Information Document Alejandro Cercas
INFORMATION DOCUMENT
INFORMATION AND CONSULTATION OF WORKERS, ANTICIPATION AND MANAGEMENT OF RESTRUCTURING PROCESSES (2012/2061(INI))
I. BACKGROUND AND CURRENT SITUATION
Europe is in the midst of the worst recession since the end of World War II. The crisis has caused a severe reduction in economic activity in the EU: millions of jobs lost, public accounts on the ropes leading to fiscal and budgetary tightening, and civil society strangled by debt. All of this along with the human cost of almost six million job losses in two years and a feeling of moral discredit among citizens who are rapidly losing confidence in Europe and in politics.
This employment crisis risks becoming structural, with differences and asymmetries among the EU countries.
The problem is not only one of increased unemployment, but also of net job losses. The EU-27 lost 5.5million jobs in the two and a half years between the last quarter of 2008 and the first quarter of 2011. The situation is even more dramatic in sectors like manufacturing, which has lost 9.9% of its jobs and, after construction, has the second fastest rate of decline in Europe (13.6%).
Furthermore, the paradigm of austerity and the consequent policies of cuts have brought the unemployment rate in the EU to 10%, or 24million people. In the countries most severely affected by the crisis, this figure is over 20% for the general population and 50% for young people.
The difficulties in adapting to change, which were already significant in the face of globalisation and enlargement of the EU, have increased with the economic crisis. We are experiencing two superimposed crises in the EU: an older, structural crisis that arose from the need to adapt to changes caused by globalisation, and another — beginning in September 2008 — with more visible and traumatic effects in Europe today.
Restructuring is not something new to Europe, but in recent years it has taken on new forms and a geographical and sectoral scope which has left no branch of the economy or European region untouched. The countries hardest hit are those that are traditionally more industrialised, with the sole exception of Germany. Today, only one in six jobs in Europe is industrial, with all countries, except Malta and Austria, showing a sharp decline in this sector.
The European Restructuring Monitor (ERM), with only fragmentary data [1] taken from press reports, points to over 5400 cases of large-scale restructuring since 2008 in the EU27. In these cases alone, where more than 100workers lost their jobs, gross job losses were calculated at 1.8million. As the creation of 800000 new jobs was also announced, we can conclude that change and restructuring in Europe results in a ratio between job losses and gains of 2.2 to 1, although at the worst moment of the crisis this ratio reached 4 to 1.
The most authoritative writers and institutions[2] in this area express the following opinions:
‘The current crisis played a role as a stress test for restructuring models in Europe and revealed some of their weaknesses:
- lack of preparation and anticipation as well as lack of capitalisation upon experiences.
- unequal access to professional transitions and support measures among employees and among companies and still unconvincing active labour market measures.
- limits of company base approaches, either because restructuring may be rooted outside of companies’ own decisions or because companies do not have enough resources to tackle restructuring in a sustainable way.
- new and particular ways to tackle deep restructuring processes in the public sector which has turned out to be one of the targets to implement reduction and reorganisation measures in coming years, with ensuing social consequences, not only collective –worsening of public services- but also individual –impact on the health of workers who are used to being more protected, disconnected from the private sector.
- an uneven landscape with regard to legislation and/or business practice implemented in most members states: few countries have carried out the measures to tackle the economic and social management of restructuring in an integrated manner. Any specific measures adopted have mostly been aimed at specific industries like, for instance, the car industry; they have been of an exceptional nature and most of them by means of state aids. Other general measures have been aimed at strengthening the social protection of the workers affected or the well-known short work-time arrangements, which were undoubtedly useful after the first impact of the crisis, but whose sustainability in time is doubtful due to collateral effects on productivity or on public social spending, in those countries where the State compensates the cost of time not working.
