Social Policy in the European Union: Between Harmonization and National Autonomy 9781685859251

Citation preview

SOCIAL POLICY

IN THE

EUROPEAN UNION

SOCIAL POLICY IN THE EUROPEAN UNION Between Harmonization and National Autonomy

Ivor Roberts and Beverly Springer

b o u l d e r l o n d o n

Published in the United States of America by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 www.rienner.com and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 2001 by Lynne Rienner Publishers, Inc. All rights reserved Library of Congress Cataloging-in-Publication Data Roberts, Ivor, 1938– Social policy in the European Union : between harmonization and national autonomy / Ivor Roberts and Beverly Springer. p. cm. Includes bibliographical references and index. ISBN 978-1-55587-977-8 (hc : alk. paper) 1. European Union countries—Social policy. I. Springer, Beverly. II. Title. HN373.5.R63 2001 361.6'1'094—dc21 00-062627 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. Printed and bound in the United States of America The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1992.

CONTENTS

Acknowledgments 1

vii

Seven Assumptions Concerning Social Policy in the European Union

1

2

EU Social Policy: Framework and Context

7

3

EU Social Policy and Employment Policy at the End of the Twentieth Century

27

4

The Member States As Participants in EU Social Policy

57

5

The European Works Council Directive: Evolution and Content

89

6

The Actors: Multilevel Governance in Action

101

7

The Member States and the Transposition of Directives

121

8

MNCs and EWCs: The Testing Ground for Policy

133

9

EU Social Policy at the Beginning of the Twenty-first Century

151

Bibliography Index About the Book

161 171 179

v

ACKNOWLEDGMENTS

W

e are grateful to the many people in the European Union who shared their time and knowledge during the process of writing this book. At the beginning of our work, we had the benefit of discussing the project with Gert Hofstede and wish to thank him for his timely and valuable advice concerning the influence of culture on the operation of international companies. We owe thanks also to Clarke Herman for his experienced advice on the practical developments of European works councils. Our field research relied heavily on information from labor union and management representatives; we appreciated their candor and their interest in our project. Jim Morris and Patrick Hughes arranged many on-site interviews with labor and management representatives for us, and we are most grateful to them. We also thank staff at the European employers’ federation UNICE, the European Trade Union Confederation, and the European Trade Union Institute, as well as their counterparts in national and industry organizations. Finally, we thank Cindy Engvall for reading and commenting on early drafts of the book.

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1 Seven Assumptions Concerning Social Policy in the European Union

A

s the twenty-first century begins, the European Union (EU) has a single market and a new monetary system but lacks a social policy to match the stature of its economic and monetary policies. This book presents one more study of EU social policy but one that differs from others in both approach and subject matter. The book has a dual subject: EU social policy at the end of the twentieth century and an indepth study of an EU directive. The general study provides an overview of trends and assesses the status of the policy; the in-depth study offers a unique insight into the dynamics that shape a social policy. Our approach is based on concepts drawn from a number of disciplines. Previous studies have focused primarily on policymaking, utilizing concepts drawn from the social sciences. In contrast, this study is comprehensive, tracing a policy from inception to implementation. While using concepts from the social sciences, it also draws on work in international business studies and industrial relations. Following a general discussion of social policy at the end of the twentieth century, the book focuses on the European Works Council Directive (EWCD) as the vehicle to analyze questions surrounding EU social policy. The study moves from Brussels to the member states and into the corporations affected by the directive. It includes the usual cast of actors but also brings in hitherto unnoticed actors such as human resource directors and officials in industry committees of European labor unions. The EWCD is a valid vehicle for the study for a number of reasons. It is regarded by many as the most important directive adopted under the rubric of social policy in the 1990s. It imposes the practice of 1

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employee consultation on the different systems of law and industrial relations in the member states. The directive requires overt action by the relevant parties that may be observed and assessed. In addition, the EWCD was and is highly controversial; pressure to minimize its relevance is intense. In short, the EWCD brings into play all factors that concern scholars interested in EU social policy. Its study should advance our understanding of EU social policy and provide a comprehensive picture of EU social policy in action at the end of the century.

Assumptions and Concepts Persons interested in the study of EU social policy bring to it a number of assumptions about the factors relevant for doing so. Such assumptions should be explicit because they determine the subjects for research and the concepts employed. Seven assumptions underlie the research presented here: 1. The European Union is a polity that operates with multilevel governance and functions as a regulatory state. This assertion is not meant to be a device to enter the intergovernmentalist versus multilevel governance controversy.1 It applies only to the small world of EU social policy wherein the authors’ own experience indicates that numerous actors affect the course of social initiatives as they pass from Brussels to their various destinations in the member states. According to multilevel governance theorists, policymaking and policy implementation in the EU involves a variety of actors ranging from EU officials to local government representatives and trade union members. National governments may be the most important participants, but they are not the only ones who shape final policy. The study of EU policy therefore involves contact with numerous actors and probes well beyond the confines of the European Commission and the Council of Ministers.2 In Europe today the regulatory state is replacing the positive or interventionist state, which had responsibilities for macroeconomic stabilization and income redistribution. The regulatory state eschews the ambitions of the positive state and adopts strategies in response to current economic and social problems. It functions to assist the operation of markets, but its reach is minimized by budget constraints and current assumptions about the role of governments. The regulatory state shares governmental activities with third parties such as private enterprises. The EU is the epitome of a regulatory state. In regard to social policy, the EU never had authority to intervene in order to redistribute incomes;

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3

it has always acted under the shadow of economic competitiveness. In recent years, the EU has tailored social policy to fit closely with economic imperatives and has widened its practice of involving third parties in both policymaking and policy implementation. 2. EU social policy is an indigenous plant rooted in European values and experiences. This statement starts with a prior assumption that Europe is distinct from other regions of the world. Historians recognize the validity of the assumption and provide evidence of a European identity. They argue that Europeans have a common culture3 and have long had an “idea of Europe.”4 One of Europe’s distinguishing factors is a commitment to social policy; this commitment is based on common values regarding the nature of man and society. European countries, irrespective of the governments’ political leanings, have longstanding social policies and spend a significant proportion of their budgets supporting them.5 EU social policy has more modest ambitions but is motivated by the common values derived from Europe’s religious and ideological heritage. 3. EU social policy on the eve of the twenty-first century has been reformatted to comply with current economic objectives while maintaining its basic values; it is a social policy of the “third way.” In the post-Delors era, EU social policy has a modest legislative agenda, but it is not withering away. It has tackled the European unemployment problem and, in so doing, has found new allies among employers and member states. It has supplemented this agenda with one of programs, studies, and initiatives to motivate member states and social partners to join the EU in searching for new ways to address current social concerns. It is the European version of British prime minister Tony Blair’s “third way.” 4. EU social policy is a superstructure built on a foundation composed of the member states’ social systems. In order for EU social policy to operate effectively, its directives and programs must be compatible with national societies and their industrial relations systems. The national systems, although based on common values, have evolved differently, making the search for common EU policies difficult. The EU can either adopt minimalist policies that sacrifice effectiveness for acceptability, or adopt stronger policies when allowed by qualified majority voting in the Council of Ministers, accepting the possiblity that the policy’s intent will be obstructed by some member states. The problems of designing common EU policies would be alleviated if the member states evolved in similar ways. They all face common pressures to change in response to the demands of new technologies, global competition, and common EU policies. Logically, convergence

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should occur among the social systems, but scholars have been unable to supply convincing proof of it.6 Moreover, sociologists warn that the ways in which social systems respond to common external pressures are shaped by societal effects that are the norms and traditional practices unique to each system. The findings regarding convergence and societal effects warn that more attention must be given to the implementation of EU social policy. The making of a common social policy does not automatically result in its implementation. The foundation on which EU social policy rests needs to be tested to ascertain how it is bearing the weight of the policy. 5. Business organizations are important actors in implementing EU social policy. The objective of many directives and programs is to bring about changes in how businesses operate within the EU. The changes should be for the benefit of employees. Businesses, like member states, differ from one another, so they are unlikely to implement policies uniformly. German business organizations differ from French ones, businesses in the service sector differ from manufacturers, and multinational enterprises differ depending on their organization’s nationality and the location of their headquarters. The literature on international business needs to be utilized to study the implementation of EU social policies by businesses operating in Europe; the subject is the dark hole of our knowledge about EU social policy. Researchers cannot possibly examine how every business acts on EU policies, but business literature provides markers to select businesses to be sampled. The field research on businesses in the EU presented here relied on business literature for determining the firms to be studied and for interpreting the findings. 6. Culture is a valuable concept to employ in studying EU social policy. The assumption that culture is important in the study of social policy is controversial, and the method used here to study the impact of culture has serious critics. Researchers in the field of policy studies, however, assert that cultural differences affect the implementation of policy and that social policy, in particular, is prone to be affected by culture and other nonstatutory variables.7 Cultural differences among member states and within business organizations affect the implementation of social policy. The findings of social psychologists and specialists in cross-cultural communications are particularly useful in analyzing employee consultation practices inside business organizations. 7. The EWCD is a prime example of EU social policy on the eve of the twenty-first century. In common with most directives on social policy in the post-Maastricht era, the EWCD was shaped by a long gestation

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5

period in the corridors of Brussels before the current era. Its objective is to instill employee consultation practices in more than a thousand international businesses operating in the EU—a monumental ambition. Although most Europeans accept the legitimacy of employee consultation, each member state has its own traditions and norms regarding how employers and employees interact. Societal effects therefore pose a barrier to comparable practices under the directive. Inside international businesses, traditional employer/employee relations are complicated by cultural differences that affect the process of employee consultation. Given all the obstacles, if the directive brings about meaningful employee consultation practices throughout the EU, its success will provide compelling evidence that a common EU social policy is possible. These seven assumptions are explored more fully in the following chapters, which are organized according to a framework borrowed from the field of policy studies. This framework requires a broad, dynamic approach tracing the evolution of the policy, and it brings into focus multiple actors who come in contact with the policy in Brussels and in corporate offices throughout the member states and other countries affected by the EWCD. One chapter examines differences among the member states, which influence how they deal with EU social policy. Other chapters consider nongovernmental actors including interest groups and multinational corporations. Our overall objective is to provide a coherent and realistic picture of the operation of EU social policy today.

Notes 1. For an interesting discussion of the controversy, see Donald Puchala, “Institutionalism, Intergovernmentalism and European Integration,” Journal of Common Market Studies 37, no. 2 (June 1999): 317–331. 2. Liesbet Hooghe and Gary Marks, “Contending Models of Governance in the European Union,” in Alan Cafruny and Carl Lankowski, eds., Europe’s Ambiguous Unity (Boulder: Lynne Rienner, 1997), pp. 21–44. 3. David S. Landes, The Wealth and Poverty of Nations: Why Are Some Nations so Rich and Others so Poor? (New York: Norton, 1998). 4. Denis de Rougement, The Idea of Europe (New York: Macmillan, 1966). 5. Gösta Esping-Andersen, The Three Worlds of Welfare Capitalism (Cambridge, Eng.: Polity Press, 1990). 6. See, for example, Léonce Bekemans and Richard Picht, eds., European Societies Between Diversity and Convergence, Vols. 1 and 2 (Brussels: European

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Interuniversity Press, 1993 and 1996); and Lisse Lotte Hansen, Jorgen Steen Madsen, and Carsten Stroby Jensen, “The Complex Reality of Convergence and Diversification in European Industrial Relations Systems: A Review of the 1996 IREC Conference,” European Journal of Industrial Relations 3, no. 3 (November 1997): 357–376. 7. See, for example, Heinrich Siedentopf and Jacques Ziller, “Foreword,” in Heinrich Siedentopf and Jacques Ziller, eds., Making European Policies Work, Vol. 1 (London: Sage Publications, Ltd., 1988), p. 6; and Daniel Mazmanian and Paul Sabatier, “Introduction by the Symposium Editors,” Special Issue 2, Policy Studies Journal 8, no. 4 (1980): 532–533.

2 EU Social Policy: Framework and Context

T

he European Union is an aberration in a world of nation-states and international organizations. Its uniqueness attracts scholars from many disciplines, and its various policies, including social policy, can be approached from many directions. EU social policy has been studied by political scientists, industrial relations specialists, legal scholars, historians, sociologists, and specialists on international business. They focus on an aspect of the policy that is of special interest for the relevant discipline, bringing its insights and concepts to the study. The research presented here draws on contributions from a number of disciplines and organizes them within a framework borrowed from the field of policy studies. The framework is a guide to order the different findings and also to ensure that relevant actors or events are not overlooked. This chapter introduces the framework and discusses briefly the context in which EU social policy is made; it also includes a discussion of some relevant aspects of business literature. Public policy is a dynamic continuum extending through various stages, including policymaking, policy implementation, and policy enforcement and adjudication. Numerous influences impinge on a policy as it passes through these stages. A policy comes into existence through the action of political leaders who are motivated by current political and economic exigencies as well as historical and sociological norms. Politicians adopt a policy to fulfill certain preconceived objectives; they launch it into a political system that is in constant flux, and they cannot always control how the policy will evolve. Conditions within the system affect how the policy operates and help determine its 7

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SOCIAL POLICY IN THE EUROPEAN UNION

success or failure. As long as the policy exists, external influences continue to shape it, and the operation of the policy affects the political system, in turn. Policy research is the “analysis and description of complex processes of interaction and the role and functioning of institutions.”1 The problems of studying public policy are compounded when the study focuses on EU social policies. Because the actors are both national and European, their interests vary depending on whether they seek a policy to serve national or European objectives. The actors are constrained by different forces and serve different constituencies. When writing a policy, they must consider a much more complex environment in which it will operate than do policymakers in national governments. In addition, the policymakers bring to the table different political and historical experiences that color the way they approach a proposed policy. Furthermore, a proposal may be compatible with the industrial relations system or national culture in most member states but anathema in one or more of the others. The study of the transposition and implementation of EU social policy poses additional challenges to scholars, who enter a relatively uncharted territory with little previous research to guide them. In general, students of EU policy assume that the transposition of directives will be relatively uniform in the member states; actors from them helped craft the directive and presumably are in agreement with its objectives. Moreover, the European Commission (the Commission) monitors the process whereby national governments transpose directives to verify that national legislation is in line with the EU directive. EU directives, however, are more loosely structured than are national regulations, in order to leave room for different national concerns. Ones such as the European Works Councils Directive provide options that member states may choose in drafting national implementation measures, so that the transposition process has some diversity. In the subsequent implementation process, however, more serious differences may appear. As one person explained it, “The national legal systems are living biological entities and Community law consists of forcing them to repeatedly undergo transplants.”2 Some governments are more efficient in putting new laws or regulations into effect; some are more rigorous in oversight and enforcement. The citizens and corporations in the member states differ in their receptivity to laws or regulation. The challenge for researchers considering implementation of EU directives is to follow their evolution through the tangle of national differences and to assess whether the outcomes that they find bear the imprint of a viable EU policy.

FRAMEWORK AND CONTEXT

9

Despite the obstacles, EU social policy is an important field of study. The stakes are high. EU social policy may raise the level of social justice in the member states and increase support for European integration, and/or it may lessen the competitiveness of European economies and lead to higher unemployment. EU social policy may exist as an ideal not affecting the daily lives of Europeans, or it may mitigate the harmful outcomes of a market economy without destroying its economic benefits.

The Framework The framework we have used to study EU social policy, and specifically the European Works Council Directive (EWCD), is drawn from policy studies and is based on the work of Paul Sabatier and Daniel Mazmanian.3 A policy process is conceptualized as a subsystem of a political system. In the case of EU social policy, four major factors must be considered. One is the context in which the policy is made and implemented. The context consists of relatively permanent factors such as the basic attributes of the system, relevant sociocultural values, and the basic rules governing the policy process. The context also includes dynamic external events that affect the process such as a new basic treaty for the EU. Sabatier refers to the two sets of factors as relatively stable parameters and dynamic external events.4 The second factor within the framework consists of the formal actors, which include the governments of the member states as well as EU institutions. Informal actors or advocacy groups, as they are called by Sabatier, comprise the third subject and are deemed highly significant in both the formation and implementation of a policy. The fourth factor is the policy itself or, as in the case of the EU, a specific directive. According to the tenets of policy studies, a directive should be considered according to three tests: Does its subject matter accord with existing practices in the member states? Does the directive clearly state its objectives and provide measures to achieve them? Does the directive structure the transposition process tightly enough to ensure that member states adopt implementation measures that are both relatively uniform from one country to another and designed to reach the directive’s objectives? Because the policy process is dynamic, the study of the EWCD included here extends over a number of years, beginning long before the directive was adopted and continuing through the formation and operation of European works councils (EWCs). The study focuses on the major actors (EU institutions and national governments) and advocacy

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groups as well as on the directive and the EWCs; it assumes an interorganizational perspective noting interaction among the EU institutions, the member states’ governments, and interest groups.5 Sabatier and Mazmanian assert that implementation is a neglected but important part of policy studies. The fate of a policy once it is adopted does not always coincide with its makers’ intent. Many factors can distort the implementation process, which has a “normal” course marked by an initial high, when its support and impact are greatest, then a long period of gradual erosion, which may be checked by the efforts of “fixers”—actors with the resources and interests to keep the policy viable. Changing socioeconomic conditions can also affect the evolution of a policy in ways not foreseen by its drafter.6 Although the framework adopted from policy studies provides focus and coherence for presenting a large amount of information, it has limits. It does not provide answers to the large theoretical questions that concern many scholars involved in EU studies. The objectives for the research presented in this book are modest: to provide insights into the making and implementation of EU social policy, to capture the dynamics of the policy process as found in the study of the EWCD, and to provide glimpses of what happens when a policy leaves Brussels and enters the world where employers and employees interact. The framework adopted for the research is adequate for these objectives but does not promise answers to more ambitious objectives.

The Context The second part of this chapter presents the general context in which EU social policy operates. The context provides the parameters that both encourage and constrain the formation and operation of social policy; they are the silent actors whose role needs to be recognized. First, we discuss sociocultural factors, then consider certain aspects of European society that have a direct bearing on social policy. (Legal rules, another important part of the general context, will be discussed in later chapters.)

Relevant Sociocultural Values EU social policy grows out of a unique policy environment shaped by European history, values, and norms. Although current needs and conditions supply the immediate initiative for a policy, historical parameters

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and societal norms and values temper the policy if it is to be regarded as legitimate. Social policy in Europe is unique. No other region of the world has developed a comparable body of protections for its citizens. Social policy is primarily a national phenomenon, but it is an EU phenomenon as well because the political forces responsible for EU social policy have their roots in European society. Political parties, labor unions, and employers’ associations draw their strength and character from European society, and the elites who formulate directives and programs are selected for their positions through procedures determined within that society. Although each member state has its own particular set of historical and cultural influences that shape national social policy, all share certain common influences, which set parameters for EU social policy. Europe, or more precisely Western Europe, is a recognized entity with cultural attributes that distinguish it from other areas of the world. David S. Landes, for example, argues that a common European culture is a key factor contributing to the relative wealth of Europe compared to other regions. 7 In the 1960s, Denis de Rougement asked “What is Europe?” and answered that it is an idea that has excited men through the centuries.8 Both Landes and de Rougement assumed that Europe is an entity composed of various parts but united by some basic cultural attributes. Four commonly recognized European characteristics contribute to the acceptance and shape of European social policy. (All four apply more to continental Europe than to the United Kingdom.) They are the group-based or collectivist orientation of continental Europeans; the importance of ideologies that share a social rather than an individualistic orientation, most noticeably social Catholicism and socialism; the absence of a strong laissez-faire attitude in continental capitalist systems; and the deep roots of European welfare states. The community base of European society traces back to early European history. Georges Duby and Philippe Braunstein wrote that any individual who attempted to remove himself from his group in feudal society would be regarded with suspicion.9 Even during the Industrial Revolution when Europeans became more individualistic, they differed greatly from people in Britain, where individualism was a much admired characteristic. This group-centered characteristic had economic and political consequences10 and today is the basis for why many in the EU believe that a legitimate polity must protect individuals within the system. The dominant political groups in postwar Europe are the Christian Democrats and the socialists, and both groups have strongly supported EU social policy. Social Catholicism is an important theme in European

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religious history, tracing its roots to the writings of St. Thomas Aquinas. In the 1891 encyclical Rerum Novarum, Pope Leo XIII called for just wages, the end of hostility between classes, and the right of workers to organize and to bargain collectively with employers. Catholic labor unions were established in many countries with the approval of the church, and Catholic intellectuals compiled a body of literature outlining the just society in an age of industrialization. Social Catholicism continued as a significant component of Catholicism into the twentieth century. In 1931, Pope Pius XI issued the encyclical Quadragesimo Anno, in which he wrote that the state has the right to tax individuals who have excessive wealth, adding that it has a duty to end conflict between the classes through the use of social policy.11 Social Catholicism remains important today and is one of the influences that led to the creation of works councils in Europe.12 Jacques Delors, president of the European Commission from 1984 to 1994, acknowledged his debt to social Catholicism in shaping his contributions to EU social policy.13 The European People’s Party, which is comprised largely of Christian Democratic parties from the member states, became the largest party group in the European Parliament following the election in 1999. Socialism and its importance in European history is a familiar story, but a few of its salient characteristics are worth recalling. Socialism is a single concept with many variations. It is rooted in the class conflicts that arose from the Industrial Revolution and in the belief that man could devise a more humane society. In each country, the idea was tempered by national political and economic struggles. In Germany and Great Britain, socialism took a more moderate course than it did in France, where political elites held out longer against efforts to empower workers and provide them with welfare assistance. In most countries, socialism was associated with the rise of labor unions and political parties that espoused the concerns of the working class. Socialism in western Europe was part of the social fabric before the Russian Revolution and was not equated with Russian communism, as it tended to be in the United States. In the twentieth century, socialists in the countries comprising the European Union came to terms with capitalism and supported public programs to protect individuals harmed by market forces and to ensure a limited redistribution of wealth.14 Today socialism continues to be the primary ideology of European labor unions and many large political parties. The majority of governments in the member states are headed by socialists or social democrats. A major political grouping in the European Parliament is the socialist one, and it frequently cooperates with the European People’s

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Party. Catholicism and modern socialism have many values in common. Both support a social market economy in which social policies protect workers from abuses resulting from market forces. Both also hold values that transcend the nation-state and national governments, so that they have no conflict with supporting both national and EU social policies. Capitalism as practiced on the continent in Europe takes different forms but is characterized by an acceptance of governments as legitimate participants in the economy and a belief that governments and the private sector can cooperate for economic goals. Laissez-faire capitalism, as admired in Britain and the United States, was almost unknown on the continent. One economic historian declared British laissezfairism an aberration in world economic history and associated it with British individualism.15 In the postwar era, a number of economists regarded continental capitalism as preferable to the British version, and indeed, economic indicators were much healthier in most continental economies than they were in the UK.16 Even in the present era when continental Europeans favor more market-driven solutions, their political leaders stop short of endorsing a laissez-faire form of capitalism. The postwar welfare state is a landmark of modern Europe. It involves vast public programs and a high level of taxes to sustain them. The growth of the welfare state took place on both sides of the English Channel, but improvements in benefits on the continent generally outpaced those in Britain, where economic recovery was slower. By 1978, France, Germany, and the northern European countries far surpassed Britain in terms of per capita spending on such programs as education and health.17 On both sides of the channel, however, citizens regarded the welfare state as a legitimate part of the postindustrial state. The characteristics discussed above provide a supportive environment for EU social policy. Historically, Europeans perceive themselves as part of a community rather than as a group of individuals; they tend to believe that their personal interests and those of their community are linked. These generalizations, however, should not be overstated. They do not constitute grounds for historical determinism. History does not require an EU social policy, but it does provide a basis for saying that such a policy is possible. Moreover, not every European fits the profile. The British, in particular, only partly share the characteristics. History and geography name peoples on both sides of the English Channel “European,” but history books also take note of British exceptionalism. The historians are not surprised that the UK has had more difficulty than any other member state in accepting a common EU social policy. The British draw a sharper distinction between the public and private sector than do their fellow members of the EU.18

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To reiterate, these European characteristics set the parameters within which an EU social policy may exist, but they do not mandate it. The British historian Christopher Dawson wrote that the unity of Europe rests on deep traditions that precede the secular culture of recent centuries19 and also provide a base on which EU social policy can be built. Another historian, Carl Strikwerda, however, warned that while history indicates that social policy is possible, it will “require a difficult reorientation.”20

Basic Attributes of the Policy Area The basic attributes of the EU social policy area are infinite, and most are familar to anyone dealing with Western Europe. Three aspects of the general topic need to be addressed carefully, however, because they relate directly to the feasibility of an effective EU social policy. They are the continued differences among member states that affect development of a common EU social policy, the existing industrial relations system in the EU, and attributes of business within it relevant to the operation of EU social policy. A common EU social policy is only possible if the societies in the member states are able to integrate it into their existing systems. Drafters of EU policy must always consider how it can and will be adapted for operation in member states. Their diverse social systems constitute a relatively stable parameter that must be respected by national governments and EU institutions when they work together to formulate policy. The parameters act to restrain what might otherwise be overly ambitious plans by Brussels’s institutions. Sociologists assume that the diverse European societies, faced with common pressures of economic development and modern technology, will respond to such pressures in similar ways and thereby become more alike. Major research on convergence in European societies is being carried on by the College of Europe,21 where scholars have focused recently on the impact of economic developments, including those resulting from European integration. They assert that a new paradigm, shaped by economic post-Fordism, an integrated macrosocietal context, and an ethical embeddedness, exists in Europe today. 22 They find, however, that the new paradigm does not necessarily lead to convergence among the societies in the different member states but that common pressures are dealt with in each society according to unique values and historical phenomena embedded in each social system. As a result, societies are changing but the diversity among them is not

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disappearing. “Europe is a diversified, but nonetheless coherent civilization” that is developing into a multidimensional entity.”23 The findings indicate that framers of EU social policy must continue to provide for its implementation in quite different societies. Differences among the welfare states are another fact of European life that constrains development of a common EU social policy. Gösta Esping-Andersen classified national welfare states into three types: liberal, social democratic, and corporatist.24 The social democratic system is associated with consensual, egalitarian countries such as Sweden and Norway; it includes the principle of universal rights and acceptance of high taxes. The corporatist type is associated with countries like Germany with strong state traditions and structured relationships among labor unions, employers’ associations, and the state in the administration of welfare. Liberal welfare systems, characterized by the United Kingdom, are limited systems in which low benefits are given on the basis of entitlement rules. Individualism and the work ethic are principles associated with liberal welfare systems. In the years since Esping-Andersen’s original work, scholars have sought to determine if the differences among European welfare states remain; in 1995, a special issue of the International Journal of Sociology was devoted to the subject. Although the contributors updated Esping-Andersen’s work and found tendencies toward convergence among different welfare states, they did not claim the differences have ended.25 Societal effects is a useful concept that helps explain why European societies and welfare states retain their distinctive characteristics. According to sociologists, existing norms and values influence how a social unit adapts to an external pressure, and therefore, they restrain the forces for convergence. Societal effects impede the uniform implementation of EU social policy inside a multidimensional Europe. Industrial relations (IR) systems provide another relatively stable parameter within which EU social policy is made. National IR systems vary significantly from one another, each reflecting different values and historical experiences. National employment policies are closely connected with the IR systems. The differences do not appear to be disappearing despite the fact that all national IR systems are facing common pressures to adapt to market forces. Franz Traxler, who conducted a major study of convergence involving nineteen countries, concluded that divergence, not convergence, is the trend in IR. He found that although all the systems face common external pressures, national institutions, labor and employers’ organizations, and political systems are intervening variables that shape

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different national reactions to the common pressure. 26 Others believe that the evidence cited above indicates a degree of convergence but not necessarily to a single model.27 Colin Crouch believes there is a “thrust toward convergence in the Community,” but the outcome will probably be four types of IR systems in the EU rather than one. The first group will consist of Germany, Benelux, the Alpine states, and northern Italy and be characterized by a dominant role for employers and by decentralized corporatism. The second, which will include the Nordic countries, will be characterized by more centralized corporatism and strong labor unions. Group three will be more diverse and include France, Britain, Ireland, and parts of Italy and Spain; it will be characterized by loose, decentralized collective bargaining. Group four will consist of the countries in southern Europe and the poorer parts of other states; these areas will be characterized by unregulated, employer-dominated systems.28 Crouch does not discount the possibility that the EU will eventually have only two IR systems, but he believes the legacy of neocorporatism found in many member states constitutes a permanent division between those states and others such as Britain, which have little experience with corporatism. One major factor distinguishing the various IR systems in the EU is the existence of corporatism in some member states and not in others. The differences have long been a troublesome fact restraining development of worker participation policies in the EU. Corporatism is one of the most studied and debated concepts in IR studies. 29 It is a difficult concept to define, and some writers use neocorporatism to distinguish corporatism in modern Europe from an earlier variant. Others use corporatism interchangeably with tripartism. Corporatism is a system of governance characterized by institutionalized relationships among the state, trade unions, and employers’ associations. The three share the making and implementing of certain types of policy. Corporatism is perceived to operate most effectively in a culture characterized by consensus and concertation. It is the opposite of pluralism. Austria and Sweden are often cited as examples of corporatist systems. In industrial relations, corporatism may be distinguished from voluntarism; in the former, labor, management, and government interact in a structured relationship, and in the latter, relationships are less regulated and may be more adversarial. Many writers also distinguish among types of corporatism. Jelle Visser and Anton Hemerijk write that different types of corporatism may be distinguished depending on the degree that organized interests are integrated into the framework for public policy formation and the degree of societal support for corporatist policies. They argue that

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corporatism is not dead in Europe but rather narrower than in the past and “more predicated on generalized trust and consensus.”30 Centralized negotiations between labor unions and employers’ associations, frequently with government oversight, characterize corporatist systems. Works councils are another common feature of such systems. It would be reasonable to expect corporatist systems to accept the EWCD more readily than noncorporatist ones. The social dialogue, a regular feature of social policymaking since the Maastricht Treaty, is a form of corporatism in which international labor unions and employers’ associations negotiate agreements for EU policy. Scholars debate the efficacy of the practice, but some see in it a new dynamic that should contribute to integration by creating international networks.31 The business environment, especially that for international business, is the final topic discussed here under the rubric of EU social policy context. The European business environment is characterized by all the trappings of advanced international business at the end of the twentieth century. It is powerful and dynamic and is supported by a public fear of harnessing it. Political leaders, including those who formulate social policies, are constantly concerned that their decisions not harm the business sector’s competitiveness. Multinational corporations (MNCs) provide the impetus for many EU social directives, including the EWCD, and national regulations can no longer match the reach of MNCs. The inability of national laws to protect employees from decisions made by MNCs compels some national governments and labor unions to turn to the EU. Business schools in the United States and Europe contribute a large amount of information on MNCs, some of which is included in the following chapters. Until Jacques Delors launched the “1992” program for the single market in the late 1980s, business schools paid relatively little attention to the EU. Since that time, academics in business schools have produced numerous books and articles about the relevance of the EU for subjects as diverse as advertising strategies for the single market to the impact of the euro on mergers and acquisitions in the EU. Some of the works are of poor quality, showing a weak grasp of the essence of the EU, but others make a significant contribution to its study and deserve attention. Perhaps the most important contributions coming from business schools, however, are not EU studies per se but those dealing with international business in general. Three categories of international business research are exceedingly important for the study of EU social policy, especially as it concerns the European Works Councils: the study of multinational corporations (MNCs), comparative management, and cross-cultural communications.

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Persons considering how MNCs are affected by EU directives should observe differences among MNCs. Corporations, despite their international activities, reflect characteristics based on their country of origin. Researchers have found little evidence that European MNCs are converging around a standard European model. In recent years, a number of European scholars looking for an optimal firm for Europe concluded that perhaps no one form is appropriate because firms are “embedded in the larger societal context of nations.” 32 Peer Hull Kristensen argues that not only do firms differ in different countries but the roles of owners, managers, and workers are not identical.33 His assertion raises a red flag for scholars studying works councils in various European countries. MNCs have long been a significant part of the European economy. The pattern of MNC activity from the 1950s to the 1980s shows a high level of activity between United States firms and European ones; western Europe was and remains the most important area for foreign investment from the United States.34 Western European firms seeking to expand beyond their national borders historically have looked to the United States or to countries that were former European colonies. In the early postwar years, such firms showed little interest in relationships with other western European firms. The pattern changed dramatically in the 1990s. Under pressures from global competitiveness, from opportunities arising from the EU single market program and, more recently, from the existence of the euro, firms within the EU discovered opportunities across their borders inside the Union. In the 1990s, European firms have engaged in major restructuring, including mergers, alliances, and purchases, while national champions have been cut loose from government support and have looked abroad for new opportunities. Meanwhile, European involvement outside the continent continues, as does the involvement of United States MNCs inside the EU. Today Europe retains its traditional base of small- and medium-sized firms that is capped by a highly interconnected group of MNCs. The generalization applies to small countries like the Netherlands and Sweden as well as large ones such as Germany and the United Kingdom. Most of the MNCs, whether headquartered in the United States, Japan, or an EU member state, are covered by the EWCD. MNCs differ not only by nationality and industry. They also may differ in the extent of the MNC home office control over its subsidiaries’ actions. D. A. Heenan and H. V. Perlmutter did the pioneering work on the subject and created four categories to distinguish MNCs: ethnocentric, polycentric, regiocentric, and geocentric.35 In ethnocentric enterprises the home office tightly controls the overseas operations, and

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the corporate culture reflects that of the home country. Polycentric enterprises are ones in which management style and practice differ in each locality and managers are recruited locally. In the regiocentric MNCs, the MNC subsidiaries in a particular region are closely linked and aloof from corporate headquarters if it is outside the region. The management structure and style as well as the corporate culture in geocentric MNCs are the most global of the four types and are not tied to any one country. Most observers believe that the latter type is the ideal and that no existing MNC qualifies as a geocentric one. Heenan and Perlmutter’s work alerts persons studying the implementation of EWCs to be careful of generalization regarding their operation in any one MNC. The researcher must consider the location of corporate headquarters and also the nature of the relationship between headquarters and its subsidiaries. For example, logic indicates that a MNC headquartered in Germany, a country with long experience of works councils, would more successfully implement EWCs than one headquartered in the UK, which has no tradition of such councils. According to Heenan and Perlmutter’s findings, however, the logic could be correct only if the MNC in question is ethnocentric. The type of MNC must therefore also be considered when studying the implementation of EWCs. Comparative management studies add another dimension to the already complex picture of international business. Scholars in the field consider how management varies in different countries (or different types of industries) and whether the variances impede effective management in MNCs with a multinational management team. They also want to know if a manager of one nationality can successfully manage a workforce of another one. They have found that managers in different countries come from different social classes, study different subjects in preparing to become managers, and follow different promotion tracks as they rise to upper management. Their values and interpersonal skills also vary widely. For example, the European management style is considered to be softer and to have effective people skills, while U.S. management excels in marketing and finance.36 German managers are seen as task oriented and the British as profit oriented.37 These differences and others can be expected to affect the implementation of EWCs in member states. Cross-cultural studies are a part of international business studies that have grown exponentially in recent decades. The field remains controversial, however, and it is not widely accepted in the social sciences. We have included contributions despite the controversy because they offer a promising tool for the study of EWCs. Many persons we

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interviewed cited culture as a significant factor affecting how EWCs operate. The study of culture is closely linked with the fields of psychology and social anthropology because culture encompasses learned patterns of thinking, feeling, and acting. People learn mental programs that affect their behavior; as its most famous proponent, Geert Hofstede, puts it, culture is the software of the mind that shapes the way individuals perceive the world around them.38 Culture is shared by members of a group. Every group confronts basic problems such as the need for group solidarity, the ranking of individuals within the group, assignment of gender roles, acceptable practices for need gratification, and ways to cope with an uncertain future. Each group finds its own solutions to the basic problems and transmits these to the upcoming generation. Members of the group have common patterns of thinking, feeling, and behaving that distinguish them from other groups. Cross-cultural studies consider the effect culture has on interactions between people from different groups. The cultural differences that are considered most often are national; such differences are assumed to affect many business activities, such as marketing and human resource management. They also appear to shape the possibilities of political practices.39 Geert Hofstede is the father of cross-cultural studies in Europe; his original work, based on data from IBM, is the bedrock from which the field has developed.40 A survey of recent books and articles on the subject, including the scholarly Journal of Cross Cultural Psychology, confirmed that his concepts still form the basis of current research in the field.41 Drawing on the work of anthropologists, he defined four dimensions of a culture that can be measured relative to other cultures: 1. Power distance, which concerns social equality, including the relationship with authority; 2. Collectivism versus individualism, which considers the relationship of the individual to the group; 3. Femininity versus masculinity, which deals with attitudes toward competitiveness, assertiveness, and related traits in a given culture; 4. Uncertainty avoidance, which involves tolerance for the unpredictable. He later added a fifth dimension: long-term orientation versus shortterm orientation.42 The first four dimensions are widely used in crosscultural studies, and their validity is accepted by scholars in the field.

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Hofstede and others have studied and ranked many countries utilizing the four dimensions of culture, and the studies have been replicated over time to determine if changes are occurring. In general, scholars find that cultures change little and that only minimal convergence has taken place among national cultures despite interaction and economic convergence. The one exception is that the more economically advanced countries generally have become more individualistic, but even on this point change is not uniform.43 Hofstede also has examined corporate cultures to understand how multinational corporations can perform productively despite the divergent cultural backgrounds of their personnel. He believes that corporate cultures grow out of their founders’ and leaders’ values, which are then translated into common practices. Although individuals working in the corporation accept the common practices set by the leader, they continue to hold the values of their national culture even over long periods of employment. In this regard, corporate cultures differ greatly from national cultures, which are rooted in shared values. 44 Professor Hofstede identifies six dimensions in corporate culture: 1. 2. 3. 4. 5. 6.

Process oriented versus results oriented. Employee oriented versus job oriented. Parochial versus professional. Open system versus closed system. Loose control versus tight control. Normative versus pragmatic.45

Strategies adopted by a corporation need to be compatible with the corporate culture, but unlike national culture, the corporate culture can be changed if a concerted effort is made to do so.46 This digression into the field of business studies has been necessary to provide background on a topic vitally important to this study but unfamiliar to many readers. Some fifteen hundred MNCs operating in the EU are affected by the EWCD. The differences among the MNCs, how managers in different countries react to the requirement to form European works councils, and how employee representatives from different countries interact all affect the implementation of the EWCD. International business studies give persons interested in its successful execution little basis for optimism. The type of MNC, the nationalities of management, and cultural differences form barriers to its uniform implementation. If, however, research in a representative sample of MNCs provides evidence that employee consultation is

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occurring and employees and managers are communicating effectively across cultural lines, the evidence would constitute compelling support for the argument that the EU can have a common social policy.

