Certificate of Achievement Course in Industrial and Employment Relations

Varieties of Industrial Relations (IR) in the European Union

Turin, ITCILO, 22 February 2016Christian Welz

christian.welz@eurofound.europa.eu

Outline

A. Varieties of national IR regimes

B. Impact of the crisis on IR regimes

C. Discussion

A. Varieties of national IR regimes

Definition of industrial relations

industrial relations (IR)  “the focal point of the field (…) is the employee-employer

relationship.” (US Social Science Research Council 1928)

“(…) the consecrated euphemism for the permanent conflict, now acute, now subdued, between capital and labour.”(Miliband,1969, 80, cited by Blyton/Turnbull, 2004, 9)

“The central concern of IR is the collective regulation (governance) of work and employment.” (Sisson 2010)

environment

political

legal

economic

societal

actors

employers

trade unions

governments

processes

collectivebargainingparticipation

industrialactionsettlement of disputes

outcomes

collective agreements

labour legislation

outputs > impacts > inputs

pay, WT, productivity, employment, job security, labour peace…

inputs outputs

System of Industrial Relations

Industrial relations regimes

• Liberal market vs. coordinated market economies

Peter Hall and David A. Soskice, 2001,

Varieties of Capitalism: the institutional foundations of comparative advantage,

Oxford University Press.

Liberal Market Economies

• UK– corporate governance: outsider shareholder dominated;

performance represented by current earnings and share prices – employee relations: short term, market relations between employee

and employer; top management has unilateral control of the firm– industrial relations: employer organisations and unions relatively

weak; decentralised wage setting; insecure employment (“hire and fire”; fluid labour markets)

– vocational training / education: vocational education offered on market; labour force has high general skills

– inter-firm relations: market relations, competition; use of formal contracting and subcontracting relationships.

Coordinated Market economies

• DE– corporate governance: long-term bank-dominated insider systems;

cross-directorships; cross-shareholding; – employee relations: long term, formalised participation of

employees; consensus decision-making with management– industrial relations: trade unions and employers organised;

industry-wide collective bargaining and pay determination; employment relatively secure

– vocational training: elaborate industry-based training schemes; labour force has high industry-specific and firm-specific skills

– inter-firm relations: development of collaborative networks; cooperation among firms in diffusing technologies

Industrial relations regimes

• 5 geographical clusters

Visser, Jelle, 2008, in: EC, Industrial Relations in Europe Report, Brussels, DG EMP.

IR regimeCentre–West

social partnership

North

nordic corporatism

West

liberal

pluralism

 South

polarised

pluralism

Centre–East

transition economies

MS Austria

Belgium

Germany

Netherlands

Luxembourg

Slovenia

Denmark

Finland

Sweden

Cyprus

Malta

Ireland

United Kingdom

Greece

Italy

France

Portugal

Spain

Bulgaria

Czech Republic

Estonia

Latvia

Lithuania

Hungary

Poland

Romania

Slovakia

Trade Unions

Intersectoral level

Government

Employers

Intersectoral level

Sectoral level Sectoral level

Company level

Levels of CB - wages

Company level

BelgiumFinland

AustriaDenmark1France1GermanyGreeceIreland1ItalyLuxembourg1NetherlandsPortugal1Spain1Sweden1

Denmark2France2Ireland2Luxembourg2 Portugal2Spain2Sweden2UK

Trade Unions

Intersectoral level

Government

Employers

Intersectoral level

Sectoral level Sectoral level

Company level

Levels of CB - wages

Company level

Slovenia 1

Bulagaria1Cyprus 1Slovakia 1Slovenia 2

Bulgaria2CroatiaCyprus 2Czech Rep.EstoniaHungaryLatviaLithuaniaMaltaPolandRomaniaSlovakia 2

