IR Notes

Working together to build a social Europe

An independent, reliable and impartial source of information on industrial relations and labour law in Europe.

IR Notes 35 – The weakened social dimension of economic and monetary union

  IR Notes 35 – 1 July 2015
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The team This issue was produced by Alain Lefebvre, Stepanka Lehmann and Frédéric Turlan. Find out more about the IR Share team on our website


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  IR Chronicle, by Fernando Vasquez
lawyer, former civil servant at the European Commission and member of the IR Share network of experts

The report by the five Presidents mentioned in this issue (see Headline News) again raises the problem of the lack of clarity in major European policies, to which I have referred several times. Once again, in a major document on European economic governance, we find calls being made for a revision of the rules and practices that govern collective bargaining and wages.


Buoyed by their rights and by the past success of collective bargaining as an instrument for redistribution and economic performance, the very negative reaction of the European trade unions was inevitable. Reactions on the part of employers, in some countries at least, are likely to be very similar, though perhaps not quite so strong.


A good ten years or more before the euro was introduced, cross-border coordination of wage negotiations was already a reality. Social partners have been completely successful in incorporating the productivity and competitiveness requirements into their negotiations in many countries, as has happened in this respect in Germany and some other northern European countries.


Regardless of the issues related to the requirement for democratic accountability, it is difficult to understand the desire for wage negotiations between the social partners to be supervised by an authority of some kind that is not part of the social dialogue. Moreover, the national authorities responsible for ensuring that developments in wages do not affect competitiveness are supposed to be “coordinated” by the Commission. The desire to impose “good examples” of social dialogue everywhere, through the power of the EU’s central authority is, in current circumstances, suicidal as far as the European ideal is concerned.


Doomed to fail through its unrealistic approach. This proposal views wages only as a component of prices and ignores their role in setting incomes. And it does so just as the IMF is pointing out to us the link between increasing the income share of the poor and the middle class and economic growth, and the fact that increasing the income share of the richest 20 % reduces growth[1].


[1] “Causes and Consequences of Income Inequality: A Global Perspective”, IMF Staff Discussion Note of 15 June 2015.

 
  Diary

23 June
Brussels
ETUI monthly forum entitled “What social face of the new EU trade agreements?“, with Pascal Lamy.


25-26 June
Dublin
Conference organised by the European Confederation of Independent Trade Unions (Cesi) on Restructuring in the public sector.


1 July
European Union
Start of Luxembourg’s presidency of the Council of the European Union (see programme).


16 July
Luxembourg
Informal meeting of the ministers of Employment, Social Affairs and Equal Opportunities


10-11 September
Gothenburg
IREC annual conference on industrial relations in Europe with the title “Converging or diverging industrial relations in Europe?“.


10-11 September
Porto
Third international congress on working conditions, organised by the Working Conditions Research Network (RICOT).


29 September
Lisbon
European conference on the future of labour relations (individual and collective) in the European Union, organised by SOCIUS-ISEG, CESIS and IR Share with funding from Fundação para a Ciência e Tecnologia.
For information contact: Fernando Vasquez or Raquel Rego.


29 September – 2 October
Paris
European Trade Union Confederation Congress.


1-2 October
Brussels
European seminar organised by Astrees, IR Share and SBI-FNV Formaat with funding from the European Commission on managing confidentiality of information provided to European works councils. This seminar is reserved for managers responsible for European works councils. An online registration form is available. The participation costs are 250 euros.
For information contact: Frédéric Turlan (frederic.t@irshare.eu – +33 6 81 41 53 95) or Christophe Teissier (c.teissier@astrees.org)


5 October
Brussels
Employment, Social Policy, Health and Consumer Affairs Council

 

IR Notes is a fortnightly newsletter produced by 
IR Share and its network of experts, and is available in several European languages. It offers Europe-wide monitoring of employment law, labour relations and employment policy. It is available by subscription for 15 euros per month ; 150 euros per year (excluding tax), via 
the IR Share website. IR Share is a privately- owned, independent, apolitical company whose aim is to inform and assist all players involved in social dialogue within and outside Europe. It has been the correspondent organisation for France and Luxembourg of the Dublin Foundation since 2009 and for Bulgaria since 2014.

