1998 Annual Review: EU-level developments and comparative overview

This record presents a summary of EU-level employment and social policy developments in 1998, and a comparative overview of industrial relations developments in the EU Member States (plus Norway).


The end of 1998 marked a milestone in the development of the European Union. On 1 January 1999, 11 Member States officially adopted the European single currency, the euro (the third stage of Economic and Monetary Union, EMU). Of the EU Member States, only Denmark, Greece, Sweden and the UK remain outside the "euro-zone", but it appears inevitable to many observers that at least most of these countries will join the single currency in the not too distant future. In 1998, the impact of EMU on industrial relations was assessed more widely than before and was the subject of keen debate for the social partners at European, national and regional levels.

Among the other key issues which dominated industrial relations in 1998 were the following:

  • the persistence of high levels of long-term unemployment despite economic growth, coupled with the emergence of skill shortages in a number of sectors and occupations;
  • the continued focusing of European and national labour market strategies around the EU Employment Guidelines;
  • the increasing involvement of the social partners in the debate on changes in working time, work organisation and labour market and vocational training policy;
  • developments in the area of worker information and consultation legislation; and
  • debates over the "Europeanisation" of collective bargaining in the context of EMU.

The European Commission's 1997 convergence report showed that 14 countries effectively met the public finance criteria for EMU. Denmark and the UK were, at the time, not seeking entry into the single currency. In Denmark, this decision is subject to another referendum, which is unlikely to be held prior to 2000, despite widespread agreement in the governmental coalition in favour of entry. In the UK, the governing Labour Party published in March 1999 its strategy for possible eventual entry into the single currency. This is believed in some circles to be a prelude to the country's entry into EMU within the lifetime of the next parliament. The situation in Sweden is less clear. Although there have been discussions over the establishment of EMU "buffer funds" similar to the Finnish model, the 1998 national parliamentary elections returned a weakened Social Democratic Party to power, which relies on the support of the anti-EU Left and Green parties.

When the decision was made on which countries were to be invited to join the single currency on 1 January 1999, Greece was held to be too far outside the public finance convergence criteria to qualify. The country has since made strides to close the gap on the required target figures and is hoping to join the euro-zone on 1 January 2001. However, the moves instituted to achieve this entry date have led to significant industrial unrest and to dissent among the social partners. While the government and employers' organisations are in agreement that the recent devaluation of the drachma should go hand-in-hand with increasing labour market flexibility in order to achieve the EMU public finance criteria, the trade unions have rejected this strategy, despite supporting entry into the single currency.

At the same time as the countries remaining outside the single currency grapple with the consequences and consider joining the euro-zone, the single currency has equally had an impact on industrial relations in the countries on the inside, albeit to a lesser extent than may have been expected. A pioneering step was taken by Belgian, Dutch, German and Luxembourg trade unions in September 1998 at a meeting at Doorn in the Netherlands, where they signed a joint declaration on collective bargaining goals. The declaration emphasises the need for close cross-border cooperation and lays down common bargaining guidelines. This and other initiatives at European level raised discussions over the possibility of an increasing Europeanisation of collective bargaining.

With the exception of Denmark, Greece, Portugal and the UK (plus Norway), the majority of Member States experienced a continuation of the period of increasing economic growth in 1998 - as shown by table 1.

Table 1. Basic economic and monetary indicators, EU and Norway, 1998 (%)
Country Economic growth (% of GDP) Inflation
Austria 3.3 1.2
Belgium 2.2 1.0
Denmark 2.4 1.8
Finland 5.0 1.5
France 3.1 0.7
Germany 2.8 0.9
Greece 3.0 4.5
Ireland 9.5 2.4
Italy 1.6 1.6
Luxembourg 5.5 1.0
Netherlands 3.7 2.0
Norway 2.5* 2.3
Portugal 3.0 2.8
Spain 3.7 1.8
Sweden 2.8 1.1
UK 2.5 2.8
* 3.0 excluding offshore sector.
Source: National and EU statistics collected by EIRO (estimates or part-year figures in some cases, with no final figures available).

In a number of countries, economic growth led to some reduction in the level of unemployment, while in certain sectors and occupations skill shortages began to emerge. According to the European Commission's 1998 Employment in Europe report, in Spain, Ireland, Finland, Luxembourg and the Netherlands the number of people in work had increased at a historically high rate and unemployment had come down significantly, although in the first three countries it remained high. In three other Member States - Germany, Austria and Sweden - employment had fallen since 1994 and in a fourth, Italy, it had remained unchanged. Unemployment had risen over this period in three of these countries, though in Sweden it had fallen markedly over the previous year, despite slow growth in employment.

However, unemployment and particularly the proportion of long-term unemployment remain high, leaving a significant number of individuals effectively excluded from the labour market - as indicated by table 2. The Commission's 1998 Employment Rates Report and the Employment in Europe report also stress the unfavourable performance of the European Union in terms of employment creation in comparison with the USA. In addition and for the fifth year in the last six, there was no net addition to full-time employment in the Union (1997 figures). Employment creation has mainly been concentrated in part-time, fixed-term and temporary contract work.

Table 2. Unemployment rates, EU and Norway 1994-8 (%)
Country 1994 1996 1997 1998
Austria n/d 5.3 4.4 4.5
Belgium 9.6 9.5 13.3 12.6
Denmark 8.0 6.8 7.4 6.3
Finland n/d 15.6 14.5 11.5
France 12.7 12.4 12.3 11.5*
Germany 8.7 8.8 11.4 11.1
Greece 8.9 9.7 10.4 10.1
Ireland 14.6 11.7 13.0 7.1*
Italy 11.3 12.2 12.3 12.6
Luxembourg 3.5 3.3 3.6 3.1
Netherlands 7.2 6.4 6.4 6.5
Norway 5.4 4.8 4.1 3.2
Portugal 6.7 7.3 6.7 4.5
Spain 24.3 22.2 20.8 18.0
Sweden n/d 9.5 9.1 7.5
UK 9.7 8.2 5.1 6.2*
* ILO definition.
Source: 1994-7 - Eurostat; 1998 - national and EU statistics collected by EIRO ( (estimates or part-year figures in some cases, with no final figures available).

The reduction in unemployment can partly be attributed to the "activation" of labour market policy, which was strongly advocated by the European Commission's 1998 Employment Guidelines. The Member States' subsequent National Action Plans (NAPs) for employment, on the whole, reflected this emphasis, although in many countries it was argued that the NAPs merely restated existing national labour market policy initiatives. The 1999 Employment Guidelines have highlighted the importance of continuity and in particular called for a strengthening of the "adaptability pillar", as well as increasing efforts in the area of equal opportunities. Where initiatives in the area of equal opportunities exist, this is often in the context of schemes encouraging greater flexibility in working time at the local level to meet the needs of both employers and employees and fostering a better reconciliation of work and family life. In Denmark, the government chose an unprecedented means of delivering on its promises in relation to family policy, when it intervened in spring 1998 to end a week-long strike resulting from the breakdown of collective bargaining for many private sector employees. Going beyond the compromise positions reached by the social partners during the negotiations, the government provided for additional time off for family reasons in the settlement imposed by law.

