European Industrial Relations Dictionary - Towards an EU system of employment and industrial relations?
Without any doubt the influence of the European Union in the field of employment and industrial relations has assumed greater importance since the mid-1980s than in the decades before. This is mainly due to three factors. The first was the idea of a European type of capitalism which includes a specific social model and the idea of a ‘social dimension’ of European policies that was adopted by the European Commission in the mid-1980s. The second factor was the move towards a common currency and more liberalised markets within the EU since the 1990s, which led to attempts to improve the coordination of economic and social policies among EU Member States across a whole range of issues. And the third factor was an increasing pressure form different actors of what is now being called the ‘civil society’ to have their positions being taken into account at European level.
The Treaties of Rome (1957)
The Treaties of Rome were the founding document for the European Community. The main aim of the treaties was to create a common market in services, goods, capital and labour. In terms of employment relations the project of creating a common market mainly implied free movement of workers in an integrated European labour market. Nevertheless, the Treaties of Rome also included some basic principles of social and employment policies:
- equal pay between men and women;
- help for improving employment opportunities and enhancing geographical and occupational mobility of workers in the Common Market; the instrument created to achieve this aim was the ‘European Social Fund’.
Beside these concrete measures, the Treaties of Rome recognised the general need for a 'social dimension’ of Europe:
‘It shall be the aim of the Commission to promote close cooperation between member states in the social field, particularly in matters relating to employment, labour legislation and working conditions, social security, protection against occupational accidents and diseases, industrial hygiene, the law as to trades unions, and collective bargaining between employers and workers’ (Art. 118).
Despite this article of the Treaties of Rome, the then Member States quickly adopted the position that the Commission should not promote a common social policy.
First Programme of Social Action (1974)
In 1974 the Council adopted the First Programme of Social Action. This programme emphasised the need to ensure more co-operation between the Member States in the social field. In order to meet the action programme's objectives of improving living and working conditions for particularly vulnerable groups in society, the Council adopted directives on equal opportunities and on health and safety at work as well as action programmes for the disabled, the poor and the elderly. During the 1970s the Council of the European Union also adopted directives and recommendations in regard to the action programme's objective of improving the conditions of employees and their legal position in undertakings, especially in the case of a collective redundancy, transfer of an undertaking and mergers of limited companies.
The Val Duchesse initiative (1985)
Despite the First Programme of Social Action, little progress had been made concerning the social dimension of Europe until the mid-1980s. Only after Jacques Delors became President of the European Commission were major initiatives started and a more systematic approach to social policy on a European level attempted. In 1985, Delors invited representatives of the national organisations affiliated to the EU-level employer and worker organisations and the EU level social partners themselves to a meeting at the castle of Val Duchesse. This meeting can be regarded as the starting point of the European social dialogue.
The Single European Act (1986)
Mainly adopted in order to facilitate the implementation of a Single European Market by 1992, the Single European Act also included two major innovations concerning the Community's working environment policy. The first one was that decisions could now be made in the Council by qualified majority voting and co-operation with the European Parliament. Three objectives were sought through the introduction of this article:
- greater effort to improve workers' health and safety at work,
- the same conditions for all workers in terms of their working environment, regardless of which Member State they work in,
- prevention of 'social dumping' as the internal market was completed.
The Single European Act also prepared grounds for a further institutionalisation of the European Social dialogue by stating that
‘the Commission shall endeavour to develop the dialogue between management and labour at European level which could, if the two sides consider it desirable, lead to relations based on agreement’ (Art. 118b).
The Social Charter (1989)
In Strasbourg, in December 1989, the Heads of States and Governments of 11 Member States - with the UK opting out - adopted the Community Charter of the fundamental social rights of workers or 'Social Charter' for short. Based on the Council of Europe's Social Charter and the ILO's core conventions, it lays down a range of social rights that are to be guaranteed in the European labour market. It is a political declaration of intent and, as such, is not legally binding. It deals with rights in 12 main areas. The Commission drew up a Social Action Programme (SAP) implementing the Social Charter, containing proposals for initiatives of various kinds, both binding and non-binding. Adoption of the SAP made slow progress, particularly as regards the binding legal acts. The Council adopted a directive on the obligation on employers to inform employees of the conditions applicable to their employment relationship but, otherwise, the main success has been the adoption of directives concerning health and safety of employees at work.
The Maastricht Treaty (1992)
The Treaty of Maastricht (also known as the Treaty of the European Union) increased the Community's powers in the social sphere. The Community was supposed not only to work towards raising living standards but also to ensure a high level of social protection. The Social Fund's remit was widened and a whole new section was inserted on education and vocational training. The adoption of the treaty meant that two sets of rules applied in the social area: the EC Treaty covering all 15 Member States and the Agreement set out in the 'Protocol (No 14) on social policy' from which the UK opted out.
