European Works Council Developments Before, During and After the Crisis

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1 Corell Uiversity ILR School Iteratioal Publicatios Key Workplace Documets 2015 Europea Works Coucil Developmets Before, Durig ad After the Crisis Eurofoud Follow this ad additioal works at: Thak you for dowloadig a article from Support this valuable resource today! This Article is brought to you for free ad ope access by the Key Workplace Documets at It has bee accepted for iclusio i Iteratioal Publicatios by a authorized admiistrator of For more iformatio, please cotact

2 Europea Works Coucil Developmets Before, Durig ad After the Crisis Abstract Europea Works Coucils (EWCs) provide trasatioal iformatio ad cosultatio mechaisms for employee represetatives i multiatioal compaies (MNCs). By orgaisig meetigs betwee cetral maagemet ad employee represetatives from the EU Member States i which the compaies operate, the EWC builds a bridge betwee the headquarters where strategic decisios are made ad the workplaces where these decisios have a impact o employees. This report explores the efforts of the members i 10 EWCs to ehace these bodies for Europea compaylevel social dialogue. Lookig at the developmets i EWCs over a loger period of time gives a isight ito how practices evolve ad how they achieve their objectives. Based o the 10 logitudial case studies, a comparative aalysis explores the factors that ca ifluece these developmets ad assesses i particular the impact of the 2008 ecoomic ad fiacial crisis ad of the recast directive 2009/38/EC. Other factors, such as compay characteristics ad whether these ca ifluece developmets i the compositio or fuctioig of EWCs, are also cosidered. Keywords Europea Works Coucils, EWCs, labor relatios, workforce maagemet Commets Suggested Citatio Europea Foudatio for the Improvemet of Livig ad Workig Coditios. (2015). Europea Works Coucil developmets before, durig ad after the crisis. Luxembourg: Publicatios Office of the Europea Uio. This article is available at

3 Europea Works Coucil developmets before, durig ad after the crisis Coordiatig the Network of EU Agecies 2015

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5 Europea Works Coucil developmets before, durig ad after the crisis Wyattville Road, Loughlistow, Dubli 18, Irelad. - Tel: (+353 1) Web:

6 Whe citig this report, please use the followig wordig: Eurofoud (2015), Europea Works Coucil developmets before, durig ad after the crisis, Publicatios Office of the Europea Uio, Luxembourg. Author ad Eurofoud Research Maager: Peter Kerckhofs Authors of the case study reports: Air Frace KLM, Bayer, ING, BNP Paribas Fortis Peter Kerckhofs (Eurofoud, Dubli); Barilla Volker Telljoha (IRES Emilia-Romaga, Bologa) ad Mirella Baglioi (Uiversity of Parma); British Airways Lioel Fulto (Labour Research Departmet, Lodo); Etex Valeria Puligao ad Nadja Dörfliger (Cetre for Sociological Research, KU Leuve); GDF Suez Isabel da Costa (CNRS-IDHE, Paris); MOL László Neuma (Cetre for Europea Employmet Studies, Budapest) ad Melida Keleme (ETUI, Brussels); Uilever Eckhard Voss (Wilke, Maack ad Parter, Hamburg). Research project: Europea Works Coucil developmets i ad after the crisis Luxembourg: Publicatios Office of the Europea Uio, 2015 doi: / ISBN: For rights of traslatio or reproductio, applicatios should be made to the Director, Europea Foudatio for the Improvemet of Livig ad Workig Coditios, Wyattville Road, Loughlistow, Dubli 18, Irelad. The Europea Foudatio for the Improvemet of Livig ad Workig Coditios (Eurofoud) is a tripartite Europea Uio Agecy, whose role is to provide kowledge i the area of social ad work-related policies. Eurofoud was established i 1975 by Coucil Regulatio (EEC) No. 1365/75, to cotribute to the plaig ad desig of better livig ad workig coditios i Europe. Europea Foudatio for the Improvemet of Livig ad Workig Coditios Telephoe (+353 1) Web: Europe Direct is a service to help you fid aswers to your questios about the Europea Uio. Freephoe umber (*): (*) Certai mobile telephoe operators do ot allow access to umbers or these calls may be billed. Cover image: Uilever Europea Works Coucil i actio Photo by Werer Altmeyer.

7 Cotets Executive summary Itroductio 1. Research approach ad methodology 2. Factors ifluecig developmets i EWCs 3. Evidece from the case studies 4. Mappig ad comparig EWC developmets 5. Geeral evaluatio ad coclusio Bibliography Aex: Authors of the case study reports

8 Coutry codes EU28 AT Austria IE Irelad BE Belgium IT Italy BG Bulgaria LT Lithuaia CY Cyprus LU Luxembourg CZ Czech Republic LV Latvia DE Germay MT Malta DK Demark NL Netherlads EE Estoia PL Polad EL Greece PT Portugal ES Spai RO Romaia FI Filad SE Swede FR Frace SI Sloveia HR Croatia SK Slovakia HU Hugary UK Uited Kigdom

