by economic prosperity, labour and/or stable union membership or support. This means that the unions must work out very different strategies in order to obtain any influence on the restructuring processes. However, despite these national differences, it is clear (and unsurprising) that the number one concern of trade unions in connection with restructuring is its social and employment consequences - including, in particular, job losses (whether "crisis" redundancies or a more continuous decline in employment levels). Saving the jobs of their members is of course a key aim for all unions. Where job losses cannot be prevented in restructuring, then the focus is on mitigating the consequences through accompanying measures (eg compensation packages). For the remaining employees, unions will seek to maintain their pay and conditions after restructuring. In recent times, unions in countries such as Denmark, Italy, the Netherlands and Norway have started to take a longer-term view of maintaining the jobs of their members by demanding and promoting "employability" measures, such as training, retraining and "lifelong learning".

A second key concern for trade unions in many countries is to increase their influence (and that of other employee representatives) over restructuring processes. They are largely in favour of an increased role for bargaining, consultation and information in this area. For example, the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) has welcomed a recent proposed reform of the Works Constitution Act (DE0102242F), in particular because it promises to extend works councils' co-determination rights in the field of restructuring. Spanish unions are currently prioritising bargaining over work organisation issues, seeing this as an important way of curbing management's unilateral powers over workforce management and thus helping to democratise companies. However, the extent to which unions see their current position in this area as unsatisfactory varies from country to country. For example, Greek unions believe that restructuring is presently occurring largely without taking account of the role and position of workers' representatives, and they are seeking to become more involved (institutionally and/or informally) in the change process. By contrast, Swedish unions are reportedly content with the possibilities offered by legislation and collective agreements on co-determination, information and consultation - 25 years of negotiations under the co-determination legislation are seen as having created a well-functioning system, providing for a smooth-running procedure in most restructuring situations.

A further matter of concern for unions in some countries is the effect of restructuring on the intensity of work and on the stress levels of employees. For example, German unions believe that, while the introduction of new technology and new forms of work organisation (notably team work) have substantially raised productivity since the 1990s, they have also increased the number of complaints about strenuous working conditions, raising the possibility of unions taking a more critical view about company restructuring. Dutch unions, too, consider that the continuous process of restructuring towards "lean and mean" organisations has largely been responsible for the current problem of work stress and the high number of disabled workers in the Netherlands.

Many unions are also agreed on the increasingly important international aspect of restructuring. In countries such as Austria and Denmark, they stress the importance of developing cross-border cooperation to counteract measures taken by multinationals, and of working within EWCs. Many unions thus support the demands of the European Trade Union Confederation (ETUC) for reform of the EU legislation in this area (eg the Directives on collective redundancies and EWCs, and the rules on the control of mergers - TN0102401S), and are in favour of initiatives such as the new European observatory on industrial change.

The basic attitudes of unions towards corporate restructuring differ to some extent, though outright opposition is rare and pragmatic acceptance of such change as an inescapable fact of current economic life is prevalent. Greek unions are highly critical, believing that much restructuring is based not on objective needs but on management strategies to increase the exploitation of the workforce. Portuguese trade unions, interestingly, are among the main advocates of the restructuring and modernisation of the country's economy - which is seen as being based on traditional industries and low wages - though accompanied by measures to ensure employability and social protection.

Dealing with restructuring appears in some cases to have contributed to significant changes in trade union attitudes. A case in point is UK unions which - after a long period of falling membership - have in many cases abandoned a more confrontational approach and are, to an increasing extent, trying to develop a "partnership" relationship with company managements. This provides them with influence and reflects the fact that the most important concern of most employees is arguably not wages, but job security and good working conditions. The unions' viewpoint is that these objectives may be obtained by strengthening companies' competitiveness through cooperation. However, there are concerns about whether employment security can be delivered by employers, and fears in some quarters that shop stewards may become incorporated into a managerial agenda.

A similar attitude is found among Irish trade unions, which are also in many cases trying to obtain workplace partnership. However, they regret that the majority of Irish companies seem to be of the opinion that the planning and development of business strategy is the exclusive prerogative of management. By contrast, in order to protect the interests of their members, the unions wish to be involved in all matters concerning the welfare of the enterprise.

A final example is France's CFDT union confederation, which has developed forward-looking new policies and demands in the face of ceaseless company change and restructuring. Accepting this situation, workers themselves should become more mobile and ready to change, though with the guarantee of continued social protection. This would require the introduction of, for instance, an individual right to training or improved possibilities of transferring employees' acquired rights and benefits from employer to employer. The idea is to allow an individualisation of workers' rights, but within a collectively agreed common framework.

