1997 Annual Review for EU Level

This record reviews 1997's main developments in industrial relations at EU Level.


Developments in European Union (EU) and national-level policy with a direct impact on industrial relations were influenced by a number of key trends and events in 1997, many of which are set to continue to be of relevance in the policy debate in 1998:

  • the persistence of the phenomenon of growth in unemployment;
  • the countdown towards the deadline for Economic and Monetary Union (EMU);
  • the announcement, without prior workforce consultation, of the closure of the Renault plant at Vilvoorde in Belgium;
  • the European Commission's review of the development of the European-level social dialogue process;
  • the conclusion of the Intergovernmental Conference and the drafting of the Treaty amendments agreed at Amsterdam; and
  • the special Employment Summit in Luxembourg.

In the year which was to act as the benchmark for fulfilling the criteria for EMU, governments across the EU accorded particular importance to the achievement of the convergence criteria in relation to:

  • inflation - an annual rate of 2.7%. This reference value is calculated by adding 1.5 percentage points to the simple arithmetic average of the rates of the three states with the lowest inflation levels - Austria, France and Ireland- using Eurostat’s Harmonised index for consumer prices, introduced in 1997;
  • government debt - 60% of GDP or "sufficiently diminishing and approaching the reference value at a satisfactory pace";
  • government deficit - 3% of GDP;
  • exchange rate stability; and
  • long-term interest rates.

As table 1 below shows, 14 countries effectively met the public finance criteria for EMU. Of these, Denmark and the United Kingdom are not at this stage seeking entry into the single currency in the first wave (Sweden is not seen by the Commission to fulfil the criteria for EMU because of question-marks over the stability of its currency and the current status of its central bank). In the light of the significant budgetary stringency required to achieve these convergence criteria, in 1997 increasing attention was accorded to the impact of EMU on the industrial relations sphere, and voices were increasingly raised, particularly among the trade union movement, in relation to the perceived detrimental effects of tight public budgets on employment and working conditions in the EU, and the lack of preparation for this event.

Table 1. Basic economic and monetary indicators, EU and Norway, 1997
Country Economic growth* Inflation** Public debt as % of GDP** Public deficit as % of GDP**
Austria 1.9% 1.1% 66.1 2.5%
Belgium 2.4% 1.4% 122.2 2.1%
Denmark 3.5% 1.9% 65.1 -0.7%
Finland 4.6% 1.3% 55.8 0.9%
France 2.4% 1.2% 58.0 3.0%
Germany 2.2% 1.4% 61.3 2.7%
Greece 3.3% 5.2% 108.7 4%
Ireland 6.6% 1.2% 66.3 -0.9%
Italy 1.4% 1.8% 121.6 2.7%
Luxembourg 3.4% 1.4% 6.7 -1.7%
Netherlands 3.0% 1.8% 72.1 1.4%
Norway 3.9% 2.5% n/d n/d†
Portugal 3.5% 1.8% 62.0 2.5%
Spain 3.4% 1.8% 68.8 2.6%
Sweden 1.8% 1.9% 76.6 0.8%
UK 3.5% 1.8% 53.4 1.9%

* Eurostat (1998).

** European Commission Convergence Report (1998).

† Deficit of NOK 20.2 billion(ECU 2.5 billion) if oil revenues are excluded.

In most Member States, the improvement of the economic parameters, however, failed to translate into a reduction of unemployment - as indicated by table 2 below - particularly for low-skilled individuals and other disadvantaged groups.

Table 2: Unemployment rates, EU and Norway, 1989-97 (%)
Country 1989* 1994* 1996* 1997**
Austria n/d n/d 5.3 4.4
Belgium 8.3 9.6 9.5 13.3
Denmark 8.1 8.0 6.8 7.4
Finland n/d n/d 15.6 14.5
France 9.6 12.7 12.4 n/d
Germany 5.7 8.7 8.8 11.4
Greece 7.5 8.9 9.7 10.4
Ireland 16.1 14.6 11.7 13.0
Italy 11.1 11.3 12.2 12.3
Luxembourg 1.6 3.5 3.3 3.6
Netherlands 8.8 7.2 6.4 6.4
Norway** 4.9 5.4 4.8 4.1
Portugal 5.2 6.7 7.3 6.7
Spain 17.3 24.3 22.2 20.8
Sweden n/d n/d 9.5 9.1
UK 7.4 9.7 8.2 5.1

* Eurostat data.

** National statistical data.

In the face of this persistence of growth in joblessness in most EU Member States, the European policy agenda continued to be dominated by the question of how to achieve greater employment creation, particularly for disadvantaged groups in the labour market, such as younger workers, low-skilled workers, women workers, older workers or disabled workers. This focusing of the agenda was assisted by the support given to concentrating on these issues by the new Socialist and Labour Governments which came to power in France and the UK during 1997. Table 3 below gives an overview of the political situation in the various countries, outlining the parties in power and any major changes which occurred in 1997 or are expected in 1998.

