Industrial relations in the public utilities

Public utilities in Europe have undergone major changes in recent years, involving processes such as liberalisation, privatisation and a growing presence of multinational companies. Focusing on the electricity and fixed-network telephony sectors, this comparative study examines the effects of these changes on industrial relations. Covering 19 EU Member States plus Norway, it looks at developments in the status of employees, the representation of workers and employers, the structure of collective bargaining, and negotiations and conflicts over issues such as restructuring, outsourcing and worker participation.

Public utilities have been at the centre of great transformations in recent years in Europe and worldwide. The common situation of public ownership of public utilities and the general lack of competitive pressures, together with their key role in national economic systems for both producers and consumers, have contributed to focusing the attention of market-oriented reforms on this important part of the economy. The prospects for reductions of public subsidies and increased efficiency of service delivery have figured prominently in the debate on the liberalisation of public utilities.

Since the early 1990s, there have been dramatic changes in the structure and dynamics of these sectors:

• the markets have been liberalised, though to different degrees;
• public ownership has decreased significantly;
• privatisation processes have emerged and new private operators are competing with the former monopoly firms;
• market mechanisms and competition are at work;
• the issue of regulation has become crucial, both to foster competition in a context of structural difficulties and to balance the interests of providers, users and the public at large, given the public interest relevance of these services (which makes them 'subject to specific public service obligations by virtue of a general interest criterion'- see the European Commission's Green Paper on services of general interest, COM(2003) 270 final); and
• multinational companies have emerged in these sectors and act as global players, while services, utilities among them, are at centre stage of (highly controversial) discussions on trade liberalisation in World Trade Organisation (WTO) negotiations and bilateral relations.

Such transformations have had important consequences for labour and industrial relations. In certain circumstances, industrial relations have played an important role in the change process. This has usually happened in relation to restructuring processes in the 'incumbent' firms, but may also involve the redefinition of the sectoral system of industrial relations. Another issue may be the possible emergence of social dialogue or partnership in these sectors.

After a brief overview of the developments that have taken place in 19 European Union countries and Norway in some important public utilities (local public transport, electricity, gas, water and fixed-network telephony), with a view to appreciating the structural changes since the early 1990s, this comparative study will focus on industrial relations in the electricity and fixed-network telephony sectors. In particular, the analysis will deal with the structure of representation and collective bargaining, as well as the contents of recent collective agreements and industrial action. The study is based mainly on contributions from the European Industrial Relations Observatory (EIRO) national centres in the countries concerned.

The transformation of public utilities

A key aspect of the transformations in public utilities since the 1990s is the shift from a situation of direct public control to looser and more indirect forms of governance, which include a significant use of market mechanisms, competition and often more or less independent regulatory bodies, such as agencies or authorities (TN9912201S). Both the initial and current arrangements differ across countries in terms of the degree of state intervention and competition. However, the above description of the general trends usually holds for most of the countries under scrutiny here - not least because there have been specific liberalisation policies undertaken by the European Union in the energy, telecommunications and transport sectors, as well as for postal services. These initiatives started in the 1990s and were in some cases reviewed and consolidated in the early 2000s. The only notable exceptions are Cyprus and Malta, where the role of the state has remained prevalent, including in the industrial relations area, and the impact of liberalisation has so far been marginal, if any, partly due to limitations on the potential for competition.

The implementation of public utilities liberalisation Directives is far from being homogeneous across the EU. For instance, a review of the progress in opening up the internal energy market conducted by the European Commission's DG for Energy and Transport, issued in 2004 (Towards a competitive and regulated European electricity and gas market), found that only a minority of countries had achieved at least a 'well developed' level of competition. According to the report, one of the main reasons for this situation was 'the existence of companies with an excessive degree of market power at national or regional level'. At the same time, improvements in terms of productivity have been substantial: over 1995-2001 the EU's annual labour productivity growth in gas, electricity and water was 5.7% (Report from the Commission. Annual Report on the implementation of the gas and electricity internal market, COM(2004) 863 final). This remarkable result is probably linked to the significant restructuring that has taken place in the public utilities sector in recent years.

Below we provide a brief survey of the present situation in all 20 countries covered by this study, focusing in particular on the level of public ownership and the sectoral structure in the five utilities considered (local public transport, electricity, gas, water and fixed-network telephony) - see table 1. Given the great variability of national situations, some or, at times, even a great degree of simplification is unavoidable, and readers should refer to the individual national reports on which this study is based for more in-depth descriptions.

It is possible to distinguish between the utilities that have essentially a local character (local public transport, water distribution and to a large extent gas distribution) and those that tend to involve the whole national population, as industrial users or consumers (electricity production and distribution, and fixed-network telephony). It should be noted that this distinction derives, at least partly, from the previous sectoral structure, which often assigned to local authorities the provision of the former services and reserved for large national monopolies the latter. Both arrangements may cause some problems for liberalisation processes, though of very different kinds: local utilities are more difficult to untangle from the influence of political authorities and municipalities still play a significant role in their provision; while national utilities may be easier to liberalise and even privatise, but are often resilient to competition, due to the dominant position of incumbent providers. The consequence in terms of effective competition can be quite similar, but very different with regard to the level of restructuring usually entailed (lower in the former utilities and higher in the latter) and, partly as a consequence, with regard to the impact on industrial relations.

The transformations in the broad public utilities sector covered by this study have been very complex over the past decade, both within and across countries. In the central and eastern European countries, this process has been part of the wider transition efforts. Despite notable differences, and given the specific features of Cyprus and Malta mentioned above, it is possible to point to a number of common features, as the reform of the public utilities sector has been general and followed similar directions:

• public utilities are now usually operated by commercial firms, while the presence of public bodies has almost disappeared (though it remains significant in Austria, Cyprus, Malta and, to a certain extent, in some of the Nordic countries, such as Norway and Finland);
• partly as a consequence of the previous development, in the few cases where employees of public utilities had civil service status, there has been a shift to private sector regulation, sometimes involving specific negotiations and solutions for the remaining civil servants - this has happened in Belgium, France (for telecommunications workers), Germany and Denmark. Civil service status remains in Austria for people employed in public utilities owned by local authorities (notably local public transport, energy and water), thereby excluding them from formal collective bargaining, and in Cyprus, while in France employees in certain public utilities - electricity and gas - retain a specific status which is close to that of public servants and entails some particular protections;
• generally, there is a growing emphasis on competition. There are projects and debates that refer to increasing the scope of market mechanisms, and in almost all cases there have been actual forms of liberalisation and privatisation, not least in application of the relevant EU Directives;
• the ownership and market structures have not changed dramatically though. Public ownership still plays an important role (with the notable exception of fixed-network telephony) and, even in the cases where liberalisation and privatisation have gone further, dominant positions, nationally or locally, are still common; and
• there has been a general trend towards a redefinition of management practices, including increased attention to economic and financial equilibria and interventions in labour relations. Restructuring processes have been widespread, often in connection with liberalisation and privatisation processes, but sometimes before or even regardless of them.

