IR Notes

At the annual meeting of Eurofound’s national correspondents (Editor’s Note: IR Share, which publishes IR Notes, is part of this network), on 10 April, a panel of researchers discussed the crisis in the automotive sector, highlighting the unequal impacts of the transformations currently under way in this industry (see Employment in the EU’s automotive sector). While some countries, such as Belgium and Italy, are witnessing a collapse in the number of manufacturing sites, others are continuing to prosper. Belgium, which used to manufacture more than a million vehicles per year in the 2000s, now produces only around 240,000. The closures of the Audi and Renault sites have had a severe impact on the country. In Italy, annual production fell from almost 2 million vehicles in 2018, to 591,000 in 2023. The current situation of Stellantis, which is the sector’s main company in Italy, is worrying (see article in the CGIL trade union newsletter). Exports from the Netherlands fell by more than 20% between 2018 and 2022. The researcher from the Netherlands presented a particularly striking case study: the closure of VDL Nedcar in the municipality of Born, in the Dutch province of Limburg. The town was severely affected by these 4,000 job losses, and social partners played a vital role in mitigating the impact of these losses, by offering legal advice, training and support. Much of this decline is due to the transition to electric vehicles and to offshoring of production.
On the other hand, the automotive sector is continuing to prosper in Hungary, Romania and the Czech Republic. In these countries, this sector represents a significant proportion (between 8 and 9%) of GDP and of the industrial labour force. In Hungary, the industry accounts for 25% of the manufacturing sector and employs 150,000 people, i.e. almost 4% of the working population. The country is also investing in battery production, which employed 8,100 workers in 2024, compared to 1500 in 2019. However, the drop in demand for electric vehicles might have unforeseeable consequences for the future of the sector. Researcher Nora Krokovay also highlights a number of risks linked to the sector’s labour force: its high proportion of unskilled workers, a lack of investment in training, a policy of inviting in “guest workers” and the widespread adoption of part-time working. She points out that when taken together, these various factors create a fragile environment for social dialogue. Romania offers a similar scenario: here, the automotive sector employs 160,000 workers, and accounts for a significant share of the country’s manufacturing industry. Most plants (almost 90%) belong to parts suppliers (primarily cable loom manufacturers). Although this sector is prosperous, it was strongly affected by the Covid-19 pandemic, given that this type of production, which is highly labour-intensive, is particularly sensitive to closures imposed by lockdowns. In contrast to Hungary, the Czech Republic’s transition to electric cars is behind schedule. The lack of interest shown in national policies aimed at encouraging companies to explore this new field might come to be a problem for the country in the medium term. For the Czech Republic, where the sector employs 180,000 workers directly and a further 500,000 among parts suppliers, the key lies in investment in training at all levels, with companies such as Skoda having their own university. The government is implementing policies designed to meet the current challenges, e.g. the National Action Plan for Clean Mobility. Nevertheless, the competitiveness of these three countries is being undermined by the rise of new, low-cost countries, such as Serbia, Moldova and Morocco.

CSRD and due diligence : Having previously been enthusiastic defenders of the European Green Deal adopted under the von der Leyen Commission’s first term, MEPs changed direction on 3 April, supporting the Commission’s proposal to postpone implementation of the new legislation on due diligence and sustainability reports. The vote was 531 in favour, 69 against and 17 abstentions (see press release). They adopted the draft directive as previously approved by the Council (see press release). The directive, which was approved by the Council on 14 April, will be published in the OJEU once it has been formally passed by Parliament, and it will then enter into force.

Social risks identified in ten Member States : On 11 April, the European Commission published the second-stage country analysis on social convergence for 10 EU Member States, in line with the EU’s new rules on economic governance. Stage one, which is aimed at identifying potential risks for social convergence that require a more in-depth analysis, involves all 27 Member States, and is based on the main indicators of the Social scoreboard. A second stage focuses on ten Member States that were identified in the Joint Employment Report 2025 as presenting risks for upward social convergence. This year, the countries concerned are Bulgaria, Estonia, Greece, Spain, Croatia, Italy, Lithuania, Luxembourg, Hungary and Romania. The main risks, which are set out in detail country by country, relate in particular to the population experiencing poverty or social exclusion, adult participation in learning, early leaving from education and training, and integration of persons with disabilities. The European Trade Union Confederation has expressed its viewpoint regarding seven countries (see document).

Company transfer : On 3 April, the Court of Justice pronounced judgment on a Belgian case involving the Wibra store chain. The company, which has been in financial difficulties for several years now and was adversely affected by the Covid-19 crisis, applied in 2020 for judicial restructuring proceedings, with a plan to cut the number of its stores from 81 to 36 and the size of its workforce from 439 to 183. The Ghent Business Court rejected this plan, primarily because of the company’s failure to abide by the collective labour agreement. The trade unions condemned management’s refusal to honour their employees’ holiday pay and end-of-year bonus. At this point, the company’s management immediately declared bankruptcy and implemented the proposed restructuring plan the next day, retaining 36 stores, with the agreement of the court-appointed administrators. The company’s entire workforce was made redundant as a result of the bankruptcy, but 183 employees were then rehired. 60 former employees challenged these proceedings, citing non-compliance with the obligations to inform and consult employee representatives in the event of collective redundancies linked to judicial restructuring proceedings. The Liège Labour Court awarded each of these employees €3,500 and referred the case to the CJEU for a ruling on whether the new Wibra company was required to fund these payments, or whether it could take advantage of the derogation applicable under the employee protection scheme established by the Transfers of Undertakings Directive 2001/23/EC, which allows a company not to rehire employees where it declares bankruptcy. The Court of Justice invites the Liège employment tribunal to determine, before applying this derogation, whether the bankruptcy proceedings were conducted “under the supervision of a competent public authority” and to check that there had not been any “misuse of insolvency proceedings”, in such a way as to deprive workers of their rights (CJEU, 3 April 2025, Case C-431/23, Wibra).

