This topical update looks at the issue of employee involvement and participation at work, specifically reviewing recent pieces of research at EU and national level, EU directives, changes in the legal framework, social partner initiatives and debates identified in EurWORK quarterly reports during 2015 and the first quarter of 2016.
Employee involvement refers to the opportunities for employees to take part in decisions that affect their work, either in their immediate job (task discretion) or in relation to wider company issues (organisational participation). When talking about employee participation, it is customary to distinguish between direct and indirect participation. ‘Indirect employee participation’ refers to the involvement of employee representatives (such as local trade unions or works councils) in decision-making processes, while ‘direct employee participation’ defines direct interaction between employers and employees, as examined in the Eurofound reports, Workplace social dialogue in Europe: An analysis of the European Company Survey 2009 and Third European Company Survey – Direct and indirect employee participation.
Employee involvement is concerned with the capacity of employees to influence decisions as individuals rather than through representatives. It is often used synonymously with the term ‘direct participation’ and is the common concept that underlies diverse notions of ‘new forms of work organisation’ – whether ‘high involvement’, ‘high performance’ or ‘learning organisations’. It is also a basic ingredient of ‘workplace innovation’.
Little is known about the factors that encourage or discourage initiatives to involve employees more closely in decision-making. However, a series of potential influences or determinants on the prevalence of employee involvement systems can be identified as:
- the characteristics of the work task;
- the nature of employer flexibility policies;
- organisational human resources capacity;
- the availability of consultative and representative institutions;
- the type of ownership;
- the nature of employment regulation.
Strong evidence about the implications of employee involvement is still limited. Nevertheless, four issues seem likely to be affected:
- learning opportunities at work;
- employee motivation;
- work and employment conditions;
- employee well-being.
The purpose of this topical update is to review some recent pieces of research, initiatives and debates on the issue of employee involvement and participation at work identified in the EurWORK quarterly reports from Eurofound’s Network of European correspondents during 2015 and the first quarter of 2016. The choice of examples is based on a ‘bottom-up’ reporting by correspondents and the most interesting examples have been selected for this article.
Research at EU level
A report published by Eurofound in 2013 analysed work organisation and employee involvement in Europe based on the findings of the Fifth European Working Conditions Survey (conducted in 2010). The report established a typology of companies according to their level of employee involvement in:
- decisions about the immediate job task;
- higher level decisions such as investment, workforce structure and product development, or in decisions about general work organisation.
This analysis showed that, in 2010, 27% of EU employees worked in high involvement organisations (high task discretion and high organisational participation) and 38% were in low involvement organisations (low in both dimensions). There were smaller proportions of employees in the two intermediary categories, that is, 14.5% in consultative organisations (high organisational participation but low task discretion) and 20.2% in discretionary organisations (high task discretion but low organisational participation).
The analysis also showed that there were noticeable differences between countries. The Nordic countries (Denmark, Finland and Sweden) showed the highest levels of involvement, while the southern countries (Greece, Italy, Portugal and Spain) and the east-south countries (Bulgaria and Romania) had particularly low levels of involvement.
A report published by Eurofound in 2015 analysed workplace practices based on information from the 2013 wave of the European Company Survey. This analysis identified three different types of establishments in terms of the degree of direct employee participation, and to what extent it is supported. Companies were grouped according to a combination of indicators. These measured:
- the level of effort made to enable direct employee participation, based on the number of instruments used;
- the extent to which employees participated directly in the most significant organisational changes (as perceived by management);
- management’s opinion about the consequences of employee participation.
This analysis resulted in the identification of three distinct types of establishment in terms of the extent of direct employee participation and to what extent is it supported by the management.
- ‘Extensive and supported’ – relatively large number of participation instruments and employees likely to be involved in joint decision-making on organisational change;
- ‘Moderate and unsupported’ – moderate number of instruments and the management attitude is often not very positive;
- ‘Low effort and little change’ – few initiatives, little scope for employee participation and no changes to allow this.
Some of the findings regarding the presence of these models can be summarised as follows.
The ‘extensive and supported’ model is most common in Austria, Denmark, Finland and Sweden, where more than 70% of establishments are of this type. This type is least common in Croatia, Hungary and Poland where it is found in fewer than 50% of establishments.
The ‘extensive and supported’ model is more frequent in large establishments (70% of large establishments belong to this type) than in small and medium-sized establishments (where this type accounts, respectively, for 56% and 64% of companies).
Finally, establishments of the ‘extensive and supported’ model obtained the highest score for workplace well-being and establishment performance. However, establishments of the other two types scored below average on both well-being and performance.