 

Lead story
The weakened social dimension of economic and monetary union

On 22 June, five presidents of European institutions (*) presented their report “Completing Europe’s Economic and Monetary Union” (EMU), which proposes a three-phase plan to strengthen EMU between now and 2025 (see press release). There are several points to note concerning the social dimension of EMU: 1/ In social policy, the sole requirement relates to a “social protection floor” provided only “for the most vulnerable”. A restrictive view, limited to social welfare, that lends credence to the fact that social protection for “non-vulnerable” people could become entirely or partially their own responsibility. 2/ Despite a few goodwill gestures with regard to the European parliament and national parliaments, the strengthening of EMU is not subject to real democratic control – the question of an elected parliament for the eurozone, promoted by Germany’s former minister of foreign affairs, Joschka Fischer, and taken up by some German (Glienicker Gruppe) and French intellectuals (“Manifesto for a euro political union“), is not dealt with. 3/ With regard to employment, the document recommends continued reform of the labour market and the establishment of “a national body in charge of tracking performance and policies in the field of competitiveness”. These “independent entities”, whose activity will be coordinated by the European Commission, will be “democratically accountable”. They will have to “assess whether wages are evolving in line with productivity, and compare with developments in other euro area countries and in the main comparable trading partners”. Social partners should “use the opinions of the Authorities as guidance during wage setting negotiations”, a proposal that was curtly rejected by the European Trade Union Confederation (see press release).


1. European Union
Social update

  • Protection against asbestos: After adopting an opinion entitled “Freeing the EU from asbestos“, in February 2015, the European Economic and Social Committee organised a conference on 24 June, supported by the European social partners for the construction industry (EFBWW and FIEC), to call for more effort to combat exposure to asbestos which, according to one expert who took part in the conference, (see press release), causes an estimated 47,000 deaths in the EU every year, in other words, 50 % more than the last estimates and twice as many as are caused by road accidents.

  • Governance of the eurozone: The European parliament has adopted a report on its recommendations for eurozone governance. “Structural reform plans should require approval by national parliaments and involve social partners at all stages, in order to improve their effectiveness and strengthen the sense of national ownership”, say MEPs. (see press release).


Sectoral social dialogue

  • Central government bodies: The European social partners for the central government sector, TUNED and EPSU, have announced that they are negotiating a “legally binding text” on the information and consultation processes, particularly where restructuring is concerned (see press release from EPSU).


Case law

  • Distinction between posting and hiring out: Should a Hungarian company that sends employees to Austria to cut up and package meat in the abattoir of an Austrian company, using part of its facilities, be considered to be posting workers as part of a provision of services or simply hiring out workers? In the first situation, the Hungarian company would merely have to make a declaration of posting, in the second, it would have to obtain a work permit for each employee. In a judgment (CJEU 18 June 2015, Case C‑586/13, Martin Meat) the Court of Justice referred to its judgment in the Vicoplus case. Three criteria characterise hiring-out: 1/ it is a service provided for remuneration in respect of which the worker who has been hired-out remains in the employ of the undertaking providing the service, no contract of employment being entered into with the user undertaking; 2/ the movement of the worker to the country where the work must be carried out constitutes the very purpose of the provision of services; 3/ The worker carries out his tasks under the control and direction of the user undertaking. In order to classify the contractual relationship “account must be taken of any evidence indicating that the movement of the worker in the host Member State constitutes or does not constitute the very purpose of the supply of services on which the contractual relationship is based”. The evidence accepted by the Court showed that this was not the case: firstly, the service provider bears the consequences of a provision of services that does not comply with the contract. Secondly, the service provider is free to determine the number of workers which it considers useful to send. In this particular case, the purpose is therefore not hiring-out, it is indeed a posting of workers, even if the undertaking that receives this service provision checks the performance of the service for compliance with the contract or gives general instructions to the workers posted.

  • Working time of peripatetic workers: the advocate general of the Court of Justice of the European Union gave his opinion (the last stage before judgment) (CJEU 11 June 2015, case C‑266/14, Federación de Servicios Privados del sindicato Comisiones Obreras) in a case that will have significant consequences. The dispute relates to the classification of the travelling time of peripatetic workers (technicians responsible for installing security systems) when they go from their home to their first client and then, at the end of the day, from the last client to their home. The employer considered that it is not actual working time. The advocate general noted that their travel “is an integral part of being a peripatetic worker and therefore inherent in the performance of their activity”. Furthermore, during these journeys, the workers “are not outside the scope of their employer’s management power”. Lastly, he added that rest periods “serve to compensate for fatigue arising from periods of work” and that “it would undermine that essential function […]” if they were deemed to include these periods of travelling time. The Court, if it follows its advocate general, would therefore have to classify these periods of travelling time as working time and not as rest periods. In practice, the travelling time at issue will have to be taken into consideration in calculating the maximum length of the working day (11 hours of rest between two working days) and the working week (48 hours).


2. Member states
Belgium

  • Works council/Health and safety council elections: The law of 2 June 2015 specifies the procedure for the works council and health and safety council elections (“élections sociales”) from 9 to 22 May 2016 (see press release, in French).


