Eurofound – European Foundation for the Improvement of Living and Working Conditions

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Impact of the crisis on industrial relations and wage-setting mechanisms in

the EU

University of Paderborn Business Law and European Business Law, Masters and PhD Class

Dublin - 20 May 2015

Christian Welz

1. Prologue

2. Actors u n d e r p r e s s u r e

3. Processes u n d e r p r e s s u r e

4. Outcomes u n d e r p r e s s u r e

5. Conclusions

6. Epilogue and discussion

Table of content

• “By viewing labour as a commodity, we at once get rid of the moral basis on which the relation of employer and employed should stand, and make the so-called law of the market the sole regulator of that relation.”

• (Dr John Kells Ingram, address to the British TUC in Dublin 1880)

1. Prologue

• Treaty of Versailles 1919 (article 427) first principle of the new ILO pro- claimed ‘ that

labour should not be regarded merely as a commodity or article of commerce

introduced by British delegation Gompers > personal defeat

• ILO DECLARATION OF PHILADELP (1944) labour is not a commodity

1. Prologue

2. Actors

Impact Member State

successful tripartite negotiation (8-10) BE, BG, CZ, EE, FR, LT, LV, NL, PL, PT

breakdown of tripartite negotiations (10---) BE(2011/12), ES, FI, GR, HR, HU, IE, IT, LU, PL(2011/12), SI

reorganisation of public actors and bodies ES, GR, HR, HU, IE, LU, RO

decline in trade union density CY, BG, DK, EE, IE, LT, LV, SE, SI, SK, UK

halt in trade union density decline/increase in trade union density

AT, CZ, DE, EE (for transport), LT

changes to membership of employer bodies CY (increase), DE (increase in members not bound by CA), LT (first decline then increase)

2. Actors

Impact MS

decreasing influence and visibility BE, DK, EE, HU, IE, LV, NL

increased cooperation between the social partners

DE, HU, LT, NL

emergence of new social movements ES, GR, PT, SI

increase government unilateralism BE, BG, EE, ES, GR, HR, IE, PL, PT, SI

new power balance among actors BG, EE, ES, GR, LT, LV, PT

Trade union density _ 2011 v 2012 EIRO/ETUI 2013

FR LT PL EE HU

LV CZ SK ES NL DE PT BG

UK

SI EU IE AT HR

RO

LU IT BE MT

DK

SE FI

2011 8 10 12 11 11 12 16 16 15 21 22 20 18 26 27 31 34 34 35 40 37 36 52 59 67 70 68

2012 8 9 10 11 11 12 14 15 16 17 18 20 22 26 27 29 31 33 35 35 37 37 50 57 67 70 74

5

15

25

35

45

55

65

75 % of workforce 2011 2012

Employer density _ 2012 v 2013 EIRO 2013/14

LT PL EE HR SK LV UK CZ BG EU DK IT IE FR FI BE LU SI SE NL AT

2011 15 20 25 28 33 34 35 41 42 54 58 58 60 60 70 76 80 80 87 90 100

2012 15 20 25 28 30 41 35 49 0 56 58 0 60 75 71 80 80 80 86 85 100

10

30

50

70

90

110% of employees in companies members of an EO

2011 2012

3. Processes

PROCESSES - SUMMARY

Type of change MSMain level(s) of bargaining:  

Decentralisation AT BG CY EL ES FR IE IT RO SI

Recentralisation BE FI

Horizontal coordination across bargaining units

AT ES HU IE RO SE SK

Linkages between levels of bargaining  

Ordering between levels EL ES PT

Opening and opt-out clauses AT BG CY DE EL ES FI FR IE IT NO PT SE SI

Extending bargaining competence EL FR HU PT RO

Reach and continuity of bargaining  

Extension procedures EL IE SK PT RO

Increased / changed use of existing procedures

BG DE IT

Continuation beyond expiry EE EL ES HR PT

Minimum wage setting and indexation mechanisms

 

