IR Notes

On 9 September, Mario Draghi (the previous President of the European Central Bank, whose role in saving the euro during the 2010 debt crisis earned him the nickname “Super Mario”) submitted his report on the future of European competitiveness, which was commissioned one year ago by the President of the European Commission, Ursula von der Leyen. His findings are unequivocal: the European economy is losing ground against the US economy, and is suffering a serious onslaught from China. The GDP per capita gap between the EU and the US rose from 15% in 2002 to 30% in 2023. According to the report, “Around 70% of the gap in per capita GDP with US at PPP is explained by lower productivity in the EU. Slower productivity growth has in turn been associated with slower income growth and weaker domestic demand in Europe: on a per capita basis, real disposable income has grown almost twice as much in the US as in the EU since 2000”. The solution lies in boosting EU productivity, and with this in mind, Mario Draghi calls on its Member States to make an annual additional investment of EUR 750 to 800 billion, i.e. 5% of EU GDP, otherwise the EU will slide into a slow agony. Part A of the report sets out this finding and makes recommendations, whereas Part B, which is over 300 pages long, analyses the weaknesses of the European economy in ten key sectors (including energy, artificial intelligence, semi-conductors, defence and transport), putting forward recommendations for each one, while at the same time developing five horizontal policies to be pursued with a view to restoring competitiveness.
Insofar as it emphasises that competitiveness should not be boosted at the expense of dismantling the European social model, the report is reassuring (see European social model). A European approach must ensure “that productivity growth and social inclusion go hand-in-hand.” “The European welfare state will therefore be critical to provide strong public services, social protection, housing, transport and childcare during this transition”. The EU should also review its approach to skills, and ensure “that all workers have a right to education and retraining, allowing them to move into new roles as their companies adopt technology, or into good jobs in new sectors.” Mario Draghi also emphasises that: “More effective and proactive citizens’ involvement and social dialogue, combining trade unions, employers and civil society actors, will be central in building the consensus needed to drive the changes. Transformation can best lead to prosperity for all when accompanied by a strong social contract”. The report has the merit of painting a realistic picture of the situation and ruling out the usual neo-liberal solutions of recourse to austerity and dismantling labour law, in favour of promoting an investment policy.
The social partners have given the report a cautious welcome (see Social update, below). Will it be enough to prompt an appropriate reaction from EU leaders, who will have to discuss this report in the coming months? Nothing could be less certain, as the report invites those in charge to use public borrowing to supplement private investment, a policy likely to deter many Member States.

Reactions to the Draghi report : The European Trade Union Confederation (ETUC) is pleased that Draghi has identified the need to tackle the “chronic under-investment in industry and public services”, even though the report highlights the risks associated with deregulation. The ETUC calls on the Commission to convene “a social partner working group to discuss the report and the way forward” (see ETUC press release). IndustriAll Europe applauds the recommendation to relaunch an industrial policy, but is disappointed that the report overlooks “important features of the European model, such as social dialogue and collective bargaining”. It also overlooks “the role that low wages played in the weakening of demand, boiling everything down to weaker productivity” and it “misses the issue of fair distribution of the wealth created between profits, wages and investments” (see press release). Speaking for the employers, BusinessEurope expresses satisfaction with the report, and calls for “measures like incentivising productive investments in Europe, lowering energy costs or reducing regulatory burdens on companies”. However, it believes that “market forces should be at the core of such a strategy, rather than excessive public intervention” (see press release). SMEunited President Petri Salminen adds: “The most important aspects for SMEs in this context are the reduction of regulatory and administrative burdens, a level playing field with big business, a better functioning single market and more reciprocity and fairness when it comes to relations with third countries.” (see press release).

Domestic workers : On 10 September, the government passed a royal decree relating to health and safety protection in the area of family services provided in the home. This law “places Spain at the forefront of legislation on preventing workplace risks faced by domestic workers”, explains the Minister of Employment, Yolanda* Díaz (photo). It grants workers the right to stop work immediately if they encounter a serious and imminent risk, without suffering any prejudicial consequences (see press release).

Labour market reforms : On 5 September, as part of the country’s labour market reforms, the government submitted a draft law to Parliament, which is designed to facilitate the process of concluding company agreements, in ways that include allowing companies to depart from the provisions of the law. The aim is to develop local agreements that will enhance companies’ performance and productivity. (see press release). The trade union confederation SAK argues, however, that this proposal will “destroy the Nordic labour market model” (see press release). The government also set up two tripartite working parties on 9 September, tasked with drafting legislative proposals to make it easier to dismiss employees on personal grounds and to allow a fixed-term contract of employment to be concluded for a one-year period without any special reasons (see press release).

Gynaecological health leave : Since early September, Strasbourg Eurométropole has been experimenting with “gynaecological health leave”. This allows female employees who are suffering from menstrual pains, endometriosis or menopause-related symptoms, to take 13 days of exceptional leave per year (no more than three days in a row per month), on presentation of a medical certificate issued by a gynaecologist or a midwife, and which is valid for two years. For female workers, “taking this leave will be a step of last resort”: they will also benefit from adaptations to their workstation, and to their work premises more generally, as well as more flexible telework arrangements and for those working outdoors, easier access to toilets. In taking these measures, the local authority is demonstrating that it intends to allow women to carry on working normally, as far as possible (see press release).

Health and safety at work : On 15 July, Parliament passed a law on occupational health and safety, establishing that it shall be an employer’s duty to ensure “the physical and psychological well-being of his workers at all times”. The law introduces heavy penalties for breaches of safety rules, with fines ranging from 1500 to 50,000 euros, and in serious cases, up to two years’ imprisonment, or four years for a repeat offence. It also introduces a round-the-clock telephone helpline. The new law creates a dedicated court to deal with occupational health and safety matters, and requires an employer to appoint a Health and Safety Reporting Officer to supervise and oversee compliance with occupational health and safety rules.