Czech Republic

  • Short-time working: On 17 June, the Czech parliament approved the establishment of a system of short-time working inspired by the German “Kurzarbeit” system, which is incorporated into employment law. It is possible to resort to short-time working during periods of economic crisis, natural disaster, or political sanctions that have an impact on production by Czech companies (such as the measures taken by Russia in retaliation against European sanctions). Employers can use the system when they are unable to guarantee at least 20 % of the working time of their employees. When resorting to short-time working, employers undertake to maintain jobs. Workers receive 70 % of their salary, of which 50 % is paid by the employer and 20% by the state. The state can intervene for a period of up to six months, which can be renewed once.


Finland

  • Restoring competitiveness: The new conservative government produced by a coalition ranging from the centre to the extreme right wants to impose an agreement on social partners to reduce the hourly cost of labour by 5%, by reducing pay or by reducing holidays or by increasing working time. If an agreement is not reached, the government has announced budget cuts amounting to 1.4 billion euros, with people’s social benefits being scrapped or reduced (see trade union press release).

    > Note also: The latest bulletin from the European Trade Union Institute on collective bargaining in the EU (Collective Bargaining developments May 2015).


3. Companies
European works councils

Siemens: At its most recent meeting, on 27 and 28 May in Manchester, representatives of Siemens’ European employees voted in favour of several changes to their European works council agreement. As a result: 1/ the threshold for the allocation of a second seat has been lowered to 5000 employees; 2/ council members are granted a right of access to all sites in their country and can give information to the employees there; 3/ the obligations related to membership must be given preference over other employment obligations and members are obliged to attend meetings; 4/ the council strongly recommends the ability to speak English and/or German, in particular for internal communication (see press release from IG Metall).
In addition, a meeting has taken place in Beijing, with representatives of German employees, including the president of the European works council, and representatives of Chinese employees. The meeting was concerned with improving representation of employees at the Chinese sites, the provision of a workshop on collective bargaining (see summary by IG Metall), and the adoption of a constitution to establish a Siemens China Committee as a national representation of interest.


Transnational negotiations

  • ENGIE: At the European works council meeting on 25 June, the management of the energy group ENGIE (formerly GDF Suez) made unilateral undertakings regarding workers directly impacted by the group’s planned reorganisation. In addition, negotiations will begin on 8 July concerning a European framework agreement on a “social contract”, which is intended to establish a framework for giving workers long-term support throughout the group’s changes and transformations.


Trade unions

  • Lafarge-Holcim: 60 representatives of workers at two cement manufacturers Lafarge and Holcim took part in a meeting on 16 and 17 June, to discuss the process for the merger between the two groups. Although both multinationals were invited to this meeting, Holcim did not send a representative, and was criticised for this by the international (BWI) and European (EFBWW) federations of building and woodworkers, and the European federation IndustriAll, in a press release.

    > Note also: The agreement of 3 June 2014 on the SE works council of Legris Industries (1300 employees), whose first meeting took place in Brussels on 30 June 2014. The German customer relations company Amevida (1800 employees) has converted to European Company status (Societas Europaea – SE), establishing a works council for the SE and employee participation in the supervisory board (see press release, in German).


4. Studies and reports

Workplace health and safety: The European Agency for Safety and Health at Work has published the results of its second European survey of businesses, ESENER-2. This survey is based on responses from almost 50,000 companies questioned about matters related to managing health and safety at work and about occupational risks (see Summary). Special attention has been paid to psychosocial risks. Around 33 % of establishments with more than 20 workers state that they have an action plan to prevent work-related stress (see also comments from the European Trade Union Institute).



  • Employment and labour costs: Eurostat has published some statistics on hourly labour costs which are rising again, except in Cyprus (– 1.8 %), and on employment, which increased slightly in the first quarter of 2015 by 0.1 % in the eurozone and by 0.3 % in the EU.

  • Use of opt-out in relation to working time: The European Foundation for the Improvement of Living and Working Conditions (Eurofound) has published a study of the use by Member States of the possibility of opting out of the maximum working week of 48 hours.

  • Labour market reforms: The European Trade Union Institute (ETUI) has published a Working paper (in English) that criticises the reforms of the Spanish labour market made since the beginning of the economic crisis. The relaxation of worker protection and the decentralisation of collective bargaining have had no impact on unemployment, which remains high, and have not mitigated the duality of the Spanish labour market, where the use of temporary contracts remains very significant. A study of the reform of the Italian labour market, conducted by the French analysis centre France Stratégie, highlights one of its features, which is to offer employers large incentives to employ workers on permanent contracts while restricting the opportunities for using temporary posts.

 

IR Notes

An introduction

IR Notes is an independent, reliable and balanced briefing note on industrial relations and labour law in Europe.

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As a result, we select the most relevant topics, which are a source of cross-disciplinary and inspiring ideas.

Each issue includes:

  • An interview with someone working in the field of industrial relations who offers their unique take on a current social issue, an agreement, or an example of best practice.
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