Flexibility of working time in Europe

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  • Observatory: EurWORK
  • Topic:
  • Date of Publication: 27 May 1998



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Author:
Jacques Freyssinet
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Flexibility of working time is undoubtedly a topical theme in European industrial relations at present. It is in the spotlight of EU social and employment policy and is becoming an increasingly important issue for collective bargaining in most countries. The emergence and implementation of working time flexibility are explored in this EIRO comparative study.

The issue of flexibility of working time is currently prominent in industrial relations across the European Union and beyond. Furthermore, this form of flexibility has been identified as a key theme in the current EU debates on work organisation and employment. The European Commission's April 1997 Green Paper on Partnership for a new organisation of work devotes considerable space to the question of a new approach to working time. The debate, according to the Green Paper "is about two separate questions. One is about working time flexibility: the adjustment of working time arrangements to the needs of firms or the needs of individual workers. The other question is about working time and employment: can a shortening of working time create more jobs?" The Paper observes that many innovative working time arrangements are being introduced in firms throughout the EU, and identifies trends such as: the decoupling of plant operating times and shop opening hours from individual working time; employment creation through working time reductions (which can occur if certain conditions are met); annualisation of working time; and greater use of part-time work. The consultative Green Paper asks: what contribution a reduction and adaptation of working time can make to the improvement of growth, productivity and employment; what the scope is for agreements at sectoral level on working time arrangements; and whether other bargaining levels are more appropriate.

The EU Guidelines for Member States' employment policies 1998 underline the importance of working time flexibility, and the social partners' role in achieving it, in employment creation/preservation. The guidelines invite the social partners "to negotiate, at the appropriate levels, in particular at sectoral and enterprise levels, agreements to modernise the organisation of work, including flexible working arrangements, with the aim of making undertakings productive and competitive and achieving the required balance between flexibility and security. Such agreements may, for example, cover the expression of working time as an annual figure, the reduction of working hours, the reduction of overtime, the development of part-time working, lifelong training and career breaks."

The contents of the 1998 National Action Plans developed by EU Member States in response to the guidelines were reviewed in a May 1998 Commission Communication From guidelines to action: the National Action Plans for employment. The Communication acknowledges that the role of the social partners in supporting the guidelines has so far been underdeveloped in most countries, owing to the limitations of time and the extensive nature of the issues involved. Formalised agreements (at national level) on the range of adaptability issues - which include working time flexibility - have been rare. However, the Commission does point out that "approaches to reorganisation of working time reflect the role of the state and the social partners." The Communication states that: "For a number of Member States (France, Italy, Belgium, Luxembourg) the modernisation of work organisation is linked to wider labour market policies on reduction/redistribution of working times, lifelong learning and the social security system. In these countries, an integrated approach to legislative change has been instigated, often leaving the social partners to negotiate aspects of implementation. Other countries (Ireland, UK) believe that the role of the State is to provide fair minimum standards, leaving the social partners themselves the task of agreeing on flexible working arrangements. For those countries with firmly established tripartite traditions (Denmark, Finland, Austria, Netherlands, Sweden) the various aspects of adaptability are being negotiated through already established bodies."

It is in this context that this comparative study seeks to examine: the background to the growing importance of this theme in western Europe; the views and strategies of the parties (employers, trade unions and governments); and the ways in which collective bargaining has dealt with the topic. The study draws on the contributions of the national centres of the European Industrial Relations Observatory (EIRO) describing the situation and developments in the 15 EU Member States, plus Norway. Given the scope of the changes which have occurred in this area over recent years, the study finds that it is unfortunate that only incomplete and disparate statistics and analyses are currently available. An international comparison in this area can thus be only of a qualitative nature.

