EU social partners issue joint statement on EWCs

In April 2005, EU-level employer and trade union bodies published a joint assessment of the operation of European Works Councils (EWCs) to date, based on case studies of the experience of a number of major companies. We highlight the main points of the document.

In early April 2005, the central EU-level social partners - the European Trade Union Confederation (ETUC), the Union of Industrial and Employers’ Confederations of Europe/European Association of Craft and Small and Medium-sized Enterprises (UNICE/UEAPME) for the private sector employers, and the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP), representing public sector organisations - published a joint statement on the 'lessons learned' from a programme of seminars that considered case studies of the operation of European Works Councils (EWCs) in nine leading companies. The social partners have presented the statement to the European Commission and EU employment ministers.

This feature highlights the main points of the document and assesses its potential significance in the light of the Commission’s recent call for the social partners to begin negotiations on the promotion of best-practice guidelines on making EWCs more effective.

Background

In September and October 2004, the social partners held two seminars to discuss case studies of how EWCs are operating, with a view to identifying best practice (TN0411101S). This exercise took place within the framework of the EU-level social dialogue process, and arose from the social partners’ existing commitment to look at the issue of EWCs and enlargement as part of their joint work programme (EU0212206F), not as a direct response to the Commission’s April 2004 consultation concerning ways of enhancing the effectiveness of EWCs, including the possible revision of the EWCs Directive (94/45/EC) (EU0405203F).

The first seminar focused on the experience of the EWCs at Fortis, Lafarge, EDF, Ericsson and Carrefour. The second examined case studies of the EWCs at Unilever, Henkel, GKN and EDS. In each case, presentations were made jointly by management and employee representatives.

The social partners subsequently drew up a detailed report describing the experience of each of the EWCs concerned. Its summary assessments of the nine cases are set out in the table below.

The EWC case studies
Company Sector Comments
Fortis group Banking and insurance 'The EWC played a useful role [in helping to integrate] the different entities in the Fortis group, in which 75% of the total workforce is based in Belgium and the Netherlands and in which diverse professional and industrial relations cultures coexist.'
Lafarge Construction materials 'Lafarge is present in 75 countries, and employs 75,000 employees on more than 2,100 sites. In a context of very rapid internationalisation of the group’s activities, the EWC proved useful to communicate on the group’s strategy and to develop a group culture.'
EDF Energy 'EDF was originally a public company in a monopoly situation in France, which has rapidly grown in [recent] years and now functions as an international group. The EWC was established fairly recently and evolved positively, allowing for good communication between management and workers without a marked French hegemony, despite the weight of French operations in the group.'
Ericsson Telecommunications 'Faced with a telecoms market which ran into severe problems, Ericsson embarked on a restructuring and cost- cutting programme to ensure its long term future in 2001. The EWC was instrumental in this process.'
Carrefour Retail/wholesale 'The good climate of cooperation in the European Committee on Information and Consultation helped the group [in] realising strategic business objectives and reinforcing its competitiveness.'
Unilever Food, home care and personal care 'The establishment of an EWC has been a gradual process in Unilever. Through the EWC, management and workers have developed information and dialogue at European level, based on mutual trust.'
Henkel Home care, personal care and adhesives, sealants and surface treatments 'The relationship and cooperation between the European Employee Council and Henkel’s management is seen as a dynamic process involving learning and improving on a permanent basis. The European Employee Council agreement provides a broad basis as a framework to find practical solutions to deal with mutual problems.'
GKN Engineering 'GKN has very diversified portfolio of products and there is a big contrast between production and services divisions. The experience of their European Forum is positive but illustrates the complexity of running an EWC and ensuring a real sense of ownership of the EWC by the whole workforce.'
EDS IT applications and business process services 'EDS has integrated the EWC at the heart of its business strategy and is developing a highly interactive way of operating in its EWC.'

The joint statement

Following the seminars, the Social Dialogue Committee appointed a drafting group to draw lessons from the case studies examined. The result of the work done by this group was a joint text, Lessons learned on European Works Councils, which was approved by the Social Dialogue Committee on 1 March 2005. Following its formal endorsement by the decision-making bodies of all the participating organisations, the document was submitted to the Commission and presented at a meeting on 7 April involving the European social partners and the 'troika' of employment ministers from the present and next two EU presidencies which took place ahead of the informal social affairs Council held in Luxembourg the following day (EU0505202N).

