Do European Works Councils Represent a Major Advance in Employee Representation - Term Paper Example

Introduction: History and Purpose of the European Work Councils In 1994, the Council of the European Union Council issued a Directive to establish the European Works Council (EWC) designed to inform and consult with employees within companies with a minimum of 1000 workers and at least 150 employees from two other member nations. European Works Councils were created in response to increased transnational restructuring of companies brought about by globalization and the formation of what is now the European Union. The main purpose of the EWCs is seen as bringing together local employee representatives from various EU countries with central management of large multinational companies to discuss issues as complex as worker rights and any plans the company may be considering that would affect workers. Meetings also allow employees of one country to share information and experiences with colleagues from other nations. “Employee participation at a European level became a reality with the introduction of the European Works Council Directive” (Fitzgerald, 2004: 1). The purpose of the Councils: to provide workers within large multinational corporations, through their designated representatives, a direct line of communication to top management. With communication as key, various national councils insure that workers in all countries are provided accurate information about plans and policies of the transnational companies who employ them, and ensure worker representatives of established unions and national works councils the opportunity to consult amongst each other and develop a common response before policies and plans are implemented. Beyond these goals, three main views about why works councils primarily exist include benign goals as stated to improve communication and less benign goals of worker control over bargaining and negotiations and input into company policy when market failures occur that may negatively impact their employment. Based purely on description of purpose, the formation of the councils appear a valid and reasonable response to the advent and power of multinational corporations—impersonal behemoths larger than life with little sense of employee conditions or problems experienced at lower management levels. The success of the councils as regards employee representation is, as might be expected, mixed. This paper examines the reality of the success or failure of the councils, and to what degree they have advanced the cause of worker representation. Evolution of the Directive and Worker Representation Fitzgerald (2004) points out that the EWC Directive in its final form was viewed as a watered-down version of an earlier directive in terms of employee participation, viewed with suspicion by companies and with complications occurring within the law. However, the new Directive “...comes (came) closest to the 1983 draft Vredeling Directive with its emphasis...on firms requirements for existing representatives to be informed and consulted; the emphasis on annual information and consultation; and the subject areas to be informed and consulted on” (Fitzgerald, 2004:5). Directives, however, were not specific when it cane to laying out benchmarks for whether the behavior set down actually would perform as intentioned. Lucio and Weston (2004) suggest that employee representation as a complex issue difficult to measure based on the actors involved. Problems arise when criteria is applied that may not be applicable under current rules. “EWCs have been contrasted with traditional forms of union activity and conflict strategies... Yet...the relations between these are always ambiguous due to the contextual factors and tensions that underpin trade unionism” (Lucio & Weston, 2004:44). The authors quote Hyman (1989) who suggests, “The challenge of representation - economic and political - means that worker representation can be inconsistent and ambivalent in terms of their roles” (Lucio & Weston qtg. Hyman, 2004: 44). In the authors’ views, there are simply too many variables immersed in worker rights, unions, corporate culture and law to make a simple judgment on whether the EWCs are producing the desired effect when it comes to worker representation. Lucio and Weston (2004) found, “We need to see EWCs less as given entities and more as dynamic developments which play varying roles and are influenced by...the material tensions that underpin the reality of worker representation. The Directiv’s Impact on Women Employees That being said, an interesting area that can be viewed in terms of representation under new work council legislation is the situation of women in the EU workforce. Hoskyns (2000) suggests that as early as 1996 “sixty-nine projects were approved for funding under AP4...The diversity of the projects is striking, with much greater emphasis than previously on communication, the media, and the dissemination of good practice” (Hoskyns, 2000: 56). An important gain has one project increasing and emphasizing “...the position and influence of women in company work councils...