The Social Protocol and the Agreement on Social Policy attached to the Protocol contained two significant innovations:
- a major boost for the role of social partner, giving employers and unions the right to negotiate binding European framework agreements;
- the extension of qualified majority voting in the Council in the following areas: improvements in the working environment to protect employees, working conditions, information and consultation of workers, equal opportunities for men and women on the labour market and equal treatment at work, and occupational integration of people excluded from the labour market.
On the basis of the Agreement, the 14 Member States adopted several directives (e.g. on the introduction of European works councils, on parental leave on part-time work).
The Amsterdam Treaty (1999)
After a change of government in the UK an agreement could be reached with the Treaty of Amsterdam to delete the Social Protocol to the Treaty of Maastricht in favour of the inclusion of a 'Social Agreement' within the Treaty. The Agreement on Social Policy was also integrated in the Treaty with some amendments. Apart from this, the main provisions affecting employment relations were:
- the introduction of an Employment Chapter which for the first time required to co-ordinate their employment strategies (including the requirement for the national governments to produce an annual report on the employment situation).
- a renewed commitment ‘to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual discrimination’.
- a renewed obligation that the principle of equal pay is applied.
The Treaty of Lisbon 2007
The Treaty of Lisbon includes enhancements of the social dimension of the European Union. ‘Non-discrimination’ and ‘equality between women and men’ are added to the values of the European Union (Article 2 TEU). The treaty also introduces a social clause that obliges the European Union to respect the social dimension and the fight against discrimination in all its policies and activities, and officially recognises the role and the autonomy of the social partners:
‘The Union recognises and promotes the role of the social partners at its level, taking into account the diversity of national systems. It shall facilitate dialogue between the social partners, respecting their autonomy’ (Art. 152 TFEU).
The Lisbon Treaty also shifts the responsibility of promoting social dialogue from the Commision to the European Union, and institutionalises, in primary law, the Tripartite Social Summit for Growth and Employment. Finally, in the recast of Art.139 (2) EC (now Article 155(2) TFEU) the European Parliament shall be informed if the social partners wish to extend their framework agreements via Council decision.
An emerging system of European industrial relations
The emergence of an EU system of industrial relations has specific features which relate to current economic, political and social developments in the EU. These features include the social dialogue, the European Employment Strategy (EES), the EU Charter of Fundamental Rights, transnational co-ordination of collective bargaining, the macroeconomic dialogue, European works councils, consultation and information rights and the development of a European Company (Societas Europaea, SE) which prescribes certain forms of employee involvement. The Report of the Commission's High-Level Group on Industrial Relations (March 2002) highlighted three issues: the interaction between European industrial relations and the national and local level; the interaction between bipartite and tripartite processes at European level; and the interaction between the sectoral and intersectoral levels.
The constitution of a specifically EU system of employment and industrial relations comprises as essential components: the European social dialogue, cross-border co-ordination of collective bargaining, co-ordination of national employment policies, open method of coordination, and fundamental rights. Like many younger constitutions, however, the elements are not all at the same stage of development.
The dominant feature of European collective industrial relations is social dialogue. Consultation and cooperation between the social partners had already begun in the 60s and 70s. However, it was in 1985, with the launch of a bipartite social dialogue initiated by Jacques Delors that the dialogue started to become a forum for negotiation on a European level. In the introduction to the Commission's Communication on ‘The European social dialogue, a force for innovation and change’ (COM (2002) 341 final) it is stated:
'The social dialogue is rooted in the history of the European continent, and this distinguishes the Union from most other regions of the world' (p.6).
One may differ between three distinct stages in the development of the European Social Dialogue: In the first period, lasting until 1991, was marked by bipartite activities on declarations and opinions without any binding power. The second stage began with an agreement between the social partners, which was later incorporated into the Protocol on Social Policy, itself annexed to the Maastricht Treaty (1993). Now, agreements negotiated by the European social partners could be given legal force through a decision by the Council, which would then have to be integrated into the legislation of each Member State. In 2001, the third period started when the European social partners presented a ‘joint contribution’ to the Laeken European Council. This phase is characterised by the growth in independence and autonomy of the European social dialogue.
As part of the policy of promoting the engagement of the European social partners in the formulation of Union social policy, including through the social dialogue, the Commission is obliged by the Treaty to consult the European social partners before submitting proposals in the social policy field (Article 154 TFEU) (European social dialogue via Articles 154-155 TFEU).
