Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Will workers’ rights lose out to ‘freedom of establishment?’

Sigurt Vitols 27th February 2019

Who stands for Europe: the council of member states or the parliament of the citizens? A little-noticed coming directive will once again test that issue—with workers’ rights at stake.

workers' rights

Sigurt Vitols

Critics of the European Union have long maintained that the social dimension has too often received the ‘short end of the stick‘ when conflicts between protecting workers and promoting market liberalisation have arisen in legislative initiatives. An extreme case has appeared in the so-called Company Law Package (CLP), which was proposed in April 2018 by the European Commission.

The CLP has now reached a crucial point in ‘trilogue’ discussions between the European Parliament (EP), the European Council and the commission. Although practically unnoticed by the public up to now, the way in which this conflict is resolved will have enormous implications for the ability of workers to protect their participation rights when companies reorganise across national borders, and to continue to be informed and consulted in the future entity. No less is at stake than the role worker participation will play in the future governance of European companies.

Exceedingly technical

One reason why the CLP has received almost no attention in the popular media is that it is exceedingly technical. One of the two associated directives proposed would create a regulatory framework for three types of corporate, cross-border reorganisations: mergers, divisions and conversions.

The general principle in company law is that the legal regime applicable to a company is determined by the country in which it is registered—which is not necessarily the country in which it has its headquarters or its employees. Companies can thus essentially ‘migrate’ to countries with lower regulatory standards through cross-border reorganisation.


Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content. We will never send you spam and you can unsubscribe anytime.

Sign up here

A key risk for workers is that they may lose existing participation rights through such a reorganisation, as the ‘new’ legal regime applying to their employing company may have weaker or no provisions for representing workers on the company’s board.  Even though EU law requires workers’ involvement in restructuring processes, these are not adequately provided for in the CLP—with the purported justification that this is company law, not employment law.

Acknowledging this risk, the commission included in the proposed package certain provisions to protect existing participation rights. These were criticised as too weak by the European trade union movement, however—particularly after the Polbud decision by the European Court of Justice in October 2017, which greatly restricts the ability of member states to regulate cross-border reorganisations.

Thanks to the efforts of key MEPs, the EP voted overwhelmingly to strengthen provisions for worker participation, along with improved rights to information and consultation. It also added improved measures for avoiding corporate abuse, such as the use of letter-box company constructions to avoid paying tax and complying with labour standards.

Grave danger

The word on the street is that the improvements supported by the EP are now in grave danger in the trilogue negotiations, which end on March 5th. Influential member states within the European Council would like to strike out these improvements or even roll back the worker-participation provisions originally included in the commission’s proposal.

The danger is that we shall see a repeat of the dynamic recently evident in the cases of the Insolvency Directive and the revised Shareholder Rights Directive, where progressive proposals by the EP were knocked out in the trilogue negotiations. In the interests of protecting workers’ rights and the exercise of ‘workers’ voice’, a key feature of corporate governance in a majority of EU countries, the council should support the improvements made to the CLP by the parliament.

An integrated single market requires flexible, joined-up policy-making which takes the interests of all stakeholders into account. Isn’t this what a Social Europe is supposed to be about?

Sigurt Vitols

Sigurt Vitols is a senior researcher at the Wissenschaftszentrum Berlin für Sozialforschung and an associate researcher at the European Trade Union Institute. His research focuses on corporate governance, worker participation, company law and sustainability. He was nominated by the ETUC as the (only) trade union representative on the EFRAG project task force on preparatory work on possible non-financial reporting standards.

You are here: Home / Politics / Will workers’ rights lose out to ‘freedom of establishment?’

Most Popular Posts

Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse
income inequality,inequality,Gini,1 per cent,elephant chart,elephant Global income inequality: time to revise the elephantBranko Milanovic
Orbán,Hungary,Russia,Putin,sanctions,European Union,EU,European Parliament,commission,funds,funding Time to confront Europe’s rogue state—HungaryStephen Pogány

Most Recent Posts

reality check,EU foreign policy,Russia Russia’s invasion of Ukraine—a reality check for the EUHeidi Mauer, Richard Whitman and Nicholas Wright
permanent EU investment fund,Recovery and Resilience Facility,public investment,RRF Towards a permanent EU investment fundPhilipp Heimberger and Andreas Lichtenberger
sustainability,SDGs,Finland Embedding sustainability in a government programmeJohanna Juselius
social dialogue,social partners Social dialogue must be at the heart of Europe’s futureClaes-Mikael Ståhl
Jacinda Ardern,women,leadership,New Zealand What it means when Jacinda Ardern calls timePeter Davis

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

Foundation for European Progressive Studies Advertisement

The winter issue of the Progressive Post magazine from FEPS is out!

The sequence of recent catastrophes has thrust new words into our vocabulary—'polycrisis', for example, even 'permacrisis'. These challenges have multiple origins, reinforce each other and cannot be tackled individually. But could they also be opportunities for the EU?

This issue offers compelling analyses on the European health union, multilateralism and international co-operation, the state of the union, political alternatives to the narrative imposed by the right and much more!


DOWNLOAD HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

The EU recovery strategy: a blueprint for a more Social Europe or a house of cards?

This new ETUI paper explores the European Union recovery strategy, with a focus on its potentially transformative aspects vis-à-vis European integration and its implications for the social dimension of the EU’s socio-economic governance. In particular, it reflects on whether the agreed measures provide sufficient safeguards against the spectre of austerity and whether these constitute steps away from treating social and labour policies as mere ‘variables’ of economic growth.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube