IR Notes

In response to the economic and financial crisis, many European countries, in particular those that have requested financial aid, have adopted profound reforms of their labour markets. Greece, Spain and Portugal have thus revised numerous aspects of their legislation. The spotlight has now switched to France, which is struggling to emerge from the crisis. And the mobilisation of certain student organisations and workers’ unions, opposing the bill in question, is likely to keep this issue at the forefront of the French news. First of all, the facts: the Council of Ministers on 24 March thus adopted the El Khomri bill, named after the present labour minister, which aims to rewrite the French Labour Code containing all of the employment regulations applicable in France (see Council of Ministers’ press release). The new Code is to comprise a preamble setting out employees’ fundamental rights in 61 articles. Next it will state the provisions to be governed by sectoral or company-level agreements, followed by the rules that apply in cases where there is no agreement. A commission will consequently be tasked with rewriting the code over a two-year period. However, the bill introduces a large number of changes that will take effect immediately it is passed: the section of the Labour Code on working hours has been completely reworked. The bill revises the right to collective bargaining, gives precedence to company-wide agreements over those agreed at industry level, and instates the company referendum as the forum for direct employee approval of collective agreements. It makes changes to the rules concerning representative employers’ organisations, redundancies on economic grounds (allowing such redundancies to be justified if a company can demonstrate falling turnover for four months in succession) and occupational medicine. It creates the “personal activity account”, which aims to secure career paths for employees throughout their lives, and relaxes certain obligations on employers relating to health and safety at work. The legislation concerning the posting of workers is further strengthened. On 31 March, student organisations and workers’ unions mobilised several hundred thousand people across France in demonstrations calling for the bill’s withdrawal. Nevertheless, the government intends to present the bill for debate before parliament this spring with a view to its definitive adoption in summer. The fact that this national issue is featured as the lead story in IR Notes derives from its relevance in a European context: in short, it responds in many respects to the recommendations of the European Commission as sometimes imposed by the latter as a member of the Troika; these prescriptive measures were inspired by studies conducted by the OECD in the 1990s, when that institution regarded decentralising collective bargaining and reducing employee protection (facilitating redundancies) as the ultimate in labour market policy. The OECD has backtracked on these assertions – unlike the Commission. Basing the development of labour regulations on company-level negotiation in the OECD country with the lowest unionisation rate appears to be quite a bold gamble: if the bill is passed, it will indirectly strengthen the Commission; if the government is obliged to withdraw it, the Commission will be faced by a scenario no less painful than the referendum rejection by the French of the European constitution.

• Social dumping: The European Transport Workers’ Federation (ETF) has presented a report produced by the Danish union 3F and the Danish employers’ organisation in the transport and logistics sector based on interviews with 225 truck drivers from three countries – Bulgaria, Macedonia and Romania – who were all working on a permanent basis in or from Denmark without exercising any activity at all in their country of origin (see ETF press release, the report and summary of the report). The ETF denounces the fact that these employees benefit from neither the salaries nor the working conditions applicable to their Danish counterparts.

• Night-time working in the e-commerce sector: A royal decree dated 13 March 2016 authorising night-time working for the performance of all activities linked to electronic commerce was published in the Belgian official gazette on 18 March.

• Reform of representativeness rules: In January the parliament adopted an amendment to the Labour Code revising the rules governing the representativeness of the social partners. To be considered representative at national level, a trade union must from now on have 50,000 members (instead of 75,000).

• Integration of migrants: The Central Organisation of Finnish Trade Unions (SAK) has launched a free advisory service for immigrants in Finland. In providing this free employment advice service in partnership with NGOs, SAK is seeking to help foreigners, immigrants and refugees, enter the world of work and integrate into society (see press release in English).

• Reform of staff representative bodies: Pursuant to law No. 2015-994 of 17 August 2015 relating to social dialogue and employment, the government on 24 March published two decrees, one defining the role of the single staff delegation in companies with 50 to 300 employees (decree No. 2016-345 of 23 March 2016), the other dealing with the body that can be established by collective agreement to amalgamate three institutions for employee representation (the staff delegates, works council and health, safety and working conditions committees) (decree No. 2016-346 of 23 March 2016).

Minimum wage increases: A substantial rise in the minimum legal wage for employees aged 25 and over came into effect on 1 April. The new hourly rate of what the Conservative government now terms the National Living Wage has gone up to £7.20 (9 euros), representing at 7.5% increase for the employees concerned, while consumer prices are going up at a rate of only 0.3% year-on-year. The government proposal, announced in July 2015, is to bring this “living wage” up to 60% of median earnings by 2020, with forecasts that it will then reach a level of around £9.00 (11.25 euros) an hour and should cover nearly one in seven employees. The impact on employment is unknown, but an official estimate suggests that some 60,000 jobs will be lost, particularly in the care sector, which employs large numbers of workers on the minimum wage. Otherwise, according to the Institute for Fiscal Studies, working households receiving the National Living Wage stand to lose more in planned reductions to state benefits than they will gain from increases to the minimum wage (The impact of proposed tax, benefit and minimum wage reforms on household incomes and work incentives, November 2015).