There is, in a number of countries, an increasing emphasis on the assessment of the tax and social security burden on employers, with a view to reducing this in order to encourage job creation. At both European and national levels, greater labour market flexibility linked with the introduction of minimum standards of social protection is increasingly perceived as a new orthodoxy. This is, for example, the approach taken by the intersectoral European-level social partners in their framework agreement on the rights of employees on fixed-term contracts, which was reached in January 1999 (and formally signed in March).

This framework agreement also demonstrates the prevailing trend for the social partners to become more actively involved in the formulation of policy, both at the national and at the European level. In 1998, the European sectoral social dialogue produced a first agreement leading to a draft Directive - on working time in the maritime sector. This agreement was welcomed by the European Commission and it has been argued that such developments are likely to continue in the context of the reorganisation of the dialogue at this level. Similarly at the national, regional and company levels, social partner organisations have become more and more involved in drawing up "employment pacts" aimed at safeguarding or creating employment, and are discussing changes in working time and work organisation as well as the organisation and funding of vocational training, to ensure the adaptability of businesses to a changing environment. The new Social Democrat/Green German government, for example, was able to revive the idea of an employment pact, leading to a new national "alliance for jobs", which includes the formation of a tripartite body. Similar pacts and labour market policy reform agreements have also been reached at national and regional level in countries such as Denmark, Belgium and Italy.

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 1998 or are expected in 1999.

Table 3. Political situation in the EU Member States and Norway
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 (Österreichsche Volkspartei, ÖVP). National elections are due to be held in October 1999.
Belgium The federal government is a coalition between socialist parties - the Parti Socialiste (PS) and Socialistiche Partij (SP) - and christian democratic parties - the Christelijke Volkspartij (CVP) and Parti Social Chrétien (PSC). However, some tensions between partners, particularly at community level, are becoming visible with the approach of the general, regional and European elections in June 1999.
Denmark A coalition government led by the Social Democratic Party (Socialdemokratiet), which also includes the Social Liberal Party (Det Radikale Venstre), won the general election in March 1998 with a parliamentary majority of one.
Finland A "rainbow" coalition government 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 (Vihrea liitto) and the Swedish People's Party (Svenska folkpartiet) - was in power in 1998. Parliamentary elections are to be held in March 1999.
France There is a "cohabitation" between a conservative President, Jacques Chirac, elected in 1995, and a socialist Prime Minister, Lionel Jospin, whose government is supported by a left-wing coalition made up of socialists, communists and ecologists, which was elected in 1997.
Germany The September 1998 general election saw a substantial drop in the vote for the former ruling coalition, composed of the Christian Democratic Union (Christlich Demokratische Union, CDU), its Bavarian associate party the Christian Social Union (Christlich-Soziale Union, CSU) and the Free Democratic Party (Freie Demokratische Partei, FDP). After 16 years in power, the conservative/liberal government coalition was replaced by a new "red-green" coalition composed of the Social Democratic Party (Sozialdemokratische Partei Deutschlands, SPD) and Alliance 90/The Greens (Bündis 90/Die Grünen), which gained a majority of 21 seats in parliament.
Greece The Pan-Hellenic Socialist Movement (Panelino Socialistiko Kinima, PASOK) forms the government. The next general election is due in 2000.
Ireland The government consists of a coalition between the centrist Fianna Fail party and the small right-of-centre party, the Progressive Democrats (PD s). The coalition has been in power since June 1997.
Italy Following a political crisis caused by the opposition of the Communist Reconstruction Party (Partito della Rifondazione Comunista, PRC) to the 1999 Budget law, a new centre-left coalition government led by Massimo D'Alema came to power in October 1998. The new coalition is formed by the Ulivo centre-left grouping (which includes the Democratic Left), the centrist Democratic Union for the Republic (Unione Democratica per la Repubblica, UDR) and the Party of Italian Communists (Partito dei Comunisti Italiani), which was created by a split within the PRC.
Luxembourg A coalition government of the Christian Social People's Party (Chrëchtlech Sozial Vollekspartei, CSV), and the Luxembourg Socialist Workers' Party (Lëtzebuergesch Sozialistesch Arbechterpartei, LSAP) is currently in office. The next elections are due in June 1999.
Netherlands A second "purple" coalition government, made up of the Labour Party (Partij van de Arbeid PvDA), the Liberal Party (Volkspartij voor Vrijheid en Democratie, VVD) and the social democratic Democraten 66 (D66) was formed after the general election in May 1998, which resulted in a left-wing majority in the second chamber of parliament.
Norway Throughout 1998, a minority coalition government was in place, comprised of three centre parties - the Christian Democratic Party (Kristelig Folkeparti), the Centre Party (Senterpartiet) and the Liberal Party (Venstre).
Portugal The Socialist Party (Partido Socialista, PS) is in government, while the President is also a PS representative. 1998 saw the country's first referenda. 1999 is sure to see intense political activity, because of parliamentary elections scheduled for October.
Spain Conservative People's Party (Partido Popular, PP) government in power, with support of conservative nationalist parties from Catalonia and the Basque Country.
Sweden In September 1998, parliamentary elections were held. The governing Social Democratic Party (Socialdemokratiska Arbetarepartiet) remained the single largest party and won 36.6% of votes, 8.7 points down from the previous election. However, for the party to remain in power it had to seek support from other parties. The result is a cooperation, though not a coalition, with the Left Party (Vansterpartiet) and Green Party (Miljopartiet de Grona), which are both anti-EU.
UK The Labour Party, elected in May 1997, completed its first full year in government. This proved to be a very busy one as it implemented some of its promised industrial relations measures, which were both national and European in orientation.
Source: EIRO.

The modernisation of work organisation was the subject of a Commission Communication on Modernising the organisation of work - a positive approach to change, issued in November 1998, calling on the social partners to take an active role in shaping this debate and taking practical initiatives. The important role to be played by the social partners was also emphasised by Managing change, the November 1998 report by the Commission's high-level expert group on the economic and social impact of industrial change (the "Gyllenhammar report").

The negative impact of a lack of consultation with social partner organisations was arguably demonstrated when a number of national-level policy reforms ran into trouble. In Denmark, for example, there was significant disagreement over the amendment of pensions legislation, which had been drawn up prior to consultation. Similarly in Greece, unilateral decisions about labour market flexibility measures instituted by the government caused significant unrest in the industrial relations sphere. There were also examples where a failure by the social partners to reach agreement on joint action prompted political intervention. This was notably the case at European level in relation to negotiations on national worker information and consultation, a subject which was highlighted by the 1997 closure of Renault's Belgian plant and given further prominence in 1998 by cases such as the job losses and closures at Levi Strauss in Belgium and elsewhere. The Commission's hand was finally forced into taking the initiative in issuing a draft Directive on this issue after the Union of Industrial and Employers' Confederations of Europe (UNICE) had repeatedly rejected offers by the European Trade Union Confederation (ETUC) and the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP) to enter into EU-level negotiations.