Background

Over the quarter of a century of rapid growth with almost full employment which followed the Second World War, the regulation of working time in western Europe followed a number of rules which steadily became general throughout the continent (except in those southern European countries with undemocratic regimes during this period). These basic rules were as follows:

  • for full-time workers, the law set maximum and normal durations for hours worked and companies adopted stable collective work timetables. The margins for flexibility were provided by the use of overtime working and temporary unemployment (lay-offs and short-time working);
  • the only role for collective agreements was to improve on statutory provisions, mainly by reducing the length of the working week and increasing the length of paid holidays;
  • the reduction of working time was seen as a part of social progress. It was one way, along with pay increases, of sharing productivity gains; and
  • atypical working hours were used only to solve specific problems. First, night and weekend work fulfilled certain technical needs related to production, or the need to keep some public services open at all times. Second, part-time work, which accounted for an increasingly large proportion of the workforce, especially in northern Europe, fitted a widespread social model of women's economic activity, and it was the same logic which brought about, at the end of this period, some experiments with flexible working hours ("flexitime") for office workers.

For the past 25 years, this framework has been in the process of profound transformation due to the conjunction of developments of varying nature, such as: new forms of organisation of production and marketing; the intensification of international competition; increasing unemployment; and new needs and preferences among male and female workers regarding the organisation of their working time. The disparate nature of these changes explains why the move toward introducing flexibility into working time has reflected different, and often contradictory, interests and objectives, depending on the economic and social actors concerned.

Analyses and strategies of the actors

The unity of employers' positions

For businesses, the introduction of flexibility into working hours is just one element of an overall strategy which also covers the introduction of flexibility into employment status and payroll costs. The national reports from the EIRO centres all confirm this. National differences in this area stem from the characteristics of the productive system, the dominant forms of competition, the respective importance of the law and collective bargaining, and the character of the power relationships within the various industrial relations systems. These are only differences of degree, which in practice affect the amount of importance granted to the three forms of flexibility - employment status, pay and working time - and, in terms of working time, the importance attached to each of the various forms of hours flexibility (see below). The dominant objective is improving the company's competitiveness, which is presented as the most effective guarantee of defending and creating jobs.

Differences between employers' organisations from country to country also turn on the schedule for change: the offensive on the introduction of flexibility into working hours has been launched earlier or later, vigorously or not so vigorously, according to the constraints imposed on companies by law and collective agreements in this area, and depending on the pace at which new forms of flexible organisation (such as "just in time" or "lean production") have caught on.

In Greece and Portugal, for example, the predominance of traditional forms of organisation of production explains why the issue of flexibility in working time has only recently surfaced and is still only relevant on a small scale.

Trade union attitudes in different countries have also caused employers to attach varying degrees of importance to either collective bargaining, at national or company level, or putting pressure on the state to have the regulations on working hours made more flexible.

Finally, the pressure exerted by employers in the area of flexibility in working time has been affected by the existing flexibility margins in the two other fields - pay and employment type. In Austria, for instance, the flexibility accepted by trade unions in negotiating annual pay agreements in line with the economic situation, seems to have made flexibility in working hours less necessary. In Spain, it was the growth in temporary or "precarious" forms of employment which, until recently, was the main tool of flexibility.

A dilemma for the trade unions

All trade unions have maintained or strengthened their claim for a reduction in working time in recent years, for two main reasons. Firstly, as in the past, the unions have aimed to improve their members' working and living conditions. Secondly, faced with a rise in unemployment, they have aimed to protect and create employment through a more equal distribution of available work. On the first aim, the unions are unanimous. On the second aim, although the European Trade Union Confederation has strongly defended this perspective, the positions adopted by national unions on the effectiveness of a reduction in working time in achieving job creation are diverse, and have changed over time in some cases. Some German, Belgian, French, Italian and Dutch unions attached a great deal of importance to this point, especially in the 1980s. In Germany, positions differed among the unions affiliated to the DGB confederation, while in France, there were differences between the different union confederations. On the other hand, British and Scandinavian unions have prioritised other types of action on employment, whose development they see as dependent on the characteristics and pattern of economic growth. These various positions may naturally be attributed to the seriousness of unemployment in each country and in each period.

The unequal priority granted to the reduction of the length of working time explains why the unions have found themselves on the horns of a dilemma regarding the employers' objective of flexibility in working time. Indeed, employers have agreed to consider the reduction of working hours only in compensation for increased flexibility, and/or a cut in pay. The unions, however, were originally hostile to these two conditions. In the first place, although they were aware of the changing needs of employees regarding the organisation of their working time, the unions felt that flexibility would be achieved, on the whole, in order to meet companies' needs, leading to increasingly high workloads and constraints weighing on workers' non-working hours. Secondly, although the unions were conscious of the constraints of competitiveness, they generally rejected any wage cuts because of their tendency to lead to deflation. The unions' opposition was obviously fiercer on this issue in the countries where pay levels were the lowest.

