Union representation: can Europe help? - 1999
This discussion paper has been specially written for Unions 21 by Professor Richard Hyman of Warwick University's Industrial Relations Research Unit.
Union decline in Britain
According to ILO conventions 87 and 98, all workers should be guaranteed the opportunity to exercise freely the right to organise' and to have their conditions of employment determined by collective bargaining. The UK took the lead in ratifying both conventions, but it is obvious that the realities of British industrial relations fall far short of these aspirations.
Certification Officer's report
The most recent report of the Certification Officer recorded a total trade union membership of 7.8 million: the lowest since 1945. The figure has fallen every year since Thatcher was elected in 1979, when there were 13.3 million trade unionists - though the decline has slowed in the last few years. TUC affiliated membership has fallen by nearly a half, from 12.2 to 6.6 million.
Labour Force Survey
The Labour Force Survey gives if anything a bleaker picture. It estimates that of those in employment (ie excluding retired and unemployed workers) there are only 7.1 million union members. This represents 30.2% of all employees. The same survey shows that 10 million employees (44.3%) are in workplaces where trade unions are recognised, but that only 8.1 million (35.5%) have their main conditions of employment determined by collective bargaining. It is worth noting that in Britain, collective bargaining applies to most trade union members, but to few other workers. This contrasts with the situation in most other European countries, where the terms of collective agreements apply much more extensively: because of the importance of industry-wide bargaining, or because the law extends the provisions of agreements to all employers whether unionised or not. The extreme example is France, where roughly 90% of employees are affected by collective agreements even though only 10% are union members.
Workplace Employee Relations Survey
The decline is also revealed by the 1998 Workplace Employee Relations Survey (WERS). In 47% of all UK workplaces there are no union members present at all (the 1990 figure was 36%). In only 2% of workplaces are all employees union members (1990: 7%). Membership is closely related to employer attitudes to membership: where management is pro-union, over 60% of workers are unionised; where management is anti-union, only 7% are union members. Whether high membership obliges employers to respond favourably to unions, or management support encourages workers to unionise, is not clear from this survey. Both union membership, and favourable management attitudes, are much more common in large than in small firms. In the smallest companies of all covered by WERS (10-24 employees), the major growth sector of the British economy, only one in five has a single union member present. It is also notable that just over half (53%) of those workplaces which have existed for 10 years or more recognise unions; in newer workplaces the figure is only just over a quarter (28%).
Union representatives
A final notable aspect of the WERS results concerns workplace union representatives. These exist in 64% of workplaces where unions are recognised (28% of all workplaces). At first sight, this suggests that shop stewards or similar representatives remain key actors in British industrial relations. However, it appears that their influence has declined substantially since the heyday of workplace trade unionism in the UK. In the main, stewards are confined to handling individual grievances, with a lesser role in negotiating over pay and health and safety. Very rarely are they informed, let alone consulted or involved in negotiations, over such matters as training, employment planning or equal opportunities. This suggests that where union representatives have retained a recognised status they have often lost significant influence over employer policies.
Unions' uphill struggle
This evidence confirms the uphill struggle which unions face in Britain today. Many of the old union strongholds have disappeared as a result of closure, contraction and privatisation. The expanding sectors of service and sweatshop employment - typically characterised by small units (even if as part of giant multinationals), low pay, insecure status, and a female or ethnic minority workforce - are largely outside the coverage of collective bargaining. Despite some strenuous recruitment efforts, unions remain excluded across much of this sector, partly because insecurity makes workers keep their heads down, while the succession of legal restrictions on secondary' industrial action makes it virtually impossible for unions to apply external pressure on anti-union employers. As the TUC emphasised in its 1998 report to Congress, the scale and urgency of the task ahead are awesome'. To forge a new unionism' and to construct an organising model' involve resisting trends which for two decades have dominated British industrial relations.
European comparisons
In Europe as a whole, unions have been on the defensive for the past two decades, and in most countries have lost membership; but in few cases on the scale experienced here. In those countries where unions have best withstood the challenges of hostile employers, adverse labour market conditions and a shift in the structure of employment away from former trade union strongholds, they have been shielded by entrenched organisational rights. In some countries these have involved statutory procedures for union recognition, in others the existence of workplace institutions independent of the employer, in yet others the facility to impose the outcome of collective bargaining on non-union employers. In Britain it is clear that the Fairness at Work' legislation will fall far short of providing the kind of union rights which are taken for granted elsewhere in Europe. But how far does existing and prospective European legislation have the potential to transform the possibilities for British unions?