Worker involvement legislation received much attention throughout 1998, not only as a result of the debate over national-level information and consultation, but also through repeated efforts to make headway on involvement issues in the European Company. The draft European Company Statute has been the subject of Community legislative initiatives for well over 25 years and, despite efforts by successive Council Presidencies, its involvement provisions failed to make decisive progress in 1998, with the Spanish government rejecting an Austrian Presidency compromise proposal in December 1998.

Key trends in collective bargaining and industrial action

Despite a widespread continuation of the trend towards the decentralisation of collective bargaining, countries with traditionally strong national and sectoral bargaining largely retained bargaining at this level as the standard mechanism for setting pay and conditions. On the whole, across many EU countries there was an emphasis on setting pay and especially maximum pay increases at central or sectoral level, as part of a continuing policy of wage restraint, with agreements on working time and work organisation often reached at the local level. This is seen to allow companies and individual employees the greatest possible scope to meet their respective needs in terms of operational flexibility and the reconciliation of work and private life.

However, the years of enforced wage moderation in the run-up to the deadline for meeting the EMU convergence criteria began to create unrest in some countries, as trade unions felt that they had kept their side of the bargain while governments and employers had not delivered on theirs, in terms of public investment or employment creation. Restructuring and redundancies also remained prevalent despite years of wage restraint. Many trade unionists perceived businesses to have benefited from several years of steady economic growth, while this had not produced higher pay awards. In countries such as Germany and the Netherlands, unions thus called for an end to moderation in future. In addition, in some cases (such as Finland and the Netherlands) it was felt that an increase in the value of share options was pushing up salaries among high-earning managers, breaking with wage moderation, while most ordinary wage earners were perceived to be left behind in the majority of sectors and occupations. In some sectors and occupations where skill shortages were becoming visible, wage drift did, however, occur (as in the Belgian chemicals sector, or Irish electronics). Moderation seemed, at least to some extent, to be abandoned in Denmark and Norway in 1998

As many collective agreements were due for renegotiation in 1998, this underlying climate of unease contributed to an increasing proliferation of industrial action. The incidence of strike action was therefore higher in 1998 than in previous years. In Denmark, for example, negotiations in most of the private sector broke down leading to a week-long strike affecting one-fifth of the national workforce. This dispute was ultimately resolved through government intervention. In other countries, including Austria and the Netherlands, industrial action was a particular feature of negotiations in the public sector, which had been starved of cash for several years as a result of budgetary stringency. As mentioned above, the year presented a differentiated picture in relation to pay trends, as some countries saw wages rise as a result of factors such as trade union pressure and increasing returns on share options, while in others wage moderation remained intact. On the whole, the year could be characterised as one of mounting unease in collective bargaining. A country-by-country analysis of bargaining trends is presented in table 4.

The overview provided in table 4 also confirms the trend towards an increasing widening of the bargaining agenda to include issues such as employment, training and "employability", flexibility and changes in working time. In the latter area, there are some examples of working time reduction, but in many countries and sectors progress in this area remains elusive as a result of a failure to resolve the argument on whether or to what extent hours cuts should lead to pay sacrifices. This widening of the collective bargaining agenda should be viewed in the context of persistently high levels of unemployment.