Table 1. Public ownership and reform in public utilities

Country	Local public transport (LPT), water and gas distribution	Electricity	Fixed-network telephony
Austria	Public ownership prevails. Services are usually provided by firms owned by municipalities or provinces.	Public ownership prevails, particularly by the provinces. The main operator (Verbund) is majority-owned by the state (51%). Fully liberalised since October 2001.	The state owns a 47.2% stake in Telekom Austria. There are other public investors active in the sector. Liberalised in 1998.
Belgium	Public ownership prevails except in gas, where the state owns only a 'golden share' in the dominant operator.	Main operator is private (Electrabel, part of the Suez group). The second largest (SPE) is public. Full liberalisation since July 2003 in the Flanders region, 2005 in Wallonia and 2007 in Brussels.	The state owns 50.6% of the main operator. Belgacom. Belgacom is a public sector company regulated by specific legislative provisions. Liberalised in 1996.
Cyprus	LPT: very limited public ownership, only private companies. Water: 100%. No gas distribution.	The state owns 100% of the Electricity Authority of Cyprus (AHK). Monopoly.	The state owns 100% of CYTA. The market was liberalised in 2003. Only small companies have emerged so far. CYTA itself may establish private law subsidiaries.
Denmark	LPT: 10% public ownership. Water and gas: 100%.	Mixed ownership prevails in regional companies (municipalities, consumer cooperatives and private undertakings). One of the main players is the state-owned energy company DONG, whose privatisation is being debated. Sector reform started in 1999; liberalisation is still under way.	There is no residual public ownership in TDC. Fully liberalised in mid-1990s
Finland	LPT: 50% public ownership. Water and gas 100%	The state owns 59% of Fortum, the leading energy company. Local authorities are also important players in generation and sale. Liberalisation started in 1995.	The state owns 13.7% of TeliaSonera, the result of the merger of Telia and Sonera, the former national fixed-network operator in 2002. Privatisation and liberalisation in late 1990s.
France	Public ownership prevails in LPT and gas; minority stakes in water.	The state fully owns Electricité de France (EDF). Liberalisation started in 1998.	The state owns 43% of France Telecom. Liberalised in 1998 and in 2002 for local calls.
Germany	Public ownership prevails.	Public ownership prevails. In three of the four leading operators (RWE, EON, and EnBW), local authorities hold controlling stakes, with other industrial or financial investors. The fourth is a subsidiary of the Swedish state electricity company (Vattenfall Europe). Liberalised in 1998.	The federal state owns 23% of Deutsche Telekom. Liberalised in 1998.
Greece	LPT: 100% public ownership. Water: 61%. Gas: 65%.	The state owns 51% of the Public Power Corporation (DEI). Sector reform started in 1999, but DEI remains the only electricity provider.	The state owns 34% of Hellenic telecommunications Organisation (OTE). Liberalisation started.
Hungary	LPT: 90% public ownership. Water: 90%. Gas: 1%	Generation 40% public ownership; distribution 20%. Major privatisations in 1995-6. The state still owns the main operator, the Hungarian Power Company (MVM).	The state owns a residual stake of 1% in MATÁV. Privatisation and liberalisation took place in 1993-5.
Ireland	LPT: parts of some networks can be franchised to private operators, though CIE company is fully state owned. Water and gas: publicly-owned.	The Electricity Supply Board (ESB) is fully owned by the state. Liberalisation started in late 1990s.	Eircom was fully privatised in 1999. Liberalisation started in late 1990s.
Italy	Public ownership prevails. The main operators are municipal companies.	The state owns some 43% of Enel. Liberalisation started in 1996. Since July 2004, the market is fully liberalised for non-household consumers	There is no residual public ownership in Telecom Italia. Liberalisation was completed in the early 2000s.
Malta	LPT: has traditionally been privately run. Gas (Enemalta): 100% public ownership. Water: 100%.	Enemalta is fully state-owned. Monopoly.	The state has a 60% stake in Maltacom. Monopoly.
Netherlands	LPT: 80% public ownership. Water: 100%. Gas: 50%.	The overall level of public ownership is around 80%. The three main operators Essent, Nuon and Eneco are fully owned by local authorities. Liberalisation started in late 1990s.	Public ownership in KPN is 14.2%. The government also holds a 'special share', with specific entitlements attached. Liberalisation started in 1994.
Norway	LPT: mainly private. Water: 90% public ownership. No gas.	Generation 90% public ownership. Distribution 100%. Liberalisation started in the early 1990s.	The state owns 51% of Telenor. The sector has been liberalised since the early 1990s.
Poland	LPT: 80% public ownership. Water: significant public ownership (private operators in several cities). Gas: 100%.	The main energy producers (BOT and PKE) are publicly owned. Other important energy companies have been privatised. Public ownership still prevails. Liberalisation and privatisation started in the second half of the 1990s.	The state still holds some 4% of Telekomunicacja Polska (TP). Privatisation occurred over 1992-2000. Liberalisation started in 1990s and completed in 2000s.
Slovakia	LPT: 100% public ownership. Water: 59%. Gas: 51%.	The state owns 100% of the dominant generation company, Slovenské elekrárne, which is awaiting privatisation. There are three regional monopolies for distribution, which are state majority joint ventures with EON, RWE and EDF. Liberalisation started.	The state owns 49% of Slovak Telecom. Liberalised in the second half of 1990s.
Slovenia	LPT: 100% public ownership. Water: public, private and mixed ownership in equal shares. Gas: minority public ownership	Generation 90%-100% public ownership; distribution 75%. Liberalisation started in late 1990s.	The state owns 63% of Telekom Slovenije. Liberalisation started by legislation in 2001.
Spain	LPT: public ownership prevails. Gas: 0%. Water: 100%.	The state holds a 3% stake in Endesa. Sector reform started in 1994 and liberalisation in 1997. Fully liberalised in 2003.	There is no residual public ownership in Telefónica. Liberalised.
Sweden	Public ownership is significant, especially of municipalities. Public firms usually compete with private undertakings.	The state fully owns Vattenfall. Liberalisation started in early 1990s and was completed in 1996.	The state owns 45.3% of TeliaSonera. Liberalisation started in early 1990s.
UK	Private ownership.	Private ownership largely prevails. Public ownership of six nuclear stations (due to close by 2010) and one hydroelectric station. Electricity distribution and generation were privatised in 1990-2. Liberalisation was completed in 1998.	Private ownership. British Telecom was privatised in 1985. Liberalisation was completed by around 1991.

Source: EIRO

There are a several further developments worth mentioning. First, in the local public transport sector there is an increasing number of cases of franchising or contracting-out of services by municipalities to private operators. Multinational companies are also emerging in this sector, such as Arriva and Connex, which may take part in local tenders or acquire local operators, as has happened most notably in the UK, but also in Denmark, France, Italy, the Netherlands, Norway, Slovenia, Spain, Sweden and recently in Ireland. At present, these experiences are not very widespread, but, if this trend develops, it might change considerably the shape of the sector, with important consequences for employment relationships as well.