For these reasons, the unions' strategies in the face of the dilemma of reduction or flexibility of working hours have varied greatly from country to country, but also, within each country, from one union to another. The following are examples:

  • in Germany, some unions, notably in metalworking, have won large reductions in hours by agreeing, first by sectoral collective agreement, then by company-level agreements, to various types of flexibility margins;
  • in France, in 1995, four of the five union confederations (after the CGT's refusal) signed an intersectoral agreement with employers which: allows working hours to be "annualised" - calculated over a 12-month period - in exchange for a reduction; and promotes an increase in part-time work, in exchange for guarantees for the workers concerned. The agreement's implementation rests on sector- or company-level agreements;
  • in Italy, the unions' objective is to obtain a reduction in the number of hours worked annually, through national sector-level agreements, leaving company-level bargaining to finalise the ways in which this is applied;
  • In Belgium, the two largest union confederations, which were at first divided on the issue, agreed after 1987 to enter negotiations on work-sharing and flexibility of working hours, if these have a positive impact on job creation;
  • in the Netherlands, the rise in unemployment allowed a national agreement in 1993 which was put into practice through sector- and company-level bargaining. Employers accepted the reduction of working time, and the unions agreed to flexibility and the decentralisation of bargaining procedures from national level. Now, the fall in unemployment has caused both growing shortages of qualified staff, and a resurgence of wage claims - developments which have put the earlier trend under strain; and
  • in the United Kingdom, the virtual disappearance of national bargaining has created a great deal of variety, depending on the power relations and union strategies operating within each company.

In other countries, union hostility toward flexibility has greatly limited the scope of negotiations.

Unions are thus put in a difficult position vis-à-vis the complicated problem of assessing the advantages and disadvantages of negotiations involving trade-offs between reductions in working time, flexibility in working time and pay adjustments - which all depends on the health of the economy and the state of power relationships. It is clear that their choices have differed widely, without it being possible in practice to identify common trends.

A wide variety of government positions

Public policies have varied from country to country, and from one period to another. This has of course resulted from governments' differing political orientations, but also from the extent of unemployment and each government's diagnosis of the effectiveness, in terms of job creation, of a policy introducing flexibility (and possibly reduction) of working time. The differences also stem from the division of roles, in this area between the state and the social partners.

In the Germanic and Scandinavian countries, the law has traditionally set obligatory yet minimum standards, with most of the responsibility for regulating working time lying with collective bargaining and the government limiting itself to making its viewpoint known. In the UK, where there has traditionally been very little regulation in this area, businesses were left a completely free hand during the long period of Conservative administration (1979-97), with collective bargaining having a weak and decreasing role. In the Latin countries, standards established by the state are highly developed, although not always respected. The authorities' involvement has been principally geared towards making the regulations more flexible, and the debate has dealt especially with the conditions and compensations involved in this flexibility.

However, despite this diversity, a broad and strikingly new trend can be identified. It relates to the relationship between officially-established standards and those established by collective agreement. As pointed out above, previously it was the case that bargaining on working time had to obey the law, and could only improve on the advantages and guarantees offered to workers. In the majority of countries, a new logic has been taking shape. The law now sets "fall-back" or "default" standards, which are imposed only if they are not modified by collective agreement. The law determines the negotiators' room for manoeuvre, and also indicates the permitted bargaining levels and conditions of validity for agreements reached in this area. Almost all the EIRO national centres mention the adoption of such legislation in recent times (see table below). Its explicit objectives are to acknowledge the responsibility of the social partners in defining the ways in which the introduction of flexibility in working time should be applied.

Moreover, Belgium, France, and Italy have introduced, or are considering introducing, financial aid for sectors and companies signing collective agreements which combine the reduction and flexibility of working time.

These changes have, in most countries, considerably broadened the field of bargaining on working time and the advantages of such bargaining.