Table 3. Political situation in the EU Member States in 1997
Country Political situation
Austria The Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) is the majority partner in a two-party coalition Government with the christian democratic Austrian People's Party (Österreichische Volkspartei, ÖVP). National elections are due in October 1999, but may be held early in spring of that year.
Belgium The Federal Government is a coalition between socialist parties - the Parti Socialiste (PS) and Socialistische Partij (SP) - and christian democratic parties - the Christelijke Volkspartij (CVP) and Parti Social Chrétien (PSC). Elections will take place in 1999.
Denmark Minority coalition Government led by the Social Democratic Party (Socialdemokratiet) and also involving the Social Liberal Party (Det Radikale Venstre,) was in power during 1997. Elections held in March 1998 (at which the Social Democrats retained power).
Finland A "rainbow coalition" of left- and right-wing parties - the Social Democratic Party (Suomen Sosialidemokraattinen Puolue), the conservative National Coalition Party (Kansallinen Kokoomus), the Left-Wing Alliance (Vasemmistoliito), the Greens (Vihreä liito) and the Swedish People's Party (Svenska folkpartiet) - is in power. Elections are due in 1999.
France Following elections in May-June 1997, conservative administration replaced by new Government led by Socialist Party (Parti Socialiste, PS) with support from Communist Party (Parti Communiste Français, PCF) and others. Priorities are: measures for job creation and social and economic union at European level; promise to create 700,000 new jobs for young people; reducing the working week to 35 hours without reductions in pay; and increasing the SMIC national minimum wage (this was implemented by a 4% increase in July 1997).
Germany The Federal Government is a coalition led by the Christian Democratic Union (Christlich Demokratische Union, CDU) and its Bavarian counterpart, the Christian Social Union (Christlich-Soziale Union, CSU), along with the Free Democratic Party (Freie Demokratische Partei, FDP). General elections are to be held in 1998.
Greece Pan-Hellenic Socialist Movement (Panellino Socialistiko Kinima, PASOK) Government in power.
Ireland New centre-right coalition Government, with Fianna Fail as the senior partner to the Progressive Democrats, came to power in June 1997 election, replacing former "rainbow" coalition of Fine Gael, the Labour Party and the Democratic Left. New Government is committed to implementing fully Partnership 2000, the current three-year national economic and social programme, with other policies including the introduction of a national minimum wage.
Italy Centre-left "Ulivo" coalition Government, including notably the Democratic Left (Partito Democratico della Sinistra, PDS), in office with support from the Communist Reconstruction Party (Partito della Rifondazione Comunista). Dispute over Government's budget proposals led in October 1997 to a compromise involving commitment to introduce 35-hour working week via legislation.
Luxembourg Coalition Government of the Christian Social People's Party (Chrëschtlich Sozial Vollekspartei, CSV), and the Luxembourg Socialist Workers' Party (Lëtzebuergesch Sozialistesch Arbechterpartei, LSAP) in power.
Netherlands "Purple" coalition Government in office, composed of the Labour Party (Partij van de Arbeid, PvdA), the liberal People's Party for Freedom and Democracy (Volkspartij voor Vrijheid en Democratie, VVD) and the social democratic Democraten 66 (D-66). Elections due in May 1998.
Norway Following the general election in September 1997, the previous minority Labour Party (Det norske Arbeiderparti) Government was replaced by a new minority coalition of the Christian Democratic Party (Kristelig Folkeparti), the Centre Party (Senterpartiet) and the Liberal Party (Venstre). The change of government brought little change in policy in relation to labour markets and industrial relations.
Portugal The Socialist Party (Partido Socialista) is currently in government, supported by the Portuguese Communist Party (Partido Communista Português).
Spain Conservative People's Party (Partido Popular, PP) Government in power with support of conservative nationalist parties from Catalonia and the Basque Country.
Sweden The Social Democratic Party (Socialdemokratiska Arbetarepartiet, SAP) is in government. The next elections are due in September 1998.
UK New Labour Party Government elected in May 1997, replacing the Conservative Party administration, with policy commitments including: a national minimum wage; the right to trade union recognition; ending age discrimination; improving health and safety at work; a right for employees to be accompanied at disciplinary meetings; streamlining the operation of industrial tribunals; protecting employees against use of "zero-hours" contracts and homeworking abuses; restoring right to union recognition at GCHQ secret communications base; and signing up to the EU "social chapter".

Source: EIRO.

Cooperation on employment policies and the achievement of job creation are among the concerns of the new "employment chapter" included in the revised EU Treaty negotiated at the Amsterdam Summit in June 1997. Support for employment creation was also at the heart of the first special European Council summit dedicated to the issue of employment, held under the Luxembourg Presidency in November 1997. The summit discussed, among other issues, employment guidelines to be translated into action plans by the Member State governments. The debate surrounding the drawing up, and the review of the implementation of these action plans will doubtless be a centrepiece for the employment debate at the national and EU level in 1998.

Hand-in-hand with this debate went discussions among policy-makers, social partners and other interest groups on the contribution that new forms of work and working time organisation could make to the twin goals of employment creation and the achievement of greater competitiveness. This debate was stimulated by the Green Paper on new forms of work organisation issued by the European Commission in April 1997.

The impact of restructuring on employment, and in particular the role played by employee information and consultation in this process was also high on the policy agenda, in the aftermath of the decision by French car maker Renault to close its plant at Vilvoorde, Belgium without prior consultation with the workforce. 1997 saw the revival of the debate on the European Company Statute, agreement on the inclusion of the UK under the provisions of the European Works Council (EWC) Directive, as well as a renewed debate on European Union regulation in the area of national employee information and consultation rights.

The year also saw ever-increasing attention being accorded to the role of the European-level social partner organisations in decision-making. This was boosted by the intersectoral framework agreement on part-time work, key sectoral agreements and finally the inclusion of the social partners in some meetings of the Council "troika" (the current, previous and following Council presidencies) on employment.

Key trends in collective bargaining and industrial action

The year saw a widespread continuation of the trend towards a greater decentralisation of collective bargaining to the company level in order to accommodate the perceived need for greater flexibility, particularly in working time arrangements. Wage increases remained modest, and public sector workers in particular were affected by governments' need to reduce public expenditure. The level of industrial action was comparatively low throughout the Union, with disputes concentrated in the public sector and transport. Table 4 presents key trends in collective bargaining and pay as well as key events and issues in the industrial relations sphere.

