The Progressive Post

For the sake of Europe: getting serious about strengthening European Works Councils

Deputy General Secretary, European Trade Union Confederation (ETUC)
30/05/2024

The European Trade Union’s call for strengthening European Works Councils (EWCs) has never been more critical. With over 1200 EWCs established, these bodies are pivotal in ensuring workers in multinational companies are informed and consulted on decisions impacting their working lives. Since companies today are primarily European, if not international, the national systems of industrial relations are reaching their limits.

EWCs are an attempt to Europeanise industrial relations and thus represent an essential building block for more democracy in the workplace at the European level. The EWC directive regulates the rights and tasks of EWCs. However, 30 years after the first EWC directive, their effectiveness remains limited due to inadequate enforceable rights, allowing companies to evade responsibilities with little consequence.

A glaring example is the 2018 incident with Deutsche Telekom, in which 10,000 job cuts were announced through the media before consultations with employee representatives, violating the directive’s core requirement for prior information and consultation. The ridiculously low penalties for such violations, like the 15,000 Euro maximum in Germany, only underscore the need for stronger enforcement mechanisms. This scenario is not isolated. One in five EWCs reports inadequate information and consultation on transnational management decisions, underscoring a systemic disregard for workers’ rights across Europe. This not only undermines the ethos of social dialogue but also erodes trust and legitimacy in European legislation.

It is high time to make the directive fit for purpose. The ongoing digital and ecological transformations and post-pandemic restructuring are churning through the working world, leading to fundamental changes in working conditions and substantial job losses. Now is not the time to look away again: robust mechanisms to enforce workers’ rights are needed more than ever if we are to meet the challenges of the future. Allowing companies to ride roughshod over workers’ interests not only undermines the ethos of social dialogue in Europe but also erodes trust in the European project itself. 

The European Trade Union Confederation, together with its affiliates, and in particular the European Trade Union Federations, have regularly flagged the legal uncertainty and lack of predictability that hinder the work of EWCs and have long called for the European Commission to act. Fortunately, recent legislative developments offer a glimmer of hope. Following extensive European social partners consultations, the European Commission has proposed amendments to strengthen the EWC Directive. These proposals include clearer definitions of transnational issues that require consultation and restrictions on the arbitrary classification of information as confidential. Notably, the European parliament’s employment committee has advocated for even more robust changes, such as give EWCs the legal means to halt company decisions, for example on restructuring, until the obligations for consultation are met.

Critics argue that these enforcement mechanisms may be too stringent and could burden businesses. However, this perspective overlooks the fundamental notion that compliance with legal and ethical standards should not be optional. Failing to respect workers’ rights is a failure of corporate ethics and governance, which is detrimental to society as a whole. 

Research consistently shows that companies with genuine worker involvement are more competitive and sustainable in the long run. Effective worker participation costs merely 0.009 per cent of global turnover, proving that it is not only ethical but also economically prudent. This makes EWC the most cost-efficient consultancy a company could wish for. Moreover, promoting democracy at work enhances societal democracy, enriching the democratic fabric of society by encouraging a more engaged and participatory workforce.

Strengthening the EWC Directive is not merely procedural. It is a crucial part of the social market economy that the European project is bringing about. It ensures that workers are recognised not as mere cogs in the corporate machinery, but as active stakeholders in the enterprises that benefit from their labour. As the European Parliament, Council and Commission work towards finalising their respective proposals, all parties involved must remain steadfast in their commitment to ensuring that the EWC Directive lives up to its intended purpose: to ensure that employee representatives are informed and consulted in good time – before a decision is taken – about those transnational measures whose impacts will play out across the company. This means not only closing existing loopholes and introducing effective penalties but also fostering an environment where multinational companies view workers’ participation not as a regulatory burden, but as a valuable component of their decision-making processes.

The impending revision of the EWC Directive offers a chance to shift the paradigm from minimal compliance and exploiting loopholes to one of genuine commitment and respect for the rights of workers. This will not only align with the EU’s principles of social justice and equity but will also serve as a beacon for similar initiatives globally, showcasing the EU’s leadership in promoting a balanced approach to economic development and labour rights. We must, therefore, not squander this legislative momentum towards an impactful revision of the EWC Directive. Let us seize this opportunity to establish a truly inclusive and democratic work environment across Europe, thereby strengthening both our economies and our societies.

Photo Credits: Shutterstock.com/MatejKastelic

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