Article 154(2) and 154(3) TFEU set out two stages of the process of EU social partner consultation in the development of EU social policy: first, consultation 'on the possible direction of Union action', and, secondly, 'on the content of the envisaged proposal.' In the course of these stages of consultation, the social partners also address the question posed by Article 154(4) TFEU: whether they wish to initiate the process provided for in Article 155 TFEU - the social dialogue which may lead to contractual relations, including agreements. A framework agreement is the term commonly used to describe the successful result of the European social dialogue.
The 1996 Parental Leave Directive, the first product of the EU social dialogue under the Protocol and Agreement on Social Policy attached to the Treaty on European Union, illustrates the practice of mandatory consultation of the European social partners and subsequent EU social dialogue. Framework agreements on part-time work (1997), fixed-term work (1999) followed. Other European framework agreements have not been transformed into Directives but shall be implemented in accordance with national practices. Examples of such cross-industry autonomous agreements refer to telework (2002), work-related stress (2004), harassment and violence at work (2007), and social inclusion (2010). There are also autonomous agreements on sectoral level (as e.g. the ‘Agreement on the European licence for drivers carrying out a cross-border interoperability service’ ); until 2010 only one multi-sector agreement - the ‘Agreement on Workers Health Protection through the Good Handling and Use of Crystalline Silica and Products containing it’ (2006) – could be reached.
The Court of First Instance (CFI) has asserted a specific vision of the legal nature of the EU social dialogue: the European social dialogue as legislative process (Union Européenne de l'Artisanat et des Petites et Moyennes Entreprises (UEAPME) v. Council of the European Union, Case T-135/96,  ECR II-2335).
'Representativeness' is a criterion adopted by the Commission in identifying the 'management and labour' with whom it must consult and who may initiate the social dialogue (Article 138 EC/now Article 154 TFEU) which may lead to contractual relations including agreements between them, such agreements to be implemented (Article 139 EC/now Article155 TFEU). The criterion of 'sufficient collective representativity' was put forward in litigation before the European Court of First Instance (CFI) to identify the social partners referred to in Articles 138-139 EC (now Articles 154 and 155 TFEU) as entitled to engage in the European social dialogue (Union Européenne de l'Artisanat et des Petites et Moyennes Entreprises (UEAPME) v. Council of the European Union, Case T-135/96,  ECR II-2335). For an agreement to be implemented by a Council decision, the CFI stipulates that it must be ascertained: (paragraph 90) 'whether, having regard to the content of the agreement in question, the signatories, taken together, are sufficiently representative' (European social dialogue and implementation of agreements). Representativeness is a quality requiring close scrutiny (European social partners). For example, although there is as yet no sectoral social dialogue in the public sector, CEEP (the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest) purports to be representative. The European Court of First Instance (CFI) specifically singled out the CEEP as an essential social partner in the context of the Agreement on Parental Leave. The European Foundation for the Improvement of Living and Working Conditions (Eurofound) supports the Commission in identifying the relevant ‘representative’ national and supranational associations – that is, the trade unions and employer organisations – in the field of industrial relations in the different business sectors which shall be consulted under the provisions of the TFEU.
Article 155(2) TFEU provides:
'Agreements concluded at Union level shall be implemented either in accordance with the procedures and practices specific to management and labour and the Member States or, in matters covered by Article 153, at the joint request of the signatory parties, by a Council decision on a proposal from the Commission. The European Parliament shall be informed.'
Article 155(2) TFEU is a unique amalgam of EC legislative processes and national labour law traditions which results in an extension of EU social dialogue agreements. The extension erga omnes of collective agreements is a conceptual bridge between the pure industrial relations discourse of articulation ('the procedures and practices specific to management and labour and the Member States') and the pure constitutional law discourse of negotiated legislation ('at the joint request of the signatory parties, by a Council decision on a proposal from the Commission').
In its Communication of 26 June 2002, the Commission placed particular emphasis on the European sectoral social dialogue: social dialogue at the sectoral level 'is the proper level for discussion on many issues linked to employment, working conditions, vocational training, industrial change, the knowledge society, demographic patterns, enlargement and globalisation' (Section 2.3.2, p.16). Under Commission Decision 98/500/EC of 20 May 1998 (OJ L 225/27 of 12.8.98), 36 European sectoral social dialogue committees have been set up with a view to promoting the social dialogue at sectoral level. Many different kinds of European sectoral social dialogue instruments are emerging from the social dialogue at the EU sectoral level. To date the 40 sectoral social dialogue committees have concluded a plethora of more than 500 texts out of which 7 are binding agreements.