Table 4. Trends in pay and collective bargaining and other key industrial relations (IR) events/issues in the EU Member States, plus Norway, 1998
Country Pay trends Trends in collective bargaining Other main IR events/issues
Austria Metalworking pay agreements in October/November raised minimum pay by 3.7%, and had repercussions for all subsequent agreements. Continued preoccupation with amending pay scales, as automatic increments were reduced or scrapped, with entry pay raised in return. Removal of remaining differences between wage and salary earners was important issue in both law and bargaining, and harmonisation should be accomplished in 1999. Centralised sectoral bargaining remained dominant. Unemployment was primary national concern. Working time reduction widely discussed at national and sectoral level, with focus on potential new employment opportunities. However, progress remained elusive owing to disagreements on pay sacrifices involved. Debate postponed in sectors such as metalworking, while progress made in paper sector, where weekly working time was reduced to 36 hours (from 2001). Reduction of seasonal unemployment and Sunday working discussed, though with little progress. Agreement on legal changes to facilitate fight against undeclared work reached in January 1999, following disagreement between social partners on definition of undeclared work. Tax, and especially tax cuts for employers, became major issue and is set to dominate 1999 elections. Against backdrop of falling membership, inter-trade union cooperation agreements increased. New union, FGÖ, formed outside ÖGB fold. Industrial action largely limited to public sector.
Belgium Wage increases remained within 6.1% margin set for for 1997-8. Actual rise in 1998 remained under 1.5%, but in some sectors with a high demand for labour (eg chemicals) settlements exceeded authorised margin. Social partners agreed on maximum 5.9% pay increase for 1999-2000, which was taken into account in new intersectoral agreement for this period. Negotiation of two-year intersectoral agreements resumed with conclusion of deal for 1999-2000. Intersectoral accords on specific issues covered issues such as the euro and the admission of voluntary sector representatives to the Central Economic Council. At sectoral level, year saw continued application of 1997-8 agreements. Bargaining focused on issues such as reduction and flexibility of working time, employment and minimum social assistance. NAP dominated employment creation/work organisation debate at national and regional levels (training, lower labour costs, job creation, worksharing, equal opportunities). Main issue at company level often workforce cuts and closures, sometimes resulting in agreements on working time and contract flexibility. Various high-profile closures, reorganisations and mergers. Organisational changes in main trade unions.
Denmark Annual wage and salary increases reached 4.6% at end of year. With inflation under 2%, this meant significant increases in real earnings. Pay increases higher than in competitor countries, raising fears about Danish competitiveness. High increases widely attributed to results of government intervention to settle widespread private sector strike in spring 1998. 1998 saw sectoral bargaining in main DA/LO bargaining area. This broke down, leading to 11-day strike involving 500,000 workers and then government intervention. Settlement imposed by government for whole DA/LO area went beyond the areas of agreement achieved in negotiations. Subsequent local pay bargaining led to significant increases. Government's private sector intervention expected to have substantial impact in bargaining in other areas in 1999. Year dominated by breakdown of private sector bargaining, strike and government intervention. Main issue involved was award of extra time off, especially for family care reasons. Labour market policy focused on increasing labour supply to reduce emerging bottlenecks, including tripartite agreement on labour market reform (especially more active policy for unemployed people). Early retirement curtailed and increasing efforts made to reintegrate excluded groups. Working time flexibility agreed in industry sector. Mixed fortunes for national tripartite consultation.
Finland Central incomes policy agreement for January 1998-January 2000 provided for average labour costs to increase by 2.6% in 1998. Central intersectoral incomes policy agreement in force, covering 98% of workforce. Bargaining increasingly decentralised to company level, especially on working time. Government extended opportunities for conclusion of local-level agreements to cover employers not organised in employers' organisations. Research programme into local-level bargaining, agreed as part of incomes policy agreement, launched in 1998, with results to feed into next round of negotiations. Working time and stress at work major issues of debate. As part of incomes policy agreement, working groups started examining these issues, among others. In context of flexibility, tripartite working groups examined issues such as working hours banks and career breaks, and scheme combining partial pension with part-time work was tested. Discussions on modernising work organisation and position of "atypical" workers. Labour market policy focused on job creation in areas such as the not-for-profit sector, private services and high technology. Government made further cuts in taxes on labour. Little industrial action recorded.
France No statistics available, but wage negotiations rendered difficult by employer attempts to retain a margin of manoeuvre for working time negotiations prompted by 35-hour week law. Pay freezes and moderation common in company bargaining agreements on working time. Bargaining dominated by new law introducing statutory 35-hour week from 2000 (2002 for small companies) and encouraging bargaining on issue. Employer opposition led to virtual breakdown in intersectoral bargaining. Sectoral bargaining slow except on working time, where it was dynamic. Company-level bargaining also dominated by working time. 35-hour week law extended use of "mandating" in company bargaining, allowing unions with no representatives in a firm to mandate an employee to conclude an agreement on their behalf. Working time law dominated IR. Company agreements on 35-hour week focused on annualised hours, reorganisation of work and wage freezes/moderation, while sectoral agreements explicitly linked reduction and reorganisation of working time. Intersectoral agreement signed on early retirement in exchange for new recruitment. Government introduced measures for disadvantaged groups in labour market. Debate on reduced employers' social security contributions for low-paid workers, with decision postponed until 1999. CNPF employers' organisation changed name to MEDEF and shifted policy in more free-market direction. Rapprochement between CFDT and CGT union confederations. Strikes largely limited to transport sector and privatisation measures implemented without significant industrial action. High-profile action by unemployed groups led to increases in benefits.
Germany Collectively agreed basic wages and salaries rose on average by 1.8% (1.7% in the west, 2.5% in the east), ranging between 1.3% in construction and 2.3% in retail and wholesale. With inflation at 0.9%, this meant a real pay increase of about 0.9%. Tendencies towards decentralisation and creeping erosion of branch-level collective bargaining continued (eg, proportion of private sector workforce covered by sectoral agreements fell, while company-level bargaining grew in coverage). However, several new collective agreements concluded in emerging sectors such as industry-related services and new telecommunications. Unions sought greater Europeanisation of bargaining within EMU - eg agreeing a joint declaration on cross-border coordination with their Benelux counterparts. Few major IR developments before September election. Bargaining dominated by pay, though employment issues continued to figure prominently. Bipartite and tripartite employment pacts signed at all levels from company upwards (though unions withdrew from east German pact), culminating in national "alliance for jobs", in form of standing tripartite body. Debate over NAP, but not systematic social partner contributions. Working time reductions stagnated, but some progress on flexibility, notably through working time accounts. New government repealed some of its predecessor's labour law amendments. Membership of unions and employers' associations falling. Fewer employees covered by co-determination. Much debate on Europeanisation of bargaining, with unions in favour and employers opposed.
Greece National General Collective Agreement 1998-9 provided for a 2.7% pay increase for the first six months of 1998, followed by 2% for the second six months, with adjustments if inflation exceeded 3.5%. Considerable trade union emphasis on maintaining workers' purchasing power. Collective bargaining on the whole remained centralised, with two-year National General Collective Agreement signed. Autonomous bargaining continued to grow in importance, with more agreements and fewer arbitration decisions. Year of increasing tensions in the industrial relations sphere (including general strikes) around issues of: privatisation; promotion of greater flexibility, either by agreement or, increasingly, by unilateral government decision (including controversial legislation); and union attempts to maintain purchasing power. Economic policy was constant area of disagreement, especially in context of devaluation of drachma and Greece's planned EMU membership. Unions took initiatives in several new areas (health and safety, women's representation in union bodies etc). First union for unemployed people created.
Ireland Bargaining governed by 1997's P2000 central agreement, which allows for a 9.25% pay increase over three years. Majority of employers abided by the terms of P2000, but some wage drift in sectors with tight labour markets. Serious pay disputes in public sector. Parameters set in P2000 centralised tripartite agreement largely adhered to in company bargaining, though evidence of wage drift in particular sectors. Suggestions that a new national agreement to succeed P2000 may differ substantially from present arrangements and allow greater flexibility. Workplace social partnership, which is promoted by P2000, became major issue of debate but, despite some initiatives, is still rare. Statutory trade union recognition was prominent concern, and high-level group proposed voluntarist solution, but this was compromised by major dispute at Ryanair airline. Following 1998 report, statutory national minimum wage to be introduced in 2000. NAP mirrored many P2000 commitments and seen by social partners as primarily repackaging of existing policies. Public sector pay main source of industrial disputes.
