Industrial Relations

Catherine Voynnet Fourboul

Objectives

• Introduce Industrial Relations

• Describe the original model of Industrial Relations in Europe

• Give information about the international TU structure and show its complexity

• case study : Mc Donald US MNC policy in Germany (Europe)

Industrial Relations : definition

collectivebargaining

WorkRules

employmentrelations

Power andconflict

economicand socialInfluence

Behavior Rules

traditional field

narrowDefinition

largeDefinition

large field

traditionnalOrientation

newOrientation

Variety of the definitions of the Industrial Relations

One definition of Industrial Relations

« The study of strategic choice and collective action of labour, business and governments, their mutual relationships of conflict, cooperation and power, affecting the content and regulation of employment relations and the use and distribution of physical and human resources »

Joris Van Ruysseveldt et Jelle Visser, Industrial Relations in Europe, Sage 1996

Social Relations and Industrial Relations

Industrial Relations :

External Pole

Social Relations:

internal Pole

State

Directors Representatives

LabourManagement

Basic Theory : Dunlop 1958

• First systemic theorization of the industrial relations

• Emphasis on the network of standards and of rules which are developed by the interaction of the 3 actor types in an environment of technology, market, labour and regulation.

Dunlop 1958

• ideology or the shared values

• the I.R. system is a separate and distinct system from the society

• invented and declined standards at the national, sectoral and company level.

• environnemental contexts: technology, market, relative power and the actors statutes.

The employer

• MNC, Company with simple or multiple establishments, SME, public companies,holding,

• employers' association at the regional, branch or national level

• Employer and Human Resources Management Role

Labour

• Workers

• Employees

• Trade Unions

• Works Councils

Government

• Different possible location in the Government structure  : – executive, – legislative, – judiciaries

Collective Bargaining

• after 1945: became the regulation tool of employment relations

• is a joint decision-making process based on conflictual cooperation  

• may concern minimum hourly wages, min. or max working hours

• procedural rules concern additional bargaining, rules for interpreting the agreement

collective bargaining criteria

• Bargaining coverage (proportion of all employees covered / collective agreement)

• Bargaining scope ( number and nature of the issues covered).

• Bargaining level: – central, national – sectorial (branches: printing, metal, banking)– region, company

Industrial Relations in Europe

The European Union's deepening economic integration

• the EU is tending more and more to compare itself in many areas with the world's two other largest economies – Japan and the USA.

• the EU's commitment: to become `the most competitive and dynamic knowledge-based economy in the world with more and better jobs and greater social cohesion´ .

• Industrial relations systems and developments play an important part in determining economic, employment and social outcomes.

• Aim: highlight some of the main areas of difference and similarity.

European social model

• the manner of regulating employment and social issues – the `social partners´ – bipartite and tripartite consultation and

dialogue– collective bargaining– employee participation

The `social partners´

– the term often used at EU level and in many Member States to denote trade unions and employers' organisations

Bipartite and tripartite consultation and dialogue– At EU level, `social dialogue´

• between European-level trade union and employers' organisations,

• at the overall level (known as `intersectoral´ or `interprofessional´ ) or at the level of individual economic sectors.

– it involves discussions, cooperation, consultation (negotiations and agreement are possible)

• bipartite, involving only unions and employers' organisations, • or tripartite, often instigated and structured by the European

Commission or in response to Commission proposals.

– In many EU Member States, there are consultative and cooperative relationships between trade union and employers' organisations

Collective bargaining

• Process of establishing pay, terms and conditions of employment

• Through bipartite negotiation and agreements • Among trade unions and either employers'

organisations or individual employers. – In the EU Member States, collective bargaining

may occur at many levels – intersectoral, sectoral, regional, company, workplace etc

– The importance of level and relationships among them differ between countries

Employee participation

• `indirect´ or representational employee involvement, through elected or appointed representatives, at company level.

• Through `works councils´ or similar bodies, with information and consultation rights – (stronger `co-determination´ rights on some topics in

some countries, such as Germany). – employee representation on the board of directors or

supervisory boards

• `direct´ employee involvement (ways of informing individual employees) or employee financial participation in company results.

