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France: Multinational companies and collective bargaining

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The impact of multinational companies (MNCs) on collective bargaining has not been an area of focus in France .Moreover, this group of firms have an ambivalent role. On the one hand, multinationals generally offer more favourable wage conditions and better profitability. The majority of them, especially those of French origin, have a favourable attitude towards negotiation with trade unions, which due to the size of these companies, have a relatively strong foothold. On the other hand, multinationals, particularly those of foreign origin, cause employment uncertainty and tension. The trade unions are often less successful mobilizing employees and public opinion to safeguard jobs in these multinationals.

1. MNCs and collective bargaining: basic data

1) MNCs account for a significant proportion of private sector employment in many European countries. Please provide the following information according to availability:

a) proportion of private sector employment accounted for by MNCs, and recent change (e.g. since 2000)

There are no statistics available on the proportion of MNCs (multinational companies). The definition of MNCs put forward by the questionnaire, taken from the directive on European works councils, is not used in national statistics.

c) proportion of service sector employment accounted for by MNCs, and recent change (e.g. since 2000)

Na

2) Please provide any available information on the breakdown of employment in multinationals between foreign-owned MNCs and home-based MNCs

Statistics are only available for foreign-owned companies in France.

According to Eurostat, foreign-owned companies employed 19% of the workforce in 2005 in all non-financial companies. (NB: this data has the advantage of being harmonised for the EU member countries, but as the Eurostat server was inaccessible, we were not able to obtain either the industry-services distribution or data for the other years). According to the National Institute of Statistics and Economic Studies (Institut national de la statistique et des études économiques, INSEE), foreign-owned companies employed 14% of the workforce in non-financial companies in 2003 (13% in 2000).

According to ministry of industry (SESSI) statistics, foreign-owned companies employed 35% of the industrial workforce in 2006 (36% in 2005, 35% in 2004 and 2003, and 33% in 2002).

3) What is the level of collective bargaining coverage amongst MNCs, and how does this compare with levels of collective bargaining coverage within the private sector?

This question is not relevant in France, as collective sector-wide agreements are generally extended by the ministry of employment to cover all companies. This leads to a coverage rate of 97% in the private sector and 99% in industry. Only the service sector has slightly lower coverage rates: business services 94% and personal services 89%.

In the absence of precise figures, please provide an estimate of whether it is higher or lower than the average in:

i) the private sector overall

Na

ii) manufacturing

Na

iii) private services

Na

4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are MNCs covered by sector agreements?

Yes (please see answer 1.3).

What is the nature of the relationship between MNCs and sector agreements?

a) If Yes, do they mainly conform with the provisions specified in these agreements?

Yes, but they improve them.

b) If No, do MNCs conclude their own company agreements? If so, what if any relationship do these company agreements have with the sector agreement?

5) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, to what extent are MNCs regarded by other employers as pattern setters for wage negotiations?

2. MNCs and change in national systems of collective bargaining

1) To what extent have MNCs been a source of recent change in the agenda and outcomes of collective bargaining in respect of any of the following issues. Please distinguish between manufacturing and private services:

a) payments systems? If so, please elaborate and give examples.

Following the Axa insurance group (service sector), IBM (IT, service sector) recently reduced the basic wage of its sales staff and increased the proportion of commission, in accordance with the company’s worldwide wage policy. This measure is thought to affect around 20% of IBM employees in France. In accordance with the labour code and case law, the works council must be consulted and the explicit individual agreement of the relevant employees must be obtained in order for this policy to be implemented. The threat of jobs cuts is thought to have forced employees to accept the new conditions. According to trade unionists, IBM often plays a ‘laboratory’ role for the social policy of the employers’ organisation, MEDEF.

b) working time arrangements? If so, please elaborate and give examples.

c) flexibility arrangements (other than working time)? If so, please elaborate and give examples.

d) handling restructuring? If so, please elaborate and give examples.

Restructuring and site closures receive a lot of media coverage. However, it has not been a source of immediate changes to the French collective bargaining system.