Legal dispute in Irland : An Irish court has ruled for the first time on a case involving a European Works Council – that of the US group Verizon, which set up an EWC under the subsidiary requirements of Irish legislation, after failing to reach an agreement with its employee representatives (IR Notes 156 and IR Notes 153). In November 2021, a number of EWC members acting in a personal capacity, including its secretary, took their case to the WRC, which is the competent commission for resolving collective labour disputes in Ireland (editor’s note: under Irish law, an EWC has no legal personality of its own, and therefore cannot take matters to court). They applied for the company’s management to be made to pay the costs incurred by four EWC members who had taken part in a training course for EWC members, and also certain consultancy fees incurred by the EWC. In respect of refunding these training costs, the WRC had ruled that the EWC had already benefitted from a training day organised by management, so the latter was not obliged to reimburse the costs incurred by the four members in attending a further seminar. Management had also informed these members in advance that the company would not fund the cost of attending this course. As regards the consultancy fees, the WRC had ruled that management should pay 50% of these costs and decided which subjects, in its view, qualified for reimbursement, and which ones did not (IR Notes 207). On appeal, on 27 August, the Labour Court handed down two decisions (one concerning training costs, the other relating to consultancy fees), completely dismissing the workforce representatives’ entire application. The Court ruled that “the Complainant’s decision to attend the conference was a unilateral one made in the full knowledge that his attendance would not be supported by his employer”. Consequently, “the company’s refusal to fund his attendance at that event was not unreasonable”, as the company is not required “to furnish its EWC with a blank cheque” (Decision TID242). As far as the consultancy fees were concerned, the Court overturned the WRC’s previous judgment of Solomon, ruling that the employees’ representative did not have an interest in bringing an action (Decision TID241). The employee representatives have now decided to take the case to the High Court, and lodge a final appeal. Over and above the material facts of these cases, the underlying issue is that of an EWC’s inability to take a matter to court: any litigation has to be pursued by individuals, at their own expense. This situation creates a practical obstacle to contesting any decisions made by company managements (see also IR Notes 204).

> Recently published on line on IR Doc: Agreement on the Involvement of Employees at Nintendo SE.

Strengthening employment rights : On 16 July, the Italian energy group Enel officially signed the updated version of its Global Framework Agreement. The renegotiation of this agreement, which was first signed in 2013, was completed in October 2023. The new agreement was signed by representatives of management and of the Italian trade unions FILCTEM CGIL, FLAEI CISL and UILTEC UIL, as well as the international trade union federations PSI and IndustriAll Global Union.  The new text adopts the standard elements contained in global framework agreements – including various ILO conventions and OECD principles, such as those on harassment and violence at work, fair pay, freedom of association, and health and safety guarantees – together with a number of enhancements. The issue of work-life balance features prominently in the agreement: in terms of working time, it enshrines the principle of employees disconnecting outside working hours and places particular emphasis on parental protection. In this regard, the agreement adopts measures aimed at protecting workers’ rights, as set out in the Statuto della Persona (“Person’s Charter”), an agreement signed at Italian level in 2022 (see IR Notes 185). The dual (digital and environmental) transition also lies at the heart of this agreement: this transition is to be the subject of a “social dialogue with the trade unions and employee representatives, with a view to finding a social consensus on the energy transition”. The agreement also includes undertakings to train employees and boost their skills. This means leaving nobody behind, as established by the “just transition” principle. Lastly, the agreement establishes a Global Council, which is set up to provide information and monitor the agreement. It has powers to set up working parties, in conjunction with management. It will bring together representatives of the group’s trade unions and of the international trade union federations that are signatories. Enel’s social relations department emphasises that its main objective is to promote an ever-more virtuous environment, in order to protect and maximise value for its workforce. This framework agreement is one of the most comprehensive to date, and sets a new standard for companies.

Supply chain : On 28 August, the UK apparel brand New Look (10,000 employees) concluded an agreement with the International Transport Workers’ Federation, which is intended “to improve the safety, resilience and sustainability of transport supply chains”. One of its objectives is to “advance freedom of association for its supply chain transport workers by, among other elements, ensuring the ITF’s affiliate trade unions have the right to organise and enter the premises of supply chain logistics providers”. Sue Fairley, New Look’s Senior Head of ESG, Quality and Sourcing, explains that the agreement will facilitate compliance with due diligence requirements (see Due diligence), as provided for by the recent European directive, by enabling the group to “make sure there is no modern slavery or human trafficking in any part of our operations, which includes transport and logistics” (see press release).

Health and Safety : The IndustriAll Global Union and IndustriAll Europe federations have organised a global day of action to draw attention to the health and safety situation at the steelmaking group ArcelorMittal. In light of the mounting death toll at the company’s sites (more than 300 fatal accidents since 2012), they call on management to convene the joint global health and safety committee, which has not met since the Covid-19 pandemic (see IndustriAll Europe press release).

Undeclared work in public procurement contracts : The European Labour Authority has published a study entitled Evaluating policy responses to prevent undeclared work in public procurement contracts. This study offers an interesting contribution, given the prospect of a forthcoming revision of European market regulations. The document analyses the various national legislations and puts forward recommendations on how to take immediate steps to tackle undeclared work in EU public procurement, in ways that include abandoning the focus on seeking the lowest price (see press release).

“Platform workers” directive : The European directive on platform workers is due to be formally adopted, first by Parliament and then the Council, in the coming days (see Platform work). To mark with this development, the European Trade Union Institute (ETUI) has published a policy brief examining the main innovations introduced by the directive, assessing its contribution to the EU acquis and identifying the main weaknesses and potential threats to its effectiveness.