- narrow concepts of employment and employability which do not take in account people needs and resources. The paradigm of flexicurity is not being implemented correctly despite the Commission’s effort in dissemination: the distance observed in practice is huge; that is, between recent legal labour market reforms and measures adopted by the national governments –including those affecting public employees and civil servants- and the Commission’s well-meant calls to promote balanced flexibility and security measures. The immediate and harsh consequence of the crisis has been to question the credibility of the flexicurity paradigm.
- increase in public and private costs generated measures to combat the crisis and the crisis itself: social costs regarding unemployment or social benefits, territorial costs regarding de-industrialisation and loss of undertakings, costs in the health of citizens and the workers affected by physical or psychosocial illness, etc.’
The overall effect of these weaknesses is very worrying:
1) Inequality and differences are on the increase not only between Member States, but also between the regions within them.
2) This inequality is also seen in a loss of capacity and hope among EU citizens and
3) There is growing disaffection in the cities and regions towards Europe, which is seen as being indifferent or powerless to help with their problems.
II RESPONSES AT EUROPEAN UNION LEVEL
The Commission has spent 10years promoting countless debates, studies, meetings and statements, but unfortunately without any concrete framework, strategy, or significant actions which are identifiable to citizens and businesses:
• In 2002, the European Commission initiated a first consultation with social partners on how to anticipate and manage the social effects of corporate restructuring.
• On 16October2003, social partners negotiated the ‘Orientations for reference in managing change and its social consequences’. However, as the text contained no mechanisms for guaranteeing its implementation, one of the partners (ETUC) never ratified it.
• On 31March2005, in a Communication[3] regarding a new consultation with social partners, the Commission emphasised that the text was inadequate and urged the social partners to ‘be more involved in the ways and means of anticipating and managing restructuring’.
• In 2005, there was a call for a new consultation with social partners to establish mechanisms for implementing and monitoring existing guidelines on restructuring. However, this second consultation was not backed by any concrete measure from the 2003 guidelines, which remain largely unknown to national and regional social partners and to workers and their union representatives.
• Since 2005, the Commission has organised numerous reports and studies within the framework of ‘Restructuring Forums’. A very useful summary of this set of experiences is found in ‘Checklist for Restructuring Processes’, presented by the Commission in a Communication dated 3June2009.
• Throughout 2010, following pressure from the European Parliament, the Commission used various communications[4] to emphasise that the joint text from 2003 needed to be revised to incorporate all the lessons learned from applying best practices in order to anticipate and manage restructuring, and in order to take account of the experience of the economic and financial crisis.
• In January2011, the Commission re-launched the political debate to ‘promote employment, growth and competitiveness’ and to ensure implementation of the 2003 text.
• On 17January2012, the Commission released the Green Paper ‘Restructuring and anticipation of change: what lessons from recent experience?’[5] accompanied by the Working Document ‘Restructuring in Europe 2011’[6]. In it, the Commission confines itself to making another recommendation for enterprises to adapt continuously to the rapidly changing socio-economic situation. However, the Green Paper does not contain any concrete measures, with the exception of a possible white paper after another period of consultation.
Thus, ten years after the first consultation phase, the EU has no regulatory framework capable of generating and promoting a social, economically active, competitive and strategic approach. Moreover, it seems that the Commission’s initiative goes back to the starting line to initiate new periods of study and analysis.
III. EXPERIENCES AND LESSONS FROM THE LAST DECADE
The enormous volume of work and of experiences over this decade clearly shows that the processes of change and restructuring are only beneficial and positive for all parties under three conditions:
1) they should combine the operational requirement of enterprises to adapt to the short term, with a long-term strategy.
2) they should be carried out to include and respect all social partners, both internal and external, including just social dialogue and fluid communication.
3) they should measure and reduce the negative impact that could occur if they are carried out, especially with regard to people (job losses, significant changes in working conditions, worsening health, etc.) and at local level.
Over the years, lack of attention to these conditions has led to numerous examples of restructuring that have failed even to reach the main goal of improving the competitiveness of enterprises in order to adapt them to changes. This is all due to lack of social dialogue, anticipation and absence of a long-term strategic vision.