Information and consultationdefinition what and when Interlocutors

Information Documents

Transmission

Reports

information meeting

Basic information,

periodic, occasional

(prior to decisions)

Trade union

representative

council

workforce

Consultation Compulsory advice

or not

Proposal

prior to decision

for activities to

be planed

for the definition

of guidance

Trade union

representative

council

Negotiation and codeterminationdefinition what and when Interlocutors

Negotiation

Collective

bargaining

agreements contract regulation settlement ,

joint decision making

trade unions

TU representatives

representative

council

Codetermination agreement process

veto right

joint decision making

mix councils

decision making

regulation settlement,

activity program,

nomination of people.

representative council

representatives take

place in the decision

making council

Trade unionism in Europe

Trade unionism Contrast at the EU and national level

• at the EU level: high degree of unity & coherence • at national level: enormous diversity and

sometimes division. • The European Trade Union Confederation (ETUC

) brings together major confederations in EU countries (74 in total).

• managerial and professional staff belong to the European Confederation of Executives and Managerial Staff (CEC);

Trade unionism Contrast at the EU and national level (2)

• organisations (generally outside the trade union `mainstream´ ) affiliated to the European Confederation of Independent Trade Unions (CESI).

• affiliated to ETUC are 11 `European industry federations´, grouping most major EU trade unions in their respective sectors. ETUC claims a total affiliated membership of 60 million.

Key differences between European I.R. systems

• Trade Unions density and structure

• Trade Unions strategies

• Managerial styles in I.R.

• collective bargaining levels

• industrial conflict and strikes

• industrial democracy and employee participation

Degree of unionization : density

Country : high unionization

% of workforce belonging to a union

Country : low unionization

% of workforce belonging to a union

Denmark 87 Germany 30

Belgium 69 Portugal 30

Luxembourg

50 UK 29

Ireland 44 Netherlands

27

Italy 35 Spain 15

Greece 32 France 9

source : EIRO 2000

Trade Unions structure

• Trade Unions – craft, – industrial, – general or conglomerate

• historic origin and variation explained by the state of technology

• no matching system

Trade Unions Structure in EuropePays Type Type représentation et NiveauxGermany Industrial a single trade union : DGB ; 16 unified sectorial trade unions (IG Metall)

separate TU for civil servants and white collar workersBelgium Industrial sectorial, no company-based union

3 trade unions (Christian, socialist, libéral)Denmark Craft close relations with the Social Democratic Party ; LO central

organization :2/3 of the workforce ; 70 trade unionsSpain General political and ideological organizations ; CCOO (marxist ideology) UGT

(socialist) , tentative of merger of this 2 trade unionsFrance General independent but strong links with political parties

5 multi-professional unionsItaly Industrial 3 trade unions : CGIL, CISL, UIL cover industrial sectors rather than craft or

occupationsNether-

landsGeneral unions of all occupations are joined in 3 federations. TU not militant, do not

use strikes as the major way to achieve theri goals ; financed solely throughmembership contributions

UK Craft national confederation of trade unions : TUC ; 73 individual unions ; severalunions represent one or more occupational groupings within the samecompanie.

source : Sparrow P., Hiltrop J.M., European Human Ressource Management inTransition, Prentice Hall, 1994

Comparison with USA and JAPAN• USA: structure of trade unionism is relatively

similar to that in Ireland and the UK. (single main national centre, the American Federation of Labor and Congress of Industrial Organisations (AFL-CIO), made up of a relatively large number of industrial and occupational unions.

• Japan: 2 confederations of significant size. Rengo organises over 60% of unionised workers. Rengo's membership is based on enterprise-level unions, organised in sectoral federations (similarities with France). The second confederation, the National Confederation of Trade Unions (Zenroren), represents 7% of all unionised workers.

Basic trade union organisation, EU, Japan and USA

. Mainly industry/sector organisational structure

Mixed (industry/general/ occupational) organisation structure

Single main confederation

Austria, Germany, EU level

Ireland, UK, USA

Multiple confederations (divided on religious/political/ organisational lines)

Belgium, France, Italy, Japan, Luxembourg, Netherlands, Portugal, Spain

Denmark, Finland, Greece, Norway, Sweden

Trend towards merger of trade union organisations.

