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13 Apr, 2013

FREE Download: Employee-Employer Relations Under Strain in Europe, Says New Report


The on-going economic crisis poses a serious challenge to the dialogue between workers’ and employers’ representatives and governments according to a report published today by the European Commission. The report shows that recent government reforms have not always been accompanied by fully effective social dialogue, leading to increasingly conflictual industrial relations in Europe.

László Andor, European Commissioner for Employment, Social Affairs and Inclusion, said: “Social dialogue is under increasing pressure in the current context of depressed macroeconomic demand, tax increases and government spending cuts. We need to reinforce the role of social partners at all levels if we are to come out of this crisis and preserve the benefits of the European social model. Well-structured social dialogue is also indispensable to address the challenge of demographic change and to achieve better working-conditions and higher social cohesion. Social dialogue must be strengthened in Central and Eastern European Member States, where it is currently significantly weaker.”

The involvement of workers’ and employers’ representatives (the “social partners”) in government reforms is vital, as solutions found through social dialogue tend to have wider acceptance in society, to be easier to implement in practice and to be less liable to give rise to conflict. Consensual agreements involving the social partners therefore help to ensure the long-term sustainability of economic and social reforms. Well-structured social dialogue can effectively contribute to the economic resilience of Europe.

In fact, countries in which social dialogue is well-established and industrial relations institutions are strong are generally those where the economic and social situation is more resilient and under less pressure. The problem-solving potential of social dialogue can help to overcome the current crisis. The new report illustrates how the outcomes of European social dialogue can make a real difference to the working lives of Europeans, for example on improved health and safety at work and working conditions.

In light of the government spending cuts in many Member States, the report focuses on industrial relations in the public sector: public administration, education and healthcare. Governments have prioritised efficiency gains within public sector restructuring. In some countries this process has continued, with a more balanced approach and limited conflict, preserving the scope for collectively agreed solutions between trade unions and the public sector.

Elsewhere the methods chosen to implement decisions have often excluded the use of social dialogue. This trend is not limited to those countries receiving financial assistance from the EU and the International Monetary Fund. As a result, in many Member States, tax increases and government spending cuts triggered a wave of industrial conflicts and highlighted the contested nature of some of the reform measures that were not subject to social dialogue.

Central and Eastern Europe

The report also analyses in depth the state of social dialogue in Central and Eastern Europe. While there is wide diversity between countries in the region, all of them, with the notable exception of Slovenia, have weak and fragmented industrial relations institutions. In fact some reforms actually undermine the involvement of social partners in introducing changes. The report shows that revitalising national industrial relation systems in order to promote and restore consensus is essential to ensure the long-term sustainability of the economic and social reforms underway.

Other issues examined in the report include the involvement of social partners in unemployment and pension system reforms and in the transition towards an economy that is more sustainable and less dependent on fossil fuels. While in countries such as Belgium, France, The Netherlands and Spain trade unions were involved in the pension reform process, elsewhere the role of social partners has been minimal, leading to conflict. With respect to climate change, the report documents that social partner activities in this area are on the rise and that their attitude to the green agenda is increasingly supportive.

Why have industrial relations become more conflictual in many countries but not in others?

There two main reasons why industrial conflicts were more widespread in some countries and less pronounced in others. Firstly, the economic and financial crisis has affected different Member States in quite different ways. The most conflictual relations can be found in general in those countries that implemented the most thorough reform programmes at a very fast pace and without an effective social dialogue. This was the case in some of the countries benefitting from an EU-IMF assistance programme, but also in several countries in Central and Eastern Europe, where some reforms undermined the consensus which is needed for effective involvement of social partners in the process of adaptation to change.

Secondly, as was already the case in the first phase of the crisis in 2008-10, the countries in which social dialogue is well-established and industrial relation institutions are strong, are generally those where the economic and social situation is more resilient and under less pressure. This situation also reflects historical patterns of industrial relations in individual countries. The evidence shows that strong industrial relations institutions and well-structured social dialogue can produce positive economic and social outcomes and contribute to resilience.

How many workers in the public sector are covered by collective agreements?

Industrial relations in the public sector are characterised by differences in employment status, with some workers enjoying tenure and life-long careers while the right to strike and bargain collectively can be limited. Nevertheless, in the public sector the collective bargaining coverage is higher than in the private sector and social dialogue is generally more centralised.

The bargaining coverage rate indicates how many employees are covered by collectively bargained labour agreements. In most Member States, this rate is significantly higher for public compared to private sector workers. In the Czech Republic, Slovakia, Ireland, the United Kingdom and Cyprus, the difference between bargaining coverage in the public sector and the whole economy is particularly large. In twenty Member States at least 90% of public sector workers are covered by a collective agreement. By contrast, across the whole economy only six Member States have an equally high bargaining coverage of around 90%: Belgium, Austria, Sweden, Slovenia, France and Finland.

Click here to download the full report free.