Conclusion This chapter opened with the assertion that the EU is an aberration in a world of nation-states and international organizations and also warned that the study of EU policy is more complicated than that of national policies. The brief overview of the context for EU social policy illustrates the complications. While European sociocultural values are conducive to such policy, the existence of member states that retain their traditional differences makes drafting acceptable common policies an exercise in compromise and implementing them a major challenge. The concept of convergence is at the heart of questions concerning the viability of EU social policy. Diverse social systems in the member states constitute a relatively stable parameter and appear to limit the development of a larger EU social policy. Two questions are vital. One is whether convergence is occurring among European societies, industrial relations systems, and so on; to date, most researchers answer negatively. The second question is whether an effective EU social policy can be superimposed on a base of different national social systems that apparently show little evidence of convergence. Both questions will be addressed in the study of the EWCD, but the subject of convergence will be a common thread in the following chapters. This study assumes a close interrelationship among the quality of the policy to be considered, the context in which it operates, the public actors involved, and the actions of interested parties. The study of the European Works Councils Directive reaches from Brussels to workplaces throughout Europe; it is a public policy that attempts to regulate the behavior of private actors through the medium of national laws. The framework we have adopted seeks to bring coherence to a far-ranging study.

Notes 1. Heinrich Siedentopf and Christoph Hauschild, “The Implementation of Community Legislation by the Member States: A Comparative Analysis,” in Heinrich Siedentopf and Jacques Ziller, eds., Making European Policies Work, Vol. 1 (London: Sage Publications, Ltd., 1988), p. 3.

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2. Remark by Professor Boulouis quoted in Jacques Ziller, “Conclusions and Issues of the IVth Erenstein Colloquium,” in Siedentopf and Ziller, eds., Making European Policies Work, Vol. 1 (London: Sage Publications, Ltd., 1988), p. 142. 3. For an example of the Sabatier framework applied to the study of the making of EU social policy, see Beverly Springer, The European Union and Its Citizens: The Social Agenda (Westport, Conn.: Greenwood Press, 1994). 4. Paul Sabatier, “An Advocacy Coalition Framework of Policy Change and the Role of Policy-Oriented Learning Therein,” Policy Sciences 21 (1988): 129–169. 5. Siedentopf and Hauschild, “The Implementation,” pp. 3–4. 6. Paul Sabatier and Daniel Mazmanian, “The Implementation of Public Policy: A Framework for Analysis,” Special Issue 2, Policy Studies Journal 8, no. 4 (1980): 538–560. 7. David S. Landes, The Wealth and Poverty of Nations: Why Are Some Nations so Rich and Others so Poor? (New York: Norton, 1998). 8. Denis de Rougement, The Idea of Europe (New York: Macmillan, 1966). 9. Georges Duby and Philippe Braunstein, “The Emergence of the Individual,” in Georges Duby, ed., A History of Private Life (Cambridge, Mass.: Belknap Press, 1988), p. 510. 10. David S. Landes, Unbound Prometheus (Cambridge, Engl.: Cambridge University Press, 1969), pp. 132, 197. 11. A useful source for the writings of St. Thomas Aquinas, Pope Leo XIII, and Pope Pius XI is Paul E. Sigmund, ed. and trans., St. Thomas Aquinas on Politics and Ethics (New York: W. W. Norton, 1988). 12. Beverly Springer, The Social Dimension of 1992 (Westport, Conn.: Greenwood Press, 1992). 13. For a discussion of the influence of social Catholicism on Jacques Delors, see Charles Grant, Delors: Inside the House That Jacques Built (London: Nicholas Brealey, 1994). 14. For a useful collection of documents and commentary on this subject, see Albert Fried and Ronald Sanders, eds., Socialist Thought: A Documentary History (Garden City, N.Y.: Anchor Books, 1964). 15. Barry Supple, “The State and the Industrial Revolution,” in Carlo M. Cipolla, ed., The Fontana Economic History of Europe, Vol. 3 (London: Collins/Fontana Press, 1973), pp. 302, 314. 16. See, for example, Andrew Shonfield, Modern Capitalism (London: Oxford University Press, 1965). 17. Arnold J. Heidenheimer, Hugh Heclo, and Carolyn Teich Adams, Comparative Public Policy: The Politics of Social Choice in Europe and America (New York: St. Martin’s Press, 1983), p. 19. 18. Ibid., p. 17. 19. Christopher Dawson, The Making of Europe (New York: Barnes & Noble, 1994), p. 244. 20. Carl Strikwerda, “Reinterpreting the History of European Integration,” in Jytte Klausen and Louise A. Tilly, eds., European Integration in Social and Historical Perspective (Lanham, Md.: Rowman & Littlefield, 1997), p. 70.

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21. Leonce Bekemans and Richard Picht, eds., European Societies Between Diversity and Convergence, Vols. 1 and 2 (Brussels: European Interuniversity Press, 1993 and 1996). 22. Leonce Bekemans and Pedro Lourtie, “Economy and Society in Europe,” in Bekemans and Picht, eds., European Societies Between Diversity and Convergence, Vol. 2 (Brussels: European Interuniversity Press, 1996), p. 76. 23. Ibid., p. 56. 24. G. Esping-Andersen, The Three Worlds of Welfare Capitalism (Cambridge, Engl.: Polity Press, 1990). 25. Pekka Kosonen, “European Welfare State Models: Converging Trends,” International Journal of Sociology 25, no. 1 (spring 1995): 81–110. 26. Franz Traxler, “Farewell to Labor Market Associations?” in Colin Crouch and Franz Traxler, eds., Organized Industrial Relations in Europe: What Future? (Aldershot, Engl.: Avebury, 1995), pp. 4, 9. 27. Lisse Lotte Hansen, Jorgen Steen Madsen, and Carsten Stroby Jensen, “The Complex Reality of Convergence and Diversification in European Industrial Relations Systems: A Review of the 1996 IREC Conference,” European Journal of Industrial Relations 3, no. 3 (November 1997): 373. 28. Colin Crouch, “Convergence or Continuing Diversity in Industrial Relations?” in Bekemans and Picht, eds., European Societies Between Diversity and Convergence, Vol. 2 (Brussels: European Interuniversity Press, 1996), pp. 150, 151–152. 29. See for example, Wolfgang Streek, “The Rise and Decline of Neocorporatism,” in Lloyd Ulman, Barry Eichengreen, and William T. Dickens, eds., Labor and an Integrated Europe (Washington, D.C.: Brookings Institution, 1993). 30. Jelle Visser and Anton Hemerijk, “A Dutch Miracle”: Job Growth, Welfare Reform and Corporatism (Amsterdam: Amsterdam University Press, 1997), pp. 64, 70. 31. Hans-Wolfgang Platzer, “Industrial Relations and European Integration: Patterns, Dynamics and Limits of Transnationalization,” in Wolfgang Lecher and Hans-Wolfgang Platzer eds., European Union—European Industrial Relations? (London: Routledge, 1998), pp. 114–115. 32. Peer Hull Kristensen, “Variations in the Nature of the Firm in Europe,” in Richard Whitley and Peer Hull Kristensen, eds., The Changing European Firm (London: Routledge, 1996), p. 2. 33. Ibid., p. 26. 34. Stephen Young, “European Business and Environments in the 1990s,” in Stephen Young and James Hamill, eds., Europe and the Multinationals (Aldershot, Engl.: Edward Elgar, 1992) pp. 4–17. 35. D. A. Heenan and H. V. Perlmutter, Multinational Organization Development (Reading, Mass.: Addison-Wesley, 1979). 36. Andrew Myers, Andrew Kakabadse, Tim McMahon, and Giles Spony, “Top Management Styles in Europe: Implications for Business and Cross-National Teams,” European Business Journal 7, no. 1 (1995): 17–27. 37. Christel Lane, Management and Labour in Europe: The Industrial Enterprise in Germany, Britain and France (Aldershot, Engl.: Edward Elgar, 1989), p. 100. 38. Geert Hofstede, Cultures and Organizations: Software of the Mind (New York: McGraw-Hill, 1997), p. 4.

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39. Stanley Renshaw and John Duckitt, “Cultural and Cross Cultural Political Psychology: Toward the Development of a New Field,” Political Psychology 18, no. 2 (1997): 233–240. 40. Geert Hofstede, Culture’s Consequences: International Differences in Work-Related Values (Beverly Hills, Calif.: Sage Publications, 1980). 41. See, for instance, Lynn R. Offermann and Peta S. Hellmann, “Culture’s Consequences for Leadership Behavior: National Values in Action,” Journal of Cross Cultural Psychology 28, no. 3 (May 1997): 342–351. 42. Hofstede, Cultures and Organizations, pp. 13–14. 43. Ibid., p. 238. 44. Ibid., p. xiii. 45. Ibid., p. 188. 46. Ibid., p. 203.

3 EU Social Policy and Employment Policy at the End of the Twentieth Century

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s the European Union reformats itself for the twenty-first century with a single currency, a single market, and an enlarged membership, its social policy appears to be an anachronism. Rooted in the early 1970s when welfare states, egalitarianism, and Keynesian economics were in vogue, the EU social policy is not compatible with the current era, which is characterized by market values and global competitiveness. Although social policy continues to involve numerous Eurocrats and a respectable budget, the fact is that the EU legislative program is largely fulfilled and no major legislative initiatives are in preparation. If social policy is an anachronism, employment policy, its close relative, definitely is not. Employment policy is compatible with an EU committed to competitiveness in the global economy. It is congenial with the values of the era and is designed to function where subsidiarity and decentralized modes of policymaking replace the rush to legislation that characterized the EU a decade ago. Employment policy and social policy coexist with only an unclear border between them, but employment policy is the star of the era and the one that attracts the broadest support. This chapter explains the distinctions between social policy and employment policy, describes recent developments in both policies, and tells why employment policy is high profile in the EU today. The terms social policy and employment policy have been used interchangeably throughout much of EU history. Social policy encompasses a broad range of employment-related policies. The term itself defies succinct definition. The author of one of the first books on social 27

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policy defined it pragmatically as “the work carried on by the directorate-general of social affairs in the European Commission.” 1 In the early history of the EU, the task of the directorate-general of social affairs (DG V) was to harmonize the social policies of the member states so that the different policies did not impede competition; the national policies per se were not the concern of DG V, only their outcomes. The Treaty of Rome demanded that harmonization would be upward in order to provide for “improved working conditions.”2 Social policy took on a new orientation in the 1970s, when it began to set minimum social standards that were to be improved regularly. Also, the policy was no longer linked to economic objectives but became a “worthwhile aim in itself.”3 The way appeared open to developing an EU social policy that would simultaneously encourage upward convergence of social policies in the member states and establish EU norms based on European social values. This promising moment in EU social policy history was thwarted, however, by two obstacles. One was the requirement that social policy directives be accepted unanimously by the Council of Ministers, and the other was the economic crisis that hit Europe in the late 1970s, bringing deep pessimism about Europe’s economic future. The British government under Margaret Thatcher steadily obstructed passage of social directives in the Council. At the same time, the economic crisis increased unemployment and weakened the bargaining power of labor. A small breach was made in the first obstacle when the Single European Act was adopted in 1986. Article 118a of the treaty allowed the Council to adopt directives dealing with health and safety by a qualified majority vote. The overall climate for social policy did not improve, however, even when economic recovery started. Europe had undergone a paradigm shift during the economic crisis, and market values took precedence over social values, which were associated with the welfare state. Changes in the basic treaties of the EU had important implications for social policy in the 1990s. Because of British opposition during the negotiation for the Treaty on European Union (Maastricht Treaty), the significant passages on social policy had to be put in a Protocol and an Agreement on Social Policy rather than in the body of the document. (This awkward construction fortunately has since been superseded by the Amsterdam Treaty.) The agreement increased the number of topics the Council (minus British participation) could adopt by means of a qualified majority vote. The treaty also brought to prominence two concepts that played an important role in shaping social policy in the 1990s. One is subsidiarity, the principle that policy should be made at the lowest appropriate level—EU, member state, local and regional governments, or social partners. The other is social partners: the

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Treaty gives trade unions and employers’ associations the right to make social policies through cooperative negotiations and also requires they be consulted on other proposals dealing with social policy. The Treaty makes several other contributions relevant to EU social policy. The Agreement on Social Policy includes a list of objectives that provides a legal basis for the claim that social policy may be made on grounds other than the purely economic objective of competitiveness. For example, possible justifications for social policy now include the need to increase employment or to encourage dialogue between labor and management. Legal scholars point out that although the list expands the EU’s competence, it does not constitute rights for employees. For example, the EU (or more correctly, the signers of the agreement) may adopt a proposal on employment, but an individual may not claim a right to employment under the agreement.4 The Amsterdam Treaty, which was signed in 1997, tidied up the legal problems resulting from the Maastricht Treaty and added some new provisions whose importance is yet to be tested. The new treaty brings the Protocol and the Social Policy Agreement into a chapter included in the basic text of the document, thus eliminating the strange British opt-out. The move also gives a more secure legal footing to the EU’s right to adopt and enforce directives on topics such as employment and the social dialogue. The EU now also has competence to adopt directives on improving living and working conditions, ensuring proper social protection, developing human resources with a view to lasting high employment, and combating social exclusion (Article 117, Amsterdam Treaty). The EU must take into account the diverse forms of national practices and the need to maintain competitiveness, however, when adopting measures in the new areas of competence. The treaty continues the practice of distinguishing between topics that allow a qualified majority vote by the Council of Ministers and those that require unanimity. Those entitled to qualified majority voting are: • Improvement of the working environment in order to protect workers’ health and safety. • Working conditions. • Information and consultation of workers. • Integration of persons excluded from the labor market. • Equality between men and women with regard to labor market opportunities and treatment at work (Article 118). The authority to act granted by a qualified majority is tempered by several restrictions. The EU is to design its directives as minimum

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requirements that complement policies in the member states and that do not add burdens on small- and medium-sized enterprises. The following areas continue to require unanimity: • Social security and social protection of workers. • Protection of workers where their employment contract is terminated. • Representation and collective defense of the interests of workers, including codetermination. • Conditions of employment for third-country nationals legally residing in EU territory. • Financial contributions for job creation, without prejudice to the provisions relating to the Social Fund (declaration to the final act). The Treaty contains several provisions that are important to women. The EU may act to combat discrimination on the grounds of gender, race, religion, sexual orientation, and age. It is committed to equal opportunity and equality in the workplace, and for the first time, positive actions to bring about equality are allowed. The Treaty broadens the definition of equal pay to include work of equal value, thus incorporating into the Treaty a ruling of the European Court of Justice. These provisions represented a partial victory for women’s groups, but many were disappointed that they focused narrowly on the workplace and failed to encompass related problems that women face.5 In addition to the provisions on social policy, the Treaty also has a chapter on employment. The distinction between social policy and employment policy is difficult to make and is not universally accepted. Increasingly, however, the two policies are being distinguished. Social policy in the 1990s is primarily employment-related social policy. It stems from European values of social democracy as well as from the basic right to the free movement of labor as protected in the Treaty of Rome. Employment policy, on the other hand, is a policy of the 1990s and stems from the values of the decade, including free markets and competitiveness. While social policy always had an uneasy relationship with economic policy, employment policy accords well with current economic policy. Employment policy concerns job creation and maintenance and, most important, job training with an emphasis on vocational education.6 This definition does not mean that employment policy appeared suddenly in the 1990s; EU concern goes back at least to the Treaty of Rome and the Social Fund. It was first considered a part of social policy; gradually it took on an independent identity.

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The gradual emergence of employment policy as a separate entity can be traced through provisions in the basic treaties. The Treaty of Rome does not list employment among the basic responsibilities of the European Community as provided in Article 2. In Article 118, however, it does make the European Commission responsible for promoting closer cooperation among member states in the field of education, as well as other areas in the social field. It also established the Social Fund to improve employment opportunities for workers. The 1992 Treaty on European Union added “a high level of employment” to the list of EU responsibilities contained in Article 2 of the Treaty of Rome. It also gave prominence to the EU’s responsibility to improve the “employmentability” of workers by encouraging higher levels of education and vocational training. The Amsterdam Treaty completes the legal evolution of the status of employment policy. It makes employment a common concern and an explicit goal for the EU, providing a separate chapter to deal with it. The language in the chapter is the language of the 1990s. It does not provide for the Commission to draft certain types of employmentcreating directives; rather it puts the EU in a coordinating position and gives the Council of Ministers and the European Council—the institutions closest to the national governments—major roles. The member states are the primary actors, but they must coordinate their employment policies and make annual reports to the EU. The Council, acting on a qualified majority vote, has the right to adopt incentive measures to encourage cooperation among the member states. It is to establish an employment committee to monitor the employment situation in member states, provide opinions to the Commission and the Council, and consult with the social partners. The employment chapter is the epitome of “soft law,” the EU’s preferred track in the 1990s.

Social Policy at the End of the Twentieth Century Four subjects dominate EU social policy when it is considered from a historical perspective, and all will continue to be on the agenda for the foreseeable future. They are employee rights, industrial democracy, equality in the workplace, and health and safety. Although the four subjects overlap, they have been handled differently through the years. The first two grow out of traditional European social values and comprise the most distinctively European parts of EU social policy. The current status of three of the policies will be assessed below, whereas industrial democracy will be examined in the chapter on the European works

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councils. First, however, some general facts about the milieu in which social policy operated in the 1990s should be noted. The Amsterdam Treaty provides policymakers with the best legal environment they have had for social policy. The British opt-out has ended. The veto has been removed as a barrier to the adoption of most directives on social policy. The role of the European Parliament, which usually supports social policy, has been elevated so that it has greater bargaining leverage with the Council of Ministers, which is more likely to oppose it. The economic situation is also more promising than it has been for years. Most member states are at the start of an upturn in their economic cycle. The main negative force is political: Member states’ governments remain unenthusiastic regarding EU social policy despite the fact that many of them are on the left. The leaders are part of the new left, however, which means they approach social proposals cautiously, fearful of negative consequences for the economy. They also have been caught in the vice created by the criteria required to join the Economic and Monetary Union. In addition, the European Commission, the initiator of social policy, also has not been a forceful advocate for it. Jacques Santer was not Jacques Delors; he lacked the vision and sense of social mission that propelled his predecessor. Moreover, his commission was weakened by damaging revelations concerning budgets and nepotism. The forced resignation of the entire Santer commission in 1999 was an unprecedented event that added uncertainty to the political milieu in Brussels. The new commission under Romano Prodi appears stronger than the previous one, but it is handicapped by low public regard. It must also rebuild a working relationship with the European Parliament. The Commission and Parliament had a good, cooperative relationship regarding social policy, but the ties were weakened by the scandal of the Santer commission and by the election in 1999 of a new Parliament in which the European People’s Party replaced the Socialists as the largest party group. Social policy at the end of the twentieth century is being redefined. Most of the legislative agenda, which characterized social policy in the past, has been fulfilled. According to the 1994 white paper on social policy, “the Commission considers that there is not a need for a wideranging programme of new legislative proposals in the coming period.” 7 Many of the assumptions that shaped the vision of the early drafters of social policy are no longer held. In addition, political leaders are hesitant to adopt policies that anger business people or add to budget deficits. The task for the current leaders is twofold. First, they must define an agenda that accords with the third way, which is the acceptable social philosophy of the time. That means finding a middle

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ground between the inhumanity of market-driven policies and the financial burden of traditional social policies, which frighten away investors. Believers in the third way assume that competitiveness is compatible with a degree of protection for employees. They believe in markets but prefer a social market that ensures the dignity of employees. The challenge for EU leaders is how to turn these beliefs into social policy. The second part of the leaders’ task is to define a postlegislative role for the EU. What do the institutions do if they are not busy drafting and adopting directives and regulations? The answer seems to be that they study, orchestrate, and mobilize. If the EU is truly characterized by multilevel governance, as discussed in Chapter 1, the success of such a procedure depends on someone providing channels of communication, keeping the parties moving, and providing information the parties need. According to EU annual reports, the institutions are involved in many activities dealing with studies, conferences, and negotiations. The Amsterdam Treaty gives the Council the right to adopt measures to encourage cooperation between member states by supplying information, developing exchanges, and encouraging best practices (Article 118). The treaty also gives the European Commission the right to encourage member states to coordinate their actions in fields such as employment and social security (Article 118c). Both the EU and member states are to consider the need for competitiveness and respect for diversity in national practices as they coordinate their practices (Article 117). EU social policy, as foreseen in these provisions, is decentralized but interactive, with participants working toward mutually defined goals such as improved health and safety at work. Social policy at the end of the twentieth century is a bubbling stew, and the EU’s task is to ascertain that everyone agrees on the recipe and the mixture does not stick. Perhaps the best illustration of the new style of operation for the EU is the social dialogue established by the Single European Act of 1985 and given added importance by the Maastricht Treaty. Today a vast number of dialogues are going on between the social partners. Some take place in permanent committees such as the Standing Committee for Employment, while some deal with a major proposal such as one that led to the parental leave directive; others concern technical subjects of interest primarily to labor and management. Social dialogues at the sectoral level have resulted in agreements on child labor in the footwear sector and ethics in the media, among others. A social dialogue summit, held in November 1997, approved the employment guidelines discussed in the next section.8 Some social dialogues include

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the Council, and all are overseen by the Commission, which was given that responsibility by the Single European Act. In 1997, the EU added a civil dialogue to parallel the social one. The Commission called for proposals for civil dialogues from charitable organizations and nongovernmental organizations; it funded twenty-two projects. The Economic and Social Committee of the EU, on its own initiative, also has started to cooperate with charitable organizations.9

Employee Rights A discussion of EU work in the area of employee rights in the 1990s begins with the Community Charter of the Fundamental Social Rights of Workers adopted in 1989. Social rights have a long history in Europe; they are rights that working people should have, just as citizens should have political rights. The rights included in the charter are sweeping. They range from the right to freedom of movement originally found in the Treaty of Rome to the right of employees to information, consultation, and participation in the workplace. Other rights include equal treatment for men and women; social protection; decent working conditions; freedom of association and collective bargaining (including bargaining at the European level if the parties so desire); vocational training; freedom of employment (including a fair wage, health, and safety); and protections for youth, the elderly, and the disabled. The flaw in the charter is that it does not actually provide rights for employees. No employee may claim a right provided in the charter. Employees cannot go to national courts or the EU court to claim rights in the charter against national or EU authorities. The charter is a declaration, not a regulation.10 In the words of Jacques Delors, it embodies an aspiration.11 In the years since the charter was issued, many persons and groups have tried to have it transposed into a true bill of rights. The goal has not been achieved, but the charter has had an effect in that it assigns authority to the Commission and the member states to implement the rights. 12 The Commission has the authority to issue proposals to implement the charter as well as annual reports assessing its implementation. In compliance with its responsibility, the Commission formulated a social action program to accompany the charter in 1989. It contained forty-seven items for action, seventeen of which were for directives, and these primarily dealt with health and safety matters. The Commission could only propose measures falling within EU competence, and most of them required a unanimous vote in the Council in order to become law. The subsequent reports on the charter issued by

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the Commission do not constitute a status report on social rights but a progress report on the fulfillment of the action program. Many persons, especially legal scholars and members of the European Parliament, were disappointed in the outcome of the charter.13 They wanted social rights to be included in the Maastricht Treaty but had only partial success. The Protocol on Social Policy states that the signatories wish to continue on the charter’s path. They had a more important victory with the Amsterdam Treaty, which states in its preamble that the signatories confirm their attachment to fundamental social rights as defined in the European Social Charter of 1961 and the Community Charter of the Fundamental Social Rights of Workers. The treaty also gives the Council the right to adopt, by a qualified majority vote, legislation dealing with many of the matters contained in the charter. The treaty, however, does not change the status of the charter insofar as it does not give rights to workers they can claim in a court. Furthermore, it makes issues dealing with basic employee rights, such as the right to protection from wrongful dismissal, subject to the rule of unanimity. It is unlikely the EU will take steps in the foreseeable future to change the situation regarding social rights, which remains murky. The European Court early in its history recognized that fundamental rights are general principles of EU law, but efforts to install social rights into the basic treaties have not succeeded. The future may, however, see the member states, in keeping with the spirit of the charter, continue to adopt policies that extend protections to workers, even if they themselves cannot claim rights under a European bill of social rights.

Health and Safety Policy Health and safety is a part of social policy little noticed by scholars other than those dealing with EU law. The topic is not intrinsically interesting, as are sex discrimination and workers’ rights. Much of the work is technical, best understood by persons with scientific knowledge. Health and safety policy does not conform to trends noted in other aspects of social policy. It is legislative and intrusive, while other parts of social policy are moving toward soft law and general principles. As one legal scholar stated in reference to health and safety policy, “Considerably more progress has been made here than in any other field.”14 Health and safety policy has a longer history and a more solid legal foundation than many other aspects of social policy. The founders of the European Coal and Steel Community, which preceded the European Economic Community (EEC), provided for health and safety protections

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for employees in both the coal and steel industries. Article 118 of the Treaty of Rome gave the EEC responsibility to encourage closer cooperation among member states on health and safety concerns. Real progress on the subject began in the 1970s, when the Commission started preparing multiyear action programs on health and safety and adopting a number of highly detailed directives. The 1980s brought major changes. The Single European Act modified Article 118 to provide for the adoption of health and safety directives in the Council by a qualified majority vote. The Commission announced it would take a broad approach to health and safety considering the entire work environment. It also began to insert into health and safety directives a provision requiring employers to consult workers. (Such a provision had been included in the 1983 directive dealing with asbestos dust and had aroused almost no controversy from employers who adamantly opposed a general provision for employees’ consultation in the Vredeling Proposal of the same era.) A new procedure for health and safety directives was established in 1989 with the adoption of a general framework directive that sets basic principles. The subsequent directives were tailored for a specific sector or industry but conformed to the general principles of the 1989 directive. These secondary directives can be quite specific and intrusive; for example, they regulate the ergonomics protecting computer users, the standards necessary to prevent back injuries when lifting heavy loads, the definition of carcinogens employees must be protected against, and so on. The EU also has considered sensitive issues such as who is responsible for protecting employees at construction sites where subcontractors as well as the primary employer are operating, and it has addressed complex health and safety issues relating to the transport sector and ships. The legislative agenda shows little sign of exhaustion. The 1995–1997 Social Action Program listed four proposed directives for different sectors.15 The 1998–2000 program added proposals that ranged from safety measures relating to scaffolding to the new standards necessary for protection from biological agents in the workplace.16 Health and safety policy is not only legislative, but increasingly it has encompassed measures concerning implementation. Officials in Brussels, as well as a number of interested parties, are concerned about how to enforce directives, fearing that employees are not as protected as they should be. Member states have been slow to transpose directives into national law. In 1994, Germany had adopted into law only one of eleven directives existing at that time. Spain, Italy, and Greece had adopted none. (In 1998, Spain had the worst rate in the EU for accidents at work, reporting over a million per year17). The EU subsequently

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stepped up pressure on countries to adopt the necessary legislation. To assist member states, it publishes information and holds conferences and seminars regarding the transposition of directives. It also compiles reports from them so that there is a central clearinghouse of information. Much of the work is carried on by the Commission, which is assisted by a number of agencies and committees including the new European Agency for Health and Safety at Work, located in Bilbao, and the important Committee of Senior Labor Inspection Officials. The EU health and safety policy rests on a “coherent body of principles” that include the prevention of risks, worker information and consultation, medical surveillance, and the full responsibility of employers to protect employees and bear the costs of any health and safety measures.18 An interesting question is why health and safety has been the major success story in the rather modest history of EU social policy. Part of the answer is, of course, that health and safety measures can be adopted by a qualified majority vote in the Council, which then raises the question why member states accepted that voting procedure. One answer is political, another is practical, and perhaps a third is cultural. The British government supported health and safety measures even in the Thatcher era when it opposed the legitimacy of social policy. The more important point is that member states had very different levels of national health and safety protection, and the directives set minimum standards. These helped level the playing field for countries with higher national standards by forcing other countries to accept the costs of raising theirs. The states with lower standards recognized the need to improve them and did not want to go on record as opposing measures that would help their citizens. In addition, employers’ associations have not opposed such measures as much as they have other social measures. All participants in negotiations on health and safety proposals appear to be restrained by a cultural norm that makes it unacceptable to place employees at risk in the pursuit of profits.

Equality Policy In contrast to health and safety, equality policy has been and continues to be high profile. A network of interest groups follow its development, and numerous scholars study it. The prominence of the policy shows no sign of abating. Prominence, however, does not necessarily mean success. The policy probably has as many critics as it has defenders in the scholarly community. While critics are not necessarily opposed to it, they believe

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it has not been effective. The unemployment rate for women in 1997 was 12.5 percent compared to 9.3 percent for men, and unemployed women remain unemployed longer than men.19 Despite the unemployment rate, women have increased their participation rate to 57 percent, and most of the jobs created in recent years have been taken by women, which is the good news. The bad news is that gender segregation has increased and indeed appears to have done so more in countries where the women’s participation rate has increased most.20 Furthermore, the pay differential between women and men has not fallen and may even have increased. On average, women make 20 percent less than men in the EU. Women are two to three times more likely than men to be in low-paying jobs. The employment picture in Europe today shows working women clustered in low-wage, part-time jobs; 83 percent of part-time workers are women. The picture also reveals increasing inequality within the female workforce. A small number of women are in high-level positions, but very few are found in the middle ranks.21 The two groups of working women are very different, sociologically as well as economically. Many writers have examined EU equality policy.22 Our purpose is not to retrace their work but to discuss recent developments and seek possible new trends in the policy. Four topics, not of equal importance, illustrate points relevant to the overall subject here: the meaning of equal opportunity after the Amsterdam Treaty, the aftermath of the Kalanke case, mainstreaming, and the burden-of-proof directive. The Amsterdam Treaty contains several provisions of special relevance for women. It has a new nondiscrimination clause that bans discrimination based on sex, race, or ethnic origin, religion or belief, disability, age, or sexual orientation (Article 6a). The ban is limited, however. Enforcement measures must be adopted unanimously in the Council. The ban does not provide individual rights and thus has no direct effect. Member states failing to respect the ban may be censored by the EU and could even lose their voting rights. The treaty mandates that the EU should respect the need to promote equality in all its undertakings. It brings into the basic treaties two concepts long debated in the courts: it recognizes that the definition of equal pay includes work of equal value, and it allows affirmative actions to ensure more equitable representation in the workplace. The provisions represent a number of victories for advocates of equality, most notably in broadening the definition of equal pay and endorsing positive action. Women’s groups, however, reacted critically to the treaty; they wanted a true right against discrimination, a firmer legal base for positive action, and a broader approach to women’s issues. Many believe that the treaty takes the EU down the same economic

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track in which the demands for monetary union take precedence over women’s needs for a social policy that addresses issues outside the workplace, such as childcare, that affect their participation in the workforce. The European Court of Justice has played a major role regarding equality. In general, its rulings have been supportive of women’s issues, but its ruling in the Kalanke case (C-450/93) was seen as a serious rebuff.23 The Court ruled that a law in the German state of Bremen was incompatible with the 1976 EU directive on equal opportunity. The case involved a man (Kalanke) who charged he had been discriminated against when a woman was given a position for which both had applied. They were equally qualified, but the woman was hired because the Bremen law on positive action stated that where both applicants were equally qualified but where women were underrepresented (less than 50 percent of the workforce), the woman should have the job. Following the Court of Justice ruling, many individuals issued statements trying to clarify the status of positive action. The European Commission proposed amending the 1976 directive, arguing that positive action should include preferential actions as well as less-controversial measures such as access to training and assistance to women to help balance the demands of work and family. The Commission argued that quota systems that were not rigid should continue to be part of positive action programs. In 1997, the Amsterdam Treaty only partly alleviated the problem. Article 119 contains a somewhat ambiguous provision regarding the right of member states to have measures that provide specific advantages for the “underrepresented sex” to compensate them for disadvantages in their careers. In 1997, the Court issued a ruling in the Marschall case (C-409/95), which removes many of the doubts about positive actions and lessens the need for other institutions to act. The case involved a male teacher, in the German state of Nordrhein-Westfalen, who charged he was discriminated against under the 1976 directive when a promotion was given to a woman rather than to him. Both were equally qualified, but the state law in question in the case provided that a woman should be given preference over an equally qualified man. The law did not give women absolute priority, and in each case an objective assessment must take place. The ruling appears to allow broad positive action programs so long as they do not include rigid quotas that preclude the hiring of the “overrepresented sex” and they do provide for objective assessments of each case on its merits. Mainstreaming is a new concept in the EU lexicon. It was launched with a Commission communication in 1996. As a program, mainstreaming is so broad and ambitious as to be either revolutionary or meaningless. It is the “systematic consideration of the differences between the

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conditions, situations and needs of women and men in all Community policies, at the point of planning, implementing and evaluation and applied to Europe, the industrialized world and developing countries.” 24 The Commission wrote about a “cultural transformation” and also indicated it was seeking a European approach to equality, which takes into account the historic and cultural diversity of the member states. As noted above, the Amsterdam Treaty includes language that appears to insert mainstreaming into the basic treaty (Articles 2 and 3). The subsequent fate of mainstreaming is not reassuring, however. The Council deleted the Commission’s insertion of mainstreaming in the guidelines on equal opportunities that the former adopted in December 1997.25 A few months later, the Commission issued its first report on mainstreaming; it was based on reports from eighteen directorategenerals in the Commission as well as horizontal services. The report states that the majority of measures reported are “isolated measures without major impact on the overall situation with regard to gender equality. Neither do these measures seriously influence the orientation of mainstream Community policies.”26 Evidence on mainstreaming in the member states is equally discouraging. The employment guidelines of 1998 make equal opportunities for women one of four priorities. Member states agree to report every year on their efforts to achieve the priorities; however, few expect the reports to show significant progress. Judging by reports member states submitted in 1996 for a Commission study on equal opportunities, most member states do not take the charge seriously. Only Sweden and Austria showed an “active concern.”27 The story of the burden-of-proof directive is part of the general story of legislation for women in the 1990s. Although the legislative agenda for equality contains few new items, several old proposals finally became law in the 1990s. The social partners succeeded in negotiating an agreement for two of the three most controversial proposals after they failed to gain acceptance via normal channels. The first to succeed was the parental leave directive that had begun as a Commission proposal in 1983 but failed to gain acceptance in the Council of Ministers. The proposal was given to the social partners, who negotiated a draft that was accepted by the Council in 1996 with no major change. It provides for a minimum of three months unpaid leave for a working parent of children under the age of eight. The directive on protection for part-time employees has a similar history. The Commission proposed a directive in 1981 that would have given part-time employees the same protections given to full-time employees, but it was blocked in the Council by the British. In 1990, the Commission tried

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again, issuing three directives to protect employees in atypical work (those without regular, full-time work contracts). This effort also failed, and in 1995, the Commission turned to the social partners. Protection for part-time employees is a contentious issue since a large and growing part of the workforce is part-time and the proportions are not evenly divided among member states. The United Kingdom and the Netherlands have had above-average growth in part-time employment. Employers in some sectors opposed any changes that would add to their labor costs because they used part-timers partly to save on costs. On the other side, women’s groups fought for adoption of protections because women hold a disproportionate percentage of part-time jobs. In June 1997, the social partners successfully concluded their negotiations and requested the Commission to give legal effect to the agreement. The Commission acted promptly, and in December 1997, the Council accepted the directive on part-time work.28 After more than a decade of effort, the EU has legislation that extends protection to parttime workers equal to that of full-time employees, including access to training. The burden-of-proof directive (97/80/EC) is the third directive relevant to women to be adopted after a long and contentious history. In this case, however, the social partners failed to reach an agreement, so the directive proceeded by the usual channels to its adoption by the Council in December 1997. The directive brings into EU law two principles recognized by the Court of Justice but not previously acceptable to the Council. One is the principle of indirect discrimination; for example, when pay differences between two types of jobs, one held largely by women, cannot be justified by objective criteria, indirect discrimination may be found to exist. The other principle is that the evidential burden of proof falls on the employer when grounds exist for a charge of discrimination. The three new directives constitute a significant advance in the legislation for working women. When this advance is placed alongside the commitment to mainstreaming, the new provisions in the Amsterdam Treaty, and the developments since the Kalanke ruling, the situation for women appears to have improved. The fact, however, as shown by statistics on working women, is that women are not making the progress the policy should provide. The fault may be a gap between policymaking and policy implementation. Ilona Ostner and Jane Lewis argue convincingly that two barriers exist.29 One is the failure of the EU to address the broader situation for women, focusing only on women as employees or as part of the unemployed. The other is the different gender regimes in the member states. “In a multitiered EU, supranational

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policy is filtered through distinctive national social policy regimes, and differences in political and cultural attitudes towards social problems influence the interpretation and implementation of supranational rules.”30 The two barriers make it difficult for EU policy for women to go beyond its present framework.

Conclusion on Social Policy While employee rights, health and safety, and equality policy have all made gains in the 1990s, all three have also reached some limit that makes further progress, at least in the ways progress has been perceived, unlikely. Member states are not ready to accept a European bill of employee rights allowing employees to bring charges against employers or EU institutions for violations of their rights as workers. The legislative program for health and safety policy is largely fulfilled; the objective now is to ensure that the EU directives lead to uniform protections for workers in the member states. Equality policy is in a similar situation. Transposition poses the next challenge for social policy; but the extent of the challenge is not known. The EU has information on countries that have failed to transpose directives, but data are scarce on whether the transposition into national law results in uniform protection from country to country. Information is also scarce on enforcement and on the compliance of firms covered by the legislation. The main vehicle to indicate a problem has been the European Court of Justice. Individuals have had to bring a case, but judicial procedures are a slow and expensive vehicle for implementation. More information and more action is needed by other EU institutions, especially the European Commission. A recent research project funded by the Commission found that even when laws exist in the member states, individuals do not have easy access to remedies when the law is violated.31 The purpose of the research was to learn why so few people used equality litigation procedures in the member states. The researchers found that multiple obstacles hindered the process, ranging from many European lawyers’ lack of knowledge about or interest in EU law to inadequate sanctions in national law for violations of laws mandated by EU directives. Individuals seeking the law’s protection faced an indifferent if not hostile environment, although the situation is not equally bad in every member state. Denmark has an active Equal Status Council that investigates suspected problems regarding equality protection, and German judges are more willing than those in many countries to invoke EU law and to

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ask for rulings from the European Court. Overall, the findings led the researchers to recommend numerous actions by the Commission to ensure that EU law has meaning inside the member states even after they have transposed EU law into national legislation. The Commission outlined a number of measures to improve the level of application of EU law in the 1995–1997 Social Action Program.32 It will issue annual reports on the transposition of directives into national legislation and will work closely with governments and social partners to ensure enforcement. In the future, national governments must establish a contact point inside the national administration when it transposes an EU directive; national governments also must include sanctions in the legislation that will deter persons breaking the law. The Commission also promised to conduct research on the best implementation practices and to promote greater awareness of EU legislation. Evidence in 1997 indicated that progress is being made on implementation. The member states have a good transposition record on directives concerning employment and social policy. The range extends from 100 percent for Finland to 72 percent for Spain. Four countries, Denmark, Germany, Sweden, and the United Kingdom, had 96 percent. The Commission showed its determination that member states not only adopt the required legislation but that they also comply with the terms of the directive. In 1997, it started infringement proceedings against every member state except Sweden, which involve either being brought before the European Court or receiving a warning from the Commission. Belgium, Denmark, Germany, Spain, France, Italy, Luxembourg, Finland, and the Netherlands were sanctioned for failure to comply with the directive on equal treatment for men and women in social security systems.33 In conclusion, social policy in the EU is not dead, but it is different from the one foreseen when Jacques Delors proclaimed a social dimension for the single market. The rush to legislation has ended, and a more modest legislative agenda has replaced it. New proposals almost always are revisions or amendments of earlier directives. The emphasis has shifted to consolidation, but this does not mean an end to activity. The participants are fully occupied. The Commission’s role has changed to one of facilitator, coordinator, and organizer, and social policy has become more interactive. Member states are learning more about what other member states are doing regarding social policy, while social partners are involved in a more structured role than ever before. Social learning and best practices are hallmarks of the new social policy. The new social policy works well in an era when fear about centralization in Brussels is widespread and when leaders fear policies

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that harm competitiveness; it pays respect to old values deep in the European psyche but also comes to terms with the new market values. Whether it provides adequate social protection for European employees, the employees themselves will have to decide.