The table below summarises the relationship in each country between legislation and the various levels of collective bargaining - national (sectoral and intersectoral) and company - in the area of working time flexibility.

Working time flexibility: relationship of legislation and the various bargaining levels
Country Legislation National bargaining (sectoral or intersectoral) Company bargaining
Austria Since 1997, the Working Time Act and the Leisure Time Act have determined the exemptions from the law that collective agreements can introduce. Negotiations on flexibility began only in 1996 and have remained limited to a few sectors. Implementation of measures may require company-level agreements. Weakly developed.
Belgium Substantial government intervention to galvanise the introduction of working time flexibility through bargaining, with a trade-off in terms of reduction in hours in some cases. Intersectoral agreements giving direction to sector-level bargaining. Decisions on precise details referred to company bargaining. Growing importance.
Denmark Matter left to collective bargaining. National agreements in 1986, 1988 and 1990 on the reduction of the working week. Several sectoral agreements during the 1990s introduced flexibility in working time and broadened scope of company bargaining. Strong trend towards decentralisation of bargaining, with the possibility of deviating from sectoral agreements included.
Finland 1996 legislative reform increased possibility of flexible working time agreements at sectoral and workplace level. 1993 intersectoral agreement broadened scope of company bargaining to cover maximum daily and weekly hours, and variations in the number of hours worked around an average. Increase in the context of the 1993 intersectoral agreement.
France 1981 and 1998 laws on the reduction of statutory working week. 1981, 1987 and 1993 laws authorising exemptions (especially in terms of varying hours around an average) through sectoral or company agreements. Exemption from employers' social security contributions for agreements on reduction and reorganisation of working hours. 1995 intersectoral agreement promoting sectoral bargaining on hours flexibility in exchange for reduction. Modest results for sectoral bargaining. Strong trend towards company bargaining on the implementation of exemptions from the law and on obtaining cuts in social contributions.
Germany Working Time Act (1994) allows introduction of flexible working time through collective agreements, works agreements with works councils, or individual employment contract. Since the mid-1980s, increase in sectoral bargaining trading reductions in hours for flexibility. Agreements with works councils specify the details of the schemes' application Trend towards decentralisation of bargaining
Greece Flexibility in working time imposed by a 1990 law despite union opposition. Bargaining hitherto non-existent because of incompatibility of positions of employers and unions No company bargaining. Employers' attempts to introduce flexibility unilaterally.
Ireland Organisation of Working Time Act (1997) sets maximum weekly hours, with possibility, by local collective agreement, of varying hours around an average over a period of up to one year. Intersectoral "framework agreement" (1989-90) defined conditions for company bargaining on reduction of standard working week. Tripartite national agreements (eg current Partnership 2000) contain clauses allowing local bargaining on flexible working time. Company bargaining in the context set by legislation and national agreements (few innovative agreements).
Italy Little impact of legislation before 1998 bill introducing 35-hour week from 2001, promoted through financial incentives. Leading role played by sectoral bargaining defining trade-offs between reduction of working hours and flexibility, with implementation decided by company agreement. In 1997, intersectoral agreement applying EU working time Directive. On the increase, often related to the annualisation of working hours.
Luxembourg No change since 1975. Law allows certain types of exemptions through bargaining (eg on varying working hours) on the condition of agreement by Ministry of Employment. Hitherto very weak development of bargaining: employers are opposed to working time reduction and unions opposed to flexibility. Changes underway. A few examples.
The Netherlands Since 1996, substantial reduction of statutory restrictions on working time flexibility. Exemptions from law possible through collective agreements or agreements with works councils. In a 1993 intersectoral agreement, employers gave up veto on reduction of working hours and unions agreed to decentralisation of bargaining and flexibility of working time. Sectoral agreements are framework agreements whose details must be decided by company agreements. Increase of bargaining on flexibility but, recently, a halt in the reduction of working hours.
Norway Worker Protection and Working Environment Act (1977) allows modifications to normal daytime working and variations in the length of the working week/day around an average through collective agreement. Most recent intersectoral agreement on reduction of length of working week dates from 1986. Numerous recent sectoral agreements calling for reduction of overtime through local agreements. Little bargaining on flexibility.
Portugal 1996 law reducing normal working week to 40 hours, with possible variation of hours around average over four-month reference period. National bargaining has turned mainly on reduction of the working week. Some recent sectoral agreements on flexibility. Innovative agreements but few of them.
Spain 1994 labour market reform changed maximum length of the working day and week into annual averages; variations within this figure are determined by collective bargaining. 1997 intersectoral agreement provides for bargaining on length and reorganisation of working time. Bargaining occurs at sectoral, provincial level. Small number of agreements within large companies. Agreements increased after 1994 labour reform. From 1997, agreements on flexibility in exchange for stable contracts or job creation.
Sweden Act on Working Time (1992) sets general standards with possibility of exemption through collective bargaining at national level. Sectoral agreements on length and reorganisation of working time, sometimes referring certain provisions to company bargaining. Some recent agreements have introduced flexible working time arrangements. Increase in agreements, promoted by national agreements which have broadened the scope for bargaining.
United Kingdom No provisions ("voluntarism"). Multi-employer bargaining on all issues in steady decline. Flexibility agreements at workplace level.