Exposure to harmful substances : On 27 March, the European Court of Human Rights (ECtHR) issued a judgment condemning Italy for not conducting an effective investigation in the case of a former Ilva employee, who had died of a pulmonary tumour. The deceased’s family alleged that the disease was caused by his exposure to toxic substances in the workplace. The Italian courts had discontinued the proceedings due to insufficient evidence, because the employer failed to provide all of the requested information, meaning that it was not possible to ascertain the specific activities undertaken by the employee. A causal link could not therefore be established with any certainty. Nevertheless, the ECtHR held that because an occupational origin of the illness had not been excluded at the outset, the trial court could have ordered further investigations to ascertain the possible existence of a causal link between exposure to harmful substances and the deceased’s illness, with a view to identifying those responsible for any breaches of safety measures. It followed that the domestic courts had not made sufficient efforts to establish the facts of the case, and that the decision to close the investigation had not been properly reasoned. The Court concluded that there had been a violation of Article 2 of the European Convention on Human Rights, because the investigation had not been effective (see press release).

Construction : On 5 March, European social partners in the construction sector issued a Joint declaration on labour and skills shortages, acknowledging that one of the reasons for labour shortages is the sector’s lack of attractiveness, due to “negative stereotypes and also difficult working conditions”. The declaration emphasises that the social partners will continue “to promote quality and good working conditions, such as fair wages, equal treatment, training opportunities, and sustainable business models, creating more direct jobs and avoiding long chains of subcontracting” (see joint press release).

New coalition faces calls for negotiations : The employers’ organisations BDA, ZDH and BDI, and the Association of German Chambers of Industry and Commerce (DIHK), are calling on the CDU-CSU-SPD coalition to implement ambitious measures to tackle the structural problems faced by the German economy (see declaration). Among other things, they call for: a reduction in the tax and administrative burdens on companies; recruitment of foreign skilled workers to meet the labour market demand; and for the independent minimum wage commission to pursue its work (see press release).

Artificial intelligence : The Church’s labour market service, the employers’ organisation KT, the trade union confederations SAK, EK and STTK, and the national institute VTML, have put forward a common position on the use of artificial intelligence in the workplace (see press release). These organisations are calling on the EU to establish clear rules, to invest in this area, to encourage cooperation and to guarantee protection for workers.

Sustainability report : On 3 April, Parliament definitively adopted a law designed to standardise various French laws with EU legislation. This law anticipates the decision made at European level to postpone implementation of the new obligations applicable under the corporate sustainability reporting directive (CSRD). These obligations, which were implemented by means of order no. 2023-1142 of 6 December 2023, have applied to the largest companies (mainly publicly listed companies, banks and insurance companies with more than 500 employees) since 1 January 2025. The remaining large companies were due to produce their first sustainability report with effect from 1 January 2026. This date has now been postponed to 1 January 2028 (for the 2027 report), and the new obligations will not apply to listed SME until 1 January 2029 onwards (for their 2028 report), rather than the original date of 1 January 2027. The new law also states that the sustainability information to be disclosed to the company’s economic and social committee [French acronym ‘CSE’] must be provided during the course of at least one of the mandatory CSE consultations relating to the company’s strategic orientations, its economic and financial situation, and its social policy, working conditions and terms of employment. This information does not have to be provided at each one of these mandatory negotiations.

Employment Code : A number of significant changes were made to the Lithuanian Employment Code on 1 January 2025 (see press release). They include stronger measures to prevent different types of workplace violence and bullying, and a change to the Code of Administrative Offences. The aim is to create a safer and more transparent working environment, to ensure better protection of employees’ rights and to improve employment relationships.

Maternity leave : On 19 March, a law reforming the Employment Code introduced additional maternity leave for parents of premature or hospitalised new-born babies. Depending on the parent’s situation, this leave will be taken on full pay and last for 8 or 15 weeks. It will be available on demand, including for adoptive and foster families.

Labour market reforms : The draft law amending the Employment Code, which was drawn up by the government in 2024 and was preceded by heated debates with social partners, was definitively approved by Parliament on 9 April. The objective is to create increased flexibility in the labour market, in ways that include simplifying the beginning and end of an employment relationship. The most significant changes are as follows: 1/ extending the trial period from 3 to 4 months (and from 6 to 8 months for managerial staff); 2/ reducing the notice period, which will no longer start on the first day of the month following presentation of the letter giving the employee their notice, but on the day this letter is handed over; 3/ reducing the age at which young people can take on a summer job, from age 15 to 14; 4/ introducing an obligation for the employer to keep an employee’s original position open when they take parental leave until the child reaches the age of two (previously, this obligation applied only up to the time the employee returned from maternity leave); 5/ introducing the option of paying employees in foreign currency; 6/ changes to unemployment benefits: increasing them during the early months and reducing them during the final months of the period during which benefits are payable, toughening up the rules governing eligibility for these benefits and linking them more closely to reskilling, etc. In the end, the most controversial element of the plan, namely introducing the right to dismiss workers without giving a valid reason – a change to which the trade unions were opposed – was not included in these amendments. If the President does not veto the plan, and instead goes ahead and signs it, these amendments could enter into force in June 2025 at the earliest, except for the changes to unemployment benefits, which are due to enter into force from 2026 onwards.