Commission seeks agreement on socially intelligentrestructuring

In January 2002, the European Commission launched consultations with EU-level employers' and trade union organisations about how to anticipate and manage the social effects of corporate restructuring. The Commission would like to see agreements on this issue at cross-industry or sectoral level.

On 15 January 2002, the European Commission began the much-anticipated first phase of formal consultations with the EU-level social partner organisations with the aim of stimulating dialogue about establishing the 'principles' governing 'socially intelligent' restructuring.

The move was first announced by the Commission in a Communication (COM (2001) 611 final) to the Ghent informal European Council in October 2001, outlining a programme of EU action in response to the terrorist attacks on the USA on 11 September 2001. This stated that 'particular attention must be paid to managing the social and employment impact of the deteriorating economic situation' and that the Commission intended to launch an initiative 'seeking to improve employability and adaptability of the workforce in the event of mergers and restructuring of business'. According to the Commission, the initiative also takes account of the European Parliament's February 2001 resolution urging a more proactive Community response to the social consequences of industrial restructuring (EU0103199N).

In November 2001, press reports of the Commission's intentions prompted expressions of concern from employers' organisations at the prospect of new EU rules on company restructuring. However, the European Trade Union Confederation (ETUC) wrote to the European Commission President, Romano Prodi, urging the Commission not to be deflected from proceeding with its plans by employer lobbying. On 13 December, at the pre-Laeken European Council 'social summit' of business and union leaders, the EU Employment and Social Affairs Commissioner, Anna Diamantopoulou, confirmed that the Commission would be launching a consultation on the issue early in 2002.

Key points of the consultation document

For the Commission, developing a positive approach to corporate restructuring 'implies combining in an effective and balanced manner the interests of businesses, faced with changes in the conditions governing their activity, and those of employees, threatened with the loss of their jobs'.

In making the case for a new initiative at EU level, the Commission highlights the upward trend in the number of mergers and acquisitions involving EU firms - from 8,239 in 1991 to 12,796 in 1999 - and the high level of redundancies experienced across the EU in 2001. The Commission argues that: 'Sustainable economic growth and strengthening competitiveness requires a new focus on the social aspects of restructuring. Whereas in the past change in general has been facilitated by social provisions, a major issue now is how social provisions can not only soften the negative aspects affecting workers in the context of restructuring, but can play a more active role in maintaining and improving the human capital in Europe.'

The consultation document notes that a range of existing EU policies are relevant to restructuring, including:

• EU legislation requiring the information and consultation of employees;

• EU-level social dialogue (EU0112262F);

• the observation and analysis of industrial change, through the establishment of the new European Monitoring Centre on Change (EU0111237N);

• the EU's structural funds;

• competition policy; and

• the promotion of corporate social responsibility (EU0107228F).

In addition to these policies, the Commission wants to examine the scope for establishing Community-level principles of good practice during restructuring based on procedures already developed in the Member States and experience within companies operating in the EU. The consultation document identifies four main areas for consideration:

• measures to promote employability and adaptability, and restructuring on the basis of 'lowest social cost';

• the effectiveness of regulatory approaches, including the identification of obstacles to restructuring in a socially positive way;

• responsibility for the impact on localities and commercial networks (subcontractors etc); and

• the 'modalities of implementation', including the involvement of employees, fair compensation where job losses cannot be avoided, whether EU-level dispute-resolution machinery would be useful, and good practice within small and medium-sized enterprises.

The consultation document seeks the views of the social partners on the usefulness of establishing at EU level 'a number of principles for action which would support business good practice in restructuring situations', and asks 'whether they consider that agreements between the social partners at cross-industry or sectoral level represent the appropriate way of proceeding', as favoured by the Commission.

The procedure

The consultation has been initiated under the 'social chapter' of theTreaty establishing the European Community (Article 138(2)). This provides for a two-stage procedure. First, 'before submitting proposals in the social policy field', the Commission must consult the social partners on the 'possible direction of Community action'. After that, if the Commission considers Community action 'advisable', it is required to consult them on 'the content of the envisaged proposal'. Each phase of the consultation process is intended to take no more than six weeks. During this process, the social partners may inform the Commission of their wish to attempt to negotiate a Community-level agreement on the issue in question. They would then have nine months (longer by agreement) within which to do so.

If the Commission's initiative does result in the negotiation of Community-level agreements, these may be implemented either:

• 'in accordance with the procedures and practices specific to management and labour and the Member States'; or

• at the joint request of the signatory parties and on a proposal by the Commission, by a Council decision (using qualified majority voting or unanimity as appropriate), but only if they concern the social policy issues (listed in Article 137) which fall within the EU's legislative remit.

Social partner reaction

The Union of Industrial and Employers' Confederations of Europe (UNICE) issued a statement in which it said: 'UNICE is pleased to see that the European Commission recognises that adaptation to change by companies and corporate restructuring are an indispensable part of modern and dynamic economies ... Consequently, public policies at national and European level must aim at facilitating change, and not prevent it.' The statement continued: 'It should not be forgotten that a substantial legal framework, collective agreements and specific traditions at national, sectoral and company level already exist. UNICE will examine the questions raised in the Commission document closely and reflect on the responses it can provide. UNICE stresses, however, that it is essential to avoid the imposition of additional legal constraints on businesses.'

In a statement issued immediately before the Commission's proposals were published, ETUC said: 'For years, we have been calling for a Commission initiative to bring about socially acceptable management of industrial change in Europe.' ETUC stated that warnings issued by UNICE prior to the publication of the Commission's proposals did 'not bode well for the social dialogue that the Commission wants to see the social partners enter into', and expressed the hope that 'the European employers will agree to get back around the table'.

Commentary

The objectives that the Commission hopes its initiative will achieve are as yet somewhat unclear. The contents of the consultation document issued to the social partners are reported to have been the subject of lengthy and difficult discussions within the Commission. The Commission has emphasised that its initiative is not aimed at harmonising rules governing the social aspects of restructuring but at promoting the development and dissemination of good practice. However, employers are clearly concerned that further EU legislation may ultimately be on the agenda. It remains to be seen whether the EU-level employers' organisations will be willing to engage in negotiations on this issue - and what approach the Commission will take if no social partner agreements are forthcoming. (Mark Hall, IRRU)