Work and Employment in Europe: A New Convergence?

WORK AND EMPLOYMENT IN EUROPE Europe’s workforce is subject to a dual convergence process: from the transnational spre...

Author: Peter Cressey | Bryn Jones

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WORK AND EMPLOYMENT IN EUROPE

Europe’s workforce is subject to a dual convergence process: from the transnational spread of new management practices and from the political force of European union. Trade union rights, hours of work, working practices and training provisions are all being subjected to these twin pressures. Work and Employment in Europe assesses both the convergent and divergent developments taking place at both pan-European and crossnational levels. Comparisons of British and French retailing, German and Italian manufacturing jobs, German and British youth training schemes, and small business strategies of Britain, France and Italy show simultaneous elements of convergence and national specificity. The Nordic Area States and Hungary, both still on the EC’s periphery, demonstrate the continuing strength of national institutions and traditions in countries seeking eventual inclusion in the EC. The detailed evidence from these cases provides original evidence, indicating fragmentary convergence and complex interactions between the political, economic and socio-institutional forces of convergence. Work and Employment in Europe provides useful theories and source materials for students and researchers of industrial change, European studies, industrial relations and the sociology of work and employment.

ROUTLEDGE STUDIES IN THE EUROPEAN ECONOMY 1 Growth and Crisis in the Spanish Economy, 1940–1943 Sima Lieberman 2 Work and Employment in Europe A new convergence? Edited by Peter Cressey and Bryn Jones 3 The Italian Economy in the 1990s Edited by Homa M.Scobie

WORK AND EMPLOYMENT IN EUROPE A new convergence?

Edited by Peter Cressey and Bryn Jones

London and New York

First published 1995 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 © 1995 Peter Cressey and Bryn Jones All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book has been requested ISBN 0-203-97604-5 Master e-book ISBN

ISBN 0-415-12532-4 (Print Edition) ISSN 1359-7957 (Print Edition)

CONTENTS

List of illustrations

vii

List of contributors

viii

INTRODUCTION—‘EUROPEANISATION’: MOTOR OR MIRAGE FOR EMPLOYMENT SYSTEMS? Bryn Jones and Peter Cressey

1

1

CONVERGENCE AND/OR SOCIETAL EFFECT FOR THE EUROPE OF THE FUTURE? Marc Maurice

28

2

MAASTRICHT AND THE GOVERNANCE OF LABOUR MARKETS: THE CASE OF IRELAND Paul Teague

41

3

THE FUTURE OF EMPLOYEE RELATIONS WITHIN EUROPEAN ENTERPRISES Kevin P.O’Kelly

69

4

EURO-UNIONISM AND THE GREAT AUCTION: AN ASSESSMENT OF THE PROSPECTS FOR THE EUROPEAN LABOUR MOVEMENT POST-MAASTRICHT Harvie Ramsay

92

5

COMMONALITIES AND DIVERGENCES IN SMALL-FIRM 121 COMPETITIVE STRATEGIES: TEXTILES AND CLOTHING MANUFACTURE IN BRITAIN, FRANCE AND ITALY Anna Bull, Joseph Szarka and Martyn Pitt

6

NEW PRODUCTION CONCEPTS IN GERMANY AND ITALY Horst Kern and Angelo Pichierri

143

7

PATTERNS OF WORKING HOURS IN LARGE-SCALE GROCERY RETAILING IN BRITAIN AND FRANCE CONVERGENCE AFTER EUROPEAN UNION? Abigail Gregory

158

vi

8

HOW YOUNG PEOPLE ARE MARGINALISED IN ENGLISH 189 AND GERMAN LABOUR MARKETS Alan Brown and Martina Behrens

9

HUNGARY’S EMPLOYMENT SYSTEM ON THE WAY TO A MARKET ECONOMY—IN 1990 AND AFTERWARDS Lajos Héthy

210

10

WORKERS’ RIGHTS AND EUROPEAN INTEGRATION: AN EXTERNAL VIEW FROM THE NORDIC AREA Michael A.McDaid

228

Index

255

ILLUSTRATIONS

FIGURES 1.1 Outline of ‘employment system’ components 2.1 Real wage gap and compensation per employee

2 50

TABLES 2.1 EC Social Protocol—the new draft Directives and Ireland 2.2 Would the full implementation of the EC Social Charter require a change in your personnel policies in any of the areas below? 2.3 How does your organisation keep abreast of EC initiatives and developments? 5.1 Major product/market positions in textiles and clothing products 5.2 Customer bases of firms in sample 5.3 Percentage of sales to biggest customer 5.4 Characteristics of Leicester firms experiencing decline 5.5 Recent changes made by Leicester firms experiencing decline 7.1 Rates of part-time work in the UK and France, 1991 7.2 Levels of part-time work in food retailing in Britain and France, 1993 7.3 Proportion of employees by age group in retail distribution, 1990/1 8.1 Participation in Berufsgrundschuljahr 8.2 Perceptions of ownership of skills of those within and outside the dual system 8.3 Perceptions of use of skills of those outside formal skilled routes

61 64 67 126 133 133 136 137 161 162 163 192 195 203

CONTRIBUTORS

Alan Brown, Martina Behrens Department of Educational Studies, University of Surrey, England Anna Bull, Joseph Szarka School of Modern Languages and International Studies, University of Bath, England Abigail Gregory Department of Modern Languages, University of Salford, England Lajos Héthy Ministry of Labour, Budapest, Hungary Bryn Jones, Peter Cressey School of Social Sciences, University of Bath, England Horst Kern Sociologisches Forschungsinstitüt, Göttingen, Germany Mike A.McDaid Turku School of Economics and Business Administration, Finland Marc Maurice Laboratoire d’Economie et Sociologie, du Travail—CNRS, Aix-en-Provence, France Kevin P.O’Kelly Centre for Enterprise and Labour, Dublin, Ireland Angelo Pichierri Dipartmento di Scienze Sociali, University of Turin, Italy Martyn Pitt School of Management, University of Bath, England Harvie Ramsay Department of Industrial Relations, University of Strathclyde, Scotland Paul Teague University of Ulster, Jordanstown, Ireland.

INTRODUCTION ‘Europeanisation’: Motor or Mirage for Employment Systems? Bryn Jones and Peter Cressey

Now capitalist convergence, not communism, seems to haunt the politics of Europe. While governments in the European Union try to orchestrate their macroeconomic policies, the EU Commission promotes policies to harmonise social provision. Giant multinational firms standardise their markets and extend their operations across Europe. Organised labour and the business elites unite at European levels to promote their own trans-European agendas. Businesses themselves adopt new managerial styles and policies to reorganise operations, and employee relations; threatening to sweep away the older, local practices. Aspiring to eventual membership of the EU, the new regimes in the excommunist societies also seek to copy commercial institutions from their older capitalist neighbours. Against all these and related changes, social and political protests have emerged in many European countries. Protests which are often based on fears that national particularities will be lost through a pan-European convergence. How much of this projected and feared convergence will take place? Major economic convergence must be largely based on greater uniformity in the world of work: the training, hiring and firing, compensation, organisation and regulation of workers—and their relations with their employers. These are complexes of economic institutions which constitute employment systems; whose detailed configuration currently varies considerably between countries. Without changes in these institutions, transnational business and economic realignment may not be realisable. Although the importance of specific changes varies according to the different contexts, Europe’s employment systems will be involved in a range of integration policies. These include: the equalisation of macroeconomic targets, wage inflation and public sector expenditures, nondiscriminatory social protection, cross-border investment opportunities, nonconflictual but non-paralysing industrial relations; as well as the extent to which new business strategies, of a supposedly ‘post-Fordist’ industrial paradigm, spread through EU and ex-communist countries. Public debate on EU integration has focused disproportionately on the prospects of convergence in levels of economic performance, to the relative neglect of more basic underlying institutions and practices—both public and

2 BRYN JONES AND PETER CRESSEY

business—that regulate employment systems. The considerable previous research on divergence and convergence makes this neglect all the more regrettable. Most previous comparative research into industrial convergence and national employment systems emphasises that both the continuity and necessity of national differences is more influential than any supposed supranational logic of industrialism. Can European integration bring convergence where earlier developments could not? The centrality of labour flexibility, wage costs and unemployment in debates over European economic development, puts employment systems at the heart of any putative Europeanisation of national economies. As indicated in Figure 1.1, an employment system refers to the interaction of various formative institutions making up the national and sectoral profile of the labour force. These institutions comprise the training and educational processes, the legal and industrial relations regulations, the organisational structure and practices of industry, and the politics of the workplace. However, we are not using the term employment system in the sense of a formal model of the use and reproduction of labour, as it is in some recent analyses (cf. Rodrigues, 1992). Work and employment patterns, in our view, are ‘systems’ inasmuch as they are conditioned and bounded by the same types of institutions in different national contexts. Several of the following contributions examine their specific components, such as collective bargaining, labour market processes and work organisation. However, they are brought together here, in one book, because we believe that the generic context of employment systems provides a more comprehensive

Figure 1.1 Outline of ‘employment system’ components

framework for analysing convergence, than perspectives which focus only on industrial relations or labour markets.

INTRODUCTION 3

The importance of national differences in employment systems may not be fully recognised but they are heavily implicated in even ‘objective’, textbook, economic policies. Despite their acknowledgements of cultural differences, appeals to ‘deregulate’ national labour markets implicitly recognise that economic logic is impeded by national institutions (OECD, 1986: 12–16). Economic convergence, and perhaps the success of political union, is thus bound up with some Europeanisation of employment systems. Will these latter changes amount to one constituent path of convergence, or are national employment systems intrinsically stronger than the various transnational pressures? The different components to this question are tackled in the contributions to this book, and are outlined in the rest of this Introduction. We begin with a more explicit identification of the forces for convergence. The second section of the Introduction examines the potency of the EU as a new political force in the convergence process. The third section asks whether the EU could successfully realise a trans-European system of industrial relations amongst the current heterogeneity of arrangements amongst multinational firms and national industries? The fourth section considers the question of whether autonomous changes in managerial policy and business strategy are contributing to convergence of different aspects of employment systems. The fifth section looks at different national and Euro-level interventions in the workings of specific labour markets. Do these detailed measures suggest common trends or continuing diversity in Britain, France and Germany? The final section is concerned with the employment systems of countries which are geographically or historically beyond the EU, but which are at various stages of entry into membership. As they queue for EU membership, how much change is taking place in the institutions in ex-communist societies such as Hungary, and the traditionally social-democratically regulated employment systems of the Nordic countries. WHAT ARE THE FORCES FOR CONVERGENCE? In much current public debate, especially in the UK, the political power of the European Union, and its executive branch the European Commission, is seen as the main force for intra-European convergence. However, this focus overlooks the less explicit confluence of industrial developments themselves. Businesses are developing, autonomously, the elements of a common industrial base for work and employment across Europe. Throughout the western part of the continent new organisational and managerial practices are being transferred spontaneously within and between enterprises and industries. Uniform adoption of these would threaten to displace the older nationally specific arrangements. This latter process parallels the internationalisation of industrial practices earlier this century, and an older, much debated, convergence thesis. Although


primarily concerned with the initial industrialisation process, this thesis argued that a transnational ‘industrial logic’ would generally diminish national particularities in work and employment structures: the iron hand of technology tends to create relative uniformity in job structure, compensation differences and technical training. These uniformities are enhanced by migration and the international flow of capital equipment and specialists. (Kerr et al., 1973:292) As this quote indicates, the 1960s’ case for convergence rested, somewhat naively, on the single pillar of a uniform industrial ‘best practice’. The social institutions underlying and ordering the employment system were assumed to require a character that was ‘functional’ for universal technological needs. Critics of this functional convergence were able to show, convincingly, that social institutions moulded common economic and technical standards into nationally specific forms. Moreover, the thesis tacitly assumed the corporate industrialism of the United States as its organisational model. For many reasons, and the widespread expansion of US multinational corporations (MNCs) notwithstanding, key organisational features of the US model—such as legally regulated, seniority-based, corporate employment systems—were not transplanted. The Ford Motor Company in Britain, for example, operated work and employment practices embedded more firmly in traditional British industrial relations institutions, than in either its own corporate model, or those of North America (Beynon, 1984; Tolliday, 1991). Detailed workplace studies refuted the broad sweep of Kerr’s ‘logic of industrialism’ model of convergence. Gallie found that national political and organisational cultures contributed to major differences between work roles and employee relations in the French and British operations of the same multinational petrochemical firm. In matched pairs of British and German metalworking plants, Sorge et al. linked significant national differences in the use and staffing of computerised machines to different training systems and occupational hierarchies (Gallie, 1978; Sorge et al., 1983). These studies partly utilised the systematically anti-convergence perspective, the ‘societal effects’ approach of Marc Maurice and his colleagues at Aix-en-Provence. For this group convergence to a universal form of economic organisation is both empirically absent and logically improbable. In their view any single aspect of national employment systems—such as the content of work roles, their management and formation—is the ‘societal effect’ of the interaction of the various national institutions: in training, education, indus trial relations and politics. If these institutions are so influential, and nationally specific, then convergence on the basis of a common industrial rationale is a mirage. However,

INTRODUCTION 5

current European developments provide a new challenge to the success of the societal effects approach for two reasons: • First, the new ‘logic’ of international industrial change covers a broader organisational and institutional spread than the 1960s’ phenomenon. • Second, and unlike the earlier stage of putative convergence, there are now supranational political agencies which aim to promote international models. The new industrial logic—variously described as post-Fordist, disorganised capitalism, flexible accumulation and so on—involves international shifts away from specialised hierarchical structures. Newer decentralised, employee-centred systems of quality management, human resource management and flexible production systems, imply a common organisational basis for European industrial firms (cf. Handy, 1994). These trends, together with movements towards decentralised interfirm networks of industrial operations, have been suggested as the common, ‘post-Fordist’ structure of Europeanising trends (Amin and Dietrich, 1991). Also implicated are Japanese industrial techniques, and the ideas of North American ‘human resource management’ (HRM) have cross-pollenated most large industrial firms in recent years. The same ideas for work reorganisation—e.g. team working or broadening task responsibilities—or for regulating the employment relationship between management and workers, have crossed most national boundaries (European Participation Monitor, 1993; Jurgens, 1989; Kruse, 1989; Pieper, 1991). Quality improvement reforms, such as total quality management, devolve more responsibility to operating staff. These changes, along with more task mobility to meet just-in-time production schedules, have increased speed and performance pressures on workers. However, jobs are subject to less direct control and redesigned work roles have generally become broader. Jobs are not necessarily acquiring higher-level skills, yet many workers report feeling that their jobs have a higher skill content as a result of organisational and technological change (see, inter alia, Gallie, 1991; Daniel, 1987). In Germany these trends have been termed ‘new production concepts’ and the possibility of convergence around such work roles is examined in Kern and Pichierri’s comparison of Germany and Italy. Today’s model business policies for work and employment tend to have transnational rather than solely US origins. Managerial authoritarianism and adversarial industrial relations are giving way gradually to the treatment of workers as a ‘human resource’. Direct and individualised arrangements flourish, while indirect and collective forms of participation—of an industrial democracy or a collective bargaining kind—are in retreat. In countries such as Italy or Britain, labour’s strategic powers over issues such as employment levels and occupational boundaries have reduced. Yet influence over other aspects, such


as job design or work scheduling, may have increased in some respects (Jones and Rose, 1986; Garibaldo, 1988). While far from full democratic controls over enterprise decisions, such concessions often mean more participative work processes at the level of the individual, and more recognition of individuals’ expectations—or at least opportunities—in training, involvement, consultation and employee assessment (Cressey et al. 1988). Overall, this may be the most distinctive pan-European managerial perspective since the spread of Tayloristic scientific management in the 1930s and 1940s. If a loose, but influential, paradigm of employee relations and work organisation is being spread internationally by business education, consultants and multinational corporations, then it ought to accelerate in the post1992 single European market (SEM) as genuinely European-wide enterprises evolve through competition, merger or cross-border investments (Cecchini, 1988; Grahl and Teague, 1989:42). Will large firms, with more sophisticated communication and control processes than thirty years ago, operationalise these policies in the same form in different national contexts? MNCs may regard the new HRM as a substitute rather than a complement for common participation arrangements; and may therefore continue to oppose them, as the chapter by Harvie Ramsay explains. Will small firms, seeking internationally competitive strategies, adopt product and production techniques with similar implications for their workforces throughout Europe? The complexities of this sphere are shown in the evidence from the textile sectors of Italy, France and the UK, in the chapter by Bull, Szarka and Pitt. It should also be noted that the SEM was partly the brainchild of the leaders of the biggest European multinational corporations.1 Between the industrial and official political spheres are powerful business lobbies, such as the European Round Table, of top MNC executives, with significant reputations for promoting the pace and direction of European industrial development. Political bodies proper, such as the European Commission and Council of Ministers, explicitly aim to spread use of the latest technologies. More significantly they aim for common standards for the social space within which technical and business practices are applied; by minimising national differences in the social aspects of work and employment, such as health and safety, employment-related benefits, employee relations and training provision. But, faced with centuries of accumulated legislation and policy in the member states, how far, and in what key areas, can European standards of regulation, provision and representation be achieved? The chapters by Gregory, O’Kelly and Ramsay, detail the potential and pros pects for EU interventions in the fields of working hours, employee participation and collective bargaining. Additionally, however, as Abigail Gregory also shows in the case of retailing, much will depend on the extent to which such policies work with, or against, the grain of

INTRODUCTION 7

autonomous industrial trends in the work roles and the firm’s management of employment. ‘THE EUROPEAN STATE’: A NEW FORCE FOR CONVERGENCE? The most obvious candidate for a politically determined force for European convergence is the supranational agencies, plans and policies of the EU. In this sense the case for contemporary European convergence is stronger than 1960s convergence theory, which lacked such a political force amongst its supposed determinants. The degree to which supranational direction of social and economic change is either feasible or desirable is a matter of academic debate and political dispute. For right-wing politicians the Commission’s powers to achieve cross-national uniformity have increased. On other grounds, as in the case of social regulation for the UK, the Commission’s efforts appear to have softened; with more emphasis on compromise and exhortation (Gold, 1992:28– 9). Nevertheless, the EU’s potential to spread common standards and practices in the social dimension of employment systems is considerable. Preconditions of a fully integrated EU economy would include a core of common standards to equalise business conditions between the member states and to substantiate its own principle of the free movement of labour. Moreover, intra-EC transfers of corporate operations, such as Hoover’s 1993 shift from Lyon to Scotland, continue to fuel the case for common social frameworks for national employment systems. With the exception of the UK ‘opt-out’, the Maastricht summit agreements of 1991 gave added influence to EC institutions over social aspects of national employment systems. McDaid’s chapter reviews some of the detailed provisions of this Treaty. Varying degrees of concertation are planned for employment contracts, security of employment, health and safety, working-time, training, and consultation and participation. Each of these areas may be seen as relatively discrete and limited in the extent to which they can alter specifically national practice in the member states. On the other hand, there is an inherent logic to EC proposals which implicate one policy area with another, and which deepen their impact on existing national arrangements. This interlocking characteristic is illustrated by the nexus of relations between occupational qualifications, training and labour mobility components. Because they are embedded in industrial relations and educational institutions this nexus is one of the most nationally specific components of employment systems. Yet it is an area in which the agreed need to raise standards and opportunities to trans-European levels adds to the potential for considerable EU direction. As other contributions do not discuss this field in any detail it is worth examining here as an example of EU intervention.


Although narrower than originally planned, there is mutual recognition of qualifications for professions entered through three or more years of study— Directive of 1988—and from a 1992 Directive for most postsecondary qualifying diplomas for less than three years’ study. EU policy is to extend mutual recognition to technical and manual occupations. An advanced programme for matching occupational qualifications has been attempted for the Commission by the European Centre for the Development of Vocational Training (CEDEFOP). However, these schemes may be insufficient, by themselves, to meet the goal of cross-border labour mobility. The content of similar national occupational definitions varies significantly. Consequently workers such as skilled machine operators in country X may have only a proportion of the experience and training expected of a skilled operator in country Y (Bertrand, 1991). It may be possible to find solutions in compromises similar to the policy for professional workers: a minimal core of skills and qualifications could be prescribed which would be topped up, if necessary, when a worker moved to a country with a wider occupational definition. More radically, discrepancies could be reduced by the EU prescribing minimal competences and qualifications for nationally varying occupations. However, a move in this direction implies the EU becoming more involved in national training policies and possibly their institutional structures and processes. Symptomatically perhaps, the Maastricht Treaty agreed: The Community shall implement a vocational training policy which shall support and supplement the action of the Member States…while fully respecting the responsibility of the Member States for the content and organisation’ (Article 126, Treaty on European Integration, Maastricht, December 1991, emphasis added). Otherwise, Euro-provision in this field is especially prone to the tendency for policy areas to interact, overlap and extend to other more contentious fields; such as enterprise-level industrial relations and employee participation. The Social Chapter of the Maastricht Treaty establishes training as an activity to which employees should have a right of access. Although this right is more moral than legal, the Social Chapter’s accompanying recommendations for consultation of employees and unions in the policies of large firms could, if implemented, lead to forms of union ‘policing’ of access to training. At EC and regional levels, union and business representatives have already begun to cooperate on the planning of certain training policies (Milner, 1992). However, as Brown and Behrens’s Anglo-German comparison, and Kern and Pichierri’s overview of Italian and German developments show, local labour market factors and regional diversity may be resistant to general revisions to training provision. So will EC regulation, perhaps in combination with new policies for organising and managing business operations, standardise at least the central features of employment conditions and work organisation? As far as

INTRODUCTION 9

multinational business is concerned, senior managements’ growing interest in the detail of employee relations and work practices increases the probability of transnational standards within companies. A broader convergence will, of course, depend upon whether such standards mesh with, or rival, those of EC social policies. Furthermore, at present, businesses tend to adapt to the institutional complexes of working conditions, occupational profiles, training practices and industrial relations arrangements prevailing in specific national economies. Marc Maurice’s chapter aims to put the foregoing issues into a broader but more precise analytical framework. Other commentators have argued that any convergence of labour market regulation and industrial relations led by a supranational EC agency will not replace, but can only limit, specifically national practices. In this view, EC regulation produces a common framework which narrows the space within which specifically national traditions continue to evolve (Due et al., 1991). Maurice draws out more fully the analytical implications of this view, by stressing the overriding importance of ‘societal effects’ in defining specific aspects of national employment systems.2 His argument is that before concrete aspects of convergence or integration can be assessed the appropriate methodological and theoretical perspectives must be clarified. The EC, argues Maurice, should be considered as a supranational ‘actor’, although he emphasises that this agency will continue to interact with different national ‘actors’. The spread of the same or similar managerial frameworks, through cross-national business channels, is agreed to be a major force for uniformity; and a phenomenon needing urgent study. However, Maurice reminds us that the force of the ‘societal effects’ approach undermines the case for any simple set of relationships. For example, a formula in which convergence as a cause is counterposed to social phenomena as the effect. Indeed, the societal effects approach is distinct, both from this kind of identification of common cross-national indicators, and also from the opposite kind of culturalist explanation in which the beliefs, customs and institutions of a given society exclude all external affinities and influences. By locating demonstrably international phenomena within the particular societal complexes which give them their different national characteristics, societal effects analysis is especially well placed to deal with processes of European convergence and unification. For Maurice this means recognising that the emerging ‘European actor’ can only modify national situations by working through ‘actors’ at the national level. Paradoxically, the latter must retain their national specificity for the European actor to be able to influence changes. Thus Maurice’s overall conclusion is that the process is one of Europeanisation rather than convergence, but a European dimension can only be inserted into national employment systems by further mobilisation of


distinctively national forces and institutions. Maurice’s arguments together with the previous analysis therefore suggest that ‘Europe’, as the executive and quasipolitical agencies of the EU, certainly makes convergence a concrete process. However, supranational institutions rely on and are mediated by national institutions. Moreover, change in one area is likely to require associated change in adjacent aspects of employment systems, which may prove more resistant to change. Without complementary national or business pressures a state of convergence is thus unlikely to be achieved in any one particular area. The scope of EU agencies to interact with national ‘actors’ depends, of course, upon the eventual degree and form of political and economic union. EU governments are currently faced with two general models of integration. The first, federalist, model entails monetary union with a common currency and exchange and interest rates. To avoid degeneration of systems of national wage determination into uncoordinated, divisive and conflictual methods of settlement, differential EU support and intervention may be necessary, especially in economically weak regions or countries. In his chapter Teague argues that, in this context, continental views of ‘subsidiarity’ differ from interpretations, such as the British Government’s—that subsidiarity returns maximum powers to the national governments. On the contrary, suggests Teague, with monetary integration, subsidiarity means that Euro-level agencies may act in concert with new regional institutions to subsidise, restructure and coordinate in regional, and even small national, economies; which can no longer be governed by exchange rate pressures and national wage-bargaining institutions. In Maurice’s perspective the European actor would need to work with both national ‘actors’ and also new or modified regional actors. However, the second form of political union, what Teague calls ‘augmented intergovernmental’ integration, would continue the joint mode of regulation, shared between the European Commission and the national governments; an approach which culminated, somewhat ambiguously, in the Maastricht Treaty. The social clauses of that agreement permit the EU to intervene in areas such as ‘atypical work’, provided the majority of governments agree, and its Commission to influence national practices by promoting agreements between representatives of the ‘social partners’ at European levels. The ‘augmented intergovernmental’ approach therefore means working mainly with national actors to modify selected policies and practices of their employment systems in the direction of transnational standards. Teague traces through the likely effects of both the federalist and augmented intergovernmental scenarios on the Irish system. Ireland’s partial move away from British-style industrial relations and its principal social actors’ general cooperation with concerted pro-European policies, make it a useful contrast and yardstick for the ambivalent and anti-Federalist stance pursued by a country such as the UK.

INTRODUCTION 11

A EUROPEAN SYSTEM OF INDUSTRIAL RELATIONS? Perhaps the most important arena for the interaction of national and European actors in the process of European union is that of industrial relations and employee representation. Elsewhere, Teague has assessed convergence in terms of the relationship between changing production systems and what he refers to as ‘industrial relations trajectories’ (Teague, 1990). These show that national industrial relations processes do tend to exhibit certain similar features at different points in time, within the bounds of the socio-political and cultural force of national institutions. Evolution of production systems—presently a transition from a Fordist mass manufacturing paradigm—provides a common driving force which sets similar challenges to national industrial relations arrangements. Centralised collective bargaining for standardised norms and categories of worker, through hierarchical channels, is giving way to more fluid practices to match flexible multi-skilled work roles and more individualised employee relations in the new post-Fordist production systems. In Teague’s theory the new industrial relations trajectory may take either a’competitive flexibility’ form, similar to the arrangements favoured by the Government and many large employers in Britain, or one of ‘constructive flexibility’—with a micro-corporatist regulation similar to Sweden and Germany. Competitive flexibility means relations of individualised cultural commitment in the firm and deregulated external market relationships. Constructive flexibility, on the other hand, aims to limit the inequalities of market determination. Various forms of codetermination, rather than market processes, set rules and standards, for wage bands, employment rights, training and so on. Traditionally, European Commission policies lean mostly towards a supranational system of constructive flexibility. A supranational order is necessary because the further internationalisation of business is a key feature of post-Fordist production systems, in relation to which the single European market is both symptom and contributory factor. Relatedly, an integrated European labour market is favoured by the growing pressure for Euro-citizenship, the spontaneous urge to compare employment standards, and EC institutional determination for diffusionist social policies. Another major force deepening this process is market integration, as it encourages growing horizontal links across companies. Common collective bargaining procedures would also push economic and industrial relations convergence. Set against this tide, however, are notable negative forces. One obstacle is the existence of different types of legal regulation of industrial relations. Three different traditions have been identified in western Europe. 1 In a Romano-Germanic system individual rights and freedoms are guaranteed by the constitution, and the state plays a major role in industrial relations.


Labour market legislation is generally extensive and covers areas like working time and employee representation. Collective agreements in this system are both binding on the parties concerned as well as capable, except in Italy, of legal extension erga omnes. All the continental EU states with the exception of Denmark possess variants of this system. 2 In the Anglo-Irish system a written constitution is absent and legislation plays a more limited role in the conduct of labour law. The tradition is one of non-intervention by the state and legal system in the functioning of the labour market and industrial relations. Significantly, collective agreements in the Anglo-Irish system are not legally binding on the parties involved. 3 A Nordic system is characterised by the greater importance afforded to collective rights established in agreements between the labour market parties and enforceable through law. Thus labour law has a more collective form in the Nordic system than in the Romano-Germanic system, and a less voluntarist form than in the Anglo-Irish system. However, the use of legislation as a source of regulation varies widely in the Nordic countries. Other Nordic countries resort to legislation much more than Denmark where, apart from recent growth as a result of EC membership, labour legislation plays a relatively minor role. Nordic collective agreements have not been subject to erga omnes extension. In principle, however, the legal extension of agreements is currently possible in Finland, Sweden and Norway; but not in Denmark (see Bruun and Nielsen, 1992:231–4; Gold, 1992:15–18). As a consequence of these different legal traditions3 it is difficult to guarantee that European proposals can have the same impact in each member state. The weakness of EC labour policies, their lack of core reference points and the absence of clear and transparent procedures is particularly evident. Attempts to promote EC-wide worker participation arrangements reveal a general problem of continual fragmentation of solutions because of resistance to change by the legal restrictions and de facto powers of industrial relations in individual countries. Overall, Teague considered the negative factors to be predominant, and ultimately frustrating the European Commission’s aim to establish a highly coordinated system of labour market legislation in the near future. Or, in the terminology used here, they will check the emergence of a supranational employment system. In some respects, of course, multinational companies could already be considered to be supranational actors, who are not so constrained by national employment systems. For several decades, trade unions and sympathetic figures at European Community levels have sought European-wide measures to make them more accountable to labour. The chapters by O’Kelly and Ramsay critically examine possible developments in industrial relations trajectories in

INTRODUCTION 13

relation to large, often multinational, firms. O’Kelly, writing essentially from a policy analysis point of view, charts the scope of EC policy to establish European-level bargaining structures. Harvie Ramsay examines the past and prospective future of relations between EC industrial relations policies and multinational corporations. In the development of Euro-level industrial relations structures, O’Kelly sees a greater role for transnational forces than a societal effects analysis might expect. Sector-level forums for the whole EC are appearing and will be needed. EC-wide unions are unlikely to develop but national unions will want cooperation within sectors to monitor multinationals’ plans and policies. Employer organisations will also find sectoral arrangements useful to coordinate their employee relations positions. Supranational consultative forums have also been created, or proposed, in a number of European-based multinationals. Although their scope and meaningfulness to actual workplaces varies, they are consistent with the EC recommendations, and some may have the potential to move towards bargaining status. The Single European Act provided for information disclosure through participation and consultation. This statute leaves the specification of the appropriate mechanisms to the relevant ‘social partners’. However, the Commission has since initiated ‘social dialogue’ sessions and Action Programme recommendations, which propose more specific topics and procedures. O’Kelly suggests that employment flexibility, consultation and information disclosure, introduction of new technology, payment systems and wage policies, training and skill shortages are areas which link the current local-national and incipient EC dimensions of employee representation. This emergent European actor— neither employer nor union, neither statutory nor completely voluntary—is, according to O’Kelly, a logical response to the increasing weight of multinational influence. Unions today have more incentive than employers to organise themselves transnationally, but the existing transnational powers of individual multinational businesses can easily override national labour interests. Such firms often prefer to delegate what they see as human resource issues to the particular needs of their local managements. There is also evidence that US multinationals prefer a loose variety of national employee relations which facilitate picking and choosing investment locations for firms’ own specific practices and preferences. We are reminded that much national labour legislation in the past twenty years has emanated from EC agreements. However, O’Kelly adds that European economies’ dependence on multinational investments make views, such as those cited by US business, a continuing drag on the potential for Europeanisation of employee relations processes. O’Kelly’s assessment is necessarily exploratory and tentative. His data are largely from French multinationals, prompted by previous French government policies to encourage


enterprise-wide consultative forums. However, these do constitute concrete experiments through which industrial relations practitioners and personnel specialists in some large European firms are already trying to accommodate Europeanisation. Even if the consultation and information structures involved are weak and provisional. Corporate antipathies to Europeanised industrial relations are emphasised even more by Harvie Ramsay. He also looks at the prospects for an adequate trade union strategy being created at the European level. The context of globalisation and transnationalisation of the economy makes such a move all the more important. Within the European Union the Single European Market and the subsequent Social Action Programme have laid foundations for trade union advances in this area, to assume the role of a full ‘social partner’ in European decision-making. Ramsay first asks whether the trade unions have the skills, organisation and motivation to rise to the new opportunities presented. He goes on to question whether the newly minted design of social partnership and social dialogue actually has sufficient authority, pointing to weaknesses of both organisation amongst the ‘partners’, and in the outcomes achieved so far. Reviewing developments so far he sees little movement towards the agenda set by the labour movement: no real procedural controls, few achievements in the worker participation field, some minimum basic rights but no prospect as yet for European collective bargaining. The reasons for lack of progress are attributed to the partners’ lack of experience and sanction at the Euro-level, the fundamental disagreements over direction between the ‘peak organisations’ of the two sides, UNICE and ETUC, and the fact that Europeanisation of decision-making is swimming against the tide of decentralisation within enterprises. Ramsay looks critically at business and trade unions and finds them wrestling with difficulties within the Commission’s strategy for designating them as social partners. These difficulties are seen as even more acute when considered in relation to the trend towards greater corporate multinationality. For the latter, according to Ramsay, indicates an increasing necessity for consultative/ bargaining procedures within, and Commission oversight over, such enterprises. In conclusion he sees the aims of the European labour movement being advanced. As yet, however, they fall a long way short of the establishment of either jointly agreed procedures, or European collective bargaining, that might allow some measure of control over large international and domestic corporations within the EU.4

INTRODUCTION 15

ARE ENTERPRISE AND INDUSTRIAL PRACTICES CONVERGING? There is still a possibility that the EC will be the source of the ‘web of rules’, which Kerr et al. thought would fulfil the same functions in each society, minimising differences in national employment systems (Kerr et al., 1973:52). However, as the above discussion of industrial relations suggests, the commonality or variety of these rules also depends on corporate attitudes. The spread of new business paradigms for organisational flexibility and the shift from specialised personnel management to multifunctional human resource management may be especially important. How far are these philosophies and management methods driven by the need for broader more responsive work roles, in more flexible industrial processes? To what extent will they reinforce a common set of rules, or run counter to them? How far will the managerial and business changes themselves be modified or resisted by national specificities? For much of the period since the Second World War, Europe’s dominant industrial paradigm consisted of national variations on Keynesian and quasicorporatist regulation of mass production-mass consumption business, with Tayloristic and bureaucratic work roles and management processes. It is still unclear exactly how far this so-called Fordist paradigm is being succeeded by a new, general, industrial model. Europe may be poised between two alternative ‘successors to Fordism’. Teague’s suggested choice between a ‘competitive flexibility’ and a ‘constructive flexibility’ form of regulation may be indicative here. However, such broad regulatory frameworks only cohere if they dovetail with the organisational and operational practices of particular firms and industrial sectors (Lane, 1991: 518–19). In this way the German system of concerted wage bargaining, negotiated employment change and proactive training policies, mutually reinforced business strategies for long-range technological investment and the manufacture of high-quality, high-value products (Sorge et al., 1983). Similarly, Piore and Sabel have argued that the innovative, versatile product and process strategies of some European manufacturing regions provide the basis for ‘flexible specialisation’ as an institutional successor to the Fordist model (Piore and Sabel, 1984). Aspects of the small-firm network basis of flexible specialisation in England, France and Italy are examined in Chapter 5 by Bull, Szarka and Pitt, while in Chapter 6 Kern and Pichierri examine the prospects for an Italian and German convergence of work organisation and employee relations. Ramsay’s analysis suggests that any commonalities in transnational business policies for work and employment will not mesh easily with the policies emanating from the supranational political force of EC activities. However, if there is a ‘post-Fordist’ pattern of international restructuring in business organisation and policy, then this is as much a process of small and mediumsized business revitalisation as it is a multinational one. Many of the expanded


networks of small and medium-sized enterprises (SMEs) in Europe have to be taken into account (Sengenberger and Loveman, 1988). Largely lacking their own industrial relations and training institutions, SMEs may in some ways be more easily regulated by supranational arrangements. On the other hand, their atomised and diverse composition may militate against such concertation. A critical factor will be the extent to which SMEs form district or regional complexes in specific industrial sectors. The distinctive and successful business strategies of SMEs in certain Italian regions have been based on district networks and representative industrial associations (Jones and Saren, 1990). The ‘flexible specialisation’ style of production attributed to these businesses is also predicted as the most likely post-Fordist paradigm for the future (Piore and Sabel, 1984). Comparative evidence of convergence or divergence between SME industrial districts is therefore a basic criterion for the related employment systems. Anna Bull, Joe Szarka and Martyn Pitt assess the prospects for convergence around a flexible production paradigm in three notable national textile working areas: Como in Italy, Lyon in France and Leicester in Britain. If convergence in employment systems does partially depend upon similar developments in business strategy then the former is not ruled out by the findings of Bull et al.; but it looks likely to be an uneven process. One reason is that what appear superficially to be the same ‘flexible specialisation’ strategies—Piore and Sabel identify Como and Lyon as classical industrial district forms of flexible specialisation—turn out to differ markedly in detail. All three districts have moved towards—or accentuated—multi-product, high-quality, middle-to-upmarket product and production stances. However, the Leicester firms remain at the less flexible higher-volume end of this spectrum; largely because the clothing industry in Britain is dominated by the purchasing power of large retail firms such as Marks & Spencer. Como’s response to competition from Third World silk producers has been twofold. Some firms have advanced more into ‘downstream’ activities such as dyeing, printing, finishing and wholesaling. Others have deepened their specialism by increasing the complexity of designs and fibre mixes, and the fashion content. The flexible responsiveness to markets and the capacity for innovation, arising from simultaneous cooperation and competition amongst subcontracting networks of SMEs, has also persisted. However, Lyon, rather than moving ‘downstream’ to counter the competition, strove to maintain its high quality and special lines emphasis in ‘upstream’ silk production. Moreover, unlike Como, enterprises tend to sell on to national and international markets rather than through local linkages. In Britain the Leicester knitwear and hosiery industry has tried to compete increasingly on inexpensive and ‘value for money’ products for both local and national markets; selling its better quality lines to the large chain stores