(Hoskyns, 2000: 56). Hoskyns cautions not to place undue import on this since the pillars of work councils—communication and transnational exchange—by themselves can not solve all of women’s issues, especially as related to disenfranchised women’s groups marginalized in the multinational workforce. But it is seems a start and positive step, if a small one. Opposing Sides in the EWC Argument Fitzgerald (2004) in his summary of the essays of Buschak (2004) and Hume-Rothery (2004) in Works Councils: Pessimism of the Intellect Optimism of the Will? found conflicting views regarding employee representation under The Directive on European Work Councils. Buschak in discussing EWC agreements argues “employers have an important advantage in negotiations...because of their greater resources” (Fitzgerald citing Buschak, 2004: 63). As such, Buschak promotes the idea that European Industry Federations should be a part of management/employee negotiations and that EWC representatives should have “right of access...when they need to discuss issues with national employee representatives” (63). Hume-Rothery, on the other hand, favors more developed lines of communication on the part of management, arguing “meetings are an expensive business” (Fitzgerald citing Hume-Rothery, 2004: 63), with Hume-Rothery further arguing sarcastically “that for EWC representatives to take a participative role they would need to be educated to the level of an MBA” (64). Fitzgerald cites Hume-Rothery who cites Kerckhofs (2002). “...the slow rate of progress of (EWC) agreements... is evidence of the lack of enthusiasm for the Directive from both employees and management” (64). Buschak (2004) in his essay The Practical and Legal Problems of European Work Councils supports the optimistic view that EWCs influence on employee representation is working and that since 1994 gains and benefits from cooperation across national borders has brought positive results. “...practice has shown that, thanks to EWCs, undertakings have gained the advice of the best possible consultants: workers and their representatives” (Buschak, 2004: 67). He offers specific instances to bolster his position. “The EWCs of Unilever, of Opel/General Motors, of Ford and many others have used the opportunity to influence restructuring all over Europe, often successfully...” (67) Hume-Rothery (2004) as intimated in his essay Implementing the Directive A from UK Business P assumes a more conservative traditionalist business approach to multinational corporate function on the continent and within Britain as a cooperative entity. He favors corporate integrity over interference by unions and worker participation as put forth by the Directive on EWCs. “As we looked at the Jacques Delors wish list, the one proposal which caused us more concern than the others was that for a construct called a European Works Council” (Hume-Rothery, 2004:80). Hume-Rothery writes: The more that we thought about this EWC idea, the more it looked to be a template for a pan-European employee relations system, and one that might even create a platform for pan-European collective bargaining. Indeed, in its original drafts the EWC Directive even had something included in it called participation, which is Euro code for co-determination. The British business community did not like that one bit” (81). Hume-Rothery (2004) criticizes the wording of the Directive as detrimental to communication between representatives and management. “...if even a quarter of the suggested amendments found their way into a revised Directive it would kill stone dead any hope of EWCs developing into structures capable of delivering meaningful transnational information and consultation to the majority of an organisations workforce” (91). Impact of EWCs on Smaller Nations Smaller countries, however, are more hopeful about the ultimate impact EWCs will have on worker relationships and representation with the multinational corporations developing within their borders. A look at how the EWCs function in these smaller business environments provides an alternate and interesting perspective on their role in promoting employee representation which, until now, has been non-existent. A (2009) case study of Cyprus partially funded by the European Commission found the number of EWCs increasing in that country with the advent of more multinational enterprises. While still in relative infancy, and the fact that many employees do not fully understand their purpose or function, the study found the meetings of the councils productive in terms of manager/worker communication. The meetings, on a local level are deemed an important forum at which problems can be discussed and ideas exchanged in open dialogue that helps both parties “avoid mistaken decisions that will bring in conflict the two sides” (Small Countries for European Work Councils, 2009: 23). Using a specific case study of how EWCs are working in the Bank of Cyprus Group Public Co. Ltd, a respondent indicated in terms of employee representation that it was working quite well, calling the EWC process in worker representation “very effective” (19). The subject of representation as a “work in progress” with residual benefits of EWC participation is studied by Rudolf (2002) in his report, Polish Employee Representation in EWCs. “...although...Polish representation in the EWCs has not been too numerous so far, the experience derived from work in these Councils has proved to be very useful” (Rudolf, 2002: 4 3). The information gathered in training helped the Polish parliament draft its own EWC Act and train more EWC representatives. Polish representatives participating in EWCs expressed favorable views regarding EWC member cooperation in terms of information exchange and mutual assistance in understanding concepts and practices (Rudolf, 2002: 18 3), an advancement over parochial interests as carried out by local employee unions before the establishment of EWCs. Regarding interaction and information exchange with multinational