Role of social dialogue in industrial policy / Foundation Focus, September 2015

Financial turmoil and the increasing globalisation of value chains have focused attention on how to stimulate economies across Europe by revitalising industrial policy. However, existing policy instruments need to be aligned to the realities of global competition and evolving technologies. The role of the state in this process is crucial, but it is clear the social partners also have a role to play. What instruments of industrial policy are currently used in Europe? What is the role of social dialogue and of the social partners in shaping them? How can social dialogue play a proactive role in the current landscape of policymaking?

Based on findings from a study by Eurofound’s network of European correspondents, a Eurofound report, Role of social dialogue in industrial policies, sought to answer these questions. Its analysis is supplemented by interviews carried out with representatives of both sides of industry in six selected sectors: automotive, defence, food, chemicals, steel, and textiles.

Policy framework

The Europe 2020 Strategy has an explicit focus on industry and puts forward a modern industrial policy for Europe, calling for close collaboration between different sectoral stakeholders at both European and national level. The 2012 Commission Communication A stronger European industry for growth and economic recovery set out a new approach to the EU’s industrial policy by delineating clear and concrete measures that combine both horizontal and selective policies in a strategic manner. The 2014 Commission Communication For a European industrial renaissance affirms that a strong industrial base is central to the recovery of the European economy and its position in the global market, pointing to the key role of the Member States and other relevant actors in implementing reforms.

Focus on recovery, innovation and restructuring

Industrial policy appears to have reignited across many EU Member States in the aftermath of the crisis, as a strategy to re-activate growth, create jobs and foster productivity. Belgium, Luxembourg and Spain were shown to have comprehensive industrial policy strategies (with a cross-sectoral focus) to drive recovery from the crisis and bring about innovation and industrial growth. Other countries have introduced horizontal policy initiatives aimed at increasing competitiveness or fostering technological innovation.

The industrial policy instruments in place in the Member States can be categorised in two main groups: horizontal or cross-sectoral instruments, and those applicable to selected sectors. The former can be related to specific themes or policy domains, such as training and education, manufacturing and productivity, tax and trade. The latter (targeted or sectoral) industrial policy instruments are aimed at strengthening specific strategic productive sectors and can involve channelling investment in research and development (R&D) into specific technologies or products, creating jobs in the entire value chain, attracting skilled labour in specific sectors, and increasing the technical skills profile of the workforce to meet the needs of strategic sectors.

While innovation appears to be a key component of the emerging industrial policy agenda, there is substantial variation in the way this is pursued by Member States. Some national policies include a focus on SMEs (as in the Czech Republic) or a regional dimension, such as Denmark’s regional councils and clusters of companies in Austria and Romania.

Restructuring and its effects are often linked with industrial policies. Most of the national examples come from the central and eastern European countries and often include funding from European regional and development funds. An example from Poland illustrates a joint effort by the social partners to put in place a restructuring programme.

Degree of involvement  

Overall, social partners’ involvement in the industrial policymaking process (particularly that of trade unions) has been quite limited. Examples of consistent and robust involvement in industrial policy emerge from countries belonging to the so-called ‘social partnership regime’ of industrial relations: Austria, Belgium, Germany, Luxembourg, the Netherlands and Slovenia. However, during the crisis even the Nordic countries – which usually display high levels of tripartitism in the process of policy development – have seen these arrangements come under pressure. Those countries particularly affected by the sovereign debt crisis demonstrate a very low degree of social partner involvement. In the central and eastern European countries, involvement is mixed: some countries (such as Estonia and Romania) benefit from social partner engagement in the process, leading to robust industrial policy initiatives; others (such as Bulgaria, the Czech Republic and Slovakia) show limited engagement even when structures are already in place.

The study shows that the degree of social partner involvement in industrial policy at national level is influenced by the institutional characteristics of the industrial relations regimes in those countries and is more substantial in the formulation of horizontal policy initiatives than in targeted, sectoral initiatives.

With the evolution of the European industrial policy agenda, the number and type of industrial policy instruments initiated at EU level has expanded greatly. Focusing on six sectors at EU level – automotive, defence, food, chemicals, steel and textiles – the study found that innovation policy and R&D are the most widely used instruments. The most encompassing form of social partner involvement is that of high-level groups, essentially multi-stakeholder groups, which overall are favourably viewed by the social partners.

Agenda shift

In terms of the role of European sectoral social dialogue in industrial policy, it appears that there is a shift in the agenda setting: while training and adapting the skills base and the social consequences of restructuring are still important, other issues such as innovation, access to raw materials, R&D and access to finance have risen higher on the agenda, enlarging the scope of the European sectoral social dialogue committees. Moreover, the social partners have produced joint reports and taken own initiatives on industrial policies, which have facilitated policymaking.

Involving the social partners in formulating and implementing policy at both national and European level can harness expertise and experience in labour market, social and industry domains, which in turn can increase the robustness, relevance and timeliness of industrial policy initiatives.

Overall, the analysis points to the potentially increased importance of social dialogue in industrial policies, but it also calls for new ways of working for both policymakers and social partners.

Harnessing strengths from both sides

The study points to the ongoing pressures of globalisation and the economic crisis, which have put social dialogue under strain and created a tendency for governments to decide and implement interventions very quickly, often without properly consulting the social partners. This is particularly evident where sectoral initiatives are taken.

For policies to be robust, coherent and effective, national instruments should benefit from the social partners’ industry-specific knowledge and enhance awareness and alignment among social partners and other industry actors. Trade unions can provide important insights into the skills of the labour force, and their involvement will facilitate the commitment of workers to political goals and objectives and help foster innovative approaches from the shop floor up. Employer organisations can bring valuable data and analysis of the dynamics at the policy level. The positive results of European sectoral social dialogue in the sectors examined call for a sharing of that experience among all interested sectors and the use of their outcomes at policymaking level.

One way of developing industrial policies so that they address the challenges of globalisation is to introduce a systemic approach that can encompass a variety of instruments and work across sectors. In developing such an approach, the knowledge of the social partners can be crucial – as it is for the implementation of programmes as well.

With ambitious social and environmental goals set at EU level and in the face of common problems confronting European industries (not least, scarce natural and energy resources), the coordination of industrial policies at EU and national level can contribute to a true European industrial renaissance.

Stavroula Demetriades

Note: This article is a summary of the report Role of social dialogue in industrial policies; a version of it was previously published in the EU Social Dialogue Newsletter No. 6 – March 2014.

Full publication with references available here

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