High Level Group on industrial change presents interim report

The EU's High Level Group on the Economic and Social Implications of Industrial Change presented its interim report in May 1998, prior to submitting it to the European Council meeting in Cardiff in June.

The High Level Group on the Economic and Social Implications of Industrial Change, chaired by Pehr Gyllenhammar, was established in response to the European Council's conclusions at the Luxembourg Jobs Summit held in November 1997 (EU9711168F). The Group's brief is to analyse the potential industrial changes that the European Union faces and make recommendations on measures or instruments which can anticipate and manage these changes effectively. The Group presented its interim report [the hypertext link here is to a RAPID document - users without a password or user name should use "guest" for both] on 14 May 1998 and plans to submit it to the European Council meeting in Cardiff in June 1998.

The Group advocates an approach whereby industrial change is anticipated and managed through voluntary action undertaken at various levels of the Community, encouraged through incentives, as opposed to legislative measures. Legislation is viewed as useful in setting minimum standards, but solutions worked out through voluntary agreements are argued to be more effective than the imposition of penalties and sanctions, and are thought to lead to a more constructive and positive environment.

The importance of developing a constructive social dialogue at all levels, particularly in areas such as information and consultation, is stressed by the Group. This is based on the belief that social dialogue based upon mutual trust and information is the best way to adjust to change on a continuous basis and to handle crises caused by industrial restructuring. The report argues that in order to reinforce the capacity for change, employers, workers and governments should share the responsibility for ensuring the employability of the workforce. It is therefore not surprising that the Group supports the need to create "a European framework for information and consultation". This recommendation was warmly welcomed by the Commissioner responsible for employment and social affairs, Pádraig Flynn, who said that, like the Group, he too "believes that the social partners should preferably find practical solutions through agreements".

The report sees the main responsibility for anticipating change as lying with each company and as a result encourages larger companies to produce a annual social report providing information on a range of social issues including their social dialogue with employees, and their preparedness for structural change. The Group believes that employers have a social responsibility to give every employee the training to develop the skills that make them attractive on the labour market and prepare them for new jobs. In its next phase of work, the Group will consider whether there is any practical way in which employers which dismiss staff in times of hardship or closure should pay for their neglect in cases where insufficient measures have been put in place to prepare employees for change.

Additionally, the report recommends the development of an "Observatory of Industrial Change" to understand more fully the forces driving industrial change, which would act as an important mechanism to document and disseminate good practice, as well as providing a meeting place for employees, employers and public authorities.

The Group also calls for the creation of a conducive environment for entrepreneurship for small and medium-sized enterprises (SME s) through the elimination of administrative barriers and the creation of "one-stop shops" that improve services to SMEs.

It is important to note that the May document is a progress report and should be seen as a first incomplete contribution, as not all the areas raised by members of the group have been fully discussed, nor does it reflect a consensus on all the issues.

The Union of Industrial and Employers' Confederations of Europe (UNICE) has already responded to the Group's interim report. The reaction is mixed, with the employers' body agreeing on some items, while at the same time arguing that there are contradictions between the general principles set out in the document and the concrete recommendations that it puts forward.

UNICE fully supports the approach advocated by the Group that progress can be best achieved via encouragement, rather than through legislation or constraints. However, it believes that the way that the idea of limiting interventions by public authorities is written into the report is unclear, and wants this to be clearly set out in a way that ensures that intervention does not impede indispensable changes. Moreover, UNICE is strongly opposed to the recommendation that careless restructuring should be punished by imposing financial penalties, and argues that this contradicts the approach advocated by the Group. Instead, UNICE argues that it would be more coherent to tackle this question via positive measures.

Although UNICE recognises the importance of social dialogue and the need for a agreed framework in order to avoid unacceptable conduct, it believes that the report's recommendations in this area are not necessary as a framework already exists governing information and consultation in the form of collective agreements and national-level legislation. Furthermore, aspects that could have cross-border implications are regulated by the Directives relating to European Works Councils and to collective redundancies.

The setting up of an Observatory on Industrial Change is viewed as a useful instrument in anticipating change, but UNICE does not believe that such an Observatory should act as a forum for sectoral supervision or a forum for a social dialogue. UNICE also expresses strong reservations on the report's recommendation that there should be a legal obligation on companies to provide social reports.

The recommendations that UNICE particularly welcomes are:

  • the call for public authorities to ensure the development of appropriate infrastructures to allow sustainable economic development, such as the necessary infrastructures for information and telecommunication technologies;
  • the idea of a European "charter" of new skills; and
  • the proposed provision of assistance to SMEs.

A final report will be produced for the European Council meeting in Vienna in December 1998 after further discussion at the Cardiff summit in June.

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