Jean Monnet Center at NYU School of Law

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The Case of the ,,European Works Councils"

Industrial citizenship, as defined by Marshall, combines elements of civil, political and social rights. Its origin was the recognition of the right to collective bargaining, which in turn was the result of the labor movement learning to use political rights to collective organization for economic purposes. Through the new hybrid institution of collective bargaining ,,social progress was being sought by strengthening civil rights, not by creating social rights; through the use of contract in the open market, not through a minimum wage and social security" (Marshall 1964, 93; my emphasis). Freedom of contract, however, was exercised not individually but collectively, and was therefore "not simply a natural extension of civil rights (but) represented the transfer of an important process from the political to the civil sphere" (Marshall 1964, 94). In this way, as Marshall puts it, the union movement created "a secondary system of industrial citizenship, parallel with and supplementary to the system of political citizenship" (1964, 94).

Rights of industrial citizenship take different forms in different countries. But in most European welfare states, they have come to include rights to collective participation of workforces at their place of employment, through information, consultation and co-decision-making, together with corresponding obligations of employers to respect such rights and enable their effective use.[12] Legally, such rights and obligations are inseparably attached to socio-economic status: the former come with being employed, the latter with being an employer. Moreover, just as workers cannot sell their rights, employers cannot buy themselves out of their obligations, even if they considered this to be in their best interest. This is because industrial citizenship constitutes part of the public machinery for the social regulation of labor markets and employment, as an institution of public rather than private governance. Created to balance the fundamental asymmetry of power involved in relations of employment, it would cease to be what it is if it were open to renegotiation in the shadow of this asymmetry.

To insulate industrial citizenship rights to workplace participation from market pressures, postwar European welfare states typically institutionalized them in statutory law, which in effect inserted them as compulsory elements in any individual employment contract regardless of the will of the contracting parties, and if necessary against their will. Technically workforce participation rights came to be written either in company law or in labor law. Rights based in company law ensure collective participation of workforces in a firm's economic decision-making; as they touch upon the exercise of property rights, they represent a stronger version of industrial citizenship that is politically more demanding to institute. Rights based in labor law are more concerned with the workplace as such, or with the plant as distinguished from the enterprise. While company-law participation rights interfere with the rights of owners in the firm, labor-law participation rights modify managerial prerogative in the day-to-day governance of the employment relationship. The two kinds of participation rights are not always entirely separable, and some issues can in principle be addressed under either company or labor law. Indeed in a country like Germany where both modes coexist in strong versions, there is often considerable functional overlap between them.

Europeanizing Workplace Participation

Capital mobility across jurisdictional boundaries, as promoted by economic integration without political integration, affects nationally based industrial citizenship as it exposes it to competition. As rights of industrial citizenship exist in most European countries, although in different forms and different strength, economic integration raises the question of how to protect and where to locate such rights in the political economy of united Europe. From the beginning, and long before the emergence of the cross-nationally integrated production systems of today, the subject arose in the context of three different projects:[13]

1. The project of a unified European industrial citizenship. An important initial motive, linked to a European federal state-building agenda, was to eliminate differences in industrial citizenship between European countries, on the premise that a united Europe had to provide for equal rights for all its citizens. This required a general European model of workplace participation to be installed in all member countries, resulting in ,,harmonization" of national systems and taking industrial citizenship out of economic competition. In the political and economic environment of the early 1970s, with the various autunni caldi of the preceding decade still fresh on everybody's mind, harmonization was deemed possible only at the highest national level. Generally there was a widely shared presumption that a European model of industrial citizenship, and in particular of workforce participation, would have to be roughly like the German one.

2. The project of a unified European company law. From early on in the integration process, a unified European company law was seen as both beneficial for and required by economic integration. By enabling firms to incorporate in just one legal system for all their European operations, a common company law would offer them an opportunity to economize on the (,,transaction") costs of incorporating in a multitude of national systems. At the time, a unified European company law without strong provisions for workforce participation was considered politically impossible. Institutionalization of industrial citizenship rights in corporate governance was regarded as the price European business had to pay for the economic benefits of company law harmonization. It was also regarded as the best way of protecting multinational companies from having to deal with a variety of different national participation regimes.

