European Metalworkers' Federation adopts European coordination rule for national bargaining

At its third collective bargaining conference, held in December 1998, the European Metalworkers' Federation (EMF) adopted a political resolution on "collective bargaining with the euro", which for the first time contains a number of guiding principles for national collective bargaining in order to prevent downward competition on wages and working conditions. According to the new "European coordination rule," national collective agreements should seek at least to offset the rate of inflation and ensure that employees' incomes reflect a balanced participation in productivity gains.

On 9-10 December 1998, the European Metalworkers' Federation (EMF) held its third European collective bargaining conference in Frankfurt. The EMF is the largest of the European Industry Federations affiliated to the European Trade Union Confederation (ETUC) and represents about 7 million workers within affiliated 55 unions in 25 European countries. Under the title Collective bargaining with the euro, around 160 trade union delegates from more than 20 countries - including most of the presidents of the national metalworking unions - discussed the consequences of EU Economic and Monetary Union (EMU) for collective bargaining, as well as possible paths towards closer European trade union cooperation. At the core of the discussion was a proposal for a political resolution which covered four basic points:

  1. the EMF's view on EMU and collective bargaining;
  2. a new "European coordination rule" for national bargaining in the metalworking sector;
  3. EMF proposals for a further Europeanisation of collective bargaining; and
  4. the EMF's further political action plans.

At the end of the conference, the resolution was adopted by the union delegates with a high degree of consensus. Although the resolution still has to be formally accepted by the EMF executive committee, it can be seen as an important political document, which for the first time develops a comprehensive strategy for collective bargaining under EMU.

EMF view on EMU and collective bargaining

The resolution starts by setting out the EMF's viewpoint on EMU. In general, the EMF takes a rather positive view on the introduction of a European single currency, which is considered to be "a significant and necessary step towards the strengthening of economic and political unity in Europe". However, the EMF also criticises what it sees as a one-sided economic approach behind the EMU project, which so far refers almost exclusively to monetary stability: "The transfer of monetary policy to a European Central Bank committed solely to the stability of the currency, cannot ensure the social and political unity of Europe or the welfare of its citizens on a lasting basis." Instead, the EMF demands a new monetary policy which considers equally the need for monetary stability and the promotion of employment. Therefor, the metalworkers' unions see a greater need for more active macroeconomic policy and economic intervention at European level.

As to the impact on collective bargaining, the EMF assumes that "wage and collective bargaining policies in EMU will be exposed to the pressure of greater competition, thereby exacerbating the risk of a downward spiral in wage-undercutting." These assumptions have been supported by recent research which was carried out on behalf of the EMF by the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) The WSI study indicates that European collective bargaining displayed as early as the 1980s a fundamental shift from a "productivity- to a competition-oriented bargaining" which aimed to increase national competitiveness through wage increases notably below the growth of productivity ("Collective bargaining in metal industry under the conditions of European Monetary Union", Thorsten Schulten, in "The impact of EMU on industrial relations in European Union", Timo Kauppinen (ed), Finnish Industrial Relations Association, Helsinki (1998)). Under a system of flexible exchange rates, however, the macroeconomic effects of such a competition-oriented bargaining policy were at least partly compensated by a valuation or devaluation of national currencies. With the introduction of the euro, wage increases will now have direct effects on national competitiveness. Since all European countries might follow more or less the same strategy, a downward spiral of wages and working conditions would be set in motion, it is argued.

European coordination rule for national bargaining in metalworking

According to the EMF, one important means of avoiding a possible downward spiral on bargaining issues is a close European coordination of national collective bargaining. The core of the "EMF's coordination approach" is that collective bargaining should remain at national level but should follow common rules which are able to limit national competition on wages and working conditions. The new EMF resolution thus seeks to define a "European coordination rule" for national bargaining - the first time that one of the leading European-level trade union organisations has taken such an initiative. The resolution states that:

The key point of reference and criterion for trade union wage policy in all countries must be to offset the rate of inflation and to ensure that workers' incomes retain a balanced participation in productivity gains. The commitment to safeguard purchasing power and to reach a balanced participation in productivity gains is the new European coordination rule for coordinated collective bargaining in the metal sector all over Europe. Only once this objective has been achieved throughout Europe in accordance with the relevant applicable conditions can wage dumping be eliminated and the continued redistribution of income to the detriment of workers be stopped.