INTRODUCTION 17

dominating UK clothes retailing. The general price reduction strategy has meant continuing competition from the developing economies’ producers, who also compete on this factor. The most relevant inference of Bull et al. for the main themes of this book is therefore one of persistent diversity in SMEs’ business strategy. Similar responses and a degree of imitation are likely in the business strategies and structural reorganisation of Europe’s SMEs; but these developments will remain local variations on an international theme, rather than convergence towards identical practices and organisations. The Como and Lyon firms are likely to place a greater priority on design and planning skills in their workforces, whereas the Leicester firms, with their pricecompetition strategies, are more likely to give priority to lower wage, and probably, lower-skill employment. Work organisation constitutes a key aspect of the spread of new industrial bases for a Euro-model employment system. Before the investigation of postFordist production patterns became fashionable researchers at the Göttingen Sociologisches Forschungsinstitüt (SOFI) had identified a decisive shift in the specialised Tayloristic work roles associated with mass production in German plants (Kern and Schumann, 1984). Their most recent research is discussed in the chapter by Kern and Pichierri who use these ‘new production concepts’ in Germany as a basis for assessing the wider prospects for a convergence of German and Italian employment systems. In view of a tacit regard for German training and occupational systems as models for less successful economies (Campbell et al., 1989; Lane, 1988; Prais, 1981, 1989; Steedman et al., 1991), the possibility of a mutual convergence between Italian and German work roles has potentially wider implications. The first SOFI study found that the range of tasks and responsibility was being increased in blue-collar jobs in the chemical, automobile and machine tool industries. Replication of their original studies in 1988/9 confirmed this trend. The SOFI researchers acknowledged the persistence of large numbers of general workers, lacking strategic work roles, and the decisive part that political regulation can play in industrial restructuring. Nevertheless, they foresaw a long-run upgrading of industrial work. Related SOFI studies also found similar, though less pronounced tendencies, in the electronics and financial services sectors. Comparing Italy to these German developments Kern and Pichierri see a number of striking similarities in work organisation trends. However, they also point to some key differences in the incidence of such work, and in the overall social and institutional context. They reject convergence in the sense of homogenisation, but see European integration as contributing to regional convergence within continuing national differences. Jobs similar to the German ‘system controllers’ may be found in Italian cases of computerised automation; but more systematic schemes for less specialised and less hierarchical work roles have been most pronounced in nationalised


industries, such as steel, as part of a rationalisation to accommodate to sectoral decline. Moreover, polyvalent jobs have also been associated more with the small-firm networks in certain specialised industrial districts in Italy, than with the planned reorganisation of production in larger firms. Some Italian observers have also claimed that some, at least, of these small-firm networks achieve enterprise flexibility at the expense of work enhancement. Yet large firms do seem to be investing substantial sums in training and retraining for certain nonmanual workers in ways which may be lessening the distinctions between clerical and technical jobs. Direct comparisons of work organisation in Kern and Pichierri are difficult because of structural differences in regional, industrial relations and education and training institutions; differences that are reflected in Italian and German methodologies: i.e. case studies and institutional contexts in Italy, general surveys and production processes in Germany. Italy’s regions differ both in industrial specialisation and between the location of older, declining industry, newer sectors and revitalised staple industries, whereas earlier regional differences in Germany have tended to be weakened by the leading role played by large firms, the central state and national trade union structures. The diffusion of new production concepts is more favoured by German traditions of the enterprise as a locus of common interests between labour and capital, a tradition reflected in an ‘integrative’ style of management, a contractual rather than conflictual stance by labour, and the prominence given to job security and the maintenance of key work roles in any rationalisation plans. The Italian tradition of adversarial relationships and conflictual union bargaining led in the 1970s to the weakening of the union influence; and so to their relative marginality in the process of introducing any new production concepts. The corresponding diversity of managerial initiatives amongst enterprises in Italy confirms the impossibility of reading off the industrial relations character of work reorganisation from common technical changes. More broadly skilled work roles are also facilitated in Germany by the codetermined training system, which is based on apprenticeship principles and is relatively easily adapted to produce new technical skills. In Italy, by contrast, an integrated national training system is lacking. Provision varies from region to region and large firms have increasingly developed their own internal arrangements; although recently they have also developed strong links with secondary schools, and influences upon the activities of technical colleges. Similarly to Japanese practices, there is also a growing tendency to employ graduates of tertiary education as production workers in large firms. Despite the apparent diversity of Italian training arrange ments these might therefore have similar functional outcomes to the more homogeneous German provision. Despite the several differences, Kern and Pichierri suggest that they may be reduced in future by certain cross-cutting influences: a possible ‘Italianisation’ of

INTRODUCTION 19

German industry via spatial decentralisation of production for more comparative advantage in geographical specialisation, plus cross-sectoral product innovation; and growing size and influence, analogous to their German counterparts for larger Italian firms; albeit often through organisational decentralisation of the small-firm industrial districts. Italian trade unions may be becoming more cooperative and inclined towards German-style comanagement, with more enterprise-level bargaining similar to the German pattern.5 This German-Italian comparison therefore suggests similarities in the autonomous changes in industrial work roles. However, a more complete convergence may depend upon corresponding shifts in enterprise organisation, industrial relations institutions and the organisation of training. Kern and Pichierri detect some movement towards cross-national similarity, principally by an Italian movement towards German forms. However, as Maurice suggests, there is more likely to be a reliance upon older national institutions to achieve similar functional gains to the German system. CAN SOCIAL POLICIES REDUCE SPECIFIC LABOUR MARKET VARIATIONS? Labour markets are highly institutionalised arrangements in which workers are recruited and discharged, and job profiles and wage rates determined. Because they are bounded by national laws, institutions and agencies it is possible to speak of ‘national’ labour markets. But specific market processes operate more fully at local, sectoral and occupational levels. In the context of European convergence it is possible to analyse such specific labour markets in terms of both the impact of EU regulation upon them and the characteristics which are likely to work against their convergence. Detailed evidence on the scale of differentiating and converging influences is provided by comparisons of youth training systems in Britain and Germany - by Alan Brown and Martina Behrens, and by Abigail Gregory’s study of regulation of working hours for British and French women employed in food retailing. Brown and Behrens’s comparison of British and German youth training processes focuses on cross-national commonalities of a more fundamental kind. The German training system has been seen as a desirable model for countries with a ‘low-skill equilibrium’ such as Britain (Finegold and Soskice, 1988; Steedman et al., 1991:73; Rose, 1990); and even as a tacit influence on recent UK Government reforms (Marsh, 1991). Brown and Behrens, however, portray a different aspect of training systems for young entrants to the labour market: the common economic forces facing the marginal participants in both Germany’s comprehensive dual system and Britain’s more heterogeneous provision. They argue that it is not the training system as such which most


affects the actual experience and vocational success of many young people. It is, rather, the articulation of the schemes with the enterprise and the condition of the local labour market. Contrasting evidence from slack and tight labour markets in both Germany and Britain—represented by Liverpool and Swindon, and Bremen and Paderborn—shows that the relatively low-skill British Youth Training Scheme (YTS) was not an obstacle to otherwise marginal youngsters getting relatively secure careers in Swindon. On the other hand, both the Liverpool youth and those on the sub-apprenticeship German schemes in Bremen were restricted to temporary, low-skill jobs, and eventual unemployment. Although the more recent decline of the buoyant Swindon labour market has probably diminished the prospects of marginal labour market entrants there, both Liverpool and Swindon YTS participants found their work experience more rewarding than their German counterparts. Moreover, the German ‘high-skill equilibrium’ (Finegold and Soskice, 1988) has to be understood as resting on a very fragile mutual reinforcement of the supply and demand for newly skilled labour. In expanding economic phases the German plethora of skills drives the expansion forward and provides corresponding rewards for otherwise marginal trainees and the newly trained. However in either national, local or sectoral downturns this virtuous circle goes into reverse. Then even the fully skilled worker in marginal trades or firms may be penalised as much as her or his British counterpart, and those who failed to get apprenticeship training even more so. Overall, the spotlight that Brown and Behrens put on the marginal participants in the training and employment nexus shows that no amount of convergence towards the best performing institutional arrangement is likely to fully transcend the elemental impulses of a capitalist economy. Hours of work constitute a striking difference in national employment conditions, and one which derives from national differences in economic structure and in the force of legal norms and labour market institutions. Working-time differences provide a crucial test case for the principles of European integration and national convergence, because of the EC’s officially declared aim of minimising these differences. Analysing the plausibility of this policy for the contrasting hours worked by British and French—mainly female —workers in grocery retailing, Abigail Gregory finds grounds for both convergence and a continuing element of divergence. In what is, in many respects, a model study of the new convergence process, Gregory partly confirms the ‘societal effects’ thesis. In Britain there has been greater use of part-time working, for shorter periods. This difference arises from national differences in employment legislation, social protection for pregnant and working mothers; and from the legal support of trade union involvement in enterprise working-time policies. For example, and unlike Britain—where weak union presence is not bolstered by legal support

INTRODUCTION 21

—some negotiated agreements in the latter may be generalised to whole sectors. On the other hand, Gregory identifies a number of medium- and longer-term developments which could lead to greater convergence. One of these is the autonomous logic of commercial practices. The operation of information technology in retailing favours rotating and part-time shifts which could increase French retailers’ use of part-time workers. A contrary force is that general retailing trends mean providing more personalised services from more highly trained staff. Shortcycle, high turnover staffing may be incompatible with such a business strategy. Political change may also encourage some convergence. If some of the ‘Social Europe’ provisions—particularly proposals and legal manoeuvres on ‘atypical’ working patterns and equal opportunities—were to apply to the UK, then British employers would lose much of the incentive for employment of short-cycle, part-time workers. In the longer term, therefore, Gregory identifies distinct possibilities for Anglo-French convergence on working hours, provided there is some prior convergence of business practices and social welfare regulation. ARE THE LATE ENTRANTS CATCHING UP OR LEVELLING DOWN? The strongest prospects for convergence are within at least the ‘core’ of the twelve states of the EC. However, the new Nordic members, Sweden and Finland, and would-be members in ex-communist countries, such as Hungary, may have to adapt their employment systems to achieve political and economic integration. The new market economies are already being pulled along similar pathways through ‘colonisation’ by west European corporations and the political influence of the EC. Economic reconstruction in Poland and Hungary has been directly influenced by the EC’s PHARE technical assistance programme; while the former German Democratic Republic has been directly subsumed into the institutions of the Federal Republic. Those central and eastern European countries with aspirations to eventual EC membership will doubtlessly also develop employment systems with at least one eye on compatibility with the emerging EC model. In the heyday of functional convergence the adoption of western, i.e. North American, forms of industrialism was predicted as inevitable for the command economies of the eastern bloc. The collapse of these communist regimes into the arms of western capitalism now makes this thesis more testable. Starting from blueprints supplied by western policy-makers, and partly driven by aspirations for western consumer life-styles, the probabilities of deliberate convergence seem higher than ever. Lajos Héthy -now political secretary in the Hungarian Ministry of Employment—outlines the legacies of state planning and


earlier compromise reforms as complications to a straightforward adoption of western business and economic practices in Hungary. Analogous problems face the Nordic area. For decades societies such as Sweden’s were depicted as a kind of halfway house between the planned social economies of the Warsaw Pact countries and the free-market capitalism represented by the USA. However, detailed welfare provision, wideranging labour market intervention by the state, and centralised bargaining arrangements between employers’ organisations and trade unions has come under increasing strain during the recessionary period of the last twenty years. Imminent EU membership could provide a safe haven for these systems if it is reorganised around a federal administration based upon constructive flexibility in the labour market. If, however, the looser intergovernmental model—in tandem with competitive flexibility—predominates, ‘Scandinavian’ employment systems would face a substantial and difficult adjustment process. McDaid’s chapter compares this Nordic model with economic and social policy trends in the EU. He shows how those trends have already modified regulation of the Finnish employment system towards a longer-term position that may be midway between ‘constructive’ and ‘competitive’ flexibility. In a new market economy, such as Hungary, with longer and independent experience of introducing market ‘reforms’, Héthy’s overview provides salutory evidence of the institutional complexities which preclude a simple and belated vindication of the functional convergence theses of the 1960s. The first attempts at economic liberalisation between 1968 and 1988 failed to develop coherent and fully independent roles and structures for employers’ and labour organisations. Consequently the accelerated promotion of market processes from 1989 has left Hungary without a Kerrstyle ‘web of rules’ to develop even the most minimal corporatist of industrial relations patterns. Paradoxically if such institutions are to be introduced as part of a pluralist market system only the state can set them up. A tripartite incomes council represents a tentative move in this direction. While this has broken with the completely ineffective command system inherited from the communist phase, it has so far failed to make enough impact to redress the equity, commercial and purchasing power shortcomings of previous arrangements. Shifts in industrial structure and deflationary economic policy have saddled much of western Europe with high unemployment for at least a decade. However, these societies at least understand its sources and have developed some measures to mitigate the severity of its impact. By contrast in Hungary the sources of unemployment—government monetary policies, privatisations, organisational and technological rationalisation and demographic shifts—are both multiple and novel. Moreover, remedial and anticipatory responses lack institutional resources such as market-oriented training systems and adequately organised and decentralised state agencies. More strategic training

INTRODUCTION 23

developments are handicapped by overspecialisation in vocational provision, by lack of coordination amongst the responsible state departments, anachronistic curricula, the higher status of education over training institutions, and enterprise reluctance to train their own workers. It is perhaps within the enterprises themselves that the ultimate restrictions on commercial convergence are located. Many of the managements of large firms have achieved success through their political ability to deal with the state and its agencies, rather than with other enterprises. As far as work organisation is concerned there is an archaic mixture of Taylorist schemes, many introduced in the 1970s, and pre-Taylorist arrangements which allowed the workers themselves considerable autonomy in work practices. Héthy points out the enormous gulf in business policies and institutions which must be filled if Hungarian firms are to match contemporary western practices. International operations management, shortening of product life cycles, and product market specialisation, have ‘mostly passed eastern Europe by’. Hungary and eastern Europe are certainly sustained by the illusion of economic convergence with the west, concludes Héthy. At the moment, however, there is an unbridgeable gap between these dreams, and the availability of concrete, and appropriate institutional measures to make economic convergence a social reality. CONCLUSION The contributions to this book help answer the six questions about Europeanisation raised at the beginning of this Introduction. • • • • • •

What are the forces for convergence? Is the European ‘state’ a new force for convergence? Can there be a European system of industrial relations? Are enterprise and industrial practices converging? Can social policies reduce labour market variations? Will new national ‘entrants’ catch up, or be ‘levelled-down’?

Taken together the contributions to this book suggest that the forces for convergence in these spheres lack, as yet, the strength to overturn local and national institutional differences. However, compared to the factors identified by 1960s’ functional convergence, the forces for identity are now multiple and potent; although, as yet, they show few signs of working together in the same direction. Paradoxically, employer-led efforts for more deregulation of national employment systems, in the competitive flexibility paradigm, are also likely to check the uniform, European-level, social regulation that could replace them. The industrial relations stance of MNCs and the narrow and diffident reception


given by large firms to EU schemes for employee participation, may be only the most visible symptoms of employers’ unwillingness to combine economic standardisation with convergence in the framework of social relations. The EU, as the new European ‘actor’, has still to work out the detailed methods and rules for working with the national, regional and industrial actors, whose support is essential for any meaningful Europeanisation of employment systems. As Gregory’s case of part-time employment in retailing suggests, the acceptability of EU standards depends partly on appropriate changes in business practice. The chapters on industrial relations show that a small amount of convergence in participation and collective bargaining may be achievable by new supranational arrangements with MNCs. But these innovations will be small in the face of the MNCs’ opposition and their rather different perspective on European integration. Beneath such ‘summits’ are a mass of interfaces between thousands of smaller business operations, and national, and now European, social arrangements. Kern and Pichierri’s German-Italian contrast focuses primarily upon the industrial, rather than the Euro-political, thrust of the scissors of convergence. It still shows, however, how the sheer range of national institutional differences can moderate forces for convergence in work and employment, which are in themselves highly favourable to business goals. The trend to decentralised production by smaller industrial firms does not entail as much similarity in business and management policies as concepts such as ‘flexible specialisation’ would imply. German-style ‘new production’ concepts may have parallels in quite different institutional environments, such as Italy. But the full range of institutional conditions in the different countries, which would make the parallels coincide, are still evolving in particularistic ways. Labour market interventions to promote similar opportunities for key groups across Europe is an explicit aim of the EU. Brown and Behrens’s AngloGerman comparison shows however that local economic conditions may be strong enough to frustrate quite different types of youth training provision, let alone a more generalised European approach. This does not mean, of course, that trans-European interventions cannot make an impact. Women workers’ differing working-time opportunities might well be significantly changed and harmonised between sectoral labour markets in quite different national contexts, as Gregory demonstrates. However, her paradigmatic analysis also shows the need for a coincidence of business policies and national social policy shifts, as well as EU measures, for this merging of differences to occur. At a societal level both Héthy’s Hungarian case, and McDaid’s analysis of the Finnish version of the Nordic model, show how configurations of political forces may react to preserve modified versions of older institutions of social

INTRODUCTION 25

regulation against outright competitive flexibility, or a levellingdown form of Europeanisation. The enormous range of issues, and the complexity of a continually evolving pattern, mean that the contributions to questions of convergence in this book can only offer minimal answers. However, we can contribute one key point to debates in the UK, and other countries, about the loss of national institutions or the failure to achieve social regulation. The railway of convergence is up and running. There are several trains but few are in sight of their destination and, unlike a real railway, some of the passengers can influence the route they will take. NOTES 1 ‘Work and Employment in European Society—Convergence and Integration’, Bath, 6–8 September 1990. The editors would like to acknowledge the financial support of the Economic and Social Research Council, and the European Centre for the Development of Vocational Training (CEDEFOP); and the help and encouragement of Bert Moorhouse, as editor of Work, Employment and Society. 2 Detailed references for the Aix approach are given in the chapter by Maurice. For a short, sympathetic overview see Rose (1985). 3 We are grateful to Helen Rainbird and Susan Milner for reminding us of this factor, also described thus in McDaid’s original contribution. 4 In this context, it is significant that critical observers of labour movement strategies detect a likely convergence of trade union cultures as ‘Europeanisation’ progresses (Hyman, 1991). Even though British employers and unions are outside of the Social Chapter provisions of the Maastricht Treaty they are “increasingly adjusting their policies to continental conditions and Social Chapter criteria (PSI, 1993). 5 An Italian labour minister has claimed that recent political reforms of the labour relations framework have brought Italy closer to the northern European model of industrial bargaining (Financial Times, 5 July 1993).

REFERENCES Amin, A. and Dietrich, M. (1991) Towards a New Europe? Structural Change in the European Economy, Aldershot: Edward Elgar. Bertrand, O. (1991) ‘Comparing Skills and Qualifications in Europe’, Cross-National Research Papers 4, Birmingham: University of Aston. Beynon, H. (1984) Working for Ford (2nd edn), Harmondsworth: Penguin. Bruun, N. and Nielsen, R. (1992) ‘The Future of the Nordic Labour Relations Model’, in N. Bruun et al., The Nordic Labour Relations Model, Aldershot: Dartmouth, pp. 221–63. Campbell, M., Currie, W. and Warner, M. (1989) ‘Innovation, Skills and Training. Microelectronics and Manpower in the United Kingdom and West Germany’, in P.Q.Hirst and J.Zeitlin (eds), Reversing Industrial Decline, Oxford: Berg Press. Castro, A., Meyhaut, P. and Ruberty, J. (eds) (1992) International Integration and Labour Market Organisation, London: Academic Press.


Cecchini, P., et al., (1988) The European Challenge: 1992—The Benefits of a Single Market, Aldershot: Wildwood House. Cressey, P., Di Martino, V., Bolle de Bal, M., Treu, T. and Traynor, K. (1988) Participation: Review of the Studies of the European Foundation, Dublin: European Foundation for the Study of Living and Working Conditions. Daniel, W.W. (1987) Workplace Industrial Relations and Technological Change, London: Frances Pinter. Due, J., Madsen, J.S. and Jensen, C.S. (1991) ‘The Social Dimension: Convergence or Diversification of IR in the Single European Market?’ Industrial Relations Journal, 22 (2): 84–102. European Participation Monitor, P+ (1993) ‘Innovative Teamworking in Europe’, Dublin: European Foundation for the Improvement of Living and Working Conditions, 5. Finegold, D. and Soskice, D. (1988) ‘The Failure of Training in Britain: Analysis and Prescription’, Oxford Review of Economic Policy, 4, 3. Gallie, D. (1978) In Search of the New Working Class, Cambridge: Cambridge University Press. Gallie, D. (1991) ‘Patterns of Skill Change: Upskilling, De-Skilling or the Polarization of Skills?’ Work, Employment & Society, 5(3): 319–51. Garibaldo, F. (1988) Lavoro, Innovazione, Sindicato, Genoa: Costa & Nolan. Gold, M. (ed.) (1992) The Social Dimension, London: Macmillan. Grahl, J. and Teague, P. (1989) ‘The Cost of Neo-Liberal Europe’, New Left Review, 174, 33–50. Handy, C. (1994) ‘Tender Loving Care for Better Workers’, Financial Times, 21 February. Hyman, R. (1991) ‘European Unions: Towards 2000’, Work, Employment and Society, 5(4): 621–39. Jones, B. and Rose, M.J. (1986) ‘Redividing Labour: Factory Politics and Work Reorganisation in the Current Industrial Transition’, in S. Allen et al. (eds), The Changing Experience of Work, London: Macmillan. Jones, B. and Saren, J. (1990) ‘Politics and Institutions in Small Business Development. Comparing Britain and Italy’, Labour and Society, 15, 5. Jurgens, U. (1989) ‘The Transfer of Japanese Management Concepts in the International Automobile Industry’, in S. Wood (ed.), The Transformation of Work, London: Unwin Hyman. Kern, H. and Schuman, M. (1984) Das Ende der Arbeitsteilung? Rationalisierung in der industriellen Produktion, Munich: Verlag C.H. Beck. Kerr, C., Dunlop, J.T., Harbison, F.H. and Myers, C.A. (1973) Industrialism and Industrial Man, Harmondsworth: Penguin. Kruse, W. (1989) Vergleichende Analyse des Standes und Entwicklung von Qualifikations—und Bescähftigungsstrukturen in der Chemischen und Prozess-Industrie in Ländern der Europäischen Gemeinschaft, Report to CEDEFOP, Dortmund: Sozialforschungsstelle Dortmund Ländesinstitut. Lane, C. (1988) ‘Industrial Change in Europe: The Pursuit of Flexible Specialisation in Britain and West Germany’, Work, Employment and Society, 2(2): 141–68. Lane, C. (1991) ‘Industrial Reorganisation in Europe: Patterns of Convergence and Divergence in Germany, France and Britain’, Work, Employment and Society, 5(4): 515– 39. Marsh, D. (1991) ‘A Hard Act To Follow’, Financial Times, 15 April.

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Organisation for Economic Cooperation and Development (OECD) (1986) Flexibility in the Labour Market: The Current Debate, Technical Report, Paris: OECD. Pieper, R. (1991) Human Resource Management. An International Comparison, Berlin: DeGruyter. Piore, M. and Sabel, C. (1984) The Second Industrial Divide, New York: Basic Books. Policy Studies Institute (1993) Trade Unions and Employers in The Single European Market, London: Policy Studies Institute. Prais, S.J. (1981) ‘Vocational Qualifications of the Workforce in Britain and Germany’, National Institute Economic Review, 98:47–59. Prais, S.J. (1989) ‘Qualified Manpower in Engineering: Britain and Other Industrially Advanced Countries’, National Institute Economic Review, 127:76–83. Rodrigues, M.J. (1992) ‘Specialisation Patterns and Employment Quality in the Construction of Europe. An Employment Systems Model as an Analytical Tool’, in A. Castro et al. (eds) International Integration and Labour Market Organisation, London: Academic Press. Rose, M.J. (1985) ‘Universalism, Culturalism and the Aix Group: Promise and Problems of a Societal Approach to Economic Institutions’, European Sociological Review, 1,1. Rose, R. (1990) ‘Prospective Evaluation through Comparative Analysis: Youth Training in a Time-Space Perspective’, Studies in Public Policy,. no. 182 University of Strathclyde: Centre for the Study of Public Policy. Sengenberger, W. and Loveman, G. (1988) Smaller Units of Employment. A Synthesis Report on Industrial Re-organisation in Industrialised Countries, Geneva: International Institute for Labour Studies. Sorge, A., Warner, M., Hartmann, G. and Nicholas, I. (1983) Micro-electronics and Manpower in Britain and West Germany, Aldershot: Gower. Steedman, H., Mason, G. and Wagner, K. (1991) ‘lntermediate Skills in the Workplace: Deployment, Standards and Supply in Britain, France and Germany’, National Institute Economic Review, no. 136, 60–76. Storey, J. (ed.) (1989) New Perspectives on Human Resource Management, London: Routledge. Teague, P. (1990) ‘The Emergence of a European Industrial Relations Structure?’ Paper for the ‘Work, Employment and European Society’ Conference, Bath, September. Teague, P. (1991) ‘Human Resource Management, Labour Market Institutions and European Integration’, Human Resource Management Journal, 2(1): 1–21. Tolliday, S. (1991) ‘Ford and “Fordism” in Post-War Britain. Enterprise Management and the Control of Labour 1937–1987’, in S. Tolliday and J. Zeitlin (eds), The Power to Manage, London: Routledge.

1 CONVERGENCE AND/OR SOCIETAL EFFECT FOR THE EUROPE OF THE FUTURE? Marc Maurice

INTRODUCTION The projected political and economic integration within the EC and the extension of markets into the ex-communist economies suggest a new process of Europeanisation of distinct national societies. How can social scientists analyse these processes? In particular should Europeanisation be viewed as a convergence of the various societies or, on the contrary, will this apparent convergence be thwarted by the exacerbation of national peculiarities? To further debate on these questions I will draw upon my own experiences as a sociologist, working with economist colleagues, in a particular type of international comparative analysis. In the first part of this chapter I shall outline the context within which ‘Europeanisation’ is located. Here it necessary to stress the heterogeneity of the different nations involved in this collective process. A process which, in our perspective, means creating new social spaces and new actors. In this respect I shall refer to the different temporalities within which national spaces, and the actors associated with them, have been formed historically. I will thus have recourse to history, in order better to understand the future development of Europe without, however, falling into the trap of historicism. These initial observations will refer to various aspects of the current debate within the social sciences: sociology, economics, history. The second part of the chapter will deal directly with the question of whether Europeanisation is likely to involve convergence, or its negation by national particularities. This assessment allows some observations on the theoretical implications of likely responses to the question, and on the ensuing methodological choices. To answer this question we must probe beneath its assumptions. It is true that support for the European project already reflects varying degrees of genuine convergence of political will amongst the member states of the EC, even though this convergence is rooted in a diversity of national strategies. However, there seems to be a popular assumption— sometimes a fear—that the current process of ‘unification’ necessarily involves a

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kind of convergence in which the elimination of economic specificities also means the elimination of the social, and even political, specificities of the various countries. This question itself has a number of component propositions. Before unambiguous answers can be given, each of the terms—nation, state, convergence, specificity, unification—ought to be clearly defined. Within the constraints of the present chapter it is not possible to elaborate these possible meanings. Let us, to progress the argument, simply consider the possible nature of unification. A united Europe need not necessarily be one which is institutionally unified. It is possible, for example, that there might be a common will and attempts to define rules and obligations whose constraints and benefits would be equally shared by each member state. Yet, even under these conditions, one could still imagine that each of the countries would adopt different solutions or make different choices to comply with, and acquire gains from, the common framework. This is where a sociological or, from my point of view, a ‘societal’ perspective becomes essential. For neither legal nor economic perspectives and policies will be able to overcome national particularities or specificities. The principal reason for this is that each individual society is itself a particular ‘actor’ in the European game. Thus each of these actors has its own interests, capabilities and resources. This perspective allows us to highlight some of the theoretical—and ideological—implications which underlie the more or less explicit choices behind decisions and agreements reached at the European level. Such an approach is, of course, very academic in its nature. Nevertheless it could also be of considerable value to all of those involved in making these decisions and choices, in various capacities. Public debate tends to polarise between a notion of convergence that rejects national specificities and, on the other hand, an excessively rigid emphasis on national specificity which contradicts the goal of unification. Both of these approaches can only diminish the notion of a united Europe. By contrast the societal perspective can be the analytical starting point for an approach which conceptualises Europeanisation as a process, but steers a course between the two poles of the debate. The relevance of our societal perspective is that it has previously been used to deal with contrasting academic approaches to social change between different societies. These approaches mirror the positions on convergence and national specificities in the contemporary debate over Europeanisation. Like the European convergence assumptions for example, economic development approaches in the 1950s and 1960s adopted a cross-national method of analysis which assumed inevitable convergence to a universal type of society—often as a liberal-pluralist model. Opposed to the crossnational perspective was the cross-

30 CONVERGENCE AND/OR SOCIETAL EFFECT

cultural approach, for which the particu larisms of national cultures meant that specific developments were always tied to the national cultures. In contrast to these polarised arguments societal analysis grew out of comparisons of work and employment in different societies which took account of specific societal institutions, but did not reduce the relevant phenomena to expressions of these institutions. It was possible to demonstrate that phenomena, such as occupational structures or wages systems, neither evolved autonomously through a universal logic of development, nor simply expressed the culture of the society in question. On the contrary, such phenomena developed in a ‘social space’ arising from the interaction of institutions such as the education system and production system. Analysis thus proceeds not on the basis of universal phenomena abstracted from their societal contexts, nor from a macro characterisation of each society as a whole. Instead the comparison is between the relevant societal complexes of each country— within which the phenomena are both situated and socially constructed by the actors involved. In the first instance, however, I want to indicate the relevance of a societal approach by a brief overview of the recent trend to historical reflections amongst investigators of economic change. That is to say, why extrapolation from economic models or general theories of politico-legal decision-making will not help to assess the likely Europeanisation process. This recourse has emerged from an awareness amongst social scientists that both economic rationality, and its institutions such as the firm, are not absolute constants in all societies. Rather, historical investigations have arisen because industrial economies, of the same market-capitalist stamp, vary in the institutions which regulate them, and because of past variations in the historical stage at which forms of regulation are adopted. Thus future convergence on solutions to problems of economic regulation is problematised by methodological and substantive considerations. Substantively because of the evidence that past institutional solutions—the Keynesianism or mass production/mass consumption structures of ‘Fordism’—varied in source and achievement between societies. Methodologically because these enquiries show that existing sociological or economic models—for which convergence was a more straightforward proposition - were inadequate to explain the complexity of what has already developed in each industrial capitalist society. CONCEIVING THE FUTURE OF EUROPE BY REFERENCE TO HISTORY The more general awareness of the methodological complexity of assessing large-scale economic adjustment between countries is indicated by the question posed by Robert Boyer about the future of the old continent of Europe:

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will one single dominant model be imposed on an international scale, or is it possible to conceive of a variety of national trajectories? (Boyer, 1989:1418) Boyer’s question is significant as it comes at the end of an article, with which Anglophone readers may not be familiar, where he makes a plea for a new alliance between economics and history. In such a stark form, moreover, it forces us to remember that the European integration is far removed from the model originally followed by the United States of America. The European Community is made up of a number of nations which already have a long history, some of which acquired their present shape only after being constituted or experiencing great upheavals in their territory and population in the course of successive wars. The differences in temporality that characterise the social and economic development of each nation have helped, just as much as the culture associated with them, to form the identity of each of them. In this sense, the Europe of twelve is already heterogeneous, and Greater Europe, enlarged to include the countries of eastern Europe, will be even more heterogeneous, for all sorts of reasons, the most obvious of which is the existence for several generations of communist regimes which, in spite of their desire for uniformity, never succeeded in erasing the historical and cultural specificities of each country. (See Héthy, this volume, Chapter 9.) As far as the Europe of twelve is concerned, it is sufficient to observe how the firm, the institution which embodied both industrialisation and the.market economy, has evolved in each nation over the course of time, in order to become aware of the particularities specific to each one of them. Indeed, so wide are the divergences that a whole wave of economists, notably Robert Boyer in France and Michael Piore and Charles Sabel in the United States, have had recourse to history in order to explain recent changes in the economic order and the model of the firm, changes which neo-classical economics cannot account for. Boyer, for example, has developed the original Marxist insights of Palloix and Aglietta, on stages of capitalism which are regulated by complexes of government, corporate and industrial relations institutions, to explain the emergence of the market flexibility regimes of the 1980s and 1990s (Boyer, 1986:111–35; Boyer and Orléan, 1991:233–72; Piore and Sabel, 1984; Aglietta, 1976). This recourse to history, in which certain sociologists (e.g. Burkart Lutz, 1984) are also involved, is certainly not fortuitous. Does it not, in part, reflect the intellectual disarray of certain researchers after the period dominated by holistic approaches, particularly among Marxists and structuralists? It would appear that attempts are now being made to look back in time in order to uncover the origins or traces of the forms or regulation in which actors’ strategies—or forms of the social bond—developed. Moreover, at the same


time, the relativity of economic rationality, both in time and space, is recognised. This interest in history is not in itself an innovation in the field of the social sciences, and is today no longer a surprise, even though sociology developed (at least in France with Durkheim) in opposition to history.1 I shall return, however, to the distortions to which such allusions might give rise; and which, for historians, constitute the worst of errors, that of anachronism, or the equally pernicious one of teleological illusion. Just as it is essential today for economists attempting to conceptualise the newly emerging economic order to take account of ‘the historicity of economic phenomena and of their variability in time and space’, to quote Robert Boyer (1989:1397), so it is also necessary to accept that this objective will be best achieved by cooperation between economists or sociologists and historians. The multi-disciplinary approach should not reduce the specificity of each discipline: on the contrary, each discipline should be enriched by the contribution of the other. This point will be taken up again later. To return to our subject, it is now also important, in considering the future of Europe, to use an historical perspective in order to reveal the variability over time of the forms of economic and social regulation that have gradually crystallised in each country and given rise in consequence to forms of variability in space. Such a strategy would lead to the combining of the historical approach with that based on international comparisons. To confine ourselves to the ‘immediate past’, international comparisons carried out over the last decade have already highlighted the variability of responses to economic crisis, and strategies for escaping from it, which leading European countries, the USA and Japan have implemented. In this sense, the last decade might be judged to have been characterised, not so much by convergence, but rather by differences between the strategies adopted by the various countries in response to economic crisis. To summarise these initial observations, it may very well be valuable, in analysing the processes of Europeanisation, to develop research programmes that take into account the variability in time and in space of the economic, social and political choices and solutions adopted by the various current or potential member states of the European Community. This could be achieved by combining the historical approach with that based on international comparison.

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CONVERGENCE AND SPECIFICITY: THE THEORETICAL AND METHODOLOGICAL IMPLICATIONS Old wine—new bottles: defining the actors The preceding observations are also part of a wider sphere of reflection. After the recent ebbing of the grand theories, whether Marxist or structuralist, and the ensuing debates between supporters of the ‘holistic approach’ and ‘methodological individualism’, a new tendency is emerging, one which is aware of the limits of individualism. This swing of the pendulum has several consequences: on the one hand, as Robert Boyer recently pointed out, greater interest is being shown in intermediate notions and objectives which had hitherto been concealed by both the holistic and the ‘individualistic’ approaches. On the other hand, account is being taken of the interactions between actors and the spaces or spheres that are being constructed in time (Boyer, 1989:1402). In other words, we are witnessing a renewal of interest on the part of researchers in the search for new solutions to classic questions in the social sciences: the interactions between micro and macro analysis of economic and social phenomena, and the articulation between actors, structures and spheres of action. The search for new paradigms is inspired in part by the renewal of the paradigm of the firm as an entity with definite relationships to other social and economic institutions. It also coincides with the previously mentioned revival of interest among economists and sociologists in international comparisons and historical research. As a result, issues such as the achievement of model forms of business organisation, the systems of industrial relations, and the spread of a transnational recipe for economic growth resemble, in many respects, problems of the 1960s, or even 1970s, and are reproduced in new terms in today’s debates. The most notable recrudescence is the thesis of the convergence of industrial societies and its contrast with the stress in the culturalist approach on the specificity of national cultures, or cultural invariants, to be found in social and cultural anthropology.2 In consequence, any attempts to conceptualise or rethink the process of Europeanisation lead us to cast a critical eye over these different approaches, which implicitly underlie the policies and practices that constitute the process of European unification. The approach of societal analysis, outlined below, lays particular emphasis on the identification of the relevant social actors and the social spaces within which they can act. This consideration is becoming important in the debates over European unification; but notions such as ‘subsidiarity’—the demarcation of separate spheres of regional, national and


political authority—do not recognise the paradox at the heart of the unification process. Societal analysis, by contrast, identifies the following problem. Is it not the case that such a process is based on a paradox: unification by definition requires societies to converge, even to lose part of their own identity, while at the same time it can succeed only if all the resources (and thus the specificities) of each society are mobilised in the interests of this complex project? In other words, does not the creation of the new European actor, able to combine the different national orientations and identities by establishing a force greater than each individual country and capable of resolving any possible divergences, involve a certain resurgence of the national consciousness characteristic of each society? And are there not already indications - in both east and west, although for different reasons—of a revival of nationalist sentiments which at least in the short term, and particularly in the east, may well block, or at least slow down, the process of Europeanisation that began in the west? Does this not provide food for thought? In order to think through this process, therefore, is it not a question of articulating and jointly managing the newly developing European actor and the national actors that make up the new Europe? The new European actor would then eventually tend, not only to unify the national actors, but also represent a social force greater than any of them, without causing them to lose their own identity or resources. Societal analysis, societal effects However, these propositions are, by themselves, merely speculative ideas. To be developed as basic analytical perspectives they need to be grounded in proven conceptual frameworks. In order to develop an analytical perspective of this kind, we have to equip ourselves with the appropriate tools. Although the international comparative approach may well be of some value in this respect, it must be implemented in a way consistent with its theoretical implications. I would like here both to emphasise the theoretical (or ideological) limits or distortions inherent in classical approaches in this area and to put forward the approach known as the ‘societal effect approach’ (or societal analysis) as an appropriate tool for analysing the trend towards Europeanisation. We can probably agree that international comparisons have hitherto been dominated by two different approaches: • on the one hand, the cross-national approach, based on the notion that societies are tending to converge and the assumption of universalism, sometimes wrongly interpreted as an expression of democracy; • and, on the other hand, the cross-cultural approach, which takes the particularism of national cultures as its starting point and which has

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sometimes been the foundation for certain nationalist ideological movements. This is not the place to elaborate on the criticisms that can be directed towards both these approaches; let us stress only that they may introduce two different distortions into the analysis of the process of Europeanisation. I shall outline briefly the assumptions on which these two approaches are based. More detailed exposition, together with the explication of the alternative societal effects approach, can be found in Maurice et al. (1986: 225–40). The cross-national approach undoubtedly reached the peak of its success during the years of growth that followed the Second World War. Its theoretical foundations lie in the classic works published by Clark Kerr, John T.Dunlop, Frederick Harbison and Charles Myers, the most famous of which is entitled Industrialism and Industrial Man (1973). The convergence thesis is here associated with an ideological vision of economic development and technological progress, embodied, implicitly, by the United States. This approach to research, based on international comparisons, presupposes continuity between the phenomena being studied; the universal character of these phenomena is revealed all the more clearly since they are already desocialised (or decontextualised). In this case, comparability is acquired in advance, since ‘comparable’ subjects are necessarily being equated. The cross-cultural approach, on the other hand, presupposes a high degree of discontinuity between the phenomena being compared, since they reflect the national cultural specificities that underlie them. Ultimately, specificity is so significant in this approach that direct relationships are forged between the phenomena under consideration and the national culture in which they exist. As a consequence, international comparisons are reduced to highlighting the differences between national cultures. The societal approach, the principal characteristics of which will be outlined here, differs in several respects from the types of comparison referred to above. Two distortions constantly threaten the social sciences, particularly economics and sociology: the ‘under-socialisation’ that underlies the ‘universalist’ approaches and the ‘over-socialisation’ that characterises the ‘culturalist’ approaches. The societal approach tries to go beyond these distortions. It gives a certain priority to the social embeddedness of the subjects of phenomena under consideration,3 while at the same time emphasising the social construction of the actors and of the space in which they act, within a given societal sphere. In other words, the phenomena to be compared are related to the societal sphere to which they belong. So that comparisons are no longer made directly—or term for term—between one country and the next, but between the societal complexes within which each phenomenon is socially situated and constructed.4


Thus this type of approach tends to shift the place and status of comparability. It gives a certain degree of priority to the articulation between micro and macro phenomena within each society—intra-societal relationship; and between societal complexes relevant to the phenomena being analysed intersocietal relationship. Thus these two analytical procedures, intraand intersocietal comparisons, form the basis for theoretical generalisation, which is the goal of any research work. Such generalisation is based on two possible alternatives: the social construction of the actors and their space for acting within a given sphere of action; for example: the sphere of relationships between education systems and productive systems. In this case, the construction of a theory consists of integrating national specificities within a conceptual space which, far from eliminating them, will make it possible to take them into account at a more general level of analysis. This is what we tried to do when first developing our approach on the basis of a comparison between France and Germany; a study which integrated various spheres of action: industrial organisation, education system and industrial relations system. CONCLUSION: TOWARDS A NEW CONVERGENCE OR A NEW SOCIETAL EFFECT? In conclusion it is necessary to clarify the suitability of the societal effects approach as an analytical perspective for the problems discussed in this book. Having decided to put forward a point of view that is both methodological and theoretical, I shall not attempt here to answer the question directly, or to propose solutions for present and future European problems. To tackle specific issues, other contributors to this book are better equipped than I. However, the changes currently taking place in Europe are also raising new questions for theories that are already established or in the process of being constructed. Societal analysis itself cannot escape this new questioning. Bryn Jones and Peter Cressey suggested the title Towards a New Convergence’ for this book. I am tempted to propose, from my own analytical perspective, a supplementary title: ‘Towards a New Societal Effect’. For the basic formulation of societal analysis has already been modified in the direction of the problems posed by the Europeanisation process. During the early stages of the development of our approach, we undoubtedly made the mistake of focusing our analysis too rigidly on the ‘coherence’ specific to each of the societies studied, France and West Germany. This gave rise to an excessively static vision of each society, a fault for which we have often been criticised. More recently, we have tried to introduce a more dynamic point of view by comparing processes of change specific to each country, notably in comparisons of French and Japanese firms. This procedure makes it possible to

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introduce historical data into the comparison, without necessarily restricting ourselves to a purely historical explanation of the phenomena observed. The recourse to history may be useful in illuminating processes that contribute to the construction of the actors and of their spaces of action. Undoubtedly there is still progress to be made in articulating this historical approach with that of the other social sciences. Nevertheless, it seems to me that an equally important aspect of societal analysis applied to the study of European issues is the articulation between various levels of macro and micro analysis, which makes it possible to take account of the social processes, and social relationships, which contribute to the construction of the actors. For example, it will be more necessary than ever to take account of the articulation between education and training systems, industrial organisation, the division of labour within firms, the processes by which skills are developed and industrial relations systems; including trade unions, firms and the state. Another aspect of societal analysis might prove useful, namely the attempt to construct a flexible societal coherence—flexible because it changes over time—by taking into account and comparing different spheres of analysis, as I have just outlined. Even then, it is necessary to conceptualise such coherence in such a way that it may, in the long term, account for the development of the new European actor. This has several consequences. First, it may weaken the specialist relationship between the various spheres of social reality and the disciplines or specialities of researchers. But, even more importantly, it may highlight the social logics that are at work in each society and which are dependent on the resources of that society, as constituted within a certain period of its history. In response to similar problems, different choices are made and different solutions are adopted, between one country and the next. We must seek the source and basis of these variabilities in the relationship, in each country, between the social logic and the available social resources. However, these variabilities, far from representing obstacles to European unification, which it would be very tempting to eliminate, could equally well be interpreted as so many specific resources, or assets, that could enrich the processes of Europeanisation. Would it not be possible to conceive of Europeanisation as a flexible process? Why is unification so commonly confused with uniformity? If it is accepted that each national identity can help to enrich the new European actor, why would it be necessary for each national actor to adopt identical solutions in all spheres to problems that actually exist everywhere? Of course, experts on Europe have long been aware of issues of this sort. But do not researchers in the social sciences also have a role to play in this respect? From the preceding analysis of social science perspectives, it will not be difficult to understand my reservations about the concept of ‘convergence’.