Table 4. Trends in pay and collective bargaining and other key industrial relations (IR) events/issues in the EU Member States, plus Norway, 1997
Country Pay trends Trends in collective bargaining Other main IR events/issues
Austria Minimum pay rose on average by 1.7% (between 1.5%-3.0%). In the civil service, minimum rates remained unchanged and in public transport the rise was limited to 0.7%. Actual pay in industrial manufacturing expected to rise by 2.0%. "Distribution option" introduced in some agreements, allowing pay for certain groups to be increased outside seniority considerations. Centralised sectoral bargaining remained dominant. Industrial relations marked by cooperation at the company level and considerable acrimony at the provincial and national level. Major national issues were: pension reform, which entails lowering entitlements and widening the contribution base to part-timers and the self-employed (the only issue that led to strike action); the enlarged gap between the number of 15-year-olds leaving school and the number of openings for apprentices; and working time flexibility, the drive for a 35-hour working week, and discussions over weekend and Sunday working.
Belgium Maximum nominal wage increases set by the Government at 6.1% for the two-year period, 1997-8. Failure of intersectoral negotiations to reach an agreement led to the Government laying down basic standards for sector- and firm-level agreements. In the absence of an intersectoral accord, sectoral bargaining - rather than company-level bargaining, as the unions had feared - gained in importance and agreements were concluded in all key sectors. With no national collective agreement, the Government laid down the themes for sector- and company-level bargaining, including: reductions in employers' social contributions if initiatives are taken to redistribute work; specific measures for special needs groups; further development of community services through return-to-work schemes for unemployed people. Sectoral agreements favoured redistribution of work measures, while some company agreements implemented government job creation or maintenance schemes by reducing working hours. Employment issues dominated at all levels.
Denmark Overall, pay increased by an average of 4.0%. Public sector agreement set wage increases at 4.25%. Centralised, sector-level, multiannual collective bargaining remained the rule. In the private sector, much debate in the bargaining round focused on the duration of agreements, but the outcome was a series of unsynchronised one-, two- and three-year agreements. In the public sector a two-year collective agreement was reached, providing for some decentralisation of pay-setting. Key issues included: reducing labour market marginalisation and improving employment opportunities for certain groups; reducing overtime; first steps in the state sector towards regulating teleworking in agreements; and inter-union disputes over privatisation and contracting-out.
Finland In 1997, the earnings index rose by 2%, while real wages increased by 1% (the new central incomes policy agreement fixes average annual pay increases at around 1.6% in 1998 and 1999). A central, intersectoral, two-year (January 1998-January 2000) incomes policy agreement was concluded in December, covering 98% of wage earners. There was some development towards more local agreements. Central two-year agreement provides for wage increases and schemes to combine part-time work with a part-time pension. Increasing tendency towards outsourcing and contracting out resulted in disputes, notably in public transport. Political debate centred around employment issues, with measures proposed for disadvantaged groups (especially older people). New legislation to improve conditions for "atypical" employment. Social partners agreed on "buffer funds" to help soften economic shocks within EMU.
France SMIC minimum wage increased by 4% in July. Following breakdown of tripartite conference on employment, bargaining was widely disrupted, with employers threatening a freeze. In some sectors, such as banking, employers decided to give notice of termination of existing agreements. New Socialist Government focused on job creation, stimulating growth through increased purchasing power and reducing statutory working week from 39 hours to 35 without loss of pay. Tripartite conference on employment ended in failure over the Governments's 35-hour week plan (which also triggered resignation of the CNPF president), and social partners have not taken up proposals to implement it through sector-level bargaining. At company level, there were agreed experiments in reducing working time to save or create jobs, prompted by legislation. Major industrial action among lorry drivers and at SNCF railways, and widely reported protests by unemployed people.
Germany Agreed basic pay increases averaged 1.4% in the west and 2.7% in the east, compared with an inflation rate of 1.8%. Some decentralisation and differentiation of branch-level collective agreements. Main policy concern was to preserve and create employment. Controversial debates focused on pay policy, working time, and the future of the system of branch-level agreements. Key issues in collective bargaining included continued payment during sickness, partial retirement, working time flexibility and preventing redundancies/creating jobs. Key legislation passed - Employment Promotion Act and Act on Temporary Employment Businesses.
Greece The 1996-7 National General Collective Agreement provided for minimum pay increases for 1997 in line with the projected rate of inflation (4.5%) plus a 2% increase awarded in two equal amounts during January and July. No centralised collective bargaining as the year saw the application of the second part of the 1996-7 National General Collective Agreement. Social dialogue process conducted between social partners and government, leading to tripartite "confidence pact" on employment. Strikes in public and private sectors opposing austerity programme introduced by the Government. Social dialogue addressed employment issues, with limited results including agreed proposals for EU Employment Summit and "confidence pact" (general guidelines on development, competitiveness and employment). Disagreements on how to bring about structural change in labour market. Little progress in bargaining on working time reduction/ reorganisation and new forms of work, or in local employment agreements
Ireland Maximum wage increases set at 9.25% over three years by the 1997 P2000 central agreement, with a 2.5% rise for the first 12 months. Highly centralised tripartite bargaining - manifested in the P2000 agreement - setting parameters for company-level bargaining. Some divergences from P2000 arose at company level - however, this did not lead to widespread wage drift. Three-year P2000 central agreement signed. National Centre for Partnership set up under P2000 to support development of workplace relations between employers, employees and unions. Discussions on new Government's planned national minimum wage and on a union recognition initiative under P2000. Working time legislation to conform with EU Directive. Few industrial disputes.
