What Do We Know About The New European Works Councils? Some Preliminary Evidence From Britain
| Date | 01 September 2002 |
| Author | Clive R. Belfield,John T. Addison |
| Published date | 01 September 2002 |
| DOI | http://doi.org/10.1111/1467-9485.00240 |
WHAT DO WE KNOW ABOUT THE NEW
EUROPEAN WORKS COUNCILS? SOME
PRELIMINARY EVIDENCE FROM BRITAIN
John T. Addison*and Clive R. Belfield**
ABSTRACT
EU legislation mandating European Works Councils (EWCs) was enacted in
1994. Although much descriptive information on the content of EWC agreements
exists, little is known of the determinants and impact of these new institutional
arrangements. In the present treatment, we exploit a question on EWC status in
the 1998 Workplace Employee Relations Survey to provide the first econometric
investigation of the determinants of (largely) voluntary transnational councils and
their potential effect on establishment performance and employee attitudes. Many
of the sharper criticisms of EWCs are not substantiated in the data, even if the
benefits appear muted.
II
NTRODUCTION
Laws seeking to mandate employee involvement in the European Union (EU)
have a decidedly checkered history, despite their being pursued in each phase of
Community social policy since 1974.1To date, only the 1994 European Works
Council (EWC) directive has been implemented.2The measure falls short of
mandating participation, and instead sets basic standards for informing and
Scottish Journal of Political Economy,Vol.49,No.4,September2002
#Scottish Economic Society 2002, Published by Blackwell PublishersLtd, 108 Cowley Road, Oxford OX4 1JF, UK and
350 Main Street, Malden, MA 02148, USA
418
*University of South Carolina
**Teachers College, Columbia University
1The first phase began in 1974 with the erection of an ambitious but ultimately largely
unsuccessful social action plan. The second, more definitive phase is defined by the 1989
social charter initiative. The third phase was initiated after ratification of the 1991 Treaty on
European Union, or Maastricht Treaty, which established a firmer basis for Community social
policy and which was marked by the emergence of a two-track social Europe by virtue of the
self-exclusion of the United Kingdom from the Agreement on Social Policy (ASP). The fourth
phase, or social chapter, is delineated by the 1997 Treaty of Amsterdam, which incorporated the
terms of the ASP into the Treaties establishing the European Community. We are now in the
fifth phase of policy, 2000– 2005, building on the employment chapter (see Commission, 2000a).
2Here we abstract from the information and consultation requirements of Community
legislation pertaining to collective dismissals and transfers of undertakings (see, respectively,
Official Journal of the European Communities, 1998b, 1998c). See also Appendix A for the
current (and decidedly advanced) state-of-play on the European Company Statute and EU
draft legislation on national systems for informing and consulting workers.
consulting workers in multinational corporations. Nevertheless, considerable
controversy attended the legislation, and its passage was long delayed until the
1993 ratification of the 1991 Treaty on European Union and the British opt-out
from the Agreement on Social Policy (ASP).3
Opposition to the draft EWC directive centred on the harmonization sought
by the legislation against the backdrop of diversity in national practices for
informing and consulting workers across the European Community. Fears were
expressed about the time and monetary costs to employers of sustaining ‘alien’
transnational councils, and there was concern that they might strengthen the
hand of unions by facilitating European-level collective bargaining. Given the
existence of other, more far reaching employee involvement proposals, there was
also fear that passage of an information and consultation mandate would
subsequently make it that much easier to secure legislation mandating
participation or co-decision making on the German pattern (see Appendix A).
Even if the tenor of the debate has changed through time, few observers seem to
be satisfied with the institution. Some see the machinery of the EWC as
inherently remote and extraneous to the needs of the modern decentralized
multinational corporation. Yet others see the apparatus as irrelevant because
management has not risen to the challenge of using the EWC as a vehicle for
facilitating organizational change and raising productivity. Employers, so this
argument goes, have simply bolted the institution on to existing procedures with
the prime goal of complying with legislation. In so doing they have somehow
‘underestimated’ the value of the institution. This criticism is often allied to the
voluntary nature of most EWC agreements (see below).
In this paper, we use British data to investigate the determinants of EWCs and
to gauge their possible effects on worker attitudes and labour productivity at
establishment level. It might strike the reader as odd to focus on the United
Kingdom since that country was not party to the Agreement on Social Policy.
Yet whether British multinationals were exempted depended in the first instance
on the scale of their European operations and not their country of origin.4
Moreover, for reasons discussed below, most continental European EWCs no
less than their counterparts headquartered in the United Kingdom have been
voluntary in nature, rather than determined by the formal procedures
established by the legislation. They have also typically extended representation
to their British units. Finally, we know of no other large-scale data set that
contains correspondingly detailed establishment data that can be linked to the
wider organization (the multinational) and EWC presence in that organization.
3The ASP marked a watershed in the history of EU social policy by formally integrating the
two sides of industry at European level— the social partners— into Community decision
making. Prior to submitting social policy proposals, the Commission has to consult the social
partners on the possible direction of Community action. If the Commission decides to pursue a
particular piece of legislation, it has again to consult the social partners, who can decide to
negotiate on the issue and reach a collectively bargained framework agreement that substitutes
for legislation.
4Any British multinational subject to the legislation at this time had to designate its
operations in one of the other member states (typically Ireland) as its ‘representative agent’ in
order to meet its responsibilities under the directive.
THE NEW EUROPEAN WORKS COUNCILS 419
#Scottish Economic Society 2002
To continue reading
Request your trial