What does it mean, and in what spheres and to what extent is it desirable that national actors draw closer together in order to construct the new European actor? There is no doubt that we are already witnessing the emergence of numerous and varied phenomena that serve to strengthen the views of those who support the convergence thesis, albeit in its revised form. TransEuropean organisations are emerging, and organisational and managerial models are being diffused throughout Europe and beyond. The former eastern bloc countries are urging the west to assist not only in the transfer of technology but also of training systems and of organisational and managerial models. The European authorities are themselves producing an incessant flow of new regulations, codes and standards which form the basis for progression towards economic, social and political unions. And researchers in the social sciences are wondering to what extend their analytical model is transferable to countries other than the one on which it is empirically based. New concepts are tending to replace old ones, although the same desire for generality is being retained: there is much talk of neoFordism, neo-Confucianism and post-modernism… So it is not without a certain degree of irony that I propose ‘a new societal effect’! In fact, the issue that has been debated here could form the basis of a whole programme of research. Jones and Cressey’s proposal, in the introduction to this book, that we should concentrate our efforts on the notion of ‘employment system’, conceived in broad terms and covering several areas of analysis, is undoubtedly a positive one, which will open up the way for a multidisciplinary approach. Using such a sphere of analysis as a starting point, would it not be possible to test research tools capable, in the long term, of constructing a paradigm of Europeanisation that would make it possible to conceptualise and articulate the processes of innovation at different levels of analysis: micro and macro, national and supranational? Similarly, it would be possible to analyse phenomena such as ‘affinity’, influence and ‘transfer’ of organisational and managerial practices, or models, between the various member states, while at the same maintaining a societal framework of analysis. As a substantive issue for this employment systems perspective, however, I return to the above-mentioned paradox in the development of the new European actor. The paradox, reformulated, is the expression of a necessary tension between two propositions. 1 The creation of new European actor—the EC or some less formal supranational force—must be capable of combining different national identities, while also establishing a power greater than any of them. 2 At the same time, however, does not the participation of each national actor in the process of Europeanisation involve a resurgence of each actor’s

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capabilities and resources that will in turn enrich, and thus modify, the new European actor? From the relevant social science perspectives reviewed here, it is a societal analysis, suitably modified, which seems best suited to appreciating and resolving this paradox.5 NOTES 1 It is true, however, that the historians were far removed from those who were to set up the ‘Ecole des Annales’ a few years later. 2 Thus some economists underline the globalisation or the internationalisation of the economy stressing the levelling of national economic differences; while others, following Polanyi (1944) or Dumont (1977) are more sensitive to the societal conditions of the economic phenomena. 3 The notion of ‘embeddedness’ was put forward by Granovetter (1985). 4 Instead of conceiving ‘workers’ or ‘engineers’ as equivalent categories from one country to another, and then immediately ‘comparable’, we take account of the ways of their ‘social construction’: e.g. education and vocational training, career path, intra- or inter-firm mobility. In other words, we do not compare universal categories but contextualised or socialised categories. That is usually forgotten by international statistics. In this sense the paradox of the societal analysis is to compare the ‘incomparable’ (Maurice, 1989). 5 For a further discussion of this issue, see Sorge (1991) and Mueller (1994).

REFERENCES Aglietta, M. (1976) Regulation et crises du capitalisme, Paris: Maspero. Boyer, R. (1986) La théorie de la regulation: une analyse critique, Paris, La Découverte. Boyer, R. (1989) ‘Economie et histoire: vers de nouvelles alliances?’ Annales ESC, no. 6: 1397–426. Boyer, R. and Orléan, A. (1991) ‘Les transformations des conventions salariales entre théorie et histoire’, Revue Economique, 42(2): 233–72. Campbell, A., Sorge, A. and Warner, M. (1989) Microelectronic Product Applications in Great Britain and West Germany, Strategies, Competence and Training, Aldershot: Gower. Dumont, L. (1977) Homo Aequalis I, Paris: Gallimard. Granovetter, M. (1985) ‘Economic Action and Social Structure: The Problem of Embeddedness’, American Journal of Sociology, 91:481–510. Grootings, P. (ed.) (1986) Technology and Work, East-West Comparisons, London: Croom Helm. Kerr, C., Dunlop, J.T., Harbison, F.H. and Myers, C.A. (1973) Industrialism and Industrial Man, Harmondsworth: Penguin. Lutz, B. (1984) Der Kurze Traum Immerwährender Prosperität, Frankfurt/Main: Campus Verlag.


Maurice, M. (1989) ‘Méthodes comparatives et analyse sociétale’ Sociologie du Travail, 31: 175–91. Maurice, M., Sellier, F. and Silvestre J.J. (1986) The Social Foundations of Industrial Power, A French-German Comparison, Boston: MIT Press. Mueller, F. (1994) ‘Societal Effect, Organisational Effect, and Globalisation’, Organisational Studies, 15(3): 407–28. Piore, M.J. and Sabel, C. (1984) The Second Industrial Divide, NewYork: Basic Books. Polanyi, K. (1944) The Great Transformation, NewYork: Rheinhardt. Sorge, A. (1991) ‘Strategic Fit and Societal Effect: Interpreting Cross-National Comparisons of Technology, Organisation and Human Resources’, Organisation Studies, 12(2): 161–90. Sorge A. and Maurice M. (1993) ‘The Societal Effect in Strategies and Competitiveness of Machine-Tool Manufacture in France and West Germany’, in B. Kogut (ed.), Country Competitiveness: Technology and the Organization of Work, pp. 75–95, Oxford: Oxford University Press.

2 MAASTRICHT AND THE GOVERNANCE OF LABOUR MARKETS The case of Ireland Paul Teague

INTRODUCTION In the late 1980s a wave of Europhoria spread across the EC. The general expectation was that the member states were about to deepen irreversibly the ties between them. Yet beneath the hype and fanfare about the integration project, remained the big question of what should be the economic and political form of a rejuvenated European Community. Ever since the creation of the Common Market in 1957, a tension has existed between whether the integration process should be driven by an intergovernmentalist or a federalist dynamic. Those favouring the intergovernmentalist route wanted the member states to have firm control over EC decision-making. On the other hand, supporters of the federalist logic sought the creation of a United States of Europe. Failure to reconcile these competing visions, along with the economic crisis of the 1970s, had caused the EC to fall short of early expectations. When the 1992 programme triggered a spontaneous resurgence in European integration, Community leaders were careful to leave the controversy between intergovernmentalism and federalism on the sidelines. But sooner or later, this difficult issue had to be addressed. The negotiations that started in 1990 on a new draft Treaty of European union is when the member states reverted to realpolitik. A key purpose of the proposed Treaty was to map out the future political and economic governance structures for the New Europe. The complex and sometimes agonising negotiations that occurred were stitched together at the 1991 Maastricht Summit. Very quickly, however, most commentators came to the conclusion that the draft Maastricht Treaty had failed to resolve the persistent federal/ intergovernmental tension. Instead it represented an uneasy and unsatisfactory compromise between the two positions (Schmitter, 1992). Much of the subsequent turmoil associated with the ratification of the Treaty owes a great deal to the shortcomings and blemishes of the deal made at Maastricht. Now the future political and economic architecture of the European Union (EU) is just as uncertain as ever.

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Such uncertainty is bad for all the member states, for it makes the integration process sluggish and indecisive. But it is particularly harmful to the small nations that have effectively tied domestic economic fortunes with that of the European Community as a whole. The Republic of Ireland represents the quintessential small pro-European member state. Since joining in 1973, Ireland has been a deeply committed and enthusiastic member of the Community (O’Donnell, 1993). For the most part, deeper connections with the rest of Europe have come to be seen, by successive governments, as the most effective way of breaking free from a close-knit but unwanted relationship with the UK. Having staked all on the European project, the current uncertainties impose a high cost on Irish economic interests—as shown by the damage inflicted on the domestic economy by the turbulences inside the Exchange Rate Mechanism (ERM). Above all, Ireland needs European integration to be placed on a clear decisive track, whether federalist or intergovernmentalism, so that it can align its domestic economic and political structures accordingly. At the same time, the various scenarios for European integration have different implications for smaller member states such as Ireland. An integration process based on a federalist dynamic would exert quite different pressures on them than an EU embedded in an intergovernmental framework. This chapter sets out to assess the implications of the federalist and intergovernmental, as well as the ‘two-speed’ Europe, scenarios for Irish industrial relations. The area of industrial relations was selected for two reasons. One, because of the growing recognition that industrial relations (IR) systems can have a key impact on overall economic performance. The other, because labour market policy—which IR has a major role in governing—has in the past been one of the most controversial interfaces between the Community centre and the member states. The chapter is organised as follows: the first section outlines the federalist, or ‘maximalist’ scenario contained in Maastricht. An assessment is then made of how this may affect Ireland. The following section assesses the likely implications for the Irish labour market of a two-speed Europe. The fourth section deals with the ‘minimalist’ scenario, and assesses the intergovernmental or, more precisely, what I shall term the augmented intergovernmental project in the draft Treaty. Again an analysis is made of how this project may impinge on Irish industrial relations. The conclusion evaluates the positive and negative implications of the different EU regimes for the Irish economy and labour markets.

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THE MAXIMALIST SCENARIO: MONETARY UNION AND SUBSIDIARITY Monetary union and collective bargaining Two key elements of the Maastricht Treaty are a plan to establish monetary union in Europe and the introduction of subsidiarity into EC decisionmaking. With regard to monetary union, the plan envisages a fairly rapid route to unification. By the end of 1997 at the earliest, and no later than the start of 1999, at least a partial form of monetary union will be established, involving some of the member states. If this actually happens the monetary policy of the member states will be passed from the national level to an independent central bank. A single currency will be established and the control of inflation as well as interest rate policy will be the responsibility of the new bank. In addition, member states will no longer be able to adjust their exchange rates unilaterally, either to offset differential inflation rates between EC countries or to deal with country-specific shocks. By creating a European monetary union, the member states will have crossed the Rubicon that has for so long divided the dynamics of Europe des parties from those associated with a federal Europe. In other words, unlike almost any other economic policy function, monetary union puts the integration process on to a supranational, as opposed to an intergovernmental, track (Artis, 1992). This is so because after the adoption of a single currency the entire spectrum of economic policy will face tremendous pressure for change. With regard to industrial relations, European monetary union will directly impinge on wagesetting institutions and the collective bargaining process (Layard, 1991). One view is that EMU would remove any exchange rate illusion that may exist in the European economy. Thus, Spanish workers may demand Danish or French rates of pay even though their productivity levels are much lower. However, European pattern bargaining of this type is unlikely to happen since wage formation across the member states remains largely national in character (Teague, 1993a). A more likely scenario is that EMU would unleash pressures towards fragmented and decentralised wage bargaining. In coordinated labour market systems such as Germany, the central bank deters trade unions from pursuing pay claims which would have a damaging effect on competitiveness. Essentially, the Bundesbank signals that it would appreciate the currency to offset the impact of high real wage increases. Trade unions regard this threat as credible, and as a result restrain collective bargaining demands. With the powers of national central banks effectively emasculated under EMU, this institutional sanction against unruly wage behaviour is removed. Accentuating this problem is that the creation of a single currency may change the economic

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context in which national collective bargaining takes place. At present, when setting an appropriate level for pay increases, the parties involved in the bargaining exercise refer to national economic conditions—unemployment and inflation rates, balance-of-payment figures and so on. With monetary union removing these national economic reference points—since there will only be European unemployment and inflation rates—the institutional foundations of collective bargaining may be eroded. Insufficiently distinct contours of wage and employment conditions may exist at the national level for the continued practice of fullblooded collective bargaining (Teague, 1993a). To compensate for the loss or weakening of wage formation systems at the national level, the Community could attempt to establish similar arrangements at the European centre. Institutionally, this would mean the European trade unions and employer bodies having a much bigger say in wage formation. Whether such a European system of collective bargaining could be established is open to question (Schmitter and Streeck, 1992). Certainly major changes would have to be made to the present social policy framework of the Community. The European social partners would have to be given much more authority and resources. More appropriate forums would have to be established for the conduct of European wage bargaining. All in all, it would involve a major centralisation of wage determination. At present, the Community lacks the institutional capacity to organise such a system. Nor are there signs that trade unions and employers at national level would transfer upwards significant powers even under monetary union conditions. Moreover, the sheer size and complexity of the new European economy militates against EC-wide wage determination (Teague, 1993b). Although this option cannot be discounted, it must be considered a remote possibility. In the absence of Europe-wide bargaining, EMU may help create decentralised employee relations regimes across the member states. Under this type of regime, enterprises would have more or less complete autonomy to pursue employment policies, including pay. In fact, enterprises might use EMU as a conduit to free themselves from existing constraints imposed by (national) labour market institutions. Such a scenario would mark a radical departure in European industrial relations (Danthine et al., 1990). In effect it would be the death knell of the ‘social model’ of European capitalism and the ‘Americanisation’ of the Community’s labour market. If decentralised industrial relations practices were to spread across the member states, then the likelihood is that the European labour market may become increasingly uncoordinated. However, in the industrial relations and labour economics literature, a consensus is emerging about the virtues of labour market coordination. Layard (1991) uses the UK experience to show why wage coordination is preferable to uncoordinated, normally enterprise level, pay deals. He argues that some sectors have inherently greater productivity growth than others, which is


mainly due to technological factors and not to the efforts of workers. Thus, he points out, that between 1979 and 1986 productivity growth in UK manufacturing varied hugely between industries—doubling in man-made fibres while remaining constant in brewing. If pay had been based on productivity, wages in man-made fibres would have doubled relative to those in brewing. But the wage increase was actually identical in both industries (70 per cent). In other words, competition for labour always produces a going rate, and where high productivity growth enterprises grant large pay increases, other industries end up paying the same in order to retain labour. Labour market coordination is seen as a possible route to resolving these tensions. But, with EMU likely to disrupt existing national coordination measures, contagions and unruly norms may spread across the European labour market. The subsidiarity principle At this point the concept of subsidiarity enters the story. In the Maastricht Treaty, the notion of subsidiarity is promoted as the new organising principle for Community decision-making in the 1990s. Officially, subsidiarity is defined as the Community only making an intervention when a proposed action cannot be fully achieved by a member state or another lower tier of government. However, in practice, the term is open to a variety of meanings. One view championed by the British Government is that subsidiarity encapsulates decentralised governmental arrangements and decision-making. From this point of view, member states should be more or less free to pursue separate labour market regimes, with Community incursions into the labour market limited to a small range of issues. This approach has much in common with the fiscal federalist literature which stresses the optimality of competition between policy regimes. In this account, local units in federalist systems should have the scope to choose their taxation/redistribution mix, which will result in some areas having high tax/high benefit regimes and others the reverse. With these contrasting regimes, individuals will have a greater opportunity to realise utility preferences (Rochet, 1991). However, for the Commission and some member states subsidiarity involves much more than decentralised decision-making (Spicker, 1991). According to this view, the concept has its origins in Roman Catholic social doctrine, which emphasises the symbiosis between the individual and society, or to put it another way, between liberty and authority. Thus, individual liberty and freedom should be at the centre of any social formation. At the same time, individuals must recognise that they should not impinge on property rights, and they should take an active and constructive part in social activity. To encourage and underscore such behaviour, the state must establish a range of social and political rights that give a level of protection to individuals. Individual

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responsibility alongside social protection is seen as preventing anomie and promoting an ordered and stable society. From this interpretation of subsidiarity, the principle is not about constraining the interventions by state institutions in order to uphold individual liberty. Rather, it is an attempt to provide a solution to the Hobbesian problem of avoiding a society where what prevails is war of each against all (Atkinson, 1992). Catholic social doctrine also gives hints about the application of the subsidiarity principle (Ranjault, 1992). It suggests that state level action, with regard to social protection, should only be pursued when lower-level institutions are unable or incapable of providing the necessary support. Thus, this doctrine must view society as made up of rich and dense social connections and groups, like the family, the church, community and regional political regimes and so on. More formal interventions by state institutions should happen only when these social networks fail to provide assistance and maintain cohesion. As a result, action by a higher-level authority is a policy of last resort—a lifeboat operation to uphold social order and stability. From this point of view, then, all tiers of governments have the right and obligation to make social interventions when appropriate.. This approach is different from the earlier definition, which portrays subsidiarity as a ‘negative principle’ in the sense of curtailing of statelevel social action. Commission thinking on subsidiarity questions appears to draw heavily on the more positive interpretation. In particular, it seems to regard the principle as a way to construct a new institutional balance between different tiers of government inside the Community. The purpose of such an institutional realignment would not be to centralise or harmonise policy at EC level, but to allow for Community interventions to supplement and coordinate lower-level activities. Subsidiarity and regional industrial relations systems With regard to the labour market, subsidiarity can be seen as a mechanism to counteract the ‘coordination deficit’ that may emerge in the wake of monetary union. In particular, through subsidiarity, the Community may encourage the regionalisation of industrial relations systems. A number of benefits may emerge from such a development. First of all, it may allow the EU to enact a more effective economic and social cohesion policy. If EMU is established then the EU will be under considerable pressure to establish strong regional distribution mechanisms to compensate those areas, and small nations, which have either lost their ability to adjust to asymmetric shocks by manipulating their exchange rates, or which are in danger of remaining depressed for a considerable period of time. But pursuing a policy of fiscal transfers to disadvantaged regions has certain hazards. A considerable body of research suggests that whilst transfers can add to income they do little to increase productive activity in depressed


areas (Barnett, 1993). This situation can prove highly distorting, since income levels get uncoupled from underlying economic performance. As a result asymmetric incentive and information structures may arise that suppress entrepreneurial dynamics in the tradeable sector. Thus a fiscal redistribution policy could end up playing the perverse role, of simultaneously being the financial lifeline to a poor region and suffocating those processes that encourage greater self-reliant forms of economic activity. A possible route out of this conundrum may be to connect the question of labour market governance to the operation of a fiscal transfer arrangement. In particular, the objective would be to create regional industrial relations procedures that reduce the negative spillover effects from an external subsidy. Many of the officially-designated deprived, or ‘Objective l’, regions inside the Community display a high correlation between high income and high unemployment, reflecting bifurcated labour market and industrial structures (Grahl and Teague, 1993). One danger is that a Community redistribution policy, by doing more to shore up incomes than to induce industrial restructuring, may embed if not accentuate inequality within poorer regions. One way to avoid an external subsidy sustaining an internal disparity of income may be to encourage the social partners and public authorities at the regional level to make strategic choices about public expenditure, wages and industrial policies (Lipietz, 1993). As well as promoting concerted bargaining, regional industrial relations systems may have an important competitive function. In the economic geography literature, a highly popular theme is that economic development has become spatially focused (Harrison, 1992). Examples of these regional economic systems vary a good deal: Emilia Romagna in Italy and Württemberg-Baden in Germany are held up as examples of regional manufacturing complexes, whereas Paris (advertising), London (finance) and Madrid (fashion) are regarded as examples of the geographical concentration of service sector activity. Three such concentrations in the British, French and Italian textile industries are examined by Bull et al. in Chapter 5. The dynamics giving rise to these regional agglomeration economies remain unclear. However, most studies suggest that each regional system has its own governance structure, which generates specific commercial norms and conventions and which connects firms with a range of external institutions as well as with each other. Locke (1990) suggests that a key dimension of these governance structures is industrial relations policies which ensure that working conditions and practices are in line with the region’s productive activity. In addition, they foster trust relationships between employers and trade unions, thereby endowing enterprises with the adapt-ability to meet the new competition in many product markets.

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Thus the maximalist scenario of the Maastricht Treaty is about a rootandbranch recasting of the economic and political architecture of Europe. By pushing economic policy functions upwards as well as pushing them downwards, monetary union may lead to a wide-ranging reconfiguration of institutions inside the European economies. Most significantly affected by this process will be national economic management, for autonomous action at this level will progressively narrow (Goodhart, 1990). To compensate for this disruption, subsidiarity is being put forward as the new organising principle for economic and political structures. In concrete terms, subsidiarity will involve the opening up of new responsibilitysharing mechanisms between the Community centre, the national level and the regional arena. All in all, the maximalist interpretation of the Maastricht Treaty will recast the European Community along federalist lines. THE MAXIMALIST SCENARIO AND LABOUR MARKET GOVERNANCE IN IRELAND Such a scenario would obviously cause major economic and political change across the Community. Yet the implications for Ireland may not be as far reaching as for other member states. Since the beginning of the 1980s, successive governments have pursued an ambitious stabilisation programme aimed at reducing inflation and the huge current account deficit. At the centre of the programme was a significant appreciation of the Irish punt against the German Deutschmark. The outcome of this disinflationary exercise has been impressive in nominal terms: inflation rates have now stabilised around the 3–4 per cent level, the exchequer borrowing requirement has declined from an alarming 13 per cent of GNP in 1981 to about 5 per cent in 1992, and for the first time for over a decade the debt/GNP ratio has settled around the 100 per cent mark. Thus for more than a decade successive Irish governments have accepted the Exchange Rate Mechanism as a disciplining device, and have more or less given up the idea of pursuing independent monetary policies. As a result, Ireland may be better placed to join a European monetary union than many of the other member states which have pursued looser macro-economic policies. This point is worth exploring in more detail. Wage formation dimension When the European Monetary System (EMS) was established in the late 1970s it was widely regarded as a ‘crawling peg’ device to link together the exchange rates of the member states in an attempt to introduce some stability into an otherwise turbulent international financial system (De Grawe, 1992). But by the mid-1980s the system had acquired the more ambitious objective of promoting price stability inside the Community. In particular, by pegging the


exchange rate to the German Deutschmark at a high level, it was thought possible that a member state could reduce domestic inflation (Gravazzi and Spaventa, 1990). Using the EMS as a disinflation mechanism became known as a ‘hard ERM’ policy. Ireland was one of the first countries to pursue such a strategy. Wage bargaining adjusted to this restrictive economic context fairly quickly. For the most part, trade unions and employers pursued pay policies consistent with a high exchange rate. As a result, the competitiveness of Irish industry was given a boost by the continuous fall of unit labour costs during the 1980s, as shown in Figure 2.1. It is this decline in unit labour costs that partly explains why, in spite of the stabilisation programme, the country has enjoyed continued export-led growth. Of course, throughout this period the country also experienced high unemployment. Despite large-scale emigration during most of the 1980s, the unemployment rate failed to drop below 16 per cent, and stood at 18 per cent for most of the time. All the blame for this high unemployment cannot be attributed to the pursuit of a hard ERM policy. Past failures on the part of successive Irish governments in terms of pursuing generous public expenditure programmes and being unable to develop an indigenous manufacturing base, as well as the huge growth in labour supply in the country, go a long way to explaining Ireland’s abysmal employment record (Kennedy, 1993). But the commitment to a high exchange rate undoubtedly encourages firms to reduce their labour input and to increase productivity and obliges governments to adopt prudent fiscal policies. Although the rigid adherence to a hard ERM policy has extracted high social costs from the country, it has also made the transition to monetary union less problematical for Ireland than for many of the other member states. Should Ireland secure entry to the ‘single currency club’, the most direct impact on wage bargaining would probably be more restrictive centralised pay awards. Currently, pay-setting in Ireland is conducted through centralised agreements as established by the Programme for Economic and Social Progress (PESP). Under this arrangement pay rises have been limited to 4 per cent in 1991, 3 per cent in 1992 and 3.75 per cent in 1993. Exceptionally, employers and unions may engage in local bargaining, allowing for one-off increases of up to 3 per cent. This agreement follows in the wake of another centralised agreement that held annual wage increases to 2.5 per cent between 1988–1990. Overall pay rates are set at a level consistent with membership of the hard ERM. In fact, the wage increases allowed for under PESP were set at a level consistent with those projected for other EC member states. Thus wage-setting in Ireland has already a European orbit of comparison. Under monetary union the current procedure may become more formalised, with wage negotiators more or less accepting that the scope for bargaining will be set by Community-wide data on employment and economic activity. The

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big problem is whether the current bargaining structure can be kept intact, for national pay limit agreements have a chequered history in Ireland. Over the past three decades, wage-setting has oscillated between centralised arrangements and decentralised enterprise bargaining. Moreover, the evidence suggests that national wage agreements reach maturity very quickly, resulting in bargaining returning to the local level (Durkin, 1992). However, the present experiment in centralised bargaining has been the most durable for some time, suggesting a new commitment on the part of trade unions and employers to such a practice. But in the past year or so a number of tensions have emerged within the PESP system. One concern is public sector pay. Because of public finance difficulties the Government deferred certain of the pay awards to public servants during 1991 and 1992. In 1993, these backdated awards were paid in full, causing public sector pay to rise by about 7 per cent. Some unions at the local level are now pushing for the 3 per cent pay rises at enterprise level allowed for under PESP, which may cause wage drift to creep into the system. As a result of these two separate developments, wages settlements are running ahead of those in other EC member states and in particular German pay rises. In the run up to, and inside, a European monetary union, Ireland cannot afford such distortions because any upward deviations from German wage settlements will carry a high price in terms of a loss in competitiveness. Thus wage push on the part of trade unions at the enterprise level must be more or less eliminated. In addition, the centralised bargaining system may need the authority to introduce pay freezes, or at least the scope to renegotiate already agreed wage rises. In other words, securing an orderly transition to monetary union will probably necessitate a strengthening of centralised pay arrangements. Whether this is possible is open to question. On the positive side, a new employers group has just been formed called the Irish Business and Employers’ Confederation (IBEC) which should introduce more organisational coherence into that side of industry. In addition, the social partners have signalled their firm commitment to the European project, which suggests that they may be open to a strengthening of existing national arrangements. Furthermore, both the Fianna Fail and the Labour parties, possible coalition Government partners, will be strongly in favour of orderly national coordination of wage rates (Hardiman, 1993). On the downside, while some trade unions support deeper European integration they are uncomfortable with centralised bargaining. Thus if it were to be proposed that national wage fixing should become a more or less permanent feature of the Irish industrial relations scene, then trade union support for such practice might quickly fragment. Existing distor-tions associated with the governance of the Irish labour market would compound the problem. Perhaps the most deep-seated difficulty is the tax wedge question, which means that a huge gap exists between gross and net earnings. With such distortions, it

Source: OECD 1993

Figure 2.1 Real wage gap and compensation per employee


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is a moot point whether employees at the ground level, and also in some instances employers, would accept a ceiling on wage increases for a sustained period of time. Thus at the moment it remains unclear whether the necessary consensus could be found for stronger pay coordination. But the basic point is that for Ireland to make an orderly transition to monetary union requires wage restraint for a good many years. Without restraint, membership of the single currency club could produce a nightmare scenario of increasing unemployment and falling living standards. The institutional dimension On the question of institutional change, Ireland would probably not have to introduce many reforms to accommodate the subsidiarity principle. Essentially this is because small nations are often regarded as large regions in the European Community context. Although not flattering to the country concerned, this analogy is actually useful since it highlights the lack of manoeuvrability small nations have with regard to macroeconomic policy in areas like the EC. To some extent this is officially recognised, since the Community’s rules for the Structural Funds designate Ireland as an Objective 1 region. Thus in relation to the subsidiarity principle and the idea of a regional industrial relations system, present policies and arrangements for employee relations in the country effectively fit the bill. For instance, the PESP wage formation structure may be regarded as a regional body that makes deals on employment and wages which ensure that unit labour costs do not become disconnected from underlying economic conditions. But whether Irish industrial relations can cover all the functions set out in the ideal-type regional system is questionable (Roche, 1993). As one of the disadvantaged regions in which a strong correlation exists between high unemployment and high income, Ireland probably needs redistribution deals to reduce internal disparities. But the social foundations for such a policy appear not to exist. Distribution mechanisms are not narrow technical devices to transfer income from one group of the population to another. Rather they embody the social compromises and economic constraints of a particular society. Successive Irish governments have chosen to tax capital lightly so as to attract inward investment, which means that a disproportionate tax burden falls on labour. Moreover, farmers also pay little tax, reflecting the rural and agricultural bias of Irish society, which burdens even further the PAYE taxpayer. It is now widely accepted that the PAYE tax sector is overloaded, resulting in distortions such as the tax wedge already referred to. In this context, reducing the present income disparities requires recasting the current social compromises and economic priorities of the country; this is a much


bigger project than simply grafting on an equity dimension to the collective bargaining system (Boyer, 1988). An issue that will become more important, whether or not Ireland joins a European monetary union, is the contribution of the industrial relations system to the competitiveness of the economy. A widely shared view, as reflected in the Culliton Report, is that the performance of indigenous industry in Ireland is dismal. Just why this should be is a keenly contested matter, and falls outside the scope of this chapter. But any attempt to improve on existing performance must incorporate an industrial relations dimension. Upgrading the competitiveness of Irish firms will invariably involve introducing new organisational structures that encourage the multiskilling of workers and allows them to use a wide range of machines and undertake a menu of worker tasks. Such changes will have far-reaching implications for industrial relations structures. Although in a narrow sense Irish industrial relations are not difficult —strike and dispute rates are not particularly high for instance—major innovations will be required before industrial relations systems can help enterprise face the ‘new’ competition. It may be worthwhile to summarise the argument so far. Contained within the Maastricht Treaty is a project to recast the political and economic architecture of Europe on more or less federal lines. Monetary union is seen as the mechanism that would disrupt existing structures and pave the way for new institutional arrangements inside the Community. By putting a corset on national economic and social interventions, monetary union would provide the scope for policy initiatives at both the Community centre and the regional level. As a result, economic governance has been envisaged as being trifurcated in the New Europe. Subsidiarity was seen as the way policy provisions would be synchronised between the three different tiers. In relation to Ireland, the upheavals of this plan in the area of labour market regulation would not be as far-reaching as for other member states. Because Ireland has effectively tied its hands with regard to monetary policy and accepted the anti-inflationary discipline of a hard ERM policy, transition to monetary union will not be as painful as, say, for Greece, Portugal or even Italy and the UK. In terms of wage formation, the implication is stronger and tighter national pay deals. With regard to the institutional structure of industrial relations, subsidiarity may not precipitate root-and-branch change, but it will probably modify the functioning of the system. In particular, more emphasis may have to be placed on how industrial relations arrangements can help improve the competitiveness of Irish companies.

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TWO-SPEED EUROPE AND IRISH LABOUR MARKET GOVERNANCE Whether monetary union as envisaged in the Maastricht Treaty will actually go ahead is questionable in the present economic and political circumstances. In 1992, sustained speculative attacks against ERM currencies, which forced Ireland as well as Spain and Portugal to devalue, and which knocked the UK and Italy out of the mechanism, have undermined the plan for monetary union. As a springboard for the single-currency project the ERM looks exceptionally fragile. A number of factors contributed to the virtual unravelling of the ERM, but the single most important cause was the ‘asymmetric shock’ in Germany after unification. To contain the costs of the unification programme, the Bundesbank was virtually obliged to increase interest rates. But what was a fairly sensible policy for the domestic economy has been disastrous for the wider European economy, since it threw the existing parity rates inside the ERM into chaos, triggering massive financial turbulence and speculation. As a result of these financial disturbances only a partial form of monetary union may well be established inside the EC in the 1990s. But partial monetary union is really only a polite term for a ‘two-tier’ Europe. Since monetary union involves a far-reaching recasting of institutions and policies, those inside the single-currency club would face quite different economic pressures and rules than those outside. As a result, two divisions would emerge inside the Community. Effectively the first division would be a greater Deutschmark zone, whereas the lower division would be without any overarching coordinating body. Currently, Ireland stands on the line that divides the potential higher and lower division countries, and as a result it is highly uncertain in which group it would be should a ‘two-tier’ Europe arise. The desperate attempts by the Government to prevent a devaluation in the winter of 1992 were a clear signal that it wanted to be part of the wider Deutschmark area. But after being forced to devalue by 10 per cent in response to enormous financial tensions, the prospects of entering the first division have somewhat receded. But should it succeed in aligning itself with Germany then an even more restrictive pay policy is likely. In effect, wage bargaining in Ireland would become more and more like the part played by the Länder, state governments, in the German federal industrial relations systems. After considering informal guidelines for pay increases passed down by national authorities, the social partners in each Länder conclude regional wage bargaining deals. Moreover, both the regional trade unions and employers are committed to policing these agreements so as to prevent distorting wage drift. A similar procedure would have to be introduced in Ireland, with the central wage formation institutions fixing pay increases which closely shadowed those made in Germany. For this to happen the power of centralised bodies would


have to increase significantly. At the same time, the remaining tendencies towards decentralised collective bargaining would have to be squeezed out. Moreover, as the competitive pressures would intensify inside ‘first division’ Europe, restrictive pay policies would have to be pursued in Ireland for some considerable time. In addition, the industrial relations system would have to make a bigger contribution to improving the competitiveness of Irish industry by creating the institutional conditions for diverse quality production. Finally, little scope would exist for independent macroeconomic action on job expansion. All in all, a truncated form of European monetary union would oblige the Irish industrial relations system to hold together an austerity and competitiveness drive. In return, the country would enjoy the benefits from being an innercore member of the EU. As one of the poorer members of this mostly rich club, it could expect to benefit from fiscal transfers which would at least equal, if not better, those currently promised under the Structural and Cohesion Funds. In addition, it would benefit from the transmission mechanisms that will invariably open, with regard to business management, training and skills development, technological diffusion and so on. A freer labour market may arise, increasing the chance of Irish people getting employment abroad. Furthermore, a more stable commercial environment would probably exist as the single currency eliminated internal financial speculation, and put the group of countries concerned in a stronger position to deal with the gyrations of the international money markets. Of course, everything would not be benign for the inner core of Europe, as it would undoubtedly experience economic constraints and problems similar to those faced by any other country or economic region. But the positive exoskeleton encouraging enterprises to pursue high-quality production strategies—which in essence is the only way European economies can survive in the world economy—is more likely to emerge in ‘division one’ Europe than in ‘division two’. Such an overarching support mechanism would be an enormous boost to Irish development in the future. However, a radically different scenario would emerge if Ireland were to slide into ‘division two’. On the positive side, the country could break free of the self-imposed macroeconomic straitjacket. Although the room for manoeuvre would not be great, more active policies could be introduced to tackle the high unemployment problem. But this is probably the only benefit that would accrue from ‘division two’ membership. Most of the consequences would be negative. In the first place, interest rates would have to be higher as the country paid a premium imposed by the international money markets for not being a member of the core currency. Furthermore, inter-regime competition would probably increase between the outer-core members, as there would be no overarching institution to either coordinate the separate economies or to put constraints on opportunistic behaviour. Thus ‘social dumping’ may become

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more prevalent: countries would compete with each other for international market share solely on the basis of lower prices from cheaper labour. Yet another difficulty would be that the fiscal transfers envisaged by the Maastricht and Edinburgh deals might not actually arise if the Community split into two groups. With a greater emphasis on cost-based commercial strategies, enterprises might be obliged to put downward pressure on wages and other working conditions. In doing so they could respond to external disorder by deciding to go it alone, internally. As a result, coordinated wage bargaining would break up and competitive decentralised bargaining would emerge once again. Thus, overall membership of ‘division two’ Europe would have a malign impact on the direction of the Irish economy and the conduct of industrial relations. THE MINIMALIST SCENARIO: AUGMENTED INTERGOVERNMENTALISM AND THE SYMBIOTIC EFFECT One possibility is that the current political and economic instability surrounding the European integration process may torpedo the project for monetary union. This would not cause the fragmentation of the Community, but could encourage the member states to fall back on the ‘augmented intergovernmental’ logic that has driven the integration process from the mid-1960s until recently. During this period, the CAP apart, EClevel policies mostly paralleled or supplemented national-level arrangements. Communitylevel competition measures, labour market interventions and environmental protection schemes are all examples of this type of policy. Even the EMS was established to combine European coordination on financial matters with autonomous national monetary policies. In many ways, these policies reflected a key aspect of the integration process—of creating a symbiotic effect between the nation state and the regional system. In other words, rather than being a zero-sum game where greater authority at the Community centre would cause a commensurate loss of national sovereignty, the integration process was about positivesum .scenarios whereby a strong regional system would enhance national systems (Taylor, 1991). Augmented intergovernmentalism is perhaps the best way of describing this logic. As emphasised earlier, monetary union would rupture this logic because monetary sovereignty is in essence indivisible: it cannot be divided up so that member states take a part and the Community centre takes a part. Moreover, its massive spillover effects narrow the possibility of the symbiotic relationship working in other policy areas. But if monetary union were to be removed from the agenda entirely, then the most likely scenario would be for the augmented intergovernmental dynamic to be once again at the centre of EU decision-


making. In the past, however, the major shortcoming of this approach is that it has been prone to break down. Disputes frequently arose about the extent and scope of EC policies, which in the absence of supranational decision-making, had to be resolved by the construction of ‘package deals’. Such compromise positions, however, are difficult to reach and, as a result, policy formation at Community level has often been slow if not blocked altogether. This has been particularly true of EC social policy. Accentuating this problem is the relative absence of support structures between the national and EU levels which would allow symbiotic integration more opportunity to take effect. Thus in the social policy field only rudimentary and partial policy communities have developed between the Commission and national labour market bodies (Teague, 1991). If monetary union stopped being at the centre of the integration process, the member states would probably try to create more durable and robust arrangements based on symbiotic principles inside the Community. Elements of this project are even contained in the Maastricht Treaty. Many of the institutional changes proposed to the formation of EC social policy may be regarded as an attempt to remove the bottlenecks that have impeded smooth decision-making in this area in the past. More specifically, the Social Chapter of the draft Treaty on European Union, which in the end became the Social Protocol, proposes three important changes to EC social policy. The social clauses of the Maastricht Treaty First, it extends EC competence in the area of social policy by allowing qualified majority voting on a number of important labour market issues. In particular the protocol allows qualified majority voting on: 1 activities to improve the working environment, including health and safety; 2 working conditions—for instance, the length of the working week or holiday entitlements; 3 information and consultation of workers; and 4 equal opportunities, and the integration of people excluded from the labour market. Unanimous voting is still in place for all other issues including social security, termination of employment, the representation and collective defence of the interests of workers (including codetermination), employment conditions for third-country nationals and financial contributions towards job creation. Second, the protocol effectively focuses on individual, not on collective rights. Paragraph (6) of Article 2 stipulates that questions of pay, the right to strike or the right to impose lockouts will remain outside the scope of Community action. Heavy intervention in these areas was ruled out, as it ran

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the danger of disrupting locally established and finely tuned arrangements which structure power relations between national employers and trade unions. Third, the protocol formalises the long-held ambitions of the Commission to have a permanent social dialogue between trade union and employer organisations (the social partners) at various levels inside the Community. Thus the Commission is obliged to consult the social partners when preparing a social policy proposal. In addition, a procedure is set out for the conclusion of European framework arrangements between management and trade union representatives, with the possibility of them being enforced by the use of Community law. Furthermore, the protocol permits Community Directives (laws) to be implemented by the social partners at member state level, rather than through the normal procedure of weaving them into national legislation. Some of these changes and developments are more contentious than others. At one level, the changes represent a fairly benign and uncontroversial tidyingup exercise. For nearly two decades now there has been a sizeable gap between the sparse clauses of the Treaty of Rome and the actual direction of EC social policy. Through a range of laws on equal opportunities and worker protection the Community has gained a presence in the area of labour market regulation without clauses directly sanctioning this in the Rome Treaty. Equally, the Treaty made no explicit mention of a Community social dialogue; yet an evergreen in Community employment policy has been the promotion of institutionalised relationships between employers and trade unions. Thus the Social Protocol attempts to bring about a greater coincidence between Treaty clauses and actual policymaking in the area of labour market regulation. At the same time, the Protocol attempts to establish a more effective decision-making process on social policy matters. In the 1980s, EC social policy was at an impasse because of the implacable opposition of the UK Government to any interventionist measures in this area. To avoid such frustrating immobilism in the future, the Protocol extends majority-voting in the field of social policy (health and safety policy was the first labour market area to come under the qualified majority voting procedure as a result of the adoption of the 1987 Single European Act). Under this new voting arrangement, a member state would still be able to argue and protest about a proposed labour market measure, but single-handedly would be unable to prevent its passage. As a result the Protocol makes decisionmaking on social policy easier, thereby creating the prospect that the Community could very quickly broaden its presence in the European labour market (Butt Philip, 1992). Controversies over the social clauses There is some credibility in the idea that these provisions will create the basis for heavy EC interventions into the European labour market. Bercussen (1992)


argues that the actions prescribed by the Maastricht deal will result in a fundamental change in European labour law. First of all, according to Bercussen, some of the clauses will create a new Community legal framework for the regulation of employment relations. For instance, the ability to pass Directives on part-time and temporary work by qualified majority voting will allow a decisive Community intervention to protect those in atypical employment. In addition, a more encompassing Community system of labour market regulation will be facilitated by the fact that it will be easier to pass laws on information and consultation, health and safety and so on. Finally, the use of collective bargaining procedures as a new avenue to introduce Community statutes and laws into national industrial relations systems will encourage EC influences on employment practices to grow. However, whilst such a reading of the Social Protocol cannot be fully ruled out, it is a very optimistic scenario for the future course of EC employment policy. The social action programme and the contents of the new draft Directives suggest that the Commission is not seeking to develop a body of supranational EC law on social policy matters (Grahl and Teague, 1992). On the policy front, the aim seems to be the intensification of coordination and communication between national labour market institutions. From these crossnational connections, it is hoped that synchronised initiatives will emerge on a wide range of issues such as long-term unemployment, youth training, equal opportunities and so on. On the legal front little attempt is being made to impose new EC labour statutes on the member states. Health and safety is perhaps the only area which will see the enactment of such supranational EC law, but the member states have conceded the need for heavy interventions in such matters in any case. For the most part, the legislative proposals in the social action programme aim at obtaining approximation between different national law regimes. Certainly this appears to be the intention of the new draft Directives on labour market regulation that have emerged in the last few years in the wake of the member states signing the Social Charter. Some of the proposals would require new legislative action, but overall the direction and content of recent social policy proposals appear not to be about replacing national systems of labour market governance with European arrangements. Rather, the objective can be seen as an attempt at greater approximation and coherence between existing national systems as well as obtaining a better fusion between EC- and national-level policies. In all but name, this is an augmented intergovernmental project, since the endeavour is to remove the fault lines and asymmetries that prevent the member states and the EC working together effectively on labour market matters. It is a strategy of unity in the context of diversity.