The content of negotiations

The national reports enable the main themes in collective bargaining on working time flexibility to be identified. These cover: the methods of introducing flexibility; the compensation for introducing flexibility; and the interaction of working time flexibility with related issues.

Methods of introducing flexibility

To put matters simply, two main functions of flexibility in working time can be identified, although they are often both present at the same time.

In the first place, flexibility can mean splitting up the periods of actual time worked so that productive equipment can be used for longer periods, or longer opening hours can be achieved in the retail and other service sectors. In this case, the form taken by flexibility is most often shiftwork, involving successive or overlapping shifts, to enable the company to keep going 24 hours a day, seven days a week (night work, and weekend work). The teams working these shifts may have alternating schedules or specialised permanent ones, and adjustment might mean resorting to part-time shifts.

Secondly, flexibility might primarily be a response to the irregularity of the company's level of activity, either because of seasonal variations (in the construction, tourism and food-processing industries, for example), daily or weekly fluctuations (shops and certain client services, for example), or due to unpredictable variations in demand, especially with a "just in time" mode of organisation of production. The main solution is thus to vary the number of hours worked; the actual number of hours worked (per week, for example) fluctuates between a minimum and a maximum around an average set by collective agreement, which must be respected over a reference period, which may vary from a few weeks to a year. In short, this is a method of calculation which enables employers not to pay overtime premia for hours worked above the average in any day, week, month etc, as long as the average number of hours is respected over the reference period. Similar methods have allowed the payment of overtime to be replaced by the granting of time off in lieu, or by crediting the extra hours to "individual working time accounts" which workers can use over a period of several years.

Forms of compensation for flexibility

The national reports identify three main aspects of compensating employees (and their representatives) for the introduction of working time flexibility.

  1. Trade unions try to obtain the right to monitor the implementation of the flexibility process. At the very least, they might gain information rights (for example, a period of notice before a work schedule is changed), while at most they can obtain a "co-determination" right in decision-making (as in Germany and Denmark). Monitoring is carried out either by unions or the works council in the countries where these exist.
  2. The implementation of flexible working time schemes can be presented by employers as a condition for making positive decisions on employment- eg by abandoning, or reducing the number of, job losses announced, guaranteeing that existing employment levels will be maintained for a certain period, or making commitments on job creation. On their side, the unions involved can view such employment measures as a factor justifying concessions on their part regarding flexibility. These positive effects on employment are usually linked to a reduction in the actual average number of hours worked per employee (through a cut in agreed normal hours, less overtime, or compensation through time off in lieu, etc).
  3. In the area of pay, the variety and, often, complexity of the solutions deployed is considerable. The increased constraints and onerousness which may be involved for employees through the introduction of flexibility into working time can be compensated for, in varying proportions, by wage rises and various bonuses, or by rest periods and days off, accompanied by a reduction in the average number of hours to be worked. The solution selected depends on the preferences of employers and employees, and also the size of the margin for negotiation created by the gains linked to the flexibility introduced (such as the reorganisation of production with an increase in productivity, or a lengthening of the time that equipment is used). This solution can be influenced by the existence of schemes providing exemptions from employer's social security contributions in the case of agreements combining the introduction of flexibility and a reduction in the number of hours worked .This is already the case in Belgium and France, and in the pipeline in Italy.