Employment Policy in the 1990s The emergence of employment policy as a major focus for EU policy in the 1990s has to be seen against the backdrop of chronic unemployment in the EU and the changing value paradigm. Unemployment has been a problem in Europe since the 1970s. Economic growth was supposed to solve it, but when economic recovery in the 1980s provided only a brief respite, leaders began searching for other solutions. The direction of their search was determined, with few exceptions, by the market values of the new era. Two of the favored remedies were increased flexibility and greater competitiveness, both of these code names for market-driven solutions. The former starts with the assumption that European unemployment is caused by regulations that prevent employers from utilizing their employees in the most efficient manner. National laws that make it difficult to fire employees were a favored target. The argument for increased competitiveness assumes that unemployment results from the high cost of labor in Europe, partly the result of excessive social security charges employers must pay. With EU encouragement, member states took steps to instill greater flexibility in their labor market and to contain the cost of labor. Despite these efforts, however, unemployment remains high, and recent research casts doubts about either inflexibility or lack of competitiveness as the cause.34 In this climate of doubt and growing concern, European leaders drafted the employment chapter in the Amsterdam Treaty to give the EU a stronger mandate to seek a solution. EU statistics provide a grim picture of unemployment. The unemployment rate was 10.6 percent in 1997, and of the people unemployed in 1995, only a third of the men and a quarter of the women had found jobs by 1996. Furthermore, 5 percent of the workforce had been unemployed for a year or more.35 Europe has not created enough new jobs to meet the demand for work for most of the past twenty years. The major document on unemployment in the early 1990s was the white paper Growth, Competitiveness, Employment: The Challenges and Ways Forward into the 21st Century.36 This document, which was drafted in the waning years of Delors’s presidency of the Commission, is a mixture of the market orthodoxy and lingering social democratic

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values that characterized the man who had revitalized the EU. According to the document, the key to economic recovery would be a massive investment program to renew the infrastructure in the EU. The program would create jobs and make European firms more competitive by providing them with a more efficient and less costly infrastructure. At the same time, governments should remove barriers to flexibility. The success of the program, called TransEuropean Networks (TENs), depended on the creation of an enormous investment fund. If the proposal were followed, fifteen million jobs would be created in the EU between 1994 and 2000. The first progress report on the policy in 1995 indicated that member states had not given full support to the required projects and that several priority projects faced funding challenges. 37 Funding continued to be a problem. In October 1996, the Council could not reach an agreement on how to revise the financial situation for 1998 and 1999, and financing difficulties were discussed in a number of meetings in 1997.38 Despite the funding problems, the number of projects in the transportation, communication, and energy sectors and the amount of funding available for them increased significantly between 1996 and 1997 with the EU committing ECU 402.9 million (402.9 million euros) in 1997 to help finance projects.39 So far, the program has not had a significant impact on job creation. Although the percentage of persons employed is increasing, the rate is slower than it was in 1991.40 The leaders of the EU embarked on another employment-related program at the Essen Council in December 1994. They selected five priority areas for initiatives to increase employment: vocational training; greater labor market flexibility and competitiveness; reduction of nonwage labor costs; more effective labor market policies, such as employment services and measures to ensure labor mobility; and measures to assist certain groups of unemployed, such as women, in entering the workforce. Member states and the European Commission were urged to track their progress in the five priority areas. The initiatives of the Essen Council would bear fruit in the Amsterdam Council a few years later. Education, especially vocational education, is an important part of EU employment policy. As previously noted, the EU had years of experience with vocational education initiatives under the rubric of the Social Fund and gained general competence for vocational education in the Maastricht Treaty. The Leonardo da Vinci program,which started operation in 1995 with a budget of ECU 139.4 million, incorporated previous EU vocational education programs and marked a major initiative in the development of an EU employment policy. The multiyear

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program mobilizes resources of the member states into a coordinated effort to enhance vocational training in the EU. The approach places the EU in a role similar to the one it plays in social policy, acting as mobilizer, funder, coordinator, and information provider. In 1997, the budget for the program was ECU 152.7 million and assistance was given to 730 projects.41 According to Commissioner Padraig Flynn, employment became the leading priority on the agenda at the Amsterdam Council, which finalized the Amsterdam Treaty.42 As previously mentioned, the treaty contains a chapter on employment, which gives employment policy separate status from social policy. According to the treaty, the EU should consider the employment effects of all future policies. The treaty also formalizes the coordinating process started at the Essen Council. Each year the Council of Ministers sets guidelines for an employment strategy, and member states indicate how their employment policies will comply with the guidelines. The Council has the right to recommend adjustment in the national programs to the member states. (The recommendations are initiated by the Commission and accepted by a qualified majority vote in the Council; they are directed to individual member states when they do not follow the guidelines.) The Council is assisted by an employment committee composed of two representatives from each member state and from the Commission. In addition, the Council may adopt incentive measures to encourage cooperation among member states and to assist them with creating employment policies. The importance of the employment chapter has been questioned by a number of scholars. Some see it as a gesture to workers in an era when the real work of the EU is the creation of a single currency. Many note that the policy set by the chapter is a procedure for coordination and has no binding legal obligation for member states. One source states that “the much heralded new chapter on employment reads more like a promise for action and exchange than a blueprint for measures.”43 Political leaders faced a dilemma at Amsterdam. They were scheduled to sign a stability pact that bound the national governments to strict budget limits; the German government had demanded it at the Dublin summit. In Amsterdam, the French socialist government insisted that the pact be balanced by a job-creating policy. The result was a resolution on growth and employment that is strong on rhetoric, calling for a skilled workforce, but is weak on concrete measures, although it does expand the right of the European Investment Bank and the European Investment Fund to invest in socially useful job-creation projects. Two French scholars assert that the resolution, far from being a

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job-creation policy, attacks the operation of social security systems and that the first draft was written in the Dutch Ministry of Finance, a ministry not known for its interest in job creation.44 The Commission did not wait for ratification of the Amsterdam Treaty before starting its implementation. Agenda 2000, a strategy for strengthening and widening the EU in the twenty-first century, was sent by the Commission to the European Parliament in July 1997. It reiterated that employment is a priority but also linked job creation and the market, stating that modern employment systems come from competitiveness and include changing social protection systems, in order to be more employment-friendly, and reforming pensions and health-care systems.45 (An employment-friendly social security system is one in which charges paid by employers are diminished.) At the extraordinary job summit of the European Council in Luxembourg in November 1997, EU leaders approved the 1998 Employment Guidelines, the most important document relating to employment policy in the post-Amsterdam era. It is addressed to member states and sets four lines of action (or pillars) for them to follow: improving employability, developing entrepreneurship, encouraging adaptability in businesses and their employees, and strengthening the policies for equal opportunities.46 Member states are instructed to introduce targets for improvement in selected areas and to provide means to measure progress in reaching the targets. They also must rate themselves compared to more successful fellow members. In general, the members states’ assignments are quite broad and propose measures they already are following. The most concrete measure concerns making taxation systems more employmentfriendly. Members are to reverse the trend toward high taxes and charges on labor and to set targets for reducing the costs of labor, especially unskilled and low-paying labor. Perhaps the two most important aspects of the Employment Guidelines are the use of targets and what might be called the Marshall Plan strategy. Targets worked very well in preparing for the Economic and Monetary Union when member states had to bring their economies into line with agreed-on criteria. The targets provided not only a goal to achieve but also a concrete measure both leaders and the public could use to assess national progress and justify necessary but unpleasant actions. Following World War II, European countries had to plan how they would use Marshall Plan aid, and they had to justify their plans and coordinate them with fellow recipients and aid administrators. Many economists have concluded that this exercise was useful in stimulating forward-looking recovery programs and the remarkable European postwar economic growth. The strategy is similar for the EU

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employment program. Each member state is responsible for its own National Action Plan (NAP) but submits the plan for consideration by other members and EU specialists, possibly facing critical comments from the Council. This strategy could lead not only to the revitalization of employment in member states but also to the EU becoming a major center for learning about employment development, the intransigent problem that troubles so many parts of the world. By April 1998, all fifteen member states had submitted NAPs to the Commission. Even though the preparation period was short and the timing made it impossible to coordinate the plans with national budgets, the first efforts were encouraging. Member states were allowed only four months to prepare their plans because the Commission had to prepare a report on them for the Cardiff summit; it issued a communication assessing the NAPs in preparation for the summit. 47 The communication is divided into four parts, each addressing one of the four pillars. The Commission noted the strong contributions from several member states; France and Spain in particular were praised for transparency in their efforts to articulate problems and to quantify resources necessary to address the problems. In general, however, the Commission criticized the reports for failure to demonstrate a commitment to fulfilling the objectives. It appears determined to keep pressure on member states to prevent the NAPs from becoming empty rhetoric, calling for clarity and concrete measures backed with the resources to fulfill them. In regard to the first pillar, improving employability, some members are developing preventive measures to check the growth of longterm unemployment. One interesting development is the growing use of individual action plans, in which persons at risk for unemployment are singled out for remedial measures designed to lessen that risk. The nearest the NAPs come to old-style job creation is in plans to promote job creation in the social economy and at the local level. A number of countries are looking at the use of cooperatives or mutual societies that could play a role in creating jobs to meet social needs if the government provides the right conditions. The pillars on adaptability and equal opportunities in business received less attention than those on employability and entrepreneurship. The pillar on adaptability relies on input from the social partners. Only a few countries, such as Denmark and the Netherlands, already have channels for the participation of the social partners, so this area’s development will lag. The pillar on equal opportunities appears to have had only two main results: one in the area of increased childcare and the other in a rather vague decision to mainstream equal opportunity by inserting its objectives into the other

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pillars. The Commission concluded its study by agreeing the four pillars had provided useful categories for organizing the findings of the member states and proposed their continued use with a few minor changes. The Commission also is concerned that budgets be coordinated with employment strategies and that political pressure be maintained in order to carry forward the Luxembourg process. (It is named for the city where the Council first agreed on the strategy.) The Luxembourg process is now the core of EU employment policy. Its stages begin with the employment guidelines issued by the Council, which provide the basis for the NAPs. Each member state makes its own national plan, as it has always been free to do, but now it has a political incentive to do so, to demonstrate its compliance with the guidelines. The NAPs are assessed individually and as a group by both the Commission and the employment committee. After the Council considers the findings, it may call on individual member states to make changes in their NAPs. The Commission and the Council then issue a Joint Employment Report, and the Commission will hold bilateral discussions with each member state regarding its measures to implement its NAP. With the Luxembourg process, the EU has an employment strategy that keeps actors at the European, national, and social partner levels in almost constant dialogue about employment issues and one that applies, at least at present, adequate political pressure to keep the process meaningful. The process is voluntary, and the relevant EU document contains no proposals for directives to enforce compliance. The process provides for benchmarking, a popular concept borrowed from business, in which the best practices of member states are held up as models for others to emulate. Participants have strong reasons to cooperate. Member governments face voters disillusioned by the chronic failure of national governments to solve unemployment; they also have budget pressures, induced in part by Economic and Monetary Union, so that the cost of unemployment becomes increasingly difficult to sustain. The EU institutions have incentives to cooperate as well. The process gives them a significant role without the appearance of domination from Brussels. The Council of Ministers is composed of national leaders who have experienced the failure of national policy. Making employment an EU policy not only offers new possibilities of success, it also may lessen pressure on national leaders. It would not be the first time the EU has been used for this purpose. The Commission’s role, which depends on expertise and negotiation skills, is one it is well placed to fulfill. The social partners also have reasons to want the process to work. For labor unions the reason is obvious, but employers see in the pillar on entrepreneurship and the somewhat ambiguous

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provisions on taxes a willingness for governments to decrease the burden of employment taxes. This mix of incentives for all players should be an inducement for successful voluntarism, but the procedure is a complicated one that will require skilled orchestration from Brussels. The process offers an example of multilevel governance, as discussed in Chapter 1. The commission and the council have responsibilities that dovetail with those of the member states and the social partners. The decisions that lead to the guidelines are shaped by the input of multiple players. Member states agree to design their national policies to comply with guidelines that no individual state controls. In addition, they agree to subject their actions to outside scrutiny and even criticism. They have not relinquished power as it is traditionally perceived, but they are engaging in a style of governance that does not conform to traditional norms, in which national governments preserve domestic policy from outside interference. Turning from the process to the substance of employment policy, an examination of the provisions in recent documents shows that the thrust of EU employment policy is largely directed toward education and training, subjects acceptable to almost all actors regardless of their political orientation. Education and training are the solution for youth unemployment as well as for long-term unemployment. The member states agreed at the Cardiff summit to increase their training programs until 20 percent of the unemployed can be placed in programs. This means doubling their training facilities. Governments will no longer make the unemployed wait until they are deemed long-term unemployed before they are eligible for training programs. The role of the EU is to supply funds and a center for discussing the most viable practices, while member states, local governments, and others devise and run the programs. Other important provisions in the guidelines include measures to decrease taxes on the private sector so that it will create new jobs. The private sector, particularly the service sector, is perceived as the engine for growth. The emphasis in national employment policies should shift from income support for the unemployed to an active policy of returning them through training to the workforce as well as encouraging job creation in the private sector. The thrust of this program may differ from older employment policies, but it also differs from wholesale deregulation. The EU appears to be pursuing the third way of new-left leaders such as Prime Minister Blair; employability, a favored new EU concept, is a prime example of this. Government programs have an important role to play in creating employability among Europe’s unemployed. Evidence indicates that member states are beginning to adopt measures in keeping with the 1998 employment guidelines. Belgium has a

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new scheme to increase job opportunities for the long-term unemployed in the service sector; employers are encouraged to create new jobs through wage compensation benefits paid by the government. Spain has reduced the tax burden on small- and medium-sized businesses, believing this will lead to job creation. Many countries have reformed their traditional employment policies to meet the needs of the modern economy. Germany has modernized its apprentice system, and Sweden has added an important computer training center to its traditional labor market activities.48 The recent collaboration of Spain and the United Kingdom on job creation is another example of new dynamics in the EU. The two countries have had very different approaches to unemployment, but the Spanish government, facing 19 percent unemployment, is eager to explore new possibilities for job creation, and Britain is willing to share its experiences with its welfare-to-work policy. The unique feature of the EU policy is not its substance but its reliance on a joint effort in which fifteen member states, social partners, and EU institutions pool their efforts and mobilize their resources.49 EU institutions and national governments all play an active role, but it is one in tune with the values and assumptions of the time. The new role for national government in identifying the at-risk unemployed and preparing them for reentry into the workforce is more active, indeed more intrusive, than the old role as provider of unemployment payments. The new one is more acceptable in the current environment, but it does not entail totally abandoning the state’s role as protector of the most vulnerable members of society. The objective of present policies is to facilitate the operation of the market, not to preempt or hinder its functions. The private sector and the market are assumed to be the real creators of employment, and the goal of EU employment policy is to ensure that employees are ready for available jobs and the private sector is free to hire new employees. The ideas are not so different from those behind national employment policies in the 1980s, but the differences are in the pooling of efforts, the provision of a mechanism for mutual learning, and most important, the existence of a central institution to orchestrate, fund, criticize, and keep the whole process moving toward agreed-on targets.

Conclusion EU social policy and employment policy at the end of the twentieth century are assuming new forms more acceptable for the current era. Social policy has not been ended but redirected, and the values that supported it in earlier times have not been lost but toned down. Policy

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has moved from a legislative agenda to a program agenda, while the main action has moved from legislative chambers to meeting rooms. Directives are still adopted, but generally they reform or amend earlier ones. Social partners meet to have a social dialogue, representatives member states’ meet with individuals from the Commission to confer on implementing the requirement for mainstreaming, and Commission officials meet with interested parties to discuss funding for social programs. The schedule for meetings is a full one indeed and reflects the reality of multilevel governance in the policy process. Member states, EU institutions, and the social partners all play important roles and have power in policymaking and policy implementation. Employment policy is the current star in the EU policy firmament. Although it fits well with the demands of the global economy, it also contains a legacy of traditional values, balancing concern for labor costs and competitiveness with concern for employee interest. It is not a deregulation policy but rather a re-regulation policy. Commitments to lower social charges and provide greater flexibility are balanced with commitments to education and retraining. Even the definition of flexibility reflects a need to balance a free labor market with the need to protect employees from its effects. Employment policy gives the EU a major, popular role in Europe as the coordinator, not the giver of the policy. It does not impose laws, it provides funds, interacting with national governments and the social partners. Employment policy is not the high politics foreseen by European federalists, but it is an acceptable policy for the EU in the current era. The contributions of scholars from various disciplines have been fruitful in assessing EU social and employment policy at the end of the twentieth century. Historians and sociologists warn observers not to take at face value current rhetoric in Europe about the market but to consider how key concepts are used and how policies are shaped. For example, labor flexibility has a much more nuanced meaning for many in Europe than it does in the United States. Some Europeans even dispute the importance of labor flexibility.50 The head of the Confederation of British Industry, perhaps the most market oriented of Europe’s employers’ associations, distinguishes between flexibility as perceived in the United States and other possible models. He warns that Europeans need to consider whether Europe wants U.S.-style flexibility, which brings more job opportunities but at the expense of greater income disparities.51 Pessimistic generalizations about EU social policy must be supplemented by a careful consideration of what is actually happening. Important developments have occurred in all three sectors of social policy considered above. The social charter is part of the Amsterdam Treaty,

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and health and safety directives now cover in detail many sectors of the European economy. Equality policy has had a surprising victory with the adoption of the burden-of-proof directive and has made other advances as well. Meanwhile, social policy has broadened to include measures for the socially excluded, the elderly, the disabled, and minorities. Although EU social policy has changed, it still reflects European values like community, social democracy, and the welfare state. The enlarged role of the social partners in both policymaking and policy implementation demonstrates that corporatism is alive and well in the EU no matter what its fate in the member states. The contribution from legal scholars needs to be acknowledged. Their research on health and safety policy provides almost the only coverage given to the subject. Without their work, it would be easy to devalue the contribution of social policy to employees. Legal scholars also bring into the light the important role of the European Court in regard to equality policy; a balanced assessment of equality policy must include rulings of the Court. The concept of soft law is another contribution from legal scholars who argue it is a meaningful form of law and one highly relevant for the EU. The study of policy implementation is in an early stage. Although the material covered in this chapter indicates growing interest in the subject and the start of a serious effort to enforce implementation, we are forewarned to expect that policy implementation will be far from uniform. Societal effects will shape the way each country adapts to the EU policy. The lack of convergence among the different welfare states and industrial relations systems of the member states are impediments to the uniform implementation of a common social policy.

Notes 1. Michael Shanks, European Social Policy, Today and Tomorrow (Oxford: Pergamon Press, 1977), p. viii. 2. Spiros Simitis and Antoine Lyon-Caen, “Community Labour Law: A Critical Introduction to Its History,” in Paul Davies, Antoine Lyon-Caen, Silvana Sciarra, and Spiros Simitis, eds., European Community Labour Law: Principles and Perspectives (Oxford: Clarendon Press, 1996), p. 4. 3. Commission of the European Communities, Report on the Development of the Social Situation in the Community in 1973 (Brussels: Commission of the European Communities, 1974), p. 12. 4. See Simitis and Lyon-Caen, “Community Labour Law,” and Miguel Rodriguez-Pinero and Emilia Casas, “In Support of a European Social Constitution,” in Davies, Lyon-Caen, Sciarra, and Simitis, European Community Labour Law (Oxford: Claredon Press, 1996), pp. 9–10, 39.

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5. “Amsterdam Treaty Reinforces People’s Rights,” CREW Reports 17, no. 7/8 (July-August 1997): 3–7. 6. Mark Freedland, “Employment Policy,” in Davies, Lyon-Caen, Sciarra, and Simitis, European Community Labour Law (Oxford: Claredon Press, 1996), pp. 277–278. 7. European Commission, European Social Policy: A Way Forward for the Union, a White Paper COM(94)333 (Luxembourg: Office for Official Publications of the European Communities, 1994), p. 13. 8. European Commission, General Report on the Activities of the European Union: 1997 (Luxembourg: Office for Official Publications of the European Communities, 1998), pp. 66–67. 9. Ibid., p. 69. 10. For background on the charter, see Beverly Springer, The Social Dimension of 1992 (Westport, Conn.: Greenwood Press, 1992), pp. 88–92. 11. European Commission, Community Charter of the Fundamental Social Rights of Workers (Luxembourg: Office for Official Publications of the European Communities, 1990), p. 3. 12. Ibid., p. 20. 13. See, for example, Catherine Barnard, EC Employment Law, rev. ed. (Chichester: John Wiley & Sons, 1996), p. 63; and Rodriguez-Pinero and Casas, “European Social Constitution,” in Davies, Lyon-Caen, Sciarra, and Simitis, European Community Labour Law (Oxford: Claredon Press, 1996), p. 38. 14. Barnard, EC Employment Law, p. 251. 15. European Commission, “Medium-Term Social Action Programme 1995–1997,” Social Europe, no. 1 (1995): 33. 16. European Commission, Social Action Programme, 1998–2000 (Luxembourg: Office for Official Publications of the European Communities, 1998), p. 14. 17. “News in Brief,” Janus, no. 27 (June 1998): 17. 18. Barnard, EC Employment Law, pp. 299–301, and Roger Blanpain, Labour Law and Industrial Relations in the European Community (Deventer, Netherlands: Kluwer, 1991), pp. 148–151. 19. European Commission, Employment in Europe, 1997 (Luxembourg: Office for Official Publications of the European Communities, 1997), p. 7. 20. Bob Hepple, “Equality and Discrimination,” in Davies, Lyon-Caen, Sciarra, and Simitis, eds., European Community Labour Law (Oxford: Claredon Press, 1996), p. 241. 21. “State of Play in the EU Today,” CREW Reports 17, no. 5/6 (1997): 5–7. 22. See, for example, Jane Lewis, ed., Women and Social Policy in Europe: Work, Family and the State (Brookfield, Vt.: Edward Elgar, 1993), or Evelyn Ellis, European Community Sex Equality Law (Oxford: Oxford University Press, 1991). 23. Eliane Vogel-Polsky, “The Conception and Instrumentalisation of Legislation on Equal Opportunities for Men and Women: Programmed Not to Succeed,” Transfer 2, no. 2 (June 1996): 349–381. 24. European Commission, Incorporating Equal Opportunities for Women and Men into All Community Policies and Activities, COM(96)67 final (Luxembourg: Office for Official Publications of the European Communities, 1996). 25. “State of Play in the EU Today,” CREW Reports 18, no. 1 (January 1998): 4.

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26. European Commission, Progress Report from the Commission on the Follow-up of the Communication: Incorporating Equal Opportunities for Women and Men into all Community Policies and Activities, COM(1998)122 final (Brussels: April 1998). 27. “State of Play in the EU Today,” CREW Reports 17, nos. 5/6 (MayJune 1997): 5–7. 28. European Commission, General Report: 1997, pp. 66, 68. 29. Ilona Ostner and Jane Lewis, “Gender and European Social Policies,” in Stephan Leibfried and Paul Pierson, eds., European Social Policy: Between Fragmentation and Integration (Washington, D.C.: Brookings Institution, 1995) pp. 177–186. 30. Ibid., p. 161. 31. Judith Blom, Barry Fitzpatrick, Jeanne Gregory, Robert Knegt, and Ursula O’Hare, The Utilisation of Sex Equality Litigation Procedures in the Member States of the European Community, report published by the European Commission, June 1995. 32. European Commission, Medium-Term Social Action Programme 1995–1997, pp. 30–31. 33. “State of Play in the EU Today,” CREW Reports 17, no. 11/12 (1997): 6. 34. See, for example, John Morley, “Unemployment in the EU—An American or a European Solution?” in John Morley and Andreas Storm, with Oliver Cullman and Michael White, eds., Unemployment in Europe: The Policy Challenge, Discussion Paper 73 (London: Royal Institute of International Affairs, 1998). For a controversial study of how one country lessened unemployment without adopting market solutions, see Jelle Visser and Anton Hemerijk, “A Dutch Miracle”: Job Growth, Welfare Reform and Corporatism (Amsterdam: Amsterdam University Press, 1997). 35. European Commission, Employment in Europe: 1997, p. 7. 36. European Commission, Growth, Competitiveness, Employment: The Challenges and Ways Forward into the 21st Century (Luxembourg: Office for Official Publications of the European Communities, 1994). 37. European Commission, General Report on the Activities of the European Union: 1995 (Luxembourg: Office for Official Publications of the European Communities, 1996), pp. 138–139. 38. European Commission, General Report: 1996, p. 139, and General Report: 1997, pp. 154–155. 39. European Commission, General Report: 1997, pp. 155–158. 40. European Commission, Employment in Europe: 1997, pp. 44–45. 41. European Commission, General Report: 1997, p. 132. 42. European Foundation for the Improvement of Living and Working Conditions, Summing up the Summit—European Social Policy After Amsterdam, Bulletin from the Foundation, no. 54 (1997), p. 1. 43. “Amsterdam Treaty,” CREW Reports 17, p. 4. See also Janine Goetschy and Philippe Pochet, “The Treaty of Amsterdam: A New Approach to Employment and Social Affairs,” Transfer 3, no. 3 (1997): 608, 611. 44. Goetschy and Pochet, “Treaty of Amsterdam,” p. 609. 45. European Commission, Agenda 2000: For a Stronger and Wider Union. Information Programs for the European Citizen (Luxembourg: Office for Official Publications of the European Communities, 1997), p. 2.

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46. European Commission, The 1998 Employment Guidelines: Council Resolution of 15 December 1997 (Luxembourg: Office for Official Publications of the European Communities, 1998), and European Commission, inforMISEP Policies, no. 61 (Spring 1998): 4. 47. European Commission, “From Guidelines to Action: The National Action Plans for Employment,” undated Commission communication. 48. European Commission, inforMISEP Policies, no. 61 (Spring 1998): 13–15, 21–22. 49. European Commission, “The Commission’s Work Programme for 1998: The Political Priorities,” October 30, 1997, http://www.cc.cec:80/80/en/ comm/co98pr/en/com517.html. 50. Morley, “Unemployment in the EU,” p. 18. 51. Robert Taylor, “Debunking the Flexibility Myth,” Financial Times, December 12, 1997.

4 The Member States As Participants in EU Social Policy

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U policies are only as effective as the member states are willing to make them. Member states stand astride the policy process affecting the quality of policies made in Brussels and their impact as they are implemented in Europe. What they want, what they can agree on, and what they make a priority combine to constitute powerful forces shaping EU policy. The dynamics of EU policymaking center on a search for consensus among member states.1 The consensus can be exceedingly elusive when member states have widely different traditions or practices relevant to the policy area. “The more diverse the behaviors to be regulated the more difficult it is to frame clear regulations.”2 If policymaking is a collective action by the member states, policy implementation is an individual action by them, and that action is colored by each country’s own culture and legal system.3 Because their individual actions are supposed to result in uniform outcomes, the differences and similarities among member states therefore become significant factors to consider in the study of EU social policy. Researchers who participated in an important study of EU policy implementation agreed that each member state has its own pattern of implementation derived from the norms associated with implementing national legislation.4 Every member state has its unique profile as a participant in the European Union. No two member states seek the same benefits from membership or respond in the same manner to EU actions. The profile of each state is a composite of current interests and politics molded by long-term values and norms, and it affects how the state participates in both policymaking and policy implementation. 57

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Profiles of the three largest members, Germany, France, and the United Kingdom, are presented in this chapter, and others will be dealt with more briefly. The focus in each case is on factors that influence the member state’s participation vis-à-vis EU social policy: its role in the EU, the national social policy, its industrial relations system, and its business environment and business culture. Each profile then assesses how these factors will affect the member state’s response to the European Works Councils Directive (EWCD).

Germany Germany has become a reluctant leader of the EU; its leadership role is one it long avoided but now plays with increasing assertiveness. The German imprint is on all the major European events of the era—the end of the Cold War, the Maastricht and Amsterdam Treaties, the European Economic and Monetary Union, and the growing role of the EU in global affairs. The power of the German economy thrusts Germany into a leadership role, and in general, the country has played the role with constraint and a commitment to European integration. The leaders of Germany support EU social policy for both ideological and pragmatic reasons; the policy requires other member states to bring their national practices—and social charges—closer to Germany’s high level. German social policy is deeply entrenched, with roots spreading back to the Bismarck era. Following World War II, the new West Germany was constituted as a “democratic and social federal state” obliged to protect citizens from social insecurity. The German policy, one of the largest and most costly in Europe, for the most part escaped the cuts that curtailed many programs in the 1980s and 1990s. German social policy is funded primarily by mandatory social insurance that has four components: pensions, health, unemployment, and old-age care. Together they make up 42 percent of wage costs.5 In addition to the social insurance programs, the policy includes child support, rent subsidies, and vocational training. In the words of a German publication, “Every inhabitant of the Federal Republic—native or alien—is entitled to social assistance at times of hardship.”6 In the 1990s, the German program came under pressure for reform. The Kohl government made a few small cuts, but Chancellor Kohl had no wish to emulate the harsh policies of Margaret Thatcher. (His dislike for her was well known; he was always more comfortable with President Mitterand, a socialist, than with Thatcher.) The current Social Democratic government is caught between campaign promises to its supporters in the labor unions

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and the financial burden resulting from an aging population and high unemployment. The German economy is the third largest in the world, but forecasters regularly warn about what they consider to be structural faults. It does not exhibit the characteristics that U.S. and British economists believe are necessary for success in today’s global economy. The German economy lacks cheap, flexible labor and is burdened with numerous regulations. It has not embraced the high-technology track in vogue in business journals but remains an industrial, export-oriented economy relying on the judicious use of technology to advance its traditional industries. Many business decisions must be codetermined with employee representatives. And in addition, the former West Germany has had the heavy financial burden of modernizing the former East German economy. German capitalism has been called “Rhine capitalism” and its economy described as a coordinated market economy.7 It is characterized by a unique network of relationships linking businesses, banks, labor unions, and public officials at both national and state levels of government. Traditionally, businesses have relied on banks for capital rather than the stock market. The ties between bankers and businessmen are institutionalized in the supervisory boards that are part of the structure of German corporations, which have a two-tiered board structure. The executive board is small and consists of executives who operate the business, and the supervisory board is responsible for oversight and long-term planning. The latter includes bankers, public officials, and labor union representatives as well as business leaders. At least one-third of the board are elected representatives of the workforce. The supervisory board of Volkswagen, for instance, has had Gerhard Schroder (the political leader of Lower Saxony, which owns part of the corporation), a leader of the European Metalworkers Federation, and high-level German bankers sitting together as participants. The network also has other components. German businesses are highly organized into employers’ associations that have a structured relationship with German labor unions as well as various levels of German government. As a consequence of this unique network system, participants in German capitalism have greater need to work together and more familiarity with their counterparts across the economic dividing lines of business, government, and labor. The result is an economy distant from the classical view of capitalism in which participants compete under laws enforcing antimonopoly behavior. The German business environment is characterized by its heavy dependence on an export market that demands quality and reliability

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rather than cheap prices. The characteristics of the German business environment help German firms to sustain their market shares. The close relationship between banks and businesses leads to an operating climate that has a long-term, conservative perspective. German managers generally have education credentials in the field of the company’s product rather than in business education, and their workforce is stable and well trained. Such an environment denigrates volatile behavior and rewards expertise. The German model of industrial relations is distant from the Anglo-American model and is highly structured and corporatist. Both law and culture require employers and employees to cooperate. Big labor and big business set the terms for collective bargaining. They deal with the government on mutual concerns and value social partnership and consensus even when they fail to live up to these values. In recent years, the corporatist, consensus model has come under strain as German business leaders look with increasing favor at the AngloAmerican model of industrial relations. Some decentralization has occurred, but German law prevents major changes in the German model. The most famous feature of the German model is the dual structure of employee representation consisting of codetermination and collective bargaining. German law requires that employees be represented by elected works councils in all German workplaces with five or more permanent employees. The 1972 Works Constitution Act states that “The employer and the works council shall work together in a spirit of mutual trust having regard to the applicable collective agreements and in cooperation with the trade unions and employers’ associations represented in the establishment for the good of the employees and of the establishment.”8 German law gives the works councils rights to information, consultation, and codetermination. Such a grant of authority to employees is unknown in Britain and the United States. The emphasis on mutual trust and the assumption that the good of employees and of the establishment are compatible are characteristic of the German approach to industrial relations. German codetermination also includes election of employees to the supervisory boards. Collective bargaining is the other part of German dual representation. It is generally conducted at the sectoral or regional level between the relevant employers’ association and labor union, although companylevel bargaining is increasing. German labor unions organize less than a third of the German workforce, but they are powerful and deeply entrenched in all aspects of German industrial relations; their strength is matched by that of employers’ associations.9 Wages and hours have been the big issues on the bargaining table in recent years. Employers

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have won wage restraint and greater flexibility in how they organize workers’ hours, but unions have won a shorter work week, an issue on which they have led the rest of Europe. The German model of industrial relations has several additional distinctive features. Law plays a major role in defining most aspects of industrial relations; few other countries have such a detailed legal code to guide these. Labor peace is an important objective of the law, which strictly limits the right to strike. The decisions of labor unions apply to all employees in the relevant sector or firm irrespective of union membership. Unions and works councils both accept the tenets of social partnership whereby they have responsibilities to respect the interests of capital as well as labor.10 Both labor and employers emphasize a trained workforce. Germany has probably the most highly developed apprentice system in Europe as well as extensive provisions for vocational training. The German model is credited with providing the country with a sound economy respected for the quality of its products, social peace, and “relative egalitarianism.”11 Many would also argue that it has given the country the highest wage costs in Europe, if not in the world. Two factors mitigate the charge, however. German productivity may offset wage costs in certain types of production to produce unit labor costs comparable to others in Europe for high-quality products.12 The other factor is relative egalitarianism. In the current climate, where income differentials between labor and management is increasing in most countries and becoming a cause for employee alienation, German chief executives make only 47 percent of the pay of chief executives in the United States, while German employees make 159.7 percent of employee pay in the United States. The ratio of chief executive pay to employee pay in 1997 in the United States was twenty-four compared to eleven in Germany.13 The work of Geert Hofstede, discussed in Chapter 2, provides four useful concepts to distinguish German culture as it applies to the subject of this book. (A fifth concept concerning long-term orientation versus short-term is not included since it largely applies to differences between western and eastern cultures.14) We use Hofstede’s concepts in discussing the culture of each country covered here, to pinpoint potential conflicts as persons from different cultures interact to carry out EU social policy in general and the European Works Councils Directive (EWCD) specifically. The first concept is uncertainty avoidance, which concerns the degree of ambiguity and the need for formal rules found in a culture. Power distance refers to the extent of hierarchy and inequalities between employees and management in a given country’s firms. In collectivist cultures as distinguished from individualistic ones,

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group interests prevail over individual interests. The masculinity versus femininity concept refers to how desirable assertive, competitive behavior is in a given culture. Germany has a distinctive profile when ranked against other EU member states and the United States on the basis of Hofstede’s four concepts. It ranks in the middle range on uncertainty avoidance but markedly higher than two of its main business partners, the United Kingdom and the United States. The German propensity for rules and regulation is a familiar target for criticism by British and U.S. businesses. On the other hand, Germany is similar to the UK and the United States on power distance, with all three being on the low side of average. Within the European context, Germany has a relatively high ranking on collectivism while the UK and especially the United States are more individualistic. Germany ranks close to the UK and the United States on the masculinity scale while Sweden, which superficially resembles Germany, shares with Norway and the Netherlands the highest rankings on femininity.15 Germany has a well-defined process for implementing EU directives that primarily involves civil servants from the national administration but also ones from the states and representatives from relevant interest groups. In general, the civil servants have a positive approach to EU policies. Somewhat surprisingly, German transposition measures tend to restate the directive and not redraft it into more detailed German style.16 The German profile provides evidence suggesting that Germany will find it relatively easy to implement the EWCD and that Germans will be willing participants in European works councils. Not only have they had experience with works councils, but they also have traditions and culture that support the endeavor. The national social policy has broad political acceptance and has withstood the recent European paradigm shift to a more market-oriented view. Germany supports European integration efforts. The characteristics of German industrial relations are another positive factor; participants are expected to be moderate and accommodating, and the law imposes cooperation on the social partners. Managers are accustomed to consulting with employees in a relationship marked by respect for expertise. Since managers are relatively free from the pressure of the stock market, they can be accommodating and make long-term agreements. Culture has shaped the participants in such a way that they are ready to accept EWCD requirements and to negotiate with participants on the European works councils. Difficulties can be expected, however, when the participants reflect other cultures and other experiences. The German system is so

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highly structured and has been so successful that Germans may not be prepared to adjust within the multicultural European works councils or to recognize contributions from persons representing other systems.

The United Kingdom In many respects, the United Kingdom is the polar opposite of Germany regarding characteristics relevant to EU social policy. Whereas Germany is the good European, the UK has been the reluctant one. Germany grew steadily in economic strength throughout the postwar era until its recent difficulties following unification. The UK fell from its historic economic prominence and spent much of the postwar era searching for new roads to affluence; its political and economic life has been much more acrimonious. Although both countries became welfare states after World War II, the UK system was not as well funded, and criticism against it grew in the late 1970s. The UK (or more properly the British system, since the system in Northern Ireland is distinctive) industrial relations system is closer to that of the United States than to European systems. History and geography have forged a distinctive society in the UK, one that is not easily reconciled with its partners across the channel. The Labour government elected in 1997 has adopted the “third way” as its motto. The government wants to escape from both its socialist and trade union heritage and the Thatcherism that prevailed in British politics during the 1980s and into the 1990s. The government wants to chart a new-left course that melds social justice with a market economy. It issued a white paper proposing measures to improve fairness at work that contains, among other proposals, one for a minimum wage. The government also has played a more constructive role in the EU than the former Conservative one and has adopted legislation to implement EU directives, such as the controversial 1993 directive on working time. On the other hand, Prime Minister Blair is careful to avoid the appearance of close ties to trade unions. Indeed, employers appear to have easier access to the government than do trade union officials. From 1978 to 1997, the UK had a Conservative government whose main features were designed by Prime Minister Thatcher. She cast herself as the opponent of trade unions and introduced legislation to curb their power. She also espoused a radical form of free market economics. Unemployment rose, trade union membership fell, and income inequality increased, but her policies were credited with providing an entrepreneurial economy and breaking the power of the trade union.