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THE SOCIAL CLAUSES AND IRISH LABOUR LAW For the most part, such a strategy would not pose too many problems for the Irish system of industrial relations. Since joining the Community, successive Irish regimes have attempted to move industrial relations closer to the European model. Before then labour market governance was heavily influenced by the British voluntarist tradition. Thus a relatively small body of law existed regulating the employment relationship. Free collective bargaining between employers and unions was at the centre of the industrial relations system. But in the past twenty years or so, as part of the wider drive to disconnect itself from British political and economic influence, the government has looked more to other European countries as reference points for developments on labour law and so on. This ‘re-orientation’ towards Europe is reflected in the country’s approach to EC social legislation. Although introduced rather clumsily, successive Irish governments had no hesitation in adopting the Community Directives covering collective redundancies, transfers of undertakings and insolvency matters. More begrudgingly accepted were the Community’s equality statutes. At the time, the world of work in Ireland was heavily conservative and male oriented. However, in the past two decades rapid transformation has occurred in this area and equality regimes both at company and national level in Ireland are now as good as anywhere else in the Community. In 1977 a Worker Participation Act was adopted which introduced formalised procedures for employee involvement in the state sector. In passing this law, the Irish Government was signalling to the rest of the Community that it would accept innovatory national labour market practices as part of the wider project of deepening integration between the member states. More recently the Part-time Employers Act passed in 1991 was heavily influenced by Community-level deliberations. When introducing the Act in the Dail (the Irish Parliament), the Minister for Labour referred directly to the similarities between the Act and the EC Commission’s proposals for a Directive on atypical employment and for a Directive on a form of proof of an employment relationship. Thus it appears that Irish policymakers have virtually tied domestic industrial relations innovations to developments elsewhere in the Community. Because the law has played previously a relatively minimal role in the labour market (Gunnigle, 1993), Ireland will have to introduce a range of new legislation to comply with the recent proposals arising from the Social Protocol and social action programme. Table 2.1 below outlines the most important of these measures and their possible impact on Ireland. As can be seen, new legalisation will be required on the regulation of temporary and short-term employment contracts and on the social dumping issue, and revisions and additions will be required to the existing body of equal opportunities law.


Table 2.1 EC Social Protocol—the new draft Directives and Ireland

But it is questionable whether any of these laws would oblige far-reaching change. Thus, for example, whilst legal regulation may be required to regulate temporary short-term contract work, most of the contents of the proposed law

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are already contained in many collective agreements operating across the economy. Probably the area which will pose the greatest problem is health and safety. Recently, important changes have been introduced into the


administration of health and safety matters which will add to the difficulty of implementing a complex family of EC health and safety Directives. Certainly the proposed statutes will represent a new departure in Irish labour law and are likely to have a direct impact on ground-level employee relations. But overall, Irish labour law will not undergo the kind of deep-seated change that would be necessary in the UK, should the Social Protocol be enacted in full. The social partners in Ireland and EC social policy Both Irish trade unions and employers accept the possibility of a social dimension to the EU. The Programme for Economic and Social Progress which established the latest round of centralised bargaining, and which both social partners signed, states that ‘lreland supports the practical expression of the rights set out in the Social Charter through the adoption of Community instruments that respect the overriding employment imperative and the varying practice of the member states/ The trade unions are particularly keen enthusiasts of the European project, and most would agree to increases in the level of resources and authority of ETUC in order to encourage the process of European collective bargaining. On the other hand, employer organisations are more reluctant about Community-level labour market interventions. Like other employer organisations across the Union, they are reluctant to accept the EU level as a strategic site for industrial relations decision-making. However, they would be prepared to accept more structured connections between EUlevel and national-level industrial relations arrangements if this were to enhance Ireland’s position in the EC. There is an acute realisation amongst employers that the future prospects of the Irish economy are integrally bound up with the European integration process. As a result, they would be prepared to accept policies with which they disagreed to keep that connection intact. Overall the social partners have accepted the growing Europeanisation of Irish industrial relations and will not stand in the way of any deepening of that influence by the Social Protocol. At ground level, the consensus view is that the Social Charter will not precipitate any radical change in Irish employee relations. A recent survey of current developments in human resource management in Europe asked enterprises about the likely impact of the EC Social Charter. As Table 2.2 shows, the vast majority of companies surveyed in each country thought that specific clauses of the Charter or even the instrument in its entirety, would either involve no change or minor change. Thus Irish companies appear relatively unconcerned about the proposals for legislative action with regard to atypical employment, health and safety and equal treatment. Only the draft Works Council Directive seemed to cause a degree of anxiety amongst the canvassed companies. This may reflect a worry amongst the large number of

Source: Adapted from the Price Waterhouse/Cranfield Survey of European HRM (Table 8.3a). Key: D(E) = East Germany; D(W) = West Germany; DK = Denmark; E = Spain; F = France; FIN = Finland; IRL = Ireland; N = Norway; NL = Netherlands; P = Portugal; S = Sweden; T = Turkey; UK = United Kingdom.

Table 2.2 Would the full implementation of the EC Social Charter require a change in your personnel policies in any of the areas below?

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transnational companies in the country that the Directive may represent the first steps towards full-blown Europe-wide collective bargaining. But the concern on this issue should not be overplayed, because even in this category the majority of enterprises thought that they could accommodate the planned consultation procedures with relative ease. All in all, the survey results suggest that companies across Europe thought that the Community had a small influence on industrial relations matters. Table 2.3 tends to confirm this conclusion, for it shows that relatively few companies thought that the Community centre was a sufficiently important site for industrial relations to employ a specialist to monitor developments at this level. Most companies were happy to keep abreast of EC social policy deliberations by participating in briefing sessions or simply through general media coverage. Overall, the survey gives no support to the idea that the Social Charter will result in heavy new EU legal interventions in the European labour market. Thus should the Union revert to an augmented intergovernmentalist logic, then the Social Protocol of the Maastricht Treaty is unlikely to pose serious problems for Ireland. In many ways it would simply involve a continuation of the present approach towards EC social policy. Ever since joining the Community, all Irish governments have been prepared to accept a symbiotic integration dynamic to guide EC-level labour market interventions. For the most part, this acceptance does not arise from any strong commitment to the ‘social model’ of European capitalism. Rather it results from a hard-headed recognition that European integration is a two-way process. On the one hand, it brings new economic and commercial opportunities. On the other hand, it involves on occasions changing domestic institutional structures which would otherwise have remained intact. Accommodating EU social policies is seen as an obligation of membership. CONCLUSIONS These are turbulent times for the European Community. The direction and speed of integration for the rest of the 1990s remains highly uncertain. None of the scenarios sketched in this chapter can be ruled out. In relation to Irish industrial relations, the worst-case scenario would be for the country to be a lower-division member of a two-tier Europe. A regime of competitive interdependence would probably prevail in this tier, reducing the possibility of any one member being able to enact a domestic system of labour market coordination. Probably the best scenario would be for Ireland to be a member of a firstdivision Europe in which the rules governing the creation of a monetary union are looser than those set out in the Maastricht Treaty. In this upper tier, a regime of cooperative interdependence is more likely to exist between the member

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states. This would mean that the Irish industrial relations system was directly locked into a development model which encouraged sophisticated high valueadded productive activity. Given the poor commercial performance of many parts of Irish industry, such a connection could prove highly beneficial. Both of the other scenarios—full monetary union in the context of Maastricht or augmented intergovernmentalism—would not involve radical change. The lesson for a country such as the UK would be that previous adaptation to EC convergence on social issues reduces the disruption of subsequent alignment on other dimensions. At one level, Maastricht-style monetary union or augmented intergovernmentalism, would allow the newly developed governance structure for the labour market to remain intact. However, it would also mean that little could be done domestically to resolve the chronic problem of high unemployment. Having tied itself to the European project, domestic economic fortunes in Ireland are now more or less a subset of the vibrancy of the European economy as a whole. ACKNOWLEDGEMENTS I thank Terry Cradden for comments on an earlier version of this paper. REFERENCES Artis, M. (1992) ‘The Maastricht Road to Monetary Union’, Journal of Common Market Studies, XXX, 3. Atkinson, T. (1992) ‘Towards a European Social Society Net?’ Fiscal Studies, 13, 3. Barnett, R. (1993), Fiscal Federalism and the Economic Organisation of the EC, London: Institute of Economic Affairs. Bean, C. (1992) ‘Economic and Monetary Union in Europe’, Journal of Economic Perspectives, 6, 4. Bercussen, B. (1992) ‘A Fundamental Change in European Labour Law’, Industrial Relations Journal, 23, 3. Boyer, R. (1988) The Search for Labour Market Flexibility, Oxford: Clarendon Press. Brewster, C. and Hegarisch, A. (1994) Policy and Practice in European Human Resource Management (The Price Waterhouse Cranfield Survey), London: Routledge. Butt Philip, A. (1992) ‘The Strengthening of the Social Dimension’, Journal of European Social Policy, 2, 2. Danthine, J.P. et al. (1990) ‘European Labour Markets: A Long Run View’, Economic Papers, Brussels: Commission of the European Communities. De Grawe, P. (1992) The Economics of Monetary Integration, Oxford: Oxford University Press. Durkin, J. (1992) ‘Social Consensus and Incomes Policy’, Economic and Social Review, 23, 3. Goodhart, C. (1990) ‘An Assessment of EMU’, The Royal Bank of Scotland Review, No. 190, June.

Source: Adapted from the Price Waterhouse/Cranfield Survey of European HRM. Note: For country names see Table 2.2.

Table 2.3 How does your organisation keep abreast of EC initiatives and developments? (Tick as many as applicable)


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Grahl, J. and Teague, P. (1992) ‘European Integration and Regional Labour Markets’, Queen Mary and Westfield College, mimeograph. Gravazzi, F. and Spaventa, L. (1990) ‘The “new” EMS’, in Paul de Grauwe and Lucas Paperdemos (eds), The European Monetary System in the 1990’s, London: Longman. Gunnigle, P. (1993) ‘Something Old, Something New: A Perspective on Industrial Relations in the Republic of Ireland’, Review of Employment Topics, 1,1. Hardiman, N. (1993) ‘The State and Economic Interests: Ireland in Comparative Perspective’, in John Goldthorpe and Chris Whelan (eds), The Development of Industrial Society in Ireland, Oxford: Oxford University Press. Harrison, B. (1992) ‘Industrial Districts: Old Wine in New Bottles?’ Regional Studies, 25, 5. Kennedy, K. (1993) Understanding Unemployment in Ireland, Cork: Cork University Press. Layard, R. (1991) Wage Bargaining in Britain and EMU, London: LSE Centre for Economic Performance. Lipietz, A. (1993) ‘Les regions qui gagnent’, CEPREMAP, mimeograph, Paris. Locke, R. (1990) ‘The Resurgence of the Local Union: Industrial Re-structuring and Industrial Relations in Italy’, Politics and Society, 17(3): 347–81. O’Donnell, R. (1993) ‘lreland and Europe: Challenges for a New Century’, Policy Research Series, Paper No. 17, Dublin: Economic and Social Research Institute. Ranjault, P. (1992) ‘On the Principle of Subsidiarity’, Journal of European Social Policy, 2, 1. Roche, W.K. (1993) ‘The Liberal Theory of Industrialism and the Development of Industrial Relations in Ireland’, in John Goldthorpe and Chris Whelan (eds), The Development of Industrial Society in Ireland, Oxford: Oxford University Press. Rochet, P. (1991) ‘La Subsidiaritie au centre du debat European?’ Notabene, 63, 2. Schmitter, P. (1992) ‘The Future Political Structure of the EC’, University of Stanford, mimeograph. Schmitter, P. and Streeck, W. (1992) ‘From National Corporatism to Transnational Pluralism, Organised Interests in the Single European Market’, Politics and Society, 19, 1. Spicker, P. (1991) ‘The Principles of Subsidiarity’, Journal of European Social Policy, 1, 1. Taylor, P. (1991) ‘Consociational Democracy and the Political System of the EC’, Review of International Studies, 25, 3. Teague, P. (1991) The European Community: The Social Dimension, London: Kogan Page. Teague, P. (1993a) ‘Towards Social Europe: Industrial Relations after 1992’, International Journal of Human Resource Management, 4, 2. Teague, P. (1993b) ‘Decentralisation or Coordination? European Industrial Relations in the 1990’s’, in J. Lodge (ed.), The Future of the European Community, London: Frances Pinter.

3 THE FUTURE OF EMPLOYEE RELATIONS WITHIN EUROPEAN ENTERPRISES Kevin R O’Kelly

INTRODUCTION Much of the focus within the European Union over the past decade has been on the economic and business integration of the member states and more recently on economic and monetary union and the potential growth in standards of living and employment for its citizens. The exciting prospects of a market of some 370 million people and the expectation of major expansion in every sector of business resulting from the integrated market has already had positive economic results and the expansion of employment. It has also unleashed a new political impetus, has reopened the debate on European political union and the direction western Europe has as a world political and economic power. With these exciting developments there has been concern that the completion of the internal market should not be at the expense of a social dimension and that a balance should be found between the economic and the social advantages flowing from the single market. The European Commission is very well aware of the importance of achieving this balance, and recognition has been given to the need for a social dimension by the governments of the member states with the adoption of the Social Charter and its associated Action Programme and the inclusion of the Social Chapter in the Maastricht Treaty. The Single European Act, which is the legal framework for the internal market, taken together with the previous EC treaties, explicitly contains a basis for social progress in line with economic integration. It guarantees genuine freedom of movement of people across the member states; it sets out the requirements for health and safety policies in the workplace; and it creates the legal basis for a form of concerted action within the Union by requiring the development of a ‘dialogue between management and labour at European level which could, if the two sides consider it desirable, lead to relations based on agreement’ (Single European Act, 1986:25).

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EUROPEAN INDUSTRIAL RELATIONS With this important aspect of the Single European Act, it is likely that, in the medium to long term, events at a European level will greatly influence the way we conduct our employee/management relations. Each of the member states has evolved its own particular brand of industrial relations depending on the unique historical, political and social developments within the country in the past one hundred years or more. The Irish way of conducting industrial relations has been greatly influenced by its historical links with Britain, both politically, through the two trade union movements and the close business links between management on the two islands. The Danish system has evolved very much within the Nordic tradition, while the French have their own particular brand of industrial relations and employee rights. The German system is a postwar development, which is highly regulated and very much based on a consensus approach, with guaranteed input from workers into decision-making. Portugal, on the other hand, is a relatively recent democracy and has only had a free trade union movement since the mid-1970s. So there is a variety of industrial relations systems within Europe, all still changing and evolving. In the long term, it is reasonable to assume that national differences in the conduct of employee relations and collective bargaining procedures will remain. However, national systems do not function in isolation and over all of these systems there is a growing influence from the European Union. Much of the labour legislation introduced by each member state in the past twenty years has resulted from EU Directives. In Ireland and the UK, for example, the balance of rights within the workplace shifted substantially during the 1970s after both countries joined the European Union, and this reflects an agreed minimum level for workers’ rights throughout the member states. This trend towards a European system of industrial relations will be accelerated by the integrated market for a number of reasons: • The commercial pressures of global competition will result in the growth of transnational enterprises through joint ventures, takeovers and amalgamations between companies in different member states. • European integration is resulting in open frontiers for the movement of labour and capital. • Pressure for the physical protection of workers on a Europe-wide basis and for representation of workers’ interests in the drafting and implementation of health and safety legislation. • The effects of economic and monetary union on the ability of national economies to operate independently and the pressure this convergence will have on the social partners to find agreement on wage increases and other

THE FUTURE OF EMPLOYEE RELATIONS 71

issues with labour cost implications within the constraints of a single monetary system. It is inevitable that as European economic and business policies become more transnational and integrated, the approach to employee relations will also become EU-wide. This is a challenge which the trade union movements, in particular, will have to meet in dealing with management of transnational enterprises and in representing their members effectively in an environment in which jobs will be interlinked across national frontiers. The European company Survival in the single market A major effect of the integral market in Europe will be the growth of Europewide enterprises. As frontiers are removed, many small and medium-sized businesses in sectors where there is transnational competition will need to join with other similar companies in other member states to survive, or it will not be possible for them to remain competitive even in their home market. Indeed, the objective of the single market is that the ‘home market’ will be European. Enterprises in other sectors will, however, be relatively unaffected by the single market; in particular, in small service, retail or craft-type businesses geared towards meeting specific demands of their local markets. Small and medium-sized businesses, faced with intense competition, will have to adjust their traditional systems of management to meet the pressures of doing business across national boundaries. Small businesses tend to operate on modest resources and have some distinct differences from large national or transnational companies; for example: • very often they employ few specialists for the different aspects of the business, such as a finance, marketing or personnel manager, and the outcome of bargaining trends in bigger companies in the relevant sector are usually followed; • the difference between the owner/manager and the employee is not as pronounced and the relationship is less structured, resulting in a low level of unionisation or formal industrial relations procedures; • in situations of employee/management conflict, industrial action is very often in the form of absenteeism and voluntary labour turnover rather than through any organised action; • the level of delegation is generally less than would be found in larger firms, with little or no middle management or supervisory structures;


• the need to meet tight schedules for delivery and quality to the client company put particular pressures on small firms; • the scope to review incomes and wage levels or to invest in improved working conditions is constrained in situations where profit margins are tight (Koning, 1990). In the context of European integration, one important area for these small and medium-sized enterprises will be in the area of health and safety and the expanding role of the EU in supervising the working environment and in the harmonisation of regulations. This aspect of Union action will have an impact on production costs, in particular in the manufacturing sectors. The flexible firm With the need to react quickly to changing market conditions and increased competition, enterprises within the European Union are adapting management approaches which give the firm greater flexibility in the organisation of work. A key aspect of this trend is in the realm of employee/management relations and some indications of this are already emerging, such as: • a concentration on the need for greater efficiency and low-cost operations so as to remain competitive on the global markets; • the increased investment in new technology resulting in the automation of many aspects of the production process, better productivity and changes in skill needs; • the importance of quality consciousness and the need for better quality management; • a recognition of the contribution of the individual to the enterprise, and the diminution of the distinctions between blue- and white-collar workers; • a recognition of the importance of staff training and development programmes and frequent updating of skills in a rapidly changing environment. Two other developments which will have a lasting impact on the European company is the fact that the labour pool from which it recruits its work-force will be better educated and better qualified than any previous generation of workers. This will create greater career ambitions and the possibility for greater job mobility within and across frontiers at a time of labour shortages in many member states. The competition for skilled workers will be intense, thus increasing the cost of labour at a time when the trend is for greater competitiveness and lower unit prices. Enterprises will have to provide more attractive working conditions, career prospects and increase investment in training so as to retain and develop their employees.


Second, the concern for the environment and how this will influence the design and organisation of work, the workplace and end product is a growing issue in employee relations.1 In many sectors the trend is towards smaller core-work groups operating together with peripheral and external groups of workers who undertake the subcontracting of unessential elements of the work (Purkiss, 1989). The development of inexpensive communications and other forms of technology gives enterprises the flexibility to move aspects of the work, not essential to the core business, out to subcontract. This trend is creating completely new patterns of working and living, such as part-time work, temporary employment, homeworking and other insecure forms of employment which are different from our traditional concept of the workplace and normal employee/management relations policies are not suitable in these new arrangements. Multinational enterprises (MNCs) The Single European Market will be dominated by multinational enterprises which operate in the many growth sectors and set trends for small, locally oriented companies to follow in terms of the management of the factors of business, including employee relations. The reasons for the phenomenal growth in MNCs is both economic and political. On the political front, governments from both developed and emerging economies have encouraged, invited and financially induced multinationals to set up assembly plants and subsidiaries or joint ventures with local enterprises within their jurisdiction. In return that country gets an investment of capital, resulting in an expansion of employment, skills training and an introduction to new technology which it could not otherwise acquire. All of this brings about a rise in the standard of living for the workforce and their dependants and an economic spin-off in the area where the subsidiary is located. The economic reasons result from the limitations companies experience because of the size of the home market. Once the company has fulfilled the demands for its products on the home market it must seek new external markets if it is to continue to expand. Initially, this is achieved by exports but the problems of transport and distribution costs and other barriers reduce the competitiveness of the products on foreign markets. So as to exploit the potential for sales, companies are opening manufacturing plants, or buying into competing enterprises and marketing facilities to reduce the costs of their products, in these markets. In ‘high-tech’ industries where the costs of research and development and the product life is short and, consequently, expensive to manufacture, concentration on one or two national markets no longer provides a basis for commercial survival. Within the European Union more and more national


enterprises are realising that, with the advent of the single market, the advantages for companies over their competitors from other trading blocs, such as the United States, Japan and the Pacific Rim, can only be exploited by a panEuropean approach. The single market is providing the motivation for enterprises based in the member states to exploit the economies of scale of this large market, through joint ventures, amalgamations, takeovers, establishment of production plants and other forms of expansion outside their domestic markets. According to the Chairman and CEO of Thomson SA, Mr Alain Gomez, the reason for consolidating European companies already exists: national markets represent only about • to l/5 of the world market in many industrial sectors, and that is no longer enough to ensure the financing of R&D and other investments. Thus European companies have a choice: consolidate through acquisitions or ventures or die by attrition. (Harvard Business Review, 1990:32) Non-European Union multinational enterprises Non-EU MNEs will also have an impact on both economic and social developments in the workplace within the internal market. The business approaches of different countries, arising from their individual traditions, influence the way in which these multinationals control their subsidiaries and protect their investments and markets. These non-EU MNEs will only remain in markets in which they can stay competitive, have company and employment legislation which are not restrictive in terms of this competitiveness and are politically stable. An analysis of the single market process by the US Industry Coordinating Group and submitted to the European Commission, points out that: Of major importance to business investment decisions are infrastructure and other considerations such as transportation, education systems, utilities, the quality of the available labor force, work ethic, labor costs and customer needs. Disparities in wage rates while important are not normally the major determinant…. In contemplating areas most appropriate for a decentralized or subsidiary approach, our view is guided by the belief that choices and options are preferable to mandated uniformity. Companies themselves are organized in many different ways, and there are many types of relationships among supervisory, management and nonsupervisory employees, with or without formal employee representation. Our experience convinces us that arrangements that make sense for one company may not for another. (US Industry Coordinating Group, 1989)


This poses a dilemma for the Commission in initiating EU draft legislation and for the Council of Ministers in adopting instruments relating to the workplace and the operation of business. A balance has to be found between the social needs of the Union in terms of workers’ rights and protection and the attractiveness of Europe and, in particular, the peripheral regions as locations for investment by non-EU multinationals. The power of the multinationals Because of their control of capital investment, multinational enterprises have acquired substantial political influence in the countries where they operate. They have close links with the political structures and can influence the direction of economic, industrial and manpower policies. The corollary of this influence is a dilution of the control which national governments have over the policies pursued by the multinationals, in particular the larger enterprises which control so much of the world’s wealth. Any attempt by national governments to impose restrictions on these companies through fiscal policies, employment, labour or environmental legislation would be considered in the light of the commercial advantages or disadvantages to the enterprise. If government intervention is unattractive in a marginal market, it will be likely that the local operation will close, or be reduced, and the market demand met from outside the country. On the whole, however, multinationals follow the requirements, local traditions and legislation of the countries within which they operate even when they would prefer to work in a different environment. INTERNATIONALISATION OF INDUSTRIAL RELATIONS Commercial decisions for whatever reason, be it marketing, technological or financial, can be met with strong resistance by the workforce of an enterprise. When a decision is taken for very good business, technical or accounting reasons, to reduce, rationalise or close a subsidiary, the effects on the labour force are often not a consideration in the equation. Labour is very often seen, like the other factors of production, in abstract terms by corporate management and responsibility to manage the ‘human resource’ is delegated down through the management structure. The corporate strategic management will expect the human resource specialists to advise on the labour-related issues which would influence decisions on production and location, and to handle any problem which might be anticipated in implementing the decisions at local and plant level. While there will inevitably be a corporate influence on the management style adopted in the subsidiaries of multinationals, research has shown that:


Ongoing multinationals’ relations with the workers are determined largely by the law and collective bargaining in the host country and applicable to all enterprises of whatever kind. This is the main reason why labour relations administrative and personnel management tend to be more decentralised than other managerial functions, and why subsidiaries usually insist that they are fully integrated in the host country and have autonomy in such matters. (ILO, 1985:158) However, as regards information and consultation on decisions which would affect employment, this survey found that: • the level and scope of the information given to the workers’ representatives is generally limited to the entity concerned and therefore applying to only part of the multinational; • within the multinationals’ decision-making structures, as a general rule, many of the decisions affecting the workforce (investment or disinvestment policies) appear to be taken ultimately by the central management, which is a decision-making centre remote from the subsidiaries abroad (ILO, 1985: 160) However, there are many examples of the management of multinational companies attempting to extend their corporate personnel policies and collective bargaining practices to their foreign subsidiaries. These policies are very often alien and contrary to the accepted traditions and norms of the countries where the subsidiaries are based. For example, many multinationals resist union organisations within their subsidiaries by non-recognition or as a condition of employment or have a policy of individual contracts. In countries with well-established trade union movements and traditions of collective representation these policies can shift the balance of power between management and labour, and affect industrial relations within that country. This approach to corporate decision-making and the influence on personnel practices by the parent company introduces an international dimension to local employee/management relations. Local management can very often be at a disadvantage in terms of having information on corporate planning concerning restructuring, product development, the introduction of new technology, etc., which can affect employment and which is of direct interest to the workforce and the trade unions. According to the ILO survey, the trade unions felt that the information given by local management should not be merely local or national in scope, but should cover all the operations of the group. This would help the workers’ understanding of managerial decisions and facilitate an assessment by the trade unions of the probable effects on employment and enable them to defend the


interests of their members. For example, if a multinational decides to close a plant for reasons connected with restructuring its international operations, trade unions believe that the workers affected should have access to complete information on the closure. In a dispute situation the ability of management to shift a local issue to an international level by threatening to move production to alternative sources in the short term, or to relocate or change investment plans in favour of other locations in the longer term, represents a major move in the power balance of negotiations and has an impact on the flexibility of trade unions to bargain. In resisting decisions which affect their jobs and very often the economy of a local area, workers have, through their trade unions, sought solidarity with fellow workers in the same multinational or through the relevant international sectoral organisation. As companies become more international, and if their planning process is centralised, there is strong pressure on trade union movements to follow suit. It is unlikely that trade unions themselves would become ‘international’, although a small step has been taken in this direction by the setting-up of a ‘bargaining unit’ representing airline pilots and flight engineers throughout the EU as a response to the deregulation and rationalisation of the air transport sector (Richards and Stevenson, 1990:24; Arkin, 1990:22–3). Apart from this example, it is more likely that, in general, the role of the international federations, international trade secretariats or joint trade union councils for a particular enterprise, will become more important and influential as a counterbalance to growing corporate power in employee/ management relations (Bendier, 1987:87).2 However, a barrier to transnational trade union cooperation and coordination of activities is the tendency to sectionalism along ideological, skill or status lines, which is often a characteristic of the labour movement and an obstacle to solidarity in a number of member states. The preservation of jobs and the survival of a subsidiary will influence workers to look at their own situation and the idea of taking industrial action to save jobs elsewhere or for the sake of international trade union solidarity is not an attractive option. This is the dilemma which the European trade union movement has to face in its pursuit of cooperation, as it is confronted by the growing power and economic influence of the multinationals. Even with these conflicts of national and local interest, cooperation is growing within the labour movement in the European Union. There are numerous examples of strong, influential trade unions in one branch of an industry assisting weaker colleagues in another subsidiary by providing information vital to a particular situation. Also, there is a growing level of training and financial assistance from better-off trade union centres to other centres internationally. Indeed, the level of assistance for the trade union


movements in central and eastern European countries from the European Trade Union Confederation (ETUC) and its affiliates is a good example of this type of transnational cooperation. However, even with a growing trend towards international trade union cooperation, there has been little progress towards transnational collective bargaining, which would reduce the power of management and of multinational companies, to set the workforce in one subsidiary at odds with another, even though such bargaining has been the ambition of the International Trade Secretariats for many years (Bendier, 1987:90). SOCIAL DIALOGUE Employee/management relations within European companies are moving towards a complex system of local and corporate levels of collective bargaining and consultation. The issues which will dominate these arrangements will reflect the concern for competitiveness on European and world markets. Management will strive to devise and implement more efficient methods of work organisation designed to reduce production costs and increase labour productivity, while worker representatives will be watchful of threats to existing employment, the quality of the working environment, reward/ remuneration packages and the representative role of trade unions. Some of the topics which could command the attention of the social partners and which overlap between the local and corporate levels might include issues of flexibility; consultation, involvement and information disclosure; the introduction of new technology; payment systems and wage policies; staff training, development and the problem of skill shortages. In keeping with these developments, the European Commission has pursued a strategy designed to bring about the disclosure of information to the workforce or their representatives in transnational enterprises, through forms of consultation and participation. The commitment in the Single European Act (Article 118B) implies that meetings should be held between management and worker representatives at Community level either within transnational enterprises or at sectoral level, and these would be encouraged by the Commission. It would be left to the social partners to agree the agenda, the types and levels of information made available and the range and outline of agreement which could result from such dialogue. The member states have agreed to the principle that there should be exchanges between the social partners, and it is the responsibility of the Commission, the corporate management of transnational enterprises, their international sectoral associations and the international trade union movement to work out the details on how this requirement of the Single European Act should be fulfilled.


As a move to stimulate social dialogue within the Union, the Commission initiated the Val Duchesse dialogue. Through these talks and the common opinions resulting from the two working parties set up under the process, employer and employee organisations affirmed their joint conviction that social dialogue is an important element in implementing economic integration. The members of the working party on new technology, while supporting the concept of information disclosure and consultations, disagreed on the appropriateness of legislation at EU level. Indeed, this is an area of fundamental disagreement between the social partners, and has caused some difficulties in advancing EU legislation on employee participation and consultation, as the Commission gave an undertaking that no legislation would be proposed, in the social affairs area, without the prior agreement of both sides of the social partnership, with the exception of health and safety at work. Thus, future progress should be by consensus only. The Commission also took the commitment to social dialogue one step further with the proposals outlined in the Action Programme for the implementation of the Social Charter (European Commission [1], 1989). The Commission proposed, after consultation with the social partners, to prepare a draft instrument covering the following principles: • The establishment of equivalent systems of worker representation in all European-scale enterprises. • General and periodic information to be provided on the development of the enterprise as it affects the employment and the interests of workers. • Information to be provided and consultations to take place before any decisions liable to impinge on the interests of employees are taken; for example, closures, transfer of work, organisational changes or changes in working practices. • The dominant associated undertakings would be required to provide the information necessary for the employer to inform the workers’ representatives. Further proposals on financial participation would be designed to encourage practices in the member states, either reached by legislation or by negotiations between the two sides of industry, on a share by employers in the profits or capital growth of the enterprise, as part of the payment/ wage package. THE SOCIAL CHAPTER Following the failure of the member states to agree a format for the inclusion of social policy in the Treaty on European Union (the Maastricht Treaty), eleven of the states concluded a protocol to the Treaty—the Social Chapter.


