Using enlargement as strengthening social dialogue and collective bargaining in the NMS

1. Using enlargement as strengthening social dialogue and collective bargaining in the NMS EMF Social Dialogue Conference 5-7 November 2008, Zagreb Béla Galgoczi European Trade Union Institute for Research, Education and Health and Safety http://www.etui-rehs.org

2. Structure of presentation • State of art of IR in NMS • General context of enlargement • One-sided and insufficient institutional architecture at EUR level • What to expect then? • Some examples, where impact is visible (I&C, EWC-s, CB Co-ordination, information exchange platforms) • Concluding remarks

3. Institutional framework of Industrial Relations • No distinctive Central Eastern European “Model” of IR • NMS fit into existing variety among EU-15 countries • Major differences and pecularities of industrial relations in NMS: • No organic and gradual development process of IR • IR development characterised by abrupt changes and turning points • Co-existence of old and new structures (parallel institutions and traditions) form specific national mixtures • Fundamental difference in the role of the shop-floor level • Major difference between NMS and mainstream Western Europe: Focus of trade union activity is the shop-floor level and not the branch level

4. What can we expect from Europe in the IR context for NMS and future members • Not much... • There is no European IR model, no model for social dialogue either • There is also no transposition of such models • The European institutional architecture is weak in general and especially weak in the social field • Europe is still the single market project – as the hard core • Moreover serious contradictions between major European objectives: • ESM - Lisbon agenda - Stability Growth Pact • Particularly strong mismatch for the NMS • Just an example: in EES social partners were in centre, in the context of SGP they have marginal role (but the latter determines the former)

5. What then to expect? • Main channels: • At accession negotiations functioning national social dialogue as criterion (vague and temporary effect often with pseudo solutions) • Implementation of the acquis gave a basic framework • Some of the EU directives had a direct impact on national social dialogue structures, institutions (in certain cases real effect) • NMS represesentatives became integrated into European Social Dialogue structures (ETUC, EIF-s, and their various committees, also in sectoral dialogue structures) – their voice not heard, discussions thematised by EU15 representatives • Capacity building, twinning programmes (results?) • Collective bargaining Information exchange and co-ordination

6. The general context of enlargement • Enlargement: skilled labour at much lower costs in vicinity • Diversity within EU not seen before – income difference up to 20 • Enlargement for OMS: integration, control, convergence • Accession for NMS: chance for catching up, stability, protecting shield from global shocks • NMS-s having adopted the ‘acquis’ (labour, industrial, environmental, investment standards) • > ‘reckless competition’ partially brought under control, but risk level for investment decreased > CEE locations more attractive

7. Successful enlargement, but crisis of ESM under global pressures? • Context of enlargement: for OMS and for NMS • Catch-up vs control reckless competition • Global context: `win-win` within EU? • Fears, lack of understanding of NMS, signs of exhaustion Europe is tired of enlargement • Major fear downward spiral – what can be done: `easy` vs `difficult` solution • Where does convergence come from? Price? • ETUC: for social Europe, balanced development, upward convergence – formulating EUROPEAN (not national) responses – conflicts between different levels • Managing change in socially responsable way...

8. Background: successful enlargement, but crisis of ESM 2004- 2005? • Integration vs. enlargement • Confidence crisis – French, Dutch NO at referendum on EU constitution, IE referendum) • Questions on the sustainability of ESM under globalisation • Fears and uncertainty about further enlargement • Hard times ahead • EU15 had profited a lot from CEE dynamism in past (but did not notice it) • Now, with NMS more hit by financial crisis, times may change – how this will be handled in the West and what this means for further enlargement???

9. Fears about enlargement • Perception in the West: enlargement is a threat on ESM, a threat to undermine precious social standards • A downward spiral is threatening • How to avoid downward spiral and make sure that convergence proceeds upwards • Free market convergence would be `nivellation` • To avoid this, active policies are needed • Easy answer: more regulation > if realities of NMS not taken into account > side effect: `social protectionism` • Difficult answer: make the `high road` a realistic perspective

10. Convergence is the key issue Sources of convergence: Relocation = capital mobility (workplaces on the move) Migration = labour mobility (workers on the move) Cohesion and regional policy – EU transfers All three are highly disputed matters… Convergence has its price – but everybody is reluctant to take part in any form… even in good times…

11. Social convergence is the key issue Economic convergence well on way Social convergence is the problem, even if wage convergence is on way - Jobless growth was characteristic for a long period in CEE The architecture of the EU is one-sided Single market (economic integration) is the hard core Social integration is the soft side and not more than a patchwork (social policies anyway nationally anchored) Social acquis is a soft basis, but gives the framework Social dialogue is a key element

