Plant level responses to the crisis Seminar ‚Coordination of collective bargaining in the EMCEF sectors‘ Elewijt, September 2009 Béla Galgóczi

2 Labour market tools and CB for safeguarding employment during the crisis Current context: aiming to diminish the employment impact of the recession for a temporary period (temporary production breakdown due to a collapse of demand) in contrast to Dealing with employment impact of restructuring (relocation) at times of expanding global production networks At he same time, Labour Law and the basic elements of the labour market policy instruments existed before (were only adjusted now) These provide further on the background of dealing with lay- offs (EPL, regulation of mass dismissals, social plans) Collective agreements have a supporting function to exploit internal flexibility of enterprises to avoid dismissals (WT accounts supplementary negotiated elements to LM policy)

3 European manufacturing industry ● Tools and practices may be similar, but purpose and scope are different (now we talk about WT reduction to minimise employment loss, earlier WT extension /at constant pay/ was applied to save cost and fend off relocation threat ● Attempts to maintain work-force while reducing production by using available instruments ● Available labour market measures are being prolonged and expanded ● Avoidance of plant closures? ● Large-scale redundancies of temporary workers, workers on fixed term contracts, migrant workers and commuters as well as workers with suppliers => vulnerable workers

4 European diversity by sector and country: institutions, strength of social partners ● Different responses in different settings ● Country -> institutions ● Sectors -> long-term needs and strategy ● Differences in workers participation structures and their scope of authority ● Relations/authority of works council/union differs by country – best option WC with union support ● Trend to avoid firing in order to maintain qualified and competent staff ● However SME and flexible workers are not visible and paying the price

5 Right of workers at restructuring measures – DIFFERENT EU COUNTRY FRAMEWORKS GERMANY : Social Plan negotiation key, individual actions possible in parallel. Preference for subsidized “Kurzarbeit” Regional variations ITALY : Cassa Integrazione (2 types – Government subsidized temporary workforce reduction) SWEDEN : preference for layoffs over workweek reduction SPAIN: Collective Agreements

6 Right of workers at restructuring measures – DIFFERENT EU COUNTRY FRAMEWORKS UK: More flexible than Continental jurisdictions, but less subsidization. FRANCE: Consultation process though without teeth to “block” becomes de-facto time consuming barrier to action, with high degree of union participation and influence on works council typical Netherlands: highly regulated, court action is high risk if no agreement reached. Can sometimes even overturn agreements made. SWITZERLAND: outside EU, more flexible legislation

7 Short-time work schemes ● Application of statutory labour market instrument of short- time work in manufacturing sector (temporary shut-downs of production) ● Only a transitional measure – no instrument to tackle structural change ● Huge differences among countries in scope of use (DE vs rest of countries; in NMS just sporadic use) ) ● ‚Sectoral asymmetry‘ of application of statutory short-time work: workers in services sectors (i.e. Banking, retail) generally not covered, e.g. only for blue-collar workers in BE; ● Divide between MNC and SME (suppliers) & ● Permanent – temporary staff: Coverage of temp. workers in some countries (NL, BE) not guaranteed.

8 Plant level responses – CB and labour market policy responses in DE, FR, BE & NL DE: two main levels of responses: Labour market (LM) policy instrument short-time work = ‚Kurzarbeit‘ (`Kurzarbeit Null`): State subsidy of wages for inactive workers or employees working shorter hrs than stipulated in coll. agreements Recent changes: period of entitlement extended to 18 months (open to a further extension to 24 months); temporary agency workers included Collective agreements (sectoral, company-level) on flexibilisation/reduction of working time (WT), e.g. ‚flexible WT accounts‘ at Volkswagen; ● Advantages: - Workers remain in employment - Possibility of voc. training (funded by BAA)

9 9 Development and level of `Kurzarbeit` in Germany In first Q 2009 stock at cca short WT employees with a loss of cca. 1/3 of WT = Full-time equivalent

10 The economic crisis – CB and labour market policy responses in FR France: ● Statutory short-time work = ‚chômage partiel‘: - State-funded min. payments: since 1/ % of hrly gross wages, in the chemical sector 80%! - eligibility: since 1/1 09 for a period of 6 weeks (before: 4 weeks), after that: payments by Assedic (unemploym. Agency); - Part-time workers included (since 1/1 2009) if they work less then 18 hrs/week; - In particular in the automotive, metal, chemical and construction industries;

11 The economic crisis – CB and labour market policy responses in FR ● Occupational transition contracts (‘CTP’ – Contrats de transition professionelle): active LM policy instrument, includes voc. training and qualification measures; ● Collective agreements on the flex./reduction of WT on company/plant level, such as working time accounts (in particular in the automotive industry); ● Framework agreement on the 35-hour working week (1999).

12 The economic crisis – CB and labour market policy responses in FR & BE BE: ● Temporary unemployment for economic reasons as statutory LM instrument; - Payments funded by national employment office: 70 or 75% of wage, with limits of monthly income, varying with duration of entitlement (6 months/6 months/ > 1 year); - Collective agreements on the WT on the sector level (e.g. metal) and plant-level, in particular automotive, steel sector; ● Collective agreements on the flex./reduction of WT on company/plant level, i.e. Car industry, metal sector;

13 The economic crisis – CB and labour market policy responses in NL NL: ● Statutory short time work regulated in the Law on Unemployment - Normally for unavoidable temporary crisis events, extended to economic crisis  companies have to prove 30% decrease of profits due to crisis over last 2 months; - State funded rates of payment: - 75% of daily wages for first 2 months, 70% for a duration of up to 24 months (with a max. limit of daily wages); - Only for permanent staff! - In particular in the car industry, ICT and steel sector; ● Sectoral collective agreements on WT & pay ● Company/plant-level agreements on flex./reduction of WT

14 New member states – plant level ● New member states from Central and Eastern Europe (CEE), in particular Visegrad Four (V4) countries – CZ, HU, PL, SK – particularly affected by the crisis on plant level, as well. ● Particlularly effected is the large automobile sector with its suppliers, including chemical companies. ● Affiliates of western multinationals adopted measures similar to those applied by parent companies, but with a heavier hand and less based on collective bargaining. In case of temporary production breaks, either the normal holiday reserves are used or, in many cases, people were sent home on basic pay. ● Only HU, BG (new PL) has introduced statutory short work time schemes ● Compensation tends to come from companies’ own resources, subject to negotiations with works councils and/or trade unions, if employee representation exists at all or there is a collective agreement.

15 Conclusions: ● Strong interlinkedness of sectoral CB and statutory short- time work – further regulation/provisions with regard to pay, WT in sectoral CAs, ex. DE, NL, FR, BE  asymmetry between countries with more centralised CB (i.e. sectoral CB) and those where CB is predominating at the company/plant level & or HRM measures as the only instruments, e.g. UK, HU, CZ (sabbaticals, WT reduction)! Increased role of CB actors? Eg. ‚emergency framework agreement on temp. lay-offs in SE but also in countries where LM instruments exist;