This agreement sets out a number of objectives for social policy, within the overall economic objectives of the member states and includes dialogue between management and labour and the information and consultation of workers. The Chapter guarantees that the management and labour representatives at EU-level, will be consulted by the Commission on the direction of social policy and on the content of its proposals. If the social partners wish to conclude agreements between themselves on particular proposals, then action at Union-level will be deferred to allow for the possibility of such agreements. The resulting agreements may be the basis for Commission proposals for legislation or can be considered as European-wide collective agreements (Treaty on European Union, 1992:196–201). EUROPEAN-LEVEL CONSULTATIVE ARRANGEMENTS The European trade union movement supports the Commission’s proposals by arguing that the Union should, indeed, guarantee workers’ representatives access to a minimum amount of information, consultation and participation and that this minimum floor should be the same for all European workers. Trade unions with members employed in multinational companies have been making three parallel demands over the past few years for information and a position of influence on decisions taken by the parent company: • a right to local and corporate information and consultation through the management of the respective subsidiaries; • a right for the trade unions in each company to have individual access to the corporate management for information and discussions. This latter right could include participation of union representatives either from all the subsidiaries or from some of them. In some cases this demand has included worker representation on the parent company management board. On the whole, employers’ organisations have resisted any move towards a formal recognition of workers’ representatives at transnational levels. Some of the arguments advanced are: • that the management of each national subsidiary should have contacts independently with the trade unions in its own country so as to provide information and also for the purpose of negotiations in recognition of the individual national systems of industrial relations; • experience shows that it is difficult to draw a clear distinction between meetings for information and consultation and negotiations when meeting trade union organisations;


• employers have also argued that meetings at corporate level could be construed as institutionalising or giving de facto recognition on the part of the parent company to consult with or inform the trade union in foreign subsidiaries and would also undermine local management and their independence in decision-making. In their review of international industrial relations for the OECD, Morgan and Blanpain found that as regards any suggestion of collective bargaining at corporate level, in contrast to meetings to provide information, that: Employers were uniformly opposed to trans-national bargaining on the grounds that wages and conditions of work were determined on the basis of conditions prevailing at the affiliate. They expressed strong doubts about the capacity of an international union organisation fully to represent the economic interests of employees in different countries. They also point out the danger that such an organisation would operate outside national law and thus be responsible to no one but itself for its actions. (Morgan and Blanpain, 1977:5) A further argument of the international employer organisations is that it is an essential part of management’s prerogative to make decisions, that they must have the necessary flexibility to react quickly to changing conditions in the marketplace. The view is expressed that while the German workforce is efficient and productive, the codetermination legislation makes the process of change in German industry inflexible and slow. If the requirements for consultation/involvement arrangements were imposed on less efficient economies, then enterprises in those countries would become uncompetitive (European Round Table of Industrialists, 1989). EUROPEAN-LEVEL COMPANY COUNCILS While employer organisations have strong reservations in regard to transnational dialogue and concern that it might eventually result in international collective bargaining, there have been some tentative moves towards European-level employee involvement and other proposals are under discussion. Three French transnational enterprises, for example, have formalised European-level agreements on information and consultation arrangements. Thomson, the electronics multinational, has had an agreement with the European Metalworkers’ Federation since 1985, which set up a European Branch Commission, covering all Thomson subsidiaries in Europe, with representation proportioned to the number of employees in each country. It


meets at least annually or as specific proposals require and is described by Thomson’s as ‘a body for dialogue’; it is not a body for European consultation. It is informed of the financial, industrial and commercial issues which could affect employees. The Commission is purely a communications forum to allow the company to convey economic information about its strategic objectives and its future direction and to convince the trade unions of the need to take certain decisions regarding restructuring which might be resisted if they were raised on a national rather than a European basis. Collective bargaining continues to be conducted at national level. Thomson has reduced its European workforce by 10,000 over the past number of years without any industrial action and management points to this as an indication of the beneficial results of such a transnational forum. Some of the problems which Thomson has experienced with the European Branch Commission have been in relation to the differing expectations of the national groups. The German representatives, who are used to a greater degree of detailed information at national and plant level and to consensus, are seeking a similar approach at European level. The French trade unions, on the other hand, take the view that it is the management’s responsibility to manage and the trade unions should have a consultative role. The original reasons given by Thomson for pursuing the idea of a European-level council had to do with restructuring of the group. This will not be a motivation in the future, so the amount of information on economic issues will not be as necessary as in the past. Consequently, Thomson are examining ways of keeping the momentum going by possibly extending the range of information to social issues such as training and working conditions or, with the group’s expansion into the United States, the inclusion of representatives from the US on a pan-Atlantic council (Allain, 1990). Another European-level information council is in Bull Computers. In 1988, the management of Bull and the Metalworkers’ Union in France signed an agreement to set up a European Information Committee for a two-year trial period. This committee is for the stated purpose of ‘establishing a dialogue in the European countries in which Bull is located’. The Committee met twice during its two-year trial period and was provided with information relating ‘to trading, economic, financial and social matters in respect of the whole group’. There was an exchange of views, and discussions took place between management and the work representatives from twelve countries. As in the Thomson experience, there have been some initial problems in moulding together the different traditions and cultures. An observation following one of the earlier meetings of Bull employee representatives and management demonstrates the different national approaches:


the French drew rigid distinctions between the process of information exchange, consultation and negotiations, the Dutch, Greek, Portuguese and Spanish delegates at the Paris meeting attempted to raise issues which their hosts thought more appropriate to other fora. (Arkin, 1990:1) A full review of the workings and effectiveness of the committee, following the initial trial period, resulted in the committee being put on a permanent footing, with its extension to those employees working in the Honeywell division of the Honeywell/Bull Group. A third initiative is in the French food and drink multinational, Danone (formerly BSN). The management of this enterprise make the point that it is comprised of a group of European companies and, therefore, must approach its employee representatives at a European level. In 1986, this company signed an agreement with the European Committee of the International Union of Food, Catering and Allied Workers’ Unions (UITA). Again, the agreement was concluded for two years and the European Consultation Committee met twice during this trial period. The committee comprised representatives from nine countries and the Secretariat of UITA as well as the relevant trade union officials from the national organisations, meeting with general management representatives. In 1988, a second agreement, the ‘Avis Communs’ (Common Advice), was signed. This covered joint initiatives on new technology, group economics, social information and employment equality, and trade union rights as set out in ILO Conventions. A number of working parties were set up to cover these topics, and in 1990 two agreed texts were signed on equality of opportunity within the group and economic and social information to employee representatives. It was agreed that these should be implemented by the end of 1991 in each company within the group. Two points worth noting about the Danone experience. First, this company has had experience with transnational consultative/information arrangements on and off since 1972, and, therefore, was the only multinational manufacturing concern that had such a written agreement with its trade unions during the 1970s. Moreover, the initiative then, as now, came from the company and not from the unions or an international trade secretariat. Second, at the meeting of the consultative committee in March 1987, apart from the agreed representation, the meeting was attended by union representatives from the Danone plants in Japan and the USA, and from the international trade secretariat (IUF) regional offices for North and Latin America, acting as observers, making it the first global consultative forum. It is the contention of both management and the main French trade union (FGACFDT) that these semi-formal arrangements directly affect the workers


within the group; they all know and are aware of the direct implications for their work location. It is the union view that the more structured agreements in Thomson and Bull do not filter down to the workers. Both the European trade union organisation and management have problems with their national colleagues. Danone corporate management very often have to encourage local management to cooperate with the process of social dialogue and to provide information in line with the group’s culture. The trade union within the group at national level also has to be encouraged to work within the spirit of cooperation by the international trade secretariat. The company is attempting to have its approach to European-level cooperation adapted to the local systems in the European countries in which it operates. Another enterprise discussing a European-level consultative arrangement with the trade unions is Pechiney, the aluminium and metals conglomerate. A number of internal meetings have already been held, including a joint management/shop stewards’ meeting with representatives from different national subsidiaries and agreement reached on how to proceed. Outside France one major development in this area has been the agreement in 1992 between the trade unions and management of Volkswagen to set up a joint European works council. This council has representatives from Germany, Belgium and Spain, seventeen members in total. Participants include VW group management and management from the local plants in the three countries. The council was set up to promote an exchange of information about developments and strategies and to ensure that measures are coordinated to the benefit of the group. It meets at least once a year or as considered necessary by its executive committee. There is an exchange of information on jobs, location and plant structures; developments in group structures; working conditions; new technology; work organisation; safety and work environment; and effects of political developments. There is consultation between the council and senior management on any issue which has cross-border implications. Apart from these enterprises, many other agreements have been reached on formal European-level Enterprise Councils, both within the European Union and in the Scandinavian countries, and active discussions are under way in many other European transnational companies to find agreements for consultation/information disclosure arrangements (European Foundation−P+, 1993). These represent a beginning and there is evidence of a growing recognition of the need for wider access to information for employees and their representatives so as to provide them with an understanding of corporate decisions and the role of their particular subsidiary in the European or global organisation. The experiences of the existing arrangements and with the growing concern of the Commission and the European trade unions for access


to a greater degree of relevant corporate information, will increase the number of enterprises looking more positively at this process as a way to improve employee relations, to develop the consensus approach to the management of the workforce, improve productivity and competitiveness. It is important also to recognise the constructive and active support of the European trade union organisations in promoting these discussions. For example, the European Metalworkers’ Federation have either taken an active role or acted in an advisory role in the establishment of many of these European-level forums, as has EuroFIET and IUF in enterprises where their affiliate unions have members. The new Directive With these developments as a background, the European Commission proposed and eleven of the member states agreed, in September 1994, that it is consistent with the objectives of a single market to provide for the disclosure of information and for consultation of workers on key decisions and issues of a European-wide nature which significantly affect workers’ interests. This Directive does not set out any rules by which this should be done provided that the procedures are agreed between the employer and the worker representatives. Nor does anything have to be done unless one of the parties requests the other to enter discussions on the setting up of a European-wide forum (European Commission [2], 1994). It is agreed, therefore, that this is consistent with the development of a single market and the equal access to information and consultation on transnational issues should be available to all workers within the transnational enterprise. It is recognised that the means of achieving this is best done through flexible structures adapted to the needs of the individual companies. The Directive, therefore, only applies to transnational companies who have: • at least 1,000 employees within the member states; • at least 150 employees in each of at least two member states. The Directive also applies to multinational groups in much the same way: • at least 1,000 employees within the member states; • at least two group undertakings in different member states; • at least one group undertaking with at least 150 employees in one member state and at least one other group undertaking with at least 150 employees in another member state. The thresholds will be determined by the average number of employees, including part-time workers, employed during the previous two years before


the enactment of the legislation. It will be possible for the national legislation to include part-time employees in the numbers threshold on a pro rata basis. The Directive does not apply to any enterprise which has a European information and consultation forum in operation when the Directive becomes law in the member state where the central management of the enterprise is located, which will be no later than two years after its adoption by the Council of Ministers. The setting up of a works council can be brought about by management but if it fails to take the initiative then 100 employees or their representatives (from two different member states) can request the establishment of a Special Negotiating Body. This body would then determine the scope, composition, powers and term of office of the council, by written agreement, or other agreed arrangements for the implementation of the Directive. The body can also decide not to go ahead with the setting up of a council or it can defer discussions for up to two years. If management refuse to open discussions within six months of a request from the employees, or if, after three years of talks, no agreement has been reached, then what is called The Annex will apply. The Annex is, in effect, the bottom line in any negotiations for the establishment of a European Works Council. It sets out a number of important rules which must be incorporated into the agreement: • the scope of the councils is limited to information and consultation on matters of a Union-wide nature or which have an impact on at least two subsidiaries; • the councils will have a minimum of three members and a maximum of thirty in proportion to the numbers in each country, with at least one member for each country where the enterprise has a subsidiary; • meetings will be at least once a year and the agenda will relate to the following issues, as they relate to the transnational enterprise: – structure, – economic and financial situation, – development of the business and of production and sales; • • • • • •

the employment situation and probable trends; investment and any substantial changes concerning the organisation; the introduction of new working methods or production processes; transfers of production, mergers, cutbacks or closures; collective redundancies; further meetings can be requested by the employee representatives in exceptional circumstances and these meetings must take place as soon as


possible and will be on the basis of a report drawn up by central management on the issue to be discussed; • all operating expenses, financial and material resources, meeting costs, accommodation and travel related to the work of the European Works Council shall be met by the central management of the enterprise. Finally, the Directive provides that a clause ensuring the confidentiality of the information provided by management to the councils or to the special negotiating bodies may be included in the national legislation. It also provides that management, in specific cases, need not give information which it deems commercially sensitive to the enterprise or any of its subsidiaries. Sector discussions Another dimension to social dialogue is at sectoral level. A number of working groups have been set up for specific purposes between the European committees of the international trade secretariats and the European sectoral employers’ organisations. Some examples are found in the work of EuroFIET, and its contacts with European employer organisations. In 1983 DGV of the Commission received a report on ‘the social implication of the introduction of new technologies into the banking sector’. Following a seminar to discuss the contents of this report, DGV decided to convene a working party to examine the contents of the report from the point of view of the future of employment and skills within the sector. The working party was composed of experts from European commercial banks, savings and cooperative banks and the trade union representatives organised within EuroFIET. The report of this working party was published in 1987. A similar working party to examine the influence on employment and qualifications resulting from the introduction of new technology in the insurance sector completed a joint report in 1988. A third important example of sectoral cooperation is the agreement (joint memorandum) between EuroFIET and the European Confederation for Retail Trades (CECD) on vocational training for the retail trade. It is proposed in the context of this agreed memorandum to act on the whole area of training for retail workers. A joint EuroFIET/CECD forum, in association with DGV agreed to set up two working groups, one to propose ways of implementing the recommendations in the training memorandum and the second to examine the future impact of the demographic changes in Europe on the retail sector and its ability to attract workers, in competition with other sectors, thus building on the positive experience of the two organisations with non-conflictual dialogue. The European Metalworkers’ Federation have also had a series of meetings with employer organisations in the steel and automotive sectors, on specific


issues of transnational importance, in particular the concern for the environment and the effects of this concern on the production process, on employment and the competitiveness of enterprises in these sectors. All of these contacts are within the objectives of the social dialogue agreed in the Single European Act and it is the view of both sides of industry that sectoral contacts provide a good forum for information and consensus approach at European Union level, leading to the development of a greater understanding between management and labour and better employee relations within European companies. CONCLUSION One of the major changes which has taken place since the end of the Second World War is the globalisation of economics. This has resulted in employment, income levels, conditions of work and personnel policies being influenced by events and forces outside the local industrial relations system and in employee relations becoming more and more international in character. Many factors have influenced the development of the global economy, the emergence of multinational companies, the growth in the application of new technologies, new management techniques, the competition between countries for employment investment and the mobility of capital, skilled labour and technology. Modern business has become too big to be controlled by national governments, even if governments wanted to control organisations which they see as essential for employment creation and economic growth. Only at an international level can curbs be put on multinational enterprises which are economically so powerful in terms of their ability to manipulate capital, jobs, governments and trade unions. International organisations such as the ILO, the OECD and the United Nations, have set standards for the behaviour of multinationals in the conduct of their business and their approach to employee relations, all with indifferent results. The vast majority of multinational enterprises adhere to and respect the international rules, such as the OECD Guideline, the ILO Recommendations or the recently agreed UN Code. However, there are cases of breaches of the international rules, in particular in relation to personnel policies, trade union recognition and employment. The European Union is, in effect, the only supranational body with the power and authority to impose a legal code on multinational enterprises operating within the jurisdiction of the member states. However, in the face of the employers’ and, indeed, multinational opposition to any moves in that direction, the Commission has opted to control transnational companies by giving them the option of registering as European companies, and, second, by


proposing the introduction of minimum information disclosure to their employees. The 1990s and beyond are going to see the multinationals grow in strength and size within the European Union with the inevitable development of management techniques designed to cope with a transnational and multicultural workforce and this will have to be matched by greater cooperation between trade unions at an international level and a greater acceptance of the need for employee involvement and consultation at corporate level within Europe. However, while there have been many examples of effective international trade union cooperation these developments present a major challenge to the European labour movement. If a process of information disclosure and consultation in transnational enterprises is to be carried out to the satisfaction of both sides, then there is a need for an improvement in the formal trade union structures at EU level. It is unlikely that there will be a unitary European trade union movement for the foreseeable future. It is also unlikely that there will be an emergence of Union-wide trade unions representing a particular industrial sector or a specific craft or profession. As there is a growth in transnational enterprises and cooperation at sectoral level on topics of mutual concern to companies, so also will the role of sectoral trade union organisations grow. It is at sectoral level that the need for close cooperation will be important in the monitoring of the policies and plans of the multinationals. Negotiations and collective bargaining will continue at plant or national industry level, but an increasing aspect of the brief for discussions for both sides will be relevant information on the corporate position and for the trade union side this information would be supplied by colleagues in sister plants or similar enterprises across the Union. The ETUC and the sectoral trade union organisations will increasingly coordinate policy and act as a conduit for an information flow between affiliate trade unions. Sectoral employer organisations will also play an increasingly important role in the coordination of employee relations policies between the member states, and ad hoc coalitions might emerge from time to time on issues of common interest to the sectors or on a multi-sectoral basis as the need arises. With an improvement in cooperation and with a greater understanding of the relevant workplace issues both management and unions could be in a better position to be proactive in defining, at least in part, the agenda for social dialogue as set out in the Social Chapter of the Maastricht Treaty, rather than responding to issues proposed by the Commission, the European Parliament or the national governments.


ACKNOWLEDGEMENTS Based on paper to the conference Work, Employment and European Society: Convergence and Integration, 6–8 September 1990, Bath University, England. NOTES 1 For example, at the 9th International Metalworkers’ Federation World Auto Conference in January 1994, a resolution was agreed calling for world environmental standards for automobiles. Three measures were agreed: harmonisation of the different national standards on the basis of the best actual standards; further world-wide unified improvements of the pollution standards and energy use in a long-term plan; accelerated research and development of alternative energy sources and engine concepts. (IMF News, No. 3, 1990) 2 Recent examples of international cooperation between workers within the same multinational are outlined in various issues of IMF News, such as the exchange of information between the US unions and the European unions, in particular in Sweden, on the alleged anti-union management techniques used by Electrolux in the United States (IMF News, No. 7, 1990); or the cooperation between Belgian and US trade unions in Caterpillar to bring about a settlement of a dispute in the Caterpillar plant at Gosselies, Belgium (IMF News, No. 12, 1989); or the case of a dispute in 1986 in BASF Corporation in the US when interunion contacts with IG Chemic in Germany brought pressure on the German management of BASF AG to influence a settlement.

REFERENCES Allain, P. (1990) Director, Industrial Relations Europe, Thomson Consumer Electronics; Paper to a European Foundation Round Table on Participation in Technological Change, Dublin, March. Arkin, A. (1990) ‘British Unions Make the French Connection’, P.M. Plus, 1, No. 1, JulyBendier, B. (1987) International Labour Affairs: The World of Trade Unions and the Multinational Companies, Oxford: Clarendon Press. European Commission [1] (1989) Communication Concerning its Action Programme Relating to the Implementation of the Community Charter of Basic Social Rights for Workers, COM(89) 568 final, November. European Commission [2] (1994) Council Directive on the Establishment of European Committees or Procedures in Community-scale Undertakings and Community-scale Groups of Undertakings for the Purpose of Informing and Consulting Employees. COM(94) 228 final, June.


European Foundation for the Improvement of Living and Working Conditions (1993), P+, European Participation Monitor, ‘Participation in European Multinationals’ (ISSN 1017– 6713), issue no. 6. European Round Table of Industrialists; Report on the European Labour Markets (1989) ‘Employment Policies in Europe for the 1990’s’, November. Harvard Business Review (1990) ‘From National Champion to Global Competitor: An Interview with Thomson’s Alain Gomez’, (May-June). International Labour Office (1985) Multinational Enterprises: Information and Consultation Concerning their Manpower Plans, Geneva: ILO. Koning, C. (1990) Council for Small and Medium-sized Businesses, The Netherlands, ‘Small Businesses and the Future of Industrial Relations in Europe’, Paper prepared for a conference on the ‘Future of Industrial Relations in Europe’, Maastricht, The Netherlands, June. Morgan, M. and Blanpain, R. (1977) ‘Industrial Relations and Employment Impacts of Multinational Enterprises’, OECD (Paris). Purkiss, C. (1989) ‘New Working Patterns in Europe’, Background paper by Director of the European Foundation for the Improvement of Living and Working Conditions to a European Business Institute Seminar on ‘EC Charter of Workers’ Rights’, October. Richards, E. and Stevenson, D. (1990) ‘Pilots Plot Course for the Workers’, The European, 18–20 May. Single European Act (Article 118B) (1986), Office for Official Publications of the EC (ISBN 92–824–0328–9). Treaty on European Union—Protocol on Social Policy (1992) Office for Official Publications of the EC (ISBN 92–824–0959–7). US Industry Coordinating Group (Employment Task Force) (1989) Discussion paper submitted to the European Commission, mimeograph, February.

4 EURO-UNIONISM AND THE GREAT AUCTION An assessment of the prospects for the European labour movement post-Maastricht Harvie Ramsay That Europe is nothin’ on earth but a great big auction. (Tennessee Williams, Cat On A Hot Tin Roof, 1955) The aim of completing a European market, embracing at least the twelve current members of what was known until recently as the European Economic Community, was set in motion by the Single European Act of 1987, for consummation on 31 December 1992. Whilst numerous problems were encountered in pressing through all of the economic reforms deemed necessary for this, such as monetary union, or the extent of powers for central economic and political regulation to be vested in Brussels, the Maastricht Treaty of December 1991 appeared to lay down a pathway to their achievement and extension (e.g. to a single currency) over the remainder of the last decade of the millennium. In practice, the Maastricht Treaty ran into unexpected problems of ratification in a number of states, and did not come into force formally until 1 November 1993 (heralding also the arrival of the European Union), by which time a persistent recession and a series of crises in the currency markets appeared to have at least delayed the pursuit of its objectives beyond the millennium. Nonetheless, there are good grounds for thinking that in some form, modified or not, the objectives of Maastricht will eventually be achieved, notwithstanding the efforts of Margaret Thatcher to hold back the tide at Bruges and The Hague. Moreover, the political context has changed so much since 1987 that the eventual economic area embraced by the new arrangements will soon stretch considerably further, to the Nordic countries, Austria, and the erstwhile Comecon countries, whether as members, associates or simply economic satellites drawn in by the burgeoning export of capital from existing EU members. By the end of this process, there could be a market area containing approaching 400 million people (and possibly considerably more, depending how much of the former USSR is drawn in) and, because of European levels of income and of business operations, a prodigious segment of global trade activity. In short, Europe would become a single, targeted area at the centre of

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the ambitions of almost all large corporations, whether originating in Europe itself or not. For the labour movement, even if no more were said, the importance of organisational success in Europe would be evident. To make gains could be a basis for the resurgence of organised labour around the globe; to fail would be to cede a key arena to capital. But the challenge is more of a litmus test even than this acknowledges. First, almost since the inception of trade unionism in Europe, it has been recognised that internationalism is a key element of survival. As capital has progressively become more multinational, the necessity to match its ability to coordinate across frontiers has been more readily recognised, just as national labour movements were a response to the growth of firms within nation states. As will be elaborated later, the attempt to remove barriers to economic exchange greatly accentuates the urgency of this aim. Second, Europe was the crucible of trade unionism, and has almost invariably been at the hub of attempts at internationalisation (Cohen, 1991) notwithstanding the greater solidarity and militancy of many Third World labour movements over the last quarter-century and more, nor the scale and strength of US labour. The international trade secretariats had their origins in Europe, many tied to the Working Class Internationals of 1889 and 1919, as did the attempts to build world federations. Indeed, Europe has also been the centre of division, partly between Christian (largely Catholic) unions and those without formal religious affiliations, but more important still between communist and non-communist unions. The Cold War and the Iron Curtain across which it was waged had their focus in postwar Europe, though the divisions in the international labour movement which they sharpened were already well-established political fissures well before 1945 (MacShane, 1992). Without denying the importance of or achievements in other regional arenas, the extent to which labour movement divisions can be healed in the new European setting can be said with confidence to be central to the future hopes of trade unionism around the world. Third, in many ways the political environment for internationalism, within Europe at least, appears as favourable at present as it is ever likely to be. The Commission of the European Union (CEU) is eager to construct a tripartite system at EU level to promote the development of the institutional and social climate for economic unity, despite the rejection by the UK in particular of such a philosophy of political economy, and needs a strong and unified labour movement as one component of this. There is also a willingness to sponsor social reform in the interest of a ‘level playing field’ for economic activity, as well as to appease labour in a search for support for change in the workplace. For labour movement optimists, the attendant talk of creating a ‘European industrial relations area’, or even the possibility of a progressive convergence in

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industrial relations arrangements (Due et al., 1991), reinforces hopes for a revival in the fortunes of international trade unionism. Two questions arise. First, does the labour movement have ‘the right stuff’ to take on board these opportunities? After all, talk of a new dawn for labour coordination across frontiers is not new; multinational collective bargaining was widely touted as the coming thing in the 1970s before being quietly forgotten in the 1980s. And, second, are the circumstances as favourable as they have been painted? Is there, for example, really a basis for convergence and the removal of barriers to cross-frontier labour organisation? The remainder of this chapter attempts to address these questions. Because of the prime emphasis on a supposedly favourable context in current bullish expectations, we will begin with the setting within the European Union for Euro-labour internationalism, examining the Union itself and the multinational business environment before returning to consider the unions themselves. For the unions, space will compel a focus on the strengths and weaknesses of federal European activity, and so largely on the European Trade Union Confederation (ETUC). THE DIMENSIONS OF THE ‘SOCIAL’ IN EUROPE When Baroness Thatcher applauded the exclusion of the Social Chapter from the Maastricht Treaty in her speech at The Hague (Financial Times, 16 May 1992), this was consistent with her view of both the Social Dimension itself, and of the appropriate role of the CEU in pursuing it, as first expressed in her infamous Bruges pronouncements. This world-view embodies the arguments of neo-liberalism, or the ‘new Right’, and insists that the only valid role for state intervention at European level is to facilitate the working of free markets, not to impose limits, regulations and administrative burdens thereon. In the labour market sphere, this allows approval only for such matters as the harmonisation of qualifications, recognition of employment contracts, and other matters easing the circulation of labour and its optimally efficient allocation. The idea of imposing individual or, far worse still from this perspective, collective rights for labour would turn the clock back to an irrational past reeking of obsolete doctrine whose roots could only be in notions of ‘Marxism and the class struggle’; it would be ‘socialism by the back door’. While some of these views are echoed by employers across the EU, in many European countries they are moderated by the notion of a ‘social market’ concept which provides a basis for political consensus, though partial and varying in degree between states, which is not found in the UK of the postThatcher era. The success of the West German system, at least until recent economic setbacks following attempts to integrate the five Länder of the former GDR, made it the prime model for the EU. Thus the ability to take advantage

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of circumstances weakening the position of labour in the 1980s was attenuated (though certainly not eliminated) by the sense of mutuality in labourmanagement relations, a reciprocity described rather fulsomely as ‘social partnership’ by its devotees. It is this notion which explains the momentum quickly attained by the call, initially from the Belgians during their period of presidency of the Commission in 1987, for a ‘social dimension’ to counterbalance the economic agreement of the Single European Act. This outraged (and still does) those on the right in the UK especially, who insist that despite the new ‘EU’ label, the former EEC is an economic community, with ‘economic’ being comprehended in narrow marketcommercial terms. In most respects the original Treaty of Rome supports this view, though Article 117 had specified a need for improved and harmonised working conditions and rewards, while Article 118 extended coverage to labour relations and personnel issues, and Articles 119–122 sought to promote equal treatment and other social matters. The scope for an active role for the Commission, or for other parties constituted at European rather than national level, remained minimal, however, and these sections of the Treaty which dealt with social issues certainly provided no grounds for legislative intervention from the Commission (Roberts, 1992). Pressures from Brussels for a more interventionist role in this direction, particularly to promote full employment and worker participation rights, had been in strong evidence throughout the 1970s, though with limited progress towards the original, highly legally-regulated proposed model. The 1975 Directive on collective redundancies, and that of 1977 on the transfer of undertakings (i.e. takeovers and mergers) were the main achievements, though far more attention was paid to the ill-fated Vredeling proposals on employee information rights, and the Fifth Directive and Eurocompany Statute plans for worker influence on decision-making, all of which were derailed by the political balance of power in the 1980s. The 1987 revival of the social element of the Community thus had an air of Lazarus about it. In the UK, the hostility of the government pushed a sceptical labour movement rapidly over to enthusiastic support, sealed by the clamorous reception for Jacques Delors’ speech to the TUC in September 1988. Despite the resistance of the British government, the other eleven members of the EC signed the Social Charter at Strasbourg in December 1989, and inaugurated a ‘Social Action Programme’ to implement its proposals. Subsequently they sought to elevate it to the status of a Social Chapter of the Maastricht Treaty in December 1991. The UK’s refusal to countenance this led to the Social Chapter being translated into a Social Protocol agreed by the eleven, to progress the social dimension as fast as possible without waiting to obtain British consent.


In reviewing the developments in this area, it is necessary to consider both the political-economic motivations behind the changes sought from Brussels, and the actual content of the Union instruments and other efforts mobilised to achieve these. Naturally, the former both shapes and sets the context for the future pursuit of the latter. Political and economic objectives A number of reasons may be adduced for the CEU’s pursuit of the Social Dimension, and each helps to explain an apparent willingness to intercede to protect labour from the raw interest of capital, and even to promote crossborder cooperation between labour organisations. First, the economic arguments for the completed internal market recognise that social and labour legislation is one important source of discrepancy between member states, and so of potential non-tariff barriers to trade. The need to harmonise can thus be presented as necessary to create open markets. It also equalises the conditions under which companies based in different states produce, so facilitating a level playing field for competition. A further argument is that European coordination allows clear guidelines to be established for pay and other bargaining, thus reducing information costs and allowing greater control over labour cost inflation without damaging bargaining rights or power (Grahl and Teague, 1992). This last argument is highly controversial and widely disputed, but has evident appeal to the CEU, especially given the third factor discussed below. Second, the pursuit of equal operating conditions could be conducted either through downwards or upwards levelling. Left to itself, the market would encourage downwards equalisation in the social conditions of labour, enticing poorer countries to use their main comparative advantage in lower direct and indirect labour costs (including individual and collective labour rights and protection) to draw in investment, and so also pressurising other regions to reduce these costs to retain and attract capital. In both rich and poor regions, the market encourages a short-termist and costoriented view of employees. The rationale of the Social Charter is to resist both of these perceptions. Downwards levelling is rejected by CEU spokespersons as a kind of fetishism, taking economic welfare to be represented by profits alone, and ignoring the interests of workers (as well as the consumer base their material prosperity ensures).1 In the preamble to the Charter, this argument is summarised as an imperative to develop ‘social aspects’ and ‘economic aspects... in a balanced manner’ (CEC, 1989). This evokes Article 117 of the Treaty of Rome, which insisted on ‘harmonisation while…improvement is being maintained’. A narrow cost-orientation is also challenged with reference to the alter native efficiency model embodied in the concept of social partnership. In

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the Charter preamble there is an explicit endorsement of an institutionalist analysis sharply at odds with the philosophy of the UK Government in particular, asserting that: the social consensus contributes to the strengthening of the competitiveness of undertakings, of the economy as a whole, and to the creation of employment; in this respect it is an essential condition for ensuring sustained economic development. (CEC, 1989) This argument is qualified, it should be noted, with the caveat that improvements in living and working conditions must be attained ‘while avoiding distortions of competition’ (CEC, 1989)–a key sticking point where the philosophies of the UK Conservatives (and to an extent the muted arguments of many European employers’ groups seeking at least to alter the boundaries of compromise) and those of the Commission contest what actions constitute a ‘distortion of competition’. A third motivation may be attributed to the Commission itself, seeking to justify and advance its own position. From the viewpoint of such a body, the attainment of legitimacy and effective power relies on the acceptance that a large number of decision-making and social management tasks must be performed at the European level. Without that acceptance, the Commission remains at the margins of decision-making, administering and just possibly power-brokering between sovereign member states whose chief ministers make the central rulings in negotiation with each other (i.e. the model up to 1987 at least). To realise such aspirations, the CEU must seek powers of regulation over member states; and because it does not wield coercive forces or punitive capabilities, it must seek them by trying to weld interest groups into a ‘neo-neocorporatist’ type of framework at the level of Brussels. For this, the interest groups themselves must be given life and recognition. In the case of industry, this has meant seeking to elevate the European Employers’ Federation (UNICE) and the unions (ETUC) to the status of genuine peak bodies able to speak for and coordinate their respective constituencies across frontiers within the EU.2 This also entails recognising the validity of claims from each of the ‘Social Partners’. A neat symmetry is provided by the reliance of these peak bodies on the CEU for their sponsorship and influence, though this does not guarantee their success in delivering the acquiescence of their respective constituencies. This will be discussed further below. Fourth, the CEU has long recognised the special threats to labour posed by multinational companies (MNCs). Its perceptions in this respect have been somewhat two-edged from a labour viewpoint, however. The threat to labour


has always been a secondary consideration relative to the perceived challenge to Euro-capital in the CEU’s eyes, and the Commission has set out to facilitate the growth of ‘home’-based Euro-MNCs, as will be discussed later. There was always some recognition of the special challenge to organised labour from all MNCs, however, and from the early 1970s onwards the Commission advanced proposals for worker participation and information rights in an effort to deal with this. Their earliest efforts focused, in fact, on the European companies expected to spread across the EC, seeking to offer them a Eurocompany Statute under which to simplify their incorporation in different member states, but proposing European-level consultation and participation as a quid pro quo for the workforce. In the meantime, draft proposals were developed to require information disclosure by all MNCs—the ‘Vredeling’ directive as they became known after the Commissioner for Social Affairs in 1980, the year it was first tabled. These were a still more direct challenge to managerial authority in international companies, initially targeting these specifically and exclusively (though later drafts were broadened to deal with large companies in general), and were successfully subjected to a massive hostile lobbying assault by employer representatives (De Vos, 1989). Under the rubric of the Social Charter, the CEU has renewed its efforts on this front. The Commission has also successfully sponsored the European Works Council (EWC) directive, as is discussed later in this chapter. In progressing these objectives, the Commission is motivated by its own identity, yet is not a closed system relative to the member states. Its Commissioners and their chief officials are appointed (on a roughly representative basis) from political figures in the twelve, not from some separate civil service echelons; and their decisions are governed above all by a summit body of the member state governments, the Council of Ministers. The balance of political opinion across the Union is thus important in shaping and constraining policies emanating from Brussels. The drift to the right (if not to raw, Thatcherite monetarism) in many countries during the first half of the 1980s thus clipped the wings of the reformism which the strategic search for corporatist arrangements fosters in the Commission. Resistance to a centralist policy is a feature not only of many right-ofcentre groups, but also of the left in many states. This unholy alliance was evident in the Danish mobilisation against Maastricht at their first referendum on ratification, for instance, with the right emphasising opposition to social interference with the market, the far right fearing waves of immigration from southern Europe, and the left demanding the protection of advanced policies on social and environmental issues which they feared Brussels might hinder. The turmoil over ratification of Maastricht and other developments of a CECdriven model in 1992 thus cannot be read in any straightforward left-right pro-

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or anti-labour terms. The resulting concessions to decentralisation and the reinforcement of the subsidiarity doctrine, which in many respects leaves each state (i.e. ruling party) to interpret and apply the spirit of a broad EU remit in accordance with its own preferences, has more anti-labour implications in the UK than it does in most of Europe, for instance. There are also signs of a widespread drift rightwards in the early 1990s, however, in the wake of the collapse of the proclaimed Marxist alternative3 of the Soviet and east European states, buttressed by the apparent failure of Austrian and Swedish models in particular. The retreat of the left, whether in or out of power, from clear support for labour movement objectives, is evident in France, Spain, the UK and most other member states; so, too, is their sliding grip on popular support and their proximity to the reins of political control. The political auguries, in short, are not particularly auspicious, even allowing for the dangers of over-generalisation. The content of policy The Social Charter, its Action Programme, and the Maastricht Social Protocol, are the most obvious symbols of hope for labour movement Eurointernationalism in the political climate of the 1990s. A number of objectives which the political sponsors of these initiatives are seeking to attain also seem destined to promote the development of a ‘European industrial relations area’, transcending the local and national limits of present arrangements (see Teague and MacDaid in this volume). While most of the elements of the Charter concern individual rights in the workplace and, to a limited extent (e.g. social security proposals and those concerning retired employees), beyond employment, there are components which focus on the collective aspect of labour relations. It is developments in this area which provide the main indicators of the extent of commitment and capacity to deliver on multinational collective bargaining. There are two of the twelve headings in the Social Charter that directly address collective employment relations. The first, ‘Freedom of association and collective bargaining’, proposes that there should be a right of association, a right to negotiate collective agreements, and a right to take industrial action. The Charter acknowledges the principle of subsidiarity repeatedly in its phrasing on this subject, an emphasis which developments at and since Maastricht can only reinforce. Freedom to join unions is not thus qualified, but the clause on negotiation emphasises that this must be, ‘under the conditions laid down by national legislation and practice’, while that on the right to strike indicates that it must be, ‘subject to the obligations arising under national regulations and collective agreements’. That this effectively eviscerates any hopes of firming-up the rights concerned seems confirmed by the Action


Programme on these issues. No proposals have been tabled at the time of writing, and there are no signs that anything stronger than an Opinion, or just possibly a Recommendation, will be forthcoming. The other major invocation on collective rights comes under the heading of Information consultation and participation for workers’. Not only does this section specify areas such as technological change, restructuring and collective redundancy as appropriately subject to advance provision of information to, consultation with, and possibly even participation in decisions for workers or their representatives; it also focuses particular attention on, ‘companies or groups of companies having establishments or companies in two or more Member States…’. Still more substantial in their potential impact is the framework for European Works Councils (EWCs) in companies, set out initially in March 1991 and finally adopted in amended form in September 1994. These provide for companies operating in more than one member state on a significant scale (at least 1,000 employees, with at least 150 in two states) to have to establish a consultative arrangement with workers’ representatives at European level (see also O’Kelly, this volume). This would be in addition to conformity with national legislation (which, provided the longawaited Fifth Directive finally goes through, would contain participative obligations of some sort in each member state also). The EWC will deal specifically with Euro-level issues only, with a right to at least an annual meeting with a designated ‘central management’ for Europe to receive information and be consulted on key business developments and plans. Decisions, nonetheless, would remain ‘exclusively the responsibility of central management…’ in the final instance.4 The ETUC have welcomed the EWC, though they regard the size threshold for including companies as too high, and regret the lack of any hold on management decisions arising from an EWC objection.5 This is clearly a tactical posture, however, since the claim in this resolution that ‘…central management is now expressly obliged to conduct bona fide negotiations’ seems poorly supported by the actual notion of prior consultation with a final managerial prerogative in the amended draft of the EWC proposal. UNICE, meanwhile, launched repeated attacks on the proposals for their purportedly bureaucratic and inflexible format, a theme echoed by other business lobbies.6 Indeed, in the absence of an explicit role for national or European trade unions in the draft Directive, the extent of real bargaining must be questioned. In practice, many companies may be expected to have Special Negotiating Bodies (to reach agreement on the EWC format in the company) composed largely of union representatives, but this is likely to be a function almost entirely of pre-existing labour organisation within the company together with management’s industrial relations approach. The degree of industrial democracy ensured by the EWC provisions themselves must therefore be in some doubt,

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as indeed is their conformance with Delors’ emphasis on collective bargaining as a keystone thereof. To take an infamous example, the Hoover decision, announced in January 1993, to transfer jobs from Dijon to Cambuslang near Glasgow, having demanded and obtained concessions from its Scottish workforce, raised storms of protests from the French. Delors is reported to have thought that EWC arrangements would have prevented this problem; but it is hard to see how such a body could be expected to have done so (IRS, 1993). It may be significant, then, that the term ‘participation’ was missed out of the original draft of the EWC Directive, leaving only ‘information’ and ‘consultation’; its restoration after protests from some quarters seems more a symbolic concession than one reflected in the substance of the proposals, since there is no apparent impact on the proposed powers of the EWC though the potency of symbols should not be entirely dismissed, it must be added. Consultation, meanwhile, is defined somewhat anodynely in the Directive as ‘the exchange of views and establishment of dialogue between employees’ representatives and central management…’. More significant still may be the failed attempt by the Commission to encourage a negotiated version of the EWC through the Social Dialogue between the peak union and employer bodies rather than an imposed legislative solution. It is to this aspect of collective relations that we now turn our attention. TAKING PARTNERS The events at Maastricht in December 1991, and the setbacks to the ERM and to smooth ratification thereafter, contained mixed but mostly negative implications for the prosecution of the Social Action Programme. Not only was there utter confusion, which persisted for over two years, as to how the Protocol on the social dimension excluding the UK would work, but each confrontation produced a reinforcement of concessions to national solutions under the rubric of subsidiarity. At the same time, however, this has pushed the Commission back to an alternative solution that appears in some respects to suit labour movement ambitions for a radical extension and internationalisation of collective bargaining. It was noted earlier that the Commission has evident vested interests in promoting tripartism at the European level (quadripartism where Commission and Council of Ministers are each represented). In practice this, too, has long been a favoured strategy. Efforts to find relevant committee members for various advisory bodies in Brussels brought union and business representatives in from the early days of the EC, and their role became formalised initially after the unrest of the late 1960s in many European countries, commencing with the 1970 Luxembourg conference on employment. Tripartite conferences on this subject met annually from 1974 until the ETUC protested its ineffectiveness in


1978, while the Standing Committee on Employment survived even the 1980s. Its role was critically assessed by the ETUC in 1983, however, as a result of a failure to gain more than a fairly marginal consultative role (Venturini, 1988). The recessionary conditions which prevailed for much of the time from the late 1970s served mainly to highlight the incompatibility of employer and union conceptions of the appropriate policy response or priorities. Delors’ accession to the Presidency of the Commission in 1985 brought a call for the relaunching of Brussels-sponsored exchanges between the ‘Social Partners’, on the basis that reform, ‘must be negotiated by the two sides of industry’.7 The route to harmonisation was now signposted as being through ‘European collective agreements’.8 The result was the Val Duchesse series of meetings under the banner of the Social Dialogue. The reasons for this change of emphasis can most plausibly be traced to a combination of the French Socialist backing for the bargaining solution, and the impasse over progress on social policy. The CEC had been facing the apparent dismantling of its hopes for Directives in the employment relations field, with the greatest debacle being that over Vredeling. This approach potentially allowed the Commission to step outside the channel of legislation blocked by the Council of Ministers, and to seek to outflank the criticisms of the political right by being seen to consult business and gain their imprimatur for reform. But such a tactic relied on the cooperation of the employer lobby at a time when management attitudes were growing in confidence and the assertion of the enterprise-level right to manage was in the ascendant. In the event the Val Duchesse dialogue was shackled from the outset by an insistence from UNICE that its products could not be seen as binding agreements, or as the basis for legislative action, but must take the form of mere ‘Joint Opinions’. Even these were rather dilute offerings, representing the rather anodyne common denominator views which could be manoeuvred through meetings by the use of general and ambiguous phrasing. The November 1986 Joint Opinion of the macroeconomics working party of the Dialogue thus endorsed a ‘cooperative growth strategy’, while that of March 1987 from the new technology working party supported retraining and advance consultation of employees. The process then foundered on failures to agree on further developments in both these areas in 1988, and had to be relaunched with a more formal structure by Delors in early 1989. New working parties on education and training, and on the European labour market, had agreed six further Joint Opinions by the end of 1991,9 though still in largely uncontroversial areas. This is not an encouraging history, yet it had remained the stated preference of the CEC to proceed by this route as far as possible.10 In official discussions, both ‘normative’ approaches (‘which seek to impose a whole range of restricting Community provision’) and the ‘decentralized’ alternative (‘which

