‘Luxembourg model’ of social dialogue explored

The concept of the ‘Luxembourg model’ of social dialogue is often referred to in Luxembourg and sometimes in other countries. Questions have arisen, however, over whether the configuration of social dialogue in Luxembourg has any value as a model, and whether such a model can be truly deemed as ‘national’. New research on the functioning of social dialogue in Luxembourg, in the context of the EURES network, has provided some answers to these questions.

In June 2008, a researcher at the social and economic research organisation CEPS-INSTEAD/REPREM (Centre d’études de populations, de pauvreté et de politiques socio-économiques – International network for studies in technology, environment, alternatives, development/Relations professionnelles et emploi) published research (in French) on the functioning of social dialogue in Luxembourg. The researcher, Franz Clément, conducted his studies in the context of the European Employment Services (EURES) network, providing an insight into the value of the ‘Luxembourg model’ of social dialogue. The findings address three aspects of the Luxembourg model in particular: whether the model is national, transposable and a legitimate model.

A national model?

References to the ‘Luxembourg model’ of social dialogue largely imply the way in which the social partners manage to resolve problems and conflicts in a spirit of consensus. This ‘model’ is usually thought to have first appeared in 1977, when the country was in the midst of a crisis in the iron and steel sector and decided to set up the Tripartite Co-ordination Committee (Comité de coordination tripartite) – often simply referred to as ‘la tripartite’.

The committee comprises the following social partner representatives: four government representatives, from the ministries of economy, labour, social security and finance; four worker representatives, consisting of three delegates from nationally representative trade unions and one delegate representing public sector workers; four employer representatives, comprising two from the Chamber of Commerce (Chambre de Commerce Luxembourg) and one each from the Chamber of trade (Chambre des métiers) and Chamber of Agriculture (Landwirtschaftskammer Luxemburg). The committee gives its opinion on any measures deemed necessary when one of the three thresholds defined in the law of 24 December 1977 authorising the government to take measures to stimulate economic growth and maintain full employment is reached. The last agreement was signed on 28 April 2006 (LU0606019I).

Two questions which arise in this context are, on the one hand, whether this concept is typical of Luxembourg and, on the other hand, whether one can truly speak of the ‘Luxembourg model’. Franz Clément, believes that the term ‘Luxembourg model’, while still widely used in Luxembourg, is inappropriate and, in any case, difficult to define. Firstly, there is nothing to indicate that Luxembourg’s system of social dialogue has any particular elements which are specific to this country. Mr Clément notes that many similarities are apparent with structures and practices in other countries. Austria, for example, has professional chambers which function in the same way as Luxembourg’s professional chambers, and tripartite negotiation is not by any means exclusive to Luxembourg. Even France, whose system of social dialogue is markedly different to that in Luxembourg, deals with certain questions using the tripartite consultation method.

Transferability of model

Secondly, Mr Clément points to the fact that a ‘model’ should serve as a reference for the purpose of being imitated. However, he argues that it is unclear whether the structures of social dialogue in Luxembourg are transposable to another context. While it is true that the Luxembourg system has a number of special features, these could be considered ‘external’ to the model itself. For instance, the importance of ‘informality’ in the functioning of consultation is one of the characteristics of the system. Nevertheless, this is only possible due to the small size of the country, which means that all of the actors know each other well. The country’s small size also partly accounts for the fact that the same people hold appointments in various different consultation structures. This situation undoubtedly improves the circulation of information and consistency of decisions.

Mr Clément also highlights how ‘interpersonal relations play a crucial role in social dialogue in Luxembourg’. He adds: ‘Hence during the crisis in the iron and steel sector in 1977, the prime minister at the time and the president of ARBED [Aciéries Réunies de Burbach-Eich-Dudelange] were apparently able to reach a compromise quickly due to the fact that they knew each other and got on well.’

Another feature of Luxembourg is its exceptional economic situation, which is likely to be the best guarantee of harmonious labour relations. As Mr Clément outlines: ‘This is why it is unlikely that the “model”, insofar as it exists, will be transposable to another country where the economy is not flourishing.’ Moreover, no indicators exist for evaluating the extent to which these harmonious relations are truly attributable to the ‘model’ as such; nevertheless, as Mr Clément points out: ‘the importance of the “institutional” lever in the robustness of the social harmony is known. To give just one example, if a serious threat of strike emerges, it is not unusual for top-ranking government figures (ministers or even the prime minister) to intervene personally.’

Legitimacy of model

Although the model of tripartite consultation embodied by the Tripartite Co-ordination Committee – whose task it is to intervene when corrective measures are necessary – has proved effective, questions may be asked about the democratic legitimacy of the principle. As Mr Clément explains: ‘Agreements negotiated by the Tripartite Co-ordination Committee end up gaining legal status when they receive the endorsement of the Chamber of Deputies. Yet, in some cases, these agreements are scarcely debated. In the worst case, they are passed by a majority vote against opposition.’ He adds: ‘It should also be pointed out that there is the – admittedly very limited – phenomenon of combined appointments, under which representatives of the social partners are also members of parliament. This form of breach of the “separation of powers”, which in countries other than Luxembourg would be condemned, does not cause any consternation here.’

The researcher admits that many aspects of the model still need to be analysed. The National Research Fund (Fonds National de la Recherche, FNR) project entitled ‘Luxmodel’, which was initiated in April 2007, is tackling this task. The final phase of this project will involve verifying the place of the ‘model’ among all European models for industrial relations.

Odette Wlodarski, Prevent