2) Are any of these changes associated with MNCs headquartered in particular countries?

No, except for the change of wage policy at IBM (question 2.1a).

If yes, which countries? :

The US.

3) Are MNCs introducing new issues onto the bargaining agenda? If so, what are these new issues? (Examples might include equality and diversity practices; environmental issues; new employee participation practices; teleworking.)

Some multinationals, particularly those under French control, have agreed to negotiate on the issue of social and environmental responsibility. This has sometimes led to international framework agreements being concluded (see 3.5.)

4) Are any of these new issues associated with MNCs headquartered in particular countries? If yes, which countries?

France in particular.

5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what has been the role of MNCs in opening up greater scope for company negotiations?

There is a widespread demand among employers for this. It is difficult to evaluate the role of the multinationals.

Please distinguish between developments in manufacturing and private services.

a) are company negotiations mainly confined to issues on which sector agreements

i) provide openings and/or a framework?

No.

ii) establish minimum standards or conditions?

Yes.

b) are there company negotiations on issues which are not addressed by sector agreements? If yes, please give examples.

Corporate social responsibility (see 2.3.)

c) are there any instances of company negotiations resulting in breaches of provisions in sector agreements?

No. Since the 2004 legislative reform (FR0507107F), overriding agreements are permitted under certain conditions. However, this option is hardly taken up in practice.

If yes, please give examples.

6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are there any recent examples of MNCs:

i) leaving a sector agreement?

No.

If yes, please give details.

ii) placing new operations or sites outside of the coverage of the sector agreement(s) which apply at existing sites? If yes, please give examples

Many companies have outsourcing policies. However, this policy is not generally driven forward by a desire to leave a sector agreement, which only establishes minimum thresholds, but instead to escape the more favourable company agreement conditions.

7) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any evidence of the practice of ‘double-breasting’ by MNCs? (Double-breasting is when companies recognise trade unions for collective bargaining purposes at longer established sites, but not at more recently opened ones.) If yes, please indicate the extent of the practice and provide examples.

Not applicable

3. MNCs and the cross-border dimension to collective bargaining

1) Is there evidence of MNCs using comparisons of labour costs, flexibility and performance drawn from company operations in other countries in the course of local company negotiations?

There has been no systematic study of this issue.

If yes, please give examples when answering the following:

i) in which sectors does this typically occur?

Na

ii) what is the geographical focus of the comparisons (e.g. western Europe, eastern Europe, Asia, worldwide)?

Na

iii) what is the impact of these comparisons on the outcome of local negotiations?

Na

2) Is there any evidence of threats to relocate operations influencing the agenda and outcomes of local company negotiations?

There has been no systematic study of this issue. In the past, multinationals have sometimes used the threat of closure and relocation to obtain social concessions from employee representatives.

If yes, please give examples when answering the following:

in which sectors has this occurred?

In the car parts manufacturing sector: Bosch (FR0604019I).

ii) what are the destination countries / regions of the global economy for any threatened relocations?

Sometimes the threat has not been geographically specific and other times the destination countries were in Eastern Europe or Asia.

iii) what has been the impact on the outcome of local negotiations?

Reorganisation, increasing working time (Bosch) (FR0604019I).

3) Is there evidence of MNCs seeking to introduce so-called ‘best’ practices and/or corporate policies from their operations in other countries in the course of local company negotiations? (This may arise through the use of benchmarking.) If yes, please give examples when answering the following:

There has been no systematic study of this issue.

i) in which sectors does this typically occur?

Na

ii) is the process linked to the use of comparisons of labour costs, flexibility and performance or other Human Resouces policies (if so, please specify)?

Na

4) Do MNCs employ significant numbers of posted workers (e.g. amounting to more than 5% of the workforce)?

There has been no systematic study of this issue.

If yes,

i) in which sectors does this typically occur?

ii) are these posted workers covered by local sector and/or company agreements?

5) Are there any instances where MNCs headquartered in your country have engaged in transnational negotiations at either European or global levels? If yes, please provide details of the MNC(s) concerned and the issues addressed.

