Co-determination strengthened in iron and steel sector

Download article in original language : LU0201191FFR.DOC

Arbed (Luxembourg), Usinor (France) and Aceralia (Spain) have merged to create the world's largest iron and steel producer, Arcelor. In January 2002, the Luxembourg government and social partners agreed that the Luxembourg state should remain an active shareholder in the new group, and that the model of co-determination and tripartism that marks Arbed should continue and be strengthened in Arcelor's Luxembourg operations.

On 19 February 2001, three iron and steel companies Arbed (Luxembourg), Usinor (France) and Aceralia (Spain) announced their intention to merge (BE0104344F), and thereby establish the largest iron and steel enterprise in the world with 45 million tonnes of steel produced a year, a turnover of EUR 30 billion, and a workforce of 110,000 worldwide. The aim of the three groups was to pool their skills and innovative strength in order to guarantee their increasingly globalised clientele a differentiated supply of products at world level.

The European Commission gave the go-ahead to the merger on 21 November 2001, but imposed conditions relating to products with steel casings.

The new giant group, known as Arcelor, was introduced to the international press on 13 December 2001, and should be operational, after three public share-exchange offers, in February 2002.

Co-determination at Arbed

The Luxembourg iron and steel industry was on the brink of bankruptcy in the 1970s, but was saved as a result of a call to 'national solidarity' and the efforts of the entire country. The quid pro quo was the creation of an intensive form of tripartism, with the state also becoming a 30% shareholder in Arbed. Arbed also has particularly well developed dialogue and co-determination (cogestion) through staff representative structures and the presence of employee representatives on its board of directors. Given its pioneering role in this area, subsequent legislation introducing general employee participation measures in Luxembourg - such as employee committee s/works council (délégations du personnel) and company joint committees (comités mixtes d'entreprise) - have always been drafted with reference to the iron and steel sector.

Positions on the merger

At the presentation of the new Arcelor group in December 2001, the representative of Arbed stated that the 'Luxembourg model' would not be called into question, and that social dialogue would continue as it had done in the past. In this context, he mentioned that a tripartite meeting had been fixed for 8 January 2002.

Although the state did not take a comprehensive position in public, the Prime Minister nonetheless said that he intended to appoint a 'steel tsar' whose job it would be to oversee and defend Luxembourg interests.

The trade unions followed developments in the merger process very closely, and intervened at all stages more or less conspicuously. Various informal and tripartite meetings culminated in an 'action day on steel' on 20 November 2001 organised by the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschafts-Bond Lëtzebuerg, OGB-L), the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB), SESM and the Neutral Union of Luxembourg Workers (Neutral Gewerkschaft Lëtzebuerg, NGL). The day commenced with pickets and culminated in a demonstration followed by a march led by trade union leaders, in which 1,500 iron and steel workers took part.

Through their action, the unions sought to send the government a clear message 'that the planned merger should not be simply a success for shareholders, but one for the workforce as well'. In the main, the speeches at the rally referred to the need to save iron and steel production sites in Luxembourg, and preserve employees' status and pay in the merged group. The unions called on the state to continue playing the role of the state in the future group, and not that of an anonymous shareholder. They emphasised that the social dialogue and special tripartite structures for the Luxembourg iron and steel industry, which had ensured industrial peace for several decades, should be maintained.

After the day of action, OGB-L, LCGB and NGL were keen to point out that it had been mainly aimed at the Luxembourg government with a view to clarifying, in the context of the establishment of Arcelor, matters relating to the definition of the role of the state in the merged group. This referred equally to: the state's role in Arcelor's future board of directors and the boards of related companies; the maintenance and adaptation of the iron and steel tripartite structures in the context of the new situation; and the details of future co-determination arrangements. They claimed that, as far as support for trade union demands was concerned, no real political will on the part of the state had been observed.

On 3 December 2001, the unions announced that a general sectoral strike would be held on 1 February 2002 if they were not satisfied with developments.

Trade unions satisfied

At a meeting on 9 December 2001 with OGB-L and LCGB, the government made it clear that it would not be withdrawing capital from the merged company, and that it would appoint a civil servant with responsibility for defending national interests and coordinating the work of the various actors.

A tripartite meeting held on 9 January 2002 led to the matter being completely resolved, and as a result, the strike announced for 1 February was cancelled. It was agreed that tripartite meetings will be held quarterly after the establishment of Arcelor, while the government confirmed its intention to remain a stable shareholder Arcelor in the long term. The current co-determination model will be retained for Arcelor iron and steel enterprises in Luxembourg, and also in companies where this is not required by law. Arbed SA will continue to be run by its own board of directors, on which representatives of the trade unions and the Luxembourg state will have seats.

An innovative feature of the deal reached in January is that if one of the partners so wishes, the situation in the Arcelor group's non-iron and steel enterprises in Luxembourg (ie Paul Wurth, Circuit Foil and IEE) may be placed on the agenda of meetings between the employers, the trade unions and the government. This broadening of the boundaries of tripartite dialogue was a trade union demand. However, these companies will not be administered by a system of co-determination.

The trade unions expressed satisfaction with the outcomes of the meeting, saying that they felt stronger as a result of the negotiations. The Prime Minister and the unions also support the view that Arcelor should cease to be a public limited-liability company, and rapidly acquire the status of a European Company, as provided for in the recently adopted European Company Statute (EU0110203N).

Commentary

The trade unions' fear of a possible attack on the Luxembourg tripartite model, an institution that the iron and steel sector brought into being, proved to be unfounded. The agreement to maintain this system may be held up as an example to an increasingly globalised world, which has a tendency to ignore participative models and restrict itself to focusing mainly on the interests of shareholders. If the Arcelor merger is as successful as hoped, it could even serve as a powerful reference point for a more balanced approach to industrial relations worldwide. (Marc Feyereisen)