Cross-border trade union cooperation
Cross-border trade union co-operation refers to unilateral forms of co-operation among trade unions across more than one Member State. It is a pre-condition for bilateral cross-border social dialogue with employers and their organisations. The Commission's Communication of 18 September 1996 concerning the development of the social dialogue at Community level emphasised the growing need to assist the development of new levels of dialogue and referred specifically to the social dialogue in transnational enterprises and at regional level, particularly in cross-border regions. For example, the Doorn Group takes its name from the Dutch town where, on 4-5 September 1998, trade union confederations from Belgium (FGTB/ABVV and CSC/ACV), Germany (DGB and DAG), Luxembourg (CGT-L and LCGB) and the Netherlands (CNV, FNV and MHP), as well as major sectoral unions representing metalworking, chemicals, construction and private and public services, met to discuss recent trends in collective bargaining and the possible impact of EU Economic and Monetary Union (EMU).
Co-ordination of collective bargaining at EU level is the consequence of a political rationale resulting from European Monetary Union and aims to counter downwards pressure on wage costs. It parallels the co-ordinated national bargaining which has been practised in some Member States where centralised national bargaining has been replaced by more decentralised systems of bargaining, but there is still a role for the national level. The process is sometimes called centrally co-ordinated decentralisation, or organised decentralisation. The co-ordination of European collective bargaining reflects this Member State experience by attempting at EU level to co-ordinate national and sub-national levels of collective bargaining.
For example, the European Metalworkers' Federation's (EMF) 3rd Collective Bargaining Conference in 1998 proposed sectoral co-ordination of collective bargaining at national level. A year later, the EMF Executive Committee and EMF Congress confirmed this proposal. The rule states, 'that the main reference point for the EMF affiliates must be to maintain purchasing power and achieve a balanced participation in productivity increases.' The rule has had effects, not so much on individual bargaining situations, but mainly in the sharing of information and growing co-operation, which can provide support in cases of conflicts.
In a communication on the Social Agenda (COM (2005) 33 final), the European Commission announced the development of an optional framework designed to enable the social partners to formalise transnational collective bargaining (Read Key EU industrial relations initiatives in prospect). Additionally, in the Commission’s Annual Policy Strategy for 2007 (COM (2006)122 final) formal consultation of the European social partners on ‘cross-border collective bargaining’ was announced.
Despite all these efforts coordinated collective bargaining on a European level has never really taken off. Collective bargaining does not increasingly take place at European level and competencies for collective bargaining are not delegated to the European level. One of the main reasons for this is that, until now, the employers have categorically refused to take part in such an exercise.
Coordination of national employment policies
The Lisbon European Council of 23-24 March 2000 articulated a new strategic goal for the EU: 'to become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion' (Lisbon Presidency Conclusions, paragraph 5) (Lisbon Strategy). In particular, this included modernising the 'European social model, investing in people and combating social exclusion.' The strategy was designed 'to enable the Union to regain the conditions for full employment' (paragraph 6). It was underlined that implementing the Lisbon agenda successfully requires the active participation of the social partners. The relevance of the European social dialogue was also emphasised at the 2001 Nice European Council were a Social Policy Agenda was approved. This document stated the importance of the social dialogue in promoting competitiveness, solidarity and an appropriate balance between flexibility and security in employment.
In 2004, the Commission published a Communication on ‘Partnership for change in an enlarged Europe. Enhancing the role of European Social Dialogue’ (COM (2004) 557 final), emphasising the necessity of a well functioning social dialogue in view of the enlargement of the EU.
The European Commission launched a revamped Lisbon strategy on growth and jobs on 2 February 2005. A Communication to the Spring European Council, Working together for growth and jobs – A new start for the Lisbon Strategy (COM (2005)24), presented policy recommendations for the mid-term review of the so-called Lisbon agenda. The Commission forewarned Member States that the Lisbon strategy was not on track to deliver the expected results. A Lisbon action plan (SEC (2005) 192) provides recommendations for actions to Member States for inclusion in their National Reform Programmes. Again, the importance of the social partners’ active involvement in order to achieve the Lisbon strategy’s objectives on growth and employment was reiterated. The Spring Council debated the mid-term review of the Lisbon Agenda and welcomed the Commission's communication.
The March 2005 Employment and Social Affairs Council stressed that the strategy on economic growth and quality job creation must be combined with the promotion of social objectives The Council emphasised the need for the employment aspect of the Lisbon Strategy to focus on four priority actions: attracting more people to and keeping them in the labour market; increasing the adaptive capacities of workers and undertakings; investing more – and more effectively – in human capital and making lifelong education and training a reality; and ensuring the effective implementation of reforms through better governance. The European social partners supported the Commission's Lisbon Strategy in a Joint Declaration on the mid-term review of the Lisbon Strategy.