Statutory minimum wage

Monthly minimum wage _ 2011 v 2016 EIRO 2013/14

BGRO LV EE LT HUCZ PL SK HR PT EL ES SI MTEU CY DE IE FR BE NL UK LU0

500

1000

1500

2000

2500EUR 2011 2016

Average hourly labour costs (2012) EIRO 2014

BG LV PL SK CZ GR CY UK IT DE FI SE LU DK0

5

10

15

20

25

30

35

40

45EUR

Real labour productivty (2012) EIRO 2014

EE SI LV LT PL CZ MT CY EU IT BE AT FI DE SE FR NL IE0

10

20

30

40

50

60EUR per h worked

Coordinating the Network of EU Agencies 2015

Different concepts of representativeness

different concepts examples

mutual recognition UK, Ireland

capacity to negotiate Germany, Austria

industrial democracy (elections) France, Luxemburg

organisational strength (membership) Poland, Romania

Coordinating the Network of EU Agencies 2015

ILO

Coordinating the Network of EU Agencies 2015

Thresholds: elections (p=peak/s=sectoral/c=companty)

Country Trade Unions votes in %

peak sector company

Spain 10% national working delegates15 % regional working delegates

10% national working delegates15% regional working delegates

France 8% 8% 10%

Italy 5% / 51% > ext. of CAs

Luxembourg 20% 50%

Coordinating the Network of EU Agencies 2015

Thresholds: membership

Cross-sector social partners in the EU

• 108 trade unions

• 134 employers associations

Coordinating the Network of EU Agencies 2015

Cross-sector social partners in the EU EIRO 2014

LV AT SK LT NL EE PT HR FIUK DK SI ES

RO0

5

10

15

20

25

30

1 1 2 3 3 2 3 3 3 2 2 3 3 4 53 3 3 4 4 4 4

7 6 7 6 5

12

2 33 2 2 4 3 3 3 5 5 4 4 3 2 5 5 5 4 5 5 6

4 6 5 7

14

15

TU EO

cross - industry

Employers

- BUSINESSEUROPE- European Centre of Employers and Enterprises providing Public Services (CEEP) - European Association of Craft, Small and Medium-Sized

Enterprises (UEAPME) Trade Unions- European Trade Union Confederation (ETUC) - CEC-European Managers - EUROCADRES (Council of European Professional

and Managerial Staff)

B. Impact of the crisis on IR regimes

1. Actors u n d e r p r e s s u r e

2. Processes u n d e r p r e s s u r e

3. Outcomes u n d e r p r e s s u r e

4. Conclusions 5. Epiloque and discussion

Actors

Impact Member State

successful tripartite negotiation (8-10) BE, BG, CZ, EE, FR, LT, LV, NL, PL, PT

breakdown of tripartite negotiations (10---) BE(2011/12), ES, FI, GR, HR, HU, IE, IT, LU, PL(2011/12), SI

reorganisation of public actors and bodies ES, GR, HR, HU, IE, LU, RO

decline in trade union density CY, BG, DK, EE, IE, LT, LV, SE, SI, SK, UK

halt in trade union density decline/increase in trade union density

AT, CZ, DE, EE (for transport), LT

changes to membership of employer bodies CY (increase), DE (increase in members not bound by CA), LT (first decline then increase)

Actors

Impact MSdecreasing influence and visibility BE, DK, EE, HU, IE, LV, NL

increased cooperation between the social partners

DE, HU, LT, NL

emergence of new social movements ES, GR, PT, SI

increase government unilateralism BE, BG, EE, ES, GR, HR, IE, PL, PT, SI

new power balance among actors BG, EE, ES, GR, LT, LV, PT

Processes

PROCESSES - SUMMARY

Type of change MSMain level(s) of bargaining:  Decentralisation AT BG CY EL ES FR IE IT RO SI Recentralisation BE FIHorizontal coordination across bargaining units

AT ES HU IE RO SE SK

Linkages between levels of bargaining  Ordering between levels EL ES PTOpening and opt-out clauses AT BG CY DE EL ES FI FR IE IT NO PT