EU directives and debate
The EU Directive establishing a general framework for informing and consulting employees (2002/14/EC) plays a key role in promoting social dialogue and gives a framework for employee participation in European enterprises. The Directive sets minimum principles, definitions and arrangements for information and consultation of employees at enterprise level within each country. Given the range of industrial relations practices across the Member States, these enjoy substantial flexibility in applying the Directive’s key concepts (on, for example, employees’ representatives, employers and employees) and implementing the arrangements for information and consultation. Management and labour play a key role in deciding those arrangements. Information and consultation are required on:
- the recent and probable development of the undertaking’s or the establishment’s activities and economic situation;
- the situation, structure and probable development of employment within the undertaking or establishment and any anticipatory measures envisaged, in particular where there is a threat to employment;
- decisions likely to lead to substantial changes in work organisation or in contractual relations.
In April 2015, the European Commission began a social partner consultation regarding the consolidation of the EU directives on information and consultation of workers (including Directive 2002/14/EC, Directive 98/59/EC on collective redundancies and Directive 2001/23/EC on transfers of undertakings). In June 2015, the Commission announced plans to recast the three directives with the adoption of this initiative programmed for the fourth quarter of 2015. However, it was not mentioned in the Commission Work Programme for 2016 and so it can be concluded that this recasting is no longer underway. The main employers’ stakeholders were against revising or recasting the directives, claiming the existing directives worked well for both employers and workers. However, trade unions tended to favour the reform, including the proposal to bring public sector within the scope of the directives, although they would have preferred a framework agreement under the sectoral dialogue. In December 2015, the Social Dialogue Committee for Central Government Administrations negotiated a common framework on information and consultation for central government administrations.
The European debate on employee participation is currently linked to the European Commission’s concept of, and initiatives on, ‘workplace innovation’. Using the European Commission’s definition, workplace innovation includes those innovations that aim at improving staff motivation and working conditions, thereby enhancing labour productivity, organisational performance, innovation capability, reactivity to market changes and consequently business competitiveness. Among other conditions, this means bringing the employee’s voice to both strategic and operational decisions, allowing employee involvement and participation in decision-making at different organisational levels. The Commission has prioritised workplace innovation, for example, with the improved 2012 EU Industrial Policy Communication and the launch of the European Workplace Innovation Network (EUWIN) in 2013.
Research at national level
Several pieces of national research have recently been published on the issue of employee involvement and participation at work. Some of these studies refer to the relationship between employees and their supervisors, or workers’ proactivity and involvement at work.
For instance, in Austria, a recent survey by Xing (N = 1,000 salaried employees) showed that Austrian employees increasingly question strong hierarchies at work, and demand more autonomy and opportunities for promotion from their supervisors. Thus, the study found that up to 80% of respondents asked for supervisors who did not act as classic bosses but treated them as colleagues. About half would also seek for more autonomy in determining working times and 46% would prefer to work ‘without instructions from above’. Some 58% of the respondents already felt that communication with their superiors was ‘open’ and that they were sufficiently valued.
A recent study by recruitment company, Latvia Talentor, on the culture of business organisation in Nordic and Baltic countries revealed that Baltic workers show lower proactivity and involvement at work compared with Nordic workers. Another recent study found that employee involvement in Latvian enterprises is particularly low in micro and small enterprises, especially compared with large enterprises and that these differences have increased in recent years. Researchers say these results are explained by there being less likelihood of bonuses and additional benefits in micro and small enterprises, despite the fact that mutual relationships among employees and managers are usually warmer.
However, the participation of workers can also be analysed from the perspective of collective bargaining and trade union membership rate. Two German research studies published in 2015 by Otto Brenner Stiftung, Betriebsräte im Aufbruch? and Gewerkschaften im Aufwind?, identify increasing participation of workers at work in east Germany, as reflected in the increasing role being played by trade unions and in rising levels of trade union membership, collective bargaining coverage and works council coverage. Among the reasons for this, suggested by the authors of these two studies, is the greater participation-oriented approach taken by local trade union branches and worker representatives, as well as the active support of regional state authorities in this field.
Finally, there are some interesting studies looking at the interaction between social partners and bargaining culture. For example, a recent Norwegian study looked at the so-called Nordic model at company level. Specifically, the study analyses how daily interaction between the social partners within individual Norwegian establishments/companies works and to what extent company democracy is actually embedded at Norwegian workplaces. The findings show that union representatives report that management has generally become increasingly top-down and bureaucratic, especially in foreign-owned enterprises. Also, the study shows that almost 3 out of 10 union representatives never attend meetings with their employer, and rarely or never have informal conversations with their closest company manager. Another study confirms these signs of deterioration of the traditional collaborative and participative Norwegian model in enterprises (Barth and Nergaard, 2015); this is well reflected in a decrease in both collective bargaining coverage and the share of companies with strong collaboration at company level.
