European Industrial Relations Dictionary - Institutional framework
The creation of the European Coal and Steel Community (ECSC) in 1951 was a brave initiative arising out of the devastation of Europe in two world wars during the first half of the 20th Century.
Although the ECSC ceased to exist in 2002, its significance in the development of European Union (EU) employment and industrial relations cannot be emphasised enough. This first Treaty organisation was highly influential in establishing European social dialogue.
Article 3 of the Treaty of Paris stated that among the purposes of the institutions of the new Community were:
...to promote improved working conditions and an improved standard of living for the workers in each of the industries for which it is responsible.
This was followed by the foundation – by the Treaties of Rome in 1957 – of the European Economic Community (EEC), which later became the European Community (EC), and is now the EU, as well as the European Atomic Energy Community (Euratom). Again, Article 117 of the EEC Treaty stipulated that:
...Member States agree upon the need to promote improved working conditions and improved standards of living for workers.
While maintaining these objectives, the institutional structures of the EU have undergone further modifications in later treaties, with important consequences for employment and industrial relations in Europe.
The Treaties of Rome provided the EEC with a relatively wide range of social objectives, but the institutions of the EEC were given only a relatively narrow set of legal social competences to achieve these objectives. The EEC Treaty established a common market, and anticipated that the successful achievement of economic objectives would enable the Community to attain its social objectives, this being widely referred to as the ‘spill-over effect’.
The legal competences which the Treaties of Rome granted to the EEC’s institutions limited them to proposing harmonisation of standards, where differences among Member States could lead to distortions in the functioning of the common market. For example, measures were necessary to secure the primary objective of a common labour market, which guaranteed the free movement of workers among the Member States.
The other main instrument for achieving the social objectives of the common market was the provision of a European Social Fund (ESF). One of four so-called ‘structural funds’, the aim of the ESF is the promotion of economic and social cohesion by providing financial assistance to certain groups of people – in particular for vocational training – in the light of industrial change. The focus of the ESF’s spending was determined by the European Employment Strategy (EES).
In the early years of the EEC, the initiatives of the Community’s institutions in the field of employment and industrial relations were relatively limited and focused on securing the objective of a common labour market. However, political events at the end of the 1960s and the economic shocks of the early 1970s coincided with the proposed expansion of the EEC from the original six members to include three new Member States in 1973 – Denmark, Ireland and the United Kingdom. These developments led to the decision to launch a Social Action Programme in 1974. The European Foundation for the Improvement of Living and Working Conditions (Eurofound) was established in 1975.
Without changes in the Treaty, however, the competences of the institutions were still limited to dealing with distortions of competition in the common market. In the field of employment and industrial relations, these involved differences in labour standards, which under certain circumstances could lead to social dumping. The Member States unanimously approved directives, such as those on collective redundancy and transfer of an undertaking, aimed at combating, in particular, the effects on employment and industrial relations of the economic dislocation following the two oil shocks of the 1970s.
At about this time, other directives in the employment field were stimulated by decisions of the European Court of Justice (ECJ) concerned with equality between women and men and based on Article 119 EC (now Article 157 TFEU), which guaranteed equal pay for equal work.
During the 1970s, the development of a legislative programme of EU directives aimed at harmonising labour standards in the Member States depended on unanimity in the Council of Ministers in adopting proposals of the Commission. In the 1980s, however, some Member States adopted policies which promoted deregulation of the labour market. Subsequently, EU activity in the employment and industrial relations field was given a new direction by the 1992 programme to establish a Single European Market (SEM) – aimed at completing the common market by 1992. The adoption of the Single European Act (SEA) in 1986, which launched this process, allowed for qualified majority voting in the Council of Ministers on matters concerned with the working environment to protect workers’ health and safety. In 1989, a directive established an EU framework for protecting workers’ health and safety.
Val Duchesse and Treaty of Maastricht
The early years saw the origins and emergence of the European social dialogue which was launched by Jacques Delors, the then President of the European Commission. An initial meeting, held at Val Duchesse in January 1985, involved the European social partners. At this meeting, the organisations agreed to engage in furthering European social dialogue, and meetings in subsequent years gradually gave their social dialogue increasing substance.
The pressure for a social dimension of the Single European Market led also to the adoption in December 1989 by 11 of the Community’s 12 Member States of the Community Charter of the Fundamental Social Rights of Workers. The political commitment of the 11 Member States took shape in subsequent years in their approval of a number of Commission proposals in the Social Action Programme. Despite the Charter having the legal status of a political declaration, the resulting legislative measures demonstrated that it had significant effects.