A report by the European Foundation (V. Telljohann et al., European and International Framework Agreements, 2009) which is currently being published, highlights the important role played by French owned multinationals in transnational collective bargaining both at European and global levels. Of the 68 international framework agreements (IFAs) identified by the report, 16 were signed by French companies, placing them in second position behind German companies (17). Regarding European transnational agreements, which were identified using a European Commission survey (2008), French companies were placed in first position with 23 agreements, ahead of American companies (21) and German companies (6).

A list of the French companies that have signed an IFA: Danone-BSN (five agreements from 1989 to 1997), Accor (1995), Carrefour (2001), Air France (2001), Club Méditerranée (2004), Renault (2004), EDF (2005), Rhodia (2005), Lafarge (2005), France Telecom (2006), PSA (2006) and Vallourec (2008). The Franco-German aircraft manufacturer EADS, whose legal headquarters are located in the Netherlands, should be added to the list. By definition, these agreements, signed by global union federations (GUFs), deal with corporate social responsibility and fundamental workers’ rights. Some agreements have been co-signed by a European works council (Danone) or a worldwide works council (Renault).

European agreements cover a wider range of issues. Some agreements cover several issues. The main issues covered by the agreements:

  • Restructuring (in the widest sense of the term, i.e. including ‘anticipation of change’ and 'forward-looking management of jobs and skill’”). Danone (2001), Club Méditerranée (2001), Total (2004), Axa (2005), Suez (2007), Schneider (2007), Total (2007).
  • Health and safety: Vivendi (1999), Usinor (2002, this multinational, which transferred its head office to Luxembourg, is now part of the Indian Arcelor-Mittal group), Suez (2002), Lafarge (2003), Vinci (2003).
  • Social dialogue: Total (2004), Axa (2005), Vivendi (2005).
  • Equal opportunities and diversity: Total (2005) Areva (2006), Suez (2007).
  • Corporate responsibility and fundamental rights: Vivendi (Générale des Eaux) (1996), Suez (1998), Bouygues (2001).
  • Human resources policy: Air France (2000), Geopost (2005).
  • Profit sharing and financial participation: Air France (2005), Suez (2007)

Almost all the European agreements were signed by European works councils. Some were co-signed by national trade unions. The most recent agreements were only signed by European trade union organisations: Total (2004, 2005 and 2007), Areva (2006) and Schneider (2007).

4. MNCs and the social partners

4a. Employers

1) Are MNCs affiliated to the main employers’ organizations at cross-sector and sector levels?

Yes.

2) To what extent are MNCs regarded as key players within the main employers’ organizations at cross-sector and sector levels?

It varies from one organisation to another. Major companies traditionally have a big influence on some employer organisations, notably MEDEF.

3) Are MNCs also organized in country-of-origin specific associations (e.g. American or German Chambers of Commerce).

There are organisations such as the American Chamber of Commerce in France and the Franco-German Chamber of Commerce and Industry. Some recently joined together in a federation of foreign chambers of commerce in France. These chambers primarily provide a service in bilateral economic relations between countries.

If yes:

Do these associations intervene on industrial relations issues?

No, at least not officially. But they provide companies with information, particularly of a legal nature, on industrial relations systems.

If yes, please provide details.

4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what influence do MNCs exercise over sector negotiations?

Difficult to assess.

For example, how far are MNC personnel involved as lead negotiators for employers’ organizations?

Negotiations are generally carried out by employees of employer organisations: the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF).

5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what, if any, kind of reforms to sector agreements are MNCs proposing? For example, are they pressing for:

i) limited reform, with modest extension of scope for company bargaining within sector agreements? If yes, please give examples.

The main employer organisation, the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), has been campaigning for years, and since the legislative change of 2004, with some success, for the option of overriding agreements for company-level agreements. It is difficult to evaluate the role of multinational companies in this policy espoused by employers.

ii) extensive reform, under which sector agreements are confined to establishing either minimum standards or a basic framework governing a few key issues? If yes, please give examples.