• Collective agreements for posted workers: The Unionen trade union recommends to foreign companies sending employees to work in Sweden as posted workers that they sign a “collective posting agreement” to make up for the lack of an applicable collective agreement. The trade union has published a model posting agreement for technical areas (in English) on its website.

Whirlpool: The management of the American domestic appliance manufacturer Whirlpool on 18 March signed a new EWC agreement that will cover the company’s 24,000 employees in Europe, the Middle East and Africa (see IndustriAll press release). The agreement, due to take effect on 1 July 2016, was negotiated following Whirlpool’s acquisition of the Italian electrical appliance maker Indesit at the end of 2014, which doubled Whirlpool’s presence in Europe. The agreement provides for “the full participation of workers’ representatives, extending it also to Russia, South Africa and Turkey,” commented the IndustriALL European coordinator of the WEEC (Whirlpool European Employee Committee), Gianni Alioti. It will “promote integration between the different cultures of Whirlpool employees”.

• Faurecia: The management of the French automotive equipment supplier Faurecia on 11 January renewed its European works council agreement, which was placed online on the European Trade Union Institute website. The EWC comprises 25 members together with a select committee of six members from the leading countries in terms of staff numbers (France, Germany, Spain, Poland, Portugal, and Czech Republic). The negotiation essentially concerned a lowering of the thresholds for the number of employees affected by a planned change to allow the EWC to be informed (consultation being under the remit of the EWC of the PSA Peugeot-Citroën group, Faurecia’s parent company). Thus, the agreement provides for meetings in extraordinary circumstances “implying an operation strongly affecting the employees’ interests” and concerning more than 3% of Faurecia’s salaried employees in Europe, in at least two countries, at which point an extraordinary EWC meeting shall be called. If this threshold is not reached, but more than 1,300 employees are affected in four or more countries (compared to 1,500 previously), an extraordinary meeting can also be called.


• GlaxoSmithKline: The management of the British pharmaceutical group GlaxoSmithKline (GSK, 41,810 employees in Europe) has renegotiated its EWC agreement in a new document signed on 11 February with members of the select committee and a representative from both the IndustriAll and Feccia European trade union federations. The number of members is increased from 33 to 38 (which becomes an upper limit) to take account of the group’s growing workforce. Countries having fewer than 1,500 employees are grouped together for the purposes of allocating a representative, likewise the three Baltic states, whose headcount does not exceed 150.

• Thyssenkrupp: To strengthen the application of the global framework agreement signed by the management of the German group ThyssenKrupp (155,000 employees), the IndustriALL Global Union federation and IG Metall in March 2015, the multinational has set up an online system for reporting violations of the agreement’s conditions (see IndustriAll press release). The company, which has had the agreement translated into ten languages, allows breaches to be reported either on behalf of a named complainant or anonymously via a secure electronic message system. Furthermore, all employees and their trade unions represented at the company can report a violation by email to a dedicated address. As Matthias Hartwich, IndustriALL Global Union director, explains, “Any complaint once accepted cannot be proclaimed finalized without approval by the International Committee, where IndustriALL is represented with ThyssenKrupp”.

DHL: The International Transport Workers’ Federation (ITF) has published a press release (EN ES DE) on a report denouncing breaches of fundamental labour rights and even the group’s own code of conduct in three countries (Chile, Colombia and Panama). The report is based on interviews with employees and was compiled by Victor Figueroa Clark of the London School of Economics (see ITF media executive summary, report and press release). The ITF underscores the contrast between the group’s practices in these countries, which run counter to the German model of industrial relations.

• Disparity of labour costs in the EU: The gap in labour costs remains very wide within the EU. According to Eurostat, average hourly labour costs (wages, salaries + non-wage costs) in the whole economy in 2015 were estimated at €25 in the EU and €29.50 in the euro area (see Eurostat press release). However, these averages mask significant gaps between member states, with the lowest hourly labour costs recorded in Bulgaria (€4.1), Romania (€5), Lithuania (€6.8), Latvia (€7.1) and Hungary (€7.5), and the highest in Denmark (€41.3), Belgium (€39.1), Sweden (€37.4), Luxembourg (€36.2) and France (€35.1). Moreover, the gap is not diminishing: between 2004 and 2015, the disparity expressed as a percentage between the five countries with the lowest wage costs and the five countries with the highest wage costs rose from 26.5 to 31.7 points, which underlines the failure of labour cost convergence in the EU.