Study examines employee participation in enterprises

In November 2005, a study was published on the little-researched issue of employee participation in Estonian companies. The study finds that in general participation is seen as an important issue, but in most cases it is limited to consultation on organisational questions. The research indicates that the intensity of participation depends not on the existence of employee representatives but on the interest of managers in the issue, and the authors thus argue that the interest of both parties is essential for successful participation.

In November 2005, the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) (EE0310102F) and the PRAXIS Center for Policy Studies published a study of employee participation in Estonian companies, written by two economists from PRAXIS (Epp Kallaste and Krista Jaakson). The subject of employee participation in companies has been very little studied in Estonia and there is no information on the extent to which employees’ representatives are involved in the decision-making process. The aim of the study is to provide an overview of other countries’ experiences in the field of employee participation and to analyse how participation works under the various forms of employee representation found in Estonia.

Legislative background

In general, there are three basic channels of employee representation at the enterprise level in EU countries - trade unions, works council-type bodies and employee participation on company boards. In Estonia, employees may be represented by a trade union representative, a 'workers' trustee' elected by non-unionised workers, or both of them together. According to the Employees’ Representatives Act (which entered into force on 16 July 1993), the workers' trustee is an employee of an enterprise who is elected by a general meeting of employees who do not belong to a trade union, in order to represent the employees in labour relations with the employer. The Estonian system is very unusual among EU Member States, as it provides for the parallel existence of both trade union and non-unionised representatives in a company, with both of them having the right to conclude collective agreements.

In January 2005, the Estonian parliament (Riigikogu) ratified the Involvement of Employees in the Activities of Community-scale Undertakings, Community-scale Groups of Undertakings and European Company Act. The Act transposes the EU Directives on European Works Councils (94/45/EC) and on employee involvement linked to the European Company Statute (2001/86/EC) (EU0206202F). The Act establishes the legal framework for information and consultation about multinational employers’ activities, economic and employment situation, work organisation and other matters that could interest employees (EE0403101F, EE0409103F and EE0502101N). Up to now, Estonia has not transposed the 2002 Directive on national information and consultation rules (2002/14/EC) (EU0204207F). In November 2005, the Ministry of Social Affairs (Sotsiaalministeerium) sent a draft of a new Employees’ Representatives Act, seeking to transpose the Directive, to the social partners for consultation, but met immediately with severe opposition from trade unions (EE0512101N).

Methodology of survey

Eight case studies were carried out in companies during spring and summer 2005. In four cases, employees were represented by a trade union; in two companies, both a trade union representative and a non-unionised trustee existed; and in two companies there were no employee representatives elected. The chosen companies all had over 50 employees and were not considered to be exceptional in any way in the Estonian context. Half of the companies were nominated by ETTK and half of them by the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) (EE0308101F). In addition, the companies expressed their willingness to participate in the study.

The case studies consisted of interviews with managers and employees’ representatives, and surveys of randomly selected employees were also carried out.

Importance of employee participation

According to the findings, managers and employees’ representatives in general believe that participation is important:

  • information was considered important by all managers interviewed and they also emphasised disseminating information beforehand. However, information on strategic issues was considered less important and managers believed that it could be spread afterwards;
  • consultation was considered important by managers in the case of certain issues, such as operational matters or renewal of technology. In general, views in this area differed to a large extent - some respondents favoured frequent and comprehensive consultation while others did not. Technological renewal was the only strategic issue where managers seemed to see a clear benefit from consultation;
  • the employees’ assessment of their opportunities to participate with regard to the economic activities of the company clearly reflected the views of the managers, as these opportunities were rated as very modest in nearly all companies; and
  • the managers also had a shared view of co-determination, which was considered unnecessary and impossible. Decision-making was seen as the right and responsibility of managers.

The case studies found that employee participation was more intensive in companies where managers paid more attention to it. There was no clear relationship between the intensity of participation and: the existence of employee representation or different forms of representation; or the nature of the work in the company or its size. The only clear determinant of participation intensity was found to be the managers’ view on the necessity for employee participation. The more positive were the manager’s views on this, the more informed were the employees and the higher they rated their opportunities to participate in organising their working life.

The authors of the study state that, as the intensity of employee participation does not depend on the existence of employees’ representatives, but on the managers’ interest in participation, this shows that interest of both parties is essential for successful participation.

Employee representatives' activities

The study found that both trade unions and non-unionised workers' trustees are insignificant in their role as a channel for information and consultation. The managers interviewed consider collective bargaining as the main role of employees’ representatives, whereas employees’ answers indicate that representatives have two main roles: mediating information and proposals between management and employees; and collective bargaining. This shows that even the role of employees’ representatives is not as wide as that of other communication channels; they still have their own niche in communication. The main channel of participation is the company’s official hierarchy, ie the employee’s direct manager. After that, the most frequently named channels were meetings and colleagues, followed by notice boards and electronic channels.

However, there were two cases in the study where the institution of non-unionised trustee was initiated by management with an aim of including the wider workforce outside trade union members in discussions over the provisions of the collective agreement (in both companies, union members were in a minority among the employees). In both cases, the idea of a non-unionised trustee was suggested by the manager, but the trustee was elected by employees. Also, in both cases, the trustee was often a lower-level manager. In all the companies studied, collective agreements covered all the employees, regardless of who signed it on behalf of employees or what was stated in the text of the agreement.

Commentary

The study found that the managers concerned saw employees’ representatives (both trade union representatives and non-unionised ones) as a formality and not as serious discussion partners. Trade unions had a bad reputation in the eyes of the interviewed managers, as they did not represent a significant part of the workforce and their demands were often not considered to be in the interests of the company. Negative attitudes were also enhanced by a view that a trade union is established in a company only in the case of a problem or a confrontation between the employer and employees. The managers did not consider non-unionised representatives very influential and saw them as incompetent. Thus, we can say that both representation forms are ineffective in providing employee participation.

The main problem seems to be attitudes: both sides do not trust each other and in many cases they are faced with confrontation. More work should be done in spreading information on good practices showing the positive sides of employee participation. (Raul Eamets and Kaia Philips, University of Tartu)

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