12. European social model: Guaranteed fundamental rights – social cohesion – education and knowledge for the future Statutory social welfare Education, vocal training and R & D Trade unions, agreed wages, workers‘ participation rights Health and safety at the workplace Public security Fuctioning infra-structure Social dialogue

13. Workers Involvement – Pieces of a Puzzle Direct Participation Collective Bargaining Workers Representation Co-determination Capital Ownership Sectoral Policies

14. Workers Involvement – European Framework Information & Consultation European Works Councils SE-Directive Collective bargaining

15. The main avenues where EU framework has a direct impact on IR in CEE • Information & consultation and workers participation • I&C institutional structures in member states on workplace level • EWC-s • Collective bargaining • Strengthening structures in member states • Information exchange platforms, co-ordination

16. The impact of I&C Directives on trade union policy and practice • Transposition of the EWC directive had a significant influence on both trade union policies, I&C and social dialogue at the company level: • Information exchange can set in motion a regularised exchange and cooperation process underpinning national and plant bargaining • Managers experience social dialogue at company level and social partnership – EWC’s are a medium for Social Europe • Participation in EWC’s may strengthen the position of trade unions and interest representations at the local plant both against employees and management

17. The impact of I&C Directives on trade union policy and practice • The effect of the I&C Directive on workplace IR strong • In particular in countries without having had regulations on I&C at company level beforehand (i.e. Poland, Estonia) • In any case position of trade unions and works councils will be strengthened (I&C as a European Fundamental Right) • As the systems with long established dual channel show that both channels very much depend on each other

18. Controversies because of different national institutional setting • One of the crucial questions: how the European framework of WP (I&C, EWC-s) fits into the national framework of the NMS-s • How these institutions find their real functions, how practices will be developed • The greatest mismatch was seen in Poland, and in the Baltic states - it is still uncertain, how transposition of the directive in national legislation would shape national practices in future

19. Workers representation at the workplace in CEE Source: ETUI.KEY: y= yes

20. Union density – coverage rate

21. Collective bargaining information exchange and co-ordination • · • The ETUC and several EIF-s practice this regular exchange of information on national CB trends, results and strategies • T EMF, EMCEF, TCL, Uni Europa • T CB formula for the co-ordination – inflation + as much share of productivity increase, as possible • Most NMS perform better in wage dynamics and providing a share of productivity gains to workers then EU-15 countries • This is the case even if bargaining coverage – in general is much lower • - again, the CB paradox: less coverage, more wage dynamics • - Often, other factors then CB drive wage increases in NMS – this is a huge challenge for TU-s (but also an opportunity) • D • ·

22. EUCOBAN - elements: Ongoing observation and compilation of CB outcomes in countries • Continuous tracking of CB agreements through intranet and questionnaire survey / ongoing up-date of CB calendars • Questionnaire also addressing selected issues relevant in the negotiations/agreements, • Annually synthesis CB report • Exploration and compilation of economic macro- and micro data – on developments in particular sectors and branches covered by the EIF

23. EWC Database identifies companies affected by the EWC Directive and their compliance with it Source: European Works Councils database, December 2007

24. Multinationals under the EWC dir and having daughter company in NMS-s (according to country of operation) Source: Kerckhofs and Pas (eds) (2004) EWC Database 2004

25. EU enlargement and EWC’s • 33 multinationals with a headquarter in a CEEC member statefall under the EWC directive • MOL Hungarian Oil and Gas Company has founded the first EWC with a headquarter in a NMS with the involvement of 10 countries • Several non-European multinationals have a European centre in a NMS • Until 2008 only 3 EWCs established in EU member states in CEEC (MOL, SAB Miller, CEZ)

26. Some lessons, challemges • Enlargement has definitely contributed to strengthening the social dimension in CEE NMS – with contradictions and shortcomings • How information & consultation practices will become an integral part of IR in NMS is still a future question – crucial how structures develop in Poland and in the Baltic states • How EWC-s could become platforms of information exchange and co-operation between East and West – instead of signs of mistrust and marginalised NMS representatives • How could EWC-s play a role in tackling restructuring and relocation questions

27. Some lessons, challemges • It is also a great question, how practices in the NMS-s will have a feed back to the whole of Europe • Current European institutional structures and the regulatory framework is not fit to respond to global challenges • The current financial crisis has brought future risks that current institutions – and the level of integration within the EU – cannot handle • NMS are more at risk