9 Executive summary Itroductio Europea Works Coucils (EWCs) provide trasatioal iformatio ad cosultatio mechaisms for employee represetatives i multiatioal compaies (MNCs). By orgaisig meetigs betwee cetral maagemet ad employee represetatives from the EU Member States i which the compaies operate, the EWC builds a bridge betwee the headquarters where strategic decisios are made ad the workplaces where these decisios have a impact o employees. This report explores the efforts of the members i 10 EWCs to ehace these bodies for Europea compay-level social dialogue. Lookig at the developmets i EWCs over a loger period of time gives a isight ito how practices evolve ad how they achieve their objectives. Based o the 10 logitudial case studies, a comparative aalysis explores the factors that ca ifluece these developmets ad assesses i particular the impact of the 2008 ecoomic ad fiacial crisis ad of the recast directive 2009/38/EC. Other factors, such as compay characteristics ad whether these ca ifluece developmets i the compositio or fuctioig of EWCs, are also cosidered. Policy cotext For the first time, directive 94/45/EC provided a legal framework for EWCs ad their trasatioal iformatio ad cosultatio mechaisms i MNCs i Europe. It aticipated the eed for a revisio after a umber of years, which resulted i the recast directive 2009/38/EC. Article 15 of this directive stipulates: No later tha 5 Jue 2016, the Europea Commissio shall report to the Europea Parliamet, the Coucil ad the Europea Ecoomic ad Social Committee o the implemetatio of this directive, makig appropriate proposals where ecessary. I the process of assessig the implemetatio of the 2009 recast directive, this report may help social parters ad decisio-makers to uderstad the practical operatio of EWCs, how they have developed over time ad what the mai factors uderlyig these developmets are likely to be. Key fidigs The report examies how 10 EWCs developed from their establishmet util Sice the atioal traspositios of the 2009 recast directive oly came ito force i all coutries i Jue 2011, the directive s impact could oly be measured i the widow of opportuity betwee Jue 2009 ad Jue I light of this, the EWCs studied here did ot show sigificat chages i their fuctioig directly resultig from the recast directive. This might be because they are examples of EWCs that had already developed beyod the previous legal miimum requiremets by, for example, havig implemeted provisios o the traiig of EWC members, holdig more tha oe aual pleary meetig or havig further fie-tued their iformatio ad cosultatio mechaisms. The potetial impact of the recast directive had thus already occurred i part i these EWCs before it was adopted. Therefore, for the period of time uder review, these case studies caot cofirm that the recast directive has had much ifluece o the developmet of EWCs, although it is possible that it has iflueced developmets after Oe impact of the 2009 recast directive that clearly emerged from the cases studied is that it triggered reegotiatios of EWC agreemets i 6 out of 10 cases from Jue 2009 to Jue The legal framework developmets that iflueced the EWCs much more i terms of their compositio, their represetativeess ad their fuctioal requiremets were the elargemet of the EU ad the subsequet Europea expasio of MNCs. This icreased the umber of employee represetatives from differet coutries i EWCs. 1

10 Regardig the impact of the crisis, EWCs were idirectly affected through compay chages that the crisis set i motio. The compaies i this study hardest hit by the crisis were i the fiacial sector, but substatial chages also occurred i some compaies prior to ad idepedetly of the crisis. While such restructurig challeged EWCs, it also offered some a opportuity to clarify iformatio ad cosultatio procedures. The study ivestigated whether the size of the MNC s workforce ad the degree of its iteratioalisatio might also ifluece the developmet of EWCs. As regards the degree of iteratioalisatio, the umber of compaies i a MNC icreases the umber of coutries from which represetatives must be icluded i the EWC. As regards workforce size, delegates from the coutries with smaller workforces do ot have the same opportuities to participate i ad cotribute to the developmet of the EWC as represetatives from the home coutry or from the coutries with larger workforces. The study also foud that the more iteratioalised the maagemet decisio-makig or the smaller the workforce i the MNC s home coutry, the higher is the iterest of the home coutry employee represetatives i the EWC activities. The chaces for EWCs to autoomously develop a proper Europea idetity are improved by givig key roles o both the maagemet ad employee represetative sides to delegates from coutries other tha the home coutry. Coclusios Certai compay characteristics ad how these chage ca ifluece developmets i the compositio or fuctioig of EWCs. However, for the compaies i this study, this has bee more of a ogoig tred tha a result of the recast directive or of the recet crisis. Reegotiatios of EWC agreemets offer a opportuity to fie-tue the parameters of a EWC i terms of its compositio, the umber of meetigs, the duratio of the meetigs, the iteral structure or the role of the select committee. This report shows that the largest potetial impact of a agreemet reegotiatio o the fuctioig of a EWC ca occur whe it is triggered by mergers or acquisitios of compaies that both have EWCs already. Compay chages ca also icrease the turover amog EWC membership, potetially impedig the developmet of cooperatio, which is cetral to the effectiveess of the EWC. The ivestmet ad efforts that employee represetatives ad maagemet make to develop a EWC deped o how they assess its fuctio. Most of the sigificat developmets i the fuctioig of the EWCs studied were due to the cotiuous efforts of committed EWC members to overcome cultural differeces, challege compay chages ad solve them through icreased cooperatio, buildig trust ad by seekig a commo uderstadig of the appropriate ways for the EWC to hadle chages. The articulatio of atioal-level iformatio ad cosultatio rights has highlighted a weakess i the represetativeess of the EWC i cases whe local-level employee represetatio structures are missig i some coutries, due to the limited umber of employees the compay has i those coutries. As for the maagemet perspective, iterestig developmets were reported i the EWCs of two compaies where a Europea huma resource (HR) etwork was developed i parallel to the EWC. This demostrates that the efforts made by maagemet ad employee represetatives to further develop their EWCs ca beefit both sides. The practices preseted i the EWC case studies i this report are examples of iovative idustrial relatios practices i a wi wi cotext. 2