Italy Wage moderation continued, based on the incomes policy introduced by the July 1993 central tripartite agreement. Two-tier (sector and company) bargaining system, based on 1993 central tripartite agreement. Industry bargaining in 1997. Lengthy and difficult negotiations in metalworking reopened debate over two-tier system. Study committee examined 1993 agrement, prior to review. National social dialogue focused on: employment creation - notably the transposition in law of 1996's tripartite Pact for Employment; welfare reform - the Government and union confederations signed an agreement focusing on pension reform; and reduction of working time - unions and employers rejected the Government's proposed legislation on the 35-hour week (but agreed on implementation of EU Directive), considering that any working time reduction should be negotiated. Bargaining at all levels addressed employment issues. Occupational pension funds introduced by agreement in a number of sectors. New rules on worker representation in public administration. Further debate on trade union unity. Industrial action levels fell, with transport most affected by disputes. Labour market deregulation though introduction of temporary agency work and reform of placement services
Luxembourg The minimum wage was increased by 3.3% in January. All pay was increased by 2.5% in February in line with automatic statutory indexation. Agreed increases generally moderate. Bargaining occurs at company and sector level. Government and social partners prepared tripartite meetings (held in early 1998) to draw up action plan to create new jobs, especially for young people and long-term unemployed people, through additional training and cash incentives for employers. Debates on working time concerning a framework law guaranteeing a 40-hour week, and ways of reducing working hours via agreements. Dispute between government and unions over former's plans to reform public sector pensions, while social partners were unable to agree on sickness insurance contributions.
Netherlands Wage moderation maintained. Centralised sector-level bargaining, although there was some movement towards decentralisation. At intersectoral level, social partners agreed on an agenda for future bargaining. In mid-November 1997, a new agreement on the future of collective bargaining (emphasising wage moderation and employability) was reached. Additionally an Employment Pact was concluded in three Dutch provinces. Some shift in bargaining agenda towards training and workloads (unions) and flexibility and performance-based pay (employers). Labour market flexibility was a key issue and the Government's proposals for a new law on flexibility and security - increasing labour market flexibility while enhancing the position of "atypical" workers in terms of job security and social security - were accepted by the lower house in November 1997. Some changes to Works Councils Act. Moves towards union mergers. Strikes relatively rare (and mainly in public sector).
Norway Pay growth around 4.25% - or 1.8% in real terms. 1996 sectoral agreements were, as usual, mainly of two-year's duration - 1997 bargaining was thus "mid-term", focusing essentially on pay. Employers seeking more flexibility on types of employment (especially temporary and leased workers) and on working hours. The 1997 LO union congress opened the possibility of discussing more flexible hours arrangements, though stressing that these must be regulated through collective agreements. LO and NHO renewed their basic agreement, providing for: new rights for workplace union representatives; and minimum membership requirements for unions to demand a wage agreement (this issue led to breakdown of talks over NHO-YS basic agreement). Review of Labour Disputes Act under debate - new Government yet to indicate whether it wants change. Further education and training reform much discussed. Split in AF professional union confederation, with new confederation - Akademikerne - formed.
Portugal Negotiated pay increases averaged about 3.6% (for agreements concluded in first half of year). General national minimum wage increased by 3.85%. Sectoral bargaining predominates: two-thirds of agreements concluded in 1997 were at this level, with company level agreements making up only a quarter of the total. Some perceived tendency towards stagnation of bargaining in terms of content, but some spread of bargaining into new areas. Employment creation regarded as crucial issue by social partners, and a tripartite declaration was (unusually) agreed and submitted to the EU Employment Summit. The Government discussed draft legislation with the social partners on part-time work, but this is yet to be approved. Legislation reducing the working week to 40 hours came into force, but social partners made little progress on introducing more flexible working time organisation to accompany the reduction. Disputes about trade union representation in national social consultation and dialogue structures.
Spain General trend towards wage restraint in collective agreements, with average agreed increases standing at 3.02% in 1997 (3.86% in 1996 and 3.94% in 1995). Public sector covered by pay freeze in 1997, and public employees’ wages lost purchasing power. Over 1995-7, taking into account inflation, collectively agreed wages have increased purchasing power by only 0.5%. Intersectoral agreements on "collective bargaining" and "filling the gaps in regulation" sought to lay down rules for the articulation of company- and sector-level bargaining (thus addressing the current unstructured state of bargaining), and to promote universal bargaining coverage. Greater autonomy for bargaining parties (and less state intervention) resulted. Intersectoral agreement on employment stability sought to reduce temporary employment, though this remains very common, at 33% of employment (part-time working is also on the increase). Greater bargaining autonomy brought trend towards negotiation of "special clauses" on geographical mobility, regulation of overtime, temporary jobs and social benefits (such as pensions). Other issues included union demands for a 35-hour week and greater working time flexibility in some sectors.
Sweden Agreed pay increases averaged 2.5%-3% (lower than expected). Bargaining conducted mainly at sector level. Most sectors were still covered by multiannnual agreements concluded previously, so little new centralised bargaining took place in 1997. Discussion of new bargaining rules to help keep pay increases at a level that is not inflationary and does not threaten employment. Trade unions and employers' organisations in industry responded with an agreement on industrial development and wage formation, aimed at promoting development, profitability and competitiveness. As well as setting up new joint structures, the deal changes the procedural rules for wage negotiations with the aim of reaching a new agreement before the old one runs out - this indirectly commits the partners to avoid industrial action, as action is illegal if an agreement is in force. Other issues on the IR agenda included lifelong training. Working time often a difficult issue in bargaining - employers wanting more flexibility and unions seeking reductions, both unsuccessfully.
UK Average pay awards ranged from 3% to 4%. Freeze on overall paybill in public sector, with any increases funded from efficiency savings. Persistence of decentralised bargaining, with a further decline in bargaining coverage. Changes following the election of a new Labour Government included: a Low Pay Commission set up to advise on the implementation and rate of a national minimum wage; rights of union recognition restored at the GCHQ secret communications base; discussions began on the right to union recognition in companies with 50 or more employees, where the majority of the relevant workforce votes in a ballot for the union to represent them; and the extension to the UK of Directives on EWCs and parental leave (with inclusion in the EU "social chapter" to follow). Government prioritised unemployment, notably through "welfare to work" programme, which received social partner support. Some focus in bargaining on employment security. Fears of an upsurge in industrial disputes proved unfounded.