Italy Average hourly contractual wages increased by 2.4% in 1998. Wage moderation generally continued, in line with incomes policy set by 1993 central tripartite agreement. Wage demands major stumbling block in negotiations over key metalworking agreement at end of year. Tripartite agreement signed in December confirmed two-tier (sector and company) bargaining system laid down by 1993 agreement, without amendments, despite prior proposals for greater decentralisation. Bargaining initially hampered by dispute over government's proposed legislation on 35-hour week. Important sectoral agreements subsequently reached in chemicals, public sector and agriculture, plus first agreement for temporary work agencies. Employment creation was prominent concern of government policy and bargaining. Tripartite "social pact for development and employment" sought to create jobs through training and cuts in labour costs and tax. Tripartite employment initiatives agreed at local level. Government measures included new agency to promote employment in South and new national vocational training system, which involves social partners. Working time very important: government proposed controversial 35-hour week law (unadopted at end of year); decree restricted use of overtime; sectoral agreements cut hours and introduced flexibility; some innovation in company agreements. Temporary agency work introduced, jobsharing promoted by government and teleworking introduced in public administration. Draft legislation issued on workplace employee representation, while first Rsu representative elections held in public sector. Unions facing representativeness problems as active membership dwindled. Various new rules on union representativeness adopted or proposed. Public sector employers joined private sector confederation, Confindustria.
Luxembourg Wage moderation, as agreed by social partners, generally continued. Most recent minimum wage rise was 3.3% from January 1997 and most recent index-linked rise for all pay was 2.5% from February 1997 (however, further increases due in early 1999). Bargaining continued to occur at company and sectoral level, with no major changes in 1998. After difficult negotiations over NAP, tripartite committee agreed: terms for review of working time legislation, stressing greater flexibility rather than reduction in statutory hours; new funding and schemes for employment creation; and introduction of six months' parental leave and six days' annual family leave. These agreements received heavy criticism from various quarters and NAP thus did not come into effect on 1 January 1999, as planned. Government and unions failed to agree on reform of public sector pensions, and subsequent legislation on issue prompted public sector strike. Proposed private sector pension reform met concerted union opposition and deferred for tripartite discussions in 1999. "Social elections" of employee representatives saw few surprises, beyond collapse in support for troubled FEP white-collar union.
Netherlands Average collectively agreed hourly wage rates rose by an estimated 3.2% in 1998. Flexible and performance-related pay made up increasing share of pay. Share options were source of contention, as rise in share prices meant significant increases in many senior managers' incomes. This helped put pressure on prevailing pay moderation, with unions seeking higher rises for 1999. Some tendency towards decentralisation of current, mainly sectoral bargaining structure. Employers in banking and healthcare sought separate company deals, while legislation allowed company-level agreements on more issues. Key issues in bargaining included pensions, workloads, "employability" and flexible pay. Part-time work much debated, with legislation proposed to allow workers to vary hours. New "flexicurity" law gave employers more flexibility in dismissal and recruitment in exchange for greater security for flexible workers. Employment creation was key concern, with new government boosting job-creation schemes and promoting lifelong learning. Privatisation of social security system, and its integration with employment services, continued. Works councils law updated and amended. Numerous company reorganisations and job losses (though overall employment continued to grow). Significant strikes in transport and public sector (health, education and welfare). Four unions merged to form FNV Bondgenoten, the largest Dutch union.
Norway Bargaining produced higher than expected wage increases, with pay growth for 1998 estimated at 6.25%, far higher than any other year during the 1990s (1997 figure was 4.3%). Growth in real pay estimated at 3.6%, the highest for two decades. Social partners and government revived cooperation on incomes policy at end of year. 1998 saw the two-yearly renegotiation of national sectoral collective agreements. Pay negotiations in private sector bargaining area covered by LO and NHO were conducted at industry level by affiliated federations and associations, though the two confederations held prior negotiations on issues including reform of further and continuing training. Employment debate centred on promoting greater labour market participation, though some measures - such as early retirement and increased benefits for parents - went in opposite direction. LO and NHO agreed action plan on further and continuing training, including right to educational leave, while public committee made recommendations on such leave. LO and NHO started examining new working time arrangements at behest of metalworking social partners, while government announced review of overtime legislation. Public committee recommended some liberalisation of temporary agency work. LO and NHO approved new Basic Agreement for 1998-2001, including new provisions on concern-level union representatives. Break-up of AF professional union confederation continued, with further defections by member unions. Pay bargaining led to strikes involving transport, telecommunications and some public sector groups - in some cases resolved by compulsory arbitration.
Portugal Collectively agreed pay increases averaged 3.3% overall. Bargaining activity stable, with sectoral agreements still predominant (two-thirds of total, compared with around a quarter for company agreements). Bargaining centralised, with national and multi-district agreements making up 87% of total. Industry accounted for half of all agreements. Some development of bargaining content, especially on working time - around a quarter of agreements included some innovation in this area. Social partners had significant input into NAP, which included new education/training agency (currently being created) and more active labour market policy. NAP implementation difficult in some areas. Bargaining orientated towards job creation remained rare. New legislation implemented aspects of EU working time Directive, while some working time flexibility introduced by law in public services and by agreement in sectors such as textiles and Oporto area retail. Large package of government employment law proposals focus of much debate, covering matters such as: part-time work; bogus self-employment; fixed-term contracts; definition of remuneration; sanctions for breaching labour law; paid holidays; health and safety representatives; and wages guarantee fund. Tripartite national social dialogue continued, often based on 1996-9 Social Concertation Pact, but cooled later in year. Industrial action mainly in public sector and related groups, notably including "self-service" doctors' strike.
Spain According to trade union figures, collective agreements concluded in 1998 produced average pay increases around 2.6% (inflation stood at 1.8% at end of year). Intersectoral bargaining on employment-related issues produced no agreements backed by all sides. At sectoral level, provincial bargaining still most important, but national bargaining gaining ground. Increasing dynamism of company-level bargaining. First steps towards rationalising bargaining structure following 1997 intersectoral agreement on subject. Dialogue and concertation dominated by job creation and improvement of forms of employment, with focus on converting temporary employment into open-ended jobs. National dialogue hit difficulties and no tripartite agreements reached in committees on: promotion of stable employment (differences on penalising use of temporary contracts and incentives for open-ended contracts); part-time work (employers opposed to government-union agreement on new form of part-time contract); and unemployment insurance cover (unions opposed to cuts in state expenditure). No national progress on reorganisation and reduction of working time, but some regional initiatives. NAP criticised by unions. Budget cuts and tax reform caused union unrest. Health and safety still high on IR agenda. Attention to organising unemployed workers in and outside unions.
Sweden Average collective agreed wage increase was 2.6%. Furthermore, unlike previous years, the 1998 sectoral agreements took account of expected wage drift of about 0.5%. Average wage increases thus totalled around 3.1%. Bargaining conducted mainly at sector level. 1998 saw renewal of most private and public sector agreements, and was unusual in that: export industries took the lead in bargaining; most agreements were concluded for three years (long by Swedish standards); there was little threatened or actual industrial action; and most deals were concluded before, or shortly after, previous agreement expired (under influence of 1997 procedural agreement for industry sectors). Central talks on skills development and "pact for growth" suggested that union and employers' confederations might be reviving their dialogue role, which had eroded since 1980s. New government announced greater role for autonomous social partner cooperation and voluntarism. NAP, alongside labour market measures, included statement that pay formation process should be improved, taking account of national economic situation. Bargaining on this issue was promoted, but official committee also started work on draft legislation. Pay formation was a key issue in subsequent "exploratory talks" between central social partners over possible "pact for growth", but talks had broken down by end of year (though signs of revival in early 1999). Bargaining brought breakthroughs in working time, with reductions accompanied by flexibility. Under pressure from Left and Green parties, government set up working party to examine possible statutory working time cuts. Most agreements covered skills development/training but left financing unclear, and doubts arose about government subsidies for the measures. Strike activity rare.
UK Collectively agreed pay increases estimated at around 3.4%-3.7%. Average gross weekly pay of full-time employees rose by 4.6%. Collective bargaining system remained largely decentralised, with bargaining coverage continuing to decline. Employment creation was a major focus of government policy, emphasising employability and labour market flexibility. CBI and TUC contributed to NAP, especially on employability and adaptability. Government promoted "partnership", but much debate as to meaning. Government's Fairness at work proposals on new individual, collective and "family-friendly" employment rights caused much debate and lobbying, especially over statutory union recognition: legislation will follow in 1999. Details of statutory national minimum wage, due to come into force in April 1999, finalised. Government implemented EU working time Directive (and parts of young workers Directive), with controversial points including: new "workforce agreement" mechanism, allowing working time flexibility deals to be signed by workers not represented by unions; and possible "individual opt-out" for employees from 48-hour weekly maximum. Government issued proposals for clearer framework for employee consultation on redundancies and business transfers. Strike levels low and falling.

