European Works Councils and the Crisis: Change and Resistance in Cross‐Border Employee Representation at Honda and Toyota
| Published date | 01 June 2015 |
| Date | 01 June 2015 |
| Author | Markus Hertwig |
| DOI | http://doi.org/10.1111/bjir.12027 |
European Works Councils and the Crisis:
Change and Resistance in Cross-Border
Employee Representation at Honda
and Toyota
Markus Hertwig
Abstract
The article analyses the effects of the financial and economic crisis on the
structures and activities of the European Works Councils (EWCs) at Honda
and Toyota, which until 2007–8 were categorized as non-efficient representation
bodies. A theoretical concept is introduced to measure activation and to analyse
the factors explaining change/stability. In the empirical part, the EWCs are
analysed using data from expert interviews. Both EWCs have undergone dif-
ferent activation ‘paths’, which partly lead to a restructuring of the bodies and
the implementation of new co-ordination processes. Yet the basic logic was
retained because of cultural and power related aspects.
1. Introduction
Because of the economic and financial crisis, the global automotive industry
faced a sharp decline of demand. As a result, many automotive companies
were forced into severe restructuring, putting plants and jobs in jeopardy. In
some companies that are active in the European Economic Area, European
Works Councils (EWCs) were highly concerned with the effects of the crisis
because corresponding management strategies apparently affected the inter-
ests of the workforces in different locations. Based on the EU Directive of
1994, an EWC can be established as a cross-border employee representation
body in a company’s European plants, providing rights of information
and consultation over transnational issues. While in some companies, EWCs
developed into highly active and influential actors, even exceeding the pro-
visions of the Directive, others remained more or less passive and ‘symbolic’.
Markus Hertwig is researcher at the Institut Arbeit und Qualifikation (IAQ)/Institute for Work,
Skills and Training, Universität Duisburg-Essen.
© John Wiley & Sons Ltd/London School of Economics 2013. Published by John Wiley & Sons Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
British Journal of Industrial Relations
53:2 June 2015 0007–1080 pp. 326–349 doi: 10.1111/bjir.12027
Evidently, a situation of crisis, which comes with restructuring and layoffs,
can trigger EWC activity as employees figure that cross-border representa-
tion might increase their leverage on management decisions (Lecher et al.
2001). For some EWCs, though, the financial and economic crisis was the
first incident that created a ‘need’ to get involved. The European businesses
of the Japanese companies Honda and Toyota, for instance, had been an
impeccable ‘success story’ for decades (Luethge and Byosière 2009): Produc-
tion, sales, net profits and employment figures had been (almost) constantly
rising through the years, placing management and employees in an overall
convenient position. Even though there are examples of EWCs that became
active without actual ‘organizational need’ — stemming from committed
individuals or specific cultures of employee representation (see Section 2) —
one may assume that the EWCs of Honda and Toyota remained more or less
inactive because of their companies’ success.
Eventually, even in those companies, the situation changed because of the
economic and financial crisis: At least since 2009, demand was dropping,
sales and net income plummeted — and eventually, so did jobs. In both
companies, management pursued different strategies in order to cope with
the crisis, most of which affected European plants and employees quite
differently. Between 2008 and 2010, Toyota laid off more than 8,000 people
(which is about 30 per cent of the workforce in Europe). At Honda, nearly
1,200 jobs were lost between 2008 and 2011 (which is nearly 20 per cent of the
workforce in Europe).
Against this backdrop, this study seeks to analyse whether and in which
way the EWCs at Honda and Toyota have attempted to cope with the
new situation. While previous research has focused on EWCs in situations of
economic downturns (a prominent example is General Motors), analysing
EWCs in Japanese companies appears of interest because they differ starkly
from what has been subject to EWC research so far. From the outset, both
EWCs formed inefficient bodies that acted inside companies that are char-
acterized by specific cultures of labour and human relations (HR) models,
which tend to oppose concepts of collective voice and prevent collective
labour disputes. Therefore, it seems quite unlikely that the EWCs will reveal
activity patterns similar to what has been observed in other EWCs.
Basically, two questions are pursued: First, does a situation of crisis trigger
changes in EWCs, which used to be rather passive, and (if so) in which way
do EWC structures and activities change? Second, which factors can explain
the observed changes or resistance to change? It is argued that a situation of
crisis breeds a growing ‘organizational need’, which prompts employee rep-
resentatives to become more active and fosters cross-border employee repre-
sentation. However, activities and structures do not change automatically —
rather they are subject to social bargaining, which is shaped by existing
structures, and the attitudes and interests of the actors involved (Giddens
1984).
The remainder of the article proceeds as follows. Previous research on the
factors that influence the effectiveness of EWCs is briefly reviewed (Section 2).
© John Wiley & Sons Ltd/London School of Economics 2013.
European Works Councils and the Crisis 327
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