Source: EIRO

Despite a slow convergence through the emergence of similar responses to global trends, the application of EU social policy, the development of the European-level social dialogue (see below) and the establishment of EWCs, collective bargaining in each economy still remains distinct. Only a small number of exceptional EWC agreements make provision for any kind of negotiation at the European level, which could be perceived as a step towards a Europeanisation of collective bargaining. Nevertheless, the sympathy action generated by the announcement of the closure of Renault's Vilvoorde plant has been argued by some observers to mark the birth of the "Euro-strike". A recent seminar on EWCs (EU9803191F) has indicated increasing cooperation among employee representatives from different countries, which, albeit currently often limited to unofficial channels, could provide an example of an increasing push for the development of common goals and strategies among employees, not only at the level of the peak organisations, but also at the company level.

However, in the context of continuing high unemployment and budgetary stringency, common Europe-wide trends in collective bargaining tended to be dominated by management's desire for greater flexibility. There are clearly common denominators which ran through all systems during 1997, such as the employers' wish to increase flexibility and decentralise collective bargaining, and also a widening of the bargaining agenda to include issues such as employment, working time, pensions and so on. A country-by-country analysis of key trends in collective bargaining also shows an emphasis on wage restraint and a comparatively peaceful bargaining round (see table 4).

In a number of countries, recent changes to collective bargaining structures are seen to be of major significance. In Germany, for example, the introduction of "opening clauses" into collective agreements, allowing lower standards to be applied at company level, may be seen as raising questions about the national system of collective bargaining, which is based on the setting of industry-level standards. Similar developments have taken place in other Member States, but are so far not held to have changed the bargaining scene substantially.

Industrial relations, employment creation and new forms of work organisation

Employment creation

Although many Member States experienced a fall in unemployment figures in 1997, the number of jobseekers chasing each vacancy increased in most countries. The European Commission's 1997 Employment in Europe report shows that a majority of jobs created in recent years have been either part-time or temporary. Tables 5 and 6 give recent figures for the extent of these forms of employment.

Table 5. Part-time work (males and females) in the EU, 1987 and 1996
Country Part-timers as % of total women's employment Part-timers as % of total men's employment
Country 1987 1996 1987 1996
Austria n/d 29.0 n/d 5.0
Belgium 24.2 31.0 1.9 3.5
Denmark 42.2 35.0 9.3 11.0
Finland n/d 16.0 n/d 7.5
France 23.1 29.0 3.5 6.0
Germany 29.5 34.0 2.0 4.0
Greece 10.8 9.0 2.7 3.5
Ireland 15.8 22.0 3.1 6.5
Italy 10.4 13.0 3.2 3.5
Luxembourg 17.4 18.0 1.7 1.5
Netherlands 57.5 69.0 13.8 17.5
Norway* 45.1 45.5 10.4 10.1
Portugal 10.4 13.0 3.5 6.0
Spain 13.9 17.0 2.4 3.5
Sweden n/d 42.0 n/d 9.0
UK 44.7 45.0 5.3 8.0

Source: Eurostat - Labour Force Surveys 1987 and 1996.

* National statistical data (definitions not necessarily compatible with Eurostat figures).

Table 6. Temporary work (males and females) in the EU, 1996
Countries Temporary workers as % of total women's employment Temporary workers as % of total men's employment
Austria 8.0 8.0
Belgium 7.0 4.0
Denmark 13.0 11.0
Finland 14.0 13.0
France 12.0 12.0
Germany 12.0 12.0
Greece 13.0 11.0
Ireland 13.0 7.0
Italy 8.0 7.0
Luxembourg 3.0 2.5
Netherlands 16.5 9.0
Norway* 15.0 12.0
Portugal 12.0 10.5
Spain 37.0 33.0
Sweden 13.5 10.5
UK 8.0 7.0

Source: Employment in Europe 1997.

* National statistical data (definitions not necessarily compatible with Eurostat figures).

Despite the persistent concerns about high levels of unemployment, the Intergovernmental Conference and the Amsterdam Summit were very much dominated by negotiations over the adaptations of the internal structures of the Union in the light of the impending accession negotiations for prospective new Member States. Another preoccupation was with the finalisation of steps towards EMU. As a result, the new Amsterdam Treaty, the draft of which was agreed on 17 June 1997, brought arguably relatively limited advances for employment and social policy at EU level (EU9707135F). In the employment area, the revisions essentially place on a Treaty footing practices previously established under the employment policy recommendations agreed at 1994's Essen European Council.

A new title on employment has been included in the Treaty establishing the European Community (TEC), which sets the objective of working towards the development of a coordinated strategy for employment and particularly for promoting a skilled, trained and adaptable workforce and labour markets responsive to economic change. Member States are called upon to coordinate their actions in this area. The process of encouraging cooperation, drawing up employment guidelines and monitoring of progress annually (a process informally established post-Essen) is strengthened by inclusion in the Treaty. As well as the "employment chapter" itself, the objectives of the Treaties have been amended to give employment a higher priority.

Because of the perceived domination of the Amsterdam Summit by issues other than employment, and in response to increasing disenchantment among many citizens with the inability of the Union to take steps to combat the problem of high unemployment in the run-up to EMU, it was agreed that a special Employment Summit was to be held under the Luxembourg Presidency in November 1997 (EU9711168F). Prior to the Summit, the Commission drew up draft guidelines for Member States' employment policies for 1998, and set targets for job creation and the inclusion of young people and unemployed people in training and other job-creation programmes (EU9710159N).

The Luxembourg Presidency placed the emphasis of the summit on the formulation of achievable targets, and the measures agreed by heads of state consequently remained more limited than was initially foreseen by the Commission. For example, the Commission had envisaged setting a target for the reduction of unemployment from nearly 11% to 5% and creating 12 million jobs in five years. The Guidelines for Member States' employment policies for 1998 finally adopted do not mention these targets, but merely speak of increasing the proportion of unemployed people who are offered training from the current average of 10% towards at least 20% (taking into account the starting position in each country). The employment guidelines focus on measures to achieve greater employability, entrepreneurship, adaptability and equal opportunities (EU9712174N). These guidelines are to be translated into Member State action plans by April 1998 and will therefore continue to occupy the employment policy debate for the foreseeable future. The plans will be discussed at the Cardiff European Council in June 1998. Early indications show that measures focus on training, retraining and the provision of work experience and job-seeking assistance for disadvantaged groups in the labour market. The focus differs from country to country as to the groups targeted for specific assistance, but there is an overall emphasis on measures for long-term unemployed people, young workers, older workers, women, people with disabilities and migrants. Few countries have so far indicated the introduction of clear targets as outlined in the employment guidelines.