Industrial relations, employment creation and work organisation

Employment creation

In 1998, employment growth failed to keep pace with economic growth and, despite a decline in the rate of unemployment in many Member States, the proportion made up by long-term unemployment continued to increase. This tendency raised increasing concerns about the exclusion of entire social groups. In addition, the trend continued towards a growth in part-time, fixed-term and temporary employment at the expense of open-ended full-time employment, as confirmed by the Commission's 1998 Employment in Europe report. Emphasis was therefore placed in many quarters on providing a minimum level of protection for those in "non-standard" employment and on active labour market measures to support the reintegration of disadvantaged groups. Many Member States emphasised the importance of the not-for-profit "third sector" in creating jobs for those returning to work from long-term unemployment. The private services and high-technology sectors were also regarded as potential sources of future employment, which needed to be exploited and supported through labour market and education and training initiatives.

The Commission continued with its employment strategy, as agreed at the special "Employment Summit" European Council meeting held in November 1997 in Luxembourg . In May 1998, it reviewed the Member States' National Action Plans (NAPs), drawn up in response to the1998 Employment Guidelines (EU9805107N). These were on the whole considered to represent a significant achievement, in most cases involving the social partners in their preparation. At the same time, however, the Commission found that insufficient attention was being paid to the "adaptability" and "equal opportunities" pillars of the Guidelines, with most Member States focusing on the activation of labour market policy and measures to support small and medium-sized enterprises (SME s). The 1999Employment Guidelines strongly emphasised continuity in relation to the four key pillars of "employability", "entrepreneurship", "adaptability" and "equal opportunities" (EU9810130F). At the same time, the Commission called for more emphasis on: the reform of tax and benefit systems; the provision of lifelong learning; the reintegration of disadvantaged groups into the labour market; the employment creation potential of the services sector; and improved reconciliation of work and family life. The Employment Rates Report 1998, published at the same time as the draft Employment Guidelines, argued that EU employment rates have developed very unfavourably over the past 20 years compared with those of the USA. In particular, private services are seen as providing a potential for employment creation which is so far insufficiently exploited.

The development of provisions to encourage continuing vocational education and training and lifelong learning was another key area of debate at national and European level in 1998. Furthermore, a number of Member States instituted measures to limit the continuing trend towards early retirement by introducing part-time pension schemes. Workplace stress and the fight against undeclared work were other issues widely discussed in the framework of employment policy.

New forms of work organisation

In November 1998, the European Commission adopted a Communication on Modernising the organisation of work - a positive approach to change (EU9901146F). This Communication built on the Green Paper on Partnership for a new organisation of work which was published in April 1997 and was followed by a period of consultation with social partners and other organisations (EU9805105F).

The new Communication re-emphasises the increasing faith - and responsibility - that the Commission is investing in the social partners' organisations at all levels. It explicitly calls upon employers and trade unions to consider the best possible means of facilitating and complementing the adaptability pillar of the Employment Guidelines, as well as developing - at appropriate levels - a framework to advance the modernisation of work organisation. The Communication argues that the process of modernisation must be speeded up through a process of mutual learning from good practice. Partnership is perceived to be the best means of achieving this. Furthermore, it is argued that in achieving a better organisation of work, the potential benefits of this process for the achievement of a better reconciliation of work and private life should be borne in mind. The Commission calls upon the social partners to develop a set of common aims and objectives in relation to the modernisation of work organisation. It is argued that this process would benefit both sides, as it enhances productivity and therefore competitiveness while at the same time safeguarding and creating jobs. In doing so, these activities should take account of national labour market policies instituted in response to the Employment Guidelines.

Finally, the social partners are called upon to examine further ways of improving both flexibility and security. The latter was the approach adopted by ETUC, UNICE and CEEP in their framework agreements on part-time work and more recently fixed-term employment. The social partners at intersectoral level also declared their intention - in the context of the December 1999 Vienna European Council meeting (EU9812141N) - to work together in formulating joint objectives in relation to the adaptability pillar of the Employment Guidelines.

Working time was an important concern at European, national and company level. In November 1998, the Commission adopted a Communication outlining an extensive package of proposals for Council Directives to cover workers in the sectors currently excluded from the provisions of the EU Directive on certain aspects of the organisation of working time (93/104/EC) (EU9901144F). It is proposed that the Directive should be amended to cover all non-mobile workers, including doctors in training, and to apply general provisions to all mobile workers. At the same time a number of sector-specific measures are proposed. These proposals endorse agreements reached by social partners in the maritime and rail sectors and take into account points of convergence in failed negotiations on working time in the road transport sector (EU9802182F). New legislative measures are to be adopted concerning the organisation of working time for mobile workers in road transport and self-employed drivers. These measures were under discussion by the Council of Ministers and other EU institutions at the end of the year.

At national and company level, there have been an increasing number of agreements aimed at retaining or creating employment through the reduction of working time. This is seen by many as an ideal way of creating additional employment, but the process is often slow because of disagreements over the pay reductions which may be involved.

Developments in representation and role of the social partners

Employee representation at the European and national levels

A long-awaited legislative initiative on employee information and consultation at national level was proposed by the European Commission in November 1998. The possibility of the introduction of an EU-level framework for information and consultation was first raised in the Commission's 1995 medium-term Social Action Programme. Calls for EU legislative action in this area became louder after the crisis sparked off by the 1997 closure of the Renault plant at Vilvoorde. Wary of the implications of the Renault affair on the perception of European integration in the run-up to EMU, Pádraig Flynn, the member of the Commission responsible for employment and social affairs, reaffirmed his commitment to take this issue forward.

Initially, the preference was clearly for joint action by the social partners and in June 1997, the Commission initiated a first round of consultations of the European-level social partners on the advisability of legislation in this area, under the procedure laid down in the social policy Agreement annexed to the Maastricht Treaty on European Union. While ETUC and CEEP welcomed this move, UNICE considered EU action in this area to be unwarranted because a European legal framework already existed in the shape of the Directives on collective redundancies (98/59/EC) and European Works Councils (94/45/EC). In November 1997, the Commission nevertheless opened a second round of consultations on national employee information and consultation. In March 1998, UNICE reaffirmed its opposition to such negotiations, reportedly mainly as a result of strong opposition from its member organisations in Germany, Greece, Portugal and the UK (EU9803192N). It was widely argued that this opposition was also motivated by the belief that any Commission draft legislation in this area would not find the approval of the German and British governments. The Commission extended its deadline for UNICE, but despite the election of a new social democrat-led government in Germany, UNICE remained opposed (EU9810133N).