6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any indication of the advantages or disadvantages that MNCs perceive in continuing to be party to sector agreements?

Sector agreements level out the competition conditions between companies putting them at a very low level and therefore leaving significant room for negotiation for multinationals, which are generally characterised by higher than average productivity and profitability.

4b. Trade unions

1) How have trade unions responded to the impact of MNCs on the agenda and outcomes of collective bargaining? Please give examples.

The trade unions try, in their company-level wage negotiations, to take advantage of the higher than average productivity and profitability of the MNCs. They also attempt to counter any blackmail about jobs by taking advantage of the balance of power, which is generally more in their favour than in small companies.

2) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to attempts by MNCs to broaden the scope of company negotiations? Please give examples.

The trade unions are not against broadening the scope of company negotiations, provided that it is not a question of negotiating agreements that unfavourably override the provisions of sector agreements.

3) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to any attempts by MNCs to:

i) leave sector agreements? Please give examples.

This is not an issue (see answer 2.6a)

ii) place new operations or sites outside of the coverage of the sector agreement which applies to existing operations? Please give examples.

The trade unions have not found a suitable solution to this problem.

4) In what ways have trade unions responded to the use by MNCs in local, company negotiations of:

i) comparisons of labour costs, flexibility and performance?

There has been no systematic study of this issue.

ii) threats to relocate? Please give examples.

They mobilise employees and appeal to public opinion and try to transform the conflict into a political issue at local and national level.

5) Are there instances where trade unions have targeted specific MNCs because of public, media or political interest in their practices? If yes,

i) Have they involved political exchange, involving mobilization of popular sentiment against foreign companies as political leverage to gain concessions from government (e.g. the cases of Alstom in France and Alitalia in Italy)? Please provide examples.

The question implies the answer. In cases such as that of large MNCs of French origin, such as Alstom, the trade unions often successfully mobilise public opinion and manage to pressurise the government in order to prevent site closures or limit redundancies. On the other hand, in the case of foreign owned companies, as was recently the case with the closure of the Arcelor-Mittal steelworks in Gandrange, they often fail.

ii) Have new industrial relations actors, such as NGOs, been involved in such campaigns? Please give examples.

So-called ‘alter-globalist’ organisations such as ATTAC are often involved in campaigns against multinationals.

6) Are trade unions in MNCs engaged in compiling their own cross-border comparisons of working conditions etc. at sites in different countries? If yes, please give examples.

There has been no systematic study of this issue.

7) Are national and local trade unions involved in European-level negotiations with MNCs on any issues? If yes, please give details.

Some transnational agreements were co-signed by national trade unions. Out of the international framework agreements, this was the case for agreements signed by Renault (2004), EDF (2005), PSA (2006) and France Telecom (2006). Out of the European agreements, this was the case for agreements signed by Air France (2005 agreements on financial participation and profit sharing), Axa (2005), Geopost (2005), Suez (three agreements in 2007).

8) More generally, do trade unions have policies aimed at developing the cross-border and European-level dimensions to collective bargaining in MNCs?

The trade unions would like the signing of transnational agreements to be their exclusive preserve. While awaiting a European Commission initiative to establish a legal framework for transnational company negotiations, sector trade unions support the policies of their European counterparts to establish internal rules on this issue.

5. Commentary by the NC

The questions in this questionnaire are not systematically covered by research in France, apart from those referring to transnational collective bargaining. Studies of collective bargaining do not separate out the role of multinational companies. They only differentiate between companies in terms of size. While multinational companies are generally large size companies, it is difficult to make generalisations. Regarding the questions about the influence of multinational companies on employer organisations, there are simply no empirical studies available on the internal decision-making processes of these organisations and on the progress of collective negotiations.

Udo Rehfeldt, Institute for Economic and Social Research (IRES)

Page last updated: 02 July, 2009
About this document
  • ID: FR0904049Q
  • Author: Udo Rehfeldt
  • Institution: Institute for Economic and Social Research (IRES)
  • Country: France
  • Language: EN
  • Publication date: 02-07-2009