In January 2015, the Central Organisation of Finnish Trade Unions (SAK), a confederation of 20 trade unions in industry, the public sector, transport and private services, carried out a survey among shop stewards (N = 1,017). The results showed that, in one-third of workplaces, the employer is in breach of workplace legislation and binding agreements. Breaches of provisions in the Act on Cooperation within Undertakings are the most common, but the survey also claims that there are breaches of provisions in collective agreements and local agreements. Around 40% of respondents reported that being a shop steward had become more difficult, especially at larger workplaces (that is, those employing more than 250 people). According to SAK, the results indicate that local bargaining is ineffectual and that there is a need for improvements in workplace bargaining culture.
Changes in the legal framework for employee participation/social dialogue
National initiatives and debates
2015 saw the development of a number of interesting measures on employee involvement and participation at work. Some countries have approved legal reforms to the social dialogue framework. This is the case of Luxembourg, where the reform of social dialogue at company level was adopted on 2 July 2015 by the Chamber of Deputies. This reform sought to abolish works councils (joint committees or comité mixte) and transfer their responsibilities to the staff delegation (délégation du personnel). The legislation partly came into force in January 2016, with joint committees expected to be abolished or merged with other bodies in 2018. The Chamber of Employees of Luxembourg has published an in-depth analysis of the reform, together with a summary in English.
In France, a draft bill on the reform of social dialogue at company level was presented by the Minister of Labour in April 2015. Approval came with the passing of law no. 2015-994 of 17 August 2015 on social dialogue and employment. This is one of the most significant laws in France since 2008, as it brought a profound change to social dialogue rules. Some of its main features are:
- the creation of joint regional bodies to enable representation of employees in very small enterprises (up to 10 employees);
- the expansion of the ‘single staff delegation’ body (by combining the works council and the staff delegates) in companies with up to 300 employees;
- the possibility of merging the staff representative bodies by collective agreement in companies with 300 or more employees.
Following the passing of this new law, the French government published two decrees in March 2016. The first set out the role of the single staff delegation in companies with 50–300 employees (Decree no. 2016-345 of 23 March 2016). The second dealt with the body that can be established by collective agreement to combine three institutions for employee representation (staff delegates, works council and health, safety and working conditions committees) (Decree no. 2016-346 of 23 March 2016). Overall, the aim is to improve the efficiency of social dialogue at company level by reducing the number of bodies, but without reducing rights.
In addition, there were also some proposals on works councils’ rights to information and consultation. For instance, in the Netherlands, a bill aiming to extend the rights of works councils on pension schemes was presented in December 2015. The bill is based on earlier advice by the Social and Economic Council (SER). It explains that the influence of the works council refers to the terms of the pension agreement and not to the employer’s choice of the pension fund or insurance company; however, the works council will get the right to be informed about changes. Also in the Netherlands, the Commission for Furthering Worker Involvement (Commissie Bevordering Medezeggenschap, a tripartite committee linked to the Social and Economic Council) gave advice on worker involvement in case of insolvency. The Commission considered that works councils have no rights over the filing of bankruptcy, but that they enjoy their full rights during the period of insolvency, acknowledging that in practice time pressure is a major problem. The Commission also advised making the courts check whether the works council are informed and consulted on the major issues linked to the insolvency.
The issue of workers’ participation and information was also present in the political debate in other European countries. For instance, in Italy, draft legislation on workers’ participation, information, and consultation was submitted on 11 March 2015 (Senate Draft Law No. 1051/2015), and was still under parliamentary discussion in the summer of 2015. The draft legislation aims to promote the employee involvement process, enabling them to participate as members of the supervisory and management board, and the setting up of profit-sharing schemes for employees. These processes should be implemented through company-level agreements.
In Spain, and particularly in the region of Gipuzkoa (one of the few Spanish regions where tax collection and management is decentralised), the regional tax agency considered the possibility of incentivising workers’ participation in companies via fiscal deductions, together with a series of measures directed at boosting the economy. In particular, the measure consists of several modifications and improvements related to personal income tax, as Gipuzkoa tax agency would like to encourage employees to participate financially in their companies. This proposal was announced in the Spanish press in February 2016; but the definitive rules are still to be decided on and approved. Other programmes promoting companies’ activities to develop employee participation are also about to be launched.
Initiatives by social partners and companies
Social partners, and particularly employees’ representatives, have also developed some interesting initiatives to promote workers’ participation.
For example, in Italy, in January 2016, the Italian General Confederation of Labour (CGIL) presented the Charter of Universal Labour Rights, thus proposing a universal model for the protection of worker’s rights. One of its aims is to update some contractual tools on the basis of the fundamental rights enshrined in the Italian Constitution (for instance, by toughening the sanctions against employers who make unlawful dismissals). Another aim is the idea of promoting workers’ participation on the basis of the German model (that is, consultations and certified voting with a view to actually implementing Article 46 of the Italian Constitution). Thus, the new statute seeks to extend participation patterns to all workers and establishes rules on representation that apply to both the public and the private sectors, as well as to all sizes of enterprises. It was voted on between January and March 2016, and was approved by over 95% of union members.
Since 2008, the Association of Works Councils (ZSDS) in Slovenia has been offering certificates to members of works councils in order to increase professionalism, efficiency and ethical behaviour in the representation of employees’ interests. The certificate provides basic knowledge on the legislative framework of workers’ participation, corporate governance, business finance, human resources management, legal protection of workers’ rights and internal communication. In 2014, the 14th wave of participants successfully finished three days of training and were awarded the ‘ZSDS Certificate’.
There are also some interesting examples of companies that have implemented measures aimed at promoting employee involvement and participation.
In France, numerous companies (such as Areva, Thales and Carrefour) have concluded agreements to implement the ‘Single database’, which contains information of an economic and social nature, introduced by the Employment Safeguarding Act of 14 June 2013. The database comprises all the data that must be sent regularly to a works council, as well as the information required for the works council’s annual consultation on the establishment’s strategy and its consequences.
In Germany, the German Trade Union Confederation (DGB ) and the metalworkers’ union (IG Metall) called for an amendment of the Works Constitution with the aim of broadening the rights of the works councils with regard to decisions on outsourcing/contracting and to workers from subcontracted companies working onsite. In this regard, a new approach to co-determination on contracting was agreed between IG Metall and Porsche, based on the concept of ‘case-oriented co-determination’ (sachbezogene Mitbestimmung) with regard to contracting. This approach implies that any plans to outsource or allocate tasks to a contractor are to be discussed by the bipartite economic committee, whereas a bipartite working group pre-selects the plans and decides on them.
In Italy, in December 2015, a group of 51 workers of Italcables, a cable manufacturing plant in Caivano (Naples, region of Campania), reopened their company, inactive for two years and under extraordinary administration. The workers prepared a business plan and opted to receive the monthly payments of their unemployment allowance in a one-off payment, creating a common fund to implement the plan.
In Slovenia, in January 2015, the Minister of Economic Development and Technology (MGRT) visited the electrical motors manufacturer, Domel, a successful model of employee ownership. The minister plans to promote Domel’s model of employee ownership as a best practice for other companies, as part of the government’s strategic project promoting the development of social entrepreneurship, cooperatives and economic democracy. The government is interested in promoting employee ownership and encouraging workers to be future owners in cases of the sale of state assets.
Employee participation is widely believed to be a major factor affecting employees’ welfare, as well as enhancing their opportunities for self-development, work satisfaction and well-being. Moreover, in the context of the current social and economic development in Europe and considering the complex framework of global competitiveness faced by European companies, employee involvement is beginning to be seen as a factor in the efficiency and success of the enterprises where they work. Additionally, employee participation is a basic ingredient of workplace innovation, allowing companies to profit fully from workers’ capabilities and their knowledge of production processes. Several studies, at both European and national level, touch upon these issues, showing how establishments with extensive and management-supported initiatives for employee participation are able to attain better workplace well-being and establishment performance.
In terms of national initiatives and debates, several interesting measures were developed in 2015 in relation to employee involvement and participation, as shown by the information collected from Eurofound’s Network of European correspondents. For example, a number of countries have approved legal reforms of the social dialogue framework (such as France or Luxembourg), while in Italy they have been working on draft legislation on workers’ participation, information and consultation. In addition, social partners and some companies have implemented a number of initiatives aimed at promoting employee involvement and participation.
Barth, E. and Nergaard, K. (2015), ‘Kollektive partfohold: Status quo eller endring?’, in Dale-Olsen, H. (eds.), Norsk arbeidsliv i turbulente tider, Gyldendal Akademisk, Oslo.