Social dialogue: an opportunity in the midst of crisis

Some claim social dialogue is a luxury in a crisis when quick decisions are needed. On the contrary, the pandemic has proved.

Despite the difficulties many of us have experienced this year, the crisis has also brought opportunities, including a re-examination of the way we work. 

The 2020 Global Deal flagship report, ‘Social Dialogue, Skills and Covid-19’, just published, documents extensively how social dialogue has proved a key tool in addressing the damage wrought on labour markets by the pandemic—and shows how we can better prepare for changes in the post-pandemic world of work.

Central role

Social dialogue played a central role in shaping those agreements which prevented the sudden lockdown of major parts of our economies from translating into an even bigger crisis. In several countries, deals were struck whereby business refrained from firing workers, trade unions accepted reduced working hours and lower monthly wages, and governments stepped in financially to make up part of the difference in the initial wage. Social dialogue on short-time working schemes acted as a crisis circuit-breaker, by preventing massive job destruction and thus avoiding further knock-on effects on aggregate demand—which would otherwise undoubtedly have deepened the crisis.

Social dialogue has also been frequently used in the negotiation of numerous guidelines and protocols, on measures to be taken to keep the virus from spreading through workplaces. One among many examples in the flagship report is from Italy, where an 18-hour negotiation round between social partners in early March was able to avoid a proliferation of strikes linked to workers’ concerns about the risk of getting infected at work. From car factories in the United States, to retail stores in Austria, to global companies such as Telefonica, many similar agreements have been struck—all with the key objective of agreeing measures to contain the pandemic in the workplace. 

Social dialogue has moreover allowed businesses to achieve flexibility in working time. An interesting practice in France is ‘bargaining under the shadow of labour law’. A labour-law reform provided more leeway for management to decide staff holidays but only if a collective agreement allowed it to do so. As a result, a range of company and sector agreements were made, whereby flexibility in working time in the post-lockdown phase was reconciled with more job and financial security for workers during the lockdown.  

Social dialogue has further been utilised to improve global supply chains. With international buyers abruptly cancelling orders, the vulnerability of those supply chains primarily based on squeezing wages, with razor-thin margins and no buffers to withstand shocks, was clearly revealed. To build more resilient supply chains, business, trade unions, governments and international organisations joined forces at the end of April, issuing a ‘call for action in the global garment industry’. The key idea was to mobilise funds to finance systems of social protection while also ensuring business continuity, with brands and retailers committing to pay producers for finished goods and goods in production and considering direct supports to factories in their supply chains.

Trust, fairness, voice

So why, in these tough times, are numerous economies embracing such intense social dialogue? As the Global Deal report describes, social dialogue presents advantages which are of particular interest when it comes to managing crises. The key words are trust, fairness and workers’ voice.

Trust between labour-market stakeholders makes a big difference. Lack of trust obstructs the whole process of dialogue, as doubts may arise as to whether others will effectively honour any bargain struck. Social dialogue helps build that trust. By regularly meeting up to discuss and manage problems which arise in the company or the economy at large, the different stakeholders (employers and their organisations, trade unions, governments) improve their mutual understanding of the problems each side is facing. Hence, when a crisis strikes, the existence of sufficient social trust ensures a consensus can be secured more readily. 

Policy responses to a crisis are also more easily reached when efforts are broad and fairly shared. Social dialogue works as a co-ordination instrument committing all actors involved to pursue similar action and behaviour. In the case of short-time work for example, cutting working hours and giving up (part of) monthly revenue is more likely to be accepted if workers know that there are no ‘freeriders’ and that efforts necessary to save jobs and businesses will be shared by all.  

Social dialogue moreover overcomes the difficulties individual workers may have in raising their concerns, by providing a collective voice, at the level of the company and that of the wider economy. This has turned out to be crucial during the pandemic. 

At the macroeconomic scale, social dialogue has enabled a timely reaction to the pandemic, moving beyond existing health-and-safety regulations through the conclusion of special codes and protocols. Within the company, it has provided a channel of communication through which workers and management can discuss the implementation and effective enforcement of these general safety measures.

In this way, social dialogue gives workers the confidence that they and their families will not be exposed to unnecessary risk. In turn, business and society also gain, as the reopening of the economy is greatly facilitated by a smoother return to workplaces. This encapsulates the ‘win-win-win’ situation social dialogue engenders.

Important responses

Social dialogue is sometimes misrepresented as theoretically desirable but practically difficult, since purportedly crises demand quick responses. The experience of recent months however shows the opposite. Social dialogue has come to the fore on many occasions, delivering important policy responses to the different labour-market challenges triggered by the pandemic. 

As a multitude of evidence in the Global Deal flagship report testifies, this is not a coincidence but the result of structural characteristics of the process and institutions of social dialogue. Strengthening social dialogue should therefore be a key part of the blueprint to rebuild labour markets.