As a result, the European Commission issued a draft Directive establishing a general framework for informing and consulting employees in the European Community on 11 November 1998 (EU9812135F). The draft Directive is based on Article 2 (2) of the Maastricht social policy Agreement and is therefore subject to qualified majority voting in the Council. The basic aim of the proposed Directive, which would apply to undertakings with at least 50 employees, is to guarantee information and consultation rights for employee representatives on certain issues. It is argued that the Directive should enhance the impact of existing Directives on collective redundancies and transfers of undertakings, and should not prejudice the provisions of the European Works Council (EWC) Directive. The draft Directive defines carefully information and consultation, while allowing for considerable flexibility as to the exact shape and scope of the information and consultation arrangements to be instituted in each firm. The social partners at company level are granted a high level of freedom to agree structures which suit their needs, though minimum requirements apply should autonomous negotiations fail to lead to an agreement. In response to criticisms raised in relation to the perceived lack of "bite" of the EWC Directive, the draft text also lays down clear sanctions to be imposed in the event of breaches of the information and consultation requirements.

The Commission initiative was welcomed by the ETUC, despite some misgivings in relation to the substance, but was rejected out of hand by UNICE. It remains to be seen whether the proposal will be able to gain the approval of a qualified majority in the Council. The British government indicated its opposition, but officially remains outside the Maastricht decision-making procedure until the Amsterdam Treaty takes effect. The position of the German government, which has the EU Presidency in the first half of 1999, may prove vital and some observers have noted widespread opposition to the draft in the new German administration.

The debate on worker involvement in the future European Company also remained on the agenda of successive meetings of EU Labour and Social Affairs Ministers in 1998. This debate has continued for nearly three decades since the European Company Statute (ECS) was first proposed in the early 1970s. The ECS seeks to to allow the establishment of a new type of company, incorporated under European rather than national law, and enjoying a number of tax advantages. Despite interest among the business community in this new form of company, successive proposals have failed to enter the statute book, largely as a result of seemingly insurmountable disagreements in relation to the nature of worker involvement in such companies.

The ECS was revived in 1997 with the publication of the "Davignon report" which made a number of recommendations in relation to worker involvement. The Davignon group proposed a flexible approach which gave priority to negotiated agreements on worker involvement in each European Company. This was embraced by subsequent draft texts put forward by the Luxembourg Presidency of the second half of 1997 and UK Presidency of the first half of 1998 (EU9803193N), but progress remained elusive. The main stumbling blocks were the arrangements for introducing possible board-level participation of employees in the European Company, and the voting arrangements within the special negotiating body (SNB) charged with negotiating with management the form that employee involvement should take in each European Company.

The Austrian Presidency of the second half of 1998 subsequently drafted its own compromise proposal, and was keen to make progress in this area, partly in an attempt to highlight the success of the Austrian model of social partnership. The Presidency sought to resolve disagreements on issues such as the manner in which existing employee involvement rights were to be safeguarded and in particular, the safeguarding of board-level employee representation. Key points for discussion were: the majority required in the SNB to take a decision on involvement arrangements; the question of consent to board-level representation by companies establishing the European Company; and the conditions to be attached to the conversion of an existing company into a European Company. It was the first item on this list which proved to be the latest stumbling block in the legislative minefield that is the ECS, with a political agreement blocked in December 1998 by the Spanish government (EU9812143N). Spain's objection was based on the fear that a minority of workers would be able to impose its traditions on a majority of the workforce, thus "jeopardising the preservation of a cultural model of industrial relations".

Negotiations on the ECS were set to continue under the German Presidency of the first half of 1999, but progress is likely to remain difficult. As outlined in an EIRO comparative study of board-level employee representation in Europe (TN9809201S), the concepts, structures and procedures covered by the term "board-level representation", and the position and role of the bodies on which employees are represented differ widely from country to country. Despite the emphasis by the Davignon report, and by subsequent draft proposals, on the negotiated approach, the nature and application of back-up standard rules for worker involvement continue to pose significant difficulties, amidst fears that structures deeply ingrained in national traditions and industrial relations culture stand to be undermined. As argued by the EIRO study, "for the foreseeable future at least, the differing positions of the social partners make any European harmonisation of employee board participation appear rather unlikely."

In terms of EWCs, 1998 was arguably a relatively quiet year in terms of new activity. Relatively few Article 6 agreements, based on the Directive, were reported to have been concluded (the European Trade Union Institute recorded 57). Neither of the two EU countries which have yet to transpose the 1994 Directive did so in 1998, though a draft transposition law was issued in Portugal and remains before parliament. The Commission has thus decided to launch infringement proceedings against both Portugal and Luxembourg. The EWC Directive was "extended" to the UK in December 1997 and during 1998 the UK Department for Trade and Industry was in the process of drafting legislation for implementation by the December 1999 deadline.

In terms of EWC research and analysis, 1998 was rather busier. A study published by the European Foundation for the Improvement of Living and Working Conditions in March 1998 examined 386 voluntary Article 13 agreements - Negotiating European Works Councils: an analysis of agreements under Article 13, Paul Marginson, Mark Gilman, Otto Jacobi and Hubert Krieger (EU9803191F). The study found that the two-thirds of companies which had reached Article 13 agreements were based in France, Germany, the UK and the USA. The manufacturing sector was the most widely represented among voluntary agreements (particularly metalworking, chemicals, food, drink and tobacco). Significantly, the study found that there was a widespread preference for the establishment of joint management-employee bodies, even in countries with a tradition of employee-side-only representative structures.

A workshop on the practical experience of EWCs held by the ETUC in March 1998 (EU9803191F) demonstrated the strong engagement on the part of the trade unions with the EWC Directive, but also highlighted a variety of perceived problems in the operation of these bodies:

  • a lack of definition of information and consultation, which means that there is a lack of clarity on the type of information to be provided to employee representatives;
  • a lack of recognition of the important role played by trade union representatives;
  • insufficient resources for translation and preparatory meetings;
  • a prevalence of management controlling the agenda of meetings; and
  • the limited competence of EWCs.

An EIRO comparative study highlighted the role of the social partners in implementing the Directive, provided examples of success stories and failures of EWCs and analysed the impact of EWCs on national industrial relations (TN9807201S). The latter was generally found to be rather limited so far. However, in future EWCs are seen as being likely to contribute to: a greater awareness of the internationalisation of company strategies; the creation of networks of employee representatives across boundaries; and a possible "centralisation" of company-level industrial relations. A study carried out for the UK Department for Trade and Industry on the costs and benefits of EWCs found that the level of awareness and impact of the EWC at company level was greater in countries which already had experience of works councils structures. While employers continued to be fearful of EWCs having the potential to lead to demands for European-wide collective bargaining, this was perceived to be some way off.

