Unleashing the potential - Flexibility in European companies

Resource pack

Companies need flexibility to respond to changing consumer demand, or to a new regulatory or competitive environment. This can often be controversial, especially when it involves flexibility in relation to such matters as pay, working time arrangements, contractual status and the organisation of work. While these forms of flexibility may benefit companies, they can also have costs, both to the workforce and the company. Hence, flexibility is not per se good or bad for employers or employees. In some cases, situations can be found that profit both.

Recession - flexible responses to save jobs

Since the start of the recession in 2008, European enterprises have faced a significant decrease in demand that has required the development of new strategies to survive the crisis and return to growth. In many cases, companies did not apply single, isolated measures but a combination of various instruments. In general, these measures were neither new nor specific to the current crisis. What is striking, however, is that anecdotal evidence shows a good level of solidarity between employers and employees, resulting in joint efforts to find acceptable solutions for both parties that at the same time fostered the sustainability of the firm and job security for the workers.

Working time - who benefits from flexibility?

More than half (56%) of companies in Europe offer some kind of flexitime arrangement. About two-thirds of establishments (67%) offer their employees part-time employment. By far the most significant job retention schemes implemented with the onset of the recession were measures to reduce working time. In general, companies’ first reaction to the slack periods resulting from lower demand was to maximise the use of working time accounts (reduction of outstanding time balances or accumulation of negative working time) and holiday entitlements. As last resort, short-time working shemes or career breaks and sabbaticals have been offered in order to avoid dismissals. Flexible working time arrangements - if used through choice only - can provide workers with a satisfying work-life balance.

Financial incentives - their use and role in industrial relations

Eurofound’s European Company Survey (ECS) 2009 found that a third (32%) of European establishments with more than 10 employees use elements of pay which depend on the performance of individuals, and less than a fifth of establishments use group-based performance-related pay (PRP). Eurofound research examined the relationship between variable pay and employment relations. It showed that the country where an establishment is based and factors related to the establishment itself (size, sector) play a major role in determining whether such schemes are in place. PRP measures are more likely to be found in companies that have experienced organisational stress, such as restructuring.

Achieving flexibility - the role of employee representation

Eurofound research looked into the connection between performance-related pay and employment relations. It could show that across Europe, PRP is more likely to be present where employee representation exists, particularly single forms (either trade union or works council in an establishment, not both); however, country factors play a major role here. Social dialogue practices matter: when the employee representatives have been involved in previous changes of the remuneration system, the likelihood that a PRP scheme is in place is higher than when they had not been involved.