Social dialogue in the candidate countries

Social dialogue and EMU in the Candidate Countries Workshop

Vienna, 22-24 May 2002

Speech abstract - Timo Kauppinen

Research manager, European Foundation for the Improvement of Living and Working Conditions

EMU, social dialogue and the Europeanisation of industrial relations

Economic and Monetary Union, EMU, was created in 1991 by the Maastricht Treaty in order to create an economically dynamic Europe. In January 1999 a single European currency (euro) was created. The 11 participating countries agreed to lock their currencies irrevocably to the euro and to a fixed conversion rate. Britain, Denmark and Sweden opted out of the system. Greece did not fulfil all the convergence criteria at that time, but was accepted in 2001 into the euro-zone. Greece's economy met the general EMU criteria of:

• low inflation (about 2%)

• low interest rate (about 3-5%)

• low public debt (less than 60% of GDP)

• low budget deficit (less than 3%)

• sustained economic development without any devaluation for two years

On 1 January 2002 the euro coins and notes were introduced as legal tender.

Social dialogue played an important role when EU countries adapted their economies to meet the EMU convergence criteria. In order to have low inflation and low interest rates, the governments and the social partners in many countries negotiated 'social pacts', which were centralised collective agreements. This happened for example in Ireland, Finland, the Netherlands, Belgium, Italy and Austria. Some countries, like Germany and Spain, adapted their economies by negotiating sectoral collective agreements. In France, the social partners preferred to negotiate company agreements, which were extended to cover all the sectors by law. Even in Britain, Denmark and Sweden, which were outside the Euro-zone, the social partners took into account the demands of EMU and negotiated moderate collective agreements.

The enlargement of the European Union in 2004 means that the candidate countries will have to join the European Exchange Rate Mechanism (ERM) and pass through the convergence process to EMU. The candidate countries have to adapt their economies to the EMU criteria of low inflation, low interest rates and sound public policy two years after joining. But what might be the role of social dialogue in this process of adaptation and in the situation where competition will increase? What can be learned from the EU countries that have gone trough the adaptation process? Can the results be used when the candidate countries are in process of adaptation?

These are some of the questions we are going to deal with during the workshop. The outcome of the workshop will be a 'draft national development plan' concerning the promotion of welfare promotion and the company competitiveness and the role of social dialogue in this transformation process.

Timo Kauppinen is research manager in the Foundation's group focusing on industrial relations and is in charge of the following projects: the European Industrial Relations Observatory, EMU's social impacts on employment, Europeanisation of industrial relations in the new economy, European Knowledge Society Foresight for working conditions, living conditions and industrial relations. Before joining the Foundation, he worked in the Ministry of Labour in Finland as research manager. He is docent in sociology at Helsinki University.