A further significant aspect of the liberalisation of public utilities is the establishment of 'multi-utility' groups of companies. The main players in this area are energy companies that extend their operations in other network industries, typically water, in addition to gas, but sometimes also in telecommunications, as has happened in Italy with Enel, in Spain with Endesa, in Sweden with Vattenfall and in UK with United Utilities. Municipal or provincial companies may also develop as multi-utilities, as has happened in the case of many Italian municipal companies (thereby confirming their traditional role in local areas) or of provincial companies in the Netherlands.

The electricity and fixed-network telephony sectors

Within the general framework outlined above, the electricity and telephony sectors are two interesting cases for a more in-depth analysis, in terms of both their common features and differences. The electricity and fixed-network telephony sectors are probably those that have gone furthest along the path of market reform compared with the other public utilities, though with a significantly different timing: fixed-network telecommunications had gone through major transformations by the second half of the 1990s, whereas the electricity sector has been involved in thorough-going changes in the early 2000s and reform has not been completed yet. Despite this difference, both utilities have often undergone privatisation and incumbent firms have been floated on the stock exchange, which has substantially changed the incentives for management (even when public ownership has remained substantial) and favoured restructuring processes. The respective markets have undergone important developments and opportunities for growth have been significant, which has provided additional reasons for restructuring.

However, there are important differences, not only because telecommunications were liberalised earlier and are now generally privately-owned while public ownership is still significant in the electricity sector, but also from the point of view of barriers to entry and the scope of competition that they allow. In electricity generation, major investments are needed to enter the market, while specific technical skills and knowledge appear to be essential to manage the various business processes. Integration between generation and distribution seems to be quite widespread and this favours the emergence of a relatively limited number of large operators which compete for specific markets, often on a regional basis.

In order to enter the fixed-network telecommunications market as an operator, far less investment is needed. However, the incumbent telecoms operator is often in a privileged position, especially for household customers, and has usually been successful in maintaining a predominant share of the fixed-network market (typically above two-thirds of all traffic), also because competition has so far been particularly focused on mobile communications rather than fixed-network telephony. The usual national market structure therefore involves the presence of a dominant company and a number of much smaller operators in terms of both traffic and employment, which may be specialised in specific market niches, such as corporate customers. This is also because the liberalisation and privatisation of telecommunications in Europe has usually included the sale of the former monopoly and the opening up of the market to new entrants, thereby assuring the integrity of the incumbent, which has not been subdivided into different firms (one exception is Hungary). By contrast, the establishment of different firms of similar size could more easily be achieved in the electricity sector, through the sale of blocks of generation capacity of the monopoly firm or where the market was already divided between regional actors.

Significant waves of mergers and acquisitions have characterised the development of the energy sector in recent years in practically all countries, after the start of the sectoral reform process. This has led to a reduction in the number of operators, as well as the integration of producers and distributors where this was not previously the case, since the outset of the liberalisation process. This happened, for instance, in Germany, through the acquisition of stakes in the local distribution companies by the larger generation groups, and in the UK, where the privatisation programme separated generation from distribution in the first place. Even more notably, the opening up of the European market has led to the emergence of a significant internationalisation of the operations of the main players, essentially through acquisitions of controlling or minority stakes. This development involves primarily the former monopolies, sometimes still controlled by the state. This is the case with:

• Electricité de France (EDF) which controls, for instance, EDF Energy in the UK and has subsidiaries in Hungary, Poland and Slovakia;
• the Swedish state-owned company Vattenfall, whose Vattenfall Europe subsidiary is among the four main operators in Germany, the largest European market for electricity, and is active in Poland and other European countries;
• the Franco-Belgian Electrabel, which has a minority stake in the Compagnie nationale du Rhône, the second-largest producer in France, and is present in Hungary and Poland (where it has a 100% stake in a power plant);
• Endesa, which controls the French National Electricity and Thermal Company (Société nationale d’électricité e de thermique, SNET); or
• the German EON and RWE, which are major actors in countries such as the UK, Hungary and Poland.

In fact, the list includes virtually all the main operators, which, in addition to acquisitions, have sometimes established joint ventures to operate in specific markets (the Austrian Verbund in Italy, the Italian Enel in Spain and the Franco-Belgian Elactrabel in Italy, to mention only some of the cases). Only Greece seems to be excluded from such transformations (together with Cyprus and Malta), as DEI has remained the only electricity operator, despite the formal liberalisation of the domestic market.

It is interesting to note that this process has not occurred on a large scale in the fixed-network telecommunication market. The internationalisation of the operations of the main telecommunications operators has usually taken the form of investments in new services, typically mobile communications, but also broadband internet access and the like. The international players in the European fixed-network telecommunications market are typically the new private operators, which have minority market shares in a number of countries (like the Sweden-based telecom operator Tele2, which is present in 15 of the 20 countries examined here, or the Italy-based Tiscali). Some significant exceptions involve the telecoms companies that were privatised in the transition process in central and eastern European countries: MATÁV (Hungary) and Slovak Telecom are both controlled by Deutsche Telekom, while Poland's Telekomunikacja Polska (TP) is part of the France Télécom group.

Owning to the emerging market structures - ie a form of oligopolistic competition in the electricity sector and a 'dominant-company' situation in fixed-network telephony - the role of regulatory bodies seems to be crucial to implement and foster competition in the energy and telecommunications industries, for instance via the definition of network-access fees and tariff controls. This is a further and significant source of pressure for restructuring on the operators.

From an industrial relations point of view, the role of the social partners in this aspect of the regulatory framework is marginal. Some exceptions exist in the form of committees that have been set up to advise regulators. A case in point is the Austrian E-Control agency for the electricity sector, which has an expert committee that includes social partner representatives. Moreover, there are a number of working groups jointly set up by E-Control and the social partners, especially on the improvement of market regulation and the assurance of supply security. Similarly, in Belgium's Wallonia region, an energy committee has been set up, with social partner representation, to issue opinions on the general interest aspects and long-term development of the local electricity market. Moreover, there are plans to set up a national-level concertation structure for the energy sector, with a view to complementing the existing regulatory framework, possibly within the bipartite Central Economic Council (Conseil Central de l’Economie/Centrale Raad voor Bedrijfsleven, CCE/CRB). In France, trade unions are not represented in the regulatory body that is responsible for the electricity sector, the Energy Regulation Commission (Commission de régulation de l'énergie, CRE); however, two former senior trade union officials are among the seven commissioners who were appointed by the government in 2002. No other instances of involvement of employer or employee interests in sectoral regulatory arrangements are reported.