11 Itroductio Europea Works Coucils (EWCs) are established i over oe thousad multiatioal compaies (MNCs), providig trasatioal iformatio ad cosultatio mechaisms for employee represetatives. Withi the legal framework of directive 94/45/EC ad the recast directive 2009/38/EC, over the years the members i these EWCs have made these bodies for Europea compay-level social dialogue fit for purpose. Lookig at developmets i EWCs over a loger period of time ca give a isight ito how practices ad possibilities are realised i some of them. This report shows how 10 differet EWCs developed from their creatio util O the basis of these 10 logitudial case studies, a comparative aalysis explores the factors that iflueced these developmets. A assessmet is made of the impact of the ecoomic ad fiacial crisis ad of the recast directive. Other factors are also cosidered, such as compay characteristics ad whether they ca ifluece developmets i the compositio or fuctioig of EWCs. Of course, the 10 cases i this report cotiued to develop after Updates have bee added to some of the case studies to reflect evets that occurred i 2013 ad Sice the iterviews ad the data collectio these case studies are based o were carried out i 2012, this report oly reflects the developmets recorded from the creatio of these EWCs util The stregth of this report lies i its compariso of log-term developmets, istead of comparig EWCs at oe sigle momet i time. The aalytical framework ad methodology are outlied i Chapter 1. Chapter 2 examies the mai factors that ifluece developmets i EWCs: the 2009 recast EWC directive ad the ecoomic ad fiacial crisis. Each of the 10 case studies is preseted i Chapter 3. For each case, the EWC agreemet settig out the mai features of how the EWC was established is compared with subsequet reegotiatios of that agreemet ad how this chaged the EWC. After that, the compositio ad iteral structures are examied, followed by a descriptio of the fuctioig of each of the 10 EWCs. At the ed of each case study, factors are explored that ca explai the developmets withi that EWC. I Chapter 4, all these EWC developmets are compared across the differet cases. Without makig geeralisatios beyod the cases studied here, this comparative aalysis shows how ad why these EWCs developed before, durig ad after the crisis. The fidigs preseted i this report lead to the coclusio i Chapter 5 that certai compay characteristics ad how they chage over time ca ifluece developmets i the compositio or fuctioig of EWCs. However, this is more of a ogoig tred tha a impact of the recast EWC directive or the recet crisis. As for the 2009 recast directive, it might be too early to assess its impact o EWC developmets o the basis of the iterviews ad data collected i The 2009 recast directive icluded a widow of opportuity that allowed ew ad reegotiated agreemets to be cocluded betwee 5 Jue 2009 ad 5 Jue 2011 (the date o which its traspositios etered ito force) which were exempt from the obligatios of the recast directive. This exemptio is comparable to the oe i Article 13 of the 1994 EWC directive for agreemets establishig EWCs before 22 September The ew exemptio clause that provided the widow of opportuity is formulated i Article 14 of the recast directive which oly came ito full legal force for reegotiatios completed after Jue A update of these 10 case studies coverig developmets over the years 2013 to 2015 would be eeded to better assess the full impact of the recast directive o their EWC practices. Based o developmets up to 2012, oly part of this impact could be measured. 3

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13 Research approach ad methodology 1 The Europea Foudatio for the Improvemet of Livig ad Workig Coditios (Eurofoud) lauched a research project to ivestigate developmets i 10 EWCs based i MNCs across Europe. For each of the 10 EWC case studies, iterviews were coducted with both EWC members ad maagemet represetatives i three differet coutries where the multiatioals operate: the home coutry, the coutry with the largest workforce outside the home coutry ad a third coutry affected by restructurig. Based o these iterviews, which were recorded ad trascribed i 2012, ad additioal documet aalyses, a overview was compiled of EWC developmets from the establishmet of the EWCs util This report attempts to aswer the folllowig research questio: what are the mai factors that ifluece developmets i EWCs? I selectig EWCs for the research, it was decided to choose those that had bee the basis of earlier research by Eurofoud: this would eable a logitudial assessmet to be made of the chages i the compay ad i the EWC (from its creatio util 2012). Table 1 lists the case studies ad period covered i the research. A list of the authors of the idividual case studies may be foud i the Aex at the ed of the report. Table 1: EWC case studies icluded i the research Case study Period covered Air Frace KLM Barilla Bayer BNP Paribas Fortis British Airways Etex GDF Suez ING MOL Uilever Buildig o Eurofoud s earlier research ito EWCs Eurofoud has bee the key referece i differet fields of EWC research for may years: i makig a comparative aalysis of EWC agreemets based o Article 13 of the directive (Eurofoud, 1998) ad i comparig Article 13 ad Article 6 agreemets (Eurofoud, 2000); i explorig the egotiatig capacity of EWCs to make trasatioal agreemets (Eurofoud, 2001); i lookig at the practical fuctioig of EWCs through case studies (Eurofoud, 2004); i assessig the experiece of EWCs i ew Member States based o case studies (Eurofoud, 2006a); i assessig the role of EWCs i restructurig (Eurofoud, 2006b). 5

14 The fidigs from these EWC research projects idetified factors that ifluece the practical fuctioig of EWCs (Eurofoud, 2008). This report aims to further this kowledge o the fuctioig of EWCs by describig how these factors ca help or hider EWC developmets ad how they are iter-related. Thus, EWCs are studied here as trasatioal idustrial relatios istitutios i the makig (Waddigto, 2011). Previous Eurofoud EWC case studies ca be foud o the Eurofoud website: Air Frace (2006) Barilla (2005) Bayer (2005) British Airways (2005) MOL (2006) Suez (2005) Uilever (2006) Other studies of the cases icluded i this report were published by Telljoha (2005) i the framework of a EU-fuded project, icludig ING, Fortis, Etex, Air Frace, British Airways ad Bayer. Theoretical framework Based o Eurofoud EWC research coducted before the crisis, four factors were foud to ifluece the practical fuctioig of EWCs: the compaies strategies ad structures; the home coutry ad compay-specific idustrial relatios practices; the resources available to the EWC; the degree of employee cohesio i the EWC (Eurofoud, 2008). May studies have explored the iteral ad exteral factors that foster or ihibit the developmet of a Europea idetity amog employee represetatives i a EWC (Müller ad Hoffma, 2001; Whittall et al, 2007). Based o EWC case studies coducted i the 1990s, Lecher et al (1999) aalysed differet fields of iteractio i EWCs ad developed a typology of EWCs. Although it was still early years for may of the EWCs studied, Lecher (1999) cocluded that atioal represetatio structures play a importat role i the provisio of the resources eeded for EWCs to work. These resources also determie a EWC s likelihood to develop a Europea idetity ad its ability to act effectively. From the perspective of employee represetatives, Margiso et al (2004) idetify factors that ifluece the impact of EWCs o maagemet decisio-makig. Few studies have explored the views of maagemet o EWCs. I the 1990s, survey-based fidigs (Nakao, 1999; Wills, 1999) ad iterview-based fidigs (Lecher et al, 1999) idetified the potetial added value for all actors ivolved, icludig maagemet ad employer orgaisatios (Lamers, 1998). Müller ad Hoffma (2001) subsequetly cocluded i their substative overview of EWC research literature that much of what is kow about maagerial approaches to EWCs has emerged from attempts to assess their potetial beefits for the maagemet of MNCs: i terms 6

15 of the EWC beig a additioal iformatio chael for cetral maagemet to hear how thigs are goig i differet foreig subsidiaries. More recetly, Timmig (2007) explored maagerial strategies i a EWC, but from the perspective of employee represetatives. The methodology of this Eurofoud EWC case study project set out to iclude iterviews with maagemet represetatives i three differet coutries for each of the EWCs studied. This ad the logitudial perspective are the chief advatages of this study. Selectio of the EWC cases uder review The two key elemets determiig the selectio of case studies i this research project were the willigess of the actors to be iterviewed ad the existece of i-depth iterview-based studies of these cases from the period before the crisis to allow for a logitudial aalysis of the EWC s developmet from its establishmet util 2012 to be made. I order to assess the differet impacts of the crisis ad the ifluece of chagig compay characteristics o the developmets i EWCs, it was decided to iclude compay cases that are clearly similar. For example, Air Frace ad British Airways both had a large proportio of their workforce i their home coutry util Air Frace merged with KLM ad British Airways merged with Iberia. ING ad Fortis both operate i the fiacial services sector, which chaged drastically because of the fiacial crisis. Fortis is ow part of BNP Paribas, while ING was forced to split up its bakig ad isurace activities. MOL ad GDF Suez are both active i the eergy sector, while Uilever ad Barilla are both food producers. The remaiig two compay case studies are Bayer, which is active i chemicals ad pharmaceuticals, ad Etex, which produces buildig materials. I 2003, Etex divested its chemicals ad plastics divisio i a separate compay, Aliaxis, which the established a separate EWC. This also happeed at Agfa, which was divested from Bayer i The Agfa EWC was based o the Bayer EWC agreemet. Whe ING had to separate its bakig ad isurace activities, a ew umbrella EWC was created before it was split ito two separate EWCs. Table 2: Cases icluded i this study Compay characteristics EWC features Selected cases Sector Home coutry Article 13 Article 6 Reegotiated betwee 5/6/09 ad 5/6/11 British Airways UK g UK ad Spai X No Trasport Air Frace KLM Frace g Frace ad Netherlads X Yes ING Netherlads X Yes Fiacial BNP Paribas Fortis Netherlads ad Belgium g Frace X Yes Barilla Italy X No Foods Uilever Netherlads ad UK X Yes MOL Hugary X Yes Eergy GDF Suez Frace X No Bayer Chemicals Germay X Yes Etex Materials Belgium X No There are similarities ad differeces i terms of owership. Both Barilla ad Etex are partly family owed, while British Airways, Air Frace ad GDF Suez were state owed. British Airways was privatised i Air Frace was partially privatised i 1999, but eve after the merger with KLM, the Frech govermet retaied 18.6% of the capital of Air Frace KLM. The privatisatio of GDF started i 2005, after which the Frech govermet kept 80% of the shares util the merger with Suez. 7

16 I six of the cases icluded i this study, the compay has a sigle home coutry. The coutries cocered are Belgium, Frace, Germay, Hugary, Italy ad the Netherlads. Uilever has always had two home coutries: the UK ad the Netherlads. Followig mergers, both of the airlies icluded i this study obtaied a secod home coutry. Fortis had bee based i both the Netherlads ad Belgium, but this eded as a result of the fiacial crisis ad the subsequet itegratio of most of its parts ito BNP Paribas, which is based i Frace. To assess the differet ways i which the recast EWC directive 2009/38/EC has iflueced EWCs, five EWCs were selected because they were established o the basis of a so-called Article 13 agreemet, while the other five cases are EWCs created via a Article 6 agreemet. The differeces betwee Article 13 ad Article 6 EWC agreemets will be clarified i Chapter 3, as will the so-called widow of opportuity for reegotiatig EWC agreemets betwee 5 Jue 2009 ad 5 Jue Amog the selected EWC cases, six reegotiated their agreemet durig this time ad four did ot. 8

17 Factors ifluecig developmets i EWCs 2 The study sets out to aswer the followig research questio: what are the mai factors ifluecig developmets i EWCs? With this as the uderlyig aim, the study explores the differet elemets impactig o EWC activities i compaies, such as the recast directive, the 2008 ecoomic ad fiacial crisis, ad compay characteristics ad other factors. Impact of the 2009/38/EC recast directive The first area i which ifluece o EWC developmets is examied is the impact of the 2009/38/EC recast EWC directive. There are two kids of potetial impacts: a procedural oe that affects the umber of reegotiatios of EWC agreemets ad a substative oe that ehaces ew provisios i EWC agreemets ad its practical applicatio based o the recast directive. I procedural terms, the widow of opportuity offered by the recast directive betwee 5 Jue 2009 ad 5 Jue 2011 may have triggered reegotiatios of EWC agreemets, as compaies with a EWC that reegotiated their agreemet durig that period of time were exempted from the legal obligatios derivig from the recast directive. A isolated readig of Article 14(1) of the recast directive suggests that all existig EWCs that were reegotiated i the traspositio period fall outside the legal upgrade offered by the recast directive. However, sigificat compay chages that trigger reegotiatios will alter this sooer or later. Otherwise, if EWC agreemets expire or have to be termiated, they must be reegotiated uder the terms of the recast directive. If this caot be doe volutarily, agreemets will ot be reached ad Article 14(2) of the recast directive will subsequetly make the provisios of the recast directive applicable. For EWCs that did ot reegotiate their agreemet betwee 5 Jue 2009 ad 5 Jue 2011, the legal impact of the recast took effect o 6 Jue 2011, whe the atioal traspositios came ito force. I substative terms, it could be expected that EWCs use the ew legal framework provided by the recast directive as a guide for their agreemets or i practice. The case studies explored the extet to which EWCs aticipated this volutarily before the traspositios of the recast directive came ito force. The legal upgrade for existig EWCs derives from Articles 1, 2 ad 10 of the recast directive. Article 1 defies iformatio ad cosultatio i such a way as to esure its effectiveess. The competece of EWCs is limited to trasatioal issues, which are defied as matters that cocer the compay as a whole or at least two differet coutries (Article 1(4) of the recast directive). The defiitio of iformatio is ew (Article 2(1f)). The defiitio of cosultatio has bee expaded to iclude the fact that it eeds to take place withi such a time, i such a fashio ad with such cotet to allow EWC members to express a opiio based o the iformatio provided. The iformatio, the cosultatio ad the expressio of the EWC s opiio eed to happe withi a reasoable time so that it ca be take ito accout i the compay s decisio-makig. The role of EWC members was also legally upgraded i Article 10 of the recast directive. This gives EWC members the right to obtai the meas ecessary to fulfil their EWC rights ad duties (Article 10(1)). For example, they are dutyboud to pass o iformatio to local workplace represetatives or, if there are o local workplace represetatives, the to the etire workforce (Article 10(2)). EWC members are also etitled to traiig durig their workig time (Article 10(4)) to develop the skills, kowledge ad competeces eeded to exercise their represetative duties. Whe assessig the impact of the recast directive o the developmets of EWCs, the possibility of a reverse effect is also cosidered. Certai formulatios i the recast directive might have bee based o or ispired by real EWC developmets before the recast directive was adopted, just as the iitial 94/45/EC directive was ispired by the first EWCs that were established betwee 1985 ad The Bayer EWC is a example of a pioeerig EWC that was 9

18 established i 1991, log before the adoptio of the 1994 EWC directive. The Uilever EWC was preseted by maagemet ad employee represetatives i a Europea social parter semiar that drew lessos from existig EWCs (ETUC/UNICE/CEEP/UEAPME, 2005) for the revisio process foresee i Article 15 of the 94/45/EC directive. I the 2009/38/EC directive, Article 15 stipulates that, o later tha 5 Jue 2016, the Commissio should report o the implemetatio of this directive, makig appropriate proposals where ecessary. Impact of the crisis The study looked for factors that ifluece EWC developmets from a logitudial perspective. The possible impact of the recast directive was the first area that was examied. A secod potetial impact is compay chages caused by the 2008 fiacial ad ecoomic crisis. This hypothesis is built o the assumptio that the crisis ca have a direct or idirect effect. A direct effect of the crisis occurs whe cost reductio measures affect certai EWC activities i terms of cacelled or postpoed meetigs. A idirect effect occurs through chages i the characteristics of the compaies as a result of their respose to the crisis, which may affect the fuctioig of their EWC. Compay characteristics ad other factors that ifluece EWCs The compay characteristics cosidered i this study are: the home coutry of the multiatioal; the MNC s sector of activity; its workforce size; its degree of iteratioalisatio. Compaies chage i may differet ways. Whe lookig at the compay characteristics that are most likely to ifluece the fuctioig of EWCs, cosideratio was give to the characteristics that appeared to vary most whe compaies that have a EWC are compared with those that do ot have oe yet. Two compay characteristics that directly or idirectly affect compliace with the directive are the size of the workforce ad the degree of iteratioalisatio. To fall withi the scope of the EWC directive, a compay eeds to have 1,000 employees withi the Europea Ecoomic Area (EEA) ad more tha 150 employees i at least two Member States. Amog compaies with more tha 10,000 employees i the EU, more tha two-thirds have established a EWC. For those with fewer tha 5,000 employees, a EWC was created i oly oe-third of the cases. 10

19 Figure 1: Compliace rates of compaies with differet sized Europea workforces 600 1, % of affected compaies with a EWC Small compaies (<5,000 employess i EEA) Medium compaies (5,000 10,000 employees i EEA) Large compaies (>10,000 employees i EEA) 0 No. of compaies affected by EWC directive No. of compaies havig a EWC Source: Kerckhofs (2006) A similar effect may be observed i the degree of a compay s iteratioalisatio. The more coutries the MNC operates i or the smaller the proportio of the Europea workforce employed i the home coutry, the more likely it is that the compay has established a EWC (Kerckhofs, 2006). 11

20 Figure 2: Compliace rates of compaies regardig the umber of coutries of operatio 420 % of affected compaies with a EWC No. of compaies affected by EWC Directive No. of compaies havig a EWC % of affected compaies with a EWC Overall compliace rate 0 Source: Kerckhofs (2006) This report aims to determie to what degree chagig compay characteristics, whether or ot resultig from the crisis, ifluece the fuctioig of EWCs. Previous research has show that compay chages ca foster EWC developmets i some cases, while i other cases this does ot happe, or at least ot to the same extet (Lückig et al, 2008; Pries, 2008; Timmig, 2006). Therefore, this report also explores other factors that ca ifluece EWC developmets. 12