3. The defense of the integrity of national legal systems and of an integrated free market. With increasing numbers of multinational firms, more and more plants and workforces in Europe are managed by company headquarters located in foreign jurisdictions. To the extent that decisions affecting such firms' local industrial citizenship obligations are made centrally, the participation rights of local workforces are potentially threatened: with management exterritorial to the legal system governing the local plant, subjecting it to legal sanctions is difficult in a regime of sovereign nation-states (Eser 1994, 93). For example, a multinational firm might try to evade consultation obligations in a host country by claiming that decisions are made at headquarters, with local management neither involved nor informed. While local management could therefore not be held responsible, central company management would remain beyond the reach of the host country's law enforcement. The issue this raised was one of equal rights of workforces, albeit not across national boundaries but within them. It also could be construed as one of fair competition, in that foreign firms might be advantaged over domestic firms who had to play by local rules whereas the former had not.[14]

Generally the rising importance of multinational firms put to a test the capacity of national governments to uphold their respective ,,law of the land". Countries could have dealt with the problem through a web of bilateral treaties. Alternatively they could have tried to write national legislation allocating statutory responsibility for compliance with local labor regimes to agents they could hold responsible in national law. But while the former would have been cumbersome at best, the latter would have raised difficult questions of exterritorial enforcement of national law liable to trigger discord between sovereignty-conscious nation-states. This suggested a collective, integrated response. However, legal integration for the collective defense of national sovereignty in an international economy requires instruments that are effective without requiring a supranational European state. As will be seen, the solution that was ultimately found for this was extremely complicated, precisely because it had to be compatible with continued fragmentation of sovereignty and citizenship.

While all three projects were pursued simultaneously by different agencies in Brussels, different member states and different social groups inside them, over time the emphasis moved from unified citizenship to the defense of national regime integrity in an international economy, and its compatibility with free competition in the ,,internal market". This coincided with, and found expression in, a change in the approach to integration which evolved in three stages, from attempted harmonization of national systems to their incorporation as building blocks in an internally diverse supranational system to, finally, their coordination through a supranational regime.

1. Harmonization. This phase began in the early 1970s, with ambitious projects promoting the rise, and ultimately dependent on the emergence, of a European supranational welfare state. The leading objective was harmonization of industrial citizenship arrangements, by means of statutory intervention superseding or homogenizing national systems and proceeding primarily in the realm of company law.

2. Incorporation. In response to lasting lack of success, a modified strategy emerged that tried to incorporate the diverse national systems as building blocks in a common European system. Policies continued to pursue common European industrial citizenship, but in a variety of - presumably equivalent - institutional forms reflecting and arising out of national traditions. Increasingly attention shifted from company to labor law. Moreover, proposed European legislation began to offer menus of alternative solutions for actors to choose from, as a substitute for politically unrealistic uniform solutions, indicating a movement from mandatory towards more voluntaristic approaches.

3. Coordination. In the third phase policies began to be aimed at supranational regulation of national systems, as in Weiler's model of national citizenships coordinated under a common European regime. Form and extent of nationally constituted industrial citizenship rights were no longer questioned. The leading objectives of European policies were to ensure that fragmented citizenship did not interfere with the integrated market, and to protect the integrity of national systems against some of the externalities arising from economic integration. Company law as a tool for instituting workplace participation was sidelined, and European-level policy became entirely confined to labor law. Also, as much as possible policy gave precedence to voluntary agreement and refrained from statutory prescription.

Movement through the three phases was caused by powerful opposition against positive integration and supranational state formation from both national and business interests. The path of withdrawal from the 1970s project of integrated European industrial citizenship was continuous and linear. As time passed, the issue came to be seen as an international problem of external effects undermining the governability of national industrial relations systems, and its solution was sought as a condition of the effective functioning of the internal market, and in particular of diversity of national institutions coexisting with cross-border mobility of capital and, increasingly, diversity of corporate cultures. In the process, workplace participation was relegated from the domain of company law to that of labor law, and the design and implementation of industrial citizenship was increasingly turned over from public authority to the voluntarism, first of national governments, and later of multinational firms.[15]

Phase One: Harmonization

The first initiatives for a European system of industrial citizenship[16] aimed at Europeanization of the German model, with a combination of parity co-determination at company level and of legal rights of works councils or unions to information, consultation and co-decision-making at plant level.[17] Two paths were simultaneously pursued:

(1) In the early 1970s the Community regarded differences in national systems of company law as "restrictive conditions on the freedom of establishment within the Community" (Article 54 of the Treaty of Rome), deriving from this a mandate to pursue "approximation and harmonization" of such systems. For this purpose, the Commission drafted a number of directives on company law. One of these - the "Fifth Directive", first issued in 1972 - dealt with the governance structure of public limited liability companies. Its passage would have meant that all member countries would have had to rewrite their company law in accordance with it. Responding among other things to the then social-liberal German government, it proposed a two-tier board system with an obligatory supervisory board that would include employee representatives.

(2) Parallel to its efforts at harmonizing national company laws, the Commission also proposed a European Company Statute. Firms based in at least two member countries would be given the option to incorporate under that statute, as an alternative to incorporation in national law. A firm incorporated as a "European Company", or Societas Europea, would have the advantage of being ipso facto considered incorporated in all Community countries, making it unnecessary to seek incorporation in different national systems. The first drafts of the Statute were presented in 1970 and 1975 and required European companies to have a supervisory board that included employee representatives with full rights to information and co-decision making, as well as a European Works Council. This combination of company- and workplace-level co-determination was the closest the Community came to a wholesale adoption of the "German model".

Harmonization of national systems, if it goes far enough, makes a separate European company law as dispensable as special legislation on participation in multinational firms. It also eliminates regime competition. The latter does not necessarily hold if a new layer of European company law is added to national laws. Not only would competition between national legal systems continue. Without strong elements of industrial citizenship, a European company law may cause legal exit from national company law that includes such elements. At the same time, if European law did include strong citizenship rights, firms from countries where industrial citizenship is weak might hesitate incorporating in it, jeopardizing the objective to accelerate economic integration. Whether or not a European Company Statute with strong workplace participation rights would be accepted by firms would ultimately depend on how they value the economic benefits of incorporation in a common legal system. Unlike Fifth Directive-style harmonization, a European Company Law approach to industrial citizenship depends to an important extent on voluntarism.

Neither the Fifth Directive nor the European Company Statute ever came close to adoption. The main reason for this was their linkage to the issue of industrial citizenship. For national governments, the political costs of changing their national systems of corporate governance in a German direction loomed ever larger the more time had passed since the labor revolts of the late 1960s. Employers, for their part, had always been opposed to any Community social policy that went beyond non-binding general principles. European legislation on German-style workforce participation in particular was rejected as "inflexible" and destructive of "the variety of information and consultation procedures evolved by companies to suit their particular circumstances" (Hall 1992, 9). Objecting to industrial citizenship being anchored in company law were not just employers unfamiliar with co-determination, but also the German employers - who preferred the pressure of regime competition on their national system over a statutory ,,leveling of the playing field". With time employers also seem to have concluded that multinational firms could if necessary live with different national company laws. In any case, the costs of this came to be regarded as lower than those of Europeanized industrial citizenship on the German model, and pressures from European business for company-law harmonization subsided.

As to European unions, Community legislation on workforce participation in company law threatened to force them to decide between nationally and ideologically sacrosanct principles like union-based and union-independent forms of industrial democracy; legal co-determination and voluntary collective bargaining; and bargaining at company and sectoral level. Such decisions were and continue to be beyond the political capacities of European union confederations. Also, a unified European system of industrial citizenship would have required most unions, except those on whose national system it was modeled, to change their mode of operation, resulting in possible advantages of unions from some countries over unions from others. Fears of this kind gave rise to institutional nationalism even among unions that were otherwise far from happy with their national institutions.[18] While the conflicting preferences of European unions were not always visible - especially when legislation seemed unlikely to be actually passed - employers and governments successfully used them to argue that strongly normative proposals like the first drafts of the Fifth Directive and the European Company Statute were "unrealistic" and did not have undivided support even from the union side.

Phase Two: Incorporation

To break the deadlock, the Commission in subsequent years offered a series of concessions to nation-state concerns over sovereignty; to union institutional nationalism; and to employer pressures for protection of property rights and more ,,flexibility". The action shifted to labor law, although some rear-guard battles continued place on company law. Legislative proposals, while still envisaging a unified European system of industrial citizenship, attempted to institutionalize it in different forms in different countries, in anticipation of the later discovery of ,,subsidiarity." Attempts were made to ensure that different national versions of European workplace participation were equivalent; where this was not possible, equivalence was heroically assumed. Although the concessions offered approached a point where the objective of a common European system, of company law as well as of workplace participation, seemed in danger, they did not go far enough for legislative progress.

It was only after the initiatives on company law had come to nothing that workforce participation came to be dealt with as a matter of labor law. In 1980 the then Commissioner for Social Affairs, Henk Vredeling, issued a broadly written draft directive on information and consultation rights for workforces, which came to be known as the "Vredeling directive". The initiative tried to utilize the momentum of the Community's Social Action Program of 1972, which had resulted in passage of a number of social policy directives. Two of these, the Collective Redundancies Directive of 1977 and the Transfer of Undertakings Directive of 1979, provided for workforce information and consultation in connection with the specific events they addressed. The Vredeling draft was an attempt to generalize the information and consultation rights member countries had accepted for firms undergoing economic restructuring, bypassing the issue of corporate governance by bringing workforce participation within the ambit of Community labor law.

The 1980 Vredeling draft was largely agnostic on structure. While it specified in great detail a wide range of information on financial, economic and employment issues to which workforces were to be regularly entitled, and in addition established legal consultation rights on decisions likely to have "serious consequences" for employees, it assigned the exercise of the new rights to "existing employee representatives by law or practice". Another defining feature of the draft was that it focussed on companies with subsidiaries, and on access of workforces in branch plants to information held by management at headquarters. Two aspects of the draft were particularly notable:

1. The draft addressed two different situations at the same time: where headquarters and subsidiary are located in the same and where they are based in different Community countries.[19] While the first condition can in principle be handled by national legislation, the directive would have mandated a common floor for all national systems, and would to this extent have harmonized them. The second condition suggests itself as a classical case for supranational regulation of transnational externalities hat undermine the governability of national systems.

2. In case a multinational company failed to enable its local management at a foreign subsidiary to comply with its information and consultation obligations under the directive, the Vredeling draft gave workers the right to deal directly with the central management, ultimately by taking it to the local courts of the host country (Danis and Hoffman 1995, 185). More then anything else, it was this ,,bypass" provision of the draft that incited the opposition of business. It can be assumed, however, that it also appeared less than reassuring to sovereignty-conscious member states.

The draft Vredeling directive met with unprecedented hostility from business, European and extra-European (DeVos 1989). Although the Commission in 1983 watered it down significantly - by confining its jurisdiction to firms with at least 1,000 employees and reducing the range and frequency of the information to which workforces would be entitled - it was unable to save it. A last-minute offer to limit the directive to multinational firms, dropping its harmonization component[20], failed to turn the tide. Under heavy fire from business and with a British veto certain, the Council in 1986 formally suspended discussion of the directive.

After its defeat on Vredeling the Commission returned to company law. Already in 1983 it had presented a new version of the Fifth Directive, offering both countries and companies a choice between four alternative models of workforce participation: the two-tier board system of the first draft, with between one third and one half of supervisory board members coming from among the workforce; a single board with the same proportion of employee representatives as non-executive members; a company-level representative body of employees only (something akin to a works council without, however, being so called); and any other participation structure provided it was agreed between employer and workforce and conformed to specified minimum standards. To prevent regime shopping by firms, the draft tried to ensure that access to information and rights to consultation and co-determination were equivalent in all models. In addition, national legislators were given the possibility to limit the choice of firms based in their country, in the extreme case to just one of the four models.

When progress on the Fifth Directive failed to materialize, the Commission in 1989 issued a revised version of the European Company Statute, which was further amended in 1991. Unlike earlier drafts, which responded primarily to German concerns about German firms escaping from co-determination by emigrating into European law, the new proposals seemed to be more concerned with fears in other countries and by employers of being forced into a "German model". To this end, they offered the same menu of alternatives for board participation as the 1983 draft of the Fifth Directive. Provisions on a works council were no longer included, separating company law from labor law. Foreshadowing subsequent developments, discussion of works councils was referred to the ,,social dialogue" between unions and employers (Zügel 1994, 139). Moreover, whereas the initial drafts had emphasized co-management and co-determination, the 1989 version stressed information and consultation, moving closer to the revised Fifth Directive as well as to Vredeling, and worker participation was described as an instrument of stable labor relations contributing to the success of the firm (Eser 1994).

