EU-level social partners negotiate joint text on restructuring

In June 2003, negotiators on behalf of the European-level social partners agreed the text of a statement on managing change and its social consequences. The move is in response to the consultation process on restructuring initiated by the European Commission in early 2002. The joint text still requires final approval by the governing bodies of the various social partner organisations, and will then be presented to the Commission.

In mid-June 2003, negotiations between the European-level intersectoral social partner organisations - the European Trade Union Confederation (ETUC), the Union of Industrial and Employers' Confederations of Europe (UNICE)/European Association of Craft, Small and Medium-Sized Enterprises (UEAPME) and the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP) - resulted in agreement on a joint statement on managing change and its social consequences. The statement identifies a range of factors that can contribute to preventing or limiting the negative social impact of restructuring, including 'good social dialogue'.

This feature looks at the background to this development and the main provisions of the statement.

Background

The move is the latest development in a process started by the European Commission in January 2002 when it launched consultations with the social partners on the scope for establishing EU-level principles to underpin 'socially intelligent' corporate restructuring (EU0201235F). The aim of the consultation document was primarily to promote the development and dissemination of good practice, and the Commission said that its preferred way forward would be the negotiation of agreements on this issue at cross-industry or sectoral level.

In their initial reactions to the Commission consultation paper, UNICE said that it saw no need for any further regulation of this issue at Community level, although it would be willing to enter into exchanges of experience, while ETUC invited UNICE/UEAPME and CEEP to engage in substantive discussions on a possible social partners’ contribution (EU0204202N).

In July 2002, ETUC, UNICE/UEAPME and CEEP asked the Commission not to proceed with a second round of consultations pending the outcome of a joint seminar they had planned to discuss a number of case studies of restructuring (EU0303101F). The seminar was held in October, following which the social partners agreed to include further consideration of restructuring in their joint work programme for 2003-5 (EU0212206F). This specified that, during 2003, the social partners would seek to 'identify orientations that could serve as a reference to assist in managing change and its social consequences on the basis of concrete cases'.

During the first half of 2003, the social partners considered further case studies (bringing the total to 10) at two more seminars, before beginning negotiations on a joint text reflecting the lessons from the case studies. A drafting group first met in May, and negotiations took place on 11 and 12 June, at which agreement was reached on a draft statement.

Key points of the joint text

The provisional English version of the text, entitled 'Orientations for reference in managing change and its social consequences', stresses that it is 'essential' for management to 'explain and give the reasons for change in good time to workers and/or their representatives in the company concerned by setting out the company’s overall strategy'. An 'open discussion' of management’s intentions 'allows workers and/or their representatives to make their views known'. It is noted that 'good information and consultation ... throughout the process of change' may need to take place at different levels, but 'existing European bodies' are seen as the appropriate level when changes affect sites in several European countries. The statement notes that 'all the case studies underlined the importance of continuous, quality communication with workers and/or their representatives'.

The statement also emphasises:

  • the importance of maintaining and developing workers’ competencies and qualifications in order to foster internal and external mobility and employability;
  • the need for concerted action by a range of key agencies, including the public authorities, when economic and social changes affect an entire region or locality; and
  • the specific issues which arise in small and medium-sized enterprises.

The text states that 'the social consequences [of restructuring] are managed locally. In the case of ‘social plans’, the negotiation takes account of factors such as the company’s constraints, the tax regime, national legislation, collective agreements and the needs and choices of workers.' It is noted that all the case studies highlighted 'a concern to explore all possible alternatives to dismissals', including:

  • reassignment;
  • training;
  • 'reconversion';
  • support for business creation;
  • an agreement to diversify forms of work and employment and/or suspend or adapt some benefits on a temporary basis;
  • personalised worker support; and
  • 'natural departures, notably through retirement or, as a last resort, early retirement'.

The joint text states that 'the management of the social consequences of a restructuring operation is a complex process', and that 'several levels of information, consultation or negotiation and several types of workers’ representation may co-exist in the companies and countries concerned.'

It is also stated that, for the 'good management of restructuring, time is an important factor, for management and workers alike. The difficulty is organising quality information and consultation without creating undue delays and uncertainties'. A 'positive attitude to change together with the existence of a climate of confidence between management and workers and/or their representatives' are said to be 'key factors'. Moreover, 'beyond formal procedures, informal relations play an important complementary role in the search for solutions which meet the needs of the enterprise and workers.'

The joint text now requires final linguistic adjustment and approval by the governing bodies of the organisations that participated in the negotiations. In the case of ETUC, ratification will be a matter for its executive committee meeting in October 2003, following consultations with its national and sectoral affiliates. The joint text will then be forwarded formally to the European Commission.

Commentary

The negotiation of the joint text is likely to be seen as a success for the EU-level social dialogue process, in that the achievement of an agreed outcome on this early element of the social partners’ joint work programme for 2003-5 is crucial for creating a positive climate for the rest of the work programme. Nevertheless, the precise status and intended practical impact of the joint text is somewhat uncertain. It clearly falls short of constituting a code of conduct or set of recommendations but, assuming that it is ratified by the relevant social partner organisations, it can be expected that trade unions and employee representative bodies such as European Works Councils (EWCs) will seek to use its contents to promote good practice by companies in the handling of restructuring. However, unions are unlikely to see it as representing a comprehensive response to the challenges posed by restructuring. The strengthening of the EWCs Directive (94/45/EC) will remain a key objective for ETUC (EU0212208F), as part of a broader restructuring agenda encompassing legislative as well as 'good practice' instruments.

For its part, the European Commission has yet to give any indication of its assessment of the joint text. It remains to be seen whether the Commission considers that the outcome of the social partners’ discussions meets its original objectives in launching the consultations on restructuring back in January 2002, though it seems likely that the Commission will welcome the fact that the social partners have been able to reach agreement on a joint text despite the significant differences that exist between employers and unions on this issue. The Commission had previously said it would take account of the social partners’ work on restructuring in determining its approach to the potential revision of the EWCs Directive. However, there seems to be little in the substantive content of the joint text that is likely to affect materially the case for or against amending the Directive. (Mark Hall, IRRU)

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