Employment has not only been the preoccupation of the EU and national governments. Collective bargaining at the national level has, in recent years, increasingly begun to take on the issue of preserving and creating employment - an issue examined in an EIRO comparative study in 1997 (TN9710201S). On the whole, employer and trade union organisations have rather different views on how collective bargaining could help to improve the employment situation, with employers focusing on supply-side policies and increasing labour market flexibility. Trade unions, on the other hand, generally seek to stimulate the economy through macroeconomic demand management and the redistribution of the available supply of work, particularly through the reduction of working time. Nevertheless, a significant number of accords on employment have been reached in national or regional bipartite or tripartite "employment alliances/pacts" and in company-level agreements.

The EIRO analysis of such agreements argued that so far the positive impact of agreements on employment concluded at national, sectoral or regional level is rather limited, because there is little opportunity for binding individual employers to the terms of such agreements. At company level, on the other hand, agreements on employment have included concrete, and in some cases even legally binding, provisions on job guarantees for a certain period of time, or even on the creation of a specific number of new jobs. In most cases, the aims of company-level agreements have been achieved. However, a number of problematic issues are associated with company agreements on employment:

  1. most of these agreements are mainly defensive, guaranteeing existing jobs rather than creating new ones;
  2. employers usually accept binding employment measures only in exchange for certain employee concessions - on wages or working time, for example;
  3. in cases where agreements on employment are concluded by works councils, the relationship and balance of power between the works councils and the trade union(s) may be affected;
  4. employment agreements at company and establishment levels lead to a further decentralisation of collective bargaining and a greater differentiation in working standards; and
  5. even if employment agreements have positive effects regarding the level of employment at micro level, this need not necessarily imply positive employment effects at macro level.

The EIRO comparative study therefore argued that collective bargaining on employment can only be seen as one part of a strategy to safeguard or create employment.

Other Treaty changes

Alongside the "employment chapter", the Amsterdam Treaty contains a number of other new significant provisions with an industrial relations impact.

The Treaty enshrines the Union's attachment to fundamental social rights, through the inclusion of this commitment in a new paragraph added to the Preamble of the Treaty on European Union (TEU). A new Article 13 of the TEC gives the Council of Ministers the power to take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation, while the objective of achieving equality between men and women is added to Article 2 of the TEC, which outlines the general principles to be promoted by the Community.

In light of the new UK Government's commitment to "sign up" to the social policy Protocol and Agreement annexed to the TEU, this is to be repealed and integrated (with a number of alterations) into the Treaty in the form of a new chapter on social policy.

New forms of work organisation and working time

As another element of the employment debate, the European Commission released a Green Paper on Partnership for a new organisation of work in April 1997, with the purpose of stimulating European debate on how competitiveness and employment opportunities can be improved through new forms of work organisation based on the model of a high-skill, high-trust and high-quality economy (EU9707134F). The consultation process on the Green Paper ran throughout 1997.

At Member State level, the debate on work organisation and working time focused on greater flexibility and working time reduction in order to support employment growth. Eurostat data on the usual average weekly working time of full-time employees (see table 7) show a European Union average of 40.4 hours.

Table 7. Average hours usually worked by full-timers per week in the EU, 1996
Country Average weekly hours usually worked by full-timers
Austria 40.4
Belgium 38.3
Denmark 38.7
Finland 38.7
France 39.8
Germany 40.0
Greece 40.4
Ireland 40.4
Italy 38.6
Luxembourg 39.5
Netherlands 39.4
Portugal 41.2
Spain 40.6
Sweden 40.0
UK 43.9

Source: Eurostat; Labour Force Survey 1996.

The EU-level debate on employment and the European social dimension has changed significantly in its form and content over the past 15 years. During the late 1980s and early 1990s, the Commission, under the leadership of President Jacques Delors, favoured a more legislative, interventionist approach, which culminated in the adoption of the (albeit not legally binding) 1989 Community Charter of the Fundamental Social Rights of Workers (by 11 out of 12 of the then Member States) and its accompanying Action Programme. The emphasis was on the creation of a high-skill, high employment-security economy, with minimum rights set at the European level. While the achievement of this aim remains an ideal in European Commission pronouncements, the approach has changed significantly since the implementation of the Maastricht Treaty and the December 1994 Essen Summit.

Emphasis has shifted from legislative attempts initiated by the Commission, to the new arrangements for consultation and possible negotiation between the social partners as set out in the Maastricht social policy Agreement, and has shifted away from an emphasis on the regulation of minimum standards to one of "negotiated flexibility". The perceived need to deregulate certain elements of labour market regulation in order to increase competitiveness is increasingly becoming accepted, and new forms of employment and work organisation are seen more and more as a means not only to increase competitiveness, but also to meet the demand among employees for a greater flexibility in working time arrangements. At the same time, there is ever-increasing emphasis on cooperation between management and employees at all levels of decision-making.

While the Commission's emphasis on a integrated approach - including education, training, social security, taxation, macroeconomic and structural policies, as well as policies on the "information society" and worker involvement - has been widely welcomed, many issues have so far remain unexplored, including the uneasy balance between security and flexibility. In national, local and company-level collective bargaining, the issues of flexibility and employment security have been of key importance, with a trade-off often taking place between the acceptance of new form of work organisation or wage moderation in exchange for employment security. In several Member States, legislation has been introduced to provide greater protection for employees on so-called "atypical" contracts. The reduction of overtime working and the limitation of weekly working hours has also been a key issue for debate in a number of countries. At the same time, there have been moves to extend shop opening hours and plant operating hours, often requiring weekend working and greater working time flexibility. The controversial nature of these measures is set to ensure that the arguments surrounding new forms of work organisation will continue to shape the policy debate in 1998.

