Workplace democracy makes firms more productive, and therefore more likely to contribute to growth in Europe. The EU should make worker participation in company governance a priority, writes Peter Scherrer.
Peter Scherrer is deputy general secretary of the European Trade Union Confederation.
In 1994, the EU passed a law to set up European Works Councils (EWCs). The single market, which came into being a year earlier, set out to promote cross-border business for multinational companies. But at the same time, it had a dramatic impact on workers whose livelihoods could depend on decisions taken far away in another country. The EWCs Directive was a major milestone in recognising their right to be involved, obliging cross-border companies with more than 1,000 employees to inform and consult workers through EWCs.
Today, EWCs are in place in around half of the companies covered by the directive: around 1,000 of them, the majority in ‘old’ member states like France and Germany. But besides the failure of an estimated 50% of businesses to implement the law, and a declining number of new EWCs being created, the ETUC has also found gaps in areas including confidentiality, coordination between national and EU levels, report-back procedures, training, translation facilities, access to company sites, finance and expert support, frequency of meetings and sanctions.
Indeed, how can the legislation be working properly when a trade union delegate to the ETUC’s annual EWC Conference in October was unable to attend because his employer FedEx refused him – for the 26th time in one year – time off to attend a union meeting? Worker representation is not a charitable gesture on the part of companies, in Europe it is a legal right: employers should be penalised if they fail to respect it.
Furthermore, the seven years since 2009 have witnessed radical changes in workplaces and the organisation of labour. Digitalisation is generating new forms of employment such as crowd work and online platforms, where conventional forms of workplace representation are nigh impossible. The ETUC cannot accept that more and more Europeans should become second-class workers more vulnerable to exploitation.
As well as adapting workers’ rights to new challenges, the gaps in EWC law need urgent attention. Article 15 of the 2009 directive clearly states that “No later than 5 June 2016, the Commission shall report to the European Parliament, the Council and the European Economic and Social Committee on the implementation (…), making appropriate proposals where necessary.”
Trade unions have been waiting … and waiting. Until finally, in mid-October, DG Employment Director-General Michel Servoz announced that the revision will be postponed to coincide with the launch of the EU Pillar of Social Rights in 2017. Yet another delay.
But recent cases such as the unforeseen closure of the Caterpillar factory in Belgium, with the loss of more than 2,000 jobs, demonstrate graphically why action cannot wait.
Company restructuring has become a feature of daily life in the EU. Workers need to know about corporate plans in time to put forward proposals and influence decisions, but our research shows only 24% of EWCs are informed in advance. Back in 2014, the European Parliament called for legislation to guarantee workers the right to prior consultation, and yet the Commission has failed to put forward any proposals. One very concrete move would be for the revised EWC Directive to include a “right of suspension” putting restructuring on hold until workers have had a say, and sanctions to penalise companies that fail to consult.
But EWCs are just one aspect of workers’ representation. Seats on European company boards should be part of a comprehensive legal framework for worker involvement which sets EU-wide minimum standards not only for legally defined ‘European companies’ (SEs), but also for businesses that use European company rules, for example to regulate mergers, transfer of undertakings or cross-border operations. Only 57 European companies have put workers on boards.
We are demanding a new directive with ambitious, binding standards for workers’ board-level representation in all member states – not only those where national legislation exists. Workers on boards must have the right to know about and influence company decisions. They need equal rights including the right to vote, ask for information, ask questions and put items on the agenda, as well as protection from dismissal, training, time and access to resources.
Current national practices diverge across Europe. British and European trade unions were deeply disappointed this autumn when, after a promising announcement by the new Prime Minister Theresa May of plans for workers’ representation on UK company boards, and despite some support from British employers, the news emerged that she did not mean it. Board-level representation will remain voluntary, and therefore powerless. On the other hand, France and Germany already have legislation, although the German system is currently being challenged in the European Court of Justice.
This assault is counterproductive, given that companies are known to perform better with workers’ involvement, which boosts innovation, productivity and well-being. German firms outstrip their British counterparts, according to Bloomberg, while in Austria and Sweden companies with worker representatives have beaten performance benchmarks by 30% or more in the last five years.
The argument in favour of more representative company boards goes wider. Four years ago, the Commission sparked controversy by proposing legislation to promote more women to executive positions. The law is still pending, but widespread public debate has increased awareness that fairer representation is a question of both social justice and business efficiency. The ETUC is insisting on no less than a 40/60% gender balance among worker representatives.
Our experience shows that EWCs work better in liaison with workers on boards. Together, they should form a comprehensive system of workers’ involvement, which would be good for workplaces, good for business and good for Europe.