The main points it highlights are that:

  • EWCs 'can help management and workers to build a corporate culture and adapt to change in fast-evolving transnational companies';
  • the establishment of 'a climate of mutual trust' between management and workers’ representatives in the EWC is important for its effective functioning;
  • investing in language as well as technical training helps to 'optimise' the functioning of the EWC;
  • finding ways of reconciling different national industrial relations practices and addressing an increasingly diverse workforce is a 'constant challenge';
  • all the case studies demonstrated that ensuring a real sense of ownership of the EWC by the whole workforce was a 'considerable challenge';
  • some companies seeking to enlarge their EWC have encountered difficulties in identifying worker representatives in the new Member States;
  • managing multiple layers of information and consultation can sometimes be very complex; and
  • all the case studies underlined that the effective functioning of EWCs is a 'learning and evolving process' requiring 'fine tuning over the years'.

ETUC assessment

The ETUC’s executive committee considered the joint text at its meeting on 15-16 March 2005. As with the earlier joint text drawn up by the social partners on restructuring, Orientations for reference in managing change and its social consequences (EU0307203F), there appears to be some trade union scepticism as to the value of this initiative. While some of the points covered in the text were seen as reinforcing the ETUC’s approach to EWCs, others were identified by ETUC officials as 'ambiguous' or 'unclear'. The ETUC notes, for example, that the document stresses that clarity of procedures are important for creating mutual trust, and refers to the benefits of language and technical training. It also includes a positive reference to the role played by European sectoral trade union federations - a point which the ETUC regards as 'particularly important, since the current Directive does not formally recognise the role of unions'. Less helpful, in the ETUC’s view, are references to the potential benefits of 'pragmatic' or 'informal' approaches to the operation of the EWC - the ETUC would prefer to emphasise procedural compliance - and the absence of a stronger reference to union-avoidance activity in the identification of EWC representatives from new Member States. The text was also criticised for having no conclusion or planned follow-up.

In its discussions with UNICE over the statement, the ETUC had been careful not to agree to further joint work that could be presented or construed as undermining its calls for the revision of the Directive, which remains its priority. However, it accepts that the Lessons learned document may provide a 'useful framework' for discussing the practical functioning of EWCs and for negotiations over new or revised EWC agreements. It could also 'provide some inspiration for the European Commission when it presents its proposals for revising the Directive'.

For its part, UNICE reportedly told the 'troika' of EU employment ministers on 7 April that it was committed to promoting this and the earlier joint text on restructuring 'at both EU and national level and hoped to find the same commitment on the trade union side'.

Commentary

The operation of EWCs was always likely to be a difficult topic for the European social dialogue, given the significant differences that exist between employers and unions over calls for the revision of the EWCs Directive (EU0407207F). While the fact that the resulting document represents a joint assessment on the part of the social partners of the way in which EWCs are operating may be of some significance, its status and practical implications are somewhat uncertain. For the most part, it offers little in terms of good-practice guidance for EWCs, and it is unclear what concrete results, if any, it is intended to promote.

In its recent Communication (COM(2005) 120 final) on restructuring (EU0504202F), the Commission called on the social partners to begin negotiations with the aim of reaching an agreement on promoting and monitoring best-practice guidelines on handling restructuring and on the operation of EWCs. In formal terms, the Commission has launched the second phase of consultations with the social partners on the two issues concerned under the procedure set out in Article 138(3) of the Treaty establishing the European Community (TEC).

The social partners are currently considering their responses. Having lobbied hard for the new Commission to take a non-legislative approach to the issues of restructuring and EWCs, UNICE seems likely to respond favourably to the Communication’s emphasis on the promotion of good practice. The approach adopted by the Commission is less welcome on the trade union side, and there is some concern within the ETUC about whether the procedural requirements for launching formal second-phase consultations have been fully met. The ETUC’s main objective will be to re-emphasise its case for the revision of the EWCs Directive and this is likely to shape how it approaches the proposed social partner talks.

The 'terms of engagement' for any negotiations between the social partners on restructuring and EWCs will clearly be highly sensitive for both employers and unions, and it remains to be seen whether further talks between the social partners can develop the joint text on EWCs into the sort of good-practice guidelines that the Commission has asked the social partners to produce. (Mark Hall, IRRU)

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