An intergovernmental conference, and the Maastricht summit of December 1991, extended the process of political integration by adopting the Treaty of Maastricht, which was also known as the Treaty of the European Union (TEU)). The parallel adoption of a programme for Economic and Monetary Union (EMU) reinforced the process of economic integration. The new Treaty also referred explicitly to the European Convention for the Protection of Human Rights and Fundamental Freedoms (Article 6(2) EC) and to the European Social Charter (Preamble EU Treaty) of the Council of Europe.
The Treaty of Maastricht included a Social Policy Protocol that finally granted extensive social competences to the EU in the area of employment and industrial relations. A striking exception, though disputed, of competences excluded from the scope of the new social competences in Article 137 EC was that:
The provisions of this Article shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs.
There was also provision for the UK to obtain an opt-out from EU labour legislation adopted under the Protocol. The Social Policy Protocol included an Agreement on Social Policy, which took up almost verbatim the agreement that the European social partners had concluded on 31 October 1991. This agreement included the processes and outcomes of the new European Social Dialogue.
Treaties of Amsterdam and Nice
Concern with rising unemployment in the 1990s stimulated proposals for a European Employment Strategy (EES), and, together with pressure for labour market reforms, prompted in December 1997 the adoption of a new employment title in the Treaty of Amsterdam. The EES is based on the open method of coordination and leads to the yearly adoption of non-binding recommendations. The strategy states that the social partners should be involved in this process.
The Amsterdam Treaty also saw the end of the UK opt-out, and the incorporation into the EC Treaty of the Agreement on Social Policy, now part of the Treaty’s Chapter on Social Policy. This Chapter now includes the European social dialogue. The Treaty provisions on social policy have allowed for adoption by the Council, by qualified majority voting, and by the European Parliament of legislative measures in areas of employment and industrial relations, such as information and consultation of employee representatives in the enterprise (2002).
The Treaty of Nice of December 2000 amended the EC Treaty’s chapter on social policy. It allowed for the possibility of qualified majority voting on proposals in the areas of employment and industrial relations which had previously required unanimity. The European Council meeting in Nice also approved the Social Policy Agenda 2000–2005 which had been adopted by the Commission in June 2000. The Treaty of Nice stipulated major changes in the judicial structure of the European courts, including the creation of European judicial panels, allowing for the possibility of a specialised EU tribunal to deal with disputes in the field of employment and industrial relations, as is found in many Member States.
At the Nice summit, the Member States also unanimously adopted the Charter of Fundamental Rights of the European Union. The EU Charter includes a Solidarity Chapter guaranteeing a series of rights in the field of employment and industrial relations.
Following negotiations with a number of candidate countries, 10 new Member States joined the EU on 1 May 2004, with two other countries joining on 1 January 2007, increasing the total number of Member States to 27. Acceding countries undertake to incorporate into their national law all the acquis communautaire in the field of employment and industrial relations (social acquis).
Treaty of Lisbon
The Treaty of Lisbon was signed in Lisbon on 13 December 2007 and entered into force after a cumbersome ratification process on 1 December 2009. The Treaty of Lisbon enhanced the social dimension of the EU via both of its constituent parts: the Treaty on the European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU). For example, ‘non-discrimination’ and ‘equality between women and men’ were added to the values of the EU (Article 2 TEU). The Treaty introduced a social clause that obliged the EU to respect the social dimension and the fight against discrimination in all its policies and activities and officially recognised the role of the social partners.
The Treaty inserted a reference to the Charter of Fundamental Rights of the European Union into Article 6 TEU, making this Charter legally binding for the EU. A protocol added to the Treaty, however, conceded that the Charter did not create enforceable rights applicable to Poland or the UK.
Finally, the Treaty of Lisbon also introduced a number of incremental innovations into the European social dialogue. The first innovation is the fact that Member States may entrust management and labour, at their joint request, with the implementation not only of directives, but also of decisions extending social partners’ agreements concluded under Articles 155(2) TFEU. The second innovation is the requirement that the European Parliament shall be informed, a practice which is, however, already in place at present. Thirdly, the Treaty of Lisbon has further consolidated the European social dialogue by rooting the Tripartite Social Summit as well as the autonomy of the social partners in primary EU law. Finally, the facilitation of social dialogue will not only be regarded as a task for the European Commission, but as one for the EU as a whole.