• The number of European industry federations affiliated to ETUC has been reduced by mergers recently (eg in the food and agricultural sectors, and in services), while the number of member unions of most national union confederations has declined

• A particularly notable recent merger was the creation in Germany in 2001 of the Unified Service Sector Union (Vereinigte Dienstleistungsgewerkschaft, ver.di), which is thought to be the largest union in the democratic world, with nearly 3 million members.

Divergence of Trade Unions strategies source Bamber & Lansbury 1987

- maximalist  respons : CGT

- interventionnist approach : Italians Trade Unions,

- defensive-particularistic strategy : UK

- corporatist strategy : Swedish Trade Unions

Decentralization of collective bargaining

• Pursuit of flexibility in order to respond to fast changing markets

• centrally co-ordinated decentralization prevails (parallel with managerial responsibilities

• MNC’s strong influence

• Sweden : central agreement - important

• Germany : works councils

• UK : no sectorial bargaining, plant bargaining formalized

Strike patterns

USA Canada Ireland long duration of stoppages

Italy, Spain, Finland,

Israel

number of people who participate is very

high

Australia, New-Zealand,

France, Portugal

number of stoppages : very high

Belgium, Denmark, Pays-

Bas, Norway, Sweden

low incidence of strike activity, but

duration not insignificant

UK, Japan no one strike characteristic is dominant

A century of union organization, 1890-1990In Van R uysseveldt J., Visser J., Industrial relations in Europe , SAG E, 1996

Threats posed to unions by MNCs 

Kennedy, T 1978, European Labour Relations , London Associated Business Programmes

- Financial resources : capacityto absorb losses in a particularforeign subsidiary that is indispute with a national union

- Alternative sources of supply« dual sourcing » outsourcing

- Abitility to move productionfacilities to other cheap labourcountries

- Superior knowledge andexpertise in labour relations

- Remote locus of authority- Production facilities in many

industries- Capacity to stage an investment

strike in which the organizationrefuses to invest in a plant thatwill become obsolete and non-competitive

0

5

10

15

20

25

30

HQ decision

sub. decision

Centralization : HQ / subsidiary

source : Hamill J., 1984, IRJ

International TU's structure

Reasons for the lack of success of international trade unions

• Good wages and working conditions provided by MNCs

• strong resistance from multinational managements to transnational bargaining and consultation

• ideological, structural and political differences between national Unions

• differing national laws et regulations

International trade unions structure

• ICFTU International Confederation of Free Trade Union

• WFTU :World Federation of Trade Unions• ITS: International Trade Secretariat• ETUC : European Trade Union

Confederation• UNICE : Union of Industries of the European

Community

ICFTU International Confederation of Free Trade Union

• anti communism

• developed with companies becoming multinational

• international cooperation between national Trade Unions : a network– at different levels : world, regional, national,

professional – through International Trade Secretariat

ITS: International Trade Secretariat

• They bring together individual national unions in particular sectors of industry.

• The ITSs are autonomous and self governing organizations but follow the ICFTU on broad policy issues.

• the larger : International Metalworkers’ Federation IMF

• A general conference of ITSs once a year

Some ITS

ICEM

IUFFIET

IFBWWIMFITGLWF

ITF

International Federation of Chemical, Energy, Mine andGeneral Workers' UnionsInternational Union of Food, Agricultural, Hotel,International Federation of Commercial, Clerical,Professional and Technical EmployeesInternational Federation of Building and Wood WorkersInternational Metal Workers' FederationInternational Textile, Garment and Leather Workers'FederationInternational Transport Workers' Federation

ICFTU : A complex membership system

• member federations opposed at the national level (FO/CFDT)

• no membership rules between federations, confederation, ITS and ICFTU

• the most integrating and representative organization:

• 124 millions of members represented by 213 members in >143 pays et territories

ICFTU relations with other organiszations

• ICFTU and ETUC : same address in Brussels but competition.