In the central and eastern European countries, sectoral social dialogue structures are usually in place and may interact with regulators. In Slovenia, the social partners influence the regulatory framework through participation in the sectoral Economic and Social Committees for energy and telecommunications, which were set up in 2002 and 2003 respectively. In Hungary, the Energy Interest Reconciliation Council (Energetikai Érdekegyeztető Tanács) operates in connection with the Hungarian Energy Office (Magyar Energia Hivatal, MEH), the sectoral governmental regulatory body, and is made of government officials and representatives of companies, employees and industrial and household consumers. Taking a different approach, the Telecommunication Interest Reconciliation Forum (Távközlési Érdekegyeztető Fórum, TÉF) has several subcommittees for social and civil dialogue where various interest groups are represented, including companies, but not workers’ representatives. In Poland, in 1998, the social partners and the government set up a tripartite body especially devoted to discussing the electricity sector reform, the Tripartite Team for Restructuring of the Power Industry Sector (PL0308101F). In Slovakia, social dialogue for the electricity sector takes place in Economic and Social Concertation Council for the Energy Sector.

As far as regulation is concerned, the German electricity sector represents an exception to the rule of the creation of independent regulatory bodies that is worth mentioning. Since liberalisation in 1998, network access in the electricity (and gas) sector has been regulated mainly through 'association agreements' (Verbändevereinbarungen) between the associations of market operators and industrial users (therefore without the involvement of household consumers), within a set of framework rules established by the government. This solution has been praised by the German government because it considers that it helped speed up liberalisation and reduce opposition. However, it has also been criticised for supposedly hindering effective competition (see, for instance, the 2004 OECD Review of Regulatory reform in Germany). In any case, in accordance with EU rules, the association agreements are now being abandoned in favour of independent regulation for both electricity and gas, which is to be assigned to the present regulatory body for telecommunications, RegTP.

The overall picture of public utilities which emerges from the above is one of notable transformations and restructuring in recent years. These changes are seemingly not so much driven by effective competition and privatisation, but prevalently by reform in the ways in which public utilities are run and managed, as well as by technological innovation - especially in the telecommunications sector. The formal withdrawal of public ownership and the reduction or abolition of direct subsidies, quotation on the stock exchange, the emergence of mixed ownership structures where institutional investors play an important role, the opening up of opportunities for growth in a liberalised European market, and pressure from regulators and potential competitors have contributed to widespread and recurrent restructuring, with a view to improving economic and financial results, which has been characterised by a strengthening of managerial prerogatives and increased unilateral action by employers. However, industrial conflict has remained limited and bargained solutions have usually been pursued and achieved, as will be seen below.

Industrial relations in the electricity sector and fixed-network telephony

The state of industrial relations in the electricity sector and fixed-network telephony (TN0108201S) seems to be relatively healthy, compared with other sectors in the countries examined - some key aspects are summarised in table 2 below. Almost invariably, levels of unionisation and collective bargaining coverage are among the highest in each country; wages are usually above the national average; employment terms and working conditions are reported to be better than in many workplaces; and overall the protection afforded by industrial relations structures and processes seem to have been particularly effective in the past and remains so. However, concerns are reported, especially on the part of the trade unions, that the processes of transformation might erode this situation and lead to a general worsening of working conditions. Indeed, there are widespread indications of a weakening of trade unions, especially in the context of the wide-ranging restructuring processes and a renewed emphasis on efficiency and cost-effectiveness, which has involved a strengthening of management prerogatives and more unilateral decision-making.

Nevertheless, there are also signs of the persistence of favourable conditions for workers and trade unions, due to factors such as the importance of public utilities and the crucial position of workers in the service provision process, or the presence of mainly large companies, which are usually characterised by a more positive stance towards collective industrial relations. This impression of persistent strength of industrial relations is underlined by looking at the forms and outcomes of restructuring processes and at the state and development of industrial relations in those countries where reforms have been particularly far-reaching and where collective labour relations are, in general, weaker than in western continental Europe, as in central and eastern European countries and the UK.

The specific nature of industrial relations in public utilities can be well illustrated by the experience of central and eastern European countries. Here, there are both higher than average unionisation rates and examples of multi-employer bargaining (generally rare in most of these countries), which contributes to increasing the rate of collective bargaining coverage. This is the case of the electricity sector in Hungary, for instance, where the Employers Federation of Electricity Companies (Villamosenergia-ipari Társaságok Munkaadói Szövetsége, VTSZ) is one of the country's strongest employers’ organisations and concludes annually a collective agreement with the sectoral trade unions, which is then extended to the whole sector at the joint request of the two parties in the industry. Also in Slovakia, employers' organisations are relatively strong in the public utilities and their affiliation level is higher than average. Moreover, there are sectoral agreements in both the electricity and telecommunications sectors. In Poland, there are industry-wide agreements for both the electricity and the telecommunications sectors, usually supplemented by company agreements, particularly in large companies. An industry-wide agreement exists in Slovenia for the electricity sector, and one is being negotiated for telecommunications and transport. Company agreements are common in both sectors. Moreover, in these industries and notably in the electricity sector there are significant examples of tripartite dialogue in Hungary, Poland, Slovenia and Slovakia, as mentioned above.

In the UK, unionisation is relatively high in public utilities and the coverage of collective bargaining is higher than the private sector norm and close to the level found in the public sector. Moreover, firms have seemingly chosen broadly to rely on industrial relations processes and collective agreements to restructure and develop their labour relations, rather than on derecognition of trade unions and unilateral action - management has generally chosen to restructure in cooperation with workers and trade unions. In the electricity sector, for instance, the cost reductions realised by the restructuring efforts of the second half of the 1990s were turned into large profits, partly thanks to the low level of competition. Therefore, companies could ease large-scale workforce cuts through attractive economic incentives and grant to the remaining employees above-inflation wage increases, in order to obtain more flexible employment terms and working conditions (UK0012105F). In practice, electricity companies have had the resources to search for a consensual, collaborative path to industrial restructuring and service quality improvement. Similarly, in UK fixed-network telephony, there have been substantial workforce reductions, which have been managed through enhanced voluntary severance arrangements. Even the very sensitive issue of the notable increase of 'personal contracts' for staff, including in supervisory positions and lower-skilled jobs, has been addressed in collective negotiations and led to an extension of trade union representation. In 2003, British Telecom and the Connect trade union reached an agreement that extended union recognition rights to around 13,000 professional and managerial staff on personal contracts, in addition to the 15,000 already covered. Despite this development, the company took a somewhat stronger unilateral approach towards these workers when, for instance, in 2004 it imposed a pay award of 1.7% that had been rejected by 97.5% of those voting in a union membership ballot organised by Connect. Another sign of cooperation between the unions and British Telecom is the involvement of union representatives in the company's anti-harassment policies to address workplace bullying and customer abuse, both informally in problem-solving discussions and through a formal grievance procedure.

