Working group reports on industrial relations implications of transition from franc to euro

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September 1998 saw the publication of a report on the impact of the introduction of the euro single currency on various aspects of industrial relations and other employment matters in France. The study, drawn up by a working group of employers, trade unions, social security organisations and the government, examines the transition period from 1999-2000, as well as the effect of the single currency on collective agreements and the functioning of works councils.

A working group was asked by the management of the Treasury at the Ministry of the Economy and Finance to produce a report on the practical industrial relations implications of the introduction of the euro single currency. The group was co-chaired by Pierre Simon, head of the French Association of Credit and Investment Institutions (Association française des établissements de crédit et d'investissement- AFECEI) and Jacques Creyssel, head of economic affairs at the National Council of French Employers (Conseil National du Patronat Français, CNPF). The group's report - Le passage à l'euro de la sphère sociale, supplementary report No. 2 of the Simon-Creyssel working group - was published on 16 September 1998. It had previously been adopted in July 1998 by the National Committee on the Euro (Comité national de l'euro), a wide-ranging body set up by the government to examine all aspects of the move to the single currency.

The impact of the introduction of the euro were reviewed in six areas:

• itemised pay statements;

• social security contribution statements;

• collective agreements;

• the functioning of works councils (comités d'entreprise) after 1 January 1999;

• familiarisation and information for workers about the euro; and

• standardising the way that the monetary value of salaries and benefits for workers and pensioners is expressed.

The conclusions of the report were approved by employers and trade unions alike, which formed part of the working group together with representatives from social security organisations and the government

Main points of the report

Itemised pay statements

Beginning on 1 January 1999, pay statements may be provided by employers in either francs or euros. The introduction of the euro should not be considered as an alteration to employment contracts. During the euro transition period, running from 1 January 1999 until 31 December 2001, documents may be issued in either currency. However, companies opting to retain pay statements in francs should be required, at the earliest possible date, to indicate the euro equivalent of the net remuneration provided.

Those companies electing to move entirely over to the euro system during the transition period should be required to indicate in both francs and euros not only net remuneration, but also gross pay, individual pay components and total annual gross and net pay.

If the pay statement is calculated in euros, the francs equivalent of the net remuneration indicated on the pay statement should be calculated by directly converting the euro amount, and vice versa if the statement is calculated in francs. Otherwise, if the total net euro remuneration were calculated by adding the franc-to-euro conversions of each line of the payslip, there would be a disparity between the total in francs and the total in euros, due to the effect of rounding figures. In addition, the rounded amount of each pay component would not correspond to the net remuneration when converted into euros.

Social security contribution statements

It will be possible to indicate social security contributions in euros from the 1 January 1999. From this date, social security organisations will accept social security premium summary statements and contribution payment slips in euros for companies covered by the general social security system.

The "yearly workforce data statements" (Déclarations annuelles des données sociales- DADS) for the period 1998-9 could be drawn up in euros as early as January 2000, provided that they are produced by a computerised system and the company has made a complete and definitive transition to euro-based pay statements for all employees. In order for DADSs to be drawn up in euros during the transition period, the ceiling for social security payments must be expressed in rounded euros.

Impact on collective agreements

Trade union representatives stressed that, in their view, it would be necessary to lay down a number of guarantees with regard to the cumulative effect of rounding figures in franc-euro conversions on the minimum pay rates included in sectoral collective agreements. Some sectors, such as the textile and clothing industries, would be more widely affected than others. Union representatives wished to see a sector-by-sector review, conducted in the framework of the National Collective Bargaining Commission (Commission nationale de la négociation collective), in order to prevent discrepancies from one sector to another and to uncover potential problems common to various sectors so that one solution could be applied across the board. Other members of the working group considered that a systematic review of collective agreements would be cumbersome and pointless, given the fact that any sums in a collective agreement indicated in francs would have to be converted into euros according to strict European conversion and rounding rules.

It was decided that this issue would be raised in autumn 1998 at a meeting of the pay subcommission of the National Collective Bargaining Commission, and that attempts would be made to draw up recommendations for each sector.

Functioning of works councils from 1999

With regard to keeping works councils informed of the practical terms of the transition to the Euro from 1 January 1999 and to promoting consultation and dialogue, the group's conclusions are as follows.

• No matter when a company adopts the euro system, the works council should receive notification as early as possible. It should especially be made aware of the precise nature of the time-frame adopted by the company for the transition to the euro, the conditions of the transition, the impact on the company and its workers and specific difficulties encountered.

• The notification and dialogue process should be decentralised. Certain issues should be dealt with by establishment-level works councils, whereas others should be discussed at all levels - from establishment-level works councils to central company works councils or even group-level councils (as far as information on the group's consolidated accounts is concerned). However, companies and unions still do not see eye-to-eye on one point. Although they both agree that the conditions governing the transition must be discussed with workers' representatives, companies believe that this must be on an informal consultation basis, with no statutory framework. Unions, on the other hand, believe that these discussions should come under the formal jurisdiction of the works council, which could then issue opinions and make recommendations regarding difficulties encountered.

The effects of the transition to the euro on the internal functioning of works councils and the services and benefits that they provide to workers were also discussed, with the following conclusions:

• " Works councils should examine the requirements and necessary means for upgrading their computer systems to deal with euros (accounting, pay systems, training of workers by works councils etc). "

• "Works councils and companies could set their own, separate dates for moving over to the euro-based system. The works council would be able to decide its own time-frame, irrespective of what the company decided. "

• " No specific problems regarding services and benefits were foreseen at this stage. Those organisations issuing vouchers - such as restaurant vouchers, holiday vouchers, gift vouchers and domestic staff vouchers - should be contacted to find out what provisions they have made for the transition to the euro system (in terms of the indication of values in francs, euros or both on vouchers). "

• "The total value of benefits and services provided to workers by works councils should be displayed in both francs and euros. "

• The unions hoped that, if necessary, companies would contribute financially to updating existing systems, both for the functioning of works councils and for social services and benefits for workers.

Information and training for workers

In general terms, the working group recommended that companies regard familiarising and training workers with regard to the euro as particularly important. In particular, it is seen as vital that in those companies with no worker representation bodies, the euro training process be undertaken directly by the company with, if necessary, support from sectoral organisations. The group stressed that a list should be drawn up and an assessment made of training needs within the company, whether these needs are of a general nature (this type of training should not be the sole responsibility of the company) or specific to the company (ie, the impact of the euro on the company and workers' jobs).

Standardised expression of monetary values

The group examined the question of standardising the monetary unit used to express the various components of pay and pensions so as to avoid any disruption. Its view was that standardisation could be achieved by indicating both francs and euros in parallel, a measure which could be recommended by the Ministry for Employment and Solidarity to social security organisations under its control.

However, there are still questions surrounding benefits overseen by certain complementary, top-up organisations (in the health sector) which will not necessarily be in a position to post figures in both francs and euros in January 1999.

Commentary

This highly technical study by the committee is interesting in several ways. It demonstrates the many real issues brought about by the introduction of the single currency and the work that has to be done to explain this transition to workers. It also shows that on this particular issue a consensus can be reached between workers' and employers' representatives. This study was merely an initial stocktaking of the issues. Further questions will be raised in the day-to-day running of companies. (Alexandre Bilous, IRES)