Minimum wage setting CY DE EL ES HR HU IE PL PT SI SK

Indexation BE CY ES IT LU

Trade Unions

Intersectoral level

Government

Employers

Intersectoral level

Sectoral level Sectoral level

Company level

Levels of CB - wages

Company level

BelgiumFinland

AustriaDenmark1France1GermanyGreeceIreland1ItalyLuxembourg1NetherlandsPortugal1Spain1Sweden1

Denmark2France2Ireland2Luxembourg2 Portugal2Spain2Sweden2UK

Trade Unions

Intersectoral level

Government

Employers

Intersectoral level

Sectoral level Sectoral level

Company level

Levels of CB - wages

Company level

Slovenia 1

Bulagaria1Cyprus 1Slovakia 1Slovenia 2

Bulgaria2CroatiaCyprus 2Czech Rep.EstoniaHungaryLatviaLithuaniaMaltaPolandRomaniaSlovakia 2

Country Multi-employer (MEB) or Single-employer (SEB) bargaining prevalent   2008 2011

Austria MEB MEBBelgium MEB MEBBulgaria Mixed MixedCroatia MEB MEB

Cyprus Mixed MixedCzech Republic SEB SEBDenmark MEB MEBEstonia SEB SEBFinland MEB MEBFrance MEB MEBGermany MEB MEBGreece MEB MEBHungary SEB SEBIreland MEB SEBItaly MEB MEBLatvia SEB SEBLithuania SEB SEBLuxembourg MEB MEBMalta SEB SEBNetherlands MEB MEBNorway MEB MEBPoland SEB SEBPortugal MEB MEBRomania MEB SEBSlovakia Mixed MixedSlovenia MEB MEBSpain MEB MEBSweden MEB MEBUnited Kingdom SEB SEB

 Company level

Sector level

National level

AT

CY

EL

IT

BG

ES

FR

FI

LT

 

RO

 

SI

IE 

Trends in main levels of CB

BE

PT

• continental Western, central Eastern and Nordic IR regimes apply the favourability’ principle to govern the relationship between different levels of CB CAs at lower levels can only improve on standards established by higher levels exceptions: IE and the UK > reflecting their different legal tradition based on voluntarism

• FR FR made changes already in 2004 (loi Fillon)

• ES 2011 law inverted the principle as between sector or provincial agreements and company

agreements

EL 2011 law inverts the principle between the sector and company levels for the duration of

the financial assistance until at least 2015• PT

2012 Labour Code inverts the principle, but allows EOs and TUs to negotiate a clause in higher-level CA reverting to the favourability principle

Ordering / favourability principle

opening clauses in sector/cross-sector CAs provide scope for further negotiation on aspects of wages at company level

opt-out clauses permit derogation under certain conditions from the wage standards specified in the sector/cross-sector CA

changes in opening clauses 6 MSAT, DE, FI, IT, PT, SE

changes in opt-out clauses 8 MSBG, CY, EL, ES, FR, IE, IT, SI

•

Changes in opening/opt-out clauses

• changes: EL, FR, HU, PT and RO

• EL under 2011 legislation, CAs can be concluded in companies with

fewer than 50 employees with unspecified ‘associations of persons’ these must represent at least 60% of the employees concerned

• RO legislation (2011) introduces harder criteria for trade TU

representativeness where TUs do not meet the new criteria at company level, EOs can

now negotiate CAs with unspecified elected employee reps

Extension of CB competence

Extension mechanisms

of the 28 MS > 23 MS have extension mechanisms or a functional equivalent (IT)

no legal procedure for extending collective agreements in

CY, DK, MT SE and UK

changes to either extension procedures or in their use

in 8 MSBG, DE, EL, IE, PT, RO, SK, IT

clauses providing for agreements to continue to have effect beyond the date of expiry until a new agreement is concluded are intended to protect workers should employers refuse to negotiate a renewal

they are found in a 9 MS at least AT, DK, EE, EL, ES, HR, PT, SE, SK

changes have been made to such provisions in 5 MS EE, EL, ES, HR, PT

Continuation of CAs beyond expiry

4. Outcomes

Impact MSinconclusive outcomes BG, CY, CZ ES, MT, NL

decrease in number of agreements CY, CZ, EE, LV, MT, PT, RO, SI

increase in duration of agreements AT, DE

decrease in duration of agreements BG, CY, DK, GR, LV, ES, SE

decrease in the level of pay increases AT, ES, FI, NL

pay cuts or freezes AT, BE, BG, DE, DK, ES, FI, GR, HU, IE, IT, LT, LU, LV, NL, PL, PT, SI, SK, UK

working time reduction/short-time working AT, BE, BG, DE, FR, HU, IT, LT, NL, PL, SI, SK

non-renewal of agreements BG, CY, EE, ES

No. of CAsEIRO 2014

AT BE BG CY CZ DE DK EE EL1 EL2 ES FR IT LT LU LV MT NL PL PT RO SE SK UK

2008 2009 2010 2011 2012 2013 2014

sector CA194

164 166 115 46 46 72

companyCA

97 87 64 55 39 49 80

total CA 291 251 230 170 85 95 152

extension 137 102 116 17 12 9 +/_15

coverage /in 1000 pers.

1,895 1,397 1,407 1,237 328 243 246

No. of CAs in PT

• change has been concentrated amongst 6 MS, whose WSMs have each undergone multiple changes CY, EL, ES, IE, PT, RO been in receipt of financial assistance packages from the ‘troika’ changes in WSMs were required in all except ES

• in a further 4 MS there have been some changes to WSMs HR, HU, IT and SI change primarily driven by domestic actors > governments or SP

• in a majority of 18 MS WSMs have seen few or no changes since 2008

5. Conclusions

• impact of the ‘troika’ in inducing changes to WSMsamongst those countries receiving financial assistance packages is clear

• government-imposed measures in these countries have substantially reconfigured WSMs

• impact of the new European Economic governance less clear

5. Conclusions

• ILO DECLARATION OF PHILADELP (1944) labour is not a commodity

• wage setting in the crisis and the new economic governance …..

• towards a marketisation of wages (Marginson)

• towards a re-commodification of labour ???

6. Epilogue and discussion

• towards a re-commodification of labour ?

• Labour is not a commodity > clause not in the Treaties

• yet Albany case (1996)• Albany used the competition rules in Article 81(1) EC (now

Article 101(1) TFEU) claiming that mandatory pension scheme compromised their competitiveness

•

6. Epilogue and discussion

• ECJ• “ social policy objectives pursued by CAs would be seriously

undermined if management and labour were subject to Article 81(1) EC (now 101(1) TFEU) “

• Advocate General Jacobs• “ CAs enjoy automatic immunity from antitrust scrutiny”

• Art. 153 (5) TFEU• The provisions of this Article shall not apply to pay, the right of

association, the right to strike or the right to impose lock-outs.

6. Epilogue and discussion

Crisis vs. megatrends

Trend OriginRestructuring of actors MegatrendDecline in trade union density MegatrendPublic Sector Reform Megatrend Decentralisation of collective bargaining Megatrend (crisis

accelerated)Increase in opt-out clauses Crisis-induced trendIncrease in opening clauses Crisis-induced trendDecrease of extensions Crisis-induced trendShorter duration of collective agreements Crisis-induced trendDrop in volume of bargaining Crisis-induced trendDrop in quality of bargaining Crisis-induced trendShorter continuation of CAs upon expiry Crisis-induced trendReforms in wage-setting mechanisms Crisis-induced trendMore adversarial industrial relations Crisis-induced trend

Trade Union density rates 2013 in %

Further information

www.eurofound.europa.eu

christian.welz@eurofound.europa.eu

slideshare Welz_

European industrial relations dictionary