Table 2. Industrial relations in the electricity and fixed-network telephony sectors

Country	Electricity			Fixed-network telephony
	Bargaining structure	Bargaining coverage	Union density	Bargaining structure	Bargaining coverage	Union density
Austria	Five collective agreements (two sectoral and three company deals). Some workers are not covered by formal agreements.	95%	90%	Two collective agreements (one sectoral and one company agreement).	100%	Estimated at >60%
Belgium	Sectoral and company.	100%	High	Company: Belgacom has its own national joint committee, as a public sector firm	100%	High
Cyprus	Company.	100%	100%	Company.	100%	95%
Denmark	Sectoral framework (whole industry) and company.	100%	98%	Sectoral framework (whole industry) and company.	100%	90%
Finland	Either central or sectoral agreements supplemented by company deals.	100%	High	Either central or sectoral agreements supplemented by company deals.	100%	High
France	Sectoral (since 2002) and company.	93.5%	17%	Sectoral (since 2002) and company.	98.3%	High
Germany	Sectoral and company. Company agreements are acquiring increasing importance. Works agreements are also present.	nd	35%	There is no sectoral agreement for telecommunications. Operators apply different industry-wide agreements. Company agreements are important. Works agreements are also present.	Electrical industry 19%, craft sector electrical trade around 10%	57%
Greece	Sectoral and company.	nearly 100%	>95%	Sectoral and company.	Nearly 100%	>90%
Hungary	Sectoral agreement extended by decree; company agreements at major firms.	Multi-employer: 100%. Single-employer 92.9%	32%	No sectoral bargaining (operators are not affiliated to employers’ organisations). Company and branch bargaining.	Multi-employer: 12.7%. Single-employer: 79.9%	35%-40%
Ireland	Sectoral and company.	Nearly 100%	Very high	Sectoral and company.	nd	Very high
Italy	Sectoral and company.	90%	74%	Sectoral and company.	90%	30%
Malta	Company.	100%	Nearly 100%	Company.	100%	70%
Netherlands	Sectoral and company.	90%-100%	50%	Sectoral and company.	90%-100%	35%
Norway	Two sectoral agreements for local authorities (KS) and private sector (NHO) and company agreements.	Above average	70%-80%	Central (NAVO) and company.	Above average	55%
Poland	Sectoral and company.	Nearly 100%	55% in generation. 37% in distribution	Company.	90%-100%	30%
Slovakia	Sectoral agreement supplemented by company accords.	85%	78%	Sectoral agreement supplemented by company accords.	100%	37%
Slovenia	National intersectoral agreement, supplemented by sectoral and company agreements. Some companies do not have a firm-level deal.	100%	60%	National intersectoral agreement, supplemented by a company agreement. No sectoral agreement so far - negotiations between the government and unions are under way.	100%	70%
Spain	Sectoral and company.	>50%	Low	Sectoral.	nd	Low
Sweden	Sectoral and company.	Estimated at 100% at Vattenfall and >90% for smaller operators	Estimated at 100% at Vattenfall and >90% for smaller operators	Sectoral and local/company.	Estimated at >90%	Estimated at >90%
UK	Company agreements. Most firms combine framework deals with decentralised agreements at divisional or profit-centre levels.	68%	53%	Company agreements. Most firms combine framework deals with decentralised agreements at divisional or profit-centre levels.	60%	37%

Source: EIRO.

Structural changes

As outlined above, the electricity sector and fixed-network telephony have undergone very significant transformations in the past decade. Both have been involved in liberalisation processes and a complete overhaul of the previous sectoral structure, with important impacts on industrial relations, as well as on personnel policies and management practices. One important set of features of present industrial relations systems derives from the shift to private sector regulation, which is in turn an aspect of the liberalisation processes. In this sense, industrial relations in the electricity and fixed-telephony sectors are still 'in transition', even if, as illustrated above, the transformation processes are well advanced, notably in telephony. The three main dimensions of this shift relate to the status of employees, the structure of representation and the structure of collective bargaining. The third aspect is also connected to the developments in sectoral structures, which have been briefly described above.

Workers' status

The presence in the electricity sector and fixed-network telephony of civil servants or workers with a particular status is a characteristic of a number of countries. This is the case in Cyprus, where employees in these sectors are included in public sector employment. However, there are no special conditions attached to this status, except a protection from dismissal until retirement age. In Denmark, in 2003, electricity workers with public employee status amounted to nearly two-thirds of total sectoral employment. France presents another particular situation, as employees in the electricity sector are covered by the specific status of 'national workers', which they acquired after the nationalisation of EDF in the mid-1940s (together with the employees of the Gas de France public utility).

There are situations where civil servants and private law employees work together, as a consequence of the fact that changes in the regulatory framework for employment affect only the workers recruited after the utility's transformation into a private law company, while the existing employees often retain their status and rights. Special interventions may be needed to allow this co-existence, such as the establishment of a public body that employs the civil servants who work for the private law company, or collective agreements to harmonise or integrate the employment rules for the two groups of workers. Examples of this situation can be found in Belgium, Denmark, France (for France Télécom workers) and Germany. The presence of civil servants is far from negligible or marginal in these cases. For instance, 'statutory employees' at Belgacom represent 70% of all those employed and in Deutsche Telekom they account for 40%. Both human resource management practices and industrial relations must thus take into account this issue. Another country where there has been a shift from civil service status to private law employment is Norway, in both the telecoms and energy sectors (as well as in transport). In all these countries, workers who are employed in the bodies that are responsible for the networks, such as the electricity transmission grid, have usually retained the status of civil servants, as these bodies have frequently remained in the public administration area.

The presence of both civil servants and private law employees may have consequences for company-level employee representation. For instance, in Germany there is a duplication of representation structures, with both staff councils for civil servants and works councils for private law employees. Something similar is happening in France. Until 2004, France Télécom did not have private law staff representative bodies, such as works councils and workforce delegates, but continued with the system of public sector representation, that is a series of joint committees (Commissions administratives paritaires, CAPs), which cover issues such as promotion, transfers, training, and disciplinary matters (FR0011106F). In accordance with an agreement signed in July 2004 by the France Télécom management and five trade unions, since January 2005 there are also private law representation bodies, which will take on some of the tasks earlier assigned to the CAPs, as in the case of information and consultation prerogatives. At EDF, the transformation into a private law company in 2004 has started a three-year adjustment process which will introduce private sector representation bodies. However, according to the Minister of the Economy, modifications to the existing situation will be limited to the 'bare minimum'.

Workers' representation

Potential jurisdictional conflicts have in some cases emerged between different trade unions over the representation of workers in the electricity sector and fixed-network telephony. This conflict or competition can be linked to: the presence of both civil servants and private law employees or the ownership shift to the private sector, thereby involving public and private sector unions; and the entry of new operators originating from different sectors or the blurring of boundaries between industries, thereby involving various sectoral unions. A related development may be the fragmentation of representation or even the opposite, ie the merger of existing trade unions or the establishment of new ones, to occupy the spaces which open up in the bargaining spectrum. Moreover, the liberalisation process and the likely increase in the number of employers may multiply the bargaining units and have an impact on workers’ representation, as well as on collective bargaining.