Employers' viewpoints

For employers, restructuring is seen as an instrument to obtain the flexibility considered necessary to compete in an increasingly international economy. However, there are considerable national differences as to the extent to which employers are willing to "pay" for this flexibility by involving employees and/or trade unions in drawing up strategies for the development of the enterprises. Some employers are strongly opposed to this, as they see it as a matter of management prerogative. If restructuring is discussed, employers generally believe that this should occur only at enterprise level, as higher levels will not be able to take into account the conditions under which individual enterprises operate.

Employers generally consider restructuring as an unavoidable necessity in the current business environment. Any job losses which occur are often considered as a precondition for maintaining the jobs of the remaining workforce in the long run. Some employers' groups, such as France's MEDEF, paint an optimistic view of the ultimate effects of changes in the global economy. However, others - such as some UK employers - recognise that restructuring and job losses have negative impacts on morale, the skills profile of their workforce and, as a result, subsequent company performance (leading some UK companies to try to involve unions in improving performance and/or reducing the number of workers - see below).

In examining employers' views on the role of employee representatives and bargaining in restructuring, it should be noted that in many countries (eg Austria, Belgium and Denmark) employers are keen to stress that decisions in this area fall within management prerogative. While employee representatives and unions might be able to give their views, it is ultimately management alone which decides on any restructuring in almost all countries. However, where legislation or agreements provide for information, consultation and other forms of employee participation over restructuring, this is generally accepted by management, and even seen relatively favourably in some countries - such as Germany, Greece, Norway and Sweden.

Germany employers are thought by and large to consider works councils to be a "reliable partner" in restructuring at company level. Similarly, Danish employers seem to accept that it is in their interests to cooperate over restructuring matters, as failure to do so could undermine staff morale or retention. Dutch employers do not appear generally to consider employee involvement - especially as far as works councils are concerned - an obstacle to change. Even in a country like Spain, where the entrepreneurial culture is very hierarchical and authoritarian, and suspicious of any type of intervention by workers and their representatives, some employers and certain employers' organisation representatives are favourable to an organisation of work that allows for the participation in an advisory capacity of workers (with limitations that safeguard the authority of the employers).

However, there are critical voices. Finnish employers complain about some aspects of current participation provisions, arguing that in the worst cases the form of management-employee cooperation has become more important than its content, and that negotiations aim only to delay or postpone necessary decisions. They also criticise the perceived complexity and opaqueness of the cooperation legislation and the sanctions provided for. Austrian employers also underline that the tactical flexibility of employers must not be limited by the intervention of employees and their representatives. Dutch employers, too, sometimes consider employee involvement as too time-consuming.

In Germany, employers which have hitherto been relatively happy with the role of works councils in restructuring are currently up in arms about proposed legislative changes which would expand co-determination rights (see above). The Confederation of German Employers' Associations (Bundesvereinigung der Arbeitgeberverbände, BDA) has claimed that the changes will lead to more bureaucracy, more paperwork and superfluous committees. It argues that, while markets are becoming more international and flexible and thus forcing companies to adjust more quickly, increased co-determination rights will slow down the decision-making process. Furthermore, the new law will, it is claimed, end the employers' prerogative to take important decisions on the administration of their business and thus put works councils in the position of "co-managers". In Spain, while the Spanish Confederation of Employers' Organisations (Confederación Española de Organizaciones Empresariales, CEOE) is in favour of workers' representatives' current right to information and consultation, it is completely opposed to the possibility of any further developments in this area - such as a right to negotiate companies' work organisation and production strategies.

Where employers state that they are in favour of company-level employee participation over restructuring, they are in some cases quick to add that they do not favour any higher-level involvement (eg through sectoral collective bargaining). As the Federation of Greek Industries (SEV) sees it, information and consultation is an important tool in restructuring, but this occurs best at enterprise level, because it is only here that a company's particularities, the needs of its workforce and its competitiveness can be taken into account and protected. Similarly, Italy's Confindustria is in favour of restructuring being managed through company-level collective bargaining, arguing that crisis situations differ from company to company and should therefore be addressed at the decentralised level. Sectoral bargaining on the issue would fail to take account of such local aspects.