Not surprisingly, a central issue in the debate became the choice of alternatives the new draft proposed to allow. While the Commission insisted that its different models were equivalent, this seemed more than doubtful to many observers, especially German ones (Addison and Siebert 1991, 622). Moreover, given the great diversity of the models, it seemed questionable whether the original objective of a unified European company law was still being served (Eser 1994). In any case, to reassure national legislators, the drafts, just as the 1983 version of the Fifth Directive, granted them the power to limit the range of models from which national firms could choose. Where firms were given a choice by national law, they had to consult with their workforce; the final decision, however, was to rest with management as otherwise it was considered unlikely that a firm would be willing to incorporate in European law.

Another significant change was that the Commission divided the original draft into two, one on the statute of the European company and another on worker participation in it (Eser 1994). According to the Commission, this was not to sever the link between the two issues and enable passage of European company law without European rules on worker participation. Arguing that it was unacceptably cumbersome for multinational companies to be subject to different participation regimes in different countries, the Commission Insisted that the two proposals be passed at the same time. The reason for dividing the draft was to facilitate legislation by changing its treaty base: instead of drawing on Art 235, which would have required unanimity, the Commission now drew on Art. 100 a for the European Company statute and on Art. 54 (3 g) for worker participation[21], under both of which decisions could be taken by qualified majority (Eser 1994). This was widely seen as an attempt to make it impossible for Britain to veto the insertion of worker participation rights in the European Company. What was less noticed was that it also ruled out a future German veto of European Company law without worker participation equivalent to German co-determination. Still, for the next half decade the European Company statute and failed to make legislative progress.

Phase Three: Coordination

The European Works Councils Directive, which after long agony was passed in 1994, is widely regarded as a classic example of the Union's post-Maastricht ,,policy innovations" of the 1990s. Indeed in the euphemistic language that has spread from the Commission to large parts of the community of students of European integration (see Hall 1992), the Directive is depicted as a model of the new European Union virtues of decentralization, subsidiarity, respect for national and cultural differences, and an intelligent use of legal patchworking techniques for creating a diverse, pluralistic, non-statist and even post-Hobbesian social order.

On this background, it is useful to remember that compared to its hapless predecessors, the Directive is extremely modest in its ambitions (McGlynn 1995). All it does is create an obligation in international law that member states make it obligatory in national law for nationally based firms with significant employment in other European Union countries to negotiate, with a body representing their entire European workforce, on a European-wide workforce information arrangement. If no agreement is reached, firms must set up a ,,European works council" with representatives from all their European plants, and member states must endow such councils with a common minimum of legal rights. In line with Weiler's model of national citizenship regimes bound by international law to extend rights to non-citizens, the Directive thus indeed requires national systems to include non-nationals. But apart from this it does very little[22]:

1. Like Vredeling, the Directive stays away from company law and remains strictly in the realm of labor law, avoiding any suspicion that the industrial rights it undertakes to create might interfere with civil rights of property.

2. Moreover, unlike Vredeling, the Directive relates exclusively to multinational firms. Workplace participation in firms with no foreign plants remains fully controlled by national systems. The latter the Directive does not touch, not even in multinational firms. All it does is graft an international on the national representation arrangement at a multinational company's headquarters, relying for the recruitment of representatives on the national systems of its various plants. In this way the Directive not only avoids harmonization, but also sidesteps any judgment on the equivalence or non-equivalence of participation rights in different countries; it merely coordinates these within a select number of firms.

3. Participation rights under the Directive amount to no more than the provision of information on a yearly basis and in exceptional emergencies. There is no obligation for management to consult, if the concept means that management can act only after workforce representatives had an opportunity to present a considered opinion.[23] There are also no rights to co-determination, under which works council consent would be a condition of management going ahead with a decision.