21 Evidece from the case studies 3 This chapter presets the empirical data from the logitudial case studies case by case. Each case study covers the developmets i the EWC from its establishmet util By usig the same structure, patters will appear that will be aalysed subsequetly i a comparative way i Chapter 4. For each case, four aspects are outlied: 1. The EWC agreemet ad its reegotiatio. 2. The compositio of the EWC ad its iteral structure. 3. The fuctioig of the EWC. 4. Factors that ifluece developmets i the EWC. I Barilla ad British Airways, the EWC agreemet was ever reegotiated. It appears that either EWC has developed very much sice its establishmet. The reegotiatio of EWC agreemets, especially i the case of a merger with or a acquisitio of a compay with its ow EWC, ca trigger the developmet of EWCs. Clear examples of this ca be see i the way the differet EWC cultures at Air Frace ad KLM were stitched together, just like the oes at GDF ad Suez, ING ad BBL, Fortis ad Geerale Bak, ad Bayer ad Scherig. Other cases, such as MOL, Uilever, Barilla ad British Airways, have ot ejoyed such opportuities. The compaies that MOL ad Barilla acquired did ot have their ow EWC. Fially, Iberia did ot have a EWC before its merger with British Airways i Jauary A EWC s compositio ad iteral structure are just as importat for its fuctioig as the EWC agreemet. The compositio is determied by the umber of madates ad how these are distributed amog the Europea coutries i which the compay operates. The represetativeess of EWCs, however, is about more tha umbers. Several EWCs i these case studies are challeged by the fact that EWC members who do ot have local employee represetatio structures are ot fully able to represet the workforce from their coutry. The British Airways EWC ad the Air Frace EWC ackowledge this ad allow their members to raise their issues i the EWC that they caot solve at local level because they do ot have social dialogue mechaisms there. The iteral structure of the EWC ca be shaped by a select committee or workig group. A select committee has bee established i all the cases icluded i this study. By extedig the compositio of the select committee ad by clarifyig its role ad competeces, the iteral structure of the EWC ca grow sigificatly. May of the cases preseted here have also established specific workig groups. The social ad fiacial committees i the ING EWC are good examples of this. The GDF Suez EWC has may workig group activities. At Bayer, such workig groups were established o a more ad hoc basis, while Etex has recetly established a committee to moitor the implemetatio of its health ad safety charter. The fuctioig of the EWC is aalysed i terms of the frequecy of the pleary ad select committee meetigs. The cotet of those meetigs, the iformatio ad cosultatio provided, the commuicatio betwee meetigs ad the outcomes produced by the EWC are also preseted. Fially, for each case, factors are explored that ca explai or have iflueced the developmets that did or did ot occur i the give EWC. For each case, the direct or idirect impact of the crisis ad the impact of the recast directive are assessed. However, for most of the cases studied here, there are other factors that appear to foster or ihibit EWC developmets. 13

22 Bayer EWC The Bayer EWC was established as a pioeerig EWC whe the EWC directive was still oly beig adopted. The iitial EWC agreemet was reegotiated i the widow of opportuity betwee 5 Jue 2009 ad 5 Jue 2011, which exempted the Bayer EWC from the obligatios derivig from the recast directive. The major ifluece of the recast directive o the Bayer EWC is i its ew provisio o traiig. As Bayer was ot greatly affected by the crisis, o direct impact o the fuctioig of the EWC was reported. The Bayer EWC is uique because of its compositio ad its atioal maagemet represetatives. This offers opportuities for local social dialogue ad for the harmoisatio of idustrial relatios practices i all the Europea coutries where Bayer operates. However, with 90 EWC members, its large size ca also hider its developmet. The select committee of this EWC therefore plays a crucial role i fosterig developmet. For efficiecy s sake, a strictly orchestrated preparatio does ot leave much room to improvise durig pleary meetigs. Because a large proportio of the Europea workforce is located i the home coutry (ad because the home coutry employee represetatives subsequetly domiate the EWC), this further reduces the scope for developig a Europea idetity or a proactive role for the EWC. EWC agreemet The Bayer EWC was established shortly after the first draft proposal for the 1994 EWC directive was made i December I 1991, the Bayer EWC was created o the basis of a agreemet of the group works coucil (Kozerbetriebsrat). This 1991 agreemet was replaced by a 1994 agreemet adjusted to the 94/45/EC directive. The EWC is called the Europea Forum. While the log EWC experiece at Bayer is a advatage, i practice the pioeerig status of the Bayer EWC agreemet has acted as a hadicap because it has bee very difficult to make chages to the agreemet. Demads for improvemets to the agreemet were related to the defiitio of cosultatio, the role of the EWC i exceptioal circumstaces ad the size ad compositio of the select committee. I 2000, oly mior chages could be itegrated ito a protocol that was aexed to the iitial agreemet. This is how the 1994 agreemet was further developed, while i strictly juridical terms the iitial Article 13 agreemet had to be kept i order to remai exempt from the 1994 EWC directive. Over the years, about 12 such iformal protocols were aexed to the EWC agreemets. The formal Bayer EWC agreemet was ot chaged betwee 1994 ad The Bayer EWC was already i the process of revisig its EWC agreemet i 2008, ad thus had already adopted a ew agreemet before the recast directive appeared i May This reegotiatio aimed to itegrate all the protocols ito the text of the agreemet. The timig of this revisio of the EWC agreemet is remarkable because it coicided with the publicatio i Jue 2008 of the proposal for the recast directive that was adopted i May This is similar to what happeed i 1991 ad i 1994, whe Bayer had already established a EWC durig the legislative process before this resulted i the adoptio of directive 94/45/EC. I the ew 2009 EWC agreemet, the 12 protocols that were aexed to the 1994 agreemet have all ow bee itegrated. Furthermore, there are additioal provisios icluded for idividual traiig of EWC members ad for traiig the etire EWC liked to EWC meetigs. The ifluece of the 2009 recast directive is evidet i this traiig provisio. The umber of pleary meetigs of the Bayer EWC has always bee kept to oe per year. The umber of select committee meetigs has bee icreased to four per year ad additioal extraordiary meetigs are possible if eeded. The 2006 itegratio of Scherig AG ito Bayer did ot have ay bearig o the reegotiatio process of the ew 2009 Bayer EWC agreemet. Like Bayer, Sherig AG had already had a EWC agreemet sice Jue 1994, siged before the 14

23 adoptio of directive 94/45/EC. The Scherig AG EWC was composed of 20 employee represetatives from 11 differet coutries. Durig the itegratio of Scherig AG ito Bayer, extraordiary meetigs of the select committees of the EWCs of Scherig AG ad Bayer were held. Subsequetly, the represetatives of the Scherig AG were simply itegrated ito the Bayer EWC without ay chage to the Bayer EWC agreemet. Compositio ad iteral structure of the EWC The compositio of the Bayer EWC is uusual ot oly because of its large size, but also because atioal maagemet represetatives are icluded i the EWC i additio to employee represetatives ad cetral maagemet actors. I 2002, employee ad maagemet represetatives from 15 Europea coutries were preset at the EWC meetig. After EU elargemet, delegatios were icluded from 24 coutries. I 2002, the EWC was composed of 45 employee represetatives ad 27 maagemet represetatives (72 members i total). I 2010, there were 54 employee represetatives ad 36 maagemet represetatives (90 members i total). To add to the overall size of the gatherig, it also icluded a umber of cetral maagemet actors, the admiistrative support staff, the iterpreters ad a guest from the Europea trade uio orgaisatio IdustriAll. Table 3: Compositio of the Bayer EWC Represetatives per coutry Workers Maagemet Total Workers Maagemet Total Austria Belgium Bulgaria Czech Republic Demark Germay Greece Filad Frace Hugary Irelad Italy Lithuaia Netherlads Norway Polad Portugal Romaia Slovakia Sloveia Spai Swede Switzerlad Uited Kigdom Total

24 To keep the meetigs ruig smoothly ad efficietly, oly coutry speakers are allowed to talk durig the pleary meetigs of the EWC. The meetigs are also prepared i detail ahead of time. Almost everythig that the chair of the EWC or the other select committee members say to the EWC is writte out i a script that has bee prepared by the admiistrative staff of the EWC. The mai perso o this team is Barbara Barz, who plays a crucial role ot oly i the orgaisatio of the meetigs, but also i the fuctioig of the EWC, without beig a formal member of it. The icreased size of the select committee from three to seve members ad its itesified fuctioig is a example of developmets that happeed i 2002 via a protocol aexed to the 1994 EWC agreemet. The select committee was ot metioed i the 1994 agreemet. The select committee adopted its iteral rules of procedures i its 30 October 1997 meetig. With 90 members i the Bayer EWC, the select committee is crucially importat for the iformatio ad cosultatio fuctio of the EWC, durig the aual pleary meetigs, betwee such meetigs ad also i case extraordiary circumstaces demad extra meetigs of the select committee. The large size of the EWC uderscores the importace of the select committee. Nevertheless, the larger size of the joitly composed select committee has also resulted i the creatio of a smaller steerig group withi the select committee, composed of the chair ad the two deputy chairpersos (three people i total, which was the iitial size of the select committee). The select committee of the Bayer EWC is called the Joit Committee Bayer Europea Forum (Paritätische Kommissio). Created i the first years of the EWC, the select committee was composed of three employee represetatives (the EWC chair ad two deputies) ad three maagemet delegates. I 1997, the select committee adopted its ow rules of procedure, icludig the possibility of holdig extraordiary meetigs just with the select committee istead of havig to gather the etire EWC i exceptioal circumstaces. The first extraordiary select committee meetig was held o 9 December 1997 i Mortsel (ear Atwerp, Belgium) o the issue of the sale of the copier divisio of Agfa-Gevaert. The compositio of the select committee (ad the chages i its compositio) had some ifluece o the iteral cooperatio i the EWC, as metioed earlier. A ew chair was elected at the August 1998 Europea Forum employeeoly meetig ad the Belgia select committee member had to be replaced i Fuctioig of the EWC Sice 1992, oe aual pleary sessio has bee orgaised every year i lie with the EWC agreemet. A extraordiary EWC meetig was held i 2006 whe Bayer acquired Scherig AG, a pharmaceutical compay with a EWC of its ow. Thirty employee represetatives ad 23 maagemet represetatives were ivited to this extraordiary meetig, which was ot as large as the full pleary EWC. Extraordiary meetigs with a reduced compositio were also orgaised for the divestmet of Laxess ad the itegratio of Avetis Crop Sciece. The agedas of both the employee-oly preparatory meetig ad the joit meetig with maagemet are prepared by the select committee. While the employee represetatives have their preparatio meetig, maagemet represetatives have their ow separate meetig with cetral maagemet actors. The secod day ad a part of the third day comprise joit meetigs of the etire EWC. Durig these joit meetigs, the compay results are preseted ad questios o curret problems are aswered. Special presetatios of coutries ad activities are also give. At the ed, there is a two- or three-hour employee-oly debriefig meetig. Normally there is a half-day preparatory meetig, although sometimes there is a whole-day employee-oly preparatio, for example whe ew select committee members eed to be elected. The structure of the preparatory meetigs is repeated virtually uchaged each year. It starts with a formal welcome, the adoptio of the ageda ad a presetatio of the ew EWC members (i 2001 there were 10 ew members, i 2002 there were ie ew members ad i 2010 there were 15 ew members). After this, the miutes of the previous meetig are adopted, the coutry speakers are 16

25 appoited ad a report is give first o the activities of the select committee ad the the workig group s activities. Fially, ad perhaps most importatly, questios for the ext day s joit meetig with maagemet represetatives are prepared. The ageda for the joit meetig of the etire EWC is as stable ad well plaed as the employee-oly preparatory meetig. It starts i the morig of the secod day with a formal opeig by the employee-side chair ad the Europea huma resources maager, followed by a presetatio by the CEO o the compay s geeral developmets ad ecoomic positio. This takes about 45 miutes ad is followed by a half-hour discussio. Aroud 11:30am, iformatio is supplied o employee-related aspects. I this part of the meetig, questios are raised ad aswered by the board member resposible for huma resources ad group strategy. I the afteroo of the secod day ad early i the morig of the third day, presetatios are give o specific coutries or types of activity of the group. The strict ageda ad the carefully pre-orchestrated preparatio for these meetigs idicate that the focus is o iformatio rather tha dialogue or cosultatio, which takes place i the select committee. Over the years, the select committee of the Bayer Europea Forum has developed its capacity for cosultatio ad eve egotiatio. However, egotiatios have bee very difficult o most issues, ad successes were reached oly after may years of discussio. Oe importat substative agreemet reached withi the select committee is the Social Charter. However, apart from this oe exceptio, most select committee discussios ad egotiatios have related to iteral EWC procedures. For example, the demad for the select committee to be expaded ad for the right to extraordiary pleary meetigs to deal with exceptioal circumstaces were debated for may years i the select committee. The solutio for the exceptioal circumstaces was foud i extraordiary select committee meetigs exteded to the coutries cocered. Aother demad was to elarge the half-day employee-oly preparatio meetig to a full day. This was accepted oly i cases where ew select committee members eed to be elected. The demad from members of the select committee to visit employee represetatives i the various coutries was also achieved. Cocerig the timig of the iformatio ad the lack of cosultatio, the employees cofirmed their wish to cooperate i a cofidetial way. The maagemet members of the select committee expressed their regret that they were ot iformed i advace about the social questioaire iitiative. The chages to ad rewritig of the agreemet have also bee discussed at may select committee meetigs. I May 2000, a Eglish-laguage semiar was orgaised for the three select committee members. Although this was a positive experiece that brought the employee-side select committee members closer together, a secod such semiar was ever held. Further Eglish-laguage traiig was provided o a idividual ad hoc basis. Besides laguage traiig, sice 2009 the EWC has held a aual traiig day o differet topics. Factors that ifluece EWC developmets The EWC actors iterviewed did ot thik the crisis had iflueced the fuctioig of the EWC. No extraordiary pleary meetigs or select committee meetigs have bee held to deal with issues directly related to the crisis. Bayer is active i three differet busiess fields, ad oly the material sciece divisio has bee impacted by the curret crisis; pharmaceuticals ad crop sciece have ot bee affected. Yet the material sciece divisio had a stroger ad quicker recovery i 2010 tha had bee expected. The restructurig process i the material sciece divisio bega before the crisis ad was ot directly related to it. The chages that occurred i Bayer durig the crisis were part of ogoig processes that were idepedet of the crisis. I terms of outcomes, i 2006 the EWC issued a joit declaratio with maagemet o diversity as a result of workig group meetigs o this topic. I February 2011, aother joit declaratio was made o social dialogue o plaed 17

26 restructurig measures, icludig a descriptio of what is uderstood to be fair treatmet for the employees affected by such restructurig. A exercise to collect social data via a questioaire resulted i data that was difficult to compare, as questios had bee iterpreted differetly. The recast directive defiitely impacted o the developmet of the Bayer EWC i the ew provisio o traiig i the 2009 EWC agreemet ad afterwards i the EWC practice. Sice 2010, all the members of the Bayer EWC have bee etitled to a oe-day traiig sessio per year. I 2010 this was o the topic of diversity, i lie with the 2006 joit declaratio. The 2011 oe-day traiig sessio aimed to help EWC members uderstad basic priciples of accoutig i order to better uderstad the fiacial iformatio give to the EWC. The relatioship betwee local works coucils ad the EWC was the topic of the 2012 EWC traiig day, while i 2013 it was o job security ad how this is regulated i atioal laws or compay agreemets. These developmets are drive by the EWC s ow iteral developmets ad are ot really iflueced or ispired by the recast directive. The recast directive also cotributed i procedural terms, or eve triggered the reegotiatio withi the widow of opportuity with the aim of keepig the EWC exempted from the obligatios prescribed i the recast directive. A uique opportuity for the EWC lies i the ivolvemet of atioal maagemet represetatives, allowig a commo Europea idustrial relatios approach i all the Europea coutries Bayer operates i to be developed. From a HR perspective, a shared service cetre has regrouped all the HR admiistratio i Leverkusse. Subsequetly, HR maagers i all the differet coutries are o loger headig HR admiistrative fuctios related to pay ad abseces. Rather, they are ow more like busiess parters who are advisig the maagers o HR matters. These chages have bee aouced i the EWC. Beyod the iformatio the EWC received o this, it did ot have ay impact o its fuctioig. The large size of the Bayer EWC ad the ivolvemet of atioal maagemet represetatives alog with employee represetatives may have a positive effect o social dialogue at local level. A adverse effect may be the difficulties of developig iteral cooperatio. The size of the EWC ihibits the cotiuity of the EWC fuctioig because a secod ordiary aual meetig is ot possible. This shifts the focus of the EWC activities to the select committee, which meets more frequetly. A group ca be its ow eemy whe it is ot big eough to deal with the tasks it eeds to perform (Hackma, 1990). Accordig to the least group size priciple, it is easier to achieve a relative coherece i iterrelatioships ad a comprehesive uderstadig of those iterrelatioships i smaller groups (Thele, 1949). Literature o group dyamics also assumes that smaller groups offer more opportuities for idividual members to participate i formal or iformal leadership roles ad to take additioal resposibilities (Barker ad Gump, 1964). It is ot the case that the efforts that EWC members eed to make to obtai sufficiet iteral cooperatio is fixed ad ca be divided by the umber of members cotributig, so that the larger the group is, the less cotributio each member eeds to make (Oxley ad Barrera, 1983). O the cotrary, the larger the EWC, the more efforts employee represetatives will have to make to commuicate with all other EWC members ad to keep everyoe ivolved ad itegrated. A sociogram draw durig participat observatio i a Bayer EWC meetig demostrated that ot all EWC members cotribute to the iteral iteractios. I additio, the iterviewees reported that the iteractios by phoe ad i betwee the meetigs are cocetrated betwee the select committee members ad very few other EWC members. Clearly, ot all members of EWCs are ivolved i the EWC to the same extet. The size hadicap is best hadled by a effective select committee, although this is ot the oly remedy (Agudo et al, 2001, p. 29). Several iitiatives have bee itroduced i the Bayer EWC to overcome its size hadicap. Coutry speakers were itroduced to operate as a spokesperso for the EWC members of that coutry, which cetralises their questios ad commets durig the meetigs. The select committee, which used to be composed of three members, was elarged to 18

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