Trade unions may take employers' professions of enthusiasm for participation with a pinch of salt. While France's MEDEF employers' confederation states that high-quality dialogue between the social partners is a prerequisite for successful change, critics claim that employers rarely negotiate, under their own initiative, "upstream" of restructuring - as recent disputes at Michelin (FR9910113F) and Danone (FR0102133F) have demonstrated.

As seen above, Ireland and the UK differ from the other 14 countries considered here in having no statutory or widely agreed system of company-level employee participation in restructuring (except in collective redundancies and transfers of undertakings). Employers' organisations in these countries tend to stress voluntary forms of participation and oppose statutory provisions. While the Irish Business and Employers Confederation (IBEC) has declared a policy of favouring new forms of work organisation and employee involvement, some commentators believe that sharp divergences of view exist among IBEC members on the desirability of partnership with trade unions (see above). They state that IBEC might be disposed to weigh in the balance its support for partnership against the advantages that might be seen to accrue to employers generally from a continuing decline in union organisation.

In the UK, existing partnership agreements have generally been initiated by employers and there have been some positive signals towards such approaches given by the main employers' body, the Confederation of British Industry (CBI). However, there is an insistence that partnership does not have to involve trade unions. The CBI claims to be "strongly committed to effective information and consultation as an integral part of good management practice", but believes that this is best achieved by voluntary practices. It has consistently argued against any statutory requirements on companies to consult or inform employees about company restructuring.

Public and academic debates

It cannot be said that the process of continuous corporate restructuring attracts much attention in public debate. Restructuring hits the headlines only when it takes on a dramatic form, usually involving job losses, plant closures and workers' protests. Recent examples - from an apparently rising number of cases - include the Europe-wide closures and mass redundancies at the French-based Danone and UK-based Marks & Spencer (FR0104147F), the closure of the Finnish operations of Fujitsu Siemens (FI0102177F) or the UK job losses at Corus (UK0102113F) and General Motors (UK0012104F). As a result, restructuring often has negative connotations and is seen as being intrinsically threatening. Public outcries over particular cases may contribute to the introduction of new legislation seeking to regulate restructuring and its consequences - examples are recent French legislation on "new economic regulations" (FR0105156F) and "social modernisation" (FR0101121F), and even arguably the European Commission's proposed Directive on national information and consultation rules. In the UK, recent closures have led to some public debate as to whether there should be statutory consultative bodies established at national company level, and may have helped prompt a government decision to review consultation requirements concerning collective redundancies (UK0101110F).

In terms of academic research and debate, restructuring would appear to an increasingly important theme in many countries, and the employment aspects of restructuring are often considered. For example, Danish research has focused on the connection between restructuring and changes in wages, working time, overall flexibility/adaptability and change at the workplace. Dutch research has suggested that multinational companies have taken their restructuring processes too far, leading to widespread disability and stress alongside high labour productivity. Spanish research into restructuring has looked at areas such as labour market restructuring, labour flexibility and outsourcing/subcontracting. In Portugal, research into restructuring and into human resources issues have only recently started to come together. The involvement of employees and of collective bargaining in the restructuring process seems to be a somewhat less common issue for research. Nevertheless, some interesting debates and findings are reported from a number of countries. To take some examples:

in Germany, there is a growing body of literature dealing with issues relating to company-level restructuring and in particular with the impact of works councils. Research conducted in by the co-determination commission (DE9806267F) indicates that, in terms of innovations concerning the quality of products and the production process, works councils do not significantly slow down or inhibit the process of restructuring. However, there seem to be no positive signs that plant-level co-determination actively promotes innovation;
Irish academic debate on company change and related employee involvement centres around claims as to the level of changes that have occurred and the extent of introduction of new forms of work organisation in workplaces. The assertion that "workplace transformation" is well advanced has been widely accepted by many commentators, to the extent that Ireland has often been seen to be ahead of other advanced industrial economies in its adoption of flexible and team-based forms of work organisation. However, other studies question the extent of workplace change, stating that at best it can be claimed that work reorganisation is well advanced in a minority of workplaces in Ireland, and that claims to the contrary are built on unreliable empirical foundations. It is claimed that examining the scope, coverage and penetration of new work structures in a more conceptually rigorous manner indicates that work reorganisation is more limited and less radical than assumed by many;
there is a considerable body of research on restructuring in Italy. A finding of several studies is that in many cases restructuring is managed by means of intense negotiation at company level. Some researchers thus refer to the development of forms of "micro-level concertation". Moreover, some studies indicate that a "participative" model of industrial relations had emerged at firm level in Italy, resulting from the choices made by individual actors (firms and trade unions) and despite the absence of institutional obligations (as exist, for example, in Germany). Some studies have examined the development of new collectively agreed instruments for managing employment crises, such as outplacement, promoting business start-ups and continuing training;
a detailed and comprehensive survey indicates that participation in restructuring is relatively widespread in Norwegian companies. The most common form of participation is employee representation. This survey confirms that restructuring processes are by and large management led and driven, and that decisions are seldom taken outside those bodies with explicit steering and decision-making powers within a company. Furthermore, it is not common to conclude company-level agreements in connection with restructuring. During restructuring, special participatory bodies are established, supplementing existing bodies established by law or higher-level agreements; and
considerable academic debate in the UK has examined "partnership" agreements, which are often associated with restructuring and change. Some researchers claim that partnership can allow unions to regain the initiative and rebuild their presence in the UK, while others argue that it is virtually impossible to achieve partnership with hostile employers and that such agreements are likely to undermine trade union support. Today's frequently more cooperative and less confrontational relationship between employers and unions is generally seen as a symptom of a weaker union movement. Recent case study research into partnership agreements found that in those organisations where employers had previously attempted to marginalise unions, agreements had been signed after management had unilaterally introduced major change programmes. Other agreements had been concluded in an attempt to overcome strong union resistance to management plans, while a further group of managers used such agreements to reassure workers where unions were weak. The researchers conclude that there is no evidence that these agreements indicate that managers have changed their views towards unions and are moving towards joint forms of governance.

Commentary

Company restructuring decisions are taken essentially by management. The reason for restructuring is most often a wish or need for increased flexibility, effectiveness and adaptability, stimulated by industrial change and increased demands for competitiveness. Once the process has started, works councils and similar representative structures are usually informed, and participation over the organisational restructuring at the workplace will occur in accordance with the level of participation rights granted to employees by legislation or agreements. These participation rights involve information and consultation in almost all cases, plus negotiations over certain issues in a minority of countries. The decision to restructure is itself not negotiable - with managerial prerogative in this area unchallenged in all countries - and any negotiations most often concern the consequences of restructuring, usually seeking to limit the harmful effects for employees.

At company level, it is generally existing employee participation structures and processes which handle restructuring issues. Indeed, dealing with restructuring has increased the importance of company-level employee representatives, giving them new roles and responsibilities, and it is one of the key issues in the work of works council-type bodies. Perhaps surprisingly, collective bargaining as such does not deal greatly with issues relating to continuous restructuring. At company level, bargaining with trade unions on restructuring (outside the abovementioned participation arrangements) does occur in some countries, often dealing with specific aspects of the consequences of restructuring, but in only a few cases is such bargaining more important than participation arrangements. At higher levels, both sectoral and intersectoral, where collective bargaining does touch on restructuring-related matters, it often provides a framework or deals with procedures, rather than containing substantive provisions. Trade unions above the local level and employers' organisations have little or no input into the practical debate on restructuring.

Overall, it can be argued that the real influence of employees and their organisations in relation to continuous company restructuring is very limited. However, continuous restructuring - in contrast to "crisis" restructuring in the form of major job losses and plant closures - has generally not caused any major industrial conflicts. Many countries have public authorities which, in cooperation with enterprises, try to find other employment or training for workers who have been made redundant, and these issues are key themes in company-level information, consultation and negotiation over restructuring. Furthermore, legislation in many countries helps to avoid random and uncontrollable restructuring (eg by regulating collective redundancies and transfers of undertakings).

Company restructuring is a continuous process and its growing pace has increased the role and area of competence of works councils and similar workplace employee representative structures. If employees and their representatives are to secure greater influence over restructuring, the area where this might possibly develop is collective bargaining and bipartite and tripartite social dialogue at higher levels. This might lead to agreements providing a basis for more substantial negotiations at company level. Of course it is not possible to prevent industrial change by law or agreements, and the issue here is not one of seeking to abolish managerial prerogatives or ownership rights, but the findings of this study indicate that, to achieve more adequate influence and protection for employees in restructuring, more regulation is required both to the benefit of the employees and, in a wider perspective, in the direction of stability in the labour market and job security. (Carsten Jørgensen and Steen E Navrbjerg, FAOS)

Page last updated: 28 July, 2001

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About this document

ID: TN0107201S
Author: Carsten Jørgensen & Steen E. Navrbjerg
Country: EU Countries
Language: EN
Publication date: 28-07-2001