Legislative institutions of the European Union
Since the beginnings of the European Community, the European Commission has had primary responsibility for shaping the EU’s strategy for European integration. Its members and officials carry out its tasks in the field of employment and industrial relations through the Commission’s Directorate-General for Employment, Social Affairs and Inclusion. The Commission makes proposals for EU action in the field of employment and industrial relations, but it is the Council of the European Union (also known as the Council of Ministers) which makes decisions, particularly on legislation.
A Committee of Permanent Representatives of the Member States, known by its French acronym, Coreper, prepares the work of the Council. Legislative measures are adopted in collaboration with the European Parliament and in accordance with Council voting procedure. Delegation of powers is possible through the Comitology procedure. The European Economic and Social Committee (EESC) and the Committee of the Regions (CoR) provide assistance.
The Treaty of Maastricht (TEU) of 1991 provided a greater role for the European Parliament in exercising these new competences. Formerly, the legislative cooperation procedure, introduced by the Single European Act had increased the legislative role of the European Parliament by enhancing its consultative role. The co-decision procedure introduced by the EU Treaty (Article 251 EC/now Article 294 TFEU) enabled the European Parliament to share legislative authority with the Council.
In the area of social and employment policy, several forms of tripartite concertation between the European social partners and the EU institutions have been developed. One example of this is the Tripartite Social Summit established by a Council Decision of 6 March 2003.
European social dialogue at intersectoral level
The EU Treaty’s principle of subsidiarity, including in this area the specific principle of horizontal subsidiarity, governs the exercise of the new EU competences in the area of employment and industrial relations. The European social dialogue, therefore, has an institutional position in the legislative framework of EU employment and industrial relations alongside the legislative processes of the Commission and the Council. Its specific nature, however, is conditioned by the autonomy of the social partners in the sphere of industrial relations, which implies that European collective agreements can develop independently of regulatory initiatives by the Community institutions.
The social dialogue actors consist of the European social partners, representatives of the European employer organisations – BUSINESSEUROPE, joined by the European Association of Craft, Small and Medium Sized Enterprises (UEAPME) representing small and medium-sized enterprises, and the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP), representing employers of the public sector – the European Trade Union Confederation (ETUC) as well as the Council of European Professional and Managerial Staff (Eurocadres) and the European Confederation of Executives and Managerial Staff (CEC).
The EU Treaty gave the social partners a central role in formulating EU policy in the field of employment and industrial relations through social dialogue at EU level. The first European social dialogue agreement, on parental leave, was reached in 1996 and incorporated into a directive binding on all Member States (except the UK at the time). This was the first of the European social dialogue intersectoral agreements, and again the first one revised by the social partners themselves in 2009, but there were also to be European sectoral agreements. These raised important issues of implementation - European social dialogue and implementation of agreements via Council Directives, European social dialogue and implementation of agreements via the autonomous route. Further intersectoral agreements have been concluded on the issues of part-time work and fixed-term contracts and subsequently implemented by means of Council Directive.
European social dialogue at sectoral level
At sectoral level, social dialogue underwent an important development following the Commission’s decision to establish sectoral dialogue committees in 1998. The objective was to promote dialogue between the sectoral employer federations and European industry federations in the sectors at European level. As at 2012, there were 41 sectoral social dialogue committees, which had produced a wide range of joint texts and agreements. The key outcomes and activities of European sectoral social dialogue concern sector restructuring, corporate social responsibility, core labour standards, training and lifelong learning, equal opportunities, harassment and violence at work, and health and safety.
European social dialogue at company level
The 1994 Directive on European Works Councils (EWCs) (Directive 94/45/EC, now recast as Directive 2009/38/EC) marked a major breakthrough in terms of European industrial relations. EWCs represented the first genuine European institution of interest representation at enterprise level. Since then, other institutions have followed: Directive 2001/86/EC regulates the involvement of employees in the European company (Societas Europaea, SE) and Directive 2003/72/EC relates to the involvement of employees in the European Cooperative Society (Societas Cooperativa Europaea, SCE).
Another important step was the 2002 Directive on information and consultation (Directive 2002/14/EC) establishing a general framework for employee representation in all undertakings with at least 50 employees in all EU Member States.
With these institutions, the requirement for the provision of information in the enterprise and consultation in the enterprise has become a common feature of the European social model.
Transnational collective bargaining
In addition to those forms of European social dialogue that are directly shaped by the legal framework of the EU, other forms of transnational collective bargaining and trade union cooperation have evolved. Cross-border trade union cooperation refers to unilateral forms of cooperation among trade unions in more than one country. It is a precondition for bilateral cross-border social dialogue with employers and their organisations.