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Thatcherism or economic liberalism was admired abroad and stimulated a trend to privatization and deregulation throughout Europe. Both Margaret Thatcher and her successor, John Major, opposed EU social policy. Under their leadership, the UK did not accept the Community Charter of the Fundamental Social Rights of Workers, and it obtained an exclusion from the social chapter attached to the Maastricht Treaty, which freed British employers from EU social policies adopted under its provisions. Although relations between the UK and EU were exceptionally strained during the Thatcher era, the Thatcher government did not start the problem; its roots were different interests, traditions, and legal systems. The UK frequently has been slow to implement EU social directives. For example, the 1977 directive to protect employee rights when one enterprise is acquired by another was not transposed into UK law until 1991. The UK has had troubles with the Court of Justice for adopting legislation that does not conform with the intent of EU directives and for allowing practices not in line with EU policies. In 1984, the Court ruled that the 1975 UK sex discrimination act did not comply with EU law,17 and in 1998, it ruled that firing a woman for absences from work because of pregnancy, as allowed under a UK contract, violated the EU sex discrimination directive.18 Although many commentators wrote about the “Thatcher revolution,” the revolution did not change traditional values associated with social policy. Public opinion surveys find that the public, never as Thatcherite as many commentators, does not support the values that underpinned her revolution. Her “children,” the young people who came of age during her government, are even less likely than their parents to support her values.19 The British public once again expects the government to provide basic social protections. The economy in the UK has changed significantly in recent decades. The workshop of the world is gone and in its place is a service economy with a global financial sector. Deregulation and low labor costs make the country a popular site for foreign investors. The typical employee is no longer a blue-collar male worker but a woman who works part-time in the service sector. After a sharp downturn in the early 1990s, the UK entered a positive swing in the economic cycle ahead of others in the EU. British firms have a different heritage from their continental counterparts. Industrialization arrived early in Britain and grew without the assistance from banks and government that characterized development on the continent. One authority asserts that the lack of state support deprived British firms of “favorable access to capital, skill and R. & D.”;

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it left them socially isolated and “reinforced the risk-aversion and short-terminism fostered by the financial system.”20 British firms have been more dependent on the stock market, and at critical moments in their development they have suffered from lack of capital to finance growth and modernization.21 Since the 1980s, British firms have made major changes—privatization, closures of manufacturing sites, new foreign owners, and the growth of service firms. They have transformed their workforce and coped with the lack of trained personnel in the face of government cuts in training. Manufacturing firms have lost competitiveness, and the prognosis for their future is not very promising.22 Firms in the service sector, especially in the financial and insurance industries, have a much better prognosis. British managers are a diverse group. Upper-level managers and those in the finance sector constitute the elite in terms of class background and education (the latter in a subject not necessarily related to their work). Lower-level managers have few opportunities to aspire to higher levels of management, from whom they are often separated by class and by educational attainments. All managers, high and low, are more likely than their continental counterparts to participate in business education. Managers involved in human resource management generally are trained in new theories in their area that emphasize participative practices such as quality circles. Surprisingly, directors of human resources in large British MNCs support the harmonization of employment policies in the EU and do not want their government to opt out of EU social policy, according to a 1999 survey. The managers also supported the EWCD and believed that workers should be consulted on issues of concern to them. 23 British managers are generally regarded as more democratic in their relations with employees and more willing to delegate responsibilities than are German managers. (The generalization does not necessarily apply to British top managers who, as noted above, tend to form a separate group from other British managers.) Democracy does not extend to equality in pay, however. The pay differential between British workers and chief executive officers is greater than that found in other leading European countries.24 The pay differential is matched by a hierarchical structure inside UK firms. The UK differs from Germany in regard to both pay differentials and hierarchy in the workplace. Employers’ associations in the UK are not as powerful or pervasive as some on the continent. The Confederation of British Industry (CBI) is the major national organization, but associations for certain sectors, such as the metalwork sector, also are influential. Employers’ associations in

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Britain do not play a major role in industrial relations as they do on the continent. They are more important as representatives of business interests in the government and as providers of various services to their members. The CBI opposed adoption of the EWCD as did many of the sectoral associations; others, such as the metalworking association, accepted the EWCD and advised their members on how to establish works councils. British trade unions have an archaic structure that reflects their long history. Most unions are members of the TUC (Trade Union Congress), the national confederation. The structure differs radically from the tidy one of German unions in which sixteen industrial unions organize the major sectors of the German economy and all belong to the DGB (Deutscher Gewerkschaftbund). (White-collar workers have a separate union.) The UK has approximately 260 unions that range from small craft unions to huge general unions like the Transport and General Workers Union (TGWU). British unions are close to the Labour Party and espouse a pragmatic form of social democracy. Their strength has waned since the 1970s, when they tied up the country with massive strikes. Today union leaders struggle to maintain jobs and benefits through collective bargaining. They lack strong ties with continental unions and are relatively isolated in the current political environment of the third way. Two words are used to describe British industrial relations—voluntarism and adversarial. The first indicates that British industrial relations are largely guided by custom and tradition rather than by law. The UK has fewer laws governing industrial relations than other European countries. Traditionally, trade unions and employers preferred to deal directly with one another without government involvement, voluntarily negotiating agreements that were not legal contracts but were respected by both parties. Adversarial describes the approach taken by trade unions and employers in their negotiations; it was a “we/they” relationship closely related to the British class system. British unions regarded the codecision practices in Germany as cooption. Although voluntarism and adversarial still describe British industrial relations, the legal, economic, and social environment in which the system operates has changed. In the 1980s the Conservative government launched a concerted attack on the system. The government adopted laws to curb the power of union leaders and rallied public hostility against unions. During the same period, the manufacturing base in Britain eroded and the service sector flourished. Traditional trade union members worked in blue-collar jobs, and as they lost their jobs, unions lost members. The new jobs in Britain are largely part-time and in the service sector—not

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a fertile ground for union recruitment. Meanwhile, employers, encouraged by the new environment, launched derecognition campaigns to weaken unions in formerly unionized workplaces. Trade unionists, battered by the government’s attack and the loss of members, changed their strategy. They found a friend in Brussels. Formerly, British unions had been cool toward the EU, but in the late 1980s they turned to it, attracted by the anti-Thatcherism in Brussels. EU social policy offered them a buffer against antiunion attacks at home. The opponents of national laws regulating industrial relations became advocates of EU directives. Britain now has a “new model of industrial relations based on the direct relationship between employer and employee.”25 A large number of British employees lack either the protection formerly offered by unions or the protection of laws such as exist in Germany to guide the employer/employee relationship. The British industrial relations system today still has sectors where traditional employer/union relations prevail, but for much of the economy, decentralization and employer domination characterize employer/employee relations. Unlike its continental partners, Britain never adopted a law on works councils; it briefly considered the idea but did not act on it. Many trade unions were suspicious of or even hostile to such continental practices. They relied on shop stewards elected by union members in their place of work to represent workers’ interests. With the decline of union workplaces, employees have been left with no spokesperson, and most unions have revised their opinion toward works councils, becoming advocates of the EWCD. The UK culture is distinguished from those of continental member states in a number of ways, and the difference is most apparent regarding uncertainty avoidance. In a study of fifty countries, the UK ranked in the bottom five for this cultural attribute. The British are comfortable living in a world with few laws and rules to provide predictability. Voluntarism is an obvious outgrowth of this characteristic. The UK ranks higher than other EU member states in regard to individualism and ranks low on power distance. These two characteristics help explain the lack of interest among employees for works councils. British employees believe they can deal individually with their managers on job-related issues. The UK, along with Germany and the United States, ranks high on masculinity. All three respect assertiveness and want individual recognition for a job well done; consequently, they may underestimate individuals from more feminine cultures where modesty rather than assertiveness is a respected trait.26 This survey of background factors shows that the UK does not provide a promising environment for the development of EWCs despite

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their apparent support by human resource managers. The government opposed the EWC legislation and any dabbling by the EU in UK employee/management relations. The British, unlike their continental counterparts, did not establish works councils after World War II. Both British trade unions and employer organizations accepted voluntaristic practices of industrial relations within a market economy. Trade unions did not admire the regulatory states across the English Channel; they preferred the established adversarial system in labor/management relations. Culturally, the British exhibit traits that are not deemed compatible with the operation of works councils. When Labour government leaders relinquished the British opt-out on EU social policy, they opened the door to a significant policy challenge. The UK represents the most difficult test case for successfully implementing that policy. The UK is in many respects distant from the practices, traditions, and values that gave rise to EU social policy and especially those that shaped the EWCD.

France To paraphrase the late President Mitterrand, the French love France, but they know that Europe is their future. French leaders combine the promotion of France with the building of European unity, working to preserve their leadership in the EU and to leave their imprint on the grand plans for integration. While the Germans submerge their sovereignty in Europe and the British guard their sovereignty from it, the French see little conflict between French nationalism and a successful EU. For the first time in recent French history, France has a political center, albeit one in which relations between the socialist and the Gaullist are less than cordial. Cohabitation, as provided in the French constitution, offers the basis for building a political center; however, changes within the major parties allow cohabitation to function. Change is most apparent in the Socialist Party, whose economic policy is designed to foster growth and prepare France for the EU monetary union. The government of Lionel Jospin has not moved as far from its roots as has the government of Tony Blair, but it does represent a noticeable shift from traditional French socialism. The political center is forged by a common commitment to austerity measures necessary to ensure French participation in the monetary union. The commitment entails a high social cost, however, with chronic unemployment and social unrest. The French economy had some remarkably good years before the 1998 global economic crisis. It met the criteria for membership in the

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monetary union, and many of its economic indicators were better than Germany’s. It received more foreign direct investment than any EU member state except the UK and had a positive current account balance. The success followed years of reform in which austerity, liberalization, and privatization reshaped the economy but did not revolutionize it. The economy is still mixed, and Jospin’s government is proceeding cautiously on further privatization. Indeed, the impetus for market liberalization was never as deep as it was in the UK. As John Zysman found in his study of the French economy, the French have an “anti-market tradition.”27 French capitalism retains a space for government involvement, although the type of involvement has changed. Today the government helps French firms become more competitive and it is less dirigiste, but it is still an active participant in the economy.28 The government, whether left or right, regards unrestrained capitalism as dangerous to civilized society. French political leaders also believe the government has a responsibility to protect people from market abuses. It is said that Prime Minister Jospin, a socialist, loves the market economy but abhors the market society. French social protections are a mixture of old French paternalism and social Catholicism, with a trace of French socialism. French social policy emphasizes protections for families with generous child allowances, rather than programs to bring about income equalization. In the 1990s, governments of both the right and left recognized that unemployment was a major problem and experimented with a variety of programs to alleviate it, but with little success. The Jospin government has made legislating a thirty-five-hour work week the centerpiece of its job creation effort. The proposal is highly controversial, however, and the government has had to make concessions to employers. 29 It is caught between the need to lessen unemployment and the need to restrain government spending. EU social policies offer a promising alternative. In the 1980s, President Mitterrand proposed that the EU create a social space, and in the 1990s, the French government proposed a major new employment initiative for the EU and tried to revive the Delors program for increased infrastructure-building in the EU in order to create jobs. French firms are divided between numerous small firms—characterized by family ownership, old-fashioned business practices, and a respectable level of technical modernization—and large firms that have close ties with the government and the financial sector. A number of large firms have undergone cycles of nationalization and privatization, and in the past some have been promoted as national champions, with a large infusion of public money to make them leaders in their sector.

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Many French firms are more competitive than is commonly realized. With government encouragement, they have modernized in the face of European competition. 30 They also have become more global in their investment practices.31 Management inside French firms tends to be centralized, authoritarian, and hierarchical in comparison to either Germany or the UK. High-level French managers traditionally come from an elite based on family background and education at one of the grandes écoles, where education for modern management draws on a strong engineering tradition blended with modern management techniques.32 Around 50 percent of high-level managers are graduates of one of three schools: ENA (École Nationale d’Administration), HEC (Haute École de Commerce), or the École Polytechnique. The same elite supplies leading politicians of both the left and right and upper-level civil servants. Among top managers in France, 44.5 percent come from families with political connections compared to only 8 percent in Germany.33 Power tends to be held at the top inside French firms. Tasks are highly differentiated, and cooperation among managers of the same level is much less common than in Germany.34 Teamwork and delegation have not been French strengths, but indications are that the new generation of managers are more accepting of such innovations. The French employers’ association CNPF (National Council of French Employers) has been one of the most right-wing employers’ associations in western Europe. About three-fourths of French enterprises belong to it. The CNPF opposed accommodation with trade unions and resisted the presence of trade union representatives inside French workplaces. A large amount of its work is connected with the government, and it serves on a number of government boards that oversee the administration of programs such as social security. It has had to submerge its hostility to unions in order to work with union leaders, who also serve on government boards. French workers have been called the most alienated in western Europe. Many of them have little trust in their employers, trade union, or capitalism itself. Few of them join unions and fewer still pay union dues. They do, however, turn out in large numbers for strikes, as they did in 1995 when some public sector workers staged a major strike and were joined by thousands from both the public and private sectors throughout the country. French trade unions have been almost devastated by a decline in membership and now organize the smallest percentage of the workforce of any EU member state. Only about 6 percent of private sector employees belong to unions.35 While the French rate of unionism never

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matched Germany’s or others in northern Europe, it has fallen precipitously for the same reasons as in other European countries, and also because French unions appear to be out of step with the concerns of modern employees. Despite their size, however, the unions play an important role in collective bargaining and as participants on government boards to administer social programs; they are given such positions by law. Unlike Germany and the UK, the French labor movement is divided by ideology. Traditionally, communism, socialism, and Catholicism contested for the hearts of French workers. Today the main labor confederations are communist or social democratic, but smaller confederations exist with different belief systems. Three main union confederations organize most union members except for white-collar employees. The CGT (General Confederation of Workers), a communist union, was the largest and most militant until recent years when its membership almost disappeared. It is anti-EU and obstructionist, generally refusing to sign national sectoral agreements. The CGT-FO (Force Ouvrière) has moved back and forth across the ideological spectrum since its break from the CGT after World War II. Today it generally sides with the CGT in obstructionist tactics and opposes both worker participation policies and the EU. The CFDT (Confederation Française Démocratique du Travail) broke away from a Catholic confederation, then moved to the left and endorsed workers’ self-management. It is now social democratic and plays a constructive role both in Paris and in Brussels. The unions have not learned to cooperate with one another across their ideological divisions as Italian unions have. They waste energy and resources on infighting, thus weakening their ability to serve their members. The interunion battles today concern welfare measures. The CGT and FO adamantly oppose cuts in programs and refuse to participate on some boards that administer welfare programs. In contrast, the CFDT cooperates in discussions to trim programs and serves on boards; it recently replaced the FO in the presidency of the sickness benefit fund and the unemployment insurance plan.36 Two characteristics are distinctive of French industrial relations. Confrontation describes relations between French trade unions and employers’ associations; it goes beyond the adversarial nature of British industrial relations in which the two sides accept a we/they contest. In the French system, the two sides are much less willing to attribute legitimacy or trustworthiness to the opposing side. The other characteristic is the importance of collective bargaining despite the weakness of trade unions. Collective agreements cover 90 percent of the workforce.37

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French law structures the system in which trade unions and employers’ associations bargain at three levels and establish terms that are extended to cover all relevant employees—union and nonunion members. The CNPF and the three major union confederations (and others) negotiate framework agreements. Participants at the industrial level set a minimum wage for the sector, while participants at the enterprise level negotiate agreements for wages and working conditions. French law plays an important role in structuring industrial relations. In 1982, the Auroux laws were adopted by a socialist government. They represent “the greatest cumulative shift ever occurring within the position of French labor,” 38 giving unions extensive rights and compelling employers to bargain with them. The laws brought French labor law closer to that of other continental countries such as Germany and Sweden and led to a major change in the French system. Although France had legislation requiring a type of works council before the Auroux laws, the 1982 laws made the right more meaningful. Today French works councils have the right to information and consultation, and employers prefer to deal with them rather than unions as the representative of employees inside the workplace.39 French employers and employee representatives meet together and share responsibilities within bodies ranging from works councils to national tripartite agencies, giving a neocorporatist appearance to French industrial relations. Few experts attribute a neocorporatist character to French industrial relations, however. The French system lacks the certainty and consensual approach that is customary in a neocorporatist system.40 The French cultural profile contains few surprises for anyone familiar with French industrial relations. France has an exceptionally high rating on the uncertainty avoidance scale, a high rating on power distance, a relatively high rating on individualism (in keeping with other western European societies), and an average rating on the femininity score. The composite score gives a profile of a society that lacks a high level of trust in officials of any type, but one that also depends on laws to ensure stability in a society familiar with serious instability. Centralization, authoritarianism, and paternalism are commonly used to describe French employer/employee relations, and these words are also associated with power distance. Perhaps the most troublesome aspect of the French cultural profile in terms of European works councils is the high scores on uncertainty avoidance and power distance. According to Hofstede, although people from different cultures can cooperate, cooperation is more problematic in groups with high scores on uncertainty avoidance and power distance.41

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France presents a mixed picture regarding participation on European works councils. As Philippe Trouve wrote, “France is a country with Catholic traditions.”42 The belief that workers and owners have mutual rights and obligations is part of the French Catholic tradition. The government supports EU social policy and encourages cooperation by business and labor, which have had experience with national works councils. All these positive factors must be considered in relation to the negative ones, perhaps the most significant being the tradition of confrontation that characterizes French industrial relations. France is neither a consensus society nor one known for a high level of trust, attributes that appear to be essential to the successful operation of a works council. Furthermore, French trade unions lack the strength and resources to help their members participate effectively. In addition, French culture has attributes that will hamper interaction with persons from other cultures as represented by participants on a European works council.

The Nordic Model The remaining member states of the EU will be discussed as groups, which are determined by common features in the countries’ industrial relations systems as set forth by Colin Crouch.43 Denmark, Sweden, and Finland have a number of commonalities relevant for a consideration of EU social policy. The characteristics they share define the Nordic model, as it is called in industrial relations literature. They have strong, centralized employers’ associations and trade unions that have engaged in stable tripartite relations with the government on employee issues. Power has been relatively balanced among unions and employers’ associations, which are bound together by a historic compromise that allocated rights and prerogatives. Governments maintained an arm’slength relationship with the two sides. Industrial peace, full employment, and wage equalization have been hallmarks of the Nordic model. Neocorporatism and works councils also have been common features.44 In the 1990s, the Nordic model has experienced common pressures from economic difficulties and changing attitudes. The changes resulting from these have not been uniform among the three member states. In Sweden, government intervention in the face of an economic crisis eroded the power of the trade union confederation and the employers’ association. Decentralization and conflict followed, and multinational corporations pushed for the right to determine their own labor conditions. The consensus on which the Swedish system was based has diminished.

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Sweden is well known for its prosperous and highly educated population and an advanced economy with strong international involvement. It is a self-consciously egalitarian society with generous welfare programs designed to maintain minimal class divisions. The centralized trade union confederation and the employers’ association have a longterm working relationship. Both sides have sophisticated negotiators guided more by pragmatism than ideology. Swedish managers receive high marks in comparative studies of management on both competence and social responsibility.45 Their employees expect to be consulted on workplace issues and to be paid wages that do not differ markedly from those of their managers. They also have one of the highest rates, for both white-collar and blue-collar employees, of union membership in Europe. Corporatism in Sweden has changed since 1992, when legislation was adopted to end the tripartite structures responsible for overseeing various social programs. In 1993, the system by which labor and employers negotiated a national framework for wage agreements broke down as well. (It also collapsed in Denmark.) At the enterprise level, however, works councils continue to operate in a form of codetermination with employers. Works councils in Nordic countries differ from those in Germany; they are part of the trade union structure. They also lack careful definition by law and thus take various forms in different enterprises. They operate in an open and consensual environment, so that Swedish employees are accustomed to easy communications with management. According to a recent study of employee participation in Europe, Sweden has the “strongest overall implementation of participation practices in Europe.”46 Finland and Denmark share many of the characteristics noted in Sweden. Although Finland is a late entrant into the Nordic model compared to the others, it is perhaps closer to the original model. Sweden and Denmark appear to have experienced more decentralization and loss of corporatist structures than has Finland. Centralized collective bargaining remains strong in Finland, and employers have not challenged the practice to the extent that they have in the other countries.47 As a new member of the EU, Finland has had to incorporate into Finnish law and practice EU social policies. The country has made the changes with little difficulty because of cooperation between the strong labor union movement and the social democratic government. Although the employers’ association has been critical, it has cooperated in the process. The labor unions in Denmark, along with those in Finland and Sweden, have grown in membership in recent years, in contrast to

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trends in the rest of Europe. The percentage of workers in Denmark covered by collective agreements, however, has declined, and the power of the LO, the central labor confederation, is threatened by membership growth in unions that do not belong to the LO. 48 The growth of such unions also challenges traditional ties between labor and the Social Democratic Party because the new unions do not necessarily support the party. Although elements of corporatism in Denmark remain, the national tripartite bargaining arrangements, which were so important in the 1960s and 1970s, have ended.49 The arrangements had provided many of the rules for employer/employee relations; without them Denmark has few laws to regulate the relations, and the demise of the tripartite system leaves Danish workers in a somewhat uncertain situation. One of the unique features of Denmark has been the custom that EU social directives are transposed by the social partners rather than through the usual legislative process. Before the Maastricht Treaty, social directives contained a clause allowing this practice, which subsequently was incorporated into the social chapter of the Treaty.50 In regard to the European works councils, it should be noted that Denmark does not share Sweden’s high rating on participation in the workplace. Denmark’s rankings are in the middle among the ten countries studied by Hubert Krieger and Kevin O’Kelly.51 All three countries have a similar cultural profile. They have low scores on power distance, reflecting their egalitarian tradition. Along with most western European countries, they are quite individualistic. Sweden is classified as the most feminine of the countries ranked by Hofstede, but Denmark and Finland have very feminine cultures compared to most in western Europe. Therefore, participants from the three countries should be cooperative in their relations with other members on EWCs and not need to dominate the proceedings. The widest difference among the three is on uncertainty avoidance. Swedes and Danes are much more comfortable with uncertainty than are the Finns according to the rankings, but even Finland does not rank above average in this regard. Participants from all three countries should bring a pragmatic orientation to the work of the EWCs. Sweden, Denmark, and Finland would appear to be the bestprepared countries to participate in EU social policy in general and European works councils in particular. All three have orderly political processes, which bodes well for the transposition of directives. Denmark is probably the most hesitant of the three, however, when expansion of EU social policy is considered. Citizens in the Nordic countries value employee rights and believe in the right of employee participation. The countries have cultural profiles that should make their representatives

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effective and tolerant members of European works councils. On the other hand, they have less to gain from such councils than do employees from countries lacking a tradition of employee participation.

Other Neocorporatist Systems Austria, Belgium, the Netherlands, and Luxembourg share corporatist characteristics with Germany. They have a decentralized corporatism, and employers are in a more dominant position than those from the Nordic group. All the countries have had experience with works councils and generally tend toward cooperative conflict management. Although these countries are small, they are extensively involved in the global economy. Belgium has been called the mother-in-law of multinational corporations because of the number of MNCs with their European headquarters in Brussels. A number of corporations took advantage of provisions in Belgium law to locate their European headquarters in Belgium for purposes of establishing European works councils. The traditional industrial relations system has been under pressure from employers seeking greater labor flexibility. The national organizations of both unions and employers’ associations, already divided along ideological lines, have weakened. The national government has assumed a major role in setting the framework for wages and working conditions.52 The present turmoil in Belgium, however, has not yet undermined the basic foundations of social relationships. Concertation is valued, and the legitimacy of trade union participation in corporatist policymaking is accepted.53 The Netherlands is one of the largest investors in the United States, and it is highly integrated into the global economy. It also attracted attention in the latter part of the 1990s because of its success in confronting problems that have troubled industrial nations. This has been called the “Dutch miracle,” and the country’s ability to create jobs is considered by some the biggest miracle of all. Observers have sought explanations for the “polder model,” the name given in the press to the process that produced the miracle. Jelle Visser and Anton Hemerijk, two of the most respected commentators on the Netherlands, dislike the term because it implies that the Netherlands has created a model others can copy. They argue that the country’s transformation came about not because of a plan or model but because the country carried out a series of necessary changes needed to meet problems using the “institutional infrastructure for a problem solving style of decisionmaking.”54 They

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also note the importance of social learning and Dutch corporatism in providing an environment for groups to work together to design and implement solutions to current problems. Firms in the Netherlands are known for their lack of hierarchy among employees and managers. Both managers and labor unions are constrained by a society that puts a premium on consensus building, accountability, and responsibility.55 Works councils have been a feature of Dutch industrial relations throughout the postwar period. Employers are required to consult the councils on a number of strategic business decisions before taking the decision. The list of mandatory topics was increased in March 1998, when decisions on introducing new technology and providing security systems were added. If employers and works councils do not agree in a consultation on a mandatory subject, employers must give the works council time to appeal the disputed issue to the Enterprise Chamber of the Amsterdam Court of Appeals before implementing the decision. If the court rules against the employer, the employer cannot proceed.56 This right of appeal is unique among works councils in Europe. Austria lacks the large multinational corporations of the Netherlands and Belgium, but it has an open economy with strong economic links to Germany, and it is trying to build on its former role as a major gateway to eastern Europe. The end of the Cold War and membership in the EU bring challenges to Austria that the country has met with relatively little disruption of its society or industrial relations. The country’s decentralized form of corporatism has operated effectively to restrain labor costs, despite the strain imposed by the linkage between the Austrian and German currencies that preceded European monetary union. Austria has a relatively high rate of union membership among employees and works councils, but both unions and the councils traditionally do not interfere in management prerogatives.57 Austria, the Netherlands, and Belgium show little affinity for each other on Hofstede’s scales except for individualism, where all have rather high rankings. On masculinity and femininity, Austria and the Netherlands are at opposite ends of the chart, with the latter ranked as a highly feminine culture. In terms of participation in EWCs, the Dutch should be more accommodating participants than the Austrians. On the two rankings considered to be most relevant for successful participation on European works councils—power distance and uncertainty avoidance—Belgium has a very high rating on uncertainty avoidance and the other two countries have a more average one. On power distance, Austria surprisingly has the lowest of any country considered, even ranking lower than Israel. The Netherlands has a fairly low rating and Belgium a fairly high one. It is interesting to speculate why three

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countries with so many commonalties in terms of industrial relations should have so little in common culturally and what both of these generalizations mean in terms of participation on European works councils. The findings lead to the expectation that Belgian participants will be more uncomfortable in the rather unstructured opening phases of EWC activity than the Dutch and Austrians, neither of whom should be bothered by lack of procedures or the need to defer to employers when they participate in EWC meetings.

Ireland, Italy, and Spain Colin Crouch places Ireland, Italy, Spain, France, and the UK together in terms of industrial relations because the countries are moving slowly and unevenly from a system characterized by decentralized collective bargaining toward one where governments, influenced by the EU, provide more rights to unions and employees but where the changes do not necessarily affect activities at the company level.58 Italy is characterized by tremendous political instability but amazing economic resiliency. The political party structure that existed throughout most of the postwar era dissolved in the 1990s, disrupting the relationships among groups and parties that had provided the infrastructure for governance. Against the background of political meltdown, however, the Italian economy gave a respectable performance and qualified for membership in the European monetary union. Trade unions, employers, and the government developed a bargaining relationship that led to the resolution of serious, long-term problems on sensitive issues such as incomes policy and social security reform. In effect, the government delegated governmental functions to the social partners in an Italian form of the EU social dialogue. Although Italy, like France, has a trade union movement divided by old ideological differences, Italian unions have joined together to present a unified voice for labor and to act as effective participants in the Italian “concerted economy.”59 Two important developments in the 1990s affect Italian industrial relations. One is that Italian employers’ associations and the labor unions both have increased in power at a time when the opposite is noted in most of western Europe. They used their power to provide Italy with a national incomes policy when similar efforts failed in Sweden, Denmark, and France. The other development concerns employee representation in the workplace. Italy had several forms of works councils operating in an unstructured environment until 1993, when a tripartite

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agreement established rules for RSUs (unitary workplace union representation), which have the authority to carry on workplace bargaining within the framework of the national incomes policy. The new bodies act with the acceptance of employers and have contributed to the revitalization of ties between national trade unions and the rank and file.60 In the 1990s, employers and trade unions have developed a working relationship that observers during the militant 1970s would not have believed possible. Ireland, like Italy, has undergone major changes that have given the country a neocorporatist orientation in the 1990s.61 Employer/employee relations in Ireland were originally structured along lines prevailing in Britain, giving the country a voluntarist, collective bargaining system of industrial relations without any form of works councils. The system was undermined by the large influx of foreign and especially U.S. investment, the Irish intention to break away from British influences and embrace EU norms, and the drive for economic prosperity. U.S. multinational corporations pushed to weaken trade union control over collective bargaining.62 Throughout the 1980s, Ireland struggled to find a process that would create productive employee/employer relations. At the end of the decade, national negotiations between trade union representatives and employers’ associations began to have results. In 1996, the two sides negotiated the important agreement “Partnership 2000” that established an economic and social program as well as a pay agreement. In 1998, the program resulted in a National Centre for Partnership that links employees and managers in enterprises into a participative relationship to improve the quality of the enterprise and to improve training. The national trade union confederation and the employers’ association will work together to facilitate its development inside Irish companies.63 At the end of the twentieth century, Ireland appears to have broad support to bring its institutions into line with EU norms and also to maintain a labor market attractive to international capital. The direction of its movement has many parallels with Italy’s changes, even though the two started from different points. Because Spain has made such a remarkable transition from the Franco era to a typical western European-style government and economy, it is difficult to remember that its institutions are still finding their roles in the new system. Employers’ associations and trade unions are post-Franco institutions, even though some have roots as illegal organizations in the Franco era. The current industrial relations system has apparent similarities with others in western Europe. It has been described as an “unsteady concertation,” with collective bargaining at the grass-roots level and weak corporatism at the national level.64 The

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trade unions are divided by ideology, but they cooperate as they do in Italy. The employers’ association fights for flexibility but recognizes the role of trade unions. The government has played a more assertive role in shaping industrial relations, perhaps, than have the governments of Italy or Ireland. Employees have works councils to provide participation, and according to some research, Spanish employees show a surprising interest in participation, both formally and informally, despite their lack of experience during the Franco era.65 In April 1998, Spain adopted a national action plan for employment in compliance with the EU employment policy; it demonstrates the interaction between EU policies and Spanish policy. In order to qualify for membership in the European monetary policy, Spain has had to follow an austerity program, and to ensure support for the program, the government engaged in a dialogue with unions and employers’ associations. Unions accepted the austerity measures in the hope that more jobs would be created. In 1997, Spain had the highest rate in the EU for job creation but still had unemployment rates of over 20 percent. The new action plan is ambitious, and one of its guidelines requires that the social dialogues continue and intensify.66 The plan promises to move the social partners into a larger role in national policy, not to the extent noted in Italy and Ireland but well beyond their recent role. When the rankings of Italy, Ireland, and Spain on Hofstede’s scales are compared, they show no surprises. Ireland is lower than the other two on both power distance and uncertainty avoidance. Spain is more feminine and less individualistic than the other two. Spain and Italy are both fairly high on uncertainty avoidance and average on power distance, the two variables considered to be most relevant for successful participation on EWCs. Culture would not appear to be a barrier to successful participation by representatives of any of the three. In addition, managers and employees have managed to work together through recent decades of instability, so a degree of relevant social learning has already occurred.

Less Developed Member States Portugal and Greece are periphery countries of the EU, in terms of socioeconomic development as well as geographically. They have unregulated labor markets and unstable employment patterns. Colin Crouch does not believe the two countries will acquire the base for the neocorporatism found in most EU member states even when they overcome their poverty.67

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In many respects, Greece is on the fringe of European developments. Its troubled political history, which lasted into the 1970s, leaves a legacy that affects the entire society. Modernization of Greek institutions is hindered by lack of trust and inadequate education. Many employers, accustomed to the unregulated conditions of the past, resist laws to modernize the economy, while many trade union leaders, recalling past abuses of authority by officials, are suspicious of efforts to modernize. Attempts in the 1980s to provide modern laws for workplace participation ended in a “sorry episode” when neither employers nor unions grasped the potential of the program.68 Collective bargaining at the enterprise level was not even sanctioned by law until the 1990s, although it operated at higher levels earlier. A trend to decentralization in collective bargaining seems to be occurring since the change in the law. Meanwhile, Greek trade unions are weak and membership is probably declining. On the other hand, the employers’ association is growing and gaining power.69 Because of the weak and unstructured situation in Greece, EU social policy has been influential in shaping modernization efforts, which under the influence of EU law include employment contracts stipulating the terms of employment, encouragement of women’s employment, and the beginning of workplace participation. According to Nancy Papalexandris, training programs financed by the EU not only have promoted job skills, they also have encouraged intercultural learning to familiarize Greek managers and employees with norms and practices prevailing in the EU. 70 Modernization is occurring in Greece, but the process is moving much more slowly than it did in Spain, which also had a bitter heritage. Portugal, like Greece, had to wait on political change in the 1970s to begin its transition to a modern western European state. It also was poor and on the periphery of Europe. Unlike Greece, however, Portugal had a heritage of corporatism under an authoritarian government and also one of paternalistic policies to protect workers. Many in Portugal remain suspicious of neocorporatist policies because of experiences in the Salazar era, and employers have struggled to obtain flexibility in the face of old legislative protections. From 1987 until 1995, Portugal’s neoliberal government carried out a number of reforms that moved the country closer to the norms in EU member states. It deregulated and privatized the economy and lessened the government’s role in industrial relations. The employers’ association, encouraged by the government’s role, bargained for wage limits and more flexibility. The resulting agreements were extended to cover almost all Portuguese employees by government decree. In 1995,

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a center-left government was elected but had little scope for reversing policies because of the Maastricht Treaty obligations and the structural reforms of the previous decade.71 Despite the negative legacy of corporatism, tripartism and worker participation have made some advances. The country has a system of dual employee representation in enterprises. A law exists for electing works councils, and unions have the right to a separate council representing union members. In reality, however, many workplaces either have no councils or the councils are inactive.72 Since 1990, tripartite negotiations also have been conducted among the government, the employers’ association, and the trade unions. In 1996, the three reached an important agreement on competitiveness and employment that paralleled many such agreements among member states, in which employers promise to create jobs in exchange for greater flexibility. In the summer of 1998, the government adopted a five-year employment plan in conformity with the EU employment guidelines; it was designed to complement the 1966 tripartite agreement. One of the plan’s main priorities is education for the workplace, low skills being a serious problem among the Portuguese unemployed. Another priority is to assist women and other socially disadvantaged groups in finding employment. The author of an article about the government’s plan had some skepticism about the plan’s success, but “at least the EU may provide an impetus to make real progress in these areas—the EU’s employment strategy provides for an annual review and assessment by the Council and the Commission of all members states’ employment plans.”73 Portugal and Greece are very similar in terms of their cultural profiles on three of Hofstede’s four variables. They rank together at the high extreme for uncertainty avoidance and they rank the lowest among western European countries for individualism. Both are in the middle range for power distance, but Greece ranks as more masculine and Portugal as more feminine. The low ranking on individualism is not surprising because individualism seems to be a variable that changes with economic development, and the two countries are lagging behind other EU partners in this regard. Although the two countries have little experience with employee participation, nothing in their cultural profiles or their recent history indicates that their citizens will have unusual difficulties with EWCs. Like their fellow periphery nations, Spain, Ireland, and Italy, they have learned to cope with change. They would be more comfortable participating in works councils that operate under detailed agreements, but they are unlikely to be very assertive participants.

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Conclusion Although the above survey of member states is brief, it does bring into focus a number of generalizations relevant to a study of EU social policy. An obvious one is that all the member states face three pressures that influence policy formation. Global competition, the EU (especially the criteria for monetary union), and unemployment all require a policy response from national governments. The responses were found to be surprisingly similar given the doubts raised in Chapter 2 about the extent of convergence among member states. All the governments tried to apply nostrums based on the teachings of liberal economics, but they had difficulties gaining acceptance for their proposals until they invoked the criteria for monetary union. Their proposals imposed austerity but stopped short of full-scale classical economic liberalism. Norms and values drawn from social Catholicism and socialism continue to infuse moderation into efforts to transform the welfare state into a Schumpeterian workfare state. The politics of the third way, which characterizes the position of many of the thirteen social democratic governments in the EU, is an example of this uneasy balance. A number of governments engage in tripartite negotiations to gain acceptance for difficult policies such as wage restraint. As mentioned in the case of Portugal, the use of tripartitism in countries without the consensus traditions usually associated with corporatism is a new strain of neocorporatism motivated more by expediency than by consensus. Interest groups play many roles in the policy process in member states, including quasigovernmental roles for employers’ associations and trade unions. Multilevel governance characterizes the implementation process. In a related finding, EU directives have had a larger influence on industrial relations law and practice than was expected. This finding is particularly marked in Spain, Greece, and Portugal, all of which had to restart their industrial relations systems following regime changes in the 1970s. The finding also applies to other countries such as Italy, France, and the UK to a lesser extent. In addition, trade unions, despite their differences, have all moderated their practices in a desperate effort to save jobs. The lack of patterns among the findings regarding culture as measured by Geert Hofstede is interesting. EU member states are distinct from one another in terms of the four cultural variables. Practices may be converging, but not cultural characteristics (with the exception of individualism); the implication of these cultural differences will be considered in Chapter 8.

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Employers and employees throughout the EU, with the exception of the UK, have experience in forms of joint consultation, ranging from works councils to tripartite negotiations at the national level, and the process appears to work well within countries regardless of their cultural profile. The question for the EU is whether the consultations will work when the participants bring different national cultures into a meeting room. For example, culture and experience predispose Dutch and German participants to expect a working environment with concrete outcomes; the French, however, have lower expectations and are more willing to accept managerial dominance of the process. The EWCs promise to be a cultural melting pot that will produce interesting results.