Interaction with related issues

Setting boundaries for an examination of the issue of working time flexibility is inevitably arbitrary - in practice, it is interlinked with a number of connected issues.

The most obvious connection is to part-time work. Theoretically, part-time work is no more or less flexible than full-time work, but in practice it provides a potential complement or alternative to introducing flexibility into full-time work (by allowing unorthodox split work schedules, or the coordination of successive shifts, for example). Part-time work itself can be varied - for example, by providing for a set number of hours to be worked over a 12-month period - and in an extreme form, as in the case of the UK, it may not even guarantee a minimum number of hours' work (this is the case with "zero hours" or "casual" contracts).

The connection with the growth in "precarious" forms of employment is less obvious, but still genuine. The use of fixed-term contracts and temporary employment is a source of employment flexibility which may be, in part, an alternative to introducing flexibility into the working time of staff already employed. Inversely, cases have been recorded of unions agreeing to flexibility in working hours in exchange for a reduction in the use of precarious employment and/or the transfer of staff occupying these positions onto stable employment contracts.

Bargaining levels

When examining the question of the level at which working time flexibility is negotiated, the broader trends which affect European industrial relations systems can be made out. Employers advocate the decentralisation of bargaining to the level closest to the practical conditions of work organisation. Unions are keen on national bargaining at sector level or even, in some countries, at intersectoral level (as is the case in Belgium, France, Ireland, Italy, Norway, the Netherlands, Portugal, and Sweden). Unions feel that these multi-employer negotiations create an impetus for change, and ensure that guarantees for minimum protection of workers are given.

Several countries have mechanisms in place which link or "articulate" sector-level and company-level bargaining. The former establishes a broad framework and sets out the margin for manoeuvre within which the latter can work. In Germany and Italy, for example, the reduction of the number of working hours (on a weekly basis in Germany, and on an annual one in Italy) is fixed by sector-level agreement, while the way in which flexibility should apply is, within specified limits, the province of company-level agreements.

The respective weight accorded to these two levels of bargaining might depend on the changes in legislation which were discussed above. When the law sets basic standards which may be the subject of exemptions through collective agreement, it should stipulate whether such exemptions require an agreement at national level or whether they can be implemented directly through a company agreement. When the second solution is open, the tendency toward decentralisation is obviously strengthened. It must also be taken into account that, depending on existing legislation and national traditions, some types of flexibility in working time may be introduced unilaterally by the employer, for example where the workforce is not represented by a union, or when negotiations have failed. In the same way, some national reports note the existence of informal local arrangements outside of the regular field of collective bargaining.

Commentary

To summarise, the theme of flexibility of working time is currently coming to the fore, with varying degrees of intensity, in all Western European countries. In some countries, the debate began as early as the late 1970s, while in others the matter only really arose a few years ago. However, in almost all cases working time flexibility is seen as an important topic for the future. The emergence of this new factor in collective bargaining can only be understood in the light of economic, technical and social changes over the past 25 years. Governments and social partners have had to adapt their analyses and strategies to this new issue, and as a result, there have been changes in the content of the rules framing the length and utilisation of working time, and also in the character of these rules, whether statutory or collectively agreed, compulsory or optional.

Although the situation varies a great deal from country to country, it must be emphasised that in the majority of them, procedures for gathering statistics and analysis provide only incomplete, disparate and piecemeal information on the processes of implementation of forms of flexible organisation of working time, on their content and on their results. Statistics on working time and collective bargaining usually correspond to traditional categories which do not enable the character and scope of innovations to be identified. Analytical work provides contradictory results, which disparate methodological approaches do not allow to be compared with one another. It would be desirable that, in an area in which major changes are already under way or just starting over the whole of Western Europe, relevant and comparable information should be put at the disposal of those involved. (Jacques Freyssinet, IRES)

EU9805201S

15 May 1998

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