EurWORK European Observatory of Working Life

European Parliament calls for EU legal act on restructuring

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The European Parliament has endorsed a report which calls on the European Commission to submit a proposal for a legal act on anticipation and management of change and restructuring. It also called for the Commission to consult with the social partners before coming back with its proposal. The report, drawn up by Spanish socialist member Alejandro Cercas, gained the support of a large majority of MEPs with 503 voting in favour and 107 voting against (European Parliament resolution of 15 January 2013 with recommendations to the Commission on information and consultation of workers, anticipation and management of restructuring (2012/2061(INI)).

Background

The question of how to manage restructuring, particularly in the current difficult economic climate, has been taxing European Union decision-makers for some time. The European Commission has been looking at this problem since the first consultation to the EU-level social partners in January 2002. Following on the above, in 2003 the EU-level cross-sectoral social partners agreed on a joint statement, Orientations for reference in managing change and its social consequences (85Kb PDF). In early April 2005, the European Commission initiated the second stage of formal consultations with the EU-level social partner organisations under Article 138(3) of the EC Treaty (now Article 154 (3) TFEU) on the related issues of handling restructuring and enhancing the role of EWCs. The Commission published a Communication, Restructuring and employment (184Kb PDF), setting out measures to be developed or strengthened with the aim of facilitating ‘anticipation of change’ and ensuring improved management of restructuring within the EU. In 2008, the Commission staff working paper (Restructuring and Employment. The Contribution of the European Union. COM2008 (419) final) outlined which EU policies and instruments are concerned with major restructuring events, referring to the European Employment Strategy, cohesion policy (ERDF and ESF), the European Globalisation Adjustment Fund, Eurofound and its European Monitoring Centre on Change. In January 2012, the Commission published a Green Paper on restructuring (EU1201041I).The European Parliament Employment and Social Affairs Committee, meanwhile, continued to work on this issue, and adopted a resolution on 15 March, 2006 European Parliament resolution on restructuring and employment. On 15 January 2013, the European Parliament voted in favour of a resolution endorsing a report which called on the European Commission to come up with a new legal act on the management of change and restructuring. The report, drawn up by Spanish Socialist Workers' Party (PSOE) member Alejandro Cercas, gained the support of a large majority of MEPs with 503 voting in favour and 107 voting against. There were 72 abstentions.

Based on Article 225 of the Treaty on the Functioning of the European Union (TFEU) the resolution urged the Commission to submit, as soon as possible, a proposal for a legal act on the information and consultation of employees, and the anticipation and management of restructuring, The EP called on the Commission to submit its proposal after consultation with the social partners. This proposal should follow the detailed recommendations as set out in an Annex.

The European Parliament resolution confirmed the relevance of strong social dialogue based on mutual trust and shared responsibility as the best instrument with which to seek consensual solutions and common outlooks when predicting, preventing and managing restructuring processes. Commissioner Andor welcomed the initiative but reminded the MEPs that ‘even before new policies or new instruments are developed, what is crucial at this stage is the implementation of applicable EU law, particularly as concerns the information and consultation of workers’. As a follow-up to the Cercas report, he said: ‘ The Commission is working on the appropriate follow-up to the consultation it carried out on the basis of the Green Paper on restructuring. This debate in Parliament and the report you will adopt make a useful contribution to the issue and the Commission will take it into account in its future work.’

Content of the resolution

The text of the resolution covers rules on the long-term strategic anticipation of employment and skills needs, early preparation of restructuring operations and management of concrete restructuring processes. It contains 14 recommendations that could be partially included in a legal act as suggested by the Parliament. After setting an objective, and a recommendation on definitions and the scope of a legal act the next recommendations cover, among others, the following issues: long-term strategic planning, adaptability and employability, anticipation of employment and skills needs, early preparation, information and consultation concerning business decisions, agreements on managing restructuring processes, minimising external economic and social and environmental impacts, public support, financial support, and the designation of the relevant public authorities.

In more detail, recommendation three proposes that any act should cover all private or publicly-owned companies when they begin major restructuring operations that may involve either a significant number of workers or a significant percentage of the staff of those companies, over a specific period of time.

Recommendation five asks the social partners at company level to: ‘... establish, in co-operation with workers’ representatives and other relevant stakeholders, mechanisms for the long-term strategy of quantitative and qualitative employment and skills needs that take into account the foreseeable evolution of the economy, employment and skills and working conditions.’

Social partners will also have to establish multiannual plans for employment, skills and working conditions development. In addition, every worker should be offered a given number of hours of training per year.

Companies that have adopted such mechanisms would not have to apply the proposed measures, including recommendations six and seven on early preparation and on reinforcement of information and consultation about business decisions.

Recommendation six calls for an early preparation of restructuring measures: ‘Except in circumstances where restructuring is triggered by unforeseen or sudden events, any restructuring operation, in particular when it is likely to have a significant negative impact, is preceded by an appropriate preparation with the relevant stakeholders, according to their respective competences, concerned with a view to preventing or alleviating its economic, social and local impact.’

Recommendation seven focuses on information and consultation of employees concerning business decisions: ‘Any restructuring operation, in particular those likely to have a negative impact on employment, is accompanied by an early explanation and justification to the relevant stakeholders before any practical measures are taken, irrespective of whether the restructuring operation is to be carried out on the basis of either long-term strategic goals and requirements or short-term constraints and whether the decision regarding restructuring is being taken by the company or by a group controlling the company.’

Recommendation eight is about minimising internal social costs through social plans: ‘When the need to restructure occurs, companies consider redundancies only as last resort and only after having considered all possible alternative options and identifying and, where available, implementing supporting measures.’

Recommendation nine calls for managing restructuring processes by means of collective agreements: ‘Companies and their workers' representatives should negotiate collective agreements to cover the issues arising from the proposed restructuring, where appropriate.’

The final recommendation calls, among other issues, for Member States to ‘…cooperate with the European Foundation for the Improvement of Living and Working Conditions by providing statistical information on restructuring operations’.

Social partner reactions

Trade unions have welcomed this resolution, and the European Trade Union Confederation (ETUC) has demanded that the Commission now acts on it.

Judith Kirton-Darling, ETUC Confederal Secretary, said in a press release: ‘After a decade of hand-wringing, it is time for the Commission to act and propose legislation.’

There has been no official reaction from the employer side, although the view from the EU-level employers’ organisation BusinessEurope was that there was no need for an EU-level instrument to manage restructuring (EU1010031I). This view was reiterated by the Markus J. Beyrer, Director General of BUSINESSEUROPE, in a letter to The Financial Times published on 28 January 2013.

Commentary

The European Commission now has a number of options. One would be to launch a consultation of the EU level social partners on grounds of Article 154 TFEU. This approach would certainly satisfy the European Parliament and trade unions. However, it is likely to be rejected by the employers and some Member States opposed to any EU regulation in this area. In any case, if the Commission decided to launch a social partner consultation, the results would not be known until the end of 2013.

Frédéric TURLAN, IR Share

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