However, the demanded return to a productivity-oriented bargaining policy does not mean that all European metalworkers' unions have to follow more or less the same bargaining pattern. On the contrary, the resolution states that:

the unions keep their full autonomy and take full responsibility in respect of how they use this distribution space for the improvement of wages and measures geared towards fostering employment such as reduction of working time and training, for a new organisation of work or special benefits as for example early retirement measures or equal treatment rules. This is their choice and their responsibility - facing actual needs.

EMF proposes a further Europeanisation of bargaining

The EMF "European coordination rule" deals mainly with the macroeconomic aspects of collective bargaining and defines a "competition-neutral" conception of bargaining, which in the first instance is rather defensive, since it merely maintains a certain level of national social development. However, the EMF also sees in a longer perspective a need for a "continual and progressive improvement and adjustment of wage and working conditions in the European metalworking industry in accordance with the level of the advanced countries". To reach that goal, the EMF calls for the introduction of "European minimum standards which should be raised progressively". As a first step, the EMF-affiliated unions should agree among themselves on certain minimum standards in the areas of flexibility, increased pay, minimum wages, continued payment of wages, etc. In June 1998 the EMF executive committee had already adopted a European charter on working time in which the EMF affiliates agreed on a maximum working time of 1,750 hours per year as a European minimum standard.

As a second step, the EMF calls for the conclusion of European framework agreement on certain minimum standards. Therefore, the metalworkers' unions support all initiatives of the European Commission to promote European social dialogue at sectoral level. However, the EMF strongly criticises the position of the Western European Metal Trades Employers' Organisation (WEM) which so far has refused any official contacts with the EMF.

The EMF's further political action plans

The last part of the EMF resolution contains the unions' further political action plans. It has been agreed that all national metalworkers' unions will report regularly within the EMF on the implementation of the new European coordination rule. All national reports will be evaluated and discussed within the EMF collective bargaining committee and executive committee. Furthermore, the EMF has decided to initiate or continue the following activities:

  • the organisation of regional and bilateral collective bargaining "cross-links" and the exchange of collective bargaining observers and negotiators;
  • the involvement of EMF observers in national bargaining, who can set out pan-European positions and pass on information;
  • the creation of a special coordinating committee on collective bargaining for the countries of Central and Eastern Europe;
  • the construction of a EMF "European data system" which provides all data for collective bargaining and regular exchange of information;
  • the development of new instruments for a sector-specific coordination of European Works Councils; and
  • initiatives for joint transnational action, demonstrations and strikes in order to establish a pan-European wage and collective bargaining policy. Therefore, the EMF insists on the right to undertake sympathy strikes and supports all unions in those countries where such a right does not exist.

Finally, the EMF calls for a further development of its own political procedures and institutions and asks its secretariat to come forward with concrete reform proposals in the first half of 1999.

Commentary

On the eve of the euro, European trade unions seem to recognise that the introduction of a single European currency will have fundamental effects on collective bargaining and might even accelerate the pressure for a downward competition on wages and working conditions. To avoid such a development, from a trade union point of view there seems to be no alternative to a closer Europeanisation of collective bargaining.

After national trade unions in Benelux and Germany took the initiative for closer coordination of bargaining policy in their "Doorn declaration" in September 1998 (DE9810278F), it is the EMF, one of the major European Industry Federations, which has now for the first time agreed a demanding political concept for a renewal of a solidarisitic bargaining policy at European level. With the adoption of a European coordination rule for national bargaining, the EMF has created a reasonable instrument which recognises the national differences in economic developments and bargaining systems but also defines common guidelines for non-competitive national bargaining policy. As the president of the EMF, the Belgian trade union leader Tony Janssen, put it: "The European metalworkers' unions need not have the same demands, but all demands must go into the same direction." (Thorsten Schulten, Institute for Economic and Social Research (WSI))

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