Examples of inter-union rivalries following privatisation and liberalisation include Denmark, where despite a strong tradition of cooperation between the different occupational unions there have been cases of jurisdictional conflict, especially between public and private sector unions (DK0302103F). The affiliation to the same confederation of the potentially conflicting unions can, in many circumstances, provide organisational resources to keep disputes under control. For instance, in Germany, an agreement was signed in November 2000 by the various unions organising in the information and communication technology sector that are affiliated to the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB). The accord provides for the creation of a joint sectoral working group (Branchenarbeitskreis) if more than one of the signatories has organisational and collective bargaining responsibilities in a particular bargaining unit; the working group must involve all relevant unions (DE0012297F).

Similar developments have taken place in the electricity sector in the UK, though linked to the increased number of bargaining units which followed privatisation (from three major national agreements to some 50-60 separate bargaining groups), rather than possible jurisdictional conflicts. The adjustments to the new complexity and fragmentation of negotiations included a shift to 'single-table' bargaining and the conclusion of 'agency agreements', which assign to one of the unions involved the leadership in negotiations, after consultations with the others. Other responses that have emerged in the UK with a view to saving organisational resources have included branch and even trade union mergers.

In Finland, the possible problems raised by the presence of different unions in the energy sector - the Finnish Metalworkers’ Union (Metallityöväen liitto, Metalli), the Finnish Electrical Workers’ Union (Sähköalojen ammattiliitto) and the Trade Union for the Municipal Sector (Kunta-alan ammattiliitto, KTV) - are resolved by the general rule that, when more than one union affiliated to a single confederation is active in an industry, the smaller organisations in that sector join the agreement signed by the largest.

In Austria, in order to cope with the effects on union representation of public utility liberalisation policies and the extension of collective bargaining to public utilities workers, a cooperation agreement has been signed between the Union of Employees of the Local State (Gewerkschaft der Gemeindebediensteten, GGB) and the Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) for white-collar employees and the Metalworking and Textiles Union (Gewerkschaft Metall-Textil, GMT) for blue-collar employees. The agreement states that GGB will maintain its organising monopoly in local public services, whereas representation of these employees in collective bargaining will move to the two other unions (AT0204202F). A similar arrangement has been reached for the fixed-telephony sector by the Union of Post and Telecommunications Employees (Gewerkschaft der Post- und Fernmeldebediensteten, GPF) and the GPA. Therefore, in Austria, the approach which seems to be emerging is to create a form of specialisation of the different unions affected by transformations, rather than establishing joint negotiation bodies or agency arrangements.

In Italy, the major transformations of the telecommunications sector since the early 1990s have caused a general reconfiguration of employee representation, which has included union mergers and eventually led to the establishment in the mid-1990s of the National Union of Communication Workers (Sindacato nazionale lavoratori della comunicazione, Slc), affiliated to the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil) and of the Federation of Entertainment, Information and Telecommunications (Federazione dello spettacolo, dell’informazione e delle telecomunicazioni, Fistel), affiliated to the Italian Confederation of Workers' Unions (Confederazione Italiana Sindacati dei Lavoratori, Cisl). In 2002, the Union of Italian Communication Workers (Unione italiana lavoratori comunicazione, Uilcomunicazione), affiliated to the Union of Italian Workers (Unione Italiana del Lavoro, Uil), was set up.

Employers' representation

Changes in public utilities have not only affected the trade union side. Liberalisation and privatisation processes have had an impact on employers by changing their legal status and usually increasing their numbers and heterogeneity.

The reorganisation of public utilities, together with the broader reform of public sector employment and industrial relations, have contributed to dismantling the traditions of encompassing collective negotiations for the whole public sector, in countries where these existed. This has happened, for instance, in Austria, initially due to a government decision in 2000, which ended the practice of central informal negotiations (since the public sector is formally excluded from collective bargaining) between the state, provinces and municipalities and the public sector unions. Subsequently, the progressive emergence of collective bargaining units directly related to public utilities reinforced and added to this fragmentation of collective bargaining (see below under 'Collective bargaining structure'). Similarly, in Germany, in 2003 the association of German public sector employers at all levels (federal state, states and municipalities) broke up after more than 40 years of joint collective bargaining, since the representatives of the federal government and the states considered the coalition with municipal employers no longer practicable (DE0306202N).

In Norway, the transformation of public utilities has often meant a transfer of employer representation from the Ministry of Labour and Social Affairs, for undertakings formerly under the direct control of the state, or from the Norwegian Association of Local and Regional Authorities (Kommunenes Sentralforbund, KS), in the case of municipal employers, to either the semi-public NAVO employers' association for deregulated public enterprises or to the private sector Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO). The major telecoms company Telenor has moved from state sector representation, through NAVO (NO0107136F) and is now affiliated to Abelia, an employers’ association affiliated to NHO. In the electricity sector, most employers are affiliated to either KS or NHO - through its sectoral association, the Norwegian Electricity Industry Association (Energibedriftenes landsforening, EBL) - while the dominant operator, Statkraft, is a member of NAVO. All of these migrations have resulted in a change in the collective agreement applicable to the workers concerned.

Some new organisations have also emerged, such as the Belgian Federation of Electricity and Gas Providers (Fédération Belge des Entreprises Electriques et Gazières/Federatie van de Belgische Elektriciteits- en Gasbedrijven, FEBEG). In Italy the conclusion by Confindustria, the major employers’ association, and the Cgil, Cisl and Uil union confederations of a new industry-wide agreement for telecommunications in 2000 (IT0007158F) promoted the establishment of a sectoral employers’ organisation, Assotelecomunicazioni. Previously there were only some trade associations that represented ICT firms.

Collective bargaining structure

Developments in the structure of representation and of collective bargaining are, to a large extent, linked. As far as collective bargaining is concerned, it is possible to identify two tendencies. First, there are examples of an emerging fragmentation of negotiations and of the increasing importance of company-level agreements. Second, there are some efforts to reverse this trend through a reconfiguration of representation, as illustrated above, and the establishment of new sectoral bargaining levels.

The fragmentation of collective bargaining is closely linked to the presence in the electricity and fixed-network telephony sectors of employers that have different legal forms, ownership structures and size, and that may apply different sectoral agreements. The increased importance of company agreements results, on one hand, from the waves of restructuring that have affected and are still affecting the two sectors, thereby shifting the focus of collective bargaining to the decentralised level. On the other hand, the prevalence of large companies, often with dominant positions, has seemingly contributed to emphasising industrial relations at firm level. Sectoral agreements still play an important role in the countries where this level is traditionally particularly strong, which is still the usual situation in continental Europe. However, probably more than in other industries, these agreements appear essentially to define a set of framework rules for the main companies. Germany offers a good illustration of both aspects. In the telecommunications sector, the lack of an industry-wide agreement results in operators applying different agreements, while in the electricity sector company-level bargaining between management and unions is becoming crucial for employment and working conditions. This situation appears to be particularly significant, given the traditional strength and key role of sectoral bargaining in Germany.