The role of the social partners

The year saw a continuation of the trend of giving increasing importance to the role of the social partners and the social dialogue in policy making. The European social dialogue process has increasingly become the focus in the EU social policy arena, partly as a result of the new competences granted to European-level representatives of employers and employees by the Maastricht social policy Agreement, notably allowing them to reach agreements which can take the place of legislation in some circumstances. The Commission is keen to foster this process, which has so far led at intersectoral level to the framework agreements on parental leave in December 1995 and part-time work in May 1997, both of which have been implemented by Council Directives (a draft agreement on fixed-term contracts was subsequently concluded in January 1999 - EU9901147F). At the sectoral level, an agreement has been reached on working time in the maritime sector (EU9802182F), which is also to be implemented via a Directive (EU9901144F).

The social dialogue at the European sectoral level has become increasingly productive and focused, a trend which is likely to be emphasised by the recent reorganisation of its structures. After an intensive period of consultation following the publication of a Communication concerning the development of the social dialogue process at Community level in September 1996 , the Commission adopted a Communication on adapting and promoting the social dialogue at Community level in May 1998 (EU9806110F) which, among other measures, set in train a reorganisation of the sectoral social dialogue. The Communication includes a Commission Decision providing for the establishment of new "sectoral dialogue committees" to replace the existing joint committees, informal working groups and non-structured discussion groups. By early 1999, almost all sectors with an existing dialogue had applied to set up new committees, with a few new sectors also seeking to join the dialogue (EU9902150F). The reorganisation has led to some restructuring of the social dialogue and is expected by the Commission to provide a renewed impetus and focus, particularly along the lines of the adaptability pillar of the Employment Guidelines. Among the other issues due to be discussed in the various sectors are vocational education and training, the fight against undeclared work, health and safety and child labour.

Hand-in-hand with the reorganisation of the sectoral social dialogue process has gone a reassessment of the representativeness of the European social partner organisations by the Commission.

As outlined above, the social partners are also playing an increasingly important role in the debate on labour market policy and work organisation at the national, regional and company levels. At the same time, many social partner organisations are facing a decline in membership and a recasting of organisational structures at home. Union mergers occurred or were planned in Belgium, Finland, Germany, Netherlands and Portugal, while in Austria unions signed an increasing number of cooperation agreements, and in France there was a rapprochement between the CFDT and CGT confederations. Union recognition issues were high on the agenda in Ireland and the UK. There were also instances of the formation of union organisations for new groups, such as Greece's first union for unemployed people, or the opening of traditional union structures to new groups, such as self-employed people in the Dutch construction sector. On employers' side, changes included: France's CNPF confederation changing its name to MEDEF as part of a change in approach in a more free-market direction; and Italian public sector employers joining the main Confindustria confederation.

Industrial relations and the impact of EMU

As mentioned above, 11 countries joined the single currency on 1 January 1999. While the UK and Denmark did not seek to join the euro at this stage, Sweden and Greece failed to meet the convergence criteria.

In the light of the imminent arrival of EMU, trade unions in particular began to engage themselves more actively with the impact of the single currency on industrial relations in 1998. Particular emphasis was placed on the possibilities for cross-border coordination of bargaining policy. In September 1998, a joint statement was signed by a number of unions from Belgium, Germany, Luxembourg and the Netherlands in the Dutch town of Doorn (DE9810278F), highlighting the increasing momentum towards joint action in this field. The Doorn declaration claims that the economic growth and wage restraint of recent years has produced too few results for workers in terms of job creation. A study by the German Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) has found that employees' share in national income has continually declined in many Member States. The unions participating in the Doorn meeting called for a change in this trend, stating that workers should be able to benefit fully from economic growth and that increased purchasing power is likely to result in job creation. The unions therefore committed themselves to the aim of achieving collective bargaining settlements which correspond to the sum total of the evolution of prices and the increase in labour productivity. A further aim of the Doorn declaration is cooperation in the reduction of working time and the achievement of an increase in purchasing power. To this end, the participating organisations agreed to inform each other regularly on developments in bargaining policy. This agreement has rightly been viewed as a pioneering step in the "Europeanisation" of collective bargaining.

The ETUC and its affiliated European Industry Federations have also been at the forefront of calling for coordinated action in area of collective bargaining. So far, the momentum has been fairly slow, but a number of individual industry federations have set out their own strategies.

In March 1998, European Regional Organisation of the International Federation of Commercial, Clerical, Professional and Technical Employees (Euro-FIET), which brings together trade unions representing private sector services and white-collar workers across Europe, launched a strategy paper on the impact of EMU on collective bargaining (EU9809128F). The paper emphasised the need to recognise the social dimension of EMU and to coordinate bargaining strategies at sectoral level across the Union. Euro-FIET foresees that EMU will have a significant impact on a number of sectors in which its members are organised, not least in banking and insurance. In this sector, more contact and exchange is being sought with European and national-level authorities to discuss the impact of the euro on employment. It is argued that job losses should not be accepted as a consequence of the euro and that comprehensive training and retraining programmes must be put in place to prevent large-scale redundancies.

Euro-FIET reiterates the widespread perception that a single currency will potentially mean greater pay transparency across Europe and thus greater competition. It is argued that this may lead to downward pressure on pay and working conditions. To counteract this trend, Euro-FIET believes that steps need to be taken towards a "European system of collective working relations". Its aim is therefore to coordinate bargaining strategies on wages, working time and education and training.

Another European Industry Federation, the European Metalworkers' Federation (EMF) adopted a political resolution on "collective bargaining with the euro" at its third collective bargaining conference, held in December 1998 (DE9812283F). Innovatively, the resolution contains a number of guiding principles for national collective bargaining in order to prevent downward competition on wages and working conditions. According to the new "European coordination rule", national collective agreements should seek at least to offset the rate of inflation and ensure that employees' incomes reflect a balanced participation in productivity gains. The EMF is thus seeking to renew a "solidaristic" bargaining policy at European level, through an instrument which recognises national differences in economic developments and bargaining systems but also defines common guidelines for non-competitive national bargaining policy. As the president of the EMF, Tony Janssen, put it: "The European metalworkers' unions need not have the same demands, but all demands must go into the same direction."

Conclusions and outlook

EMU seems sure to have an increasing influence on industrial relations over the coming years and the development of common bargaining strategies in relation to EMU is likely to become more prevalent. Similarly, joint social partner actions at European, national, regional and company level in relation to the modernisation of work organisation and working time will undoubtedly remain a feature in 1999, as they were in 1998. The enlargement of the European Union is also likely to remain a preoccupation as social partners are increasingly establishing links with their counterparts in the accession states (EU9808123F). (Tina Weber, ECOTEC Research and Consulting Ltd)

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