European initiatives
European law already has a significant impact on worker representation in Britain. Most important is the September 1994 directive on European Works Councils (EWCs), soon to be transposed into British law. But also relevant is the decision of the European Court of Justice (ECJ) in June 1994 that EU directives on employee consultation in cases of redundancies and transfers of undertakings had not been adequately implemented in the UK, since British law required such consultation only where the employer recognised trade unions. The Conservative government then legislated - in the most grudging and tokenistic manner; the Labour government has promised amendments, as yet unspecified - to provide for consultation with elected employee representatives where no trade union is recognised. This imported continental notions of dual representation' into British law. In combination, these developments influenced the policy adopted by the TUC in 1995 which marked a cautious but significant shift from its traditional insistence on a single channel of representation' through trade unions.
Works Council directive
The EWC directive was adopted under the Maastricht social chapter; because of the UK opt-out it did not apply directly in Britain, but came into force in the other 17 members states of the European Economic Area in September 1996. Its extension to the UK will take effect in December 1999. The directive applies to multinational companies or groups with at least 1,000 employees in the countries covered and at least 150 employees in each of two of these countries. It is not certain how many companies meet these criteria; the original directive probably affected over 1,100 firms, more than 100 of these UK-based (their employment elsewhere in the EU exceeding the threshold). The extension of the directive will probably bring the total number of companies covered to over 1,400, employing roughly 15 million workers across Europe.
The directive specifies three routes to establishing an EWC or a procedure... for the purposes of informing and consulting employees'. First, Article 13 provides that a voluntary agreement reached before the directive came into force can in principle satisfy the requirements. The second route is for either management or 100 employees (or their representatives) from at least two countries to initiate the formation of a special negotiating body' (SNB) which under Article 6 may agree to set up an EWC or an information and consultation procedure. The SNB has up to three years to reach agreement; failing this, the directive prescribes a standard model of EWC with between 3 and 30 members, meeting at least once a year at the employer's expense, to be informed and consulted by management on business and employment developments within the company.
These minimum requirements are evidently weak (and bear no comparison with the powers and functions of works councils in Germany, for example). Trade unions are not formally part of the process at all; and though in practice national unions, or European Industry Federations, have been closely involved in the establishment of EWCs, some employers (notably UK-based companies) have done their best to ensure the election' of non-union representatives'. A single annual meeting in itself has little significance. And the directive hardly prevents a company from undertaking information and consultation in a purely ritualistic manner. In many respects, the content of voluntary Article 13 agreements has been close to the fall-back provisions. Roughly 400 of these were reached before the September 1996 deadline, about a third of all companies covered by the directive. Over two thirds are joint management-employee committees - the French model - though almost invariably there are provisions for employee-only pre-meetings, and often also for employee-only select committees'. In many cases, national or international trade union organisations were involved in negotiating the agreement and have a continuing role as external experts'. However, almost invariably (a notable exception is the French Danone group) the functions of EWCs have been confined to information and consultation, with a collective bargaining role explicitly excluded.
Though SNBs have been created in many companies since September 1996, the number of agreements reached has been small and these have in the main differed little from the fall-back provisions. This means, it should be noted, that only a minority of firms covered by the directive currently have EWCs in operation.
Works Councils - key issues
The formal constitution of an EWC is one thing; its actual functioning another. Two aspects are of key importance. First, whether it can move beyond the role of passive recipient of management information to exert active influence over company policy. Second, and as a precondition of such influence, whether the EWC can be an effective forum for information and consultation among employee representatives themselves. Arguably, the EWC has the dramatic potential to act as a kind of transnational joint shop stewards' committee, financed by the employer. If this function is achieved, the basis then exists to intervene strategically in defence of workers' interests.
Few companies would welcome such a development. Most of those that consider the EWC a useful body do so because they feel they can use it as a channel of transnational employee communication, strengthening workers' commitment to the corporate culture'. The ETUC has recently complained that: "again and again, workers' representatives in EWCs are not consulted about decisions which have yet to be taken, but simply presented with a fait accompli. Sometimes they have to glean information about company restructuring from the press. All too often, company management sees the EWC as a body which can be used to legitimise decisions which have already been taken." Nevertheless, a considerable proportion of EWC representatives regard the new institution as helpful to them in their union work: in part at least because of its assistance in networking with unionists from other countries, and the strengthening of links with national and European trade union organisations.