In Austria, the fragmentation of collective bargaining in the sectors concerned is not only the result of the co-existence of civil servants and private law employees (see above). It also derives from exceptions to the rule of representational monopoly that usually characterises Austrian industrial relations, via compulsory employer representation through the Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ). Unusually, the right to conduct collective bargaining has been awarded to the holding company of the municipality of Vienna (which has operations in the electricity sector) and to the main fixed-network telecoms operator, Austrian Telekom (AT0203202F). These are two of very few such examples in Austria, and bargaining rights were probably granted due to recognition of the special nature of these sectors. Owing to the fragmentation of representation, workers in the electricity sector in Austria are covered by five collective agreements, two industry-wide accords and three company deals, not to mention those civil service employees who are formally excluded from collective bargaining. Three-quarters of sectoral employment is covered by the private sector agreements signed by the blue- and white-collar unions with the sectoral employers’ association (Verband der Elektrizitätsunternehmen Österreichs, VEÖ); another significant share of employment (some 20%) is covered by the three agreements for the companies owned by the municipalities of Vienna, Graz and Innsbruck, which are signed either by VEÖ and WKÖ (Graz and Innsbruck) or by the company itself (Vienna) and the GGB local public employees’ union; and there are also a number of local public companies, employing less than 5% of the sectoral workforce, which bargain only informally with GGB.

Another example of the presence of particular arrangements in these two sectors that deviate from the general national pattern of collective bargaining can be found in Belgium, where there is no sectoral joint committee for telecommunications, and therefore no industry-wide agreement. Instead, Belgacom, like other public sector firms, has a special (national) company joint committee, which is in charge of all collective negotiations. In Norway, the creation of various subsidiaries in the Telenor group has given rise to an internal differentiation of negotiations and conditions.

Contrary to these examples of increasing fragmentation of collective bargaining, there are also some cases of attempts to create encompassing agreements. This has taken place notably in France and Italy:

• in France, after the liberalisation and opening up of the relevant markets, there have been sectoral agreements in place for the telecommunications and electricity sectors since 2000 and 2002 respectively. The coverage of both agreements has been extended by decrees of the Minister of Labour to the whole sectors, thereby replacing company bargaining to some extent and establishing minimum protection levels for workers employed in new businesses. It should be noted, however, that the employment and pay conditions of civil servant in the fixed-network sector are still regulated by the national negotiations for the public sector;
• in Italy, the first sectoral agreement for the telecommunications sector was signed in June 2000 (IT0007158F). Since then, practically all the telecoms companies have moved to the industry-wide agreement - previously, many of them applied other agreements, notably the metalworking accord. At present, only Tele2 applies a different agreement, that for trade and commerce, as its 940 staff are concentrated in marketing and call centre activities. In the case of the electricity sector, liberalisation led to the conclusion in 2001 of a single sectoral agreement (IT0109197N) which replaced the previous fragmentation between the Enel agreement and those of municipal companies, and so-called private 'self-generators' (autoproduttori), ie private firms producing energy for their own operations;
• a debate on the creation of an industry-wide telecoms agreement is also under way in Spain, where the trade unions would like to abandon the present combination with the transport sector for a specific deal; and
• in Slovenia, negotiations are under way to conclude an industry-wide agreement for telecommunications (and transport). The unions, in particular, would like to sign it as soon as possible in order to define minimum protection levels that would apply to all workers in the sector in the event of privatisation and liberalisation.

An interesting case of more decentralised development towards homogeneity is the electricity sector in the UK. After a progressive fragmentation of collective bargaining, which in 10 years led to the emergence of some 50-60 bargaining groups, it seems that a tendency towards more homogeneity is now emerging, at least in the domain of pay bargaining. This is due both to the consolidation of a small number of predominant bargaining groups and to the development of common terms within such groups, often accompanied by a reduced emphasis on individual pay. These two trends contribute to diminishing wage differentials across and within companies.

Collective bargaining and conflict

In the two sectors under review, collective bargaining is quite varied and complex. Liberalisation and restructuring has meant the introduction of new human resource management practices and many innovations in employment and working conditions. Performance-related pay is reported in almost every country, as are more flexible work practices and working time arrangements, including measures to favour reconciliation between work and personal life. For instance, an agreement has been signed at the Spanish electricity company Iberdrola that introduces the possibility for parents to apply for reduced working hours for care duties until children are eight years old or to stay on maternity leave until the child is three, while in Austria part-time work possibilities for older workers have been introduced in the electricity sector. Another emerging issue refers to training and education, with a view to improving skills or employability. Agreements in the electricity sector in the Netherlands provide for an assessment of individual skills and employability, while in other countries, such as Austria and Malta, there are specific leave entitlements to enter training or education.

Company restructuring

As seen above, restructuring has been a constant feature of both the electricity and fixed-line telephony sectors in recent years. Employment reductions in both cases have been substantial, often involving thousands of job losses. However, the social impact of restructuring has been to a large extent cushioned by recourse to incentives for voluntary resignations, early retirement and other measures. As illustrated by the case of the electricity sector in UK, the productivity and profitability gains allowed by restructuring have often provided enough resources to compensate workers made redundant and possibly improve the conditions of those remaining. Examples include the following:

• the RWE electricity group in Germany, which reduced its workforce by 12,000 without dismissals;
• agreements signed in 1996 and 2001 (IE0105235N) at the Irish Electricity Supply Board (ESB), which covered significant redundancies and introduced more flexible work practices, and at the same time set pay increases, established a 5% worker shareholding (in 1996) and recorded the firm’s commitment to investments (in 2001);
• job cuts at the Greek telecoms operator OTE, which were implemented via retirement and voluntary severance;
• Eircom in Ireland and France Télécom, which have realised substantial employment reductions without outright dismissals;
• the Polish telecoms operator TP, which has reduced staff by some 50% since 2001 with the help of high severance payments and now plans to cut 6,000 more jobs (PL0504101F); and
• at Belgacom, there have been three successive agreed restructuring plans since 1997 (BE0201322N), which have involved some 10,000 job cuts (more than half of present employment) and introduced work flexibility and internal mobility.

Other deals provide a commitment to employment security. For example, the agreement on the 2002 merger which led to the establishment of Vattenfall Europe, one of the four leading electricity producers in Germany, excluded dismissals until 2007. Similarly, Deutsche Telekom concluded an employment pact in March 2004 that introduced a reduction of weekly working time from 38 to 34 hours with a less than proportional wage decrease and excludes dismissals for economic reasons until 2008 (DE0405205F).

Outsourcing

Outsourcing and contracting-out seem to be particularly common in fixed-network telephony, especially for network maintenance. Countries where this phenomenon seems to be significant include Spain, Hungary, Italy and the Netherlands. In Spain, around 16,000 employees work for firms dealing with installation and maintenance for Telefónica; they have replaced former Telefónica employees who have gone into early retirement in recent years (ES9806266N). In Hungary, the MATÁV telecoms company is planning to contract out customer and transport services; an initiative which could involve 800 employees, that is some 10% of overall employment (HU0412101N). In the Hungarian electricity sector, it is estimated that outsourced activities in maintenance and customer services involve some 10,000 people. This has led to an erosion of collective bargaining coverage, despite the extension of the sectoral agreement to the whole industry, since small subcontractors can evade it by registering in different sectors.

