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The European Union

Lecture in Preparation for May 3-13, 2003 Ireland Trip

School of Labor and Industrial Relations

Michigan State University

April 18, 2003

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What is the European Union (EU)?

• A treaty-based, institutional framework that defines and manages economic (and, to some extent) political cooperation among its fifteen European member countries

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History of EU• Discussions began in 1950 in wake of WWII

– Belgium, Federal Republic of (West) Germany, France, Italy, Luxembourg, Netherlands

• Treaties of Rome in 1957– European Economic Community

• Free movement of goods, services, and workers within community

• Expansions to Current 15 Members– 1973: Denmark, Ireland, United Kingdom– 1981: Greece– 1986: Spain, Portugal– 1995: Austria, Finland, Sweden

• 10 New Members in May 2004– Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta,

Poland, Slovakia and Slovenia

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Basic Statistics 2001

  EU-15 US

Area, 1,000 Square Miles 1,249.0 3,717.9

Population (Millions) 378.0 284.8

Population Density/Square Mile 302.6 76.6

Unemployment Rate % 7.4 4.8

Gross Domestic Product (Billions $) 7894.5 10208.0

GDP (Volume) % Increase 2001/2000 .5 1.7

Inflation (GDP Price Deflator %) 2.4 2.4

Source: Eurostat, OECD, Economic & Financial Affairs DG

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Other Treaties• Merger Treaty of 1965• Single European Act of 1987• Treaty of European Union (Maastricht) in

1992• Treaty of Amsterdam in 1997 • Treaty of Nice in 2000

• All moving toward closer economic integration within EU

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Euro

• Monetary Union – Common Currency– 12 countries participating

• Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal, Finland

– 3 countries not participating• Denmark, Sweden, UK

• Went into effect February 28, 2002

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Governing Bodies• European Commission

– Proposes legislation– Administers legislation

• European Council– Ministers representing governments of member states– Enacts binding legislation

• Majority or unanimous

• European Parliament– 626 members– Can reject European Council enacted legislation

• European Court of Justice– Interprets EU law– Issues binding rulings

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Legislation in the EU

• EU Does Enact Legislation – Directives– Binding on member countries

• Procedure– European Commission initiation– European Council approval– European Parliament concurrence

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Selected Areas in Which EU Legislates

•  General, financial and institutional matters

•  Customs Union and free movement of goods•  Agriculture•  Fisheries•  Freedom of movement for workers and social policy•  Right of establishment and freedom to provide services•  Transport policy•  Competition policy•  Taxation•  Economic and monetary policy and free movement of capital•  External relations•  Energy•  Industrial policy and internal•  Environment, consumers and health protection•  Science, information, education and culture• Undertakings

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Social (Labor and Employment) Policy

• Traditionally difficult for EC to enact– Different national norms– Employer and UK resistance

• Three types of issues– Free movement of labor– Labor standards– Labor-management relations

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Decision-Making- Maastricht Treaty (1992)

• legislation on the less controversial “social” issues may be adopted by a qualified majority of the Council – health and safety, nondiscrimination,

consultation with workers

• legislation on the more controversial issues must be unanimous on the Council– worker representation, guest workers, and

termination

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Decision-Making Maastricht Treaty (1992)

• UK Opt Out on Social Issues– Other member states permitted to adopt directives

• Would apply to other member states

• Would not apply to UK

• Permitted EU to move forward on social issues• Treaty of Amsterdam (1997)

– UK opted out of “opt out”

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Social Directives

• Free Movement of Workers (EC Treaty)

• Individual Employment Contracts– Workers must be informed of H & S risks (’89)– Er’s responsible for ee H & S– Nondiscrim against pt/temp workers– Er must inform ees of essential aspects of job

• Wages– No EC-wide minimum wage

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Social Directives and Other Legislation (continued)

• Working Time– By regulation rather than overtime “penalty”

• 11 hours rest in 24• Rest/meal period after 6 hours work• Max average of 48 hours over 7-day period

– Paid-Time Off• Paid vacation/annual leave 4 weeks minimum required

• Unemployment Insurance and Workers Comp– No EU directives

• Collective Bargaining– Guaranteed by Charter of Fundamental Rights

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Social Directives and Other Legislation (continued)

• Discrimination– Same as U.S. plus sexual preference covered

• Unjust Dismissal– Charter of Fundamental Rights

• Safety and Health– Worker consultation– Informing employees– Training obligation– Psychological factors

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Social Directives and Other Legislation (continued)

• Employee Consultation– European Works Council or an employee consultation

procedure in every large (more than 1,000 employees) organization that has at least 150 employees in each of two member states

– all European companies, companies established under the Statute for European Company, must establish negotiating committees consisting of elected employee representatives with which the company must consult

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Social Directives and Other Legislation (continued)

• Parental Family Leave– 3 months of parental leave for each child up to age 8

• Changes of Ownership– successor must abide by the employment “contract,” the

basic terms and conditions of employment provided to the employees by the predecessor

– employees are protected from dismissal due solely to the change in ownership

– employees entitled to information and consultation with their representatives

– if there is a collective agreement in place, it must be honored

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Collective Bargaining and EU• No EU-Level collective bargaining

legislation– EU Charter requires members to protect

freedom of association and collective bargaining

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Social Partners – Treaty of Amsterdam (1997)

• Article 137– A Member State may entrust management and labour, at their joint

request, with the implementation of (social policy) directives adopted pursuant to paragraphs 2 and 3.

• Article 138 – 1. The Commission shall have the task of promoting the consultation

of management and labour at Community level and shall take any relevant measure to facilitate their dialogue by ensuring balanced support for the parties.

– 2. To this end, before submitting proposals in the social policy field, the Commission shall consult management and labour on the possible direction of Community action.

– 3. If, after such consultation, the Commission considers Community action advisable, it shall consult management and labour on the content of the envisaged proposal. Management and labour shall forward to the Commission an opinion or, where appropriate, a recommendation.

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European Foundation for Employment and Living

Conditions• Established by EU in 1975

• Research on social and economic matters to inform EU policy

• Funded by EU

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Some Representative EU Directives

• Worker Consultation– Directive 2001/86/EC, Council Regulation

(EC) No 2157/2001of 8 October 2001– Directive 94/45/EC of 22 September 1994

• Gender Discrimination– 97/80/EC of 15 December 1997

• Working Time– 93/104/EC, 23 November 1993

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Key Web Addresses

• European Union and the United States– http://www.eurunion.org/infores/resguide.htm

• European Union Online– http://europa.eu.int/

• Eur-Lex, Portal to European Law – http://europa.eu.int/eur-lex/en/

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Conclusions

• Labor and employment issues dealt with under broader rubric of social issues

• In terms of economic/social issues– Moving closer to U.S.– Currently more uniformity across EU members

than across Canadian provinces– Euro