• continuous dialogue between ITS and ICFTU

• ITS  : operational approach, ICFTU  : political approach

• ICFTU and UNO  : recommendation IMF, UNESCO, Commission United-Nations, International Labor Organization

ETUC : European Trade Union Confederation

• creation : 1973 linked to Europe

• play a part at the European institutions

• claim difficulty at the European level

• no authority on its trade unions members

• meeting and exchange location between national trade unions

• 60 million affiliated members

ETUC : European Trade Union Confederation

• Disparity in the representation– favorable to the British TUC et DGB – unfavorable to the French trade unions

• tries to find a consensus

• membership condition :– not belonging to WFTU– take into account the opinion of the oldest– independent from the ICFTU

An example : French CFDT

• In 74 : CFDT become member of the ETUC – french FO was opposed– compromise with German DGB. – French CGT is refused still march 99

• work with other European trade unions

• Jacques Delors et Jacques Moreau CFDT.

• En 89 become member of the ICFTU the at the steering committee

Employers' organisations

Union of Industrial and Employers' Confederations of Europe & CEEP

• The UNICE: the main national intersectoral confederations of private sector employers in the EU Member States (and elsewhere in Europe).– engages dialogue, negotiations with ETUC– promotes its members' interests, seeks to influence EU

decision-making).

• Since 1998, UNICE has cooperated closely in EU-level social dialogue and negotiations with ETUC

• The European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP) (organisations with public participation)

Sectoral social dialogue

• 20 sectoral dialogue committees bring together European-level representatives of trade unions and employers for discussions on employment and social issues.

• Sectors: agriculture, banking, civil aviation, cleaning, commerce, construction, electricity, footwear, hotels and catering; inland navigation, insurance, leather, maritime transport, personal services (hairdressing), postal services, private security, public services, railways, road transport, sea fishing, sugar, telecommunications, textiles and clothing, tobacco and woodworking.

Sectoral social dialogue: action

• Joint texts (opinions, declarations, codes of conduct etc) on a range of issues (eg training, employment, fundamental rights or health and safety)

• Not real bargaining role over pay and conditions, except– eg the conclusion of an agreement on the organisation of working time in March 2000 in civil aviation

Organisation of employers at national level

• At intersectoral level, (B, Dk, F, Ir, I), NL, Sp, S UK) : a single umbrella organisation representing companies' employers' and business/trade interests

• In D –a division between the representation of employers' and of business/trade interests, with separate central organisations for each.

• separate bodies for industry, services and in some cases agriculture as in Finland, Greece and Portugal.

Industrial relations role of employers'

organisations in the EU, Japan and USA Bargaining or significant dialogue with unions

Little/no bargaining or dialogue with unions

Intersectoral organisations

EU level,

Au, B Dk, Fin, F, D, G, Ire, I, Japan, Lux, NL, P, Sp, S

UK, USA

Sectoral organisations

EU level,

Au, B Dk, Fin, F, D, G, I, NL, P, Sp, S

Ireland, Japan, Luxembourg, UK, USA

Wage bargaining levels in the European Union

Source: EIRO * = existing level of wage bargaining; *** = dominant level of wage bargaining.

.Intersectoral

levelSectoral level Company level

B Fin Ire *** * *

Aus D . *** *

I NL P SP S . *** *

F UK . * ***

Wage formation in the European Union Source: Emmanuel Mermet, ETUI, October 1999

Country Productivity Enterprises' profits

Country Productivity Enterprises' profits

Inflation as a general indicator Inflation as determinant S UK B

Aus **   Fin P ***  

Ire   ** G   **

NL ** ** SP *** **

Dk ** *** F   ***

      D *** ***

Collective bargaining coverage

Country Coverage

Austria Belgium 100%

Sweden (private sector) 90%

Denmark 80%

Netherlands 75%

Germany - France 68%

UK (non-managerial staff) 36%

system of sectoral agreements

at company level

Japan : 21 % USA : 15 %

Employee participation

Employee participation : `works councils´

• System of indirect or representational employee participation at company level or similar bodies.