Worker participation

The situation in each country with regard to board-level employee representation in electricity and telecoms companies reflects the specific national system in this area. However, there are in some cases particular features that derive from companies having a specific status. For instance, according to 1983 French law on the democratisation of the public sector, staff representatives sit on the boards of both EDF and France Télécom. In Malta, at Enemalta (electricity) and Maltacom (telecoms), specific laws grant the employees the right to elect one board member. In addition, Maltacom workers elect one employee director, since they hold a 3% stake in the company. Sectoral reform might mean the elimination of such special rules, as has happened at Greece's OTE, where workers' representatives no longer sit on the administrative board.

With regard to financial participation, there are many example of employee shareholdings, which were typically established either at the time of privatisation or to support restructuring processes, but can also be part of specific company policies. For instance, this form of financial participation has been reported at the the RWE electricity group and at France Télécom. In Hungary, employee shares were issued on very favourable conditions at the time of privatisation and the same happened in Italy at both Enel and Telecom Italia. Of particular relevance is the experience of Ireland's Eircom in this respect. In the mid-1990s, a joint strategic consultative group was set up to consider the changes that had to be implemented with a view to revitalising the company and prepare it for privatisation and liberalisation. This consultation process led to the conclusion of a 'Telecom partnership agreement' in 1997, which addressed the issues of employment levels and redundancies, training, work organisation and decision-making within the firm, and established an employee share-ownership plan (ESOP), to be administered collectively through a specific trust (IE9807253N). Initially covering 14.9% of the company's shares, the ESOP was raised to 29.9% in 2001, when the company was acquired by the Valentia consortium. This case has become a model for other Irish public utilities involved in liberalisation and privatisation processes. It especially stands out for its notable collective dimension. In many other companies in other countries, the distribution of shares to individual employees has been equivalent to a one-off payment and often resulted in the beneficiaries selling the shares in a relatively short time. A programme similar to Eircom’s exists in Slovenia, at Telekom Slovenije, where there is a formal ESOP and an employee director sits in the company board.

Conflict

Industrial conflict is not common in the two sectors examined. It appears that a general attitude in favour of cooperation and a search for shared solutions helps those involved face and resolve potential difficulties. Moreover, in every country considered there are some limits on industrial action in public utilities, which usually include the guarantee of minimum service levels, notice periods and dispute-resolution mechanisms. These provisions may derive from legislation or agreements, as happened recently in Cyprus, where a deal on the settlement of labour disputes in essential services, including electricity and telecommunications, was reached in 2004, after nine years of negotiations (CY0404103F).

However, there have been important episodes of industrial action. For instance, the partnership approach that now seemingly distinguishes industrial relations in the electricity sector in Ireland came about after a major strike at ESB in 1991 and strong criticism of that action. The careful examination of ESB costs, work practices and industrial relations that followed the strike led in 1996 to an agreement on a 'cost and competitiveness review' (IE9902272N). In some cases, the consequences of sectoral reform have been at the centre of disputes. Anti-privatisation strikes have constantly marked the transformation process at France Télécom; the trade unions organised action in 1993, 1995, 1996 and 2004, but participation steadily decreased from 75% in 1993 to 18% in 2004, as reported by the firm management. In the Netherlands, in 2001, there was a serious conflict over the collective agreement renewal in the energy sector, since the employers were pressing for employment and working conditions more in line with what they regarded as requisites for market competition. After a strike threat, a mediation procedure was activated and eventually a solution was found. Obviously, restructuring is always a major reason for confrontation. Conflict has been particularly severe in the telecoms sector in Spain, especially in the firms which resulted from spin-offs from Telefónica, as happened with the restructuring of Sintel (ES0010118F). In Italy, the electricity sector unions perceive a worsening of industrial relations and an increase in conflict, due to the spread of restructuring processes which they see as guided essentially by financial reasons and cost-cutting measures affecting employment levels and conditions. For this reason, they are asking for a revision of the existing agreement on the exercise of the right to strike and minimum services in the electricity sector, which was signed in 1991.

Commentary

The picture of industrial relations in public utilities, and especially in fixed-network telecommunications and in the electricity sector, that emerges from this study is quite complex. There are common trends across the European Union and Norway, but important national specificities remain, which are linked to the importance of public utilities for national economies and communities. Liberalisation and privatisation have affected all public utilities and notably the electricity sector and fixed-network telephony. The combination of the pressures of a new ownership structure, which often includes institutional investors and diffuse shareholdings, of a competitive environment and of the regulators has fostered important waves of restructuring and significant changes in employment and working conditions.

Public utilities, including electricity and fixed-line telephony, have always been an area where the strong presence of trade unions and the consensus-building attitudes of employers have contributed to assigning a key role to industrial relations. The recent transformations have challenged this situation and some of the existing protections have been redefined and even reduced. As a consequence, trade unions often voice criticism and disappointment with the reforms still under way. Despite this underlying confrontation, employers and unions have usually been able to find agreements on the changes required by the new situation (sometimes they have even joined forces to oppose some of the transformations envisaged by government policies). Industrial relations have not lost their crucial position in regulating employment relationships; rather, restructuring has usually been implemented through collective bargaining and unionisation rates remain high. Adversarial attitudes have not gained momentum, partly because employers have seemingly continued to rely on collective labour relations. Indeed the opposite has sometimes occurred, and reform and restructuring have in some circumstances led to the development of forms of partnership, the most notable examples being found in Ireland, both in the electricity sector and at Eircom. Other examples include the consensual path to reorganisation that apparently characterises adjustments in the UK and also the experience of some central and eastern European countries, such as Hungary.

The possible erosion of collective labour relations cannot be ruled out. However, future prospects for industrial relations are probably far from meagre. This is especially true for the major firms examined in this study. Maybe a different picture would result from an analysis of small companies or subcontractor firms in these same sectors. Some indications emerged in the national reports on which this study is based, which serve to draw attention towards an area of possible 'labour protection deficits'. Efforts to create encompassing industry-wide agreements, as in France, Italy and possibly for telecommunications in Spain and Slovenia, are one of the ways available to the social partners to try to avoid excessive differentials in protection levels across firms operating in the same industry.

Finally, it may be worth noting that regulatory arrangements in the public utilities have involved the social partners only to a minor extent so far, except in central and eastern European countries, where sectoral social dialogue is often present in the electricity and fixed-network telephony industries. Given the market structure that characterises these sectors, which often hinders effective competition, and the residual but significant scope for industrial policies, the creation of some sort of connection between social dialogue and regulation might contribute to defining an environment conducive to both growth and social cohesion. (Roberto Pedersini, Fondazione Regionale Pietro Seveso)

• ID: TN0502101S
• Author: Roberto Pedersini
• Country: EU Countries
• Language: EN
• Publication date: 15-06-2005
• Sector: Post and Telecommunications, Energy