Notes 1. Heinrich Siedentopf and Christoph Hauschild, “Comparative Conclusions,” in Heinrich Siedentopf and Jacques Ziller, eds., Making European Policies Work, Vol. 1 (London: Sage Publications, Ltd., 1988), p. 78. 2. Paul Sabatier and Daniel Mazmanian, “The Implementation of Public Policy: A Framework for Analysis,” Special Issue 2, Policy Studies Journal 8, no. 4 (1980): 543. 3. Heinrich Siedentopf and Jacques Ziller, “Foreword,” in Siedentopf and Ziller, eds., Making European Policies Work, Vol. 1 (London: Sage Publications, Ltd., 1988), p. 6. 4. Ibid., p. 58. 5. “Germany: Survey,” Financial Times, November 18, 1998, p. V. 6. Karl Romer, Ulrich Dreikandt, and Claudia Hauptmann, Facts About Germany (Braunschweig, West Germany: Bertelsmann, 1989), p. 269. 7. Bob Hanke and David Soskice, “The Wonderful World of Capitalisms,” European Players in Global Competition, Special Issue of Die Mitbestimmung, the magazine of the Hans Bockler Stiftung labor movement, 1998, p. 9. 8. Federal Minister of Labour and Social Affairs, Federal Republic of Germany, Co-determination in the Federal Republic of Germany (Bonn: Der Bundesminister fur Arbeit und Sozialordnung, 1980), p. 103. 9. Otto Jacobi, Berndt Keller, and Walther Muller-Jentsch, “Germany: Facing New Challenges,” in Anthony Ferner and Richard Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), pp. 204–207. 10. Ibid., pp. 190–191. 11. Kathleen Thelen and Lowell Turner, “Codetermination in Comparative Perspective,” European Players in Global Competition, Special Issue of Die Mitbestimmung (1998), p. 16. 12. European Commission, Employment in Europe: 1997 (Luxembourg: Office for Official Publications of the European Communities, 1997), pp. 81–83.

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13. The figures were produced by the Economic Policy Institute and published in the Financial Times, September 18, 1998. 14. Geert Hofstede, Cultures and Organizations: Software of the Mind (New York: McGraw-Hill, 1997), p. 14. 15. Ibid., pp. 26, 53, 85, 113. 16. Sabine Pag and Wolfgang Wessels, “Federal Republic of Germany,” in Heinrich Siedentopf and Jacques Ziller, eds., Making European Policies Work, Vol. 2 (London: Sage Publications, Ltd., 1988), pp. 169, 189. 17. Paul Edwards, Mark Hall, Richard Hyman, Paul Marginson, Keith Sisson, Jeremy Waddinton, and David Winchester, “Great Britain: From Partial Collectivism to Neo-Liberalism to Where?” in Ferner and Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), pp. 15–16. 18. European Court of Justice, Brown v. Rentokill Limited, Case C394–96, June 30, 1998. 19. Financial Times, November 19, 1997. 20. Christel Lane, “The Social Constitution of Supplier Relations in Britain and Germany: An Institutional Analysis,” in Richard Whitley and Peer Hull Kristensen, eds., The Changing European Firm: Limits to Convergence (London: Routledge, 1996), p. 276. 21. Charles Kindleberger, A Financial History of Western Europe, 2nd ed. (New York: Oxford University Press, 1993), pp. 200–201. 22. Christel Lane, Management and Labour in Europe: The Industrial Enterprise in Germany, Britain and France (Aldershot, Engl.: Edward Elgar, 1989), pp. 11–12. 23. Reported in Financial Times, August 16, 1999. 24. Ibid., September 18, 1998. 25. Edwards et al., “Great Britain,” in Ferner and Hyman, eds., Changing Industrial Relations in Europe (Oxford: Blackwell Publishers, 1998), p. 21. 26. The information on culture is largely based on the work of Hofstede cited above. 27. John Zysman, Political Strategies for Industrial Order: State, Market and Industry in France (Berkeley: University of California Press, 1977), p. 51. 28. Richard F. Kuisel, “The France We Have Lost: Social, Economic and Cultural Discontinuities,” in Gregory Flynn, ed., Remaking the Hexagon: The New France and the New Europe (Boulder, Colo.: Westview Press, 1995), p. 43. 29. Robert Graham, “Turning Back the Clock,” Financial Times, July 29, 1999, p. 13. 30. Julien Savary, French Multinationals (London: Frances Pinter, 1984), pp. 157–187. 31. Janine Goetschy, “France: The Limits of Reform,” in Ferner and Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), p. 371. 32. Lane, Management and Labour in Europe, pp. 86–114. 33. Philippe Trouve, “Managing People in France,” in Terry Garrison and David Rees, eds., Managing People Across Europe (Oxford: Butterworth, 1994), p. 85.

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34. Christoph Kohler and James Woodward, “Systems of Work and SocioEconomic Structures: A Comparison of Germany, Spain, France and Japan,” European Journal of Industrial Relations 3, no. 1 (March 1997): 62–63. 35. Jean-Ives Boulin, “Trade Union Modernization in France: Is There Still Time?” Transfer 2, no. 1 (February 1996): 131. 36. Christian Dufour and Adeleid Hege, “The Transformation of French Industrial Relations: Glorification of the Enterprise and Disaffection on the Streets,” European Journal of Industrial Relations 3, no. 3 (November 1997): 349. 37. Ibid., p. 337. 38. Mark Kesselman, “Conclusion,” in Mark Kesselman, ed., The French Workers’ Movement: Economic Crisis and Political Change (London: George Allen & Unwin, 1984), p. 315. 39. Boulin, “Trade Union Modernization,” p. 140. 40. Janine Goetschy, “The Neo-Corporatist Issue in France,” in Ilja Scholten, ed., Political Stability and Neo-Corporatism (London: Sage Publications, Ltd., 1987), p. 191. 41. Hofstede, Cultures and Organizations, p. 237. 42. Trouve, “Managing People in France,” in Garrison and Rees, eds., Managing People Across Europe (Oxford: Butterworth, 1994), p. 63. 43. Crouch, “Convergence or Continuing Diversity?” in Bekemans and Picht, eds., European Societies Between Diversity and Convergence, Vol. 2 (Brussels: European Interuniversity Press, 1996), pp. 151–155. 44. Flemming Ibsen, “The Role of the State in Industrial Relations in the Nordic Countries,” in Josephine Browne, ed., The Role of the State in Industrial Relations, Vol. 3 of the Official Proceedings of the Fifth IIRA European Regional Industrial Relations Congress (Dublin: Oak Tree Press, 1997), pp. 151–159. 45. Charles Hampden-Turner and Alfons Trompenaars, The Seven Cultures of Capitalism (New York: Doubleday, 1993), pp. 235–248. 46. Hubert Krieger and Kevin O’Kelly, “The Extent of Participation in Europe,” Transfer 4, no. 2 (Summer 1998): 228. 47. Karl Lilja, “Finland: Continuity and Modest Moves Towards Company-level Corporatism,” in Ferner and Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), p. 171. 48. Steen Scheuer, “Denmark: A Less Regulated Model,” in Ferner and Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), pp. 146, 165. 49. Ibsen, “The Role of the State,” in Browne, ed., Role of the State in Industrial Relations (Dublin: Oak Tree Press, 1997), p. 181. 50. Renate Hornung-Draus, “The Union of Industry and Employers’ Association in Europe—UNICE,” in Wolfgang Lecher and Hans-Wolfgang Platzer, eds., European Union—European Industrial Relations? (London: Routledge, 1998), pp. 195–196. 51. Krieger and O’Kelly, “Extent of Participation,” p. 228. 52. Jacques Vilrokx and Jim Van Leemput, “Belgium: The Great Transformation,” in Ferner and Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), pp. 337–342. 53. Armand Spineux, “Trade Unionism in Belgium: The Difficulties of Major Renovation,” in Guido Baglioni and Colin Crouch, eds., European Industrial Relations (London: Sage Publications, Ltd., 1990), p. 59.

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54. Jelle Visser and Anton Hemerijk, “A Dutch Miracle”: Job Growth, Welfare Reform and Corporatism (Amsterdam: Amsterdam University Press, 1997), p. 185. 55. Arndt Sorge and Ad van Iterson, “The Netherlands,” in Ingrid Brunstein, ed., Human Resource Management in Western Europe (Berlin: Walter de Gruyter, 1995), pp. 194, 207. 56. European Union, “Works Councils and Their Right of Appeal—Current Trends,” Eironline, on-line server of the European Industrial Relations Observatory, October 1998. 57. Franz Traxler, “Austria: Still the Country of Corporatism,” in Ferner and Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), p. 254. 58. Crouch, “Convergence or Continuing Diversity?” in Bekemans and Picht, eds., European Societies Between Diversity and Convergence, Vol. 2 (Brussels: European Interuniversity Press, 1996), p. 152. 59. Marino Regini, “Still Engaging in Corporatism? Recent Italian Experience in Comparative Perspective,” European Journal of Industrial Relations 3, no. 3 (November 1997): 262–265. 60. Ida Regalia and Marino Regini, “Italy: The Dual Character of Industrial Relations,” in Ferner and Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), p. 477. 61. Jurgen Grote and Philippe Schmitter, “The Renaissance of National Corporatism: Unintended Side-effects of European Economic and Monetary Union or Calculated Response to the Absence of European Social Policy?” Transfer 5, nos. 1–2 (Spring-Summer, 1999): 44–45. 62. Patrick Gunnigle, Michael Morley, and Kieran Foley, “Ireland,” ed., Human Resource Management (Berlin: Walter de Gruyter, 1995), in Brunstein, ed., Human Resource Management in Western Europe (Berlin: Walter de Gruyter, 1995), pp. 150–153. 63. European Union, CEDEFOP INFO, no. 2, publication of the European Centre on Vocational Training in the European Union (1998), p. 17. 64. Jordi Estivill and Josep M. de la Hoz, “Transition and Crisis: The Complexity of Spanish Industrial Relations,” in Baglioni and Crouch, eds., European Industrial Relations (London: Sage Publications, Ltd., 1990), p. 289. 65. Kohler and Woodward, “Systems of Work,” pp. 63–64. 66. European Commission, InforMISEP Policies, no. 62 (Berlin: European Employment Observatory, Summer 1998), pp. 7–8. 67. Crouch, “Convergence or Continuing Diversity?” in Bekemans and Picht, eds., European Societies Between Diversity and Convergence, Vol. 2 (Brussels: European Interuniversity Press, 1996), pp. 153–154. 68. Nicos D. Kritsantonis, “Greece: The Maturing of the System,” in Ferner and Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), p. 519. 69. Christos A. Ioannou, “Change and Continuity in Greek Industrial Relations,” in Browne, ed., Role of the State (Dublin: Oak Tree Press, 1997), pp. 36–46. 70. Nancy Papalexandris, “Greece,” in Brunstein, ed., Human Resources Management (Berlin: Walter de Gruyter, 1995), pp. 126–127. 71. Reinhard Naumann, “Portugal,” in Collective Bargaining in Western Europe 1994–1995 (Brussels: European Trade Union Institute, 1995), pp. 127, 134–135.

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72. Jose Barreto and Reinhard Naumann, “Portugal: Industrial Relations Under Democracy,” in Ferner and Hyman, eds., Changing Industrial Relations in Europe, 2nd ed. (Oxford: Blackwell Publishers, 1998), p. 415. 73. “Portugal: Government Attempts Labour Market Reform,” European Industrial Relations Review, no. 295 (August 1998): 24.

5 The European Works Council Directive: Evolution and Content

T

he discussion of employee rights to information and consultation in transnational companies has been going on in the European Union for more than three decades and has been the subject of heated debate among national governments as well as the social partners (employers’ associations and trade unions). While these rights were approved in a limited sense within the context of EU directives on collective dismissals and transfer of company ownerships, more ambitious Commission proposals were gridlocked until the 1990s. In an attempt to accommodate its critics, the European Commission offered more flexible options to governments, employers, and labor. In order to appreciate the difficulty of the Commission’s task, it is necessary to refer to the first enlargement of the EU in 1973, which brought two basic industrial relations traditions together: the legalistic one of the six existing member states and the voluntaristic one of the three new members. From that point, the Commission attempted to move from a purely legalistic approach toward one involving both legalism and voluntarism. Directives began to include provisions for negotiated arrangements with equivalent effect. The European Company Statute (1970) was the first proposal to include provisions for European works councils in transnational companies.1 The proposal for a new legal form of company in Europe combined several fundamental economic and social issues, generating heated debate on the principle and the degree of worker involvement in company affairs. The structured provisions for employee participation were particularly opposed by the new members of the European Community, 89

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forcing the Commission to seek a more acceptable way to provide for employee participation. One discernible thread running through EU thinking is the belief that when the EU gives advantages to capital, such as the European Company or the Single Market, the advantages must be accompanied by compensatory arrangements for employees, such as rights within their companies. Two examples illustrate this point. The Davignon Report on worker involvement systems with regard to the European Company Statute (1997) reflects the long-term underlying view in Europe: “The type of labor required by European companies cannot simply be expected to obey employer instructions. Workers must be closely and permanently involved in decision-making at all levels of the company.”2 The advisory group on competitiveness also issued a report indicating that mainstream European leaders believe increased employee involvement in work organizations is conducive to competitiveness and to improved product quality.3 The right of employees to be informed and consulted about activities in their company has broad legitimacy in the EU. While the debate about including of a European works council within the proposed European Company Statute continues, the idea of EU legislation on informing and consulting employees has progressed. In the late 1970s, two commissioners became the focal point of an attempt by the Commission to promote employee rights to information and consultation. They came from opposite ends of the political spectrum: Etienne Davignon from the political right in Belgium and Henk Vredeling from the social democratic left in the Netherlands. The socalled Vredeling Proposal (1980) embodied new Commission thinking that the principle of employee rights could be protected without the requirement for works councils, which were disliked by the new member states. 4 Transnational corporations would be required to provide certain types of information to their employees, but how they would do so would not be stipulated by law. The Commission proposal represented a binding approach based on a consensus among many member governments from across the whole political spectrum at that time. The proposal encountered strong opposition from the Union of Industrial and Employers’ Confederation of Europe (UNICE); the public sector employers’ organization, Center for European Public Enterprises (CEEP); and a wide range of other bodies, especially U.S. multinationals. Indeed, the U.S. administration at that time indicated that such a directive would damage U.S.-EC relations, and a number of proposals were presented in Congress to protect U.S. multinational interests against enforced information disclosure. While unable to influence the Commission and the

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Economic and Social Committee, the opposition forces succeeded in having members of the European Parliament introduce over two hundred amendments, which stopped any further progress of the proposal in 1982. In 1980, a Commission study on information and consultation procedures pinpointed a basic problem: transnational companies were well equipped to operate over national borders, while employees and their representative organizations were not. The national rights of employees could not be exercised in the transnational company context. Professor Van Langendonck, author of the study, believed the Commission had a responsibility to demonstrate to Europe’s citizens the value of the European Community to their lives by addressing just such issues.5 Events would show, however, that some national governments wanted to limit developments in this field. Their reservations were enough to block progress on these early proposals, which would have required unanimous consent of the Council of Ministers to be adopted. At least three major obstacles impeded the realization of EU proposals. First, and probably the most important, was the opposition of employers (European and non-European) to the whole idea and their ability to unite and lobby against proposals. They were aided by the second key factor, which was unavailable later, namely, the legal basis of Article 100 in the Treaty of Rome and its mandatory unanimous voting procedure in the Council of Ministers. This meant that any one government could veto the proposal. Third, the diversity of employee representation practices in the member states posed a technical obstacle that nourished the employers’ political approach. Finally, the Vredeling Proposal engendered opposition from several governments with state-owned and/or capitalized undertakings. The Vredeling Proposal was intended to cover transnational enterprises and also national enterprises with complex structures. In practice several member states had significant public sector companies that could have been affected by the proposal. While the debate on employee involvement in companies continued during the 1980s, it was paralleled by another development that would catalyze the employee involvement issue significantly, if indirectly. This was the ratification of the Single European Act (SEA) in 1986–1987. The act was important for future EU social policy for two reasons. First, it contained two articles that constituted the Social Chapter—Articles 118A and 118B. The first of these opened the door for changing the Council’s voting procedure for legislation on the work environment by introducing qualified majority voting (QMV). The new procedure eliminated the veto by a single member state and required,

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in practice, two large and one small member states voting together as a minority to block a Commission proposal. The second article gave the Commission the right to request that the social partners negotiate EU agreements, which could be transposed into EU directives if the parties so decided. These innovations contributed to the prospects for adopting an employee information and consultation proposal in the early 1990s, by introducing a QMV procedure for certain social legislation, thus eliminating the veto in Council, and by giving the Commission a more formalized role in bringing both sides of industry—the European Trade Union Confederation (ETUC) and UNICE/CEEP—together. The second effect of the SEA was to fast-track the completion of the EU internal market by providing for the adoption of over three hundred economic and commercial legislative proposals by QMV procedures. The act presented employers with a barrier-free market of approximately three hundred million people and provided employees some form of employee participation in the transnational enterprises that would thrive in the new internal market. This legislative and political development in the mid-1980s was mirror-imaged in 1991 in the form of a new treaty, the Maastricht Treaty on European Union. The Social Chapter in the treaty expanded the power of the social partners to negotiate agreements by requiring the Commission to cede to the ETUC and UNICE/CEEP the task of concluding EU agreements in areas of social legislation. The proposal would originate with the Commission, and both social partners would undertake the task voluntarily. Therefore, when the Commission returned to center stage with a new proposal for employee rights to information and consultation in transnational companies in the early 1990s, the political, institutional, legal, and procedural parameters were significantly different from those ten years earlier. The scope for opposition to the proposal was much more limited; moreover, the British government, a major opponent, removed itself from the negotiations. (The British government had won the right to exclude itself from EU social legislation, referred to as “opting out,” in the treaty.)

The Evolution of the Directive, 1990–1996 As the completion of the European internal market progressed into the early 1990s, the issue of employee rights in transnational undertakings came back on the agenda with added urgency. The Commission launched a proposal for a European works council (EWC) in 1991. The

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long process of discussion and debate on suitable arrangements for informing and consulting employees in EU transnational undertakings entered its final phase with the publication of the new proposal. It failed to receive unanimous support from all members in the Council of Ministers, however, and the unanimity requirement was still in force.6 When the new Maastricht procedure came into force in November 1993, the Commission announced its intention to utilize the procedure set out in the Agreement on Social Policy to process the proposal. The Commission, therefore, changed the legal basis for the directive, subjecting it to QMV in the Council and removing it from the vulnerability of a single country veto under the unanimous voting procedure. The Commission requested that the ETUC and UNICE conclude an agreement that could be transposed into EU law if both organizations so wished, and failing this, the Commission would launch a legislative initiative that could be adopted by the Council by a qualified majority vote. This is exactly what happened. The social partners failed to negotiate an agreement, and the initiative passed back to the Commission. The European commissioners, meeting on April 13, 1994, approved a proposed draft directive. Its text was based on a draft approved by a majority of the members’ governments in a Council meeting in October 1993 and included changes coming from the European Parliament, the tripartite Economic and Social Committee, and consultations with national administrations. The proposal was ready for consideration by the Council. In June 1994, both the ETUC and UNICE issued statements on the eve of the Social Council meeting on the directive. The statements, however, reflected very different attitudes to the proposals. The UNICE statement urged the member governments meeting in the Social Affairs Council to reject the Commission proposal, which it believed would cause conflicts and damage industrial relations at both European and company levels. The statement suggested that if the Council adopted a common position, the future of the social dialogue would be in question.7 The ETUC statement, on the other hand, called for the adoption of a common position that it hoped could be finalized at the October Social Council meeting, following a second reading in the European Parliament. ETUC General Secretary Emilio Gabaglio said it was the first social initiative with “added value” that could consolidate social dynamics and industrial relations.8 The Social Affairs Council adopted a common position, under the Maastricht social policy agreement procedures, on the Commission draft directive on June 22, 1994, with the abstention of only the Portuguese minister (the UK excluded itself from the decision-making

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process through its opt-out from the Social Chapter of the Maastricht Treaty). The only change to the Commission’s proposal was made at the request of the French minister: it increased the negotiating period before subsidiary requirements come into effect from two to three years. In the period from April to September 1994, therefore, all stages of the procedure were completed, and on September 22, 1994, under the presidency of the German government and employing the QMV procedure of the Maastricht protocol, the European Works Councils Directive was approved by all eleven member states’ governments, except of course, the British. The EU had produced the first international legislation according employees in transnational companies rights to information and consultation.9 It is relevant to ask why the social partners failed between 1993 and the spring of 1994 to conclude a voluntary agreement, and how, after three decades, Europe’s trade unions achieved a major policy objective of securing European legislation on workers’ rights in multinational enterprises. Any such discussion must start with the positions adopted by UK Conservative governments regarding the EU role in social policy in general and the idea of workers’ rights in particular. The British government’s hostility to the Commission’s approach to EU social policy had already surfaced in the late 1980s. In spite of signing the Single European Act, the government was the only one that refused to sign the Charter of the Fundamental Social Rights of Workers in 1989.10 (See Chapter 3). Undeterred, the Commission in early 1990 had launched a social action program covering some but not all the subjects referred to in the Social Charter. Among these was a commitment to take action on employee participation rights. This battle had already been joined when discussions on the new Treaty on European Union began in earnest. Second, there was believed to be a political resonance between the British employers’ organizations and the government on this issue. For some observers, the positions adopted by these British institutions arose from strong ideological convictions rather than from a more measured political strategy. The situation was not helped when the president of the Commission, Jacques Delors, addressed the annual congress of the British Trades Union Congress (TUC) in 1988. Whatever misgivings the trade unions had about the EU were put aside from then on. The Commission was perceived as the provider of social- and labor-related legislation throughout the EU, including Britain, whereas the national government was seen as threatening long-standing protective labor legislation; the EU was now the only entity from which the unions could expect even

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minimal legal standards. Moreover, the government placed less value on national consultation with unions and employers than had previous governments, and it had dismantled several bodies in which this took place. The government’s orientation appears to have galvanized the British unions’ determination to work through the European institutions to achieve and secure advances in social and labor legislation. This was manifested in the opening of a permanent British union office in Brussels that has continued in the period of Labour government since May 1997. (See Chapters 6 and 7 for more discussion of the UK government role.)

The Content of the Directive We will consider here the broad areas of the directive’s content rather than a detailed point-by-point examination, which can be found in legal texts.11 Enterprises employing more than a thousand employees and having at least 150 in two or more countries of the EU and/or the European Economic Area (EEA) are covered by the directive. The directive states that employees of European Community–scale undertakings must be informed and consulted when decisions affecting them are taken in a member state other than the one in which they are employed; the forum for this is in the EWC or an equivalent information and consultation procedure. This process must occur at least once a year. From 1994 to 1996, the directive covered fourteen EU countries and three EEA countries (Norway, Iceland, and Liechtenstein). Following the UK elections in May 1997, the new government signed the Social Chapter (opting in to its provisions) and became the fifteenth EU member state as of December 1999. Consistent with the European Commission’s practice, companies were given three options in the directive. They could opt for concluding voluntary agreements (so-called Article 13 agreements) in the period from September 22, 1994, until the same date in 1996, when the directive was finally transposed into national legislation. Such agreements did not have to comply with national transposition measures. Management and employees, as the sole actors, had considerable flexibility. Second, after the 1996 date companies were subject to provisions involving a special negotiating body (SNB) procedure detailed in the directive. Agreements under this procedure are known as Article 6 agreements and must contain at least the mandatory minimum provisions listed in the directive, which are called the subsidiary requirements of the directive. The minimum requirements cover the competencies of the

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EWC, the composition and election or appointment of employee representatives from the countries in which the multinational has operations, the size of the EWC, frequency of EWC meetings (at least once a year), a comprehensive list of the type of information to be provided by the management to the EWC, and the obligation of management to cover the costs of the EWC operation. Under Article 6, central management or at least one hundred employees or labor unions can call for the establishment of an SNB whose function is to negotiate an agreement for the company. In a number of countries—for example, Germany, Denmark, Spain, the Netherlands— the SNB procedure can be initiated by requests from employees to either local or central management. The directive specifies the size of the SNB—between three and seventeen—and its composition; it must have an employee representative from each country in which the enterprise has operations and supplementary members according to the size of national establishments. The transposition working party recommended the addition of one extra member from the country in which at least 25 percent of the workforce was concentrated, two extra seats for countries having more than 50 percent of the workforce, and three extra seats for those countries with more than 75 percent. The recommendations have been adopted by the majority of countries. In addition, the size of the SNBs can be (and has been) exceeded in some countries, and the maximum of seventeen has been excluded from the legal texts. In short, a degree of flexibility has been incorporated into the national situations to accommodate industrial relations realities such as workforce distribution. The SNB has to negotiate with central management, which is legally obliged to meet with the SNB and produce a written agreement on the scope, functions, composition, and the term of office of the EWC or equivalent procedure. This negotiation has to start as soon as possible after the enterprise has been informed about the appointed SNB members. The parties may, however, exercise discretion as to the method of negotiation they follow, the use of external experts such as union officials and academic researchers, and the holding of parallel or preparatory meetings. The costs of the SNB, the use of an expert, and the EWC expenses are borne by the company on the basis of national legislation. The directive specifies four possible outcomes from SNB deliberations. First, the SNB can decide not to proceed with a negotiating procedure with central management. Second, an agreement for an EWC can be concluded with central management. Third, the SNB and management can agree on an information and consultation procedure. Finally, a mandatory EWC (the so-called subsidiary requirement) can emerge if

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both sides agree, or if management refuses to negotiate, or if an agreement fails to materialize within three years. National legislation in some countries provides for variations or additions to these circumstances. For example, in Spain the minimum subsidiary requirement can kick in if management unilaterally suspends negotiations with the SNB. The agreement negotiated by an SNB includes details about the composition of the EWC, the functions and procedures of information and consultation, the venue and frequency of EWC meetings, the durations of the agreement, and other details relating to the EWC’s operation and activities. Such agreements can and do have provisions above those specified in the subsidiary requirements. The third and final fall-back option covered the situation where central management refuses to negotiate with their workforce representatives within six months of a request to do so; in such a case the directive’s minimum provisions apply (the subsidiary requirement). Agreements reached under any of the four options must respect the minimum requirement of the directive, and they can be voided if they introduce provisions below these minima. Agreements reached under either of the first two options can provide for participation of union officials in the work of the EWC alongside employee representatives. Including union officials is not possible under the third option. According to the EWC directive, companies must inform and consult employees concerning economic and financial developments, restructuring, and company location or relocation. In practice, information and consultation issues have implications for the workforce of the company. Included in the catalogue of specific subjects are mass dismissals, mergers and downsizing, relocation of production, introduction of new technologies and working methods, changes in the organization of the business, development of quantitative and qualitative employment levels, and forecasts about the development of the business, production, and sales. The directive does not provide details about who serves as employee representatives, and it does not designate labor unions as employee representatives. This task is delegated to the national authorities who, in the transposition process, may choose to name unions as representatives and/or give them powers to negotiate national agreements affecting the transposition of the directive. The directive does designate a company’s central management as the negotiating partner for the employer’s side. The central management may be headquartered within the EU/EEA, but if the headquarters is outside the EU/EEA, then a subsidiary, usually the largest employing site on EU territory, is nominated as the central management for the purposes of the directive.

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Although the EWC directive deals primarily with the institution of EWCs, the directive also refers to procedures of equivalent effect. The reference was included as the result of discussions with employers who claimed that most companies had procedures for informing and consulting employees—individual letters, staff meetings, e-mail, video conferences, and others—and these arrangements mitigated the need for EWCs. While skeptical of the effectiveness of such arrangements, the drafters acquiesced to employer demands to include procedures of equivalent effect in the document.

Conclusion The adoption of the EWCD is a milestone, not an end point, in the long history of employee information and consultation rights in the EU. In 1997, the Council of Ministers adopted a directive to extend the terms of the EWCD to the UK. 12 In addition, the EU is at work on another proposal for a general framework directive about information and consultation practices in the member states. The idea that took more than a quarter of a century to come to fruition now is poised to become a defining characteristic of EU social policy. The contents of the EWCD were carefully crafted to provide a balance between essential minimum standards and limited intrusion into existing practices in the member states. National governments must ensure that employees in multinationals covered by the directive are informed and consulted on issues relevant to them, but the players have numerous options for achieving the objective. The directive is a delicate mechanism that, if properly balanced, will provide European employees in multinationals with rights unknown to their counterparts in other parts of the world. If the balance is not correct, however, multinationals may be burdened with a white elephant in their organizational structure, and employees will know the frustration of meaningless participation. The directive pays due respect to the principle of subsidiarity. Member states have the freedom to adapt the directive’s objectives to existing national practices. The directive is not unique in this regard. Other directives relating to social policy, such as ones for health and safety, also allow adaption, but the distinctive feature of the EWCD is the extent to which the principle of subsidiarity also encompasses the social partners and the multinationals. The social partners in the member states have authority to carry out the transposition of the directive if the national government agrees, and they have a wide enough latitude that the resulting agreement does not disrupt the existing modus

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vivendi. The directive also gave multinationals a two-year period during which they could design their own EWCs with their employees without regard to national transposition measures. This feature of the directive added a new dimension to the principle of subsidiarity. The directive will have a noticeable impact on European industrial relations. It thrusts labor unions into new roles, challenging the relations among labor unions as well as those between labor unions and their members. Unions will need to improve their communications skills if they are to grapple successfully with the opportunities presented by the directive. Employers’ associations will need to close gaps in their organizational structures if they are to carry out their responsibilities as social partners. Management must provide better communications within companies to ensure that local managers are as well informed as employee representatives, and management in countries without a tradition of employee participation must learn how to integrate the new responsibilities for information and consultation into existing management practices. All parties involved in industrial relations also must consider whether EWCs are a step toward European collective bargaining and, if so, whether such a future is desirable. Article 15 of the EWCD charges the Commission, in consultation with the relevant parties, to prepare a report on the operation of the EWCs by 1999. The report did not appear until April 2000. The report was to provide the basis for discussions in the European Parliament and the Council, which would consider amendments to the directive. The delayed report, however, did include suggestions for change in the directive despite containing a list of specific problems. The Council took no action following the issuance of the Commission report. Many speculate that the Council will not open discussions on the directive until it completes work on two related and contentious issues—the proposed directives on national works councils and on employee participation in a European company.

Notes 1. European Commission, Proposal for a Council Regulation on the Statute for a European Company, COM(89)268/I and II final (Brussels, 1989). 2. European Commission, European Systems of Workers’ Involvement, Report of the High-Level Group of Experts Chaired by Etienne Davignon (May 1997), p. 2, para. 19. Emphasis added. 3. European Commission, Enhancing European Competitiveness, Third Report to the President of the Commission, the Prime Ministers, and Heads of State by the Competitiveness Advisory Group Chaired by C. A. Ciampi (Brussels, June 1996).

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4. European Commission, Proposal for a Directive on Procedures for Informing and Consulting the Employees of Undertakings with Complex Structures, in Particular Transnational Undertakings, COM(80)423 final (Brussels, 1980). 5. European Commission, Procedures for Informing and Consulting Employees in Multinational Companies, report prepared by Professor Van Langendonck (Brussels, 1980). 6. The proposal was based on the original Article 100 of the Treaty of Rome, which required unanimity in the Council. 7. UNICE Press Release, June 1994, Brussels. 8. ETUC Press Release, June 1994, Brussels. 9. EU Council, Directive on the Establishment of a European Works Council or a Procedure in Community Scale Undertakings and Community Scale Groups of Undertakings for the Purpose of Informing and Consulting Employees, OJ 254.30.09 (Luxembourg: Office for Official Publications of the European Communities, 1994). 10. European Commission, Community Charter of the Fundamental Social Rights of Workers (Luxembourg: Office for Official Publications of the European Communities, 1990). 11. For a compact overview of the directive’s content see Willy Buschak, “European Works Council: A Step Towards the Social Dialogue,” in Norman Levine, ed., The US and the EU: Economic Relations in a World in Transition (Lanham, Md.: University Press of America, 1996). 12. EU Council, Council Directive 97/74/EC, OJ 010 16.01.98.

6 The Actors: Multilevel Governance in Action

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he realization of social legislation in the EU involves multiple actors, both official and unofficial. The roles that actors play have changed through the years as a result of new basic treaties and the evolution of the EU as an organic entity. The demarcation between official and unofficial actors has blurred, and the social partners play roles on both sides of the demarcation. The official role of national governments in the transposition of directives is now shared with the social partners. The emergence of the social partners as well as other changes affecting various actors have been little noted in the literature on the EU despite the importance of the subject. Study of the actors extends into a labyrinth of little-known trade union structures, obscure employers’ associations, corporate actors, and national bureaucracies; it also involves a fresh look at the role of official institutions. This chapter introduces the complex world of actors involved in EU social policy, using the European Works Councils Directive as the vehicle for the study.1 The main players in the determination, transposition, and implementation of EU social legislation are the major EU institutions: the EU Commission, Council of Ministers, European Parliament, and Economic and Social Committee. These bodies are collectively responsible for the entire administrative procedure, from the Commission as the formulator and promoter of proposed EU legislation, to the Parliament’s and Economic and Social Committee’s involvement in the formal consultation process on the proposed legislation, to the Council of Ministers as the collective forum where national governments make decisions on whether to approve these proposals. 101

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Once approved, EU legislation has to be transposed into national legislation within a specified time period, usually two years. This is the responsibility of national governments and their agencies. The actual implementation of the legislation involves a wide range of actors including the social partners (national and European employers’ organizations and trade unions); the industrial relations actors within enterprises, or works councilors (the elected employee representatives to works councils who may or may not be unionized); labor unions and their workplace representatives; and national and local company management. In practice none of the players has had the stage to themselves, and interaction among them has been extensive. Many publications deal with the EU institutions; this discussion is limited to special aspects of their roles as they relate to the EWCD. The Commission, although the civil service of the EU, should not be equated to a national civil service administration; it is a multicultural, multipolitical, and multinational organization. Its staff is currently drawn from the fifteen member states. The twenty commissioners who head the institution are almost without exception drawn from national political parties and are nominated as commissioners by the national governments. Two departments (directorates-general) in the Commission have been directly responsible for formulating and processing legislative proposals on employee rights to information and consultation within enterprises: the directorate-general for social affairs, employment, and industrial relations and the directorate-general responsible (at various times) for company law or the internal market. In other words, the issue of workers’ information and consultation rights in the Commission has not been exclusively a social policy question but has been a key issue in company law reform as well. Differing national regulations for workers’ rights have been a stumbling block to crossborder company mergers, which should characterize the restructuring of enterprises in preparation for the common internal market in Europe. Not surprisingly, the Commission has attempted to iron out these disparities over the years through EU legislation, but with very limited success. The two proposals, which after two decades remain unapproved, are the Fifth Directive on the reform of company structure and the proposed European Company Statute. The Fifth Directive would establish worker representation in the supervisory boards of companies along the lines of German company law. The proposal has undergone numerous revisions, and more flexible arrangements have been proposed for creating labor-management arrangements with equivalent effect; however, the directive remains unapproved by the Council of Ministers. If approved, it would require the restructuring of classic single

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company boards into two-tier boards, a change many governments refuse to contemplate. Nevertheless, as far as EU institutions are concerned, it is interesting to recognize that such proposals have existed for a long time, have been created in a company law environment, and have been promoted by the European Commission. The second company law proposal, the statute, is still not approved after more than twenty-five years and numerous face-lifts. The notion of a European works council first saw the light of day in the proposed statute. The Commission believed that EWCs would provide a suitable balance for employees in exchange for the benefits transnational enterprises could receive from the EU law option. The EWC would provide a forum where workers’ representatives were informed and consulted about activities of the enterprise that employed them. Thus, at an EU level the Commission has been a key actor in promoting proposals for employee rights to information and consultation. The commissioners responsible for these developments have not necessarily come from center-left backgrounds. Indeed, the commissioner responsible for the EWCD in 1994 was from the center-right party in his own country, although the Commission’s work in this field was undoubtedly enhanced by its president between 1984 and 1994, Jacques Delors. He brought to it traditions of social Catholicism and created an ambience within the Commission conducive to the development of social partnership between labor and management. He represented the view that creating the single market in Europe required compensatory measures to ensure employees would have a voice in the new EU economy. Delors was instrumental in establishing the social dialogue and reinvigorating the search for employee rights to information and consultation. He presided over an ambitious agenda to establish a “social” Europe. The Delors commission helped secure the inclusion of Articles 118A and 118B in the Single European Act in 1986. Article 118A enables the Council to approve proposed legislation in the working environment, especially concerning safety and health at work, by a qualified majority, while Article 118B established a legal basis for the Commission to promote the social dialogue between organized labor and employers at EU level. Out of this forum arose the so-called October 31st Declaration, which became, almost word for word, the Social Chapter in the Maastricht Treaty. These developments, the new articles, the social dialogue, and the Social Chapter led to the reappearance of workers’ rights to information and consultation in transnational companies on the EU agenda. Indeed, the topic was intended to be the first issue subject to the new EU ETUC-UNICE (European Trade Union

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Confederation and the Union of Industrial and Employers’ Confederations of Europe) negotiating procedure leading to a voluntary agreement, to be voted on by qualified majority voting. The EWC directive, therefore, was at the end of a long process in which the European Commission played a vital role. The Commission was assisted by the European Parliament in its role as a consultative organ. The Parliament was politically tilted to the left partly because of the British Conservative Party’s disinclination to take the 1990 elections seriously, which resulted in the Labour Party becoming the biggest single block in the Parliament. Since a high proportion of the Labour group were members of and were supported by individual British unions, their influence was not insignificant in the deliberations on the draft directive. When the earlier Vredling Proposal on worker information rights came to the Parliament, it was effectively dropped through the successful lobbying of the transnational companies. In 1994, however, the situation was different. The Parliament also went a step further. It took the view that the EWC should be a vehicle for bringing European working people together. The Parliament initially earmarked nearly eight million dollars and eventually approximately nineteen million dollars for financing the exchange of workers’ representatives in transnational enterprises to familiarize them with using European information and consultation procedures in their companies, that is, the EWC. The European Commission administered this budget, which was to diminish as the EWCs came into existence; by 1998, it had dropped to approximately five million dollars. The budget was an important factor in stimulating interest in EWCs among European employee representatives. The Parliament developed a multiparty consensus on the draft EWCD similar to the one in the Commission. In other words, it was not simply a left-ofcenter-driven issue. The final EU institutional actor is the Council of Ministers, the forum in which national governments come together to discuss and approve draft legislation. The member state that holds the Council presidency can be an important actor influencing EU priorities. Although the troika system (the practice of the past, current, and next presidents of the Council consulting together on policy issues) smoothes out the long-term policy and legislative developments, within this forum each member state occupying the presidency can and does have its goals for its six-month period of office. The German government, which held it the second half of 1994, made adoption of the EWCD one of its goals. A second aspect of the Council as an institutional actor is the voting procedure used on a given issue. As discussed above, Article 118A

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of the Single European Act introduced the qualified majority voting (QMV) system for legislation in the work environment. New provisions in the Maastricht Treaty made the EWC directive elgible for the QMV procedure. Third, the overall political balance of the Council is determined by national elections. Thus, the balance during the 1993–1994 period was dominated by center-right governments of which the German was the most influential at that time. On average, three to four changes of government are possible in a twelve-month period; that is, fifteen countries with an average four-year period of office per government. For example, changes of governments occurred in 1997–1998 in France, Germany, and the UK, all moving to the center left. Such changes alter the political balance of the Council, and this can influence EU priorities and policies. The Council, acting under the German presidency, adopted the EWCD with the support of both its left- and right-leaning members in 1994.