Three effective requirements
There seem to be three main requirements for effective use of the new mechanisms. First, EWC representatives need specialist training to perform their role. This includes a grounding in what financial and business information they should expect from management, and how they should interpret this and use it to inform their collective bargaining activities; familiarisation with the industrial relations institutions and practices in other countries; and ideally, some language skills. Second, there needs to be an adequate structure (whether or not formally recognised by management) for continuous co-ordination between workplaces; on their own, one or two official EWC meetings each year are clearly insufficient. Third, a transnational mechanism which is detached from the realities of local industrial relations is of little use. There have to be appropriate report-back systems so that workplace-level representatives, and union members more generally, are aware of (even better, involved in) the activities of the EWC.
Where these preconditions are met, EWCs have managed to develop significant initiatives, in terms both of assisting union work at local level and of pressing management at transnational level. In a number of cases, establishing an EWC has provided both the impetus and the infrastructure for regular surveys of employment conditions in the various locations - a task which is also facilitated by the rapid spread of electronic communications. The notions of benchmarking' and best practice' which have long been central to management strategies in multinationals can be re-applied to match trade union objectives.
As yet there have been few real advances towards transnational collective bargaining. However there is evidence of moves to framework agreements, or quasi-agreements, particularly in respect of issues which are not perceived as fundamentally conflictual: training, equal opportunities, health and safety. Conversely, managements are likely to bypass EWCs or exploit divisions of interest between workforces in the case of major restructuring, closures and redundancies (Renault's sidelining of the EWC in the case of the Vilvoorde closure in 1997 is a notorious example). Given the accelerating process of cross-frontier company mergers, EWCs will increasingly face testing challenges.
Future developments
There are prospects of further extensions of the European social model' in Britain. During 1999 the EU Commission is required to review the working of the EWC directive and suggest amendments as appropriate. The ETUC has already outlined its views: the rights of EWC representatives and the role of trade unions need to be clarified, and the size threshold for firms to be covered by the directive should be substantially reduced. If this should occur, the number of British workers covered by EWCs could increase considerably.
The proposed directive on information and consultation in national-level companies has even more radical implications. The draft issued by the Commission last November would apply to all firms with over 50 employees (though with possible limitations in the case of those with fewer than 100). Management would be obliged to inform and consult employee representatives on the economic situation and prospects of the company and on reasonably foreseeable' developments in employment; firms failing to comply would be liable to effective, proportionate and dissuasive' sanctions. The Labour government, like the Conservatives before them, is hostile to establishing such rights; but the TUC endorsed them at the last Congress.
It is as yet unclear whether the directive will be adopted (the position of the new German government will be crucial) or how far the contents may be modified. If and when it is approved, its transposition into British law will present unions with both challenges and opportunities. Where unions exist and are recognised, their workplace representatives could exercise the prescribed functions. Almost certainly this would strengthen their position in relation to management and would make it easier to intervene effectively in the event of major rationalisation and restructuring.
The major innovation would occur in the case of non-union employers. In effect, the very limited obligation to consult employee representatives defined in the aftermath of the 1994 ECJ judgment would be given far wider application, creating a weak version of a continental works council or works committee. The detail of the implementing legislation would be crucial: electoral procedures, rights of unions to nominate and campaign, protections for candidates, sanctions against employers that fail to comply. The struggle to obtain a satisfactory form of transposition could make the conflicts over Fairness at Work' seem like a picnic.
The key challenge for unions would then be to make effective use of the new mechanisms. As was clear from the debates on Your Voice at Work' in 1995, many trade unionists fear that hostile employers could use directly elected structures of employee representation to manipulate the workforce and keep bona fide unions at bay. The position adopted by the TUC was however that such structures could provide "a springboard for new approaches to membership growth and influence". Early in the new millennium, this could be put to the test. A new EU directive would certainly not provide a miracle cure for union decline in Britain. Whatever the threshold, many employees would not be covered. There would indeed be a risk that sophisticated employers could use the new mechanisms to legitimise company strategies which damage workers' interests. But given satisfactory transposition provisions, unions would obtain a new platform to campaign for support in the medium-sized firms where they are currently so weak. There would be a real potential to reverse the vicious circle of dwindling membership and declining resources.