4. Finally, the Directive goes to great lengths to preserve a wide space for contractual voluntarism, leaving it almost entirely to negotiations between management and labor in individual firms to determine the structure and rights of their European works council. Although the Directive does provide for a compulsory fall-back solution, great care is taken to ensure that it never applies.[24] First, management and labor remain free to agree not to have any workplace participation arrangement at all. They can also decide to set up an ,,information procedure" for existing national workforce representatives, instead of a European body entitled to receive information. Furthermore, agreed-upon rights of workers under the procedure, or the rights of a European works council if one is set up, may remain below the fall-back option, difficult as that may seem. Agreements that are negotiated before the Directive takes effect - which it does only after its transposition in national law by all countries concerned, which is expected in early 1997 - are considered valid, even if the body that negotiated them on behalf of the workforce was not representative.[25] Finally, the obligatory solution comes in force only after three years of negotiations, from the day of the Directive taking effect. Workers that want to have a European works council before the end of the century may as a consequence have to agree to rights that are inferior even to the statutory minimum.

If nationally fragmented citizenship is to be coordinated rather than integrated, critical questions of institutional design must arise. If the objective is equal treatment of workforces in non-domestic subsidiary plants, the standards of either the host or the home country of the employing firm could be applied. In the first case, the rights of subsidiary workforces would equal those of workers of other employers in their country; in the second, subsidiary workforces would be given the same rights as workers in the firm's country. However, host country equality would fragment industrial citizenship rights within multinational firms, affording different national segments of a company's workforce different rights to participation at its supranational headquarters. Being impracticable and inimical to economic integration, this solution was never pursued. Equality in terms of the company's home country standards, on the other hand, would fragment industrial citizenship in host countries, as the rights of a potentially growing share of national workforces would be determined by a multitude of foreign legislators, and could therefore widely differ.

Further problems arise for the operation of the integrated market. If home country standards exceed host country standards, making multinational firms grant home country rights to foreign workforces may place such firms at a local competitive disadvantage compared to host country firms, or to multinationals from third countries with lower standards also investing in the host country. If, on the other hand, host country standards are higher, limiting host country workers to home country rights would give advantage to foreign over domestic firms in the host country. Difficulties like these are endemic to arrangements of fragmented citizenship and must inevitably accompany any attempt, motivated by political expediency or by respect for national diversity, to live with a coordinated patchwork of national citizenship regimes as an alternative to unified citizenship in a supranational state.

Trying to avoid the complex puzzles of equality and inequality under fragmented citizenship, the Directive managed to be passed by creating a separate system of uniform weak European rights for foreigners, to exist alongside the pre-existing systems of differently strong rights for nationals. Responsibility for whether or not national rights, in home or host countries, are below or above the European rights of subsidiary workforces is thereby handed to national legislators. Fair competition is secured in that all multinational companies, wherever they and their subsidiary plants may be based, have to comply with the same rules concerning the information rights of non-domestic workforces. In this sense, European legislation, taken by itself, does remain competitively neutral. At the same time, national rights remain exposed to competitive pressure, as it is left to the discretion of national policy-makers whether they want their domestic standards to be above or below the European standard or, for that matter, the standard of other countries.

Working out the details of the coexistence between national and supranational participation rights is, again, left to national legislation and to the voluntarism of the marketplace. Here, too, what in fact was an admission of defeat by the unsolvable technical complexities and political dilemmas that follow from fragmentation of state capacity and citizenship, is presented as an inventive practical application of the new creed of decentralization and ,,subsidiarity". Indeed even with respect to the substance of European rights, the Directive goes out of its way to turn industrial citizenship, from an institutional condition of negotiations between employers and workforces, into their result. While it does not prevent firms from agreeing to councils with consultation or even co-determination rights, no firm has done so as yet, and all known agreements have remained at or below the statutory minimum of participation rights (Bonneton et al. 1996).