The National Governments As Actors Apart from their role in the Council of Ministers, governments play a second role as actors, namely in transposing of approved EU directives into national legislation. An interactive relationship exists between these two roles. A government in Council will be influenced in its decision to approve a draft directive or not by the synergy between the draft and existing national laws and practices. In the EWC case, ten of the eleven member states voting in Council already had national works councils systems. Only the Republic of Ireland and the UK did not, but the UK had opted out of this process. It is significant that the state with the most sophisticated national system was also the one in the presidency—Germany under the Kohl government. Once the directive is approved, the national administrations have to transpose it into national law via the usual administrative and parliamentary processes. A broad division (discussed in Chapter 7) existed among the member states between those that delegated the task to the national labor union and employer organizations through collective agreements (Belgium and Norway), those that included the social partners in national legislation for the transposition process (Italy); and those that simply used the national administrative process to produce legislation, excluding social partner organizations (Germany). The national governments interact with other governments, the Commission, and a joint working party for oversight. The EWC directive

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gave national governments the right to choose among various options when adopting transposition measures. They could, for example, write into their measures the definitions for employee representatives, methods for their election, and methods to ensure compliance that most nearly paralleled similar national practices. They also could put into them procedures more favorable to employers or trade unions, depending on their orientation. Social directives are designed to provide desirable minimum standards to protect employees across the EU. Because a government’s failure to transpose and implement a directive can lead to unfair competition among the member states, the Commission is responsible for ensuring this does not happen. In the case of the EWCD, the joint oversight working party has the task of promoting greater harmonization in national approaches and practices. The bottom-line role of governments has been the complete and satisfactory transposition of the EWC directive within the given time frame, by September 1996. How well they met this responsibility is discussed in Chapter 7.

Organized Labor and Employers— Social Partners As Actors In examining the role of labor and employers in relation to the EWCD, we must consider European, national, and local organizations. At the EU level, employers’ interests are represented by UNICE and organized labor by the ETUC; they are the lead players. In addition, an employer organization for the public services, CEEP, cooperates with UNICE. UNICE and the ETUC are important actors as well in the social dialogue that has become an important forum for industrial relations issues.

UNICE UNICE’s members are drawn from the national employer confederations, for example, the Confederation of British Industry (CBI) in the UK, and also from industrial employer organizations. As of 1999, there are currently some thirty-three member organizations coming from twenty-five countries inside and outside the EU. UNICE’s links with individual enterprises are therefore indirect. It was formed in 1958, and its development, like that of the ETUC, is closely tied to the EU integration process itself; it has derived its raison d’etre from this association.

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UNICE is a smaller organization than the ETUC. In contrast to the latter, which has a complex makeup determined by ideological differences within member labor movements, UNICE has its own internal complexities deriving from its national affiliates. For example, Germany and Denmark have two employer organizations belonging to UNICE, one for commercial, industrial, and economic issues and the other for social and industrial relations questions. In addition, the status of affiliated organizations varies within their own countries; some represent the majority of firms and enterprises and others do not. Some, such as the national employers’ confederations in Scandinavia, are involved in national collective bargaining relations with the labor unions while others like CBI are not. Thus UNICE has to accommodate these differences within its organizational structure and adjust the pressures caused by them. Like any organization, large affiliates have a determining influence on policy and activities, and this has certainly been true in the evolution of the EWC directive. UNICE differs in a fundamental way from its social partner, the ETUC, as regards the infrastructure. Whereas the ETUC has fourteen separate and independent sectoral or industrial EU federations composed of national industrial unions, on the employers’ side this is much less the case. UNICE has some national sectoral employers’ organizations as members, but they are not themselves organized into separate industry bodies outside the framework of the UNICE. In 1993, UNICE launched an intersectoral organization, the European Employers Network (EEN), an informal network bringing together employers in specific industrial sectors to exchange information and coordinate activities in the social policy sphere. The EEN facilitates the convergence and coordination of employers’ views on social policy issues in order to present a united front to labor unions and EU institutions. The failure of employers to organize effective EU industry associations has impeded the development of dialogue between employers and trade unions, which have powerful EU industry federations. Single enterprises are not represented at the EU level; their representation is indirect via the national affiliates. Moreover, many U.S. transnationals do not join the European groups, belonging instead to the European/American Chamber of Commerce that acts as a lobbist on their behalf. Social and labor market questions are handled by the Social Affairs committee of UNICE, which along with four other committees is composed of representatives from the national affiliates. With its secretariat located in Brussels, UNICE interfaces extensively, both formally and informally, with the EU institutions as well as interested bodies such as

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the representatives of national governments located in Brussels, the ETUC, and others. UNICE is an “EU watcher.” It tracks developments coming out of the European Commission and other EU institutions, coordinates the positions of its affiliates, formulates common positions of its members in response to EU initiatives, and lobbies and represents those members’ interests as widely as possible. Life is not always easy within any European organization, and UNICE is no exception. It has been a cautious partner attempting to head off formal binding arrangements with the EU and trade unions in favor of nonbinding arrangements. UNICE’s position in regard to EWCs demonstrates this internal problem quite clearly; some of its affiliates refused to give UNICE a mandate to negotiate with the ETUC to conclude a voluntary EU agreement on the works councils’ issue. Understandably, UNICE generally has reflected the view of its affiliates that regulation of industrial relations issues at the EU level is unnecessary and undesirable. Officials of UNICE believe that individual firms should be free from Brussels, a position that has resonated with the subsidiarity principle promulgated by some EU governments. UNICE’s opposition to regulations from Brussels, however, has been affected by the shift in EU voting procedure on social policy issues from unanimity to qualified majority voting in the Council of Ministers. The change made possible the adoption of the EWC directive. The disappearance of the single country veto in the Council has therefore not been helpful to employer interests and UNICE’s scope for effective blocking action. Its doomsday claims regarding a Commission draft directive ring rather hollow when a majority of governments vote that draft through in Council. Over a ten- to fifteen-year period, UNICE has had to accommodate Commission pressure for a social framework for the single market— an espace sociale in the EU. At the same time, its affiliates generally have been opposed to EU regulation of industrial relations issues. How, then, has UNICE adjusted to and been involved with those components of the EU process significant to the EWC directive? Europe’s employers pushed for and secured the EU “1992” program that resulted in the single market. This was achieved through the acceptance of the Single European Act in 1986, which introduced the qualified majority vote for over three hundred draft directives on the single market. The act also introduced the same voting procedure for work environment directives, as discussed above. But of special importance was Article 118b, which gave the Commission the legal platform for calling UNICE and the ETUC together for an EU-level dialogue.

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In 1989, UNICE was consulted on the drawing up of the European Commission’s Social Charter, which contained reference to workers’ rights to information and consultation. This document was signed by all member states except the UK. At the same time, UNICE was party to discussions with the Commission and the ETUC that resulted in the October 31 agreement in 1991 on procedures to involve the social partners in what became known as the social dialogue. This involvement represented an important departure from UNICE’s traditional, more aloof role as an EU lobbyist. Even the CBI, one of UNICE’s largest affiliates, signed this agreement, which was integrated into the Maastricht Treaty’s social protocol and paved the way for qualified majority voting on the EWC draft directive in 1994. UNICE has, however, maintained critical reservations about the social protocol. UNICE was put to the test in 1993–1994 when, under the Maastricht procedure, the Commission invited the ETUC and UNICE to conclude a voluntary agreement on the EWC. UNICE was clearly in some difficulty at an early stage of this procedure. It overran the consultation period, and rumors circulated about internal differences, especially involving the British CBI. The political atmosphere also was colored by other considerations. The newly terminated 1992 single market program, which was perceived as favoring capital, put pressure on the European Commission and increased its determination to realize the counterbalancing measure of workers’ rights to information and consultation in transnational enterprises. In addition, a surprising consensus existed among the eleven national governments to make progress in the worker information and consultation field, a situation that boded ill for UNICE. Moreover, UNICE had made constitutional changes in 1992 to facilitate the social dialogue and to secure a consensus among members in support of voluntary agreements produced through a social dialogue. In the event, UNICE found itself “between a rock and a hard place.” It was denied a mandate by some of its affiliates to negotiate with the ETUC. On the other hand, if it opted out of this procedure, the ETUC would call on the Commission to treat the issue as a regular directive under the Maastricht procedure, that is, with qualified majority voting in Council. UNICE underestimated the will of the member state governments and the determination of the European Parliament for action; it withdrew from the social dialogue on a European works council and the issue went forward as a proposed directive. The procedure resulted in the approval of the EWC directive in September 1994. Thus UNICE had failed the first test of the new Maastricht procedure it had

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been involved in developing some years earlier. At the same time, many observers thought the British government and employers’ organization shared the dubious honor of bringing about a major labor union objective in Europe by default. UNICE subsequently concluded voluntary agreements with the ETUC on parental leave and working time, which it requested the Commission to transpose into EU directives. The process of voluntary agreements clearly has reinforced the role of both organizations. At the same time, it enables nongovernmental actors to call upon the European Commission to transpose their agreements into directives.

European Trade Union Confederation—ETUC The ETUC affiliates only the national union confederations, both inside and outside the EU, such as the British Trades Unions Congress (TUC), the Norwegian Federation of Trade Unions (LO), and the Hungarian Trade Union Confederation (MSZOSZ). It has over forty affiliates and represents approximately forty-five million trade unionists, accepting as members organizations from across the whole ideological spectrum: Christian unions, Social Democratic confederations, former communist organizations, and professional bodies. Thus it reflects the pluralistic character of Europe itself. It is democratically structured, and its powers and functions are closely defined and monitored by its affiliates. The European union movement has been, on balance, a consistent supporter of the European integration process. As indicated above, the ETUC was very much involved in the evolution of the EWC directive via its discussions with UNICE and the Commission. During this process, it was aided by the presence of Jacques Delors as president of the Commission. Delors was determined to see installed a broad social dialogue in general and the EWC procedure in particular. An informal but discernible ideological motif characterized the ETUC/Commission relationship, which can loosely be described as a Franco-Italian, social Catholicism link. Within the Commission, Delors was not alone in sharing a center-left Catholic background. At the same time in 1991, the new general secretary and deputy general secretary of the ETUC came respectively from the Italian Christian union, the Confederazione Sindicato Lavoratori (CISL), and the French equivalent, the Confederation Française Démocratique du Travail (CFDT), the same union in which Delors had been an official in his early career. While the EWC idea preceded this ideological coalition by decades, their convergence nevertheless proved crucial for the ETUC in achieving the EWC directive.

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The status of these bodies is not straightforward because the national industrial unions affiliate both to the international organization—the international trade secretariats (ITS)—and to the European federations. For some sectors, the European bodies are a regional organization of the international trade secretariats and, as such, are dependent on them for constitutional and operational issues. The secretariats employ the federation staffs, pay salaries, provide their budgets, and keep a close liaison on overall policy and operational matters. At the other extreme are organizations such as the European Metalworkers Federation (EMF), which has established itself as an independent organization within the ETUC framework but belongs also to the International Metalworkers Federation. Between the two extremes, other international and European union organizations exist with various internal relationships. Tensions sometimes occur in this triangle of national unions, European organizations, and international secretariats. Hence in the EWC context, when agreements were made with corporations, sometimes the international was the lead player, but sometimes the European body or the national unions alone undertook the negotiations. At other times, the in-company union or works council representatives undertook the negotiations backed up by the unions outside. The EMF is one of the most developed European federations. This organization, set up in 1971, has fifty-five affiliates in twenty-five countries. As is common with other federations, it has at least three major functions: to coordinate the work of its affiliates, to conduct social dialogues with European employers, and to explore possibilities for collective bargaining.2 For example, the EMF collects and distributes information related to collective bargaining, and it has coordinated actions across Europe in pursuit of a thirty-five hour working week. The EMF does not always agree with the positions of the ETUC. The EMF has been seeking an effective EU-level employer body to deal with. The employers’ side is represented by the Western European Metaltrades Employers Association (WEM) and by separate industry organizations in the manufacturing sector, such as the automobile industry. WEM has refused to sit down with the EMF as a formal negotiation partner because its affiliates want to avoid collective action and retain their company autonomy to negotiate. WEM is less developed and weaker overall than the EMF. For its part, the EMF, aware of its greater strength, wants to avoid what it terms “pseudo negotiations” by the employers, in which the weaker party drags out an issue without any eventual agreement. In its role as coordinator, the EMF developed a set of guidelines in 1996 for its affiliates to use when negotiating EWC agreements. The

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EMF itself has been directly involved in negotiating along with its relevant national affiliates. It concluded 130 Article 13 (voluntary) agreements between 1994 and 1996, and has been involved in an estimated five hundred Article 6 EWC agreements between 1996 and 1999. According to the EMF, “The relatively early establishment of enforceable common rules of procedure and guidelines for substance made the EMF attractive to companies as a broker or partner in negotiating EWC agreements.”3 The guidelines guarantee systematic labor union involvement in the work of the EWCs and, through strong coordination, ensure the union’s influence on both the company and the union member. As an actor, therefore, the EMF plays a pivotal role in the coordination, cooperation, and promotion of a cohesive union approach to EWC negotiations with transnational companies. The EMF guidelines can be divided into three categories: identification of priority companies, procedure and content of agreements, and training and education of trade union representatives in EWCs. In the first category, the EMF asked its national affiliates to make lists of companies deemed suitable for an EWC. The lists can cover an industry or a whole country and can be matched with lists from unions in other countries. The EMF used the information to compile a comprehensive list of all companies coming within the scope of the EWC directive, and therefore target companies for EWC agreements. The EMF or the national unions then initiated negotiations with the targeted companies. The formal initiative to establish a special negotiating body (SNB) involves a request from unions or workers’ representatives in the country in which the company has its European headquarters. The parties then inform the EMF about the date of commencement of negotiations, contents, names of SNB members, company reactions, and so on, and the EMF acts as a distributor of such information throughout its affiliate network. It may or may not participate in these negotiations, depending on the national unions’ and employers’ attitudes. At the same time, the EMF can intervene through warnings or corrective measures when a company attempts to exclude unions from the EWC development or otherwise reacts negatively to the idea of an EWC agreement. Union negotiators and national works councils’ members (usually unionized in the metal sectors) are supplied with relevant information about their companies as well as about the EMF guidelines—all in their own languages. The EMF supplies negotiators the EWC policy recommendations developed by its task force in order to ensure a constant EMF line throughout all the agreements. National unions are urged to establish information links and networks and to make sure that legal and other advice is available to avoid stalling negotiations.

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The EMF has a contact official at either the head office or the local level and acts as a facilitator and internal arbitrator between its members to arrive at a suitable agreement. An EWC agreement cannot be ratified until all countries involved, all affected EMF affiliates, and the EMF secretariat have been consulted and have approved the agreement. In the event of an internal impasse, the EMF provides an arbitrator to make a final decision. The same set of rules and procedures apply when the initiative for an EWC comes from the company itself. The EMF guidelines lay down basic minimum standards for the content of agreements; the nine-point list provides a framework based on the minimum standards of the EWC directive. An EWC must meet at least once a year, and workers must have simultaneous interpretation for all the relevant languages and union representatives should have the right to a preliminary meeting the day before the EWC meets. The EWC should have the right to a steering committee whose chair must be a union member, and the committee and the EWC should have the right to invite an expert of their choice whose costs are to be covered by the company. Management should be obliged to present written reports to the EWC, and these must contain at least the minimum subsidiary requirements of the EWC directive (Article 2). The EMF and similar federations have been significant actors in penetrating the ring-fenced legal positions of the countries excluded from the directive—the UK and Switzerland. The EMF places great importance in its guidelines to the inclusion of UK and Swiss union representatives, as well as representatives from central and eastern European unions in the EWC arrangement. This is an act of union solidarity and appears to have been accepted by many employers. In many cases, the EMF has been pushing at an open door as far as companies are concerned. The authors’ field work indicates that many transnational companies took the view that information on the company leaks out of national works council systems, such as in Germany, so that it was academic to exclude UK employee representatives from the EWC discussions; their action undermined the UK government’s efforts to prevent the directive’s application in British territory. Finally, the EMF places considerable importance on education and training and with its affiliates has worked out training packages for EWC representatives. The training activities are coordinated by the EMF with similar programs in other European federations and the ETUC. The EMF, therefore, plays an important role as a hub organization in the European metalworking industries, as an information gatherer and analyzer, as a monitor for the content and evolution of EWC agreements, as an arbitrator between affiliates, and as a focal point for

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education and training of union representatives. Other, albeit less developed, European federations also serve as hubs, but few do it as well as the EMF. It should be emphasized that the absence of corresponding sectoral employer organizations has militated against EU sectoral agreements. Employers, it seems, want to avoid centralized guidelines and prefer to negotiate their own deals in their own way. A second European sectoral federation active in the EWC field is the one for the printing and graphics sector, the European Graphical Federation (EGF). This federation has been a signatory to more than 50 percent of all EWC agreements in its sector. In order to handle EWC developments, the EGF set up an EGF/EWC network to gather information and coordinate efforts by relevant actors. Like the EMF, the EGF has developed its own set of guidelines for EWC agreements, which define the role of the EGF and the responsibility of the affiliate unions that are involved in EWC negotiations to advise and inform the EGF of progress. The union(s) in the EU country in which the company has its European headquarters take the lead in initiating EWC negotiations. However, they are obliged by the guidelines to involve other unions represented in the company and other EGF affiliates. The EWC agreements must conform to the minimum standards laid down in the transposition of the directive into national law and must be approved by the EGF management committee. The EGF advises against unilateral national negotiations with management on the grounds that European interests can become marginalized by preoccupation with national issues, do little to engender mutual trust, and in practice, bring few results. Such agreements frequently consolidate existing domination by national unions with the national management of their undertakings, a tendency the authors observed in, for example, Swedish and German case studies where the national unions dominated the representation of employees. However, these situations do not seem sustainable in the longer term. EGF guidelines recommend the inclusion of representation from plants in countries outside the scope of the directive—the UK, Switzerland, and central and eastern Europe. The EGF compiled a checklist for worker representatives when drafting an EWC agreement and informed negotiators that an EWC agreement could encompass different levels of the corporation, such as product, business, or sector. The EGF strongly recommends against agreements that provide for information and consultation procedures without the institution of an EWC, on the grounds that a forum (EWC) is necessary for exchanging experiences and knowledge among worker representatives in order to be able to contest information from management about the company’s European activities.

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The notion of a council itself implies a manifestation of worker rights. The EWC is seen as a vehicle for generating comparative information about aspects of company policies that can be used to develop maximalist strategies to deal with company management in the longer term. Such a mechanism could also provide a step toward European collective bargaining. Among the other industry federations, the experience of the European Committee of Food, Catering and Allied Workers–International Union of Food Workers (ECF-IUF) has been interesting. Of fifty EWC voluntary agreements concluded as of September 22, 1996, in companies such as Kelloggs and United Biscuits (UK), the ECF and national unions were involved and included in thirty-two of them. The ECF also appears to perform a role as coordinator and compiler of information similar to the role of the EMF and EGF; it has developed its own EWC checklist and guidelines for its affiliates and has a steering committee to approve newly negotiated EWC agreements. The ECF has found that discrepancies frequently occur between the agreements and actual practice. They cite two common problems: Some enterprises supply an inadequate amount of information and some involve only lower levels of management in the work of the EWC. The ECF asserts that persons from the company’s central management must be involved if the agreements are to be effective. What does the experience of the European industry federations for unions say about their role as actors in the EWC process? They play a key role as information collectors and disseminators. They have developed EWC content and negotiating guidelines for their affiliated unions, provided an internal infrastructure for vetting and approving new agreements, and been directly involved in company negotiations along with national affiliates; they also monitor the operation of agreements and are developing training programs both on their own and by using the education facilities of the ETUC training college in Brussels. They have been involved in applications for and the use of EU funds for exchanging worker representatives (Budget line 4004) in the preparatory stage for EWC agreements and have been concerned to ensure a labor union presence in the EWC agreements and subsequent arrangements within undertakings. At the same time, the federations have a structurally difficult position between the demands, reservations, and pressures from national affiliates and their relations with the international trade secretariats. They are underresourced in financial and personnel terms by the affiliates who, in jealously guarding their own roles and jurisdictions, keep their federations from acquiring a more significant centralized role. Not surprisingly, rumors exist about possible mergers among some of the federations.

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National Works Councils Labor unions are not the only workers’ representatives in industrial relations in the EU. In all but two member states, national legislation provides for some form of plant-level works council system in which the whole workforce elects the workers’ representatives. The scope and effectiveness of these councils vary from country to country, but all fit into one of the two basic models, either an all-employee model (Germany and the Netherlands) or a joint labor-management model (France and Belgium). Probably the most sophisticated and developed is the German system, which provides for plant-level councils, companywide (national) councils, and group councils. The German council system is paralleled by board arrangements stemming from the two-tier board structure of German companies—the management and the supervisory board. Employee representatives are elected from the company workforce. Space does not permit detailed consideration of the works councils’ systems as such, so we will focus on those aspects relevant in the European Works Council context. Works councils complicate the life of labor unions, drawing them into a dual worker representation situation. In some countries, such as Germany, unions have come to dominate the councils in the larger sectors like engineering, and they have modi operandi that work to their satisfaction. In Italy, for example, the unions have the exclusive right to draw up the list of candidates for works council’s elections so that the councilor is synonymous with a union member. Where councilors are not union members, however, unions face a real challenge in securing and maintaining their influence within the company. Even where councilors are simultaneously union members, they can acquire a degree of independence from the external union and may act in defiance of union policies on occasion, either voluntarily or by force of their legal obligations. This is particularly relevant in the EWC context where councilors combine with their counterparts in other countries, challenging both national- and European-level unions. They could even obtain EU funding for meetings without going through their union. The situation risks developing into the “union within a union” scenario—a European-wide “company” union—a possibility union administrations would want to avoid. Works councils, although resisted by many employers, can be used by them as a vehicle to generate a unitary relationship with their workforces. This possible bonding process between workers and their companies poses a potential threat to the unions, who cannot take for granted the loyalty and solidarity of unionized workforces.

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In most countries the existence of works councils solves the question of recognition, that is, who are to be the workers’ representatives on EWCs. According to the EWC Directive, national legislation for its transposition can designate representatives from works councils as participants in EWCs (see Chapter 7 for examples). Such legislation puts pressure on unions to ensure their involvement in EWC developments and raises the specter of EWCs composed of national works councilors of whom some are union members and others are not. For some union movements, the possibility raises the difficult question of whether their own (unionized) councilors should tolerate nonunion councilors in the EWCs. National works councils can provide a means for antiunion transnational companies, using appropriate industrial relations policies, to keep unions out of both national and later European works councils. The existence of works councils does not, however, exclude union influence, both direct and indirect, from outside the company, for example, from collective bargaining processes or strikes. National works councils can in some situations undermine the role of the EWC by means of a tacit understanding between the national management and works councilors in a company. This seems likely to happen where the council system is well established, as in Germany; the bulk of the workforce is in one country and both sides wish to maintain an overriding (national) grip on the EWC. In Germany, the distinction between a national company-wide works council and an EWC is often opaque, since the latter is so dominated by the national works council. Information leakage from a national company-wide council can occur into other countries through informal contacts between employee representatives. For this reason, some UK companies decided to include their UK workforce in any EWC arrangement, especially if it involved a German subsidiary. This phenomenon demonstrates how the industrial relations actors at company level can and have undermined the intention of a national government (UK) to prevent application of EU legislation within its territory. Although statutory works councils are the usual employee representative bodies within enterprises in most EU countries, such works councils do not exist in the UK or Ireland. The employees’ workplace representative in the two countries is the union shop steward. Shop stewards are the tip of the representative iceberg. U.S. companies dealing with British labor forces can find this situation perplexing. In the UK and Ireland, the external union structure is horizontal because union organizations were traditionally based on skill. Consequently, the UK has many more unions than other countries where unions are industry based, and UK firms have to deal with a number of unions, depending

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on the skills of their employees, rather than a single industrial union. The UK has no institutional provision for representation of nonunionized employees, although in practice unions are deemed to represent the entire company workforce. The EWC situation in the UK, already complicated by UK exclusion from the EWC directive until after December 1999, becomes more complex. One of the key questions is recognition for employee representative purposes. It is not only an issue of union or nonunion; if union representation prevails, a company may face not one but several unions. The size and influence of individual unions will be reflected in the workforce organization levels, and problems may arise in determining from which union(s) representatives for the EWC will come. For example, how will a company with six unions allocate the EWC seats it is entitled to if there are only two seats? Will the company risk having legal claims of nonrepresentation brought against it by nonunionized employees? On the union side, the situation is usually simplified when the shop stewards from the several unions form a joint shop stewards’ committee. This committee has no legal basis; it is a working arrangement that management usually recognizes but is not obliged to do so. These committees are parallel to the works councils the managements face in other countries, but of course they are uniononly bodies. Like the works councils, the joint committees can pose a threat to national unions and become unions within unions, synthesizing the interests of the several unions involved into one in-company body. The joint committees provide EWC representatives from British plants of transnational companies; this practice may weaken the link of any one national union with its members who serve on EWCs and who may be more responsive to the interests of the joint committee than to those of the national union. The British case may be the most complex one, but in all member states the way employee representatives are selected and the experiences they bring with them affect them as actors on EWCs and also affect the access trade unions will have in the continuing evolution of EWCs. The issue of employee representatives will be discussed again in Chapter 8.

Conclusion The search for actors concerned with forming and implementing EU social policy extends from the new Council of Ministers’ building in Brussels to shabby workplaces in north Wales. The story of EU social

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policy is only partly told if the focus does not extend beyond Brussels. The policy that goes out from Brussels is a framework, and it is fleshed out in workplaces throughout the EU. Multiple actors affect the formation; multiple actors affect the implementation. Five important conclusions can be drawn regarding social policy in general, and the EWCD in particular. The first concerns the role of the Commission, which should receive some award for persistence. In the face of general indifference and some concentrated hostility, it has pursued the objectives of EU social policy, including employee rights to information and consultation. When the conditions for social policy improved after ratification of the Maastricht Treaty, the Commission moved efficiently to expedite passage of the EWCD. It did not work alone, however, but used a network of supporters in trade unions and political parties who helped design a policy acceptable to the Council and the Parliament and later helped ensure its implementation. The role of the Commission as a permanent European institution committed to EU social policy has been absolutely essential to the furtherance of the policy. Another significant finding relates to the employers’ associations. In an era of apparent domination of business, UNICE could not block the EWCD. Indeed, business interest groups did not act very effectively on any level covered in this study; they were hampered in their efforts by organizational weaknesses and lack of support from the businesses they represent. They also were fighting an issue—employee rights to information and consultation—with broad social acceptance in Europe. Moreover, national government leaders, including those from centerright political parties, did not support business interests on the issue of EWCs. In 1999, a new leadership team took control of UNICE and promised to be more proactive regarding social policy, but they will continue to be hampered unless serious organizational reform is made. The findings here raise serious doubts about a social Europe a la carte. The fence with which the UK ringed the country to prevent the EWCD intrusion did not work. In an era when the Europeanization of the EU economy is a reality, national isolation from parts of the development does not appear feasible. The issue of the opt-out is an important one because it goes to the very heart of what integration means for the EU and the member states: it will be touched on again in subsequent chapters. Perhaps this chapter’s most important contribution is the light it sheds on the labyrinth of interest-group activity surrounding the workings of the EU, in particular, the intricacies and absolute importance of trade unions. Trade union fingerprints are on the EWCD from beginning

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to end. EU institutions do not operate in a vacuum. Their officials are intimately involved with representatives of interest groups relevant for their subject of concern. In the case of social policy, the relevant groups are obviously employers’ associations and trade unions; the latter appear to be better organized to deal with issues. They are prepared with information and advice to guide EU officials in regard to social policy. Trade unions also stand ready to help their members when policies are ready for implementation. Few researchers have ventured into the trade union labyrinth. The intricate world of European industry union federations, in particular, is not an easy one to penetrate. As the research presented here shows, however, the effort is essential because the federations are a vital connecting link between EU policy and its implementation in the thousands of transnational enterprises covered by the policy.

Notes 1. Most of the discussion here is based on field research and interviews with relevant actors, while much of the background for analysis is derived from industrial relations literature. See also Chapters 2 and 4. 2. Barbara Gerstenberger and Bert Thierron, “European Collective Bargaining at European Level,” in Wolfgang Lecher and Hans-Wolfgang Platzer, eds., European Union—European Industrial Relations (London: Routledge, 1998). 3. European Metalworkers Federation Executive, EWC Guidelines (Brussels, November 6, 1996).

7 The Member States and the Transposition of Directives

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irectives of the European Union are transposed by the member states into national laws or agreements.1 The process of transposition is affected both by the wording of the directive and by national preferences regarding the subject of the agreement. Directives do not emerge into a vacuum. National governments and social partners are involved in all stages of the drafting as well as transposing of directives, so there are no surprises when the transposition process begins in the member states. Some directives allow member states a broad scope to adapt its objectives into national laws or agreements. The subject of directives may be more or less similar to existing national laws or practices. In the case of the European Works Council Directive, it allows member states a number of options by which to transpose the directive; the subject is quite compatible with existing national laws and practices in some member states and quite foreign to others. This chapter considers how the member states have transposed the EWCD and what factors affected how they handled it.

EWC Background Several background factors affected the way the EWCD was drafted as well as how it was transposed in the member states. National industrial relations systems, laws, and cultural norms are particularly relevant background factors. The EU’s six original member states represented national cultures known for their reliance on well-defined legal rights 121

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and obligations. The three later members—the UK, Denmark, and Ireland, who joined in 1973—brought different traditions. Their industrial relations systems depended largely on practices such as “gentlemen’s agreement” customs and unwritten agreements, and on the belief that the two sides of an agreement could resolve any problems that might arise from it. The parties did not look to the law to regulate their actions. Geert Hofstede’s work shows that the cultural traditions of the original six member states, all of whom were part of the Roman Empire, score high on the uncertainty avoidance scale. 2 The traditions of codified law and of government by law persist in the countries that are heir to the Roman Empire. According to Hofstede, the six original member states are in the top quarter of the fify-three countries studied in regard to uncertainty avoidance, and the three that joined later are among the bottom six.3 This first enlargement brought two basic industrial relations traditions together: the legalistic one of the existing six member states and the voluntaristic one of the three newer members. From that point, the Commission began to shift from a purely legalistic approach toward one that combined legalism with voluntarism. Directives began to contain a provision either to allow member states to transpose the directive through legislation or regulation or to empower the social partners to reach a collective agreement as long as the agreement had an equivalent effect. The addition of more members—Greece in 1981, Spain and Portugal in 1986, and Austria, Finland, and Sweden in 1995—added more diversity to the environment in which EU social policy is implemented. The probable accessions of countries in central and eastern Europe will further increase the diversity.

Transposition of the Directive In the EU system a directive is a legal instrument that lays down objectives to be achieved by member states through incorporating the terms of the directive into national legislation, regulations, or agreements in a way that accommodate differences in national laws and practices. Thus the EWC directive was to be transposed by September 1996 into the eleven national legal systems it covered. The process of transposition and implementation of EU directives in the social policy sphere underwent significant change as a result of the Social Policy agreement in the Maastricht Treaty in 1992. Under Article 2 (4) of the agreement, EU states have the option of entrusting

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to the social partners the responsibility of implementing EU directives. This option is consistent with the general EU objective of promoting social dialogue between management and labor according to national practices and procedures. It is also in accord with the EU Commission’s intention to increase flexibility in order to accommodate the diversity of practices across the member states. One additional point should be reiterated. The EWCD provides for voluntary agreements under Article 13, which shields multinationals that conclude such agreements from the impact of national transposition measures. Voluntary agreements can be renegotiated and extended when the original term of the agreement expires, thereby exempting the company from many provisions of the directive and of national transposition measures.

National Transposition In transposing the EWC directive, national governments can “customize” the arrangements in line with existing national practices. They can act through legislation or by delegating the task of transposition to the social partners. Much has been made about the subsidiarity aspect of the EWC directive, that is, leaving to the national level the issues and details best determined by national actors in transposing the directive. However, the EWC directive is not the first to provide for subsidiarity. Directives lay down agreed objectives to be realized by national governments generally via national legislation. For example, two directives from the 1970s, on collective dismissals and on employee rights in the event of the transfer of ownership—both of which contain employee rights to information and consultation—were handled this way. A number of directives on safety and health at work also have been incorporated into national legislation in line with existing national practices. An important aspect of the EWC directive is that it introduces a new structure at European level by means of national rules derived from incorporating the directive’s objectives into national legislation. This differentiates the EWC directive from others in the social and labor field. What, therefore, will be the key determinants in the process of transposing the directive and the national arrangements arising from it? First, the institutional and legal “gap” between the existing national practices and the standards contained in the directive will indicate its likely impact in any country. It also will reveal the dimensions of the tasks facing national organizations in the transposition process. For

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example, Germany has existing legislation on works as well as company-wide councils to keep employees informed on company developments that affect them. In other countries such as the United Kingdom and Ireland, no similar system exists. In Germany, therefore, the impact of the directive, the climate in which the transposition takes place, and the work needed to transpose it are likely to be less stressful than in a country where existing arrangements are less well developed. In countries like Germany, established practices exist for electing or appointing employee representatives in companies. In other nations this is less often the case. In the UK, for example, the selection of employee representatives is an informal affair with no statutory basis. Second, the transposition process has attracted the attention of political and socioeconomic organizations both inside and outside the country. As experience in the Netherlands shows, national labor and employer’s organizations have been involved with government offices and parliament, both formally and informally, during the transposition process. From outside the country, international and European-level trade unions, as well as Japanese and U.S. chambers of commerce in Europe, also have attempted to influence the outcome of the Dutch and other national processes. These external bodies bring with them benchmark standards from the transposition processes in other countries. For example, the European industrial union federations cooperate with their national affiliated organizations and brief them on experiences elsewhere. They can appoint one of their own officials or nominate an affiliate’s senior official to act on their behalf. Third, the transposition will be influenced by the political motivations of the government and the ruling parties, and also each country’s parliamentary procedures for passing national legislation. In assessing the performance of national authorities in this respect, only six out of seventeen countries met the September 22, 1996, deadline.4 Of particular relevance is whether the government is disposed to designate the labor unions as a negotiating partner. The Italian Act of Parliament names the three national labor union confederations as authorized negotiating bodies for employees. French transposition legislation specifically designates labor unions as the employee representative bodies for negotiating purposes. The British Trade Union Congress (TUC) has demanded that a similar provision be placed in UK legislation; it seeks to maintain a role as the sole representative of workers in the new situation and to impress this view both on the Labour Party (of which unions are the biggest financial supporters) and the Labour government. The success of unions in some countries in establishing their negotiation and representation rights in national legislation on EWCs

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bears witness both to the inclination of governments to go down this track and to the importance that unions attribute to national aspects of EWCs. Fourth, national governments have shown a determination to prevent the erosion of well-established, national industrial relations’ arrangements in the face of EU directives. They do not want “interference” from the EU in regard to national systems of industrial relations and other issues. The national social partners, who are concerned about their own future role, share the national governments’ concerns. As Roger Blanpain and T. Hanami point out, the directive is a balance of subsidiarity (adaptation consistent with national practices and circumstances), proportionality (cooperation between the governments and social partner organizations in the preparation and transposition process), and flexibility (allowance in the directive for a number of transposition options).5 This balance allows the national governments and the social partners to preserve existing practices while dovetailing them into the directive’s requirements. The EU directive, therefore, is not a vehicle for the harmonization of practices; however, too much variation in the transposition of the directive could undermine the effectiveness of the measures involved, as well as lead to accusations of unfair competition.6 Fifth, the outcome of the national transposition process is important for both companies and trade unions. It accounts, in part, for their involvement in national deliberations. The transposition agreement affects the role unions will play and the scope companies will have in operating their EWCs. Transposition measures are important in determining which country a company chooses to anchor its EWC agreement. The national legislation is the legally actionable one in the event of a dispute involving an EWC. Sixth, the external trade union structures in the EU lead to potential overlapping of jurisdictions and competition between the national confederations and between their respective national affiliates. For example, an enterprise in Italy will likely have representatives from two, if not three, of the main confederations, CISL, CGIL, and UIL. The UK has only one national confederation, but multiunion representation occurs among the several horizontally organized unions. In order to avoid internal union tension, the ETUC issued a protocol of procedures regarding EWC negotiations. The protocol gives an important role to the European sectoral or industry union federations. The protocol stipulates that no ETUC affiliate should initiate steps toward establishing an EWC without involving the industry federation(s) and the union(s) in the country where the enterprise is headquartered. The ETUC also stipulated that unions in the UK and Switzerland (both excluded from

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the directive at that time) and in eastern and central Europe should be included in the EWC negotiations whenever possible. The ETUC protocol specified key provisions to be incorporated into agreements, such as involvement of full-time union officials and gender balance in worker representation, in order to establish some minimum standards across EWC negotiations. Finally, to minimize the potential diversity in the transposition measures, a transition working party was set up consisting of national government representatives and a secretariat provided by the European Commission. This party drew up guidelines and recommendations to assist national governments in drafting their own measures. The purpose of the working party was to keep the national measures as close as possible to the directive and to limit divergence among various national measures.

Country Results Article 14 of the EWC directive allows for transposition measures to take the form either of collective agreements or legislation. In the former situation, governments must ensure that the agreements comply with the directive’s objectives through back-up legislation. The seventeen countries covered by the directive (excluding the United Kingdom until after 1999) can be divided into three groups according to whether they choose to transpose the directive by collective bargaining or by legislation. Belgium, Italy, and Norway effected the transposition through collective bargaining by the social partners, leading to an agreement which was backed up by legislation. Denmark and Sweden tried but failed to secure a collective agreement. Germany, Austria, France, Finland, Greece, Portugal, Ireland, the Netherlands, and Spain opted for national legislation from the outset, albeit with consultation with the social partners. Luxembourg lagged behind the other countries, and the UK was excluded from the directive until December 1999. The social partners in Belgium, working within the framework of the National Labour Council, reached an agreement in place of a draft law the government had submitted to them for consideration. The agreement was subsequently backed up by legislation to guarantee its enforcement. As legislation has played a minimal role in Italy in industrial relations, it was appropriate that the three main union confederations and the two employers’ organizations should conclude a collective agreement.