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rejects—as being counterproductive—any form of additional social legislation at Community level’)11 are scorned in favour of enact ments of a floor of rights and guidelines emanating from negotiations between the Social Partners. More recent developments have lent fresh impetus to this solution. The resistance of the UK Government to progress on the implementation of the Social Action Programme led to concern in many quarters that instead of compromise and restraint, the other members of the EC would seek a more radical break on social policy. It was this fear which led UNICE to change its policy of refusing to countenance any form of binding negotiation with the ETUC, opening the way to an accord between the two Social Partners in October 1991 to discuss EC reforms. This agreement was presented to the Commission as a way of making proposals for change emanating from the two sides of industry themselves, and was readily welcomed. UNICE’s general secretary, Zygmunt Tyszkiewicz, described the agreement as one which many members would accept reluctantly, but as an ‘insurance policy’ against CEC extremism in substance or oppressive legislated inflexibility.12 Despite this, the British CBI initially threatened to revoke the agreement,13 but subsequently reconciled themselves to a preference for a common front amongst employers given the danger of isolation of all voices for UK employers from social policy decisions otherwise.14 It is worth noting, incidentally, that this agreement was actually predated by over a year, by a framework agreement between the ETUC and the CEEP (public sector employers’ organisation) signed in September 1990; CEEP are thus also part of the post-Maastricht process. The trade union side has seen additional bids for recognition by federations of professional and managerial employees, and by the European Confederation of Independent Unions (CESI).15 The developments at Maastricht entailed that the acceptance of the ETUC/ UNICE/CEEP Accord by the Commission took on an unexpectedly high profile, perhaps justifying UNICE’s gamble. The social policy clauses of the Maastricht protocol were a close echo of the Accord. It thus appears to offer an opening for joint agreement between unions and management, at both Community and national levels, to displace legislative action, or at least to lay down the basis on which legislation would be enacted. This raised the potential status of collective bargaining at European and member state level very considerably. It extended provisions already made in selected Directives and by some decisions of the European Court which permit member states to leave the implementation of Directives to collective agreements, provided coverage of the agreement is sufficient and the content is compatible with the Directive concerned (Bercusson, 1992). It remains to assess these developments as contributions to the emergence of European collective bargaining. The ETUC welcomed the deal of October 1991 as a major advance in the creation of a ‘European Industrial Relations Area’.16 There is no question that


if the new arrangements were to be successfully elevated to effective negotiation on the content and implementation of employment regulation at a European level, and cascading down from there, this would meet many of the aspirations of the union movement. It would at the same time provide a powerful impetus for the achievement of unity between unions from the various member states, to present a common front. Collective bargaining would also provide a basis for greater flexibility in application, though the required agreement of the two sides should prevent cynical departure from the spirit of EC proposals by individual governments, with the knowledge that failure to agree after a period (initially suggested to be nine months) would induce CEC intervention. However, three years after Maastricht there remain major uncertainties as to how this arrangement might work (Bercusson, 1992; Fitzpatrick, 1992; IDS, 1992). The role of subsidiarity in the collective agreement process is still unspecified; for instance, should national or European bargaining take precedence? The remit under which bargains at either level will be made is also uncertain: will the Social Partners have free rein to explore solutions, or at the other extreme will they be negotiating at gunpoint, with a detailed proposal from the Commission before them for ratification? Will the Commission be bound by the content of agreements reached by the Social Partners? (Provisional readings of the proposals suggest not, but in practice the CEU may be hard put to push through a contrary formula.) The first attempt to operate the arrangements, discussed below, saw priority given to the European bargaining level, but foundered on national divisions. At the same time, that experience has strengthened impressions that the process will take place very much in the shadow of the CEU’s fallback proposals. These are awkward and serious problems, but in principle there is no reason why they should prove irresolvable. The real obstacles, which may prevent such resolutions or render the outcome inconsequential in the long run, lie deeper in the existing structure of Union employment relations, and are not as yet directly confronted by the emerging proposals. Let us consider these briefly. First, at enterprise and national levels, scantily concealed beneath the bargaining table remains the possibility of industrial action. The Social Charter even lends this recognition by supporting the right to strike, as we saw. The sanctions available for either side in the Social Dialogue are hard to discern, and may hardly be sufficient in many cases to force the parties to agreement. Second, the objectives of the two Partners remain markedly at odds. It is true that both UNICE and the ETUC find their main raisons d’être in their Brussels lobbying role; yet they represent two communities with predictably contrasting agendas. While unions generally wish to see extensive statutory regulation of employee rights and conditions imposed on the employer, and derive their unity from the weakness of their membership in isolation, employers largely

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seek to limit intervention (other than to restrain labour where possible). Thus much of the shared ground which UNICE represents in Brussels is concerned with damage limitation rather than the positive promotion of social policy. It is hard to detect any powerful area of ideological consensus between the parties which could define a common field within which to negotiate specific rules. This gap was well illustrated by the collapse of the first exercise in negotiation under the new rubric, over European Works Councils.17 The third of the deeper obstacles to European bargaining through the Social Dialogue involves the move to enterprise management demands for decisionmaking autonomy. This suggests that in some respects the contradiction between Union-level policy and trends in management practice may be becoming more severe. This is illustrated by the gathering momentum of business conceptions of corporate strategy, and at the level of employment questions, human resource management (Teague, 1991). Whatever else may be said about these approaches, it is evident that they greatly reinforce the focus of identity and action at the level of the enterprise. Competitiveness is seen increasingly to rest upon the internal cohesion and external manoeuvring of the corporation. In this setting, the role for social policy, whether at national or European level, is greeted with increasing irritation, as an intrusion on managerial prerogative. Yet it is the attempt to sharpen integrated strategic corporate activity which is also creating the enhanced perceived need for a collectivist response at European level by labour. The attempt to inaugurate bargaining arrangements at the European level creates evident problems for coordination and unity for all of the actors involved as successful bargaining requires that the negotiators can actually deliver the compliance of their side in the agreement. Failing this authority, the process retains little value. For the moment let us consider the social partners and their strengths and weaknesses, beginning with UNICE before going on to look at the corporate growth in transnationalism and finally the union response. UNICE The organisation was created in 1958, as a direct response to the Treaty of Rome, though it claimed members from twenty-two countries in 1990.18 It is a federation of federations, rather than having individual companies as members directly. Even industry-based federations of business do not affiliate to UNICE, belonging instead to the range of European sectoral federations with which UNICE attempts to maintain a degree of behindthe-scenes coordination. This, incidentally, creates a potential further complication, through different trajectories developing in the sector committees set up by the CEU to promote dialogue at this level. In the long run, this level may prove more active than the


superfederal one of UNICE-ETUC, but an exploration of developments here is beyond the scope of this chapter. The strong presence of foreign capital in Europe, particularly from the United States, further entails that separate bodies such as the Council of American Chambers of Commerce in Europe command greater allegiance from many major corporate actors. This was particularly visible when management protests were given full vent in the campaign against Vredeling (De Vos, 1989). In any case, it has been argued that all employers’ associations, European or non-European, are largely compelled to dance to the tunes of the large MNCs who are their dominant members (Sisson, 1990). The stated objectives and priorities of UNICE are very strongly focused on Brussels, including the maintenance of contacts in European institutions, the preparation of position documents, and the promotion of the Single Market. Not surprisingly, perhaps, its main role has appeared to be the parrying of proposals such as those contained in the Social Charter, and the promotion of voluntary alternatives with itself in a prominent role. UNICE claims to owe little of its establishment to EU funding, and relies in part on secondment of able individuals from European business. It has never been richly endowed (De Vos, 1989), but the level of funding and staffing has evidently grown considerably in recent years in response to its increasing prominence, and by 1992 the Brussels office had around thirty-five staff.19 UNICE has enjoyed a fair measure of success in attaining recognition, but while its hold on member federations has grown a little firmer in recent years, its ability to deliver company conformance with any agreement must be questionable. As its General Secretary commented: ‘I organize the power of others. There is almost no majority voting in UNICE; it’s the search for unanimity that requires firm control of the steering wheel’.20 In the same interview, he made it clear that the pre- and post-Maastricht moves towards collective agreements were a rescue operation in the face of what was regarded as a defeat on social policy. In 1990, UNICE set up an advisory group of (entirely MNC) company representatives to strengthen their direct links to business, but it remains extremely poorly placed to negotiate on behalf of corporate managements across Europe (Grant, 1993). Internal conflicts in 1994, over implementation of EWCs, epitomise UNICE’s problems of internal cohesion and authority (see Ramsay in Labour and Industry, forthcoming, 1995, for discussion). Once an analysis of the labour movement, and the ETUC in particular (see later in this chapter), is set alongside the factors discussed above, major question marks are raised over the capacity or will of the parties to Euro-agreements under the rubric of Maastricht to deliver the goods. In qualification, it should be said that this analysis is rather static and pessimistic, since the very shift in circumstances may change attitudes and policies, and even over time the

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structures within which they operate. Realism, though, remains a convincing sceptic for the moment. THE CHALLENGE FROM INTERNATIONAL CAPITAL If, as has been argued above, the attempts by the CEU to provide an improved environment for European trade unionism and collective bargaining have been at best of limited benefit, then what of the opposition—the multinational corporation? Has the MNC become more or less of a challenge to labour? Has the need for cross-border negotiation grown or declined? And what is the contribution of the completion of the Single European Market to this likely to be? The analysis which follows continues to focus on the European scene in seeking to answer these questions. The heyday of multinational companies’ residency in the limelight of political and industrial relations analysis passed around the end of the 1970s. Because the image of the MNC was so overblown, monolithic and demonic from a labour movement viewpoint, the subsequent reaction in many quarters seems to have been to dismiss them as an issue altogether, and to assume the problem had gone away. Yet there remain strong grounds for seeing MNCs as posing special challenges to organised labour,21 even if the earlier picture of MNC management needed marked revision to assess the question properly.22 Moreover, far from going into retreat, the internationalisation of capital has continued apace, after a marked slowdown in the recession of the early 1980s. The growth in foreign direct investment (FDI) from 1984 to 1989 ran at an ‘unprecedented’ average annual rate of 29 per cent, three times as fast as world exports and four times as fast as world output (UN, 1991). Indeed, some commentators believe that FDI has accelerated to a new level of development, and is only now beginning to exert its full effect transformation of the world economy (Julius, 1990; McKiernan, 1992; UN, 1993). International trade inside the largest 350 MNCs is now reckoned to account for almost 40 per cent of world merchandise trade.23 Yet even figures for foreign ownership and control such as those cited below are sure to underestimate the influence of MNCs considerably with the growth of a variety of ‘distancing’ techniques.24 The MNC is in some respects only now coming of age. Many ‘multinationals’ are simply medium-sized companies with operations in more than one country, rather than truly global, transnational entities seeking to integrate international business strategy, and make the parts serve the whole. It is only this last state which really transforms the terrain of labour-management relations, and creates a valid pressure for cross-border collective bargaining. It should be noted, further, that although the internationalisation of manufacturing activities has continued, the main source of the acceleration in


FDI is the rise of international service organisations, such that services accounted for only a quarter of the world stock of FDI in 1970, but comprised half of the total by the end of the 1980s (UN, 1988, 1991). By and large, services outside the (almost entirely nationally contained) public sector are far weaker arenas for union organisation than manufacturing. European countries have been a prime target for FDI from the first emergence of the multinational company over a century ago (Teichova et al., 1986). As the scale of corporate internationalisation accelerated from the 1950s onwards, so a fixed pattern seemed to emerge of US company dominance in this process. By the late 1960s, Europe was increasingly perceived by politicians and labour movements to be the first base for the Americanisation of the world,25 with almost half of the world stock of FDI originating from the USA (UN, 1983). This was perceived by some observers as a pyrrhic victory for the majority of Americans, since it involved the transnationalisation of US capital and the increasing centralisation of economic power in a few hands. Thus concern was greater in the American trade union movement than anywhere else in the 1960s and 1970s, since this process was feared to entail the export of jobs from the home country. Increasingly in this period the focus of investment was market-led, and so concentrated in the developed economies, with the result that in 1975 over two-fifths of all world FDI was located in Europe, including over 50 per cent of all American-sourced manufacturing investment (Dicken, 1992). The period from the mid-1970s was to see a dramatic break in the pattern of US dominance of FDI. Whereas in 1975 the value of FDI stocks held by American firms in Europe was about four times that of European companies in the United States, by 1985 the levels were equal (UN, 1988), and by 1989 European stocks in the US were almost half as large again as those in the other direction. The shift in this balance was complicated further by the rise of Japanese FDI. The US provided 26 per cent of world FDI flows over the period 1980–5, falling to 14 per cent for 1986–90, while the Japanese share rose to 10 per cent in the first period and 20 per cent in the second; the combined contribution of the three largest EC players, Germany, France and the UK, rose marginally from 34 per cent in the first half of the 1980s to 35 per cent in the second, with the UK providing the largest single-country source from 1985 until finally being surpassed by Japan in 1989 (UN, 1991, 1992).26 In short, EU-based companies are certainly among the largest global players, and although many have been slow to integrate even their transEuropean operations effectively, let alone their worldwide activities, there are signs that they are increasingly doing so. A good example of this process is the British company ICI, which by 1991 employed only 40 per cent of its workforce in the UK, and had adopted a deliberate policy of aiming to spread its operations onethird in Europe, one-third in the US, and the remaining third largely on the

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Pacific Rim. Despite this, ICI’s unions in Britain rallied behind the company when it seemed threatened in 1991 with a bid from the financially-controlled conglomerate, Hanson, with an even less European-based operation much of which is registered in Panama. While the opposition to Hanson succeeded (their ICI shares were disposed of in 1992), it was also notable that the debate and activity seemed to focus on protecting the ‘British’ workforce of 53,000, with little reference to the remainder of ICI’s 132,000 employees around the world. In the aftermath, ICI launched a global round of radical restructuring that seemed to show little allegiance to its erstwhile internal supporters.27 In practice, EU-based companies with a long tradition of non-European activity are most likely to be British in origin. UK companies have particularly widespread investments.28 A far larger proportion of British fixed capital lies overseas than for its major rivals in the FDI stakes, the USA, Japan, Germany or France (UN, 1988),29 and this is reflected in available estimates of the proportion of employees working overseas in British MNCs.30 Whilst a number of other large European companies (Philips, Siemens, Allianz) are developing similarly global outlooks, and often a predatory approach to international acquisitions more typical of British or American firms, for many the vast majority of their employees remain within the EU (and even their nation of origin). These observations were intriguingly confirmed by research for the Commission aimed at establishing the numbers and identities of companies likely to be eligible to establish European Works Councils under the draft legislation discussed earlier (Sisson et al., 1991). Using the Dun & Bradstreet database, the researchers uncovered 8,447 enterprises with 1,000 or more employees registered inside the EC, including 128 with over 50,000 employees. The UK accounted for 3,024 of the companies with over 1,000 employees, and Germany for 2,449, these two thus dominating the origins of larger enterprises based inside the EC. The UK had 332 groups likely to qualify under EWC criteria (only twenty-eight classified as ‘manufacturing’) and Germany 257 (154 in manufacturing), of a total just under 900 in the EC as a whole. A further 280 groups were identified that met these criteria but had their headquarters outside the EC, three-quarters of them from the USA. The European base for these companies varied, but again the UK was easily the front runner with 133, followed by Germany with fifty, and France with twenty-six. The dominance of UK-originated or UK-based companies in these lists is confirmed by other sources.31 It is worth pausing to note that it creates a double-edged problem, for the Social Charter attempts to address such companies: on the one hand, the exclusion of the UK from the coverage of the EWC directive appears to drive a coach and horses through the coverage of legislation under the protocol of the eleven; on the other, many of these UK operations are of sufficient scale to stand above the legislative threshold even


without considering UK employment (just over 100 on most estimates (TUC, 1994), before considering the sizeable number of non-European companies with European operations headquartered in the UK) yet the UK Government has been unable to influence the legislation thus affecting them by sustaining its opt-out stance. This brings us finally to developments within the EU related to 1992 and after. That a process of concentration is underway, in which multinational activity within and beyond the borders of the EU is playing a major role, is incontrovertible.32 For the CEU the invasion of nonEuropean MNCs is the continuation of a long-acknowledged trend. Their response has been to campaign for the policy weaponry to promote Eurochampions, MNCs from the newly-defined ‘home’ base, to do battle with the invaders, an approach with a long lineage in Brussels, but for which the potential for success has only arisen with the mobilisation of the Single European Act.33 Many of the benefits of 1992 are touted by official EU calculations (see Cecchini, 1988; Emerson et al., 1988) to flow not from the lowering of non-tariff barriers on which most public attention has focused, but from the creation of Euro-champions and the process of restructuring entailed by this reaction to the freeing of access to markets in Europe. In particular cooperation through joint ventures, and failing this mergers and takeovers, are encouraged between firms in different countries within the EU. This policy has attracted severe criticism, partly because of its apparently flawed logic concerning the economic welfare for Europeans expected to flow from Euro-giantism,34 and partly because the trends it predicts seem to misconceive rational business strategy.35 While the consequences of a failure of the predicted benefits to materialise would certainly be negative for labour organisation, probably forcing a further round of restructuring and retrenchment, there are longer-term implications also. The CEU ideology is so favourable towards cross-border restructuring that it is frankly hard to see a commitment to offering support to employees in all MNCs, however genuine, standing against the exigencies of capital’s readjustment when push comes to shove. In other words, in the final analysis the rationality of multinational integration is likely to take precedence over the rights and interests of labour. The industry policy of the Commission has thus in many ways exacerbated the MNC challenge to labour. In some respects this may vary sharply by sector and country, but the general observation endures in the absence of space to explore such likely variations here.36 THE POWER WITHIN? This brings us to the final element of the situation under scrutiny in this survey: the unions themselves. How far have labour movements seen their capacity to

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cooperate across frontiers, and to lay the foundations for multinational collective bargaining (MNCB), strengthen or weaken since the 1970s? The bullish expectations of the 1970s (paralleled by the fears of many manageriallyoriented commentators) would have predicted great strides by now;37 the cynics and pessimists would expect a continuation of the lowering gloom of the early 1980s.38 It was recorded earlier that Europe has been the fount of internationalism, and yet also of many of the divisions that have plagued it. The axis of the division between the World Federation of Trade Unions (WFTU), headquartered in Prague, and the International Confederation of Free Trade Unions (ICFTU) in Brussels, was the political partition of Europe that led to the Cold War. Whatever their conflicts with capitalist states, labour movements in the west largely took the national line against the Communist Partycontrolled unions of the Soviet bloc; communist allegiance for the French CGT and others brought exclusion from the mainstream of the western movement. Further divisions emerged based on religion, leaving the labour movements of many European countries fragmented and promoting greater still cross-border malintegration.39 Later, the softening of anti-communist stances in western Europe, together with a rivalry between the TUC and the American AFL-CIO served only to provoke a transatlantic division to compound these problems (Busch, 1983; Carew, 1984). It was amid this internal chaos that the awareness of the challenge of the MNC began to emerge in the 1960s. Inevitably, perhaps, perceptions of the nature of the problem were dominated by the political and economic interests of the labour movement in each country, leaving calls for unity largely as exercises in drum beating with a hollow echo. Despite these daunting obstacles to progress in the name of international solidarity, some organisational developments have been worthy of note. In 1973 the European TUC was founded, provoked by the need to have a body able to lobby effectively in the newly expanding EC, and was quickly able to bridge some gaps by admitting a number of Christian unions and the Italian CGIL (Busch, 1983; Barnouin, 1986). More recently, with the collapse of Communist Party control to the east, and so of the rival WFTU, most of the other union federations in Europe have joined, leaving the CGT as almost the last bastion of resistance to at least this institutional unity. The ETUC claimed to embrace forty Confederations in twenty-one European countries by 1991, thus representing 95 per cent of unionised workers and 40 per cent of all workers in western Europe; a number of trade union movements from central and eastern Europe are also in the process of seeking to affiliate.40 Meanwhile the ITSs have continued, occasionally with a strong US influence (as in the UAW’s impact on the policies of the International Metalworkers’ Federation), but for the most part driven from Europe. These


bodies affiliated, but maintained some distance from, the ICFTU (the WFTU set up its own sectoral bodies). There were some thirty-three of these in 1914, but by the 1980s they had rationalised into sixteen; their organisation had nonetheless improved markedly. However, in Europe itself these bodies have faced growing competition from the European sector federations, linked more closely to the ETUC than to the ITSs. In this respect, indeed, it appears that integration in the European trade union movement at these peak levels is better than the equivalent employer organisation. A recent move to bring the ICFTU, ETUC and several trade secretariats together into one building in Brussels may further aid this concertation. Having said this, the ETUC (together with its formerly separate research wing, the European Trade Union Institute) still has only fifty to sixty staff, though this represents a significant increase over the last decade. It operates almost entirely in the EC-lobby circuit, leaving any cross-national bargaining coordination at company level to the relevant sector bodies. There is a close symbiosis in particular with DGV and DGX in the Commission (though personal and interest group networks can cause interference in the transmission lines), and there is no doubt that in many respects the ETUC is heavily reliant on Commission patronage—far more so even than UNICE in some respects. In these circumstances it is not surprising that despite some misgivings about aspects of the Social Charter, the ETUC favours the growth of Brussels regulation over social matters only slightly less than it does the prospect of substantial progress on a negotiating platform, under the October 1991 accord with UNICE and the Maastricht proposals. Extending the purview briefly beyond the ETUC, the state of European trade unionism looked a little ragged entering the 1990s. Union membership density had declined most steeply over the dread 1980s in the UK, but falling numbers were in evidence in most other European countries (OECD, 1991; ILO, 1993), and appeared to be driven by similar longterm structural employment and power shifts. The growth of service industries, of part-time and temporary employment, the privatisation of union havens in the state sector, the increasing female proportion of the workforce, are all examples of shared trends that are tied to membership recruitment and retention difficulties (Hyman, 1991). Moreover, the hustle for competitive position with the prospective completion of the EC market led many governments to take a hard line in direct negotiations and other regulative activities encroaching on union effectiveness. Nonetheless, the events of 1992 in Germany (in the public sector, and at the brink in engineering), and later in France (over the regulation of the lorry drivers’ labour process, and the risks imposed by unconstrained competitive pressures on drivers to break speed limits) continued to demonstrate that successful militancy was still possible; and public sector protests in France, Italy,

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Germany, Spain and Belgium in 1993 indicated enduring militancy. Yet even in Euro-union circles the stasis or retreat on the collective bargaining front in the severe recession of 1993–4 was acknowledged to have forced labour onto the retreat in most European countries (ETUI, 1994). Despite this, other research suggests a revival of union-sponsored and informal combine networks in MNCs across Europe, especially in the large companies facing the prospect of being affected by the EWC directive (Lucio and Weston, 1993; TUC 1994). Moreover, around forty companies had voluntarily conceded the establishment of European-level information and consultation bodies by late 1994.41 Our key concern in this chapter is with cross-national organisation and strength, especially at the peak federal body level. While such strength relies on local and national capacities, at present the best indicator of potential is the status of European-level coordination. As there is only space for a summary consideration, it is proposed to apply the four-dimensional analysis proposed by Hyman (1990) for national union bodies as a reasonable indication of progress. His first criterion is organisational comprehensiveness, i.e. the extent to which relevant bodies are affiliated to the peak body. In this respect, we have seen that the unification of the west European market and the collapse of the communist alternative has allowed considerable advances to be made. Second, Hyman considers inclusiveness. On this score, membership density figures claimed by the ETUC are respectable, and the probable entry of up to four countries (Austria, Sweden, Norway and Finland) with high union density to the EU in the next few years should enhance the impact of this leverage within the EU (Labour Research, August 1993). But as Hyman observes, ‘willingness to act’ may count for more than formal membership, and the distance between the ETUC and actual union members makes its relevance to the latter questionable. This leads to the third dimension, internal authority—the extent to which a federation is able to act on behalf of its affiliates, knowing its agreements will be accepted and honoured by them. Here is the greatest question mark against the ETUC, whose ability to carry its constituent federations with it often seems to rely on the adoption of lowest-commondenominator positions with little specificity.42 This will no doubt continue to be put to the test in the application of the Maastricht proposals (as it will, of course, for UNICE). Finally, Hyman cites external recognition, by government and employer bodies, as his fourth dimension. Here the ETUC has certainly made considerable progress with the CEU and UNICE. Whether it or, perhaps ultimately more importantly, the sectoral federations, can achieve the same status with member-state governments or individual MNCs, remains to be tested. As yet, indications of progress are at best patchy, at worst barely visible beyond a superficial establishment of the peak union bodies’ exist ence. In the absence of internal authority, there are few sanctions the international labour


organisations can mount against any official or de facto withdrawal of external recognition in times of stress. CONCLUSION This brings us to the end of this review of conditions for peak-level European trade union organisation and collective bargaining in the aftermath of the completion of the Single European Market. Broadly, the reliance on changes promoted from within the European Commission appears to have severe limitations, while signs on other fronts such as employer organisation and outlook, union organisation and outlook, and evidence of actual developments on the MNCB front are rather mixed. Meanwhile, an examination of the structure of international capital, and the development of European MNCs in particular, suggested that there are stronger grounds than ever from the viewpoint of the labour movement for prioritising the quest for progress in this area. The recession of the early 1990s may have slowed the pace of the ‘great auction’ somewhat, but this is unlikely to be more than a temporary lull in the restructuring and globalisation of capital. Whether trade unions have recognised this at more than a superficial level, and are prepared to change their behaviour and organisation accordingly, cannot yet be answered in the affirmative with any great conviction. The view that ‘European collective bargaining will be here sooner rather than later’ (Coldrick, 1990)43 is commendable for its optimism and determination, but may work better as a rallying call than a sober prediction. But then sober prediction never won faint heart. ACKNOWLEDGEMENTS This is a modified version of a paper published in the journal Labour & Industry, whose permission to publish this chapter is gratefully acknowledged. Earlier versions were presented at the 8th AIRAANZ (Association of Industrial Relations Academics of Australia and New Zealand) Conference, Coogee, Sydney, 10–12 February 1994; and at the inaugural Europe 2000 conference of the European Community Studies Association of New Zealand, University of Auckland, 14–17 February 1994. Thanks are due to participants in both conferences, and to colleagues at Strathclyde University (where an earlier version appeared as Department of Human Resource Management, Occasional Paper No. 5, February 1994), and at the IRRU in Warwick University.

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NOTES 1 As in Delors (1988); or the responses by the then Social Affairs Commissioner, Vassilo Papandreou, to the neo-liberal arguments of the British Cabinet Minister, Norman Fowler, 1989. 2 See Streeck and Schmitter (1991). They are rather dismissive of the prospects of success for a Brussels corporatism; so far events have not altogether vindicated their scepticism. 3 Whether they were ‘really’ Marxist or not does not require discussion here,thankfully. 4 See Hall (1992); Gold and Hall (1994); Ramsay (1991), for further details. 5 Resolution of the ETUC Executives, 3/4 October 1991. 6 Notably the Multinational Business Forum (with some sixty affiliate companies selected from the world’s largest corporations, spread across diverse sectors and with home bases in eleven different countries), which published a detailed critique of the EWC proposals (MBF, 1993). 7 Quoted from a speech to the European Parliament, January 1985, in IRS (1992). 8 Ibid. 9 Ibid. See also Trade Union Information Bulletin (produced by DGX), 1992(2). 10 Venturini, (1988): Teague (1989a, 1989b). 11 Quotations from CEC (1988:9). 12 Quoted in Financial Times, 25 November 1991. 13 Financial Times, 25 November 1991. 14 Based on CBI documents published since the Maastricht conference, and on interviews with key informants in April 1992. 15 See European Industrial Relations Review, no. 236, September 1993. 16 A phrase used by the Commission—see CEC (1988). 17 See Ramsay in Labour and Industry (forthcoming, 1995) for detailed discussion of this debate and its outcome. 18 Based on information provided by UNICE. 19 Compared to twenty-five reported for the early 1980s—see Morris (1985). 20 International Management interview, July/August 1992. 21 Haworth and Ramsay, (1986); Ramsay (1986, 1991). 22 Ramsay and Haworth (1990). 23 World Bank figures, cited in Financial Times, 2 June 1992. 24 Cross-border subcontracting, joint ventures, licensing and other means of retaining effective control with partial or zero formal ownership involvement. See UN (1983) for discussion. 25 Ramsay (1991); Servan-Schreiber (1967). 26 For an extended look at this, see Ramsay in Labour and Industry (forthcoming, 1995). 27 Financial Times, 31 August 1992. 28 Even by comparison with US or Japanese corporations: see Dicken (1992); Stopford and Turner, (1985). 29 One-third approximately for the UK, less than 10 per cent for all other major economies—only smaller economies like Switzerland, Sweden or the Netherlands can exceed or challenge the UK proportion.


30 See Labour Research, January 1989. ILO figures also cited by UN (1988), put the proportion at 40 per cent of employees in large UK MNCs working outside the UK. 31 Based on examination of the Top 500 European company listings in the Financial Times, 11 November 1991; and in International Management, April 1992. 32 See Ramsay (1990, 1991); Amin and Dietrich (1991); Smith and Walter (1992) and other papers in Cool et al. (1992); Hamill (1992); and other studies in, e.g., Young and Hamill (1992); Burgenmeier and Mucchielli (1991). 33 See Ramsay (1992) for a detailed résumé of the history of CEC industry policy initiatives. 34 Geroski (1988, 1992); Neuberger (1989); Kay (1992); Ramsay (1990, 1992). 35 Kay (1989) provides evidence to support his argument that European multinationals will tend to prefer a cooperative option with non-European counterparts, rather than other European companies (who they would prefer to eliminate by takeover). See Ramsay (1992, 1995), for further comment. 36 See Ramsay (1995) for a first consideration of some sources of and directions in such variation. 37 Levinson (1972), and numerous subsequent collections of papers from a shortlived rash of academic conferences on the issue. 38 See, e.g. Olle and Schoeller (1977); Northrup and Rowan (1979); Haworth and Ramsay (1986); for a review of the debate, see Ramsay (1993). 39 See Busch (1983); Thomson and Larson (1978); Press (1989). 40 ETUC (1991); further information from interviews. 41 Gold and Hall (1992); ETUC (1992); European Industrial Relations Review, nos. 228/ 229, January/February 1993; IRS (1994). 42 Some of the internal tensions and divisions within the European labour movement are described in the accounts of France and Germany by, respectively, MacShane (1991); Streeck (1991). 43 Personnel Management, October 1990. Coldrick is Confederal Secretary of the ETUC.

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Cohen, R. (1991) Contested Domains: Debates in International Labour Studies, London: Zed Press. Coldrick, P. (1990) ‘Collective Bargaining in Europe’, Personnel Management, October: 58– 61. Commission of the European Communities (1988) Social Europe: The Social Dimension of the Internal Market, Brussels: CEC. Commission of the European Communities (1990) ‘Community Charter of the Fundamental Social Rights of Workers’, Social Europe, No. 1/90, Luxembourg: Office of Publications of the European Communities. Cool, K., Neven, D.J. and Walter, I. (eds) (1992) European Industrial Restructuring in the 1990s, London: Macmillan. De Vos, T. (1989) Multinational Corporations in Democratic Host Countries: US Multinationals and the Vredeling Proposal, Aldershot: Dartmouth. Delors, J. (1988) Europe 1992: The Social Dimension, address to TUC, Bournemouth. Brussels: CEC. Dicken, P. (1992) Global Shift: The Internationalization of Economic Activity (2nd edn), London: Paul Chapman. Due, J., Madsen, J.S. and Jensen, C.S. (1991) ‘The Social Dimension: Convergence or Diversification of Industrial Relations in the Single European Market?’ Industrial Relations Journal, 22(2), Summer: 85–102. Dunning, J.H. and Cantwell, J.A. (1991), ‘Japanese Direct Investment in Europe’, in B. Burgenmeier and J.L. Mucchielli (eds), Multinationals and Europe 1992: Strategies for the Future, London: Routledge, pp. 155–84. Emerson, M., et al. (1988) The Economics of 1992: The EC Commission’s Assessment of the Economics Effects of Completing the Internal Market, Oxford: Oxford University Press. ETUC (1991) The European Trade Union Confederation, Brussels: ETUI, Info. No. 29. ETUC (1992) The Social Dimension of the Internal Market Part III: The Representation of Workers in the Workplace in Western Europe, Brussels: ETUI, Info. No. 32. European Trade Union Institute (1994) Bargaining in Recession: Trends in Collective Bargaining in Western Europe 1993–94, Brussels: ETUI. Fitzpatrick, B. (1992) ‘Community Social Law after Maastricht’, Industrial Law, 21(3), September: 199–213. Geroski, P.A. (1988) ‘European Industrial Policy and Industrial Policy in Europe’, Oxford Review of Economic Policy, 5(2): 20–36. Geroski, P.A. (1992) The Choice between Diversity and Scale’, in E. Davies et al. (eds), Myths and Realities, London: Centre for Business Strategy. Gold, M. and Hall, M. (1992) European-Level Information and Consultation in Multinational Companies: An Evaluation of Practice, Dublin: European Foundation for the Improvement of Living and Working Conditions. Gold, M. and Hall, M. (1994) ‘Statutory European Works Councils: The Final Countdown?’, Industrial Relations Journal, 25(3), September: 177–86. Grahl, J. and Teague, P. (1992) ‘Integration Theory and European Labour Markets’, British Journal of Industrial Relations, 30(4), December: 515–27. Grant, W. (1993) Business and Politics in Britain, (2nd edn), London: Macmillan. Hall, M. (1992) Legislating for Employee Participation: A Case Study of the European Works Council Directive, Warwick Papers in Industrial Relations, No. 39: Coventry, IRRU, University of Warwick.


Hamill, J. (1992) ‘Cross-Border Mergers, Acquisitions and Alliances in Europe’ in S. Young and J. Hamill (eds), Europe and the Multinationals: Issues and Responses for the 1990s, Aldershot: Edward Elgar, pp. 137–58. Haworth, N. and Ramsay, H. (1986) ‘Workers of the World Untied: A Critical Analysis of the Labour Response to the Internationalisation of Capital’, International Law of Sociology and Social Policy, 6(2): 55–82. Hyman, R. (1990) The Representativeness of National Trade Union Confederations: Challenges from Above and Below, mimeo. Paper to ISA Congress, Madrid, 12 July. Hyman, R. (1991) ‘European Unions: Towards 2000’, Work, Employment & Society, 5(4), December: 621–39. IDS (1992) ‘Social Europe after the Summer’, IDS European Special, February. ILO (1993) World Labour Report 1993, Geneva: ILO. IRS (1992) The Social Dialogue: Euro-bargaining in the Making?’ European Industrial Relations Review, No. 220, May. IRS (1993) The Hoover Affair and Social Dumping’, European Industrial Relations Review, No. 230, March. IRS (1994) ‘European Works Councils—The Action Begins’, European Industrial Relations Review, No. 250, November. Jenkins, R. (1984) ‘Division over the International Division of Labour’, Capital and Class, No. 22:28–58. Julius, D. (1990) Global Companies and Public Policy: The Growing Challenge of Foreign Direct Investment, London: Frances Pinter. Kay, J. (1992) ‘Myths and Realities’, in E. Davis et al., Myths and Realities, London: Centre for Business Strategy. Kay, N.M. (1989) Corporate Strategies, Technological Change and 1992, Standing Commission on the Scottish Economy, Working Paper Series, Glasgow: Fraser of Allander Institute. Kujawa, D. (1975) ‘Transnational Industrial Relations: A Collective Bargaining Prospect?’ in D. Kujawa (ed.) International Labour and the Multinational Enterprise, New York: Praeger. Levinson, C. (1972) International Trade Unionism, London: Allen and Unwin. Lucio, M.M. and Weston, S. (1993) Trade Unions and Networking in a Context of Organisational Change’ paper to Conference on Unions on the Brink? The Future of the Trade Union Movement, Cardiff Business School, 28–29 September. McKiernan, P. (1992) Strategies for Growth, London: Routledge. MacShane, D. (1991) ‘France—The Missing Link in European Labour?’ European Labour Forum, No 4. MacShane, D. (1992) International Labour and the Origins of the Cold War, Oxford: Clarendon Press. Matsson, L.G. and Stymne, B. (1991) Corporate and Industry Strategies for Europe: Adaption to the European Single Market in a Global Industrial Environment, Amsterdam: NorthHolland. Morris, J.M. (1985) ‘Lobbying the EC ’, International Management Development Review. Multinational Business Forum (1993) Thriving on Diversity: Informing and Consulting Employees in Multinational Enterprises, Brussels: MNB/ORC. Neuberger, H. (1989) The Economics of 1992, Brussels: Report for British Labour Group of MEPs.

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Northrup, H.R. and Rowan, R.L. (1979) Multinational Collective Bargaining Attempts, Philadelphia: University of Pennsylvania. Northrup, H.R. et al. (1988) ‘Multinationals Union-Management Consultation in Europe: Resurgence in the 1980s’, International Labour Review, 127(5). OECD (1991) Trends in Trade Union Membership’, in Employment Outlook, No. 9, Paris: Organisation for Economic Cooperation and Development. Olle, W. and Schoeller, W. (1977) ‘World Market Competition and Restrictions upon International Trade Union Policies’, Capital and Class, No. 2. Panic, M. (1991) The Impact of Multinationals on National Economic Policies’, in B. Burgenmeier and J.L. Mucchielli (eds), Multinationals and Europe 1992: Strategies for the Future, London: Routledge, pp. 204–22. Press, M. (1989) ‘A Critique of Trade Union Internationalism’ in M. Press and D. Thomson (eds), Solidarity for Survival: The Don Thomson Reader, Nottingham: Spokesman. Ramsay, H.E. (1986) Transnational Corporations in Australia: Issues for Industrial Democracy, Canberra: AGPS. Ramsay, H.E. (1990) 1992: The Year of Multinationals? Corporate Restructuring and Labour in the Single Market, Warwick Papers in Industrial Relations, No. 35, Coventry: IRRU, University of Warwick. Ramsay, H.E. (1991) The Community, the Multinational, its Workers and their Charter. A Modern Tale of Industrial Democracy?’ Work, Employment & Society, 5(4), December: 541–66. Ramsay, H.E. (1992) ‘Whose Champions? Multinationals, Labour and Industry Policy in the European Community after 1992’ Capital and Class, No 48. Ramsay, H.E. (1993) ‘Transcendental Mediators? Revisiting International Trade Union Theory after Maastricht’, paper to conference on Unions at the Brink? The Future of the Trade Union Movement, Cardiff Business School, September. Ramsay, H.E. (1995) ‘Le défi Européen: Multinational Restructuring, Labour and EU Policy’, in A. Amin and J. Tomaney (eds), Behind the Myth of European Union, London: Routledge (forthcoming). Ramsay, H.E. and Haworth, N. (1990) ‘Managing the Multinationals: The Emerging Theory of the Multinational Enterprise and its Implications for Labour Resistance’ in S. Clegg (ed.) Organisation Theory and Class Analysis: New Approaches and New Issues, Berlin: de Gruyter. Roberts, I. (1992) ‘A Review of IR Developments in the EC’, Industrial Relations Journal, 23(1), Spring: 3–13. Servan-Schreiber, J.J. (1967) Le Défi American, Paris: Denoél. Sisson, K. (1990) ‘Employers’ Organisations and the Industrial Relations Strategies of Individual Employers’, mimeo. Paper to Conference of the International Network of Research Institutions: Industrial Relations in the European Community—Employers’ Associations in Europe, Policy and Organisations, Thiers, 28–30 September. Sisson, K., Waddington, J. and Whitson, C. (1991) ‘Company, Size in the European Community’, Human Resource Management Journal, 2(1), Autumn. Smith, R.C. and Walter, I. (1992) ‘Economic Restructuring in Europe and the Market for Corporate Control’ in K. Cool, D.J. Neven and I. Walter (eds) European Industrial Restructuring in the 1990s, London: Macmillan, pp. 77–118. Stopford, J.M. and Turner, L.M. (1985) Britain and the Multinationals, Chichester: Wiley/ IRM.