These experiences lead us to conclude that the restructuring carried out in Europe has been thoroughly analysed and that it is now time to take concrete steps to improve results, increasing the competitiveness of enterprises and achieving a job-rich economic recovery.
In order to achieve these objectives, we need a public and private environment that facilitates management and anticipation in order to adapt to changes in the socio-economic situation, through a system that encourages professional transitions, combining social protection with efficiency and with the proper functioning of the labour market.
In short, we need a more intelligent restructuring policy.
IV. A COMMON EUROPEAN FRAMEWORK IS REQUIRED
There is widespread support for the proposal to create a common European framework, for the following reasons:
a) Because there is a European dimension to restructuring and adapting to changes.
Firstly, this is due to the undeniable presence of multinational enterprises with places of business in several Member States. Secondly, the way in which restructuring is managed, both locally and nationally, is strongly connected to the need to achieve greater efficiency in the Internal Market, to improve the competitiveness of enterprises and to avoid unfair competition between Member States in terms of social costs. Thirdly, SMEs account for a very significant proportion of employment in the EU, as well as being an indispensable part of its industrial fabric, but not many of them are prepared to cope with, or manage, restructuring in a socially responsible way.
b) Because the current rules are inadequate and fragmented
Current EU legislation[7] dates from a period prior to the intensification of globalisation processes and responds to a different economic and business situation. Provisions in the legislation on the management of restructuring are too fragmented, are more reactive than preventive and more marginal than global. Current directives are clearly insufficient to address the complexity of today’s restructuring process.
This desert in terms of restructuring legislation contradicts the spirit and letter of EU policies and against the Commission’s own Green Paper ‘... ‘Better anticipating and managing restructuring would help employees and companies to adapt to transitions imposed by excess capacities and by modernisation and structural adjustment’.[8]
c) Because a minimum common framework is necessary and possible
Only a few Member States have developed policies and legislation specifically aimed at promoting improved competitiveness in the restructuring processes used in enterprises. Some, but only a few, have adopted rules to ensure the protection of workers and to minimise negative impact on employment, or legislation establishing the need to anticipate the effects of restructuring through anticipated management of professional skills. Some companies — but only some, and not always the multinationals — have also implemented socially responsible practices and measures with a long-term strategy.
Unfortunately, most current regulations and business practices at national level do not include an integrated, competitive and responsible approach to restructuring. They rarely contain any kind of strategic or proactive approach.
There are over 40international and European framework agreements containing, directly or indirectly, obligations related to the form and content of restructuring. These agreements were negotiated, signed and agreed bilaterally between employers and workers’ representatives and unions in large transnational corporations operating in Europe, in the conviction that the provisions agreed were good enough to maintain and improve the competitiveness of multinational enterprises.
If these enterprises, which employ hundreds of thousands of European workers, are aware of the need to regulate on these matters, why do others in the same market, or sector, and in similar circumstances, not do so? Above all, why are the appropriate decisions not taken to generalise these practices?
If we do not react now, amid the crisis and when we need it most, then when will we adopt a European framework to facilitate implementation of truly competitive restructuring?
This Legislative Initiative Report takes the view that, since the common European framework is positive, possible and necessary, it is now time to make it happen.
V. A LEGISLATIVE SOLUTION IS NECESSARY
Legislation through a Directive is the most effective and recommendable type of action available to the Commission. It now makes no sense to wait for good practice and the other recommendations to become generalised and applied in a spontaneous or voluntary way. This is no longer good enough.
The main goal of the European legal framework should be to promote a solution and fruitful cooperation. This is not a matter of imposing additional administrative burdens on enterprises, but of helping them to be successful when restructuring. It involves encouraging restructuring in an intelligent and productive way through negotiation, agreement and cooperation between owners and managers of enterprises and all the other parties concerned: workers and their representatives, unions, local authorities and networks of subsidiaries, suppliers and subcontractors.