This does not rule out that some firms may in the future institute participation procedures, very likely decentralized ones, that go further than the Directive. However, voluntary participation arrangements are of a different quality than obligatory ones, as firms enter into them only if they promise to be pro-competitive. Their presence and structure depends on technological and market conditions, and perhaps on managerial strategy. They can therefore be expected to vary widely, making worker access to participation highly unequal in different countries, sectors and companies. Legal regulation is precisely to prevent such inequality by neutralizing the impact of markets, establishing participation as a universal right rather than a contingent and particularistic benefit of favorable market conditions. To the extent that works councils are institutions of industrial citizenship bringing non-competitive ,,social" interests to bear on managerial decision-making, the mostly voluntary European works councils are works councils only in name.[26]

[12]See Sturmthal 1964; Rogers and Streeck 1995. This does not apply in Britain where industrial citizenship remained limited to a right of workers to be represented by trade unions through collective bargaining. In most countries of the European Continent, collective bargaining came to be supplemented by rights of workforces to participate through union-independent workplace representatives in the management of the firm where they are employed. Because of peculiarities of the British legal system, rights to collective bargaining in Britain were never safely enshrined in law, although at the time Marshall was writing they were widely considered as so immovable a fact of industrial life that Marshall could conceive of them as of rights of citizenship. In the Roman law systems of the Continent such rights became much more formally established. This protected them better against changes in political and market power - see the different impact of the changes of the 1980s on industrial relations in, for example, Britain and Germany.

[13]On the early history of European workplace participation policy, see Nagels and Sorge (1977), Zügel (1994).

[14]Initially the European Works Councils Directive of 1994 was introduced, in 1990, not as social policy legislation, but under Article 100, as ,,vital to the removal of unfair competitive advantage" (McGlynn 1995, 79).

[15]On voluntarism in European social policy see Streeck (1995).

[16]On the history see Eser (1994) and Kolvenbach (1990).

[17]On workplace participation in Germany see Müller-Jentsch (1995), Streeck (1984), Thelen (1991), Turner (1991).

[18]On ,,institutional nationalism", see my chapter in Marks et al. (1996). Danis and Hoffman (1995, 180), among others, point out that the German features of the proposed legislation did not endear it with non-German unions.

[19]In fact it dealt with a third situation as well, where the headquarters is located outside the Community. This became politically important as it mobilized the vigorous and successful opposition of U.S. multinationals. It can, however, be disregarded for present purposes.

[20]And thereby effectively reducing European participation rights to a mere annex to national participation systems. This prefigured the 1994 Directive; see below.

[21]Article 54 deals with the removal of barriers for companies choosing their seat!

[22]The text of the Directive is found in Blanpain and Windey (1994, 118 ff.) and in Hall et al. (1995, 49 ff.).

[23]Which it still meant in the Vredeling draft. Under its 1983 version, managements would have had to obtain a view from workforce representatives on planned measures that were likely to have ,,severe consequences" for employees. Workforce representatives had 30 days to state their view; within this period the measure in question could not be enacted and litigation could have prolonged the period to 60 days (Zügel 1994, 49). By comparison, while the 1994 Directive does speak of consultation, it defines it simply as ,,exchange of views and establishment of dialogue" (Article 2 (f)). In the Annex, where the statutory fall-back provisions are spelled out, it is made explicit that even in ,,exceptional circumstances affecting the employees' interests to a considerable extent", the requirement to inform the workforce ,,shall not affect the prerogatives of the central management" (para. 3). This is clearly below the standard even of the 1989 Social Charter - which is, of course, not legally binding (Danis and Hoffman 1995, 87).

[24]According to the responsible EU Commissioner, Padraig Flynn, ,,the success of the directive ... will reside in the fact that its provisions will never need to be implemented" (quoted in TUC n.d., 16).

[25]In this way, an agreement can stand even if negotiated exclusively by the central works council or the union representing the workforce at company headquarters.

[26]In the debate on European works councils, unusually muddled even by European standards, the voluntarism of the Directive is sometimes defended with reference to the ,,Nordic model" of workforce participation, which is based on national industrial agreement, as distinguished from the German, or even: ,,Germanic", model based on, inevitably, ,,rigid" legislation. Critique of the voluntarism of the Directive can then be dismissed as expression of an idiosyncratic national preference for law over negotiations, or worse as an imperialistic attempt to impose one ,,national culture" on the others. The fact of the matter is, of course, that from the perspective of the individual firm, a strongly normative and effectively enforceable national agreement of the Scandinavian sort is for all practical purposes the same as legislation, as it exempts high standards of participation from inter-firm competition. This is very different in the case of the Directive where the voluntarism takes place, not between powerful associations, but exclusively at the level of the individual enterprise. On the relationship between the voluntarism of the Directive and the minimalism of European works councils as representative institutions, see Schulten (1996).

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