Streeck, W. (1991) ‘More Uncertainties; German Unions facing 1992’, Industrial Relations, 30(3), Fall: 317–49. Streeck, W. and Schmitter, P. (1991) ‘From National Corporatism to Transnational Pluralism: Organised Interests in the Single European Market, mimeo. Paper to conference on The New Europe(s), Mannheim, 21–23 February. Teague, P. (1989a) ‘Constitution or Regime? The Social Dimension to the 1992 Project’, British Journal of Industrial Relations, 27(3): 310–29. Teague, P. (1989b) The European Community: The Social Dimension, London: Kogan Page/ Cranfield. Teague, P. (1991) ‘Human Resource Management, Labour Market Institutions and European Integration’, Human Resource Management Journal, 2(1), Autumn: 1–21. Teichova, A., et al. (eds) (1986) Multinational Enterprise in Historical Perspective, Cambridge: Cambridge University Press. Thomson, D. and Larson, R. (1978) Where Were You Brother? An Account of Trade Union Imperialism, London: War on Want. Trades Union Congress (1994) European Works Councils: Multinationals Information Project Information Pack, mimeo. London: TUC. United Nations (1983) Transnational Corporations in World Development: The Third Survey, New York: UN Centre on Transnational Corporations. United Nations (1988) Transnational Corporations in World Devlopment: Trends and Prospects, New York: UN Centre on Transnational Corporations. United Nations (1991) World Investment Report 1991: The Triad in Foreign Direct Investment, New York: UN. United Nations (1992) World Investment Report 1992: Transnational Corporations as Engines of Growth, New York: UN. United Nations (1993) World Investment Report 1993: Transnational Corporations and Integrated International Production, New York: UN. UNICE (1991a) UNICE: Position Paper on Information/Consultation, Brussels: UNICE, 4 March. UNICE (1991b) UNICE’s Approach to Community Action with Regard to Information and Consultation, Brussels: UNICE, Press Release 7 October. Venturini, P. (1988) 1992: The European Social Dimension, Brussels: CEC. Young, S. and Hamill, J. (eds) (1992) Europe and the Multinationals: Issues and Responses for the 1990s, Aldershot: Edward Elgar.

5 COMMONALITIES AND DIVERGENCES IN SMALLFIRM COMPETITIVE STRATEGIES Textiles and clothing manufacture in Britain, France and Italy Anna Bull, Joseph Szarka and Martyn Pitt INTRODUCTION Acceleration in the process of European integration has raised the question of the nature and extent of economic and social convergence within EC countries (Cressey and Jones, 1991). In a mature industry such as textiles and clothing, the convergence hypothesis is plausible. Broad-brush descriptions would posit convergence as a result both of supply-side factors such as capital and worker mobility and rapid innovation diffusion, as well as market-driven phenomena such as increased homogeneity of tastes within European markets and rapid fashion dissemination, comparable disposable income per head and patterns of purchasing underpinned by cultural and socioeconomic similarities. All these factors have possible implications for wealth creation and job sustainment in sectors like textiles and clothing, where a significant proportion of value-adding and employment occurs in small and medium-sized enterprises (SMEs). Yet closer inspection raises questions about the meaning and extent of convergence. First, does convergence imply that a group of travellers will reach the same destination at the same time? Or can convergence be said to occur if, following the same paths, they reach it at different times? Second, European economies are characterised both by divergences in the ‘industrial order’ of different nation states (Lane, 1991) and by heterogeneity in terms of distinctive regional structures and specific patterns of demand segmentation within sectors. These issues make the mapping of trends towards convergence problematic. Accordingly this chapter will not attempt to give global responses, but will focus on a case study of the nature and limits of convergence in the strategies of small textile-clothing firms in three regional agglomerations. By placing these strategies within wider market and production trends in the international economy, it is hoped that the study will illustrate generic issues relevant to other industrial sectors. Drawing on literature surveys and field-work conducted by the authors on small textile-clothing firms in Como, Leicester and Lyon,1 we will analyse the issue of convergence of small-firm strategies at two levels. At one level is the

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question of whether convergence of firm strategies exists within regional agglomerations of small firms. Variables here include predominant production activities and types of specialisation in the area, its industrial traditions and reputation as well as its outside markets. At another level is the question of cross-national convergence of ‘best practice’ in terms of the strategies pursued by individual firms. Thus we look at convergence both in terms of industrial organisation within the three districts and in terms of the practices of comparable groups of firms across the three areas. However, the two levels are clearly interdependent: for example, whilst a range of firm strategies can be discerned within a region, firms are not entirely free to select their specialisation strategies. As will be seen, regional and national factors offer differential opportunities but also constrain in-firm strategy formulation. The chapter’s structure reflects the multiple interdependencies experienced by small textile and clothing firms. The first section will set out major industry developments at international and national levels. The second section will consider the regional profiles of Como, Leicester and Lyon, whilst the final section will compare strategy developments in the firms sampled. As a whole the chapter will address the question of whether ‘convergence on quality, design and innovation’ along Italian lines can be taken as the most valid business strategy for small textile firms in other parts of Europe. It will argue that although some current trends point in this direction, local and national specificities are likely to be continuing sources of divergence. THE EFFECTS OF INTERNATIONALISATION ON THE TEXTILE AND CLOTHING INDUSTRIES As non-tariff barriers to intra-EC trade in textiles and clothing have been relatively low, textile producers within Europe have operated at a high level of market integration for some time already (Cecchini et al., 1988). Further, despite protectionist measures set up by the various Multi-Fibre Arrangements, garments and textiles from developing nations and the newly-industrialised countries (NICs) have made increasing inroads into the markets of the developed world, in some cases decimating indigenous production. Due to increased competitive pressures stemming from internationalisation, the textile and clothing industries of the developed nations have experienced a period of crisis. Yet significant performance differences exist among the textile-clothing sectors of the industrialised nations. Accordingly, this section will first provide statistical data on recent international trends and analyse the underlying causes of the crisis, and then will discuss differences in national responses.

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Recent international trends The textile and clothing industries of the developed nations were still experiencing a period of modest expansion until the first oil shock of 1973, but have experienced difficulties, even crisis, since. Over the 1973–9 period, textiles output was stagnant in industrialised countries and declined by 0.5 per cent in the EC. The situation worsened during the recession at the start of the 1980s (GATT, 1980, 1985). With the economic upturn of the mid-1980s, European textile and clothing output increased yearly through the remainder of the decade. In millions of (current) ecu, EC textiles production rose steadily from 63,075 in 1983 to 89, 065 in 1990 and clothing output rose from 29,201 in 1983 to 42,095 in 1990 (Panorama of EC Industry, 1993). However, employment in the European textile and clothing industries has contracted. In 1982 employment in firms with over twenty employees was over 2.8 million, but fell by some 20 per cent to approximately 2.2 million people by 1990 (Panorama of EC Industry, 1991). Despite falling employment in the bigger firms there is evidence, albeit hard to quantify from official data, that small firms have sustained substantial numbers of jobs in textiles and clothing, by way of partial compensation for the decline in larger firms. Productivity has clearly increased, improving the international competitiveness of the sector. Yet non-European producers have also improved their competitive position. With consumption rising faster than production, the EC has been running a major deficit on its balance of trade in clothing (2,337 million current ecus in 1982, 10,004 in 1991); trade in textiles was close to equilibrium during most of the 1980s but has since dipped into deficit, estimated at 2,916 million current ecus in 1991 (Panorama of EC Industry, 1993). However, clear contrasts exist in the performance of the three countries covered in this study, namely Britain, France and Italy. Between 1973 and 1981 output fell by 19 per cent in France and 36 per cent in Britain whilst in Italy, despite falls in the mid-1970s, production had increased by 15 per cent by 1980 (Shepherd, 1983). Italy has become the world’s leading exporter of clothing with a world market share of 11 per cent (Faini and Heimler, 1991:56). The Italian trade balance for the textiles, clothing and footwear sectors was in the black during the 1980s and indeed through 1990–2 (EC, 1993). Whereas for the UK textile and clothing exports amounted to only 53 per cent of imports in 1992 (CSO, 1993), for Italy the figure in 1990 was 235 per cent.2 Closer examination of national economies highlights the striking differences between Italy and the UK, with France falling in between. All three countries ran a trade deficit for most of the 1980s, but whereas Italy (and to a lesser extent France) had a surplus in manufactures, the UK experienced a deficit. By contrast, Italy ran a heavy deficit in energy and minerals, whereas the UK showed a much healthier balance (Eurostat, 1993). In terms of the three countries’ GDP


per head, calculated at purchasing power parities, in 1991 France was ahead with 17,250, followed by Italy with 15,890 and lastly by the UK with 14,732. Significantly, the annual rates of growth of GDP between 1986 and 1991 were 2.7 per cent in France, 2.8 per cent in Italy, and 1.9 per cent in the UK (Eurostat, 1993). Higher growth rates allowed Italy to overtake the UK in the 1980s, with the Italian economy becoming the third largest in the EC after Germany and France. Thus, despite Italy’s persisting regional problems due to the underdevelopment of the south, these developments indicate that the industrialised regions of the country have enjoyed resounding success in manufacturing, not least in textiles and clothing. This sector, like so many others in industrialised countries, has been forced to develop new strategies in a bid to retain competitiveness. It is upon these strategies, first on a European and then at a local level, that we will next focus our attention. European strategies in textiles and clothing Despite the difficulties, recent international trends have created opportunities for small European textile and clothing firms. These have largely been associated with changes in demand. The 1980s saw a fragmentation and multiplication of European lifestyles. As clothing and furnishing are among the vehicles by which these life-styles are expressed, a massive increase in the range of styles, patterns and colours of textile goods available occurred during the 1980s. Whilst this process has generally been a demand-led phenomenon, European textile producers have been keen to promote its development, because an acceleration of fashion cycles allows them increased sales. Several reasons can be cited to explain this. The first is that a high rate of fashion change reduces the tendency to market saturation. Instead of buying no more than they need, consumers buy as much as they can afford. The second reason is that highly differentiated demand is more easily satisfied by the local producer than by one several thousand miles away. The local producers’ competitive advantages include: (i) lower transportation costs, (ii) speed of response to changes in demand and (iii) lower inventory costs. Fast response is particularly important in fashion markets where the aim is not simply to keep pace with demand but to be one step ahead and to anticipate the next trend. The ability to anticipate trends requires in-depth familiarity with final markets, hence the marketing importance of being ‘onthe-spot’. Third, highly variegated demand places a premium on creativity, originality and, frequently, on quality. Consumers have increasingly come to associate goods bearing a brand name with style and quality. In these market segments, ‘unknown’ producers whose primary competitive advantage is based on low wage costs and/or long production runs can be marginalised; though


‘pirating’ of brand names has sometimes been the response, creating a major international problem. Not all European producers have been able to exploit the former trends. As indicated above, Italy has fared considerably better than France or Britain, where demand for low-cost, moderate quality garments is particularly in evidence. Thus we suggest that low-cost imports represent only a partial cause of the difficulties of the textile and clothing industries in EC countries. Structural problems have also played their part. A high degree of industrial concentration and vertical integration in textiles and clothing in certain countries, particularly the UK and to a lesser degree France, exacerbated the difficulties. As documented by Toyne et al. (1984), the reaction in the UK and France to increased international competition in the 1970s was to implement greater vertical integration. By exploiting economies of scale linked to long runs of standard products, large firms such as Courtaulds hoped to compete on price with imports from developing countries. Once fashions became more variegated, the large firms which were usually geared to standardised mass merchandise proved slow in adjusting to changes in demand. Their bureaucratic organisation militated against the promotion of the entrepreneurial culture required for fastmoving markets. On the other hand, the trend in Italy was towards manufacturing ‘de-integration’, with a significant increase in numbers of small, flexible firms. The proportion of small firms is generally highest in the Mediterranean countries and it is particularly high in Italy where it reaches 45 per cent. By contrast, it is lower in the north; the figure for the UK is 18 per cent (Eurostat, 1992). However, in the UK clothing sector the 1980s were characterised by a proliferation of small firms, often leading a very precarious existence. On the other hand, there was continuing growth of a few large firms (Courtaulds, Coats Viyella). As the industry became increasingly demand-led and fashion-oriented, the emphasis shifted markedly from production capacity to marketing capability. By the start of the 1980s, the centre of gravity in the industry had shifted towards distributors, especially multiple retailers (Weisz and Anselme, 1981). The phenomenon of concentration in the distribution system is particularly salient in Britain, where 70 per cent of all clothing sales are made by multiple retailers and department stores (such as the Burton Group and Marks & Spencer), a higher proportion than in any other western economy (Zeitlin and Totterdill, 1989). Multiple retailers in Britain tend to rely on ‘value-for-money’ products rather than fashion and style, albeit with some increase in recent years in the design appeal and fashion content of their goods. Although the multiples have gradually acquired greater importance in Italy and France, they are less important than in the UK. In 1988 multiple retailers and department stores accounted for only 17 per cent of all clothing sales in Italy, and 24 per cent in France (Panorama of EC Industry, 1993). Hyper- and


Table 5.1 Major product/market positions in textiles and clothing products

supermarkets had a considerable share of all sales in France (18 per cent) but were negligible in Italy (1 per cent). The Italian group Benetton relies greatly on the ability to satisfy diverse and rapidly changing markets (Tuloup, 1987:76– 82). Fashion and style are much associated with the group. By contrast, Italian department stores such as Upim and Standa which sold standardised and generally low-cost clothes contracted in the 1980s. Independent retailers accounted for 70 per cent of all sales in Italy in 1988 and 38 per cent in France, but only 20 per cent in the UK (Panorama of EC Industry, 1993). Other sources give a much higher figure for the French independent retailing sector (Jacomet, 1992). Notwithstanding this discrepancy, it is clear that the distribution sector is far more fragmented in Italy and to a lesser extent France, than in Britain. Producers have developed multi-faceted competitive strategies in relation to demand trends and to the characteristics of national distribution systems. In textile and clothing products, the major product parameters are design/ fashion content, construction quality and price. Textiles and clothing products must simultaneously be designed for specific, sometimes very tightly defined, social groups and be commercially attractive to the appropriate distribution channels. The structures of national distribution sectors afford differential opportunities of access: selling into the concentrated UK distribution sector is a vastly different proposition to selling to Italy’s fragmented retail trade. Furthermore, the small producer will be particularly affected by national or even local demand characteristics. As Stopford and Baden-Fuller (1990) indicated, it remains extremely difficult in textilesclothing to identify ‘mass-customised segments’; i.e. exact cross-border correspondences within national patterns of demand fragmentation allowing an aggregation of sales. Although this by no means eliminates the scope for exporting, it highlights the challenges faced by producers wishing to link into international distribution networks and tailor their products to foreign markets. For the sake of clarity, Table 5.1 offers a synthesis of the major permutations in product/market positioning. The archetypal example of highfashion/highquality products (point 1) is haute couture, an area in which the French have traditionally been strong, though with increasing competition from other European and indeed Japanese designers. In itself, this is a tiny market but astronomical prices make it lucrative. It also launches some, though far from


all, mass merchandising fashions. Closely allied is the luxury goods market, where Italy has also held strong positions. But much of the Italian textiles-clothing industry was characterised in the 1980s by a relatively high-fashion content coupled with medium construction quality (point 2). These strong features allow Italian producers to compete on the price/quality relationship rather than price alone. Thus prices are relatively high, but considered affordable by the more affluent social groups in Europe and beyond. Disposable fashion or prêt-à-jeter (point 3) was enormously popular in the 1980s as fashion cycles accelerated and increasing consumerism made oneseason purchases seem normal. Clearly this type of fashion favoured small local producers who were fast enough to catch the vagaries of fickle demand. It also corresponds closely to a widespread British view of what fashion is. Conversely, the British have historically associated quality with low-fashion content: points 4 and 5 represent the market situation of upmarket stores who trade in ‘classic’ clothes such as Saville Row for men’s suits, and the major UK merchandiser in textiles-clothing, Marks & Spencer, for middle-market segments. Interestingly, despite their attempts to conquer the French, Marks & Spencer do not seem able to command a ‘quality’ image in France, probably because the French associate good construction quality with moderate to highfashion content. Finally, the low-quality/low-fashion segment (point 6) assembles a variety of producers, including both large integrated firms trading on economies of scale and backstreet sweat shops. However, it is worth noting that although points 5 and 6 have accounted for the bulk of import penetration into European markets, third-party producers are increasingly attacking other segments. This can occur in association with European producers who provide the design, marketing and distribution expertise, whilst the third-party producer provides labour and materials. Germany is particularly associated with this strategy. But as competitive pressures increase and with even strategy 2 becoming less secure, the Italian response seems to lie in improving the quality and increasing the added-value of products offered (Unioncamere-Istituto Tagliacarne-Censis, 1991). To sum up, similarities in tastes together with the need to respond quickly to fashion changes have led to a measure of convergence within European textileclothing markets, but this exists alongside deep-rooted dissimilarities related to differing degrees of vertical integration and concentration in production and distribution within nations. Thus although the Italian textiles and clothing industries have generally been the most successful among EC countries, convergence towards creative, high-quality, middle- to up-market production along Italian lines is not a foregone conclusion. A closer look at Como, Leicester and Lyon—three areas which in many ways epitomise their country’s industrial strategy in textiles and clothing—will show why.


LOCAL INDUSTRIAL STRATEGIES Each of the three major areas we studied has a long tradition of textilesclothing manufacture.3 This has resulted in a distinct profile in each, creating both opportunities and constraints for local firms. Further, survival and prosperity have required the ability to adapt to the turbulent business environment of recent years but, as the following analysis will indicate, the adjustment process has met with varying degrees of success in the three localities. Como: success through industrial cohesion The textiles and clothing industry in Como town and province (in northern Italy) is partly rurally based and forms an ‘industrial district’.4 Small firms are responsible for most of the area’s output and are variously interlinked to form a highly coherent industrial structure. The Como area is highly specialised in silk manufacture and it draws strength from its reputation for quality. Silk has historically been too expensive for low-fashion goods: thus Como’s handkerchiefs, neckerchiefs and ties are usually marketed under the names of the best-known international fashion stylists and sell to middle-market segments as well as into luxury markets (points 1 and 2 of Table 5.1). The area exports between 50 and 70 per cent of its production, with the USA as its major market. Competition from Europe comes mainly from Lyon. Although it was fierce up to the 1960s, Como has replaced the French city as the highestvolume producer of silk products in Europe. Competition from the Far East has, however, been on the increase. In the past, Como manufacturers imported raw silk from China and re-exported silk fabrics, including large quantities of crêpe de Chine. Recently, China diversified from raw silk into the production of woven fabrics. This directly threatened Como weaving firms, who had to abandon the production of crêpe de Chine, which is a more standardised fabric. In addition, problems arose concerning the supply of raw silk, as China linked exports of raw material to purchases of fixed quantities of home-produced silk fabrics. Como producers have reacted by refining their sourcing and production strategies. To safeguard their supplies of raw material, they have encouraged other countries, notably Brazil, to cultivate mulberry leaves and raise cocoons. In addition, local merchants have been importing cheaper woven silk from China and having it finished at Como. Thus some suppliers are moving downstream and concentrating on design, dyeing, printing and finishing as well as wholesaling. Most of these activities are highly specialised, requiring sophisticated machinery, skilled labour and considerable technical knowhow. Meanwhile, some weavers are preferring to reinforce their specialism by working with more sophisticated mixed fibres as well as increasing the fashion content and design complexity of their fabrics in order to


outpace developing countries. These competitive strategies maintain product differentiation in quality terms and preserve Como’s lead. Industrial cohesion has been crucial in Como’s success. As with other Italian ‘industrial districts’, firms specialise in one or two activities, making extensive use of subcontracting by specialism as well as by capacity. Thus both competitive and collaborative practices are fostered. Rapid uptake of new products and processes, together with a high degree of flexibility in work organisation, ensure quick reactions to market trends. Convergence in the industrial and marketing strengths of local firms have ensured considerable success for the Como district. Although employment in the textiles and clothing sectors declined over the long term (falling from over 50,000 in 1951 to around 30,000 in 1981), the reduction in the labour force was a consequence of considerable new investment in machinery, not of industrial recession. Moreover, export performance has been strong: in 1985, exports from Como accounted for 10 per cent of Italian textile and clothing exports. Finally, the district draws strength from its strong sense of self-identity. Because of the high level of industrial cohesion, Como producers conceive of their individual future in collective terms. Doubts have been raised about the future of local textiles, leading to claims that Como risks pricing itself out of the market and that in the 1990s it needs to capture the middle components of European markets, offering medium-quality products at accessible prices to larger segments of the population. The challenge will be to respond to the perceived need to reduce prices owing to competitive pressures from the Far East whilst maintaining Como’s traditional reputation for high quality. Lyon: strength through specialisation The textile-clothing industry in the major industrial city of Lyon works with a greater range of raw materials and product types and has a lower level of interlinking than is the case in Como. However, both localities contain large numbers of specialised small and medium-sized firms and share a common tradition of silk manufacture. Nonetheless, the industrial development of the two localities has followed different paths. Throughout the nineteenth century and for most of this century Lyon was the major European centre for silk production and has retained a reputation for top-quality fabrics. The industrial traditions of the nineteenthcentury fabrique lyonnaise bore a number of similarities with contemporary ‘industrial districts’, namely a high interfirm division of labour through smallfirm or artisanal specialisation. Silk production has declined in importance but its traditions have been imprinted onto textile-clothing production in Lyon today. The decline was


linked to Lyon’s concentration on limited haute couture markets in silk, whereas Como targeted a larger stratum of consumers and thereby gained primacy in silk production. However, over the course of the twentieth century, Lyon firms developed their specialisms in natural fibres whilst also innovating with synthetic and artificial materials. This tradition has been continued in recent years, for example, with developments in ‘hightech’, carbon-based fibres for industrial use. Finally Lyon, as one of Europe’s major industrial cities, has greatly diversified away from textiles and clothing. This is reflected both in relative terms, the rise in importance of chemicals and mechanical engineering, and in absolute terms, with significant contraction in textiles employment. Jobs in the textiles sector within Lyon itself fell from some 36,000 in 1966 to around 12,000 in 1984 (Bonnet, 1988). Though the decrease in silk manufacture meant some dilution in overall quality levels, pockets of excellence in silk and other materials have survived. Unlike Como, Lyon did not move downstream in textiles manufacture to avoid the competition of cheap goods from abroad. Rather, significant numbers of fibre manufacturers and cloth mills survive and thrive on the basis of high quality, productivity and specialisation. With the exception of the chemicals multinational Rhône-Poulenc, the level of vertical integration among Lyon-based firms is quite low. The major regional specialisations revealed by an INSEE (1988) survey were cloth mills on the one hand and clothing manufacture on the other, together with a smaller number of firms specialising in finishing activities. A high level of specialisation is thus a feature common to both Lyon and Como. Unlike the Como firms which benefited from extensive regional subcontracting, the firms in the Lyon sample did not trade locally to any great extent. In the majority of firms, both inward purchasing and outward sales were conducted mainly in national and international markets, indicating more individualistic firm strategies than in Como where the collective identity of the district seems to be stronger. Further, close inspection of firms in Lyon indicated a wide spread of product/market positions, covering many of the points in Table 5.1. This illustrates more divergence within the area than is the case in Como. As regards recent performance, garment manufacturers have been as hard hit in Lyon as elsewhere in Europe. However, Lyon’s specialisations in higher value-added, capital and skill-intensive, upstream activities have helped the local textiles industry to weather the storm of international competition rather better than, for example, the Lille conurbation in northern France which has suffered extensively. In brief, textiles-clothing production in Lyon has not emerged unscathed from the sharpening of international competition, but traditions of quality and


specialisation—especially in upstream manufacture—continue to be major strengths. Leicester: the dangers of an old formula Leicester is a major East Midlands knitwear and hosiery centre with a long history of textiles manufacture. In recent years, it has competed on inexpensive and ‘value for money’ products for local and national markets (corresponding to points 5 and 6 of Table 5.1). The better-quality items are sold to the large chain stores, whilst cheaper products are sold in market stalls and in down-market retail shops throughout the country. In the 1970s, considerable Asian immigration to the city stimulated the local textile industry but at the same time reinforced the area’s tendency to compete on price rather than on quality or fashion. The use of unskilled homeworkers and increased incidence of tax evasion have been reported, though the local textiles industry is by no means to be generally equated with these. The tendency to compete on price has increasingly incurred difficulties because of cheap imports from developing countries. Further, non-European producers such as Hong Kong now also offer Value for money’ products, rather than just low prices. Yet Leicester firms tend to blame cheap imports for the industry’s present difficulties. Many textile firms have closed down in the last few years—including plants owned by the largest employers, N.Corah and Courtaulds. The recent UK recession has clearly deepened Leicester’s problems. Leicester seems a typical case where a change of strategy is indicated. It is most unlikely to beat the NICs in the production of low-priced and standard goods. A switch to better-quality and/or higher-fashion goods would allow Leicester to compete more effectively on non-price factors. The question remains, however, whether Leicester firms have the necessary equipment, design and management skills to make the change. To conclude this discussion on broad strategies at district level, there are signs that convergence towards mid- to up-market products which are high on quality and fashion content is a valid business strategy for European textiles producers. Indeed a number of firms within each of our three national samples have successfully adapted to changing conditions by implementing that strategy. Moreover, where success has occurred, it has often been attributable to small units, rather than to large firms. Accordingly, we turn next to the characteristics of the small firms in the survey in order to address the hypothesis of ‘convergence on quality, design and innovation’ more precisely.


STRATEGIES AT THE FIRM LEVEL This section first sets out the general characteristics of firms contacted during our field research and then analyses the distinctive features of those firms which have grown most quickly. It will be argued that such elements of convergence as exist are strongest among this latter group. Characteristics of the total sample From analysis of all firms responding to our survey, three distinct national profiles emerged. The Lyon firms tended to be older, second or later generation family firms. They were generally larger in terms of assets, sales and employees than firms in the other two cohorts. The firm owners were frequently wellqualified, having a degree or equivalent, employed specialists to cover major business functions, whilst also assuming the role of the strategist. The typical French firm in our survey operated as a ‘minilarge’ firm. Major success factors included significant capital accumulation over the long term and professional management. In addition, the French firms had a large customer base and a significant export orientation. The Italian firms were generally younger than the French, with the founding entrepreneurs still in charge, albeit sometimes near the end of their working life. They were typically less well educated than their French counterparts and tended to have a ‘hands-on’, production role rather than a’director’ role as in France. Fewer in-house specialists were identified compared to the French sample. Despite the fact that 79 per cent of Italian respondents claimed that their firms were experiencing moderate or rapid growth, the average headcount of employees in the Italian firms was the lowest of the three national samples whilst the ratio of capital to employees was the highest of the three. A major success factor has been significant capital investment, based on a strategy of levering-up business activity without greatly increasing numbers of employees. A division of labour based on subcontracting by specialisation has allowed firms to develop expertise typically in one stage of the production process. The Italian firms were export-oriented and offered high-quality products. The British firms gave fewer indications of professional management than the French, whilst levels of investment in productive assets were frequently very low, unlike the Italians. The Leicester knitwear firms were less specialised in terms of their markets—low- to medium-quality sweaters etc. generally produced by cut-and-sew methods rather than fully fashioned. They were also less specialised in terms of their position in the value chain, i.e. more vertically integrated. The reason cited by respondents was the lack of perceived advantage in using subcontractors, hence their general preference for in-house


Table 5.2 Customer bases of firms in sample

Source: Questionnaire results.

solutions as being more reliable. Finally, many firms depended on a limited number of UK customers. The most striking differences between the three samples related to: (a) the total number of customers with whom firms did business and (b) the percentage of sales going to a single major customer. Data on these variables are presented in Tables 5.2 and 5.3. Here the profile of the Lyon firms was very clear-cut. The vast majority (83 per cent) had more than fifty customers. In 80 per cent of French firms surveyed, sales to their biggest customer were less than a fifth of company turnover. At the opposite extreme, 65 per cent of Leicester firms had fifty or fewer customers whilst 70 per cent sold a fifth or more of their output to their biggest client. However, the Como firms largely divided into two populations: firms with 100+ customers (37 per cent) and firms with between twenty-one and fifty customers (35 per cent). A majority of Como firms sold less than a fifth of output to a single customer but a large minority did rely on one client for substantial custom. The skewed distribution of the Como sample reflects the division of labour between prime- contractors and subcontractors. According to Brusco (1986), subcontractors with more than twenty customers enjoy a relatively high degree of independence from their clients, particularly when they are specialist firms, as is the case in Como. In Leicester the division of labour is not as clear cut. Although subcontracting is widespread, it serves a different purpose. Rather than delegate by specialism, Leicester firms tend to subcontract laterally, i.e. one firm Table 5.3 Percentage of sales to biggest customer


helps out a similar firm on an ad hoc basis to smooth out periodic mismatches in demand and capacity. In addition, the phenomena of having a limited


number of customers and relying largely on a single customer for orders did not correlate exclusively with subcontractor status. In consequence, Leicester textiles manufacturers do not trade with each other in a systematic fashion. Many of them supply the large retail chains, to which they are able to sell their products in comparative bulk. This has considerable advantages but has also constrained opportunities for small textiles and clothing firms in Leicester and throughout the UK. Large distributors have tended to provide design input whilst requiring manufacturers to supply process expertise. British producers have not had the same incentive to innovate individually in terms of design and fashion content as in Italy. Further, reliance on UK multiples seems to have limited the search for export outlets. Whereas 31 per cent of Lyon firms and 48 per cent of Como firms in the survey exported over a quarter of their sales, only 9 per cent of the Leicester sample exported to the same extent. Seizing market opportunities, especially overseas, has allowed significant numbers of Continental firms to expand. A third of Italian firms in the survey reported rapid growth in recent years, compared to a quarter of the French— but only 11 per cent of the UK firms. Conversely, a quarter of Leicester firms reported decline compared to under 10 per cent of French and Italian respondents. These data suggest that even in a mature industry like textiles, fast growth for small manufacturing firms is still perfectly possible: decline is caused as much by strategic errors as by external trading factors. Nonetheless, most of the firms surveyed in the three localities have sought to adapt to changing conditions. A majority of firms have recently up-graded their operations in key areas such as: • improved production quality (68 per cent of Leicester firms, 67 per cent of Como and 78 per cent of Lyon); • improved equipment standards (68 per cent of Leicester firms, 71 per cent of Como and 78 per cent of Lyon); • increased product variety (84 per cent of Leicester firms, 70 per cent of Como and 68 per cent of Lyon); • increased flexibility towards customers (73 per cent of Leicester firms, 57 per cent of Como and 67 per cent of Lyon); and • faster delivery times (55 per cent in Leicester, 45 per cent in Como and 50 per cent in Lyon). Although Leicester firms reported fewer increases in the number of customers (32 per cent of Leicester firms, 42 per cent of Lyon and 46 per cent of Como), most of these data present the Leicester firms in a positive light. Indeed, they show that on many counts the proportion of Como firms which have not introduced changes is the highest, while in Lyon it is the lowest. Firms in


Como may now have reached a flatter gradient on the learning curve and are changing at a slower pace than is the case in Lyon and Leicester. This suggests that some convergence during this decade is possible. Strategies of fast-growth firms But is the move towards a higher-quality model a rewarding one for the firms which have effected it? Are improvements in quality of output, standard of equipment and levels of flexibility associated with good performance and growth? To answer these questions, we compared the fastestgrowing firms in each area to those which were stable or in decline. In particular, we sought to establish how the strategies of high- and lowgrowth firms differed, and whether there was a ‘success formula’ that worked in all three areas. The main findings of the analysis were that in all three localities the fast growers relied on high-quality output to a larger extent than did stable or declining firms. Contrary to expectations, flexibility towards customers did not stand out as an important growth factor. In Leicester, only a third of the fast growers claimed to have increased their flexibility to customers’ needs, compared to over three-quarters of stable or declining firms. In Como and Lyon, the percentages were almost the same for the fast growers and stable or declining firms. Market positioning was also clearly important. In Como, three-quarters of the fast growers produced up-market products. This compared with only 40 per cent of stable or declining firms. In Leicester, half of the fast growers offered high-quality products. Only a third of stable or declining firms produced for the top end of the market. In Lyon the difference was small, the percentages being 36 per cent for fast growers and 33 per cent for the others. Nonetheless, Lyon fast growers were the ones to report improvements most frequently. Of this group, 82 per cent had increased product quality, compared with only a third of stable or declining firms. In Como, 88 per cent of the fast growers had made improvements, compared with only 40 per cent of stable or declining firms. In Leicester, the figures were 67 per cent for the fast growers and 48 per cent for stable or declining firms. In all three areas, then, improved quality was associated with fast growth, although in Leicester a minority of firms had grown quickly without improving product quality. Improvements in quality among fast growers were also linked to higher levels of investment in machinery and better equipment standards. Roughly half of the fast growers in all three areas reported assets in equipment and machinery worth more than £500,000, compared with a much smaller proportion of stable or declining firms. In all three countries a higher pro portion of the fast growers said they had recently improved the standard of their equipment—in Leicester, 100 per cent for the fast growers and 45 per cent


for stable or declining firms; in Como, the percentages were 75 per cent and 60 per cent, respectively, whilst in Lyon they were 82 per cent and 50 per cent. Although it may seem self-evident that the firms achieving greater growth are those which invest more, textile and especially garment-manufacturing firms in Britain have had a poor record on investment. Where old machinery has been used to produce low-quality goods, costs may fall but the value-added is also depressed—thereby leaving producers short of capital for investment. Extrapolating from our findings, generating more business by moving upmarket and making appropriate capital investment are allied responses that small firms can successfully adopt. A diversified customer base is a notable feature of the Leicester fast growers: 66 per cent had more than 100 clients, as opposed to only 11 per cent of the firms indicating stability or decline. Moreover, 83 per cent of the Leicester fast growers sold 20 per cent or less of their production to a single customer. Conversely, 89 per cent of stable or declining firms sold 20 per cent or more of output to one customer. Likewise, in both Como and Lyon many fast growers report increases in the number of customers to a much larger extent than do stable or declining firms. By implication, firms which pursue an aggressive marketing and sales policy based on quality production can succeed in finding new customers and increasing their output. This analysis is reinforced by a review of the characteristics of least successful firms. The profile of the quarter of Leicester firms experiencing decline is singularly unambiguous, as Tables 5.4 and 5.5 show. Few customers, lack of design flair, low investment levels and down-market products are associated with declining firms. The data in Table 5.5 suggest that some firms have tried to adapt to new conditions by increasing product variety but without a corresponding emphasis on quality and investment. To sum up, despite some differences across localities, our findings indicate some cross-national convergence in terms of a formula for growth. In all three areas, firms are likely to grow faster if they step up their investment, improve product quality and increase their marketing effort towards Table 5.4 Characteristics of Leicester firms experiencing decline


new markets and a wider spread of customers. However, the opportunities for subcontracting by specialism are high in Como and Lyon, but low in Leicester. This introduces an important element of local variation into the picture.