• Aus, B, Dk, Fin, F, D, G, I, L, ND, P and Sp. 1. - elected by employees (sometimes trade union lists) 2. - have a range of information and consultation rights 3. - even `co-determination´ rights on some topics in some

countries (eg Germany) 4. - In Sweden, legislation provides similar rights to trade

unions in companies.

– Only in Ireland and the UK: no general, permanent system of works council-type bodies.

Patterns of representationsingle channel dual channel

based on negotiation based on information

Representatives institutions aredeveloped on a contractual

basis through sectorialagreement: the trade unionist is

the privileged interlocutor

the workforce representation insidethe company is done by an

institution different from the tradeunion

the council ismix and

directed bythe President

the councilconsists of

solely employeerepresentatives

FranceBelgiumLuxembourg

GermanySpain

UKIrelandItaly

Employee representation on the board of directors

• (or supervisory boards) • widespread participation in Aus, Dk, Fin, F,

D, Lux, NL and S, and restricted to some public sector organisations in G and Ir.

• European Works Councils (EWCs), information and/or consultation on specific issues, business transfers, collective redundancies and health and safety.

Employee participation in the USA• no legislation providing for works council-type structures or board-level employee

representation. • 96% of large employers had some form of employee involvement team, (1994)• 52% of employees reported some form of employee participation at their workplace. • participation arrangements are limited in their scope• The reason is that the National Labor Relations Act prohibits the formation of an

employer-dominated `labour organisation´ or `employee representation committee´ which deals with management over pay, working time or conditions of work. The original purpose of this provision, introduced in 1935, was to prevent employers from controlling company unions. However, as interpreted by the National Labor Relations Board (NLRB), the law results in severe restrictions on the formation of non-union teams or committees that address `terms and conditions of employment´ – which is taken to include a wide range of matters such as pay, training, productivity/efficiency rewards, work assignments, job descriptions/classification, workloads/quotas, recruitment and dismissal. However, a number of recent NLRB decisions (notably the Crown Cork & Seal case in 1998) may indicate some relaxation of this position.

• The 1995 report of the Dunlop Commission on the `future of worker-management relations´ recommended that this restriction on employee participation programmes in non-union workplaces should be lifted (though with protection for union representation). A Teamwork for Employees and Managers (TEAM) Act was subsequently introduced in Congress, which would have allowed teams of employees in non-union workplaces to work with management to address workplace issues of mutual interest. The legislation did not pass in 1995 and has not been reintroduced.

Employee participation in Japan• not governed by legislation, but• high level of employee-management cooperation• (1999) 42 % of establishments >30 employees had

a `labour-management consultation organisation´ – a permanent structure, – Japanese labour-management consultation

organisations deal with working time, working conditions, health and safety, welfare, childcare, management policies, overtime premia, pensions, lay-offs, restructuring, production/sales and training.

– Participation take many forms: written explanation by management, exchange of opinions, discussion and agreement.

Case study: McDonald

Mc donald caseRoyle T., Avoidance strategies and the German system of co-determination,

International Journal of HRM, december 1998

• In 82 : 2 betriebsrat for 160 shops

• neither group comity nor central comity

• law conditions : 1 betriebsrat by company with at least 5 employees

• the companies have between 50 and 100 employees but no betriebsrat , why?

Mc donaldexplanations

- Part time working

- high turn over

- Students, second income

- Foreigners (Turkey and Eastern) : 50 to 80 % of employees

• employees do not know their rights

Mc donaldexplanations

• no cooperation willingness with Trade Unions : only an image strategy.

• American HQ links betriebsrat with Trade Unions (communists).

• good management means no BR

Mc donaldexplanations

• In 1995 election of only 6 additional BR

• students more aware of their rights bring about the new BR.

• Management tries to delay the process

• they give special bonus from DM 5.000 to DM 90.000 in order to get rid of too zealous students

Avoidance strategies

• Legal form and job classification

• illegal measures

• regulatory lacunae

• Co-option or capture

• Bypass

• recruited acquiescence

• coercive comparisons