Developments in representation and the role of the social partners

Employee representation at the European level

The announcement in February 1997 by the French car maker Renault of the closure of its plant in the Belgian Prime Minister's constituency of Vilvoorde, generated an unprecedented storm of protest from the labour movement and the political establishment of the European Union (EU9703108F). It raised questions over the ability of European legislation to prevent multinational companies from enforcing economically motivated decisions on production locations without prior workforce consultation. In the light of the approaching deadline for EMU, the Commission was keen that European integration should not become associated with job losses and quickly condemned the decision by Renault as being in breach of the spirit of EU legislation on employee information and consultation and on collective redundancies. It gave unprecedented vocal support to a legal challenge to the actions of the company. French and Belgian courts subsequently condemned Renault's actions (EU9704118F).

When called upon to strengthen existing legislation and to impose heavier fines on those breaching EU law, Pádraig Flynn, the commissioner responsible for social affairs and employment, argued that existing legislation was sufficient. However, he stated that consultations were to be speeded up with the social partners on possible EU measures to complement existing legislation governing information and consultation at the national level. Such consultations started formally in June (EU9710157N), with the second round launched in November (EU9711160N). However, a mooted joint code of conduct from the social partners on the social aspects of industrial restructuring did not materialise (EU9706132F).

Another area of worker involvement which has long been on the agenda of the EU is that of involvement in the proposed "European Company". Proposals for a European Company Statute have been on the policy-making agenda of the European Commission for 25 years and it has repeatedly stressed the importance of legislation enabling the incorporation of companies at EU level in order to improve the competitiveness of European companies. The proposed Statute has always been accompanied by proposals for employee involvement, and these have been largely responsible for the deadlock that has developed in the Council, particularly because of concerns from countries with advanced information, consultation and especially board-level participation systems. These countries fear that the Statute could be used to circumvent national legislation in this area. Similarly, objections were voiced from countries which currently have no provision for the appointment of worker representatives on company boards, or a lower level of information and consultation provision.

In 1996, a high-level expert group on worker involvement was set up by the Commission with the aim of breaking the deadlock in this debate. The so-called "Davignon group" issued its report on 14 May 1997 (EU9705128N) and recommended that priority should be given to free negotiation between the parties directly concerned as to the system of employee involvement to be applied. Only if the parties should fail to reach agreement, would a set of minimum reference rules come into operation. This proposed procedure was therefore similar to that contained in the EWC Directive, but it was suggested that reference rules should contain stronger information and consultation provisions than those applied in the EWC Directive's subsidiary requirements, along with board-level participation provisions. The Davignon report resulted in the development of a compromise text of the Statute's involvement provisions by the Luxembourg Presidency of the second half of the year, which stuck relatively closely to the report's recommendations, and some progress was made in Council (EU9710158N) (the UK Presidency of the first half of 1998 went on to produce further proposals - EU9803193N)

The cultural and legal differences in national worker involvement systems will continue to make European regulation in this area difficult. However, the approach taken by the EWC Directive, with the accent on voluntary agreements backed up by minimum statutory provisions implemented at Member State level, is now becoming established as a solution. The experience of the existing EWCs is particularly instructive in assessing the impact of such legislation.

In advance of the Amsterdam Treaty coming into force, thus bringing the UK under the same EU "social chapter" as the other Member States, December 1997 saw the adoption of a special "extension" Directive to apply the EWCs Directive (as well as the parental leave Directive) to the UK (EU9712175N). As a result, all EU (and other EEA) countries are now covered by the Directive. The UK is to bring in implementing legislation within two years, while all the other EU countries had transposed the Directive by the end of 1997, with the exception of Luxembourg and Portugal. Since the Directive came into force in September 1996, it is not known how many EWCs have been set up based on Article 6 of the Directive under the "special negotiating body" procedure, though by the end of 1997 it is unlikely that more than 30 or so agreements had been signed. However, comprehensive information on the "Article 13" agreements signed before the Directive came into force is now available. According to a recent study carried out for the European Foundation for the Improvement of Living and Working Conditions, over 400 companies headquartered in 25 countries concluded such agreements, and 386 of the agreements are analysed in the study - see table 8 below.

Table 8: Country of origin of companies with Article 13 EWC agreements
Country % of all agreements Number of agreements Country % of all agreements Number of agreements
Austria 2 7 Netherlands 5 18
Belgium 4 17 Norway 1 7
Denmark 2 6 Portugal - -
Finland 4 14 Spain 1 3
France 11 42 Sweden 6 22
Germany 23 89 Total of EEA 17 63 244
Greece - - . . .
Iceland - - Switzerland 5 19
Ireland 1 3 UK 15 58
Italy 4 14 Japan 4 14
Liechtenstein - - USA 15 59
Luxembourg 1 2 Rest of the World 1 5

Base: All agreements, N = 386. Note: percentages total more than 100% and numbers add up to 395 because in nine cases, organisations are headquartered in more than one country.

Source: European Foundation for the Improvement of Living and Working Conditions, 1998.

The study found that, despite a strong tendency to opt for information and consultation arrangements similar to those prevailing in the country in which the undertaking is headquartered, this is by no means true of all agreements. A significant number of agreements concluded in companies where employee-only representative bodies are the norm, have opted for joint structures (ie including management representatives) in their EWC (EU9803191F). It remains unclear whether this implies a trend towards a "watering down" of national provisions, or whether this constitutes a deliberate move to safeguard stronger national arrangements which already exist in these companies. The impact of European legislation on national information and consultation systems thus remains unclear.

The role of the social partners

Another feature of policy-making at the European Union level has been the increasing importance accorded to the dialogue and autonomous consultation and negotiations between the social partner organisations at sectoral and intersectoral level. This role was boosted by Articles 3 and 4 of the Maastricht Agreement on social policy which extended the social dialogue provisions of Article 118b of the TEC considerably by imposing an obligation to consult management and labour before presenting a proposal in the social field. The social partners may decide, after a two-stage consultation process, to open autonomous negotiations with the aim of concluding a European framework agreement on the issue in question, which can then either be implemented through a Council decision or in accordance with national structures.