The new Social Agenda 2005-2010 was launched in February 2005 (COM (2005)33). The review was considered to have played a key role in fostering the social dimension of economic growth and in supporting the revamped Lisbon strategy for growth and jobs. The new Social Agenda presents key measures under two major headings covered by the Commission's strategic objectives 2005-2009 (COM (2005)12): employment and equal opportunities, and inclusion. In terms of employment this includes both the quantity and the quality of jobs and the productivity of work, as well as the issue of economic migration.
Open method of coordination
The Commission's Communication of 26 June 2002 on 'The European social dialogue, a force for innovation and change' recommended: 'The social partners are requested to: adapt the open method of coordination to their relations in all appropriate areas'.
The Lisbon Council also highlighted the 'open method of co-ordination' as a principal process through which this goal was to be achieved. The specific application of this method to the European Employment Strategy was confirmed, as already begun in the Luxembourg process, and was to be strengthened through an additional annual meeting of the European Council in the spring of each year, for which an annual synthesis report would be prepared, devoted to considering economic and social questions (paragraph 36). Other processes are complementary: the Cardiff Process and the Cologne Process, and reflect trends at national level, as in Pacts for Employment and Competitiveness (PECs).
Employment policy is the paradigm case of the open method of co-ordination. The OMC in the field of employment is encapsulated in Article 148 TFEU. The Council and Commission formulate an annual joint report put to the European Council, which adopts conclusions and draws up guidelines that the Member States 'shall take into account in their employment policies.' Each Member State has to make an annual report on 'the principal measures taken to implement its employment policy in the light of the guidelines for employment' (the National Action Plans). These are prepared with varying degrees of social partner involvement. The National Action Plans have been replaced by National Reform Programmes which are a key instrument in the integrated package of employment guidelines and Broad Economic Policy Guidelines. The National Reform Programmes are intended to be forward-looking political programmes setting out a comprehensive three-year strategy to implement the integrated guidelines. On the basis of proposals by the Commission, the Council may then make (non-binding) recommendations to Member States concerning their employment policies. Other follow-up procedures may take the form of peer review, launched in 1999 with the aim of promoting the transferability of good practice in active labour market policy.
A critical issue concerns the respective importance in combating unemployment of the Guidelines' proposals for structural labour market reforms as compared to macro-economic reforms. In this respect, the last sentence of Article 148(3) TFEU is important: 'These guidelines shall be consistent with the broad guidelines adopted pursuant to Article 121(2).' Broad Economic Policy Guidelines (BEPGs) adopted pursuant to Article 121(2) TFEU aim to implement the undertaking in Article 121(1) TFEU that 'Member States shall regard their economic policies as a matter of common concern and shall co-ordinate them within the Council…'
At present the social dialogue is not institutionally integrated into the open method of co-ordination (OMC) implementing the European Employment Strategy through Article 148 TFEU. However, an institutional design could integrate the best features of the EU social dialogue and of OMC.
Various fundamental trade union rights are protected by all Member States, and in a number of Member States have acquired constitutional status. Despite differences in their precise scope, there are elements of trade union rights which all, or most Member States agree are protected. Many are derived from international labour standards in the form of ILO Conventions ratified by all Member States (international labour standards) or the instruments of the Council of Europe. For example, there is a unanimous consensus among all EU Member States in favour of fundamental trade union rights such as freedom of association/to join trade unions, not to join trade unions (negative freedom of association), to autonomous organisation, to trade union activity (including in works councils) and to a legal status for collective agreements. Some of these were given early recognition in the Community Charter of the Fundamental Rights of Workers of 1989 (Freedom of association and the Community Charter of the Fundamental Social Rights of Workers).
These and other rights in individual employment and collective labour relations are now to be found in the EU Charter of Fundamental Rights signed in 2007 and which came into force together with the Treaty of Lisbon on 1 December 2009. For example, freedom of association which is critical to the issue of Freedom of association at EU level, the right of collective bargaining at EU level, and the right of transnational industrial action.
The role of the EU Charter is to provide the constitutional legitimacy of the EU system of employment and industrial relations. Fundamental rights in the Charter ascribe legitimacy to collective bargaining and collective action, information and consultation on a wide range of issues, free movement, fair and just working conditions, including health and safety in individual employment, non-discrimination and equal treatment, solidarity, and so on. The EU Charter legitimises the actors, processes and outcomes of the EU system of employment relations and the institutional and legal structure of a system of industrial relations at EU level.