Implications of European Monetary Unit for European Industrial Relations - Essay Example

Examine the implications of EMU for European industrial relations Social and economic policies within nation s have a variety of objectives, most of which can only be approached, not attained. Many of these objectives may conflict in the sense that further progress towards one involves less progress towards another, or even divergence from it. The European Union is not immune from these same problems. Indeed, since the EU budget is so small, the policy directorates-general are fairly independent and the ambitions large, the conflicts emerge clearly. (John Kelly, 59,65) This essay focuses on one example, the implications of the European Monetary Union on industrial relations in Europe. The effects of advancing European integration on national systems of industrial relations, and the associated need for a systematic analysis of the conditions, forms, and direction of the Europeanisation and 'supranationalisation' of industrial relations, have long ago attracted the attention of researchers. Although a number of valuable comparative studies have appeared in the last decade (Ferner and Hyman 1992; Hyman and Ferner 1997; Bispinck and Lecher 1999), by and large these have not concerned themselves with the specific context of the European Union and the transnational dimension of industrial relations. (Wolfgang Lecher, 133) In particular, there has been almost no systematic consideration of the interaction between and consequences of the co-existence and superimposition of supranational and national relations between state actors and the parties to collective bargaining, both for systems of industrial relations and for broader areas of policy at the various levels of the European Union's multi-tiered system of governance. Similarly, there has been little research into the effects of the horizontal interaction between differing national systems of industrial relations and approaches to social and economic organization which are embedded in the same EMU and, as a result, are subject to the pressures of mutual regime competition. According to Jelle Visser (http://www.ser.nl/_upload/b23574_4.pdf) prior to the EMU, industrial relations in member states seemed to follow one of two broad tracks: 1. Attempts at cross-border co-ordination among trade unions in continental welfare states and in what broadly can be described as the D-mark zone (Germany, Austria, the Netherlands, Belgium, France and, although not member of EMU, Denmark) to seek wage increases within specified parameters and thereby preventing upward wage pressure (endangering monetary stability) and downward wage competition and social dumping. 2. The adoption of or attempt at tripartite Social Pacts in peripheral or 'catch-up' countries outside the D-mark zone (Portugal, Spain, Italy, Greece) and those prospective EMU members which were confronted with deep structural changes (Ireland, Finland), prioritising national competitiveness, addressing crisis situations and preparing for EMU membership. This view sets out from the position that the developments referred to above constitute structuring elements in a future system of European industrial relations, organised around two dynamic poles-the company-centred transnational level and an overarching macro level, with its institutional focus in the 'social dialogue'. It expects the guaranteed rights to information and consultation which will result from the across-the-board establishment of European works councils (EWCs) in the wake of the Directive to create the foundations for the possibility of company-based collective bargaining on issues such as training and working time. Moreover, EWCs are to promote the conver gence of workplace employee representation across Europe and act as a catalyst for the harmonisation of trade union policies on employment issues and collective bargaining. (Wolfgang Lecher, 135) This optimistic standpoint sees a positive link between trade union demands for participation, on the one hand, and the establishment of new post-Fordist systems of production and employment combined with the trend for many companies to move from nationally focused to pan-European organisations, on the other. On this view, EWCs would be a component and agent of a 'New Deal' in European industrial relations and, by forging new links and networks, would form the foundation for the subsequent emergence of collective bargaining at sectoral or supra-sectoral European-level, at least as far as the setting of framework conditions is concerned. At the same time, the possibility of 'compensatory social dialogue' facilitated by the Social Protocol could be expected to yield further agreements, such as on training, etc., with an increase in the importance and role of tripartite concertation on employment matters. The arguments adduced to support this are: a changed institutional framework; that is, the development of the social dialogue, originally established in the mid-1980s, from a 'round table' to the 'privileged forum for consultation and negotiation' of the European social partners following Maastricht, with a growing 'proto-corporatist' quality. the changed political constellation within the Council of Ministers as a result of the accession of Austria, Sweden and Finland; that is, the extension of the EMU to embrace countries which, as a result of their own national employment structures and traditions and their comparatively high level of social regulation, take a positive view of European social regulation-not least on grounds of the threat of regime competition. the 'strategic exigencies' confronting the employers' side as a result of this political constellation; that is, the option of an 'autonomous' social partners' agreement as a 'second best' solution instead of an 'authoritative' statutory provision. the assumption that under some circumstances negotiations as an alternative to legislation constitute non-zero sum games for the European social partners involved The Euro-pessimist view-which exists to varying degrees and is coloured by diverse organisational and theoretical concerns-proceeds from the argument that any extensive Europeanisation of systems of industrial relations is tightly circumscribed and the establishment of a genuine supranational system is improbable for the following main reasons: differences in the organisation, ideology and interests of Europe's national trade unions; trade union organisational and political weakness either in establishing an 'autonomous' transnational system of industrial relations or in impelling the EMU legislature to create corresponding regulations; the absence of any corresponding economic and political-strategic interest on the part of companies and their representative associations and, to some degree, a lack of organisational capacity to create the preconditions for European industrial relations, combined with their possession of sufficient veto powers within European decision-making processes; the weight of national or sectoral coalitions of trade unions, employers and-in many instances-official institutions and the institutional inertia of these established national structures; the risks and costs of transformation expected by the actors in the creation of new (European) regulations. (Wolfgang Lecher, 133-137) The EMU encompassing the entire European Union (except for the UK and Denmark) would lead to the reverse of the first scenario, namely severe, widespread competitive pressure. Depending on how one assesses the scope for action by the trade unions, this situation can be described as constituting a danger of 'disintegration of the trade unions' (national) wage cartels in Europe' or as an impending 'European wage cartel'. Undoubtedly, coordination or centralisation of policy on collective agreements in a full EMU would be all the more necessary but also considerably more difficult to achieve due to the imbalances involved. It is generally accepted that the implementation of a single European currency have compelled collective bargaining to adhere rigorously to the dictates of economic stability, forcing it to bear the burden of many of the major economic adjustments previously absorbed by the buffer of exchange rate mechanisms. For any critique of the European currency union which begins from a concern for social policy, the main risk is: that the possibilities for changing nominal exchange rates will be lost. The process of adjustment in an economic and currency union demands substantially more sacrifice from working people than a mechanism for adjustment executed through a correction in exchange rates. Employees will have to suffer a phase of unemployment, which ultimately will compel a cut in real wages far beyond any cut in pay necessitated by devaluation. (Busch 1991:267) This sceptical position is contrasted with the view which argues that the completion of the European Monetary Union has already imposed tight limits on the conduct of national collective bargaining: More than ever before, investors now react to the varying trends within collective bargaining in individual countries. If collective bargaining in a country does not take account of what is going on around it and is awarded poor marks by investors, this will prompt a shift of capital to other European countries. This is true irrespective of whether there will ever be a single currency. A decision 'against Maastricht' would not lower the pressure on collective bargaining being exerted by the growing integration of all the markets in Europe. Against this pressure have to be set the advantages of liberalisation and integration-that is, the welfare and growth gains which will also benefit Europe's employees. (Pohl 1992:755) The EMU have almost fully been achieved within the timescale originally envisaged at Maastricht (1997-9). Efforts to supplement the decision to proceed with EMU with provisions to safeguard free collective bargaining in the negotiations for the Maastricht Treaty met with no success: the Treaty excluded freedom of association and the right to strike and lock-out. However,it was considered that EMU would not only place growing pressures on the parties to collective bargaining-and, in particular, the trade unions-to tread a path consistent with the dictates of economic stability; it would itself generate a need for cross-border collective bargaining because of the need to establish some general framework conditions at EU level. On this argument, the EU had eventually been confronted with a need to create the legal prerequisites for a system of European collective agreements. Given the diverse legal and industrial relations traditions and practices in the member states, however, no swift harmonisation was expected in this sphere. As a result, the existing asymmetrical course of development within the European Union-and specifically the relationship between rapidly advancing 'market integration' (post-Maastricht in the monetary, finance and credit sphere) and lagging political and social integration-is likely to become even more unbalanced at precisely the point at which economic policy, social cohesion and collective bargaining are most interdependent. (Christiansen, T, 73-90) Collective bargaining, by nature both a social and an economic regulative, occupies a central and a strategic role in the process of European integration. Viewed from the standpoint of both the functional demands of integration and the pressing issue of the popular acceptance of economic integration, to what extent, and through what forms, might a 'Europeanisation' of industrial relations serve as a key regulative not simply of employment issues, but ultimately