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The EWC directive provided the Italian industrial relations system “an opportunity to develop company-level institutions within the European framework but without the need for domestic legislation.“7 The agreement ensures that unions have a strong stake in EWC development in Italian companies. For example, the agreement gives management or one hundred employees the right to initiate the procedure to negotiate an EWC agreement, and it also gives this right to unions. The agreement stipulates that relevant unions shall decide the composition of the special negotiating body (SNB). Although the agreement was not signed by every union in Italy, it applies to all unions and to situations where no unions exist and gives an important role to the joint trade union bodies that operate in many Italian workplaces. Although the social partners concluded the agreement on time, back-up legislation has been slow in coming, and none had been passed as of the fall of 1998. In Norway, the social partners concluded a national agreement as a means of transposing the EWC directive. Centralized agreements are the norm in Norway, so the EWC agreement fell into this mold. The government has had to introduce legislation to guarantee backup for the agreement. The long tradition of voluntarism in Sweden appears to be breaking down because of tensions among the social partners over centralized wage bargaining. In spite of the tension, the government tried to foster voluntary negotiations for an EWC agreement, but the employers’ association neutralized its efforts and forced the government to transpose the directive through legislation. Although Denmark has a long tradition of voluntarism, the government was forced to adopt transposition measures via legislation. The Danish social partners, especially the unions, guard their autonomy jealously. They are negative about edicts coming from Brussels and try to preserve existing practices based on voluntary agreements. For example, the Danish union voted in 1999 against an EU directive of fixed-term agreements even though it was based on an agreement negotiated by the EU social partners. The countries opting for national laws have drafted the legislation to complement existing national practices. Legislation was concluded in Germany on October 18, 1996, and in Austria on October 16, 1996. The engineering and chemical industries tried to negotiate voluntary agreements in Germany, but these attempts foundered and legislation resulted. Germany and Austria have well-established and effective national works councils at plant, multiplant (company), and group levels. Both countries require that members of the special negotiating body come from works councils. Although the representatives are likely also

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to be union members, the legislation does not attribute any role to trade unions in this context. The legislation in both countries provides for inclusion of representatives from the UK and from the European Economic Area to EWCs if the SNB and central management so agree. The social partners in France did not expect to reach a voluntary agreement; French transposition was by legislation that, however, extended certain rights to labor unions regarding special negotiating bodies and stated that Article 13 agreements are valid only if concluded by labor unions. French law also gives unions the right to appoint participants on SNB and on EWCs from among their works councils’ representatives. French-based EWCs are composed of both management and employee representatives, as are the national works councils in France. All the governments that opted for legislation involved the social partners in bilateral consultations during the formulation of draft legislation. While the national laws have a basic similarity because they must conform to the EWC directive, each has characteristics that reflect national concerns and practices. For example, the Dutch legislation reflects both the Dutch tradition of consensus building and their desire to protect the role of Dutch works councils. Both employers’ groups and labor had opportunities to consult with the government and insert items into the final document. One provision in the Dutch law, which labor requested, is the requirement that management will bear the cost if a legal action is taken regarding the work of the EWC. Failure to insert a comparable provision in the law in other countries has led to at least one bitter dispute in an EWC, when employee representatives believed that management had violated the agreement but could not afford the legal recourse to establish their rights. The French law is generally regarded as the one most carefully crafted to accord with existing national labor laws. It even provides criminal penalties for managers who refuse to negotiate for an EWC agreement.

Conclusion The EWCD offered sufficient flexibility to allow enterprises, labor unions, employers’ organizations, and governments scope for achieving the objectives of the directive in ways suitable to the parties involved. Article 13, which provided for voluntary agreements between employers and employee representatives, allowed the social actors the opportunity to cut deals best suited to their needs, using collective bargaining traditions. In a way, this underpinned the raison d’etre of the unions. Voluntary agreements predated the transposition of the directive into

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national legislation and were a manifestation of the EU’s aim of encouraging voluntarism and flexibility. The Commission encouraged voluntary agreements by incentives that allowed enterprises an exemption from national legislation—an exemption that can be extended into the twenty-first century. The directive also provided flexibility for the national governments in delegating responsibility for transposition to the social partners or opting to transpose the directive through normal legislative procedures. The majority of member states followed the latter course. The actors in the transposition process had a choice at each stage between voluntary or legalistic procedures. The Commission positioned itself well in relation to the two main industrial relations’ traditions in the EU. Article 13 agreements, national collective agreements, and national legislation all allowed considerable scope for the relevant parties to craft the directive in terms appropriate to their perceived requirements. To sum up the transposition of the directive, most national arrangements kept close to the conditions and content. National legislation in the member states has many similarities with regard to specific issues such as the definition of employee representatives. The transposition working party of national government representatives played a significant role in preventing large disparities, as the working party placed a high priority on harmonizing procedures for the special negotiating bodies. The ETUC protocol that guided the work of the European industry federations also ensured a degree of consistency in the unions’ negotiating position. The protocol laid down rules for the role, functioning, and composition of EWCs, which provided a benchmark for union negotiators. Furthermore, the Commission’s practice of contacting national governments about a year after the approval of a directive helped constrain any divergent tendencies. In addition, the member states themselves feared that marked disparities in national legislation would lead to unfair competitive advantages for those countries with lower legal norms. Each country has grafted the directive onto its existing national custom and practice, be it voluntary or legislative. Countries with works councils generally follow existing national practices regarding the selection of employee representatives, the role of unions, and so on. Transposition measures build quite naturally on national foundations. The five countries with a voluntarist tradition were not uniformly successful in following this tradition when adopting transposition measures. Two of them had to resort to legislation following the social partners’ failure to reach agreements, but social partners in the remaining countries successfully negotiated agreements.

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Transposition measures differ in the role they extend to trade unions. In those countries where the measures were adopted via collective agreements, unions have an important role in the formation and operation of EWCs. In others such as Germany, where transposition occurred through legislation, the role of unions is less defined; France, while opting for legislation, explicitly accords a role for them. The maverick situation of the UK has changed from an opt-out to an opt-in. On September 24, 1997, the Commission of Ministers agreed to a directive extending the EWCD to the UK, and the Council subsequently approved it. The directive poses some different and difficult problems for the country, for it has the most entrenched voluntary tradition and a political climate favoring labor market flexibility with minimal legal regulation. The UK will have difficulty specifying employee representatives for SNB and for EWCs because it has no existing statutory provision for such representation. The directive came into force in December 1999, and UK companies that have kept out of EWCs will now be included. They have the choice of concluding voluntary agreements or waiting for national legislation. The existence of different national transposition measures poses an unusual legal challenge for governments. The directive’s provisions, as transposed into national legislation, extend beyond the national borders of one EU state. For example, a multinational corporation having France as its legal headquarters must respect the provisions of the directive as transposed in French law not only in dealing with its French employees but also with its employees covered by the directive in other member states where the corporation operates. In conclusion, the EWCD appears to have been accommodated within the existing practices of each country, and wide disparities have been avoided. The apparent relative success of the transposition process may be undermined, however, by the fact that in 1999, the number of voluntary agreements was six times higher than the number of agreements concluded under national transposition measures. In other words, most corporations operating EWCs do so under voluntary agreements, and only a small number of them are bound by national transposition measures. The result may be that more disparity exists in the implementation of the EWCD than would appear possible if one considers only national transposition measures. This possibility will be considered in Chapter 8. When the Commission issued its report on the application of the directive in April 2000, it was generally complimentary about the way the member states had transposed the directive. The Commission, however, noted that Portugal was slow to transpose the directive and that

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Italy had not fully transposed the directive through its collective agreements. Italy was warned to adopt supplementary legislation or the Commission would open infringements procedures against it.8

Notes 1. Few scholarly sources exist on the subject of transposition. Most of the discussion in this chapter is based on actual transposition documents supplemented by numerous interviews with relevant parties. A good summary of the national transposition documents is contained in European Trade Union Confederation, Transposition of the EWC-Directive into National Law (Brussels: European Trade Union Confederation, 1998). 2. Geert Hofstede, Cultures and Organizations: Software of the Mind (New York: McGraw-Hill, 1997), p. 135. 3. Ibid., p. 113. 4. The six countries were Belgium, Norway, Sweden, Denmark, Finland, and Ireland. 5. Roger Blanpain and T. Hanami, eds., European Works Councils: The Implementation of the Directive in the Member States of the European Union (Leuven, Belgium: Institute for European Law, University of Leuven, 1995). 6. Research by the Trade Union Technical Bureau, the research agency of the European Trade Union Confederation, indicates that the transposition of health and safety directives provides an example of a situation in which the extent of divergence in the national transposition measures is great enough to undermine the effectiveness of the original directives. (ETUC, Conference Proceedings, Brussels: December 1–2, 1997.) 7. “National Agreement on Implementation in Italy,” European Works Council Bulletin, no. 7 (January-February 1997): 5. 8. European Commission, Report to the European Parliament and EU Council on the Application of the 1994 European Works Council Directive (94/45/EC), April 4, 2000.

8 MNCs and EWCs: The Testing Ground for Policy

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he operation of European works councils in multinational corporations is the last stage in the implementation of the European Works Councils Directive. It is the testing ground to demonstrate if the directive is providing the benefits promised by its proponents. It is also the place to ascertain if a social policy, which has been adopted by member states with varying degrees of diversity, provides employees with a common degree of protection. The study of policy implementation inside MNCs is a major challenge; it is the dark continent of EU policy studies. The reason for the lacuna is not difficult to find. The number of MNCs operating inside the EU is daunting, and defining a sample of MNCs for study is difficult because of the diversity among them and the intervening variable of national transposition measures. The organization of an MNC and the national culture in which it operates may affect the EWC. Moreover, the directive itself as well as the way member states have chosen to implement it provide grounds for significant variations in the operation of EWCs. Adding to the challenge is the fact that several hundred EWCs are now in operation and more are being formed. Researchers at this stage in the development of the EWCD can only start on what will be a long-term project. Despite the difficulties, however, it is important to begin, to look for patterns, to try to ascertain the influences that shape the operation of EWCs, and to pinpoint obstacles to their operations. The material in this chapter is based on early studies by interested parties such as trade unions and employers’ associations, on research carried on by the European Foundation for the Improvement of Living and Working Conditions, and on field research by the authors. 133

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Around thirteen hundred MNCs are covered by the EWC directive, and eventually as many as thirty thousand persons will be involved in the work of an EWC. They will not necessarily have a uniform experience, however. The directive allowed member states broad scope for how it was transposed into national legislation; moreover, MNCs had two years before the directive came into force, during which time they could negotiate voluntary agreements, called Article 13 agreements in reference to the enabling article in the directive. EWCs negotiated during the voluntary period do not have to conform to the strictures of the directive so long as they cover the entire workforce and provide for transnational information and consultation.

Voluntary Agreements Approximately four hundred voluntary agreements were negotiated in the two years before the September 1996 deadline, while only fifty were negotiated in the following two years.1 Prior to September 1996, employers were eager to reach agreements in order to avoid the strictures that came into effect after that date.2 They avoided not only provisions in the directive but also ones in national transposition measures. The participants involved in negotiating voluntary agreements did not have to include representatives of all employees to be covered by the agreement. In many cases, the employee representatives were a small group of experienced negotiators well prepared to reach an agreement with employers who were eager to reach one before the deadline for voluntary agreements.3 The European Foundation for the Improvement of Living and Working Conditions commissioned a study of 386 of the approximately four hundred voluntary agreements.4 The researchers found that twothirds of the MNCs covered are headquartered in Germany, France, the UK, and the United States. (The directive applies to MNCs operating in the EU if they have the requisite number of employees, even though the MNC headquarters is outside the EU.) Most of the MNCs are manufacturers, but 13 percent are in the service sector. The higher rate of trade union membership in manufacturing probably explains why more agreements were reached in manufacturing firms than in service industries. The importance of trade unions and national works councils in initiating negotiations for EWCs can be determined by noting who signed the agreements. Trade union representatives signed 45 percent of the agreements, and national works council representatives signed

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about 34 percent; some were signed by both. Only about 25 percent of the agreements were signed by undesignated employee representatives. Most of the agreements provide for a French-style council in which both employers and employees participate, while a large majority provide for participation by employee representatives from countries not covered by the directive, such as Switzerland. Most of the agreements state that the function of the EWC is to provide information and consultation, and they list topics to be discussed in meetings, such as employee-related issues. Only non-European–based MNCs and UK and Irish MNCs specifically designated topics not to be discussed, such as pay. Most EWCs are relatively small with fewer than thirty members. Membership is generally allocated proportionately according to size of the workforce in the relevant countries or on a flat rate for each country represented. The MNCs’ country of origin appears to influence their willingness to negotiate agreements. Many observers were surprised at the number of UK firms that negotiated agreements despite the UK opt-out at that time. Apparently, some trade unions played an active role in requesting negotiations in the belief that UK employees needed a European style of participation. Some employers, assuming that the opt-out would not last indefinitely, also preferred to negotiate during the voluntary period. A study of voluntary agreements in Nordic countries found further evidence that nationality matters. Although all four Nordic countries studied had more than the average number of voluntary agreements in proportion to the number of eligible MNCs, Norway and Finland had a much higher rate (78 percent and 62 percent respectively) than Denmark and Sweden (29 percent and 25 percent respectively).5 The researchers explained the high rate on the grounds that the social partners in the Nordic countries have a tradition of collaboration. They further asserted that the differences among the four countries result from the fact that Norwegian and Finnish employers have had more experience with employee participation at a group level than have their Danish and Swedish counterparts. (National works councils generally involved only the employees in a single company or subsidiary; corporations in Norway and Finland also have works councils at the group level.) Other researchers also agree that in most cases, employers from countries where national information and consultation practices are required either by law or by agreements are more likely to enter EWC agreements than employers without such experience.6 A number of French MNCs already had experience with European works councils before the acceptance of the EWC directive. In some

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repects, French experiences in the 1980s were a trial run for the EWCD. Under a socialist government in the 1980s, the French adopted legislation requiring enterprises to have national works councils at the group level. During the same period, a number of large corporations were nationalized and new top managers were put in place under the influence of the socialist government. More than ten of the newly nationalized corporations established European works councils before the adoption of the directive, the first one being Thomson Grand Public in 1985. According to Udo Rehfeldt, French trade unions requested that the French government adopt national legislation after the EU failed to adopt a proposal for worker information and consultation.7 Rehfeldt also asserted that some French managers believed employee involvement would be beneficial and facilitate the modernization of production processes.8 French EWCs generally involve participation of both employee representatives and employers, who are responsible for drawing up the agenda and chairing meetings. The French style of joint council is the most common form among all EWCs. The German form, in which only employee representatives are members but in which managers may be invited to attend meetings, is less common. The situation of the United Kingdom was rather unique given that the UK was excluded from the directive. The exclusion did not preclude, however, British MNCs and British employees from participating in EWCs in certain situations. British MNCs with operations in other EU/EEA countries came within the legal catchment of the directive. Employees of British companies in other European countries had the right therefore to information and consultation under the terms of the directive while employees in Britain did not. In theory, a voluntary agreement in a British transnational could cover non-UK employees and exclude ones in the UK. Second, non-British companies operating both in the UK and other EU/EEA countries came within the scope of the directive and could conclude voluntary agreements. Legally, British employees could be excluded from the total number of employees in the company and from the provisions of the voluntary agreement. In practice, British employees were included either because the company so decided or because the labor unions and works councilors from other countries insisted on including their British colleagues. In either case, labor and management penetrated the fence the British government sought to put around the UK when it opted out of the directive. In 1997, the new British government accepted the Social agreement under Maastricht, and the situations for British companies and employees took another unique turn. Another three hundred companies (119 of which are UK based) came into the directive’s coverage. The companies

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had until December 1999 to negotiate voluntary agreements; after that, they would have to comply with the transposition measures the government would establish. Prior experience with works councils appears to be an important factor in determining which MNCs entered voluntary agreements. In total, nearly two-thirds of all voluntary agreements were attributable to the Germanic-Dutch, Nordic, and Franco-Belgian groups of countries, all of which have national works councils. The Germanic-Dutch alone accounted for 33 percent, while the Anglo-Irish accounted for only 15 percent, which may be partly attributed to the lack of experience in Anglo-Irish companies with works councils. Another factor that appears to encourage some MNCs to enter voluntary agreements is the MNC’s sector or type of industry. Voluntary agreements tend to be concentrated in certain sectors. Thirty-five percent of all voluntary agreements are in the metalworking sector. The chemical sector and the food, drink, and tobacco sectors are also well represented. In contrast, the textile, mining, and construction sectors account for only 3 percent of the total. Voluntary agreements tend to be somewhat vague on several crucial points and particularly on the timing for information and consultation. Agreements typically do not specify when information and consultation should take place—before a decision is made or before it is implemented. Because the directive does not provide a precise definition, the failure of agreements to specify one has led to many bitter disagreements between employers and employee representatives about the timing of information and consultation. Despite the broad scope given to drafters of EWCs during the voluntary period, the councils they designed are surprisingly similar. Most agreements establish a structure with many of the features known in national works councils. Most provide for participation of both employee representatives and representatives from management. German MNCs are the major exception. Nearly two-thirds of German EWCs have employee-only representatives. UK and U.S. companies overwhelmingly practice joint representation. The structure of most EWCs covers the entire operation of a MNC. A minority of companies (prevalently U.S. ones) provide separate EWCs for different product or activity divisions. The decision appears related to the extent the MNC operates with a centralized or decentralized organization. The approximately four hundred EWCs established by voluntary agreements provide a tantalizing subject for researchers interested in employee participation in Europe as well as EU social policy. The EWCs are a pioneering effort and a bold undertaking, and their study is

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fascinating and important. One should remember, however, that findings regarding EWCs that operate under voluntary agreements do not necessarily apply to ones operating under the tenets of Article 6 of the EWC directive.

Field Research Findings Interviews among EWC participants elicited some interesting insights into EWCs. The interviews were conducted during 1997 and 1999 and involved employee representatives, human resource managers, consultants, and representatives of trade unions and employers’ associations. The research focused primarily on British, U.S., German, Swedish, and Japanese MNCs, but some interviews were with individuals from MNCs headquartered in other countries. Discussion of the research is divided into findings regarding the establishment of EWCs and those regarding their operation. The initiative to establish an EWC generally came from a trade union industry group, but some human resource managers initiated negotiations as a preemptive measure that allowed them to control a process they knew was inevitable. The decision to proceed with negotiations was always made by the headquarters of the MNC involved, but usually after discussions with human resource managers at national sites. U.S. MNCs appeared to have the most difficulty reaching a decision, and input from European managers was frequently needed to convince headquarters to proceed. Using the concepts of D. A. Heenan and H. V. Perlmutter (discussed in Chapter 2), all the MNCs involved would be classified as ethnocentric because the headquarters controlled the decision.9 Some evidence was found, however, of a movement toward regiocentric decisionmaking in that human resource managers from the various European sites cooperated and tried to influence the headquarters. As a generalization, it is probably correct to say that all the leaders of the MNCs studied regarded the decision to establish an EWC as a major one requiring consideration at the highest levels. Although each MNC made its own arrangements for the negotiations to establish its own EWC, some individuals and groups were involved in negotiations for several different EWCs. One consultant was involved in almost all negotiations for voluntary agreements carried on by U.S. MNCs; his pragmatic approach was acceptable both to U.S. headquarters and to European employee representatives and resulted in balanced agreements. Franco Bisegna, the general secretary of the European Federation of Chemical and General Workers Union (an industry

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trade union), was involved as an outside expert in numerous negotiations in the chemical sector and was admired as a master negotiator by both employees and managers. Various labor unions and employers’ associations played important roles as well. As a result, the outcomes of the individual negotiations frequently show commonalties with one another and were not sui generis actions, as they might appear to an observer. The nationality of the headquarters affected the negotiation process. German MNCs and British/U.S. MNCs marked the two extremes in regard to establishing a milieu for the negotiation. German MNCs created a hospitable bargaining atmosphere by hosting dinners for the participants and involving high-level managers in negotiating sessions. U.S. MNCs were much more reluctant and suspicious of a procedure that was so foreign to their managerial ethos. They were less willing to meet with trade union officials than were Germans. British managers frequently mentioned the costs of setting up an EWC and occasionally made it difficult for British employee representatives to participate in planning sessions. Neither British nor U.S. MNCs invited employee representatives to social affairs, and both denied employee representatives access to buildings in which to hold meetings. Surprisingly, employees did not take the initiative to demand negotiations for an EWC in any of the cases studied; indeed, they appeared to be indifferent to the prospect of an EWC. Their elected representatives or trade union officials, however, took serious interest in the process, and trade unionists often initiated the negotiations. Many had a list of items, provided by their union, that they wanted to include in the final agreement. They wanted the EWC to meet more than once a year, especially if an extraordinary decision by management was pending; they also wanted to include outside experts (usually trade union officials) and to have an agenda on which to place items for consideration. A number of studies exist concerning the written agreements that establish EWCs and set out their terms of operation.10 The agreements studied in our field research did not differ markedly from those studied by other researchers. Most provided for a joint employee/manager forum with representation from all European countries in which an MNC had operations, including representatives from non-EU countries. The agreements from U.S. and British MNCs were generally shorter than those from other countries and either did not list subjects to be discussed in meetings (Article 13 agreements) or listed only those required by the directive (Article 6 agreements). A German MNC provided the most generous list of subjects, and it also provided for two meetings a year. One of the most progressive agreements from an

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employee perspective was negotiated by a Japanese MNC, with a Japanese human resource director leading the negotiations. The agreement mentioned trade unions as employee representatives (as do French agreements) and provided for joint discussions among managers and employee representatives—unlike other agreements, which state that only managers will provide information. Most agreements give control of the agenda to employers but allow employee representatives to suggest items for inclusion on the agenda. Few include training for participants. As an overall observation, the agreements covered in our field research established works councils on the French model, which means they are bodies where managers are in control and whose main function is to provide information to employee representatives. The issues of consultation, training, and feedback were left for later consideration. While the EWCs included in the field research are still in their infancy, interesting developments are already discernible. The operation of an EWC appears to be less influenced by the written agreement than by the attitudes of managers involved with it. Some managers appear determined to keep the EWC in a weak position. They sought a voluntary agreement in order to avoid the requirements of Article 6 agreements. They take a minimalist approach, refusing to fund items like outside experts unless they are required by the agreements. They limit access to the agenda, do not send ranking managers to EWC meetings, and obstruct contacts among employee representatives. Many are also slow to provide minutes of meetings and do not disseminate them to employees. One potentially divisive approach taken by several managers is to announce an expected reduction of jobs at an EWC meeting and inform participants that the cuts will be made where labor costs are highest, thus pitting the various workforces against each other in a competition to control wage costs. Even when managers are not hostile to EWCs, they question the need to interrupt the schedules of highlevel managers and fly them to employee meetings. Given the demands such managers have on their time, EWCs do not appear to be a high priority. Not only can EWCs be an aggravation to managers in their dealings with employees, they also can cause tension inside the ranks of management. Some mid-level managers mentioned that members of the EWCs had more information than they did regarding future plans of the corporation. They felt isolated from headquarters and believed they had lost status as the purveyors of information to employees. Other managers, however, particularly human resource managers, recognize the potential of EWCs as a communications medium to

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increase understanding among employees about the needs of the corporation. Some have developed good working relations with employee representatives. A number of human resource managers who were initially skeptical about EWCs changed their opinion after their EWC started operating. One commented that the participants were much less demanding and more understanding than he had expected. Although many managers had feared that information provided to EWCs would be leaked to competitors, no manager interviewed mentioned that such a leak had occurred. In general, human resource managers appear to accept EWCs as an obligation that can be handled and one that does not need to be a high priority in their list of tasks. The employee representatives who were interviewed were all experienced negotiators involved in trade union activities and/or works councils. They were pragmatic in their approach to EWCs, regarding them as means to gain access to information. They took on the task at some cost since their fellow employees often described their travel to meetings as junkets, and managers were not always willing to allow them time to carry out their duties. Some of them expressed disillusionment with the quality of information provided at meetings and the lack of discussion about issues affecting employees. They also found that a number of issues needed to be clarified, including the meaning of information and consultation. Our research showed that many employee representatives could not participate effectively in EWC meetings because of language problems and lack of training. Many meetings are devoted to the presentation of detailed corporate reports that participants are not prepared to understand. The issue of training needs to be resolved.11 The EU argues that training is the responsibility of the social partners, although it does provide some funds for training. Employers do not want to add another expense to what many regard as the already high costs of EWCs. Some unions, especially the German metalworking union, provide training, but they do not have funds to cover training for all participants, whose total may reach thirty thousand. Moreover, communications are hampered by language barriers. Interpreters are usually provided by the MNC for EWC meetings, but they may not be available for every language represented in the room. In addition, interpreters are usually not provided for informal occasions (e.g., social gatherings and meals) when important contacts should be made and confidences exchanged. Participants almost without exception claim that language problems are a major barrier to rapport among representatives from different countries, as well as in their discussions with management. They comment that informal but valuable discussion can take place only between

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participants with a common language. Language courses are included in a few training programs, but they are wholly inadequate for the need. Employee representatives who were interviewed were aware of cultural differences but did not regard them as a serious barrier, unlike language differences. Indeed, a number provided anecdotes showing that initial suspicion about their peers from other countries gave way to acceptance, if not respect. In one example, a British participant who was in tough contract talks in Britain received useful information from a Portuguese employee representative regarding how the MNC had handled a similar negotiation. Several examples were provided of situations in which German employee representatives or trade union officials intervened with their own managers to help participants in disputes in other countries. Many mentioned the effectiveness of German participants, which is not surprising given their long experience with German works councils. What is surprising, however, is that no one singled out Swedish or Dutch participants as helpful, given that they also have experience with national works councils. In fact, several participants commented they were disappointed by the lack of support from Dutch and especially Swedish participants. Two explanations are possible. Some have argued that the Dutch and Swedish participants have such a close relationship between employers and employees that they do not need EWCs and therefore take little interest in them, but the same explanation should apply to Germans in that case. A more likely explanation derives from cultural differences. The widest difference between the Dutch and Swedes on one extreme and the Germans on the other is on Hofstede’s masculinity/femininity scale. It may be that Germans, who rank higher on masculinity, are more comfortable playing an assertive role in a new body than are the Dutch and Swedes, who both rank high on the femininity scale and respect more modest behavior. Indeed, Dutch individuals often speak disparagingly about the “pushy” Germans. When employee representatives were asked about the greatest benefit that EWCs have provided, almost without exception they cited access to information. They saw the information not as a tool to use at the corporate level but as one that strengthens them for local negotiations. It is somewhat ironic that the EWCs, which were championed for so many years by persons desiring European integration, should have their first success on the national scene. In general, employee representatives appear somewhat satisfied with their experiences on EWCs and hope to make them into effective organizations. Feedback is the final topic we discuss in regard to the field research. Neither managers nor employee representatives seemed to make

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feedback a priority. Some human resource managers conduct polls to ascertain how EWC participants evaluate meetings, then make the polls available to employees. Most provide minutes of meetings, but no rules enforce their prompt and widespread dissemination. Some employee representatives report promptly to their fellow employees about developments on the EWCs, but many allow months to elapse before doing so. Employees are unlikely to regard EWCs as important unless both managers and employee representatives take the need for feedback more seriously. A summary of the minutes published in company newsletters or a brief presentation at a general meeting months after the EWC meeting will not stimulate much employee interest in an institution for which they had no intrinsic interest and that has yet to prove its relevance to them. The existence of EWCs has helped forge contacts among employees. Despite language difficulties, many employee representatives keep in contact with fellow participants in other countries. Many of the representatives interviewed mentioned they kept in touch via e-mail and believed access to a computer was essential to their work as an EWC participant. One trade union industry group is demanding that all MNCs provide access to e-mail for employee representatives. The potential for networks among employee representatives across the EU has interesting implications not only for the operation of EWCs but also for the conduct of collective bargaining.

Questions and Issues Relating to EWCs The question of who represents employees in EWCs is important because the directive gives member states flexibility in making that determination. Furthermore, MNCs had freedom to determine the selection of actors during the voluntary period. Three broad groups of actors comprise the category defined as employee representatives: union representatives, works councils representatives, and nondesignated employee representatives (individuals selected from the workforce without regard to their status either as members of the works council or as union officials). In reality, each of the groups, and especially the union group, can be divided into various subgroups. The creation of transnational employee representative bodies, that is, the EWCs, was both a challenge and an opportunity for labor unions. Previous transnational links involving workplace union stewards in some countries had been heavily influenced by left-wing groups, and such links threatened formal union structures by constituting a “union

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within a union.” Union officials were concerned to ensure that the new transnational structures not undermine traditional union functions. At the same time, union officials were eager to seize the opportunity presented by EWCs to become involved in a new area of organization and and to avoid the possibility of employers squeezing them out of their companies; they also wanted to gain control of the financial resources allocated by the EU to facilitate contacts among employee representatives before the directive came into force—around eighteen million dollars. Application for these funds was handled by the European Commission, which itself was anxious to have public money administered through legally responsible organizations such as labor unions or companies and not through plant-level employee representatives. The funding facilitated some hundreds of meetings among employee representatives throughout the EU during the formative stage of EWCs. Eventually, funding was extended to employers and also to joint employee/employer operations. Before 1996, unions appear to have grasped the initiatives with MNCs to be the parties involved in negotiating EWC agreements. Equally, MNCs were clearly prepared to recognize unions for negotiating purposes. Trade union representatives signed 45 percent of Article 13 agreements. Thirty-two percent of the agreements were signed by external unions (international unions that did not represent the employees of an MNC in collective bargaining), usually the European Trade Union Confederation. The relationship between the union group of employee representatives and the works councils’ group of employee representatives is complex. On the one hand, the unions regarded works councils’ representatives as competitors for control of EWCs and also feared they might be used by management to undermine union membership among company employees. On the other hand, elected works councilors in large enterprises are frequently union members and therefore complementary to any external union. The union groups are composed of both national union representatives and those of international unions. Research carried out by the European Trade Union Institute found that the importance of the two types of union representatives varied among countries. In France, almost half of union-signed agreements involved national, international, and European unions, and one-third involved only national unions. The predominance of international unions was even larger in the case of agreements with U.S. MNCs. Only 7 percent of such agreements were signed by national unions. International and national unions generally acted together in the case of agreements signed with British MNCs.

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The most significant conclusion from the study was the pivotal role played by unions in about three-fourths of the Article 13 agreements. International and European union structures have been directly involved in around two-thirds of such agreements where unions were signatories. Established employee bodies were involved in around twothirds of all Article 13 agreements. If the signators from German works councils are included (because German councils are generally regarded as unionized) then unions dominated about three-quarters of all Article 13 agreements. Some evidence of the relative importance of the three groups of employee representatives can be gathered by considering who has signed agreements of EWCs. Seventy-two percent of French agreements were signed by union representatives and none by works councilors. In Germany, however, only 4 percent were signed by union representatives and 66 percent by works councilors, reflecting the incompany statutory role of works councils in Germany. Not unexpectedly, 44 percent of agreements with U.S. enterprises were signed by unspecified employee representatives, that is, nonunion, and 18 percent by union representatives.12 Works councils’ representatives appear to play the most significant role in Dutch and especially German MNCs. Wolfgang Lecher documented the close working relationship between the chairman of the group works council and the person from management responsible for the EWC. He wrote that they formed the real power center.13 After September 1996, as previously mentioned, negotiations for EWC agreements became slower and more complex. Actors on both sides of the table experienced greater difficulties in reaching decisions. Employers sought to find ways to meet the minimum standards required by the directive and national transposition measures without losing the flexibility needed in a global economy. Employee representatives also had to conform to the directive. The required special negotiating bodies are a more diverse group than the more informal but generally more professional group of actors who previously represented employees. The law requires all employees covered by an Article 6 agreement to be represented.14 By 1999, only eighty Article 6 agreements had been negotiated.15 The agreements tend to be clustered in the same sectors as the voluntary agreements, with manufacturing industries dominating. More agreements were reached with U.S. MNCs than with those of other countries, which may reflect a preference for legal certainty under Article 6 rather than the broader freedom but greater uncertainty under Article 13. Despite the various differences, unions appear to be the

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dominant actors in the Article 6 agreements judging by the list of signatories of the agreements. The continued strong showing by unions is due, in part, to enabling legislation in countries like Italy, which provides for unions to be represented on SNB and to be signatories of the EWC agreements. The strong showing is likely also because of the continued efforts of unions, both national and international, to secure their role on EWCs. A number of issues have been raised since the implementation of the EWC directive, but none as contentious as the meaning of information and consultation. Employees believe that information has not been provided in a timely manner and that consultation should consist of serious dialogue regarding company plans before a final decision by management. Employers fear that the definition desired by employees would interfere with management’s right to manage. The famous Renault case illustrates the problem for both sides. Ironically, the case involves one of the model EWCs, established by a nationalized French corporation in 1993. In 1997, Renault announced the closure of the factory in Vilvoorde, Belgium, and the movement of production to Spain. Management argued that the need for restructuring was urgent and that it was not required to inform employees prior to the act. The Renault action was criticized by the European Commission. The event was a major news event and angered the public throughout the EU; the case was heard by both Belgian and French courts. Although the judgment was ultimately against Renault, the judges noted that the EWC directive, unlike the directives on collective dismissal or transfer of undertakings, does not state that information must be “provided in good time.” 16 Subsequently, the EU Council discussed the subject and requested the social partners issue a joint position on it. UNICE, the European employers’ association, while not denying that Renault was wrong, argued that the EWC directive did not need to be changed. The European Trade Union Confederation did not agree.17 The Commission then decided to put the issue before the Council when it met to reconsider the directive. The Commission only referred indirectly to the Renault case when it belatedly issued its report on the application of the directive in April 2000. It did not suggest a remedy, and the Council discussion of possible revisions of the directive has not been scheduled. Other cases, such as the Levi-Stauss and Philips cases, have kept the issue of information and consultation in the public eye. Most commentators believe that information should be provided in writing before a decision is made and that it should be comprehensive enough to give EWC participants a basis for reaching an opinion on the pending decision. They also generally believe that consultation should be early in

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the process so that the participants’ views can be considered when the decision is made. Although the issue of information and consultation is the most serious one, other concerns about the operation of EWCs have been raised by the social partners. Trade union leaders assert that management should do more to ensure that EWCs provide a balanced and open forum. The agenda needs to provide for input from employee representatives and be circulated early enough for employee representatives to prepare a response. In addition, management should provide more training for employee representatives and better translation services.18 Employee representatives are also concerned about situations where management uses the EWC to advise employees about proposed job cuts, probably at the least cost-effective site. The recent Ford case is an example. A Ford vice-president in Detroit used a video conference with employee representatives to warn that Ford would close its plant in Valencia if a labor dispute that started in 1998 was not ended. The company threatened to move production to Germany. An agreement was ultimately reached, but the case illustrates that management can use an EWC to pit employees in different countries against each other, undermining the potential effectiveness of employee participation.19 Employers, on the other hand, continue to regard the existence of EWCs as an issue. They believe that EWCs are a costly and inefficient way to provide employees with information. They further believe that EWCs impose a centralized structure on MNCs at a time when the organization of MNCs is moving toward greater decentralization. They also fear that EWCs contain a hidden agenda for trade union leaders who see EWCs as a step toward European collective bargaining, something most MNCs adamantly oppose.20 In addition, UNICE cites a study they commissioned from the firm of Ernst and Young that found social regulations to be the second most important factor inhibiting growth of companies in the EU.21 The UNICE study concludes that EWCs harm the competitiveness of companies in the EU.

Conclusion EWCs are now operating throughout the European Union, and more are in the process of formation. What they will become in the EU of the twenty-first century is difficult to foresee. The law can only partly shape the future, while much depends on the participants. Management may try to make EWCs empty structures in which bored participants listen to boring reports, or they may decide to use them as vehicles to

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improve understanding between employees and managers. Employees may decide that participation is not worth the trouble when their fellow employees show little interest and local managers make participation difficult. Some evidence of participants’ disillusionment already exists, and turnover among participants occurs. Current trends indicate that EWCs will function primarily as a locus for managers to present information. Employee representatives will seek information useful for national negotiations, and employers will try to limit the information given to what is required by the directive. In most cases, the struggle over the amount and timing of the information will be limited, but some conflicts will have to be resolved by the courts. The struggle over consultation, which is only just beginning, will be a more important one to observe. If EWCs gain full consultation rights, they will become true works councils, as they are perceived by their supporters in northern Europe. Despite evidence of weaknesses and problems, the fact remains that the operation of EWCs is going forward in MNCs throughout the EU. New items are appearing on agendas as participants gain respect for EWCs. EWCs take different forms, but they all require employees and managers to cooperate in a new format; they have the additional consequence of introducing employees to their peers across national borders. One German stated that Germans are not good at cross-border cooperation but they must learn. EWCs introduce a new dynamic in the EU that may create the basis for a pan-European culture of social participation and contribute to social convergence, as one authority has suggested, but such a development would be in the distant future.22 The existence of the EWC directive has forced MNCs to act. How they have acted and how fast they have responded has differed, as we have seen, according to a number of factors, including culture, the behavior of individuals, and the existence of trade unions. Despite differences, however, MNCs throughout the EU have implemented the directive either directly or via national transposition measures. The consequences are not insignificant. EWCs have not installed industrial democracy in the EU, but numerous tendrils are growing from the central fact of their existence, affecting both the way managers operate and the way employees deal with them and their fellow employees across the EU. Cultural differences affect the formation and operation of EWCs. This finding is not surprising. Business literature often treats the impact of the culture of the country of origin on the operation of MNCs.23 What is surprising is the fact that culture was an obstacle, not a barricade. The case of the UK is the most dramatic example. British MNCs and British trade union officials were in the forefront of establishing

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and operating EWCs despite a culture that does not favor values usually associated with works councils. Moreover, they acted in the face of government opposition to the directive. U.S. MNCs provide another example of culture acting as an obstacle and not a barricade. Early in the discussion for an EU directive for worker participation, U.S. MNCs representatives warned that their MNCs would disinvest before they would comply with such a requirement. No example of disinvestment for this reason was found, and as the evidence shows, U.S. MNCs have complied with the directive. Culture also has not prevented employee representatives from establishing contacts with their counterparts in countries for which they express antipathy. The French multinationals provide a different type of example of culture as an obstacle, not a barrier. The discussion in Chapter 4 pointed to French characteristics such as managerial hierarchy, centralization of control, and power distance that should be barriers to the successful operation of EWCs in French multinationals. The field research and current literature, however, report successful EWCs in French MNCs. The explanation may be that the first French MNCs to establish EWCs were either the ones discussed earlier, which were closer to the government, or ones such as Danone, which pioneered progressive reforms, including a flat management structure. All of these are atypical and raise the question of the malleability of culture. The real test of French culture and EWCs will come when EWCs are functioning in more typical French MNCs. Perhaps the cultural variable that links all participants on EWCs is pragmatism! When the law compels and the result offers some benefits or at least no great harm, then perhaps the EU has a basis for a common social policy. The evidence gathered from MNCs, the last stage in the implementation of most social directives, appears to tentatively support the conclusion that a common social policy is possible.

Notes 1. Willy Buschak, “Cautious Optimism from the ETUC,” Trade Union World, no. 9 (September 1998): 20. 2. “European Works Councils: A Progress Report,” Trade Union World, no. 9 (September 1998): 18. 3. Alan Wild, “Dealing with a Special Negotiating Body,” European Works Council Bulletin, no. 10 (July/August 1997): 14–16. 4. “European Works Councils: The Experience So Far,” Eironline (on-line service of the European Foundation for the Improvement of Living and Working Conditions), March 1998.

