Transnational company agreements – another form of social dialogue in Europe

Transnational company agreements made within European multinationals have helped to Europeanise industrial relations. Although the European Commission views such agreements as an innovative tool for cooperation, it has yet to define a legal framework for them. EURACTIV.fr reports.

It is difficult to assess the number of transnational agreements concluded by European companies these last few years or even to assess any overall trend. The database on transnational company agreements that had been specially set up to give them more visibility has been dormant since 2015.

“Preparations are underway to update it this year,” said a spokesperson for the Directorate-General for employment, social affairs and inclusion.

Autonomous and voluntary agreements

These autonomous and voluntary agreements, agreed within multinationals, might constitute a less formal version than the two levels of social dialogue (sectoral and interoccupational) provided for by the European Treaties, but nevertheless represent a very real part of agreements between social partners in the EU.

Since the first agreements were signed thirty years ago, they have contributed in their own way to the Europeanisation of industrial relations and to a harmonisation of working conditions.

Sectoral Social Dialogue: The promising side of industrial relations in the EU

The 44 Sectoral Social Dialogue Committees promote better working conditions in sectors as varied as the chemical industry or the footwear sector. It enjoys a lot of support and has received rave reviews but currently only affects a limited number of sectors. EURACTIV.fr reports.

Governing a broad range of areas

These agreements cover all workplaces and subsidiaries of a company in Europe, or elsewhere abroad.

“They are the product of distinct dynamics,” said Udo Rehfeldt, a political scientist at the Institute of Economic and Social Research in France. “Even if they have gradually been extended to cover other areas, originally, such global agreements focused on upholding fundamental labour rights as established by the ILO (International Labour Organisation)”.

“The European agreements, however, right from the beginning focused on a broader and more precise range of areas, such as restructuring, health and safety, equal opportunities, training, mobility, and anticipating change.”

Minimum standards

The European agreement signed within the French energy company ENGIE in April 2016, after 19 rounds of negotiations, for example, lays down various social guarantees and targets the employability of and training for employees.

“When GDF-SUEZ became ENGIE, the company changed its strategy to focus on gas and renewable energy. The trade unions asked for a social component to be included in the new strategy. This agreement sets minimum standards for all the companies in the group,” said Sylvain Lefebvre, deputy general secretary of IndustriAll Europe.

It is one of the three European trade union federations to have signed the agreement with management. In December 2017, a new European agreement on gender equality in the workplace was signed within the energy group.

Agreements with trade union federations and EWCs

At the last count by Udo Rehfeldt at end 2015, there were a total of 295 transnational agreements, 140 were European, and 156 were global (of which 132 were signed by European undertakings).

Although most global agreements are concluded with international trade union federations, the European level agreements can be, as is increasingly the case, agreed with European Works Councils (EWCs) or European trade unions, or with both.

EWCs were established by a European directive in 1994, which was recast in 2008 to encourage their growth. Their aim is to allow for a better employee representation in companies with more than 1,000 employees, and with at least 150 employees in at least two EU member states. There are currently more than a thousand EWCs.

“German companies have yet to sign any agreement with a European trade union federation. They prefer negotiating with European Works Councils,” said Udo Rehfeldt. “It is a matter of trust. Whereas in France, where trade unions have a virtual monopoly over collective bargaining, companies are more willing to negotiate with trade union federations.”

France leads the way

France was the first country in which transnational agreements were signed, in the 1980’s, first of all at Thomson Grand Public (a consumer electronics company), then at BSN Danone. The socialist party was in power at the time in France, where there was a number of nationalised companies. It was a time when labour relations were given great importance and France wanted to lead the way.

From the end of the 1990s, the growing influence of globalisation was accompanied by a sharp increase in the number of such agreements elsewhere in Europe.

Multinationals have begun to take the initiative in concluding such agreements, which enable them to convey a social image, help them forge a European corporate culture and coordinat their human resources policies across borders.

No legal framework

Between 2000 and 2010, around nine European level agreements were signed every year on average. Since then the trend has subsided, unless there is increasing recourse to more informal deals, as suggested by Udo Rehfeldt: “ German companies sometimes prefer not to qualify the outcome of negotiations as an agreement.”

Companies can choose not to disclose the terms of transnational agreements as they are not subject to any legal provisions. There are no notification requirements, no rules on their implementation and no mechanisms for monitoring or resolving any disputes.

Faced with the opposition from employers’ organisations, the Commission appears to have given up on the idea of determining a legal framework for these agreements, even on an optional basis, although it had planned to do so in 2004 in order to encourage such agreements.

The end of European labour agreements?

Barely a dozen sectoral agreements have been finalised ever since social dialogue was established in Europe. The social partners’ contradictory objectives and the progressive disinvestment of the European Commission are to blame for this.

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