management, respondents to Rudolf indicated responses by multinational management boards of transnational companies to be generally positive, indicating their interest not only in employee problems but being aggressively willing, available and open to speak with representatives “coming up to them during a break or an informal meeting and asking about existing problems” (19 3). On the other hand, not all respondents agreed, seeing the Council as “...weak and badly organized... it does not constitute the employee representation but a set of loosely interrelated individuals” (Rudolf, 2002: 19 3). These respondents developed the impression that the management board in their cordiality is merely going through the motions of communication because they are bound by the Directive to do so, but in reality are merely attempting to “minimise" difficulties connected with it (employee representation under the EWCs)” (19 3). Conclusion Perhaps in conclusion, and considering the information presented, the answer to the question of whether works councils have advanced the cause of worker representation is best summed up by Lucio and Weston (2004): It is beyond contention that EWCs are subject to interventions from a range of actors. They are subject to influences within the internal environments of their relevant TNCs and a host of external political and regulatory factors. Within these two environments there are dual pressures that both push unions towards managerial agendas and pull them towards autonomous labour ones. These distinct pressures mean that EWCs cannot be viewed as given entities with coherent actors that develop clear and consistent interests. Instead, they will vary according to the way these internal and external environments, and their corresponding actors, influence their development. In this respect EWCs share a historic characteristic of worker representation generally in that they are capable of being both forces for aligning worker and employer interests and, on the other hand, creating new forms of worker dialogue and action (Lucio & Weston, 2004: 34). The excerpt presents what is probably a realistic view of the issue of worker representation, and whether with the development of EWCs it has advanced--how, for whom, and to what extent. It is too soon to tell and the issue too complex to evaluate at this juncture. Different countries involved in EWCs are at different stages of societal and political development, some with little to no previous experience in workplace representation of any kind. Some are far more sophisticated. The fact is the issue of employment with burgeoning multinational entities is a rather new situation in itself, and with it comes new challenges for worker/management communication. From evidence gained it appears that philosophically the EWCs seem an intelligent course to take, and to some extent, at least, have advanced the interests of workers if only in terms of the international dialogue it has prompted. There are certainly enough players who are determined to make representation work. However, it will be up to employee representatives and their strength of commitment to ensure their voices are heard and heeded. It will also take commitment on the part of governments to ensure cooperative attitudes on the part of multinational corporations to heed the voices of their workers and respond appropriately. Regarding the impact of EWC operations on trade unions and their negotiations, Berry (2008) found this new enhanced form of worker representation will do nothing but “boost” their negotiating power and the power of EU unions in general. Berry writes, “Clauses in the new directive give unions extra rights to act as expert advisers to employees and to attend meetings between employers and employees, even when a company does not recognise a union… Another provision will force companies with EWCs to renegotiate their agreements when a significant restructuring occurs” (Berry, 2008: para. 3-4). The impact of union opinion on the directives is a clear indication that nothing about European Works Councils and their operations will diminish their power, and will in fact probably enhance it over time through the equally enhanced numbers in worker representation brought about by the work councils. Bibliography Act on European Works Councils. (1996) as amended by the Act dated 22 December 1999 (“Bundesgesetzblatt“, Part I: 2809) and by the Act dated 21 December 2000 (“Bundesgesetzblatt“, Part I:1983). Accessed: 29 November 2009). Berry, M. (2008) ‘European Works Councils Restructuring to Boost Unions’ Power’. 03 July 10:21. 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(2003) The Challenge of Representation at the Workplace in EU Accession Countries. Does the Creation of Works Councils Offer a Solution Alongside Trade Unions? Presentation at: Tripartite Conference, The Right to Information and Consultation in Practice in an Enlarged European Union. Warsaw: (12-13 December 2003. Sponsor: International Labour Office Sub-Regional Office for Central and Eastern Europe, Budapest, Hungary. Accessed: (29 November 2009). Wikipedia. ‘Works Councils.’ Last modified 22 November 2009 at 02:00. Text available under the Creative Commons Attribution-Share Alike License. Accessed: (1 December 2009). Worker Participation EU. (2009) European Works Councils. Accessed: (29 November 2009). EUROPEAN WORK COUNCILS: A MAJOR ADVANCE IN EMPLOYEE REPRESENTATION? by (your name) Presented to: (professor’s name) (Class name and number) (Name of University) (city where located) (Paper due date) Read More