of the EU's social market economy as a whole Neither the Maastricht Treaty, nor its successor negotiated at Amsterdam in June 1997, offers any legal basis for collective bargaining in the 'classical' sense at European level. The problems and challenges raised by this initial position will be taken up at various points in the course of this volume. The proposition that the probability of collective bargaining at the level of the European Union increases with the degree of structural uniformity between national industrial relations systems, becam obvious. If the regulation and organization of national systems are rooted in highly divergent principles, then the tasks and costs of European-level coordination will be so great as to diminish the likelihood of any focused supranational approach on the part of the individual national actors (trade unions, employers, governments). However, if national systems are broadly uniform the costs of coordination at Community-level will be both low and sustainable. An extensive degree of uniformity between national systems does not mean, however, that European-level collective bargaining necessarily comes about: it is simply, and merely, one important precondition. (Carley, M, 33) Moreover, this is a condition, which does not apply only to the process of formulating and negotiating a claim but also, and in particular, to the process of 'implementing the contract' (i.e. collective agreements). If European collective agreements are to achieve their aim, they must be implemented throughout the EU. This went through easier where the differences between the implementing institutions were small. As far as the prospects for European labour relations are concerned, moreover, the form taken by European integration in general is a relevant factor. European policy has certainly become a focal point for social interest groups, first as a result of the internal market and especially now with the implementation the EMU. The crucial factor is, however, how far this policy is negotiated and pursued by the member states through the EU at intergovernmental level or whether it is a genuine supranational European policy. It also makes a difference whether 'negative' integration takes place, as was and is largely the case in the internal market with liberalisation and the principle of mutual recognition, or whether increasingly 'positive' integration is pursued in the form of minimum harmonisation and active economic and structural policies. The composition of the EU has certainly had repercussions too: on the one hand, the enlargement to Austria, Sweden and Finland strengthens a latent trend towards a union with a pronounced internal market character, but on the other, it contributed considerable potential in terms of national labour and social policies and established labour relations. (Hugh Compston, 63-64) On the whole-leaving aside the question of the implementation of the EMU-the current trend, shaped by subsidiarity and rapid enlargement to the east, is towards 'negative' integration with little minimum harmonisation and weaker 'positive' integration in mainly intergovernmental form. Only further strengthening of the European Parliament can give the EU a more authentic European political dimension and also, therefore, a focal point for the social partners. As Jelle Visser (http://www.ser.nl/_upload/b23574_4.pdf) mentioned - EMU and economic co-ordination render labour costs and cost of living comparisons more feasible there are obvious competitive reasons for setting wages in line with or slightly below settlements reached in European neighbours. EU Member States have always been free to set pay awards compatible with historical productivity differences and with an element of 'catching-up' on other countries. Convergence in Europe, beyond the acceptance and implementation of a common acquis of legal standards, is in part built upon such competitive processes. This competitive element has increased with the accession of the new member states, as it creates more feasible and attractive locations for production at lower costs nearby. EMU has brought pluses and minuses to the development process of the European industrila relations. Though the main achievement of the EMU institution is new horizons for industrial relations, which overlay national level and pass to multinational thus contributing to the common economy of EU. Bibliography 1. Ebbinghaus, B. and Visser, J. 'Barrieren und Wege "grenzenloser Solidaritt": Gewerkschaften und europische Integration', in W. Streeck (ed.) Staat und Verbnde, Opladen: PVS Sonderheft, 1994, 13 2. Hyman, R. and Ferner, A. (eds) New Frontiers in European Industrial Relations, Oxford: Blackwell, 1994, 45-65 3. Ferner, A and Hyman, R. (eds) (1992) Industrial Relations in the New Europe, Oxford. 4. Pohl, R. 'Tarifpolitik in der fortschreitenden europaischen Integration', WSI- Mitteilungen, 1992, 12, 755 5. (http://www.ser.nl/_upload/b23574_4.pdf) 6. Busch, K. Europische Integration und Tarifpolitik. Lohnpolitische Konsequenzen der Wirtschafts- und Whrungsunion, Cologne, 1994, 267, 214 7. Wolfgang Lecher, Hans-Wolfgang Platzer, European Union-- European Industrial RelationsGlobal Challenges, National Developments and Transnational Dynamics; Routledge, 1998, 133-137 8. John Kelly, Rethinking Industrial Relations: Mobilization, Collectivism, and Long Waves; Routledge, 1998, 59, 65 9. Hugh Compston, Justin G Reenwood, Social Partnership in the European Union; Palgrave, 2001, 61, 63-64. 10. Carley, M. 'Social Dialogue', in M. Gold (ed.), The Social Dimension: Employment Policy in the European Community, London: Macmillan, 1993, 33 11. Christiansen, T. 'Tensions of European Governance: Politicised Bureaucracy and Multiple Accountability in the European Commission', Journal of European Public Policy, vol. 4, 1997, no. 1, pp.73-90. Read More