SE SIExtending bargaining competence EL FR HU PT ROReach and continuity of bargaining  Extension procedures EL IE SK PT ROIncreased / changed use of existing procedures

BG DE IT

Continuation beyond expiry EE EL ES HR PTMinimum wage setting and indexation mechanisms

 

Minimum wage setting CY DE EL ES HR HU IE PL PT SI SKIndexation BE CY ES IT LU

Trade Union density rates 2013 in %

Employer density rates 2013

Eurofound 2015

Membership of employers’ organisations participating in collective bargaining (%)

Collective bargaining coverage 2002 - 2013

Country Multi-employer (MEB) or Single-employer (SEB) bargaining prevalent   2008 2011

Austria MEB MEBBelgium MEB MEBBulgaria Mixed MixedCroatia MEB MEB

Cyprus Mixed MixedCzech Republic SEB SEBDenmark MEB MEBEstonia SEB SEBFinland MEB MEB

France MEB MEBGermany MEB MEBGreece MEB MEBHungary SEB SEBIreland MEB SEBItaly MEB MEBLatvia SEB SEBLithuania SEB SEBLuxembourg MEB MEBMalta SEB SEBNetherlands MEB MEBNorway MEB MEBPoland SEB SEBPortugal MEB MEBRomania MEB SEBSlovakia Mixed MixedSlovenia MEB MEBSpain MEB MEBSweden MEB MEBUnited Kingdom SEB SEB

 Company level

Sector level

National level

AT

CY

EL

IT

BG

ES

FR

FI

RO

Trends in main levels of CB

BE

PT

• continental Western, central Eastern and Nordic IR regimes apply the favourability’ principle to govern the relationship between different levels of CB CAs at lower levels can only improve on standards established by higher levels exceptions: IE and the UK > reflecting their different legal tradition based on voluntarism

• FR FR made changes already in 2004 (loi Fillon)

• ES 2011 law inverted the principle as between sector or provincial agreements and company

agreementsEL 2011 law inverts the principle between the sector and company levels for the duration of

the financial assistance until at least 2015• PT

2012 Labour Code inverts the principle, but allows EOs and TUs to negotiate a clause in higher-level CA reverting to the favourability principle

Ordering / favourability principle

opening clauses in sector/cross-sector CAs provide scope for further negotiation on aspects of wages at company level

opt-out clauses permit derogation under certain conditions from the wage standards specified in the sector/cross-sector CA

changes in opening clauses 6 MSAT, DE, FI, IT, PT, SE

changes in opt-out clauses 8 MSBG, CY, EL, ES, FR, IE, IT, SI

•

Changes in opening/opt-out clauses

• changes: EL, FR, HU, PT and RO

• EL under 2011 legislation, CAs can be concluded in companies with

fewer than 50 employees with unspecified ‘associations of persons’ these must represent at least 60% of the employees concerned

• RO legislation (2011) introduces harder criteria for trade TU

representativeness where TUs do not meet the new criteria at company level, EOs can

now negotiate CAs with unspecified elected employee reps

Extension of CB competence

Extension mechanisms

of the 28 MS > 23 MS have extension mechanisms or a functional equivalent (IT)

no legal procedure for extending collective agreements in

CY, DK, MT SE and UK changes to either extension procedures or in their use

in 8 MSBG, DE, EL, IE, PT, RO, SK, IT

clauses providing for agreements to continue to have effect beyond the date of expiry until a new agreement is concluded are intended to protect workers should employers refuse to negotiate a renewal

they are found in a 9 MS at least AT, DK, EE, EL, ES, HR, PT, SE, SK

changes have been made to such provisions in 5 MS EE, EL, ES, HR, PT

Continuation of CAs beyond expiry

Outcomes

Impact MSinconclusive outcomes BG, CY, CZ ES, MT, NL

decrease in number of agreements CY, CZ, EE, LV, MT, PT, RO, SI

increase in duration of agreements AT, DE

decrease in duration of agreements BG, CY, DK, GR, LV, ES, SE

decrease in the level of pay increases AT, ES, FI, NL

pay cuts or freezes AT, BE, BG, DE, DK, ES, FI, GR, HU, IE, IT, LT, LU, LV, NL, PL, PT, SI, SK, UK