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5. Henric Diefke, “Works Councils in Nordic Companies: Voluntary Agreements Slightly Below the Level of the Directive,” Nordic Labour Journal, no. 1 (1998): 22. 6. Paul Marginson, Mark Gilman, Otto Jacobi, and Hubert Krieger, “Negotiating European Works Councils: An Analysis of Agreements Under Article 13,” Interim Report (Dublin: European Foundation for the Improvement of Living and Working Conditions, March 1998). 7. Udo Rehfeldt, “European Works Councils—An Assessment of French Initiatives,” in Wolfgang E. Lecher and Hans-Wolfgang Platzer, eds., European Union—European Industrial Relations? (London: Routledge, 1998),p. 217. 8. Ibid., p. 219. 9. D. A. Heenan and H. V. Perlmutter, Multinational Organization Development (Reading, Mass.: Addison-Wesley, 1979). 10. See, for example, the ongoing research by the EU’s European Foundation for the Improvement of Living and Working Conditions, based in Dublin. 11. Doug Miller and John Sterling, “European Works Councils Training: An Opportunity Missed?” European Journal of Industrial Relations 4, no. 1 (March 1998): 35–56. 12. Paul Marginson, “EWC Agreements Under Review: Arrangements in Companies Based in Four Countries Compared,” Transfer 5, no. 3 (Autumn 1999): 256–277. 13. Wolfgang Lecher, “Resources of the European Works Council—Empirical Knowledge and Prospects,” Transfer 5, no. 3 (Autumn 1999): 283. 14. Wild, “Dealing with a Special Negotiating Body.” 15. Paul Marginson, “Article 6 Agreements Analyzed: Part One,” European Works Council Bulletin, no. 20 (March 1999). 16. Pascale Lorber, “The Renault Case: The European Works Council Put to the Test,” International Journal of Comparative Labour Law and Industrial Relations 13, no. 2 (Summer 1997): 135–142. 17. “Social Affairs Council Takes Stock of Information and Consultation Initiatives,” Euroline, May 1997. 18. “European Works Councils: A Progress Report.” 19. Antonio Martin Artiles, “Working for Big Brother Ford: Limits to the Effectiveness of the European Works Councils?” Transfer 5, no. 3 (Autumn 1999): 394–399. 20. Renate Hornung-Draus, “The EWCs Directive Revisited: No Reason for Euphoria,” European Works Council Bulletin, no. 5 (September/October 1996): 20. 21. UNICE, Releasing Europe’s Potential Through Targeted Regulatory Reform: The UNICE Regulatory Report, 1995 (Brussels: UNICE, 1995), p. 1. 22. “European Works Councils: The Experience So Far.” 23. See, for example, Anthony Ferner and Javier Quintanilla, “Multinationals, National Business Systems and HRM: The Enduring Influence of National Identity or a Process of ‘Anglo-Saxonization,’” International Journal of Human Resource Management 9, no. 4 (August 1998): 710–731.

9 EU Social Policy at the Beginning of the Twenty-first Century

A

s the European Union prepares for the twenty-first century, it has a social policy adapted to the prevailing conditions and expectations of its citizens. The policy per se is one with modest ambitions. Its offspring, education policy, has outgrown the parent to become a major initiative of the EU. In contrast, social policy no longer has an important advocate in Brussels or an ambitious agenda. It has changed from a policy based on legislative proposals to one in which the EU mobilizes, coordinates, and funds activities throughout the member states that involve both public and private actors. It is an interactive policy in which diverse actors participate in all aspects of it. The EU operates as a regulatory state and shares its roles in policymaking and policy implementation with numerous actors in a process best described as multilevel governance. Traditional European social values blended with the market values of the 1990s to shape EU social policy. The competitiveness of EU enterprises is the premier concern in Brussels while job creation is a second and related objective. Leaders of the EU have not abandoned traditional social values, such as employee rights and gender equality at work, so long as they are compatible with competitiveness. The European social system has been pruned and its growth checked, but it is not at risk of extinction. EU social policy attracts the interest of scholars from a number of disciplines, and their work provides the basis for the research in this study. The work of three groups of scholars has been particularly important. Political scientists contribute the concept of multilevel governance, 151

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which requires researchers to cast a wide net when searching for actors who influence the making and implementation of EU social policy. Industrial relations scholars bring into focus industrial relations systems in the member states and their relationship to EU social policy. They pose the question of whether a single social policy can be superimposed on the different national industrial relations systems. Scholars in the field of international business provide information on multinational corporations that is relevant but usually overlooked in studies on EU policy. The oversight is surprising because the objective of many EU directives is to ensure that employees in MNCs are protected from possible abuses by their employers. The work of business scholars illuminates the decisionmaking structure inside corporations, as well as influences such as culture that affect decisions. The contributions from these three groups of scholars and others were used here to provide a comprehensive study of EU social policy in action. The study is bound together within a framework borrowed from the field of policy studies. The European Works Council Directive provided a useful vehicle for an in-depth study of EU social policy in operation. The issue of workers’ right to information and consultation is included in the list of subjects decided by qualified majority voting (QMV) as provided in Article 2.1 of the Maastricht Treaty. Our findings fall into three categories: the EWCD as an example of EU social policy in the 1990s, multilevel governance in action, and what the operation of EWCs tells us about EU social policy and its potential for the twenty-first century. The adoption of the EWCD by QMV marked the culmination of a long search to find an acceptable form of worker participation. The directive had been molded by pressures from member states and other interested parties to have it become a capstone for existing national policies and not a radical innovation created in Brussels. It was accepted in an era when enthusiasm for market solutions was at a peak. The directive gives member states the option to adopt transposition measures through either their own legislative processes or an agreement negotiated by the national social partners. The two options accommodate with the basic differences among member states between those with legalistic industrial relations traditions and those with voluntaristic ones. The directive, despite its name, does not require the social partners to agree to establish the institution of an EWC. They may opt for a procedure or more informal means of information sharing (which employers had argued already existed, thus obviating the need for a directive). The directive now operating throughout the EU is a much more flexible and adaptable addition to EU social policy than its ancestors in the 1970s. It retains traditional social democratic values found in earlier versions

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but is modified so that its impact on the competitiveness of MNCs is minimal. Indeed, the European Commission justifies the directive and other proposals for employee involvement partly on grounds that they are conducive to improved productivity and competitiveness. They provide mechanisms to facilitate changes necessitated by market pressures. Perhaps the most significant contribution of the research reported here is the detailed picture it provides of multilevel governance in action. National governments and EU institutions provide the bold figures in the foreground, but interest groups are the warp and woof that weave the policy together. The apparently separate actions of EU institutions, national governments, and MNCs are linked by a network of interest groups and working parties. The networks function during both the formulation of the policy and its transposition and implementation. The importance of networks has been highlighted in work on EU regional policy, but their importance regarding social policy has been little noted.1 In the case of the EWCD, the Commission was the institution responsible for keeping the initiative alive while seeking a workable compromise. The member states played their roles as Council participants and as the responsible parties in transposing the directive into national policy. They rejected earlier proposals for employee participation, demanding one compatible with national practices. They then accepted the revised proposal despite opposition from their business lobbies and their own free-market rhetoric. When the member states were engaged in the act of transposition, their separate actions were woven together by the working group on transposition. This blending of national action with a growing reliance on mutual consultation and learning is a characteristic of EU social policy in the 1990s, as noted in Chapter 3. The brief history of the EWCD reveals how interlocked the member states have become through the development of a single market and the existence of EU policies. Even the rogue member state, the United Kingdom, could not avoid the reach of the EWCD despite the British opt-out, because its citizens were involved in corporations and interest groups whose activities no longer operate solely within the UK borders. Indeed, the traditional assumption that the reach of national laws and national borders are coterminous no longer holds inside the EU. In the case of the EWCD, national transposition measures apply to MNCs headquartered in the member state and to their employees, wherever they live in the EU. Employees of a given state who work for MNCs headquartered elsewhere in the EU are covered by that state’s transposition measures. The member states remain important actors in the EU, but they are by no means autonomous actors.

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The transposition process in the member states was affected by a number of factors. The strength and the relationship among the national social partners partly determined if transposition occurred via collective agreements or legislation. Countries with legalistic industrial relations traditions generally moved more expeditiously to transpose the directive than those without such a tradition. Existing national legislation for works councils facilitated the determination of employee representatives. The EU working group on transposition provided a vehicle for mutual learning among the national governments and ensured that the transposition measures had common themes. The social partners have a role in every stage of the development and implementation of the EWCD; they are a uniquely European phenomenon. Business interests are in ascendancy everywhere in the global economy, but only inside the EU are such interests paired with trade unions and given reponsibility to make and implement public policy. Trade unions in the EU have important new responsibilities in an era when most trade unions in the world are struggling to maintain a role in the modern economy. The EU has generally acted in a “laborinclusive” way. It has institutionalized, in Article 4 of the Social Protocol of the Maastricht Treaty, an important role for European trade unions, which have in turn given their national affiliates a perspective beyond their traditional borders. As a result, some of the established roles of national unions have been eroded, and a “Europeanization” of trade unions has occurred. The variety of trade unions involved with EU social policy is an important but little noted fact. The EU union industry federations, in particular, have been instrumental in providing common threads that run through the agreements establishing EWCs. Experts from these groups guide employee representatives by providing expert advisors, model agreements, and training courses on subjects such as how to read a financial report. The findings reported here regarding social partners warn researchers, and especially political scientists, that the study of EU social policy must encompass the social partners. They play highly visible roles in the social dialogue, but they also spin the background threads that weave the policy together. MNCs provide the final arena in the study of EU social policy. They try to influence social policy through their employers’ associations and directly as lobbyists in Brussels and with the national governments. Their lobbying efforts with national governments have been complicated by the introduction of QMV for many measures dealing with social policy. In the past, they only had to influence one government in order to block measures before the Council; now they must

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convince several governments to block a qualified majority vote. They have been effective, however, in restraining the growth of social policy by making a compelling argument that such policy harms their competitiveness in the global economy. Some members of the Council have been particularly receptive to their case. MNCs are most concerned to preclude measures that diminish their right to manage or that are possible forerunners to European collective bargaining. They opposed proposals to give employees the right to information and consultation. Since losing the battle over the EWCD, they have, with varying degrees of willingness, negotiated agreements for EWCs. MNCs have tried to limit the impact of EWCs by controlling the frequency of their meetings, giving management the right to set the agenda, and refusing to fund the participation of experts to assist employee representatives. The managements of MNCs have responded to the requirement to create EWCs with varying degrees of success. Their response appears to be shaped in part by the national culture that predominates inside the management. Some managements perceive the EWCs as a threat to their status and freedom to manage. The human resource policies of MNCs also affect the response of management to EWCs. The authors’ field work showed that the directive exposed differences in how MNCs organize their human resource management. Some give a large amount of autonomy to their subsidiaries through a policy of decentralized (national) industrial relations; in such cases, MNCs have a problem coordinating a common strategy for EWCs because their managers in different countries react differently to EWCs. Cultural differences among managers from different countries is a significant variable affecting the implementation of the EWCD. When national managers are accustomed to the autonomy afforded by decentralized human resource management, the problem of implementation is intensified. While differences exist among European managers, they share a common model of strategic socioeconomic management in which individualistic values are constrained by power sharing with trade unions and an acceptance of state authority, be it national or European. Edgar Krau, an authority on international management, asserts that so long as national governments and the EU act with restraint, European managers are prepared to accept political intervention.2 MNCs have not given up on Europe despite their opposition to the EWCD because the EU market is too important for them. They continue to vigorously oppose EU social policy and frequently succeed in restraining its growth, but they will comply as necessary. Those that fail to comply with the EWCD risk challenges from their employees or the Commission that will be resolved in court. A number of cases are

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already being prepared regarding disputed interpretations of the directive. Implementation is an ongoing process, not a final stage. MNCs have been and will continue to be participants in the evolution of the EWCD. While MNCs argue that employee participation undermines their economic performance, the Commission bases its case for such employee involvement partly on the opposite grounds that such policies are conducive to improved company efficiency. The Commission’s case has been argued effectively in the preamble of the recent proposal for a general framework directive on employee participation and in a report on the management of industrial change that recommends employee involvement.3 EU social policy is superimposed on national legal systems, industrial relations systems, traditions, and cultures. In order to be successful, it must serve a need that cannot be met nationally and must be at least minimally compatible with national practices and values. It has long been recognized that economic integration erodes the effectiveness of national laws to protect employees. Firms can move from countries with high levels of employment protections to ones with low levels and still function in the same economic system. Many feared that the possible mobility of firms would force governments to reduce employee protections in order to keep valuable investments inside national borders. Nonregression clauses in EU social legislation, however, have impeded such developments in countries where existing standards are above the EU legislation minima. The Commission’s operating principle has been that there is an upward harmonization or convergence of standards, with less developed countries moving upward faster than others. This does not, however, always allay employees’ fears in member states with higher standards that their national standards may, over a period of time, be eroded by EU legislation. In the 1970s, a number of persons recognized another threat to the efficacy of national employment legislation. National laws to require firms to inform employees in advance of redundancies were considered important in those days when unemployment first threatened postwar affluence. MNCs, however, could avoid the reach of national laws by claiming that managers inside the country were not informed of redundancies by their headquarters located in another country. From that time, many regarded EU social policy not simply as a matter of social justice but also as an essential appendage to effective national legislation. EU legislation also provides a bulwark against the erosion of workers’ rights by national governments hostile to employees. EU legislation elevates the national minimum standards of social legislation. The

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United Kingdom in the Thatcher era is a case in point, when EU legislation imposed higher standards in sectors such as gender equality. The EWCD stands as an example of both continuity and adaptation in EU social policy. The gestation period for EU policy is always long, and especially long for social policy. The search for a policy on worker information and consultation began in the late 1960s, persisted throughout the 1970s and 1980s, and finally had its first success with the adoption of the EWCD in 1994. The success was the result of two facts. The directive covered a subject, industrial democracy, that resonantes across various religious, ideological, and political strata throughout Europe. Second, it dealt with a matter that could not be handled successfully at the national level. National leaders (except those in the UK) knew that national laws on employee participation did not serve citizens employed by MNCs as they did citizens employed by domestic firms, and therefore the proposed directive would supplement existing national objectives. Despite its long history, the EWCD stands as an example of “new” social policy. It was the first proposal to be sent to the social partners for action under the provisions of the Maastricht Treaty. The social partners failed to reach an agreement because the employers’ association UNICE could not get agreement from all its affiliates. The failure of the social dialogue did not block the proposal’s evolution, however, because an alternative channel existed. The proposal was subsequently adopted as a regular directive. The EWCD also is new in the scope it gives for numerous actors. The social partners in some member states had the authority to transpose the directive. Employers must comply with the objective of the directive, but they have maximum scope to negotiate arrangements best suited to their own organizations. (The scope was even wider during the period when voluntary agreements were possible.) Trade unions have been assisted by the Commission with funds and training programs, but they themselves must work with employers to ensure that employees obtain the intended benefits. In short, the objective of the EWCD is traditional European social democracy, but the way it operates is in tune with the new era’s decentralized, market-oriented social policy. The directive is consistent with the principle of subsidiarity as well as the European social dialogue and involves employers, employees, and public authorities. While the EWCD represented a new phase in the involvement of industrial relations actors in social policy and the development of EU social dialogue, the Commission’s work continues in this domain. The work can be characterized by the continued development of “social

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space” in the EU and, in particular, the deliberate development of social policy in enterprises operating within its territory. The proposed general framework directive on informing and consulting employees in the EU represents another step in the context of employee rights to information and consultation in their own enterprises. The 1998 Commission report on managing change in industry is another example of continued Commission interest. The report stresses that steps taken by the Commission, corporations, the social partners, and governments to create a broader system of information and consultation are quite necessary. The authors of the report agree on the need to create a European framework for information and consultation of employees. 4 They also state that the new competitive environment “requires not only good economic decisions but also the close involvement of employees and the development of their skills.”5 In summary, the Commission has adopted the position that the way to improve the competitiveness of EU enterprises is through certain social measures. This involves representatives of employees and management at local, national, and EU levels in negotiating agreements that can be transposed into EU legislation. This new approach is compatible with the cultures and traditions of some member states and companies, but for others it will be perceived as eroding management prerogatives and increasing burdensome social costs. It could be argued that the Commission approach constitutes a restatement of the European norm of a social, free-market system. The continuing commitment of the Commission to EU social policy is clear, but the future evolution of the policy is less so. The determinants of advancement in EU social policy are several and complex, and the question of whether and at what pace EU social policy measures will advance will be determined in part by constitutional, political, national, and technical considerations in the affected policy area. The Maastricht Treaty and the Amsterdam Treaty indicate the areas in which developments such as the EWCD may continue to be expected. These include information and consultation of workers, working environment, safety and health, equality between men and women in the labor market, and the integration of excluded groups into the labor market. Proposals on any of these subjects are subject to qualified majority voting in the Council of Ministers as well as to the social dialogue procedure available to the social partners. All other subjects included in social policy are also subject to agreements by the social partners, but directives emanating from the agreements require unanimity when they come before the Council. Subjects falling into this category include social security and social

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protection of workers, termination of employment contracts, representation and collective defense of employees’ interests, employment of third-country nationals, and financial contributions to employment and job creation schemes. The treaty excludes consideration of pay issues, strikes and lockouts, and rights of association. The question of a common social policy remains to be discussed. We expected the study of policy implementation to provide the answer to the question. Policy implementation is a complicated subject to study and little research exists to guide the effort. Major differences were found in national laws, industrial relations systems, and cultures, but despite the differences, European works councils are being established throughout the EU. The EWCs are affected by the relevant national EWCD transposition measures, industrial relations actors, and cultures. The national effects are countered, however, by the fact that the primary actors in the implementation process are international, not national entities. The decisionmakers in a German MNC, for example, may not all be German, and they certainly are persons with international experience. They usually employ consultants who have been involved in numerous negotiations. They have recourse to the European employers’ associations as well, where they may find guidelines to follow when they negotiate the agreement for a EWC. The employees’ representatives with whom they negotiate are not simply autonomous spokespeople for employees. They are frequently trade union members with access to highly effective European trade union industry federations that provide contact with international negotiators and relevant specialists. As a result, the actual implementation of the directive is much less a national event than we anticipated. The impact of national differences is being attenuated by cross-cutting groups and individual experiences. The EU is, at the grass roots, less national than usually envisioned. National differences affect the implementation of the EWCD, but they do not prevent the directive from providing at least the rudiments of worker participation and consultation. It is not possible, however, to generalize that similar cross-cutting forces exist to affect the implementation of other directives dealing with social policy. Such findings are necessary before the argument can be made that a single social policy is possible in the European Union.

Notes 1. Christopher Ansell, Craig Parsons, and Keith Darden, “Dual Networks in European Regional Policy,” Journal of Common Market Studies 35, no. 3 (September 1997): 347–375.

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2. Edgar Krau, Social and Economic Management in the Competitive Society (Boston: Kluwer Academic Publisher, 1998), pp. 13, 109–110. 3. European Commission, Managing Change: High Level Group on Economic and Social Implications of Industrial Change, Final Report, DirectorateGeneral for Social Affairs, Brussels, November 1998. 4. Ibid., p. 5. 5. Ibid., p. 24.

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INDEX

Actors in multilevel governance: Council of Ministers, 101, 104–105; ETUC, 110–115; European Commission, 101–104; European Parliament, 101, 104; informal, 9; national governments, 105–106; national works councils, 116–118; role of, 2, 101, 151–153; UNICE, 106–110 Advocacy groups: policy role of, 9 Agenda 2000, 47 Agreement on Social Policy, 28–29, 92, 93 Alpine states, 16 Amsterdam Council, 45–46 Amsterdam Treaty, 28–30, 32, 38, 46 Auroux laws (France), 72 Austria: culture, 77–78; as EU member, 122; gender equality, 40; transposition of directives in, 126, 127–128 Belgium: culture, 77–78; employment policy, 50–51; gender equality, 43; industrial relations, 76; national works councils, 116; transposition of directives in, 105, 126 Benchmarking, 49 Benelux, 16. See also Belgium; Luxembourg; Netherlands Bisegna, Franco, 138 Blair, Tony, 3, 50, 63

Blanpain, Roger, 125 Braunstein, Philippe, 11 Burden-of-proof directive, 41 Business: employee rights, 89–91; EU’s effect on, 17; international studies on, 17–22; social policy role of, 4. See also Multinational corporations (MNCs) Capitalism: on the continent, 13; in France, 69; in Germany, 59–60; laissez-faire, 13; in the United Kingdom, 13, 64–65 Cardiff summit, 50 Catholic Church, 11–12 Center for European Public Enterprises (CEEP), 90, 92, 106 Christian Democrats, 11 Collectivism, 61–62 College of Europe, 14 Committee of Senior Labor Inspection Officials, 37 Communication, 17, 141–143 Community Charter of the Fundamental Social Rights of Workers (1989), 34–35, 64, 94 Comparative management, 17 Competitiveness, 44, 147. See also Masculinity vs. femininity Confederation of British Industry, 52, 65–66, 106–107, 109

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Confederation Française Démocratique du Travail (CFDT), 71, 110 Confederazione Sindicato Lavoratori (CISL), 110 Consensus, 16, 77 Conservative Party (UK), 104 Convergence, 15–16, 22 Corporatism, 16–17, 77 Council of Ministers: as institutional actor, 101, 104–105; multilevel governance role of, 2; social policy directives, 28, 158–159; unanimity requirement for voting, 91 Cross-cultural communication, 17 Cross-cultural studies, 19–22 Crouch, Colin, 16, 73, 78, 80 Culture: in Austria, 77–78; in Belgium, 77–78; communication and, 17; cross-cultural studies, 19–22; defined, 20; dimensions of, 20–21; in EWCs, 135–137, 148–149; in France, 72; in Germany, 61–62, 148; in Greece, 82; in Ireland, 80; in Italy, 80; multinational corporations and, 20–22, 148–149, 155; national, 3; in the Netherlands, 77–78; in the Nordic countries, 75–76, 135; in Portugal, 82; in Spain, 80; in study of social policy, 4, 10–14; in the United Kingdom, 67, 135 Davignon, Etienne, 90 Davignon Report (1997), 90 Dawson, Christopher, 14 De Rougement, Denis, 11 Delors, Jacques: employee rights, 34, 94, 103; employment policy, 44–45; EWCD, 110; 1992 program, 17; social Catholicism of, 12; social policy, 43; vision of, 32 Denmark: employer organizations, 107; employment policy, 48; implementation of EU directives in, 43; EWC agreements, 96, 135; gender equality, 40, 43; industrial relations, 74–75; transposition of directives in, 126, 127; voluntarism, 122 Deutscher Gewerkschaftbund (DGB), 66 Directives: under the Amsterdam Treaty, 29–30; on employee rights, 123; implementation of, 43, 64, 135;

under the Maastricht Treaty, 28–29; tests for evaluation of, 9. See also European Works Council Directive (EWCD); Transposition of directives Divergence, 15–16 Duby, Georges, 11 Economic and Social Committee, 34, 91 Education: employment policy and, 45–46; for the Portuguese workplace, 82; of youth and unemployed, 50 Egalitarianism, 61 Employee rights: consultation, 146–147; decisionmaking role in companies, 89–91; directives on, 123; evolution of, 34–35; as major EU social concern, 31; of part-time workers, 40–41; in the United Kingdom, 64 Employer organizations, 70, 107, 111. See also Union of the Industries of the European Union (UNICE) Employment policy, EU: in the 1990s, 44–51; education and, 45–46; European Parliament and, 47; gender equality, 31, 37–43, 53, 157; importance of, 27; under the Maastricht Treaty, 31; in the present, 51–53; under the Treaty of Amsterdam, 30; under the Treaty of Rome, 31 Equivalent effect procedures, 98 Esping-Anderson, Gösta, 15 Essen Council, 45, 46 Ethnocentric MNCs, 18–19 Euro, 18 Europe: business environment, 17; common identity, 3, 10–14; diversity, 14–15, 22; economic crises, 28; wealth, 11 European Agency for Health and Safety at Work, 37 European Coal and Steel Community (ECSC), 35–36 European Commission: employment policy, 49, 89; EWC budget, 104, 144; EWC development by, 92–93, 119, 153, 156, 158; EWCD report (2000), 99; monitoring of national legislation, 8, 106; multilevel governance role of, 2, 101–104;

INDEX

Social Charter, 109; social policy role of, 102–104; weakness of, 32 European Committee of Food, Catering and Allied Workers (ECF-IUF), 115 European Company Statute, 89–90, 102 European Council of Ministers, 47, 49, 99, 104–105 European Court of Justice: social policy issues before, 42; women’s rights, 30, 39, 53 European Economic Area (EEA), l, 95 European Employers Network (EEN), 107 European Foundation for the Improvement of Living and Working Conditions, 133, 134 European Graphical Federation (EGF), 114 European Metalworkers Federation (EMF), 111–115 European Parliament, 47, 99, 104 European People’s Party, 12–13 European Social Charter, 35, 109 European Trade Union Confederation (ETUC): as actor in multilevel governance, 110–115; EU agreement role of, 92, 93, 125–126, 129; parental leave, 110; Renault case, 146; social dialogue, 108–109; structure of, 107; workers’ consultation and information rights, 103–104; working time, 110 European Trade Union Institute, 144 European Union (EU): British labor union attitude toward, 67; employee rights, 90; national social systems as basis for, 3; as regulatory state, 2; uniqueness of, 7, 22 European Works Council Directive (EWCD): approval of, 94; British implementation of, 65–66, 67–68, 98; content of, 95–99; evolution of, 89–95, 121–122; as example of social policy, 4–5; framework for study of, 9; German implementation of, 62; effect on MNCs, 18; national responses to, 58; 2000 report on, 99; subsidiary requirements, 96–97, 113; transposition of, 8, 121; in the twenty-first century, 152–159; as vehicle for social policy analysis, 1–2

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European works councils (EWCs), 9–10; in Austria, 78; in Belgium, 78; British labor union attitude toward, 67; budget, 104, 144; communication, 141–143; consultation, 146– 147; cross-cultural factors, 19–20, 84; culture in, 135–137, 148–149; development of, 92–93, 119, 153, 156, 158; effect on international business research, 17; European Commission proposal for, 92–93; in France, 72, 73, 135–136, 144–145; French model for, 140; in Germany, 96, 104, 137, 142, 145; in Greece, 82; in Ireland, 135; in Italy, 78–79, 146; labor union role, 17, 143–145; managerial attitude toward, 140–141, 155; MNC design of, 99; in the Netherlands, 77, 78, 96, 142, 145; in the Nordic countries, 74, 76, 135, 142; in Portugal, 82; research findings on, 138–143; training for membership in, 141; in the United Kingdom, 135, 136–137 European/American Chamber of Commerce, 107 Federation of Trade Unions (LO) (Norway), 110 Fifth Directive, 102 Finland, 43, 122, 135 Flexibility, 125 Flynn, Padraig, 46 Ford Motor Co., 147 Foreign direct investment, 69 France: capitalism, 59; culture, 72; economic system, 68–70; employment policy, 46, 48; gender equality, 43; industrial relations systems, 16, 71–72; management styles, 70; in multicultural situations, 73; national works councils, 116; social policy roots, 68–69; social spending, 13 Gabaglio, Emilio, 93 Gender equality, 31, 37–43, 53, 157 General Confederation of Workers (CGT) (France), 71 Geocentric MNCs, 18–19 Germany: capitalism, 59–60; as corporatist welfare state, 15; culture, 61–62, 148; economic system of,

174

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59–60; employer organizations, 107; employment policy, 51; EU law in, 42–43; EWC agreements, 96, 104, 137; EWCD transposition into law in, 105; health and safety policy, 36; implementation of EU directives, 43, 62; industrial relations, 16, 59–61; leadership role in EU, 58; management styles, 19; MNCs, 18; in multicultural situations, 62–63; national works councils, 116, 117; social policy roots, 58; social spending, 13 Greece: culture, 82; EU membership, 122; health and safety policy, 36; industrial relations, 80–81; transposition of directives in, 126 Hanami, T., 125 Health and safety policy, 31, 35–37 Heenan, D. A., 18–19, 138 Hemerijk, Anton, 16, 76 Hofstede, Geert, 20–21, 61, 80, 82, 83, 122 Hungarian Trade Union Confederation (MSZOSZ), 110 Iceland, 95 Income differentials, 61, 65 Individualism, 61–62, 67, 82 Industrial democracy, 31 Industrial relations (IR) systems: Anglo-American model, 60; divergence in, 15–16; in France, 16, 71–72; in Germany, 16, 59–61; in Greece, 80–81; in Ireland, 16, 78–79; in Italy, 16, 78; in Portugal, 81–82; in Spain, 79–80; in the United Kingdom, 66–67 Informal actors, 9 International business studies, 17–22 International Metalworkers Federation, 111 International trade secretariats (ITS), 111 Interventionist states, 2 Ireland: culture in, 80; industrial relations systems in, 16, 78–79; national works councils, 105, 117; transposition of directives in, 124, 126; voluntarism in, 122 Israel, 77

Italy: culture, 80; economic system, 78; EWCs in, 78–79, 146; gender equality, 43; health and safety policy, 36; industrial relations, 16, 78; labor unions, 78–79, 125; national works councils, 116; transposition of directives in, 105, 124, 125, 126–127, 131 Japan, 124 Job creation, 46–47 Jospin, Lionel, 68, 69 Kalanke case, 38, 39 Kelloggs, 115 Kohl, Helmut, 58 Krau, Edgar, 155 Krieger, Hubert, 75 Kristensen, Peer Hull, 18 Labor flexibility, 52 Labor unions: in Austria, 77; Catholic, 12; in corporatist societies, 16–17; in Denmark, 74–75; the EWC and, 110–115, 119–120; in Finland, 74; in France, 70–71; in Germany, 59–61, 66; in Greece, 81; in Ireland, 79; in Italy, 78–79, 125; MNCs and, 17, 143–145; national works councils and, 116–118; in Sweden, 74; transposition process and, 125; in the United Kingdom, 63, 66–67 Labour Party (UK), 66, 124 Landes, David S., 11 Lecher, Wolfgang, 145 Leo XIII, Pope, 12 Leonardo da Vinci program, 45 Lewis, Jane, 41 Liechtenstein, 95 Luxembourg, 43; process, 49 Maastricht Treaty: Agreement on Social Policy, 28–29, 92, 93, 103, 122; British opposition, 28, 64; employment policy under, 31; qualified majority voting under, 105, 152; social dialogue, 17 Mainstreaming, 38, 39–40 Major, John, 64 Management styles, 19, 65, 70 Marschall case, 39 Marshall Plan, 47

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Masculinity vs. femininity, 75, 77, 80, 82; in France, 72; in Germany, 62; in the United Kingdom, 67 Mazmanian, Daniel, 9–10 Mitterand, François, 58, 68, 69 Multilevel governance: actors’ roles in, 2, 101, 151–153; in employment policy, 50; role of institutions under, 33 Multinational corporations (MNCs): British/U.S.-based, 18, 139, 144, 145, 148–149; categories, 18–19; consultation with EWCs, 146–147; cross-cultural dimensions in, 20–22, 148–149, 155; diversity of, 133; employee rights, 90–91; EWCs designed by, 99; French, 149; German-based, 139; Japanese, 140; labor relations, 144; national governments and, 17, 154; research on EWCs in, 138–143; voluntary agreements with, 134–138. See also Business National Action Plans (NAPs), 48 National Centre for Partnership (Ireland), 79 National Council of French Employers (CNPF), 70 National Labor Council (Belgium), 126 National social systems, 3. See also Culture National works councils, 105, 116–118. See also European works councils (EWCs) Neocorporatism, 16, 76–78, 83 Netherlands: culture, 77–78; economic system, 76–77; employment policy, 47, 48; EWC agreements, 96; gender equality, 43; industrial relations in, 77; MNCs, 18; national works councils, 116; part-time employment, 41 1998 Employment Guidelines, 47 Nordic countries: culture, 75–76, 135; employer organizations, 107; industrial relations, 16, 73–75. See also individual Nordic countries Northern Ireland, 63 Norway: European works councils, 95, 135; EWCD approval by, 105; as social democratic welfare state, 15;

transposition of directives in, 126, 127 October 31st Declaration, 103 O’Kelly, Kevin, 75 Ostner, Ilona, 41 Papalexandris, Nancy, 81 Parental leave, 40, 110 Part-time workers, 40–41 Partnership 2000 (Ireland), 79 Perlmutter, H. V., 18–19, 138 Pius XI, Pope, 12 Policy processes, 9 Policy research, 8–10 Polycentric MNCs, 18–19 Portugal, 80–83, 122, 126, 130 Post-Fordism, 14 Power distance, 75, 77, 80, 82; in France, 72; in Germany, 61–62; in the United Kingdom, 67 Prodi, Romano, 32 Proportionality, 125 Public policy, 7–8 Quadragesimo Anno, 12 Qualified majority voting (QMV), 91–92, 104–105, 152 Regiocentric MNCs, 18–19 Regulatory states, 2 Rehfeldt, Udo, 136 Renault, 146 Rerum Novarum, 12 Rhine capitalism, 59 Roman Empire, 122 Sabatier, Paul, 9–10 Santer, Jacques, 32 Scandinavia. See Nordic countries Schroder, Gerhard, 59 Single European Act (1986), 28, 33–34; British signing of, 94; EU 1992 program and, 108; fast-tracking the single market, 92; health and safety policy, 36; Social Chapter, 91, 103; voting procedures, 91–92, 104–105 Social Action Programs, 36, 43 Social Affairs Council, 93 Social Catholicism, 11–12, 69, 110 Social dialogue, 17, 33–34 Social Fund, 30, 45

176

INDEX

Social partners, 28, 48, 105, 106–118 Social policy, EU: as anachronism, 27; assumptions about, 1–5; basic attributes of, 14–22; common, 159; cultural values and, 4, 10–14; framework for study of, 9–10; history of, 28–34; institutions responsible for, 101–102; member states as participants in, 57–58; Nordic model, 73–76; redefinition of, 32–33; in the twenty-first century, 151–159 Social space, 157–158 Socialism, 11, 12–13 Socialist Party (France), 68 Societal effects, 15 Sociocultural values. See Values Soft law, 31, 53 Spain: culture, 80; employment policy, 48, 51; EU membership, 122; EWC agreements, 96, 97; health and safety policy, 36; implementation of EU directives, 43; industrial relations, 16, 79–80; taxation, 51; transposition of directives in, 126 Special negotiating body (SNB) procedures, 95–97, 112, 127, 145–146 Standing Committee for Employment, 33 Strikwerda, Carl, 14 Subsidiarity, 28, 98, 125 Sweden: employment policy, 51; EU membership, 122; EWC agreements, 135, 142; gender equality, 40; implementation of EU directives, 43; industrial relations, 74; MNCs, 18; as social democratic welfare state, 15 Switzerland, 113, 125–126, 135 Taxation, 15, 51 Thatcher, Margaret: Kohl’s dislike of, 58; obstruction of social directives by, 28, 63–64 Third-way social policies, 3, 50, 63 Thomas Aquinas, Saint, 12 Thomson Grand Public, 136 Trade Union Congress (TUC) (UK), 66, 94, 110, 124 TransEuropean Networks (TENs), 45 Transposition of directives: in Austria, 126, 127–128; in Belgium, 105, 126;

in Denmark, 126, 127; the EWC, 121–123; external influences on, 124; in Finland, 126; in France, 124, 126, 128, 130; in Germany, 105, 124, 126, 127–128, 130; in Greece, 126; on health and safety, 131n6; in Ireland, 124, 126; in Italy, 105, 124, 125, 126–127, 131; in Luxembourg, 126; on a national level, 123–126; in the Netherlands, 124, 126, 128; in Norway, 126, 127; in Portugal, 126, 130; in Spain, 126; study of, 8; in Sweden, 126, 127; in the United Kingdom, 124, 130 Traxler, Franz, 15 Treaty on European Union. See Maastricht Treaty Treaty of Rome: Article 100, 91; employment policy, 31; free movement of labor under, 30; social policy harmonization under, 28 Tripartism, 16 Troika system, 104 Trouve, Philippe, 73 Unanimity in voting, 28, 29, 30, 91 Uncertainty avoidance, 75, 77, 80, 82; in France, 72; in Germany, 61–62; in later EC states, 122; in the six original EC states, 122; in the United Kingdom, 67 Unemployment, 3, 44, 50. See also Employment policy Union of the Industries of the European Community (UNICE), 90, 92–93, 103–104, 106–110, 119, 157 United Biscuits (UK), 115 United Kingdom (UK): Amsterdam Treaty vetoes, 28, 29, 32; capitalism, 13, 64–65; culture, 67, 135; economic system, 63–65; employee rights, 64; employment policy, 51; European Commission Social Charter, 109; EWC exclusion of, 113, 125–126; EWCD implementation, 65–66, 67–68, 98; health and safety policy, 37; implementation of EU directives, 43, 64; industrial relations, 16, 66–67; labor unions, 117–118; as liberal welfare state, 15; management styles, 19; MNCs in, 18, 139, 144, 145, 148–149; national

INDEX

works councils, 105, 117; opposition to Maastricht Treaty, 28, 64; parttime employment, 40–41; social chapter opt-out, 92, 93–95; social policy roots, 63–64; social spending, 13; values, 11; voluntarism, 122 Values: European, 3, 10–14 Van Langendonck, Jef, 91 Visser, Jelle, 16, 76 Volkswagen, 59 Voluntarism, 16, 66, 122 Voluntary (Article 13) agreements, 95, 112, 123, 128–129; with multinational corporations, 134–138, 144–145

177

Voting: by majority, 29; by unanimity, 28, 29, 30, 91; qualified majority voting (QMV), 91–92, 104–105, 152 Vredeling, Henk, 90 Vredeling Proposal (1980), 36, 90, 91 Welfare states, 13, 15 Western European Metaltrades Employers Association (WEM), 111 Women: under the Amsterdam Treaty, 30; employment equality policy, 31, 37–43, 53, 157; in Portugal, 82; in the United Kingdom, 64 Working time, 110 Zysman, John, 69

ABOUT THE BOOK

This comprehensive study provides the first systematic examination of the feasibility of a common European Union social policy superimposed on fifteen distinctive national systems. Roberts and Springer trace the making of EU social policy from formulation to implementation, highlighting the roles of labor unions and employers’ associations. By focusing on the European Works Council Directive, they are able to examine implementation by both member states and multinational corporations. Extensive interviews with corporate managers from the UK, Germany, and France inform this realistic assessment of the dynamics involved in taking a social policy from its inception in Brussels to its practice in member states. Ivor Roberts, a former trade union information official with the Commission of the European Union, is an adjunct professor at the American Graduate School of International Management and a member of the board of governors of Ruskin College at Oxford University. Beverly Springer is professor emeritus of international studies at the American Graduate School of International Management. Her publications include The European Union and Its Citizens.

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