New forms of cross-border cooperation have developed at company level in the banking sector as a response to the free movement of capital, the common currency, and mergers and acquisitions of banks across Europe. A new study on the experiences of Danish multinational banks and their European affiliates in this regard reveals that some banks and trade unions have signed cross-border agreements and texts, as well as set-up different arbitration systems to handle potential company-level disputes.
Cross-border cooperation between the social partners takes place at various levels within the banking sector, ranging from the EU level over the national and sectoral levels to company level. A new study (in Danish, 957Kb PDF) published by the Employment Relations Research Centre (FAOS) at the University of Copenhagen examines and compares cross-border cooperation at company level, using the banking sectors in Denmark, Estonia, Sweden and Northern Ireland (part of the UK) as empirical examples.
In the banking sector, European integration has progressed the furthest in terms of deregulation, free movement of capital, the common currency and cross-border cooperation. The study concludes that despite a wide range of challenges such as language barriers, different cultures and various traditions of collective bargaining, cross-border coordination and negotiations continue to take place across Europe. Moreover, cross-border works councils seem to be the most adequate forum for such negotiations. Some Danish multinational banks such as Nordea and Dansk Bank have even concluded cross-border agreements or texts, set-up cross-border arbitration systems and/or established a cross-border union with a mandate to negotiate. The latter is rather exceptional as work councils primarily represent a forum for information and consultation.
Experiences of cross-border cooperation
A rising number of European banks merge and acquire other financial institutions, which add pressure to national labour market systems and regulations. A number of European, Danish, Swedish and British trade union and employer representatives highlight the importance of developing cross-border systems of industrial relations to match the changing structures of European banks. However, this is not without problems, as most trade unions and employer associations continue to concentrate on the national rather than the international scene. In the end, when some trade unions and employers pursue the establishment of cross-national systems for negotiations, they are faced with other barriers such as cultural differences, inadequate language skills, misunderstandings due to unawareness of different traditions of social dialogue and also low trade union density in a number of European countries. For example, Nordic employers have great difficulties understanding that eastern European bank employees in particular often oppose the opportunity to be organised in a trade union. The reason for this resistance firstly relates to a deep-rooted belief from the Communist period that trade unionism is part of a restrictive state apparatus, and secondly is due to the fact that eastern European employees in multinational establishments often have obtained wages and working conditions well above the national average. Despite these concerns, the social partners have to a varying degree signed cross-border company agreements and texts – in this context, the Nordic and Danish banks are often considered the forerunners.
Cross-border company agreements and texts
Several multinational banks and their counterparts have concluded various cross-border agreements often regarding procedures for information and consultation. However, Danske Bank and Uni-Finance are the first to sign a legally binding transnational agreement (70Kb PDF), which includes more specific clauses rather than the texts that consist of relatively broadly defined guidelines for good practice and are non-legally binding. Their agreement set the overall framework for an honest and open social dialogue and includes guidelines for consultations between management and trade union representatives regarding health and safety, working time, lifelong learning, equal pay and restructuring. While those statements could be considered to be ‘window dressing’, two more substantial elements have been included in the agreement. First, subcontractors cannot compete on wage and working conditions and, secondly, Danish trade unions have the mandate to negotiate on behalf of all employees working in the multinational company. This not only legitimises trade unions, but also highlights the importance of employees being members of trade unions.
Both trade unions and employers were reportedly satisfied with the agreement. Trade unions saw it as a way to strengthen their role and the employees’ various rights, and employers perceived the agreement as a tool to strengthen social dialogue and attract the most qualified workers. However, the policy process prior to the agreement also reflected some of the problems involved when trying to reach a cross-border agreement. In some instances, the social partners disagreed on the topics to include on the policy agenda, while in others the various practical problems in terms of a potential clash with national legislation and other collective agreements limited the scope for negotiation. In the recent past, the social partners have been forced to abandon the idea of concluding cross-border agreements on specific topics for such reasons. For example, Danske Bank and its counterparts were unable to set up a common bonus system covering all Danske Bank employees due to differences in national tax regulations.
It is seldom considered that the social partners in European banks have the mandate to conclude cross-border agreements. In fact, Danske Bank and its counterparts are rather unique. Most banks, including the multinational company Nordea (DK0411101N), only allow trade union representatives and management to sign cross-border agreements on information and consultation. Other topics such as cross-border wage negotiations are specifically excluded in some general cross-border framework agreements. Nordea is an example of the latter. In addition, most bank employees rarely exploit the full potential of their works councils. None of the trade union representatives working in the multinational banks participating in the study by FAOS appear to have had contact, exchanged information or coordinated with their colleagues in other countries prior to or during national collective bargaining rounds. In fact, they were often unaware of the national collective bargaining rounds and the topics discussed nationally, which reportedly in some instances have been used by management to the company’s own advantage.
Cross-border systems of arbitration
To ensure compliance with their various cross-border agreements or texts, some multinational banks have developed company-based systems of arbitration. In this regard, Danske Bank also presents a relatively unique case. In 2008, the bank set up its own internal cross-border arbitration system. The system is based on similar principles as the Danish system of arbitration, which stipulates that in the case of disputes both sides of industry elect an independent arbitrator (opmand) to make the final ruling. Other multinational banks, such as Nordea, have a different cross-border system of arbitration. Nordea’s system consists of a bargaining committee, where social partners meet if they are unable to reach agreement in their consultative committee. However, Nordea’s bargaining committee differs from the arbitration system of Danske Bank, as management takes the final decision rather than leaving it to an independently-elected person, which is the tradition of the arbitration system in most European countries.
Interviews with bank representatives show that the decisions to develop cross-border systems of arbitration were made to add more weight to their transnational agreements and texts. Trade unions and employers in the banking sector stated that it was crucial to set up an internal cross-border system of arbitration to ensure that both parties feel obliged to implement and follow the different agreements and texts, although the employers initially felt that there was no need to develop such a system. In addition, both management and employee representatives from the participating Danish and European banks consider the new internal system mainly as a formality, as they emphasise that most disputes will be solved before they reach a stage where it is necessary to enact the new system of arbitration.
Commentary
The recent cross-border agreements and texts, along with the internal cross-border systems of arbitration, suggest that influential employers do not always oppose initiatives to strengthen social dialogue and the role of trade unions. In fact, the different initiatives imply that both local trade unions and multinational employers have an interest in and are willing to develop social dialogue across national borders because both parties can benefit from such a move. Trade unions can potentially expand their membership base, while employers can use these forums as a way to strengthen social dialogue with employees and as a potential system to recruit qualified employees.
Trine P. Larsen and Steen Navrbjerg, FAOS