working time reduction/short-time working AT, BE, BG, DE, FR, HU, IT, LT, NL, PL, SI, SK

non-renewal of agreements BG, CY, EE, ES

No. of CAsEIRO 2014

AT BE BG CY CZ DE DK EE EL1 EL2 ES FR IT LT LU LV MT NL PL PT RO SE SK UK

2008 2009 2010 2011 2012 2013 2014

sector CA194

164 166 115 46 46 72

companyCA

97 87 64 55 39 49 80

total CA 291 251 230 170 85 95 152

extension 137 102 116 17 12 9 +/_15

coverage /in 1000 pers.

1,895 1,397 1,407 1,237 328 243 246

No. of CAs in PT

• change has been concentrated amongst 6 MS, whose WSMs have each undergone multiple changes CY, EL, ES, IE, PT, RO been in receipt of financial assistance packages from the ‘troika’ changes in WSMs were required in all except ES

• in a further 4 MS there have been some changes to WSMs HR, HU, IT and SI change primarily driven by domestic actors > governments or SP

• in a majority of 18 MS WSMs have seen few or no changes since 2008

Conclusions

• impact of the ‘troika’ in inducing changes to WSMsamongst those countries receiving financial assistance packages is clear

• government-imposed measures in these countries have substantially reconfigured WSMs

Conclusions

C. Discussion

• “By viewing labour as a commodity, we at once get rid of the moral basis on which the relation of employer and employed should stand, and make the so-called law of the market the sole regulator of that relation.”

• (Dr John Kells Ingram, address to the British TUC in Dublin 1880)

Discussion > labour = commodity?

• Clayton Anti-Trust Act (1914: section 6)

• 'that the labor of a human being is not a commodity or article of commerce'. Samuel Gompers – leader of the American Federation of Labour for

20 years was inspired by Ingram

Discussion

• Treaty of Versailles (1919: article 427)

first principle of the new ILO pro- claimed ‘ that labour should not be regarded merely as a commodity or article of commerce

introduced by British delegation Gompers > personal defeat

• ILO DECLARATION OF PHILADELPHIA (10 May 1944) labour is not a commodity

Discussion

• towards a re-commodification of labour ?

• Labour is not a commodity > clause is not in the EU Treaties

• yet Albany case (1996)

• Albany used the competition rules in article 81(1) EC (now article 101(1) TFEU) claiming that mandatory pension scheme compromised their competitiveness

•

Discussion

• ECJ• “ social policy objectives pursued by CAs would be seriously

undermined if management and labour were subject to Article 85(1) “

• Advocate General Jacobs• “ CAs enjoy automatic immunity from antitrust scrutiny”

• Art. 153 (5) TFEU• The provisions of this Article shall not apply to pay, the right of

association, the right to strike or the right to impose lock-outs.

Discussion

Trend OriginRestructuring of actors megatrendDecline in trade union density megatrendPublic Sector Reform megatrend Decentralisation of collective bargaining megatrend

(crisis accelerated)Increase in opt-out clauses crisis-induced trendIncrease in opening clauses crisis-induced trendDecrease of extensions crisis-induced trendShorter duration of collective agreements crisis-induced trendDrop in volume of bargaining crisis-induced trendDrop in quality of bargaining crisis-induced trendShorter continuation of CAs crisis-induced trendReforms in wage-setting mechanisms crisis-induced trendMore adversarial industrial relations crisis-induced trend

Discussion: crisis vs. megatrends

• http://www.eurofound.europa.eu

• christian.welz@eurofound.europa.eu

• European industrial relations dictionary

Further information

thank you!