This process led to the December 1995 parental leave agreement between the Union of Industrial and Employers' Confederations of Europe (UNICE), the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP) and the European Trade Union Confederation (ETUC), which was subsequently implemented by a Council Directive (96/34/EC). In May 1997, the same parties concluded a framework agreement on part-time work, after many months of difficult negotiations (EU9706131F). The conclusion of this agreement, which was implemented by a Directive in December (EU9712175N) and is to be transposed by the Member States within two years, represented a considerable success, bearing in mind that previous legislative initiatives in this area - which had been under discussion for some 15 years - had failed. The deal should be viewed in the light of the fact that the conclusion of the Intergovernmental Conference and the Amsterdam Summit were then imminent. A further important factor was arguably the somewhat dented estimation of the European social partner organisations after they had failed, following the Renault Vilvoorde affair, to reach an agreement on a code of conduct for companies faced with the need to restructure (see above).

ETUC, UNICE and CEEP also issued joint contributions in relation to the Commission'sConfidence pact for employment initiative (EU9702101F) and the Luxembourg Employment Summit. Having thus demonstrated their willingness to cooperate on such issues, it was decided at the summit that they should be involved in twice-yearly meetings with the Council troika in order to discuss employment issues (EU9711168F). In December 1997, the decision was taken by the social partners to move on to intersectoral negotiations on the employment conditions of workers on fixed-term contracts (EU9802183F), a subject previously excluded, at the request of UNICE, from the negotiations on "atypical" work that led to the part-time work agreement. Nevertheless, the two rounds of consultation on the issue of national arrangements for information and consultation of employees - see above - failed to produce consensus over the establishment of autonomous intersectoral negotiations and the formulation of a draft Directive in this area now appears the most likely course of action (EU9803192N).

At the sectoral level, the social dialogue process has also seen the conclusion of an unprecedented number of joint statements and opinions in recent years. 1997 saw several milestones in the sectoral dialogue - the conclusion of a first sectoral on the improvement of paid employment in agriculture (EU9709145F), as well as a first agreement on working time in the maritime transport sector (EU9802182F) which, it is hoped, will now be implemented via a Council Directive. There was also significant progress in the dialogue in other sectors, particularly on the issues of employment, equal opportunities and training. Examples include: the follow-up to a 1996 joint memorandum on new sources of employment in the cleaning industry (EU9710153F); a joint statement on employment in local and regional government (EU9803190F); and a code of conduct on basic labour standards in textiles and clothing (EU9709150N). The year also saw the Commission's first annual review of the social dialogue process (EU9705126N).

Nevertheless, the social dialogue continues to be fraught with difficulty because of the perceived inadequate "representativeness" of certain social partner organisations and the desire among a number of bodies currently excluded from consultations (particularly under the Maastricht social policy Agreement) to attain a greater voice and involvement in these processes. In order to ascertain the desired paths for the future development of the European social dialogue, the European Commission issued a consultation document in September 1996 (EU9702102F), to which all relevant organisations responded over 1997. A second consultation document is now imminent and is set to have an important impact on the nature and focus of the social dialogue process and the involvement of different actors.

While the role of the social partners at the European level was significantly boosted, at the Member State level many trade union organisations have been faced with continuing membership loss. Table 9 below gives figures for union density in Europe in 1995, as calculated in the International Labour Organisation's 1997-8 World Labour Report. Many unions have responded with mergers in order to retain their bargaining strength - examples include major mergers occurring or in prospect in Austria, Germany, the Netherlands and the UK. Nevertheless, tripartite arrangements of various kinds have largely remained intact, or were indeed revived to some extent in the case of the UK. In Ireland and the UK, the issue of trade union recognition is set to occupy the policy agenda in 1998.

Table 9. Union density rates, 1995
Country Union density*
Austria 41.2%
Denmark 80.1%
Finland 79.3%
France 9.1%
Germany 28.9%
Greece 24.3%
Italy 44.1%
Netherlands 25.6%
Norway** 57.2%
Portugal 25.6%
Spain 18.6%
Sweden 91.1%
UK 32.9%

* Calculated as union membership as % of wage and salary earners.

** National statistical data (definitions not necessarily compatible with ILO figures).

Source: ILO

Industrial relations and the impact of EMU

It is almost certain that 11 countries will join the EU single currency in the first wave. Denmark, and the UK will not join the first wave and Sweden and Greece are the only countries which may not qualify (see above). The countries which do not qualify at this stage or have chosen not to join are being encouraged to join sooner rather than later.

There has been little research or thought into the actual industrial relations consequences of EMU - instead most countries have concentrated on issues such as inflation, budget deficits, employment effects and wage policy. Some countries, however have began to realise this fact and to attempt to prepare the way for some issues. In countries such as Belgium, Italy, the Netherlands and Spain, the changes required to prepare for EMU, particularly in terms of public spending, have played a large role in shaping collective bargaining and social dialogue, while the Greek Government's industrial relations policies are seen to have been influenced by this issue. In Finland, the social partners have agreed at national level on "EMU buffer funds" aimed at protecting Finnish workers against economic fluctuations within EMU by creating reserves in the occupational pension scheme and the unemployment insurance system. The German trade unions, fearing pressure on their system of collective bargaining through intensifying international competition, have called for a "Europeanisation" of collective bargaining through the extension of European minimum social standards and a stronger coordination of collective bargaining policy at European level. In 1997, for example, IG Metall started to establish transnational bargaining networks and invited foreign trade union colleagues to participate to some extent in German collective bargaining.

Conclusions and outlook

As the introduction made clear, the big issues of 1997 are likely to remain dominant throughout 1998. In many of the countries characterised by national, regional and sectoral collective bargaining, negotiations over new agreements are due in 1998 and are likely to include clauses on flexibility of work and working time, employment security and job creation. As the deadline for EMU comes ever closer, most economies are likely to be under the dual pressure of creating more flexible labour markets whilst holding down wage demands in order to keep a grip on inflation. Another preoccupation in 1998 is likely to be the preparation for enlargement of the Union to the east and south (EU9708143F).

(Tina Weber, ECOTEC Research and Consulting Ltd)

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