Table 5.5 Recent changes made by Leicester firms experiencing decline


POLICY IMPLICATIONS The analysis of growth factors across the three localities has indicated elements of convergence of business strategy and market positioning in textiles and clothing firms in three EU countries towards an up-market, ‘high-quality’ model of production. However, the true nature of that convergence needs to be brought into sharper focus. In Como, the strategies pursued by firms individually and collectively have reinforced a high-quality profile and enhanced international competitiveness. In Lyon, many firms never abandoned their high-quality, upmarket profile whilst among the others, recent moves in that direction represent a return to tradition. That tradition makes credible a relaunch of the high-quality approach historically associated with Lyon’s status as a centre of silk production. However, Leicester sends confused signals to the outside world. The area appears to polarise into two models of development. One is the ‘traditional’ path of ‘value-for-money’ production, a strategy that risks slipping ever further from middle- to down-market goods. Here UK producers are becoming increasingly uncompetitive in relation to developing countries in terms of labour costs. The other model is to embrace a ‘high-quality’ strategy. The latter has paid off for some firms, yet to encourage a widespread switch from price competition to competition on non-price factors at the level of the district is a major task that not all interested parties can agree on readily. That some of the best-performing firms are converging towards an up-market, highquality strategy is therefore no guarantee that the district will come to be associated with this strategy. A number of factors militate against this outcome. First, local producers may not perceive the necessity of changing course but hope instead for benefits from improving macroeconomic conditions. Whilst this may produce short-term comfort, it will not resolve structural shortfalls in competitiveness. Second, small UK firms are often hampered by a lack of capital, little training in management skills and a total unfamiliarity with export markets. Third, they are strongly influenced by national demand characteristics, particularly the emphasis placed by UK consumers on price. Fourth, the inertia of industrial tradition and established practices limits innovation. This is


particularly clear as regards changes to the existing interfirm division of labour (such as a move to subcontracting by specialism). Collective momentum or clear leadership rather than individual initiative would be required to effect change, but currently no single group or interest is championing this type of initiative. This raises the question of how an ineffective industrial community might restructure and innovate which, in turn, leads to considerations of broader industrial policy. At overall EU policy-making level, politicians and commissioners alike often feel pressures to make concessions that will tend to abandon or discourage low-technology sectors in favour of highertechnology sectors with better perceived future prospects. So it would seem unwise to think that indigenous textiles communities can expect overtly generous assistance from Brussels. The trend has been towards a policy of restructuring, notably through the RETEX scheme, set up in December 1991, and modelled on policies already implemented in steel, coal and shipbuilding, with a budget of 500 million ecus over a five-year period (Euro-info, 1991; Target, 1992). The aim, however, is not to prop up an ailing industry, but to target small viable firms in order to improve managerial skills and vocational training, increase interfirm co-operation, in research, marketing, etc., and reduce pollution (Euroinfo, 1992). Significantly, the scheme aims to diversify the economic base of regions heavily dependent on the textiles industry in order to decrease their level of dependence. In 1992, Leicester appealed for EU funding under RETEX, which is a further indication of the precarious position of the textiles-clothing community there, but also a positive sign of action on the part of the city’s local government institutions. As it stands, however, the RETEX scheme is ambiguous and its outcome uncertain. On the one hand, it appears to offer little hope to the weaker European textiles industries, pushing them towards closure. On the other hand, it seems to offer communities such as Leicester a lifeline and a chance to change strategy and innovate. Yet to what extent the slide can be halted is unclear. Policies for providing support and stimulus to growth—as opposed to disengagement—have clearly to be modified to local circumstances. This points to the important role to be played by local and regional agencies, both in assessing the failings of the local industry and in highlighting appropriate measures to overcome them by continuing collaboration with and among local firms. Indeed, a recent comprehensive review (Storey, 1994) affirms the importance of public policy towards the small-firm sector and argues for greater coherence and focus in regional, national and EClevel policy-making. The weakness of the English regions in this respect is very much in evidence when seen against the experience of much of continental Europe. Eastern England does not have regional institutional structures comparable to those in Rhône-


Alpes or Lombardy. As integration within the EU develops, the regional tier of government will arguably become more significant. Yet recent Conservative initiatives to reform local government in the UK appear to make no provision for this development. This undoubtedly restricts the scope for regional industrial policy in Britain. But other local/regional agencies can also play a part. Among these are educational institutions committed to the training of highly skilled textiles and clothing managers and would-be entrepreneurs. The recent initiative by Marks & Spencer and other leading textiles and clothing manufacturers to sponsor degree courses in Textiles Studies at the University of Leeds, UMIST and Leicester’s new De Monfort University should be welcomed. The need also exists for more effective Chambers of Commerce and more dynamic trade associations promoting debates and encouraging new initiatives among local entrepreneurs. Exploration of mutual self-interest and collaboration among the entrepreneurs themselves and between them and local/regional agencies seems to us an essential condition for achieving success at the level of the district rather than individual firms. In brief, there is a need to recognise and enable leadership potential from whatever source it emerges. CONCLUSIONS The extent of genuine industrial convergence is problematic to assess. Elements of cross-national convergence exist in terms of individual firms’ strategies. Faster growing firms are producing more up-market products for a greater number of customers, an outcome requiring higher levels of design skills, of investment and marketing effort. But fewer signs of convergence can be discerned across the three localities. Similarities in development paths should not disguise dissimilar starting points. The baseline from which we judge whether different regional groups of firms are moving up-market is different in each case. The baseline for Leicester is low compared to the more prestigious baselines conferred on Lyon and Como by their history of silk production. In consequence, each of the three areas may show signs of moving up-market, yet if each steps to a higher rung of the ladder their respective positions will be maintained or even be separated further. In the aggregate, wealth and employment creation will continue to be asymmetrically distributed in favour of those localities where firms pursue high growth strategies effectively. To return to the two conceptions of European convergence outlined in the introduction, the first—which suggests a meeting of equals at the same point— implies a reassuring outcome. However, the second conception stresses the process of following the same trajectories in space, but at discrete time intervals. This conception evokes the image of a race—which indeed market competition usually is. But like all races, it has winners and losers. This is a less


comfortable outlook, particularly for areas such as Leicester which appear to lag behind—being on the right track need not equate to completing the course. Finally, it is worth asking whether any European producer localities are implementing a strategy of differentiation on quality and/or fashion sufficiently quickly in comparison to non-European producers, many of whom are already hurrying along the same road. Hong Kong, for example, is now a high-quality, comparatively low-cost locality which recognises the need to distance itself from ultra-low-cost sources in Asia. Without significant changes in strategy, initiated individually or collectively by local producers and such support agencies as exist, the long-run survival of some current textiles and clothing centres is in doubt. NOTES 1 We surveyed small firms in three, ‘traditional’, textiles-clothing-producing regions, namely the areas around Como, Leicester and Lyon. All firms in the survey conformed to the EU definition of small- and medium-sized enterprises, with none having more than 500 employees and over 90 per cent having fewer than 200. Given the geographical spread, the major research tool was a postal questionnaire, though this was combined with a number of ‘follow-up’ interviews, both in the company and by telephone. The questionnaire was circulated to 1,200 small firms (400 per region) and generated 151 usable replies. The socioeconomic characteristics of each area were also explored, through study of secondary sources and contacts with local industrial associations. We would like to thank the European Commission for the research grant that financed the collection of the new data in this chapter. The views expressed are those of the authors. 2 European Community (1993) European Economy. Reports and Studies. The Economic and Financial Situation in Italy, Luxembourg: Office for Official Publications of the EC. Statistics for 1991 and 1992 were only available for the textiles, clothing and footwear sector as a whole, nonetheless they suggest a similar trend as in 1990. 3 For fuller treatment of the industrial development of each region see Bull et al. (1993:90–119). Interested readers may also wish to consult Biffignandi (1987), Caizzi (1952) or King (1985) for Como; Bonnet (1988), Cayez (1980) or Labasse and Laferrère (1966) for Lyon; Mounfield (1972), Newman (1968) or Wells (1972) for Leicester. 4 Recent interest in ‘industrial districts’ has resulted in a vast literature on the subject. Useful overviews are provided by Goodman et al. (1989), Lorenzoni and Ornati (1988), Piore and Sabel (1984) and Gobbo (1990). For a more detailed discussion on contrasts in industrial structure between Como, Leicester and Lyon, see Bull et al. (1991, 1993).

REFERENCES Biffignandi, S. (1987) Il sistema industriale della Lombardia, Bologna: Il Mulino.


Bonnet, J. (1988) ‘Lyon et son agglomeration’, Paris: La Documentation française, Notes et Etudes Documentaires, No. 4836. Brusco, S. (1986) ‘Small Firms and Industrial Districts: The Experience of Italy’, in D. Keeble, and E. Wever (eds), New Firms and Regional Development in Europe, London: Croom Helm. Bull, A., Pitt, M. and Szarka, J. (1991) ‘Small Firms and Industrial Districts: Structural Explanations of Small Firm Viability in Three Countries’, Entrepreneurship and Regional Development, 3:83–99. Bull, A., Pitt, M. and Szarka, J. (1993) Entrepreneurial Textile Communities. A Comparative Study of Small Textile and Clothing Firms, London: Chapman & Hall. Caizzi, B. (1952) Vicende storiche della tessitura serica comasca, Como: Noseda. Cayez, P. (1980) Crises et croissance de l’industrie lyonnaise, Paris: Editions du CNRS. Cecchini, P. et al. (1988) 1992: The European Challenge. The Benefits of a Single Market, Aldershot: Wildwood House. Central Statistical Office (1993) Annual Abstracts of Statistics, London: HMSO. Cressey, P. and Jones, B. (1991) ‘A New Convergence?’ Work, Employment and Society, 5(4), December: 493–5. Euro-info (1991) ‘Textile Industry: An Overall Strategy to Increase Competitiveness’, Euroinfo, 44, 4–5. Euro-info (1992) ‘RETEX: Aids to Small and Medium-Sized Enterprises’, Euroinfo, 47, 7. European Community (1993) European Economy. Reports and Studies. The Economic and Financial Situation in Italy, Luxembourg: Office for Official Publications of the EC. Eurostat (1992) Europe in Figures, Luxembourg: Office for Official Publications of the EC. Eurostat (1993) Basic Statistics of the Community, Luxembourg: Office for Official Publications of the EC. Faini, R. and Heimler, A. (1991) ‘The Quality and Production of Textiles and Clothing and the Completion of the Internal Market’, in L.A. Winters andA. J. Venebles (eds), European Integration: Trade and Industry, Cambridge: Cam-bridge University Press, pp. 54–78. GATT (1980, 1985) International Trade, Geneva: GATT. Gobbo, F. (1990) Distretti e sistemi produttivi alla soglia degli anni ‘90, Milan: Angeli. Goodman, E., Bamford, J. and Saynor, P. (eds) (1989) Small Firms and Industrial Districts in Italy, London: Routledge. INSEE (1988) ‘Textile-habillement: Rhône-Alpes dans le peloton de tête des regions’, Bref Rhône-Alpes, 1018, 21 September: 3. Jacomet, D. (1992) Les textiles, Paris: Cyclope. King, R. (1985) The Industrial Geography of Italy, London: Croom Helm. Labasse, J. and Laferrère, M. (1966) La region lyonnaise, Paris: PUF. Lane, C. (1991) ‘Industrial Reorganisation in Europe: Patterns of Convergence and Divergence in Germany, France and Britain’, Work, Employment and Society, 5(4), December: 515–39. Lorenzoni, G. and Ornati, D. (1988) ‘Constellations of Firms and New Ventures’, Journal of Business Venturing, 3:41–57. Mounfield, P.R. (1972) ‘The Foundations of the Modern Industrial Pattern’, in N. Pye (ed.), Leicester and its Region, Leicester: Leicester University Press, Chapter 16. Mounfield, P.R. et al. (1972) The Modern Industrial Scene: Changing Patterns of Manufacturing in the Post-War Period’, in N. Pye (ed.), Leicester and its Region, Leicester: Leicester University Press, Chapter 17.


Newman, B. (1968) Portrait of the Shires, London: Robert Hale. Panorama of EC Industry (1991, 1993) Luxembourg: Office for Official Publications of the EC. Piore, M. and Sabel, C. (1984) The Second Industrial Divide: Possibilities for Prosperity, New York: Basic Books. Shepherd, G. (1983) ‘Textiles: New Ways of Surviving in an Old Industry’, in G. Shepherd, F. Duchêne and C. Saunders (eds), Europe’s Industries. Public and Private Strategies for Change, London: Frances Pinter. Stopford, J.M. and Baden-Fuller, C. (1990) ‘Flexible Strategies—The Key to Success in Knitwear’, Long Range Planning, 23(6): 56–62. Storey, D.J. (1994) Understanding the Small Business Sector, London: Routledge. Target 1992 (1992) ‘RETEX: Help for Textile and Clothing SMEs’, Target 1992, February: 4. Toyne, B. et al. (1984) The Global Textile Industry, London: George Allen & Unwin. Tuloup, A. (1987) Strategies performantes dans les industries de la mode, Paris: Editions de l’ADIDO. Unioncamere-Istituto Tagliacarne-Censis (1991) Rapporto 1990 sull’impresa, il sistema pubblico e le economie locali. L’impresa italiana e il mercato unico europeo, Milan: Angeli. Weisz, R. and Anselme, M. (1981) ‘L’Industrie de l’habillement en region ProvenceAlpesCôtes d’Azur. Strategies d’entreprises et organisation de la production’, Centre d’Etudes, de recherches et de formation institutionnelles du Sud-Est. Wells, F.A. (1972) The British Hosiery and Knitwear Industry (2nd edn), Newton Abbot: David & Charles. Zeitlin, J. and Totterdill, P. (1989) ‘Markets, Technology and Local Intervention: The Case of Clothing’, in P. Hirst and J. Zeitlin (eds), Reversing Industrial Decline? Industrial Structure and Policy in Britain and her Competitors, Oxford: Berg, pp. 155–190.

6 NEW PRODUCTION CONCEPTS IN GERMANY AND ITALY Horst Kern and Angelo Pichierri

The Italian translation of a book by Kern and Schumann published in Germany seven years earlier, was a good opportunity for an evaluation of the transformation of industrial work in that country. It also allowed an appraisal of the factors affecting this transformation, and a tentative comparison of related trends and factors at work in Italy. The following commentary1 refers, therefore, mainly to the state of the art at the end of the 1980s; just before the reunification of Germany. The first section presents Kern and Schumann’s main thesis concerning the ‘new production concepts’. That is, the integration of functions and reprofessionalisation of work emerging in the German car, chemical and machine-tool industries. We also note here, further research results showing similar arrangements are increasingly spreading in the large electrotechnical industry, and in the private, tertiary sector. The second section records, on the basis of large, if unsystematic, evidence, the new production concepts in the recent evolution of Italian industrial firms. Important differences between Italy and Germany are to be seen, however, in the importance of ‘external flexibility’—through subcontracting and decentralisation—and in regional differentiation—integration of functions. For example, as is the rule in the dynamic small firms of the industrial districts of the Third Italy’. In the third section, the suggestion is made that at least part of the differences emerging from the comparison may be the result of different research traditions and methods of German and Italian social scientists. The final section is devoted to the comparison of factors producing rather different ‘industrial orders’ in the two countries: industrial relations, professional training, regionalisation of production. The existence of important similarities—such as the diffusion of ‘new production concepts’ - suggests, however, that functional alternatives are at work, and a convergence in decisive features of German and Italian industrial systems can be observed at national level and, even more clearly, at the regional one.

144 HORST KERN AND ANGELO PICHIERRI

GERMAN INDUSTRY IN THE 1980s: THE EMERGENCE AND DIFFUSION OF NEW PRODUCTION CONCEPTS The increase in productivity on one hand and the demotion and lowering of the value of skill on the other, seem to belong therefore most definitely to the past. The concept of liberated work was at first conceivable only as an anticapitalist policy. Today it finds itself brought to centre-stage, by capitalism itself, as a concept of efficiency. With modern rationalisation, conducted according to the model of the new concept of production, the fragmentation and the phasing-out of industrial labour are no longer advocated but, instead, rejected. Nevertheless, as emphasised by the authors, political intervention remains a necessity, although with changed perspectives and targets to attack. Do these outlined points hold much water when compared with past developments? What role does the new concept of production really play in Federal Germany’s industry? Were the subsequent changes as expected or not? From the more contemporary point of view the reply is positive, but with some qualification. The authors were clearly correct on many points concerning the three particular sectors dealt with in the The End of the Division of Labour, the industries central to the Federal German economy, i.e. the car industry, chemicals and machine tools. In 1988/9, for their part, the Soziologisches Forschunginstitüt in Göttingen conducted control surveys in these three sectors on a broader basis and with more representative samples (Schumann et al., 1989). The most important results are as follows: (a) However multifarious industrial change in the Federal Republic of Germany appears to be, rationalisation has a common thread running through the three sectors quoted, in the fact that the utilisation of the labour force seems to be free from the fetters of the Taylor-Fordist dogmas. In no case have the researchers discovered an increase in the division of labour within a company; as a rule they have discovered the opposite. The attempt to achieve greater efficiency no longer entails, as it did formerly, a greater subdivision of operations and a more rigid definition of activities. Without exception all experiments seem to favour the integration of functions and the allocation of complex tasks, with a more decisive revision of the concept of labour which has presided over decades. (b) Unlike the 1983/4 situation, when the book was written, today the new categories of worker referred to—skilled production workers constitute a numerically important and quantitatively noticeable segment of industrial workforces. In 1987 in the car industry 10 per cent of the 209,000 production workers were qualified, of the 118,000 in maintenance, quality control, and procurement most were qualified, with 108,000 white-collar

NEW PRODUCTION CONCEPTS 145

workers. The results of the latest research, summarised in Trendreport, 10 per cent of car manufacturing workers, but 32 per cent of chemical industry workers, and 92 per cent of machine-tool construction workers belonged to the category of qualified production workers. However, the new concept of production has yet to affect the general structure of labour. The new research shows that it is only after generalised automation, in other words when the productive process is automated at the centre and on the peripheries, that simple manual labour disappears completely and labour qualified in production comes to the fore. (c) As regards ‘system regulators’—supervisors and regulators of automated production systems, including maintenance and quality-control tasks— although in the minority, these workers acquire a higher bargaining potential within a company, thanks to their strategic position and to the process of modernisation. By contrast, workers concentrated in the lowtech sectors are ostracised completely from these advantages. The changes conclude therefore with a new type of segmentation between the ‘system regulators’, the victorious party heading for expansion,2 and the residual group of general workers, heading for contraction, but destined to survive in the long run. There are also other groups which show no dramatic changes from either the quantitative or qualitative point of view. The advent of ‘system regulators’ is a significant accompaniment to the industrial change and is increasingly reflected in workforce composition. It is, however, a gradual one, not at all sudden or generalised. As the book emphasised, for some time this process has been accompanied by divisions. However, the results of the most recent research reveal that these divisions are more incisive and persistent than was previously thought. The call for policy regulation of industrial modernisation which concludes the book is therefore all the more urgent. All in all, the results and interpretations of The End of the Division of Labour?, greeted in Germany at the time of its publication both with much curiosity and scepticism, have proved themselves to be durable enough. This holds true at least for the three sectors to which this analysis essentially refers. But what is the situation as regards the other sectors of the German economy? What forms the crux of the answer to this question is the electrotechnical industry which, as far as sales and number of employees go, is equal to, or bigger than, the car, chemicals and machine-tools industries (160 billion trade marks, one million employees), and also the tertiary sector, in particular banks, insurance and trade/ commerce, which boast an impressive number of employees (700,000 in credit institutions and insurance, 2,500,000 in trade/commerce). In the last few years SOFI has also investigated closely the developments in these sectors, obtaining results which agree completely with those presented in The End of the Division of


Labour?, demonstrating clearly how complex and diverse the modernisation process of the Federal German economy is. Keeping to essentials, the following can be noted. Electrotechnical industry In the past, German electrical engineering has been a stronghold of Taylorism; with the exception of that third of the sector in which complex investment goods are produced on electrotechnical or electronic bases, because the tradition here is rather one of non-Taylorist rationalisation. In the meantime, a change of scene, not however generalised, has presented itself in the massproduction centres of the electrotechnical industry. So far this change is taking place in the anti-Taylorist sense. According to research by SOFI (Voskamp et al., 1989), this is primarily in segments of the productive process such as manufacturing and the assembly of groups and components; while another important segment, that of final assembly, remains completely excluded. This latter segment is still being rationalised according to the Taylorist model. In the former segments the dynamics of change revealed certainly correspond to those described in The End of the Division of Labour? Up until now a concrete revision of the Taylorist forms of labour has taken place only where the technology of the productive process has been radically transformed, that is to say into a particularly extensive automation. Where instead this last condition is absent or weak, the situation is more uncertain. It is a question of a relaxation of the traditional approach as opposed to radically exceeding it. The picture painted by the electrotechnical industry is not therefore univocal. This sector too is also heading for a new concept of production, but amidst more complicated conditions than were described for the other sectors in The End of the Division of Labour? The tertiary, services, sector In the meantime the existence of a turning-point in the rationalisation of the tertiary sector has come to the fore. It is a question of asking oneself according to which concept is this rationalisation being conducted today, and also whether it is comparable with that which is coming ever more clearly to the forefront in manufacturing industry. Differences relating to materials, the market and history might confer a completely different form on the rationalisation of the tertiary sector. According to the analyses of SOFI (Baethge and Oberbeck, 1986) we are facing a ‘systematics rationalis-ation’ in the offices and administrations. This is characterised by the fact that, by means of the processing and communication of data technology based on microelectronics, company and inter-company information networks and the communication of data, the


organisation of business processes and the control of diverse functions, are all undergoing simultaneous change in the tertiary sector. Research clearly shows that the thesis of replacement of white-collar workers which foresees within the technical systems an accelerated concentration of intelligent functions, along with a general tendency correlating to the qualitative phasing-out of such activities—is too general and schematic. Naturally, the intelligence of the technical systems is growing. This new technical potential, nevertheless, can be used in many different ways. This type of utilisation also derives from employers’ diverse definitions of functions and considerable differences as regards qualification, stress and career possibilities. It is only in some sectors of the tertiary sector that the application of the new communication and information technology clearly follow the model of replacing human labour with technology. The administrative/ executive functions are being imposed on more and more by a systematic technicalisation; here we are talking about a real replacement along with a virtual elimination of primarily simple white-collar activities. Opposed to these developments, however, are those of the other fractions of tertiary labour. That is, amongst the marketing employees who are closer to the client but also, although to a lesser extent, among supervisory employees. In this latter group a more clean-cut accentuation of professional skill and social communication can be observed. This is doubtless the result of classic office activities being dealt with by machines, of the development of skilled activities resulting from changes to commercial policies—new offers of services, more assistance to clients, etc.—and also of the organisational reunification of functions that were formerly carried out separately. In this area, therefore, white-collar labour content is growing in complexity, and there is a global utilisation of the work capacities of white-collar employees. THE ITALIAN SITUATION Our knowledge and hypotheses about the current stage of evolution of labour in Italian industry are based on plentiful but unsystematic information and observations. These include a certain number of studies which, while being sufficiently rigorous in themselves, assume the characteristics of a case study rather than a survey of a group of businesses or an industry. The industrial terrain on which an outline check might be tested does not appear to have much uniformity. In the picture painted for us by Kern and Schumann, the new concept of production is to be found in central industries and in very large firms. The partial exception is machine-tool firms, whose location does not seem to play a determining role; apart from the tendency of company management to initiate bolder experiments in relatively quiet, peripheral plants. In Italy, however, innovative tendencies in the qualification


and managing of the workforce, in some ways comparable to a new concept of production, manifest themselves in very diverse situations: within the industrial sector, in the size of a firm and in its location. As regards distribution within the industrial sector, one noticeable specificity of the Italian case is that innovative forms of organisation of labour and growth in worker skills, have been particularly diffused in firms subject to state participation, and in sectors involved in the iron and steel industry, activities subject to a recent and accelerated decline. The association of new concepts of production with central industrial sectors is therefore problematic. Similarly, it is only in parts of Italy that the German association between a new concept of production and large firms emerges as an implicit or explicit characteristic. Important, but not ‘central’, systems of small businesses exist—in advanced sectors such as industrial automation or in ‘traditional’ sectors such as mechanics and textiles. In the latter, innovative products destined for demanding and changeable segments of the market originate from an organisation of production characterised by polyvalence, higher qualification, frequent interaction between producer and client and fluid business structures. The fact that some of these business systems are specific to certain regions—nowadays there is a vast amount of literature available about the industrial regions with a flexible specialisation in the ‘third Italy’—suggests the hypothesis of a possible plurality of ‘regional goods’ to the new concept of production, and of a possible territorial diversification of the ‘industrial order’ which we will talk about at the end of this chapter. Judging from the results of some recent research this diversification and pluralism constitutes a distinct characteristic of the Italian ‘industrial readjustment’ (Regini and Sabel, 1989; Locke, 1989). For Italian industry, the 1970s can be described as an incubation period for the radical transformations which came to light in the 1980s. In the first place, these transformations affect the structure of the industrial system, i.e. industrial organisation. Some of these transformations—changes in sector composition and in the regional hierarchy, growth of relations between white- and bluecollar workers, the diffusion of microelectronics—are taking place in both Italy and Germany. Other changes—growth of autonomous work roles and a reduction in the average size of a company - are instead much more typically Italian. Corresponding to these radical developments are other changes, in the qualification of the workforce and in the nature of its management, of the sort highlighted in the research that we are presenting. These latter changes—the existence of which observers are in agreement—turn out to be irregular, difficult to reconcile to one uniform model and not univocally correlated to the transformations of the macrostructures and inter-company relations. As regards this last point, it has in fact been noted (Regini and Sabel, 1989) that more


flexible business structures can be accompanied by a more rigid use of the workforce, and that external flexibility can be used as a substitute for internal flexibility. The fact that the two types of flexibility do not necessarily accompany one another suggests an explanation which differentiates between overcoming Taylorism, by internal flexibility, and overcoming Fordism, by external flexibility (Bonazzi, 1989). The apparent regression in internal flexibility particularly affects businesses where the changeover to less rigid forms of labour organisation, to a somehow ‘enriched’ and ‘integrated’ labour, has been particularly visible at the end of the 1960s and all through the 1970s. This is the case in Olivetti, where today the automatically manufactured line of personal computers appears to be more rigid than the former ‘unity of integrated assembly’ was. Cases of this type, however, are becoming part of an industrial scenario in which instances of ‘restricted’ labour, consisting of separate, repetitive functions, are becoming less common. Where these are applicable, as in the classic conveyor-belt assembly system of the car industry, while waiting for an as yet unspecified automation to arrive, labour carried out on moving components is being superseded by labour carried out on static components; resulting, at least, in an ergonomic improvement. A use of the workforce, until now clearly post-Taylorist and very similar to that pointed out in Kern and Schumann’s book, primarily affects companies such as some in the iron and steel sectors. These have just undergone profound restructuring within which the changeover to a new concept of production seems to be an essential element of the current recovery of productivity. The more or less pervasive presence of the new technology based on microelectronics characterises the situations in which the worker is depicted as a ‘process operator’. Such situations have also been studied in Italy, in the chemicals industry, the car industry and generally in the sections of iron manufacture which use machine tools. This research has revealed a tendency which until now has manifested itself as the integration of functions, typically between maintenance and operation. This is present in chemical plants, in automatic, partly robotised assembly lines and in the flexible manufacturing systems present in both engineering and chemicals (Butera, 1987). Observers close to trade unions emphasise the link between this tendency and the requirement of ‘saturation’ (or continuous use) of working time. This saturation diminishes with the introduction of new technology. The integration of functions is particularly evident in the numerically restricted, but qualitatively and symbolically important, case of the automobile industry. In the already noteworthy case of FIAT in Termoli, the complete integration of functions requested by the firm is not achieved, because of the limited schooling of ‘recycled’ operators, and their explicit or implicit desire for a higher grading—which the firm is not prepared to grant. The quest for integration of functions at plant level is very clear in the organisational model


of the ‘integrated factory’ that the FIAT management has introduced in its purest form in the brand new works of Melfi. Such a model is a result of the relatively recent awareness of the fact that flexibility and quality problems can be better settled with the intelligent use of a skilled workforce than with the exclusive use of automated technology. The cases cited here have generally been studied within very large firms. However, an important characteristic of Italian industry is the elements of the new concept of production which are even, some say particularly, present in small ‘flexible specialisation’ businesses. Research carried out on small Modenese manufacturers has clarified the centrality of worker qualifications in productive capacity and company competitiveness (Rieser, 1986). In such dynamic firms, polyvalence and advanced integration of functions are typically the result of the combination of small size and technological innovation. For example, when a numerically controlled machine is introduced programming cannot be an exclusive function; and one or more workers have to learn it. Tasks normally performed by qualified workers of these small businesses require long periods of training. This training actually takes place on company premises, rendering the company a seat of true apprenticeship, even if this is often underpaid and exploited (Rieser, 1986). Also in the case of non-manual workers in Italian industry, much information exists but it is hardly systematic nor amenable to diachronic comparisons. Nonetheless, one can speak confidently of the extensive (re) qualification process of technical and white-collar labour which is under way. The most significant indicator of this process is probably the enormous investments to which large firms, at least, commit themselves, and from which workers and technicians alike have benefited in a permanent way. An increase in training programmes, in general concerning short and frequent courses, is one of the clearest indicators of professional growth, whose characteristics and distribution (Rieser, 1988) is controlled for the most part by company management. From an organisational point of view, the professional growth here is also correlated to the integration of functions, typically between design and manufacturing or between marketing and manufacturing. The once rigid boundaries of organisational unities are becoming much less so, with the result that the new white-collar ‘professions’ are less linked to the single function and the single firm (Butera, 1987). COMPARING RESEARCH APPROACHES International comparisons are a complex matter. One can never be sure that the differences that such comparisons reveal are real, rather than based on different national research traditions. If, as in our case, it is a question of sociological research into industrial rearrangements in the Federal Republic of


Germany and in Italy, one cannot exclude the risk of considering as real, differences which only exist on the basis of a particular scientific point of view. In fact, the social sciences of the two countries have placed different emphases on the subject and used different methods to deal with it. The organisational model used by German industrial sociology, up until when the studies mentioned in the first part of this introduction were carried out, is as follows: analysis of changes in industrial work in central sectors of big business, administered by relatively unchanging teams of researchers using wide surveys conducted over a long period of time. This organisational model is the foundation of its strength, which lies particularly in a solid knowledge of the basic trends in the changing work structures in the principal sectors of big business. On the other hand, certain weaknesses shown by sociological industrial research in Germany have been related to this same method. One such weakness, for example, lies in having long neglected the sociology of the organisation of the industrial company in favour of the sociology of the work of the industrial production process. Perhaps another weakness lies in the fact that developments which contradict the basic trends are rarely considered important; too little attention has been dedicated to the possible plurality of industrial developments, to regional, sectoral and dimensional differences. Now these deficiencies in German research concern the precise fields in which Italian economic and industrial sociology has been particularly active, fields which today constitute strong points. It is therefore possible that the diversity of results arise from the different ways in which the research was conducted. Up to the present the comparison has brought certain differences to light: • the particular importance of small businesses in Italian industrial restructuring compared to the major importance of large businesses in Germany; • the plurality of regional channels in Italy compared to those in Germany which are, in the main, uniform; • the complex transformations involving the whole social business organisation in Italy, compared to the changes in Germany which have mainly centred around work and the production process. The particular significance with which the differences are emerging in recent literature is also dependent de facto on the varying theoretical viewpoints from which the researchers of the two countries look at the processes of industrial rationalisation. An attempt to obtain a balanced impression of the differences which really exist is influenced by the fact that the available paradigms are different. However, even having put the research results of the two countries into perspective, it is important to remember that the cited differences are not only caused by varying points of view, but that factual differences also exist.


COMPARING INDUSTRIAL ORDERS Let us look at the social surroundings to which the adjustment processes of Italian and West German industries are exposed. It seems, from a sociological point of view, that there are three environmental factors above all which give the above-mentioned industrial restructuring its emergent characteristics: 1 the different systems of industrial relations, 2 the different vocational training institutions, and, finally 3 the different ‘regionalisation’ of industrial production. Different industrial relations In Germany, the traditional ideology of the business as an industrial community and as a business family is deeply rooted in history and the national character. The economic revival and prosperity of the postwar period, which temporarily played down the distribution problems, together with legislative and legal aid, led to the establishment of a system of industrial relations within which each region attempted to satisfy its own specific interests by combining constraint with cooperation. With this background, one can observe fairly frequently in Germany a style of integrative rule on the part of the management, which corresponds to a preference for negotiation rather than confrontation on the part of the workers. This capacity, which is encouraged by employers as well as workers for putting into practice the idea of do ut des, even in areas which are highly sensitive for both parties, facilitates the spread of the new concept of production. The management is aware that it is better not to risk conflict with an organised workforce if it wants to gain approval for its restructuring plans. Quite simply, compromise and cooperation seem to be the most promising ways to do this. For their part, Betriebsräte (works councils) and trade unions, whatever their political orientation, will tolerate company policy during the adjustment period, as long as the employers are able and willing to meet them on the level of job guarantees and to assure the workers of a share in the advantages of the rationalisation. It is this interpretation of industrial reality which prompts worker representatives to adopt a constantly cooperative stance, whatever the innovations introduced by the management. The organisational strength of German trade unions has not been seriously threatened by changes in the 1980s. The unionisation rate remains around 40 per cent. It is 35 per cent for the main federation the DGB; 80 per cent of the workers take part in the elections of the Betriebsräte. In industry the share of representatives who are members of DGB trade unions has risen to 80 per cent. In the Italian system, by contrast, industrial relations that were characterised by the presence of forceful and conflictual unions and company representatives


have given way to negotiation mechanisms, both formal and informal, in which union agreement is becoming more and more unimportant. As is also the case in negotiations regarding technical innovations and their consequences. All these changes result from the deep crisis and the changes experienced in industrial relations from the middle of the 1970s which were marked by splits within and the progressive weakening of the unions. An indicator of the crisis is the fact that in many large factories, including FIAT, elections for workers’ representatives did not take place over a period of several years. This meant a complete delegitimation of the factory council members who were still, formally, in office. In general, it can be argued that the changes towards a new concept of production came about without the intervention of Italian trade unions. They were not in a position to affect the introduction in any significant way, or to negotiate over the effects. This is opportune in the two opposing situations mentioned earlier: at FIAT, where in the 1980s the trade union was rendered powerless, and in the Emilian and Tuscan industrial districts where the union— entitled and empowered to intervene in negotiations at a regional level—was not, however, in a position to influence the organisation of work at a company level. In the past, the more important cases of active union participation in technical and organisational changes have taken place in state-owned enterprises and it is possible to hypothesise that the poor performance and crisis of a few of the most important firms of this group have contributed to the delegitimation of joint management. In apparent contrast to this statement, it is possible to cite a number of cases of large companies in which the active participation of union representatives in the restructuring/changes has pushed a long way ahead; for example in the iron and steel industry (Falck di Sesto, S.Giovanni), the chemical industry (Montedison di Ferrara), the printing industry (ILTE of Turin) and elsewhere. In many, though not all, of these cases it was a ‘modern’ and ‘democratic’ management which took the initiative to involve a weak trade union, an involvement which, to quote one interviewed unionist, was an optional rather than a functional necessity. The general picture that emerges is on the whole quite diversified, with a clear tendency to a union policy which deals with each firm on an individual level. Contributing to this diversity of company policy and trade union responses in terms of business strategy, is on the one hand the plurality of managerial styles (Baglioni, 1989) and the uncertainty of man agement (Streeck, 1986); this is at least as pronounced in Italy as in Germany. On the other hand there is the weakness, more evident in Italy, of a trade union incapable of orientating and controlling its representatives within the firms. In any case, it seems to be quite difficult to establish correlations between the


degree of technical and organisational modernity of a company and the modernity of its industrial relations. Different vocational training institutions In Germany, many industrial companies have developed from artisan origins. This meant that they were originally able to satisfy their personnel needs by recourse to the artisan’s traditional qualifications. But before long, around 1910, it was the companies themselves who began to take on the task of professionally training their employees, and as such the training of industrial workforces assumed the form of the apprenticeship of a modern occupation. Established by the trade union and controlled by the State, vocational training took shape according to a social model which became the point of reference for most would-be workers. Of course, job descriptions have changed somewhat with the passage of time and there have been clear and repeated attempts on the management’s part to free itself from the burden of qualified vocational training, especially when the demand for skilled work started to decline as a result of large steps taken towards mass production. The fact remains, however, that these developments have not resulted in the erosion of vocational training. On the contrary, many new and useful jobs have been developed and firmly established in place of the obsolete ones. As well as this, it is particularly important today to note, in the more dynamic industries, the development and establishment of new job profiles which aim to provide the qualifications needed in the new production organisation—specialised chemical workers, industrial mechanics, system regulators. These measures have in some ways made the previous available skills supports for the change in the concept of production. In terms of personnel, a deep reserve of highly qualified and multi-purpose workers today represents a basic resource in the context of extensive industrial restructuring. In addition to being generally inefficient, the vocational training system in Italy is deeply fragmented and diverse. Therefore it would not appear that, in the case of industrial workers, one can talk about an ‘over-supply’ of vocationally qualified workers. The characteristics of the supply have considerable regional variations, reinforcing the pluralism mentioned earlier. Having said all of this, one does not get the impression that the lack of highly qualified work has up to now been such as to impede the spread of the new concepts of production, or seriously to prejudice even the international competitiveness of those companies adopting them. It is therefore probable that alternative mechanisms, functionally equivalent to the German vocational training system, are working to produce the skills which are a prerequisite of diversified quality production (Streeck and Sorge, 1986) and flexible specialisation (Sabel and Zeitlin, 1982).


The massive investments in training that the large companies are putting into effect within themselves certainly constitute one of these mechanisms. Similarly, the large companies have opened, or re-opened, their channels of communication, control and recruitment with secondary schools, like the industrial technical institutes, in which they are most interested, and influence their activities and syllabuses. The lack and unreliability of a supply of labour with specific vocational training is, on the Italian jobs market, accompanied by the availability of personnel who attended good secondary schools. More and more frequently, companies are taking on high-school graduates to fill unskilled positions, and extremely specialised tasks are carried out by those who have only the most general of academic backgrounds. In the industrial areas of the Third Italy’, recruitment of highly qualified workers is at least partially guaranteed by a system of vocational training which is found to be less deficient than elsewhere, and also by ‘community’ communication networks which allow a relatively close and precise relationship between the training institutes and the entrepreneurs who use their end result. Differences in regional diversity Regional differences, which have already been mentioned in terms of industrial relations and professional training, are definitely characteristic of Italian industry. The nature of productive activity seems to be profoundly shaped by its territorial location. From an analytical point of view, the prominent territorial component of the industrial structure has been gradually recognised in studies about the ‘various Italies’ and their complex interrelations. From a factual point of view, the territorial diversity has been further complicated by the presence of traditional industrial areas, in a more or less advanced state of decline, next to areas of recent and widespread industrialisation. As has been said before, aspects of the new production concepts show themselves thus, in industrial/territorial contexts which differ significantly from each other. German industry, on the other hand, has characteristics which allow an interpretation at variance with that of Italy. Not that regional specificities have been lacking from German industrial development. Different supplies of natural resources, varying industrial policies in regions which used to be autonomous, different appraisals of the value of property and of profit by the two leading religious faiths: all this has resulted in differences which have an effect even today. However, these days one cannot talk about economic and political particularism. The course of German industrialisation post-1870 has certainly not erased regional differences but it has considerably minimised them. The distinctive characteristics of the make-up of German industry, that is, centralised state regulation and the prevalence of the large company, have favoured the construction of relatively homogeneous industrial structures. In


their turn, the political organisations, in particular the trade unions, have exercised a homogenising function by way of normativecontractual unification. As a result of this historical evolution it now seems legitimate to attribute less importance to the regional differences in the productive system in the German case than in that of Italy. It is a simplification to talk about the ‘new concept of production’ in the case of the Federal Republic of Germany without mentioning regional specifications, but it is a more judicious simplification than it would be in the Italian case. CONCLUSION: TOWARDS MUTUAL CONVERGENCE? However, one cannot be completely certain that the differences between the two national cases will remain as they are in the long term. It is possible to hypothesise that the growing links between the national economies will, to a greater and greater extent, limit the options for different economic strategies. This would mean that the similarities in the forms of readjustment in the Italian and German industries would grow rather than diminish. Recent phenomena show that German industry is, to a certain extent, becoming ‘Italianised’: a major spatial decentralisation of production, an accentuated exploitation of comparative advantages and a greater division of labour between the firms themselves, go way beyond the traditional confines of the sector. In Italy, big companies and large industrial groups need to expand in importance and scope in a way fairly similar to that of their German counterparts, but with decentralised and network organisational structures which imitate, sometimes deliberately, those of the industrial districts. Moreover, in these latter structures, forms of hierarchical integration are emerging between businesses and this contributes to a further toning down of once very clear differences between regional models. As to the trade unions, even though the confusion of industrial relations and the weakness of the unions suggests caution in forecasting future arrangements, elements of ‘Germanisation’ can be seen in the Italian trade union movement; above all in the growing acceptance of cooperation and joint management. The growing importance and relative autonomy of negotiation at a company level constitutes yet another aspect potentially common to the two countries. The convergences, moreover, do not operate in the sense of portraying national industrial systems as similar, for on the whole they are quite different. In fact it is probable that, with the growth of European integration, the convergences and divergences will result in the creation of miniature industrial subsystems with territorial bases which are significantly different to others in the same country, yet significantly similar to others in different countries.


NOTES 1 This article is an abbreviated and modified version of the ‘lntroduction’ to H. Kern and Michael Schumann, La fine della divisione del lavoro? Einaudi, Turin, 1991. 2 The dimensions of the quantitative growth of the ‘system regulators’ have been estimated in the above research with the help of information already gathered about labour structures in ‘pilot projects’. That is, in special departments in which the firm has already set up a labour organisation which, according to their evaluation, represents a model for the future. In the pilot projects in the car industry, the percentage of qualified system regulators in the production work total hovers around 100 per cent for moulding, 90 per cent for mechanics, 56 per cent for body work, 20 per cent for painting, 75 per cent for intermediate assembly and 0 per cent for final assembly: in the latter case, the work continues to be manual, elevated all the same to a semi-qualified level.

REFERENCES Baethge, M. and Oberbeck, H. (1986) Zukunft der Angestellten. Neue Technologien und berufliche Perspektiven in Böro und Veraltung, Frankfurt: Campus Verlag. Baglioni, G. (1989) ‘Il sistema delle relazioni industriali in Italia: carratteri ed evoluzione storica’, in Gian Primo Cella e Tiziano Treu (ed.), Relazioni industriale. Manuale per l’analisa dell’esperienza italiana, Bologna: Il Mulino. Bonazzi, G. (1989) Lo stato dell’arte nella sociologia economica italiana, contribution presented to the National Convention of the Italian Sociology Association, Turin, October. Butera, R (1987) Dalle occupazioni industriali alle nuove professioni, Milan: Angeli. Locke, R.M. (1989) ‘Local Politics and Industrial Adjustment: The Political Economy of Italy in the 1980s’, Boston: Doctoral thesis. Regini, M. and Sabel, C.F. (eds) (1989) Strategie di riaggiustamento industriale, Bologna: Il Mulino. Rieser, V. (1986) ‘Aspetti e immagini della professionalità nelle imprese artigiane e industriali’, in AA.VV., L’impresa artigiana: ruolo e prospettive, Roma: Ediesse. Rieser, V. (1988) ‘Gli impiegati tra Marx e Weber’, Turin: IRES, unpublished. Sabel, C. and Zeitlin, J. (1982) ‘