The planned closure of the Caterpillar plant in Gosselies (Belgium) is a heavy blow for workers in the Wallonia region but, more generally, raises major questions on the role of European industrial relations and workers’ participation rights.
Around 2,200 workers are likely to be dismissed and thousands of sub-contracted workers affected. This is the visible local social damage from a global restructuring scheme also affecting Northern Ireland. The reasons behind the move cited by the company are declining demand and profits and the plant’s high costs. Output will instead be reallocated to more cost-efficient plants in France and China.
20 years ago, the Renault site in Vilvoorde (Belgium) suffered a similar fate, leaving 3,100 workers unemployed without any prior notice. After a severe social conflict, the Belgian “Loi Renault” introduced a ‘last chance’ opportunity for social dialogue in the event of collective redundancy. This act forces companies – under penalty of sanctions – to inform and consult employee representatives about (1) the possibilities of avoiding or limiting the redundancies and (2) the accompanying social measures aimed at redeploying or retraining the affected employees. The EU Directive on collective dismissals of 1998 sets a similar procedure for information and consultation across Europe in such critical cases. However, this ‘last minute’ approach still leaves the company free to implement the closure and redundancies.
The EU Directive on general framework of information and consultation came about in 2002 in order to reinforce the effectiveness of these rights. Companies should now regularly provide accurate information and consult employee representatives before taking any decision, and certainly before it goes public. This preventive approach was particularly welcomed in a context where restructuring is no longer an exception, but rather a core element of global capitalism strategies.
National regulation, international decisions
In practice, the legal instruments in force (national or European) might just not cut it for employees. In the Caterpillar case, the local management was caught off guard: the decision was taken at a higher level.
The apparent shift of managerial power to a European or even global level greatly limits the opportunities for workers in Belgium (or elsewhere) to discuss strategies with their local management to ‘avoid or limit the redundancies’. Their interlocutor should naturally be the one taking the decisions.
European information and consultation institutions…
Luckily, since 1994 the European Works Councils EU Directive has been in place (recast in 2009) and provides for multinationals like Caterpillar to establish a ‘European Works Council’. Here, representatives of the European workforce discuss with the European management transnational issues and strategies that may affect them. It opens up the possibility of a social dialogue at the level where decisions are made. European Works Councils must be consulted on issues such as transfers of production “at such time, in such fashion and with such content as enables employees’ representatives to express an opinion on the basis of the information provided about the proposed measures to which the consultation is related (…) which may be taken into account” (Article 2.1 EWC EU Recast Directive of 2009).
This can be an effective forum for social dialogue when it works closely with other social dialogue bodies and actors at national and local level. European works councils often have a crucial role to play in coordinating strategies and bargaining. In some restructuring cases, even negotiations between central management, EWC representatives and trade unions resulted in European agreements on ‘anticipation of change’, laying down specific measures to secure jobs and working conditions applicable in future restructuring processes in the company as a means of early and proactive forewarning (e.g. Alstom, Axa, Ford or Engie).
…with serious limits
So, in theory, at the European level employee representatives can focus on finding alternative strategies to avoid redundancies or at least limit their impact, while the national level can put its efforts into negotiating a good social plan with adequate provisions for retraining. But theory is not always in line with practice.
First, European agreements on anticipation of change remain rare and their implementation is challenging. That explains why trade unions and experts demand a legal framework with certain binding implementation rules, currently absent from European labour law.
A second recurrent problem is enforcement. When a company omits to consult the EWC or does so when the final decision has already been taken, this breach has no serious practical consequence. Workers lack resources to launch very costly procedures and fines imposed on companies tend to be slight. In the Belgian case (which applies to Caterpillar) they range from €50 to €19,830, a derisory amount that hardly dents the coffers of any multinational.
A third problem has to do with transnational solidarity among employees from different countries (or the lack thereof). Offshoring means some countries can lose while others win, which may lead to competing interests across European workers. Transnational solidarity is the answer, and ‘sharing the pain’ is the method. But these principles are constantly challenged by management pressures and practices of benchmarking and inter-firm competition.
Finally, current national and European laws are incomplete: they only cover workers directly employed by the company, but not employees working in the plant for subcontractors, local suppliers or temporary agencies or economically dependent self-employed workers. These remain unprotected and left out of any information and consultation procedures, although they are usually the first affected by cuts, restructuring or offshoring decisions.
Democracy at work
As long as transnational restructuring remains a core element of global capitalism, it is up to policy makers to provide frameworks guaranteeing that those most affected by decisions, the employees, are adequately informed and consulted about them beforehand – and have the opportunity to influence company strategy by suggesting more palatable alternatives. It is time to hasten the development of this fundamental aspect of a democratic and social Europe.