One major example of this kind of cooperation is the Doorn group, named after the Dutch town where trade union confederations and major sectoral trade unions from Germany and the Benelux countries (Belgium, Luxembourg and the Netherlands) met on 4 and 5 September 1998. They discussed trends in collective bargaining and the possible impact of EMU. The meeting resulted in a joint declaration which stated the strong need for close cross-border coordination of collective bargaining. This is widely seen as a pioneer in terms of European collective bargaining coordination.
The European social dialogue can result in a range of different types of European collective agreements at different levels.
European framework agreements are agreements between the European social partners, either at cross-sector or sector level.
Cross-sector framework agreements are based on Article 155(1) of the Treaty on the Functioning of the European Union (TFEU), which states that the dialogue between the European social partners ‘may lead to contractual relations, including agreements’.
The cross-sector social dialogue is carried out by the EU-level social partners – ETUC, BUSINESSEUROPE, CEEP, UEAPM and Eurocadres and CEC – which participate in the dialogue as part of the ETUC delegation. This dialogue can lead to a framework agreement which is subsequently given legal force by means of a Directive, under Article 155(2) TFEU.
European sectoral agreements are concluded between social partners organised on a sectoral basis at European level by means of sectoral social dialogue committees. In July 2010, the European Commission issued a working document on the progress and functioning of the European sectoral social dialogue. In 2012 there were a total of 41 sectoral social dialogue committees covering more than 150 million workers around the EU.
In addition, there is provision for a multi-sector agreement negotiated and signed by the European social partners representing several sectors.
A transnational company agreement is, according to the European Commission in its 2012 staff working document SWD(2012) 264 final (84Kb PDF):
...an agreement comprising reciprocal commitments the scope of which extends to the territory of several States and which has been concluded by one or more representatives of a company or a group of companies on the one hand, and one or more workers’ organisations on the other hand, and which covers working and employment conditions and/or relations between employers and workers or their representatives.
According to the 2009 Eurofound report European and international framework agreements: Practical experiences and strategic approaches (1.3Mb PDF), TCAs can be subdivided into International Framework Agreements (IFAs) and European Framework Agreements (EFAs). IFAs are signed by Global Union Federations (GUFs) and have a global scope of application, European Framework Agreements (EFAs) have a regional (European) scope of application and are signed by European Industry Federations (EIFs), EWCs and/or national unions and central management.
The Commission notes that transnational company agreements have gained significance over the past decade since the first initiatives in 2000. By early 2012, 224 such agreements had been recorded in 144 companies, mostly with headquarters in Europe, covering over 10 million employees. The Commission set up a database consisting of transnational company agreements, which contains details on every company and agreement.
European Works Councils (EWCs) agreements are concluded by EWCs, standing bodies providing for the information and consultation of employees in Community-scale undertakings and Community-scale groups of undertakings as required by the 1994 European Works Council Directive (Directive 94/45/EC, now updated by the recast Directive 2009/38/EC). The latest data from the European Trade Union Institute (ETUI) database show that, as at 2012, a total of 1,214 EWCs had been created. However, it should be noted that some multinational companies have installed EWCs at a division level. Therefore, the total number of EWCs is larger than the number of multinational companies that have a EWC. Currently, 931 multinationals have an active EWC.
There are also agreements on employee involvement in a European Company (SE). SEs are governed by EC law directly applicable in the Member States, rather than by national law. This was established by the European Company Statute (ECS) Regulation, Council Regulation (EC)2157/2001 on the statute for a European company (SE). It is estimated that as at June 2012 there are 78 agreements providing for employee involvement within SEs.
The interaction of these institutions is shaped by the principles of harmonisation, solidarity, proportionality and subsidiarity.
Harmonisation relates, in the context of EU employment and industrial relations, to the EU objective to improve living and working conditions throughout the EU and to reduce the differences between the EU Member States.
The solidarity principle of the EU is a fundamental principle based on sharing both the advantages – such as economic well-being – and the burdens equally and justly among members.
The principle of proportionality consists of the quest for the measure impeding the least on national prerogatives.
The subsidiarity principle is based on the need for the most appropriate level of action and the idea that decisions must be taken ideally as closely as possible to the citizen. In the area of industrial relations, the specific principle of horizontal subsidiarity is important, implying, for example, that European social dialogue is preferable to legislative action.