Multinational reorganisation decisions increasingly removed from union and works council influence

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In late 1999, labour unrest hit three Dutch-based multinationals, Philips, Akzo Nobel and Corus, as a result of reorganisation decisions no longer being made in consultation with local trade unions and works councils. Decision-making had shifted to a higher level, rendering discussions between local management and employee representatives inconsequential. Such conflicts are seen as a break with the consensus-based Dutch" polder model", which places value on both employer and employee interests. Corporate policy now seems to place increasing weight on shareholder interests.

In late 1999, labour unrest hit three Dutch-based multinational companies, Philips, Akzo Nobel and Corus, as a result of reorganisation decisions no longer being made in consultation with employee representatives but rather imposed from upper-level management. Philips made headlines in early 1999 when the Allied Unions (FNV Bondgenoten) reported that the company had cut 5,000 of the 45,000 jobs at the firm in a matter of months (NL9811107N). The trade union took this as a clear sign that the Philips corporation intended to maintain only the headquarters and sales office in the Netherlands and to relocate production to lower-wage countries in Eastern Europe and Asia. All the European trade unions involved with the company met during summer 1999 to discuss the labour situation. However, the autumn brought news of cutbacks in three more Philips production plants. Dozens of the 400 jobs at Philips-Vitrine in Middelburg disappeared due to more efficient production methods, the plastics factory in Eindhoven shut its doors and the research centre and production moved to the Belgian town of Lommel, home of a comparable Philips factory. Half of the 230 employees were offered positions at the Belgian site.

Wildcat strikes and reorganisations

The reorganisation of Philips' energy-saving light bulb factory in Terneuzen attracted the most attention. In October 1999, plans to eliminate 280 of the 500 jobs were made public, with production moving to Pila in Poland and other departments moving to Shanghai in China and the Dutch city of Roosendaal. Production of fluorescent light starters, a division employing approximately 180 people, will remain in Terneuzen. Trade unions reacted with outrage to these plans. Previous cutbacks and the failure to occur of scheduled investments raised union suspicions that the corporation was headed towards completely dismantling the company. Employees initiated a wildcat strike, which was soon made official by the trade unions. The works council presented an alternative survival plan, based on a belief that the key to making the company viable and competitive was for Philips to invest in faster, automated production. In addition, recommendations were made to take medium-term results into consideration as well as short-term results. The plan was of no avail. Ultimately, management and a task group of experts and trade union members studied the works council's plan only to discard it. FNV Bondgenoten has now called for a meeting with employees from the other Philips establishments, fearing that the closure in Terneuzen, one of 10 Dutch factories, will not be the last.

In November, a wildcat strike erupted at Corus, the multinational formed by the merger of Hoogoven and British Steel in 1999 (UK9908125F), following the announcement that the steel manufacturing department in IJmuiden would shut down sometime in 2001 and 590 employees would be out of work. Employee representatives and management here also fail to see eye-to-eye on decision-making participation following the merger. Employee representatives want to expand the European Works Council and increase opportunities to meet regularly with colleagues from the same business unit in other branches, which management opposes despite a previous agreement reached on the topic.

Finally, a strike was held at Akzo Nobel in November 1999 as a reaction to the relocation of a paint factory with 80 employees in Sneek to another Akzo location in the Netherlands.

The strikes at these three multinationals in the Netherlands in late 1999 seem to indicate an end to an era of labour peace. Throughout the 1980s, labour unrest in multinational companies had become rare in the Netherlands. Timely meetings with trade unions and works councils to discuss possible reorganisations became the norm, partially due to employee representatives focusing mainly on creating "social plans" to accompany redundancies. Acceptable social plans quickly led to satisfied trade unions that approved prospective reorganisations. Unions grew more accepting of continuous reorganisation, seeing it as an integral part of international business. An approved social plan along with the Dutch social security system, which provided reasonable benefits for a guaranteed period of time, offset the unavoidable loss of jobs.

Shareholder interests

According to the Dutch media, the consensus among the social partners on the necessity of reorganisations and the manner in which they should be implemented in social terms has been eroding over recent years due to shareholder interests increasingly overshadowing employee interests (NL9811106F). The so-called "Anglo-Saxon" management culture has also permeated the Netherlands and increased the influence of shareholders' interests in corporate decision-making (NL9801154F). Further globalisation of the capital market has reduced efforts to maintain good relations between management and employee representatives at the level of local branches. Decisions in areas such as reorganisation are taking place at management levels, in these cases at the top of Philips, Akzo and Corus, which are far above the levels in which discussions with employee representatives normally occur in the Netherlands. Consequently, local management must implement decisions handed down from much higher levels, and therefore has very little to discuss with trade unions or works councils. Obviously, this only widens the gap between the shopfloor and top management, reduces the possibility of creating a foundation for decision-making and significantly increases the chances of wildcat strikes. Growing internationalisation of multinational companies places considerable pressure on Dutch co-determination system and the trade unions involved cite its decline and a waning consultative culture. Given the fact that the European Works Councils are not very well equipped to reach a comparable level of consultation, and that Dutch central works councils consult only with Dutch holding companies, a consultative vacuum may very well exist.

Commentary

The strikes at the three multinationals have been connected to the new relationship between capital and labour. Corporate policy places increasing importance on shareholder interests and stock-market listings, and has in turn caused new imbalances in Dutch relationships - clashing with the consultation, well-balanced weighting of interests and labour peace, otherwise collectively known as the Dutch "polder model". A recent international comparison indicates that this model serves labour and capital alike. A van Witteloostuyn, a professor of business economics in Maastricht, compared the performances of "conflict economies" such as the UK and the USA with "harmony economies" such as Germany, Japan and the Netherlands over a period ranging from 10 to 20 years, finding that the latter have experienced a higher level of investment and a high increase in productivity since the early 1970s ("De anorexiastrategie. Over de gevolgen van saneren" [The anorexia strategy. Consequences of reorganisation], A van Witteloostuyn, de Arbeiderspers, Amsterdam/Antwerp (1999)). Professor van Witteloostuyn therefore recommends a return to a long-term orientation, a focus on co-determination, sparing use of reorganisation and restoring the value placed on middle management. (Marianne Grünell, HSI)