Putting the social dimension on equal footing with the economy

Preparing a poster to be displayed at a symposium organised by Hans Böckler Foundation in Brussels on 26-27 April 2018. [EURACTIV]

An improved EU legislation that boosts workers’ information, consultation and participation rights will push social matters higher up on the EU political agenda, according to the participants of a symposium about workers held in Brussels on 26-27 April.

“There is a really intensive year for workers’ rights that lies ahead of us and we are in the middle of it,” MEP Evelyn Regner told the symposium, hosted by the Hans Böckler Foundation and the EU Trade Union Institute (ETUI). The event was dedicated to strengthening workers’ voice.

‘Workers’ voice’ refers to information, consultation, participation and co-determination rights in the workplace, in companies and in company supervisory and administrative boards.

Currently, workers representative have the right to seat in a company boardroom in 18 out of the 28 EU member states as well as in Norway.

“2018 is particularly important because it is the last chance to really deliver on workers’ rights before the next European elections are held and the mandate of the European Commission expires [both in 2019],” Regner explained.

At stake, she explained, is “building a stronger social safety net we are entitled to expect from the European Union”.

“A ‘Europe that protects’ is a nice motto. But it is not only about physical security and police reinforcement we are talking about. We are also talking about social safety. The two, security and social safety, go hand in hand. And citizens expect the EU to deliver on this issue,” she said.

Given the current defiance of EU citizens towards European institutions, this might seem quite a challenging task. 

This is why MEP and socialist leader Udo Bullmann called for action: “People want to see us fight. Only then will they identify with us, and only then can we really make a difference”.

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What is the issue?

“All opinion polls show that having a secured job, a good education and social fairness are the most important issues for European citizens”, said Maria Jepsen from the European Trade Union Institute.

Yet, the European project has largely been focusing on economic development and on the EU internal market’s legal framing to the detriment of the social dimension, underlined Peter Scherrer, European Trade Union Confederation (ETUC) Deputy General Secretary.

“A fair single market must deliver for both workers and businesses, not only for companies. Social and economic issues must be on equal footing, and more progress towards democracy at work is urgently needed,” he said.

Which is why workers’ participation and democracy at work should be put high on the European political agenda, much higher than it currently is, insisted Norbert Kluge, from the Hans Böckler Foundation. 

But the challenge is big.

Anke Hassel from the Institute of Economic and Social Research within the Hans Böckler Foundation released new findings at the event, showing how powerful transnational companies have become.

“In 2015, 69 out of 100 largest economic entities were companies. Walmart has higher revenues than the government of Spain and Apple has higher revenues than the government of Belgium,” she said.

“Transnational companies have long become major political and economic actors in Europe and beyond,” she continued, adding that the decisions the top managers of these companies are taking have a powerful impact on local communities and governments’ tax base, as well as on social and environmental standards.

This is due to the entry of China, India and the former communist countries into the global trading system in the early 1990s, a move that has boosted globalisation extensively and contributed to the financialisation of the economy, she explained.

“Transnational companies shape globalisation. If globalisation is to be made fairer, transnational companies have to be better regulated and embedded into the societies where they operate,” Hassel observed, adding that as a consequence, a better corporate governance fostering sustainable companies has to become a stronger concern amid European trade unions and other stakeholders. 

Fostering tax justice

In that regard, the European Commission has made a move in the right direction with the release on 25 April of its proposals for new company law rules, participants said.

But there is much room for improvement, they warned.

ETUC’s Peter Scherrer said at a first glance the proposals on cross-border conversions seem to show a welcome change of direction in EU company law, “which until now has facilitated deregulation and regime shopping”.

“The Commission aims to ensure that a company has genuine economic activity in the member state where it wants to relocate its registered office. The proposed Directive therefore offers a basis for discussion, meaning there is definitely space for improvement,” Scherrer said.

“What is of very much importance to us, is that we get into the process where we can introduce amendments, where we can change the proposals. Some people say the glass is half full or half empty. I would say the glass is 1/3 full at the moment”, he said. 

European Dialogue 2018: Social Europe Strengthening Workers' Voice

The worker’s voice is part of a democratic Europe. Securing and strengthening it is supposed to increase the acceptance of the EU.

The new proposals tackle the companies’ mobility issue, that is, the possibility for a company to move to another member state without losing its legal personality or having to liquidate or renegotiate their business contracts beforehand.

The trade unions have been warning that if not properly regulated, this might result in abuse and unfair competition through artificial arrangements – for example via letterbox companies – in order for companies to avoid paying taxes, social contributions and comply with workers’ rights.

“We are trying hard to prevent the use of letterbox companies”, said Renate Nikolay, from the DG Justice at the European Commission but added:

“We have rules on cross-border mergers, but no regulation on cross-border divisions or cross-border conversions.”

“So what we are offering with the new proposals is a balanced approach which enables businesses to take advantage of the single market while attaching to it a large number of safeguards beneficial to workers”, Renate Nikolay said.

Codetermination, a boost for the economy

In the context of member state competing against one another on tax issues, Norbert Kluge from the Hans Böckler Foundation said Europe needs a new understanding of what competition really means.

And pushing codetermination at the EU level is the way forward because it levels down the race to the bottom in tax avoidance and non-completion of workers’ rights between member states, he added.

Codetermination is a specific regulation related to workers’ rights and representation at companies’ supervisory boards. It is also a characteristic of Germany’s social and labour legislation.

The Hans Böckler Foundation explained that codetermination in Germany defines a set of rights that give employees the possibility of actively participating in the shaping of their working environment.

This includes legally stipulated company-internal agreements devised in conjunction with union contracts as well as informal determination possibilities that have arisen from codetermination practice.

The European Court of Justice has ruled that German codetermination conforms to EU law.

“Workers‘ participation and codetermination are not an obstacle to a productive and profitable economy, on the contrary, codetermination is an asset for EU countries,” Norbert Kluge continued, citing the findings released by Anke Hassel. «The active participation of workers and their representatives not only contributes to employment stability but also boost the economy».

The study she conducted shows that member states like Sweden, Denmark, Germany and Austria, with strong workers’ participation rights in companies and in administrations, have the best economic performances.

But the trade union community finds that workers’ participation in the companies is still kept at a low level across the EU.

“We need better and more efficient control instruments to strengthen codetermination and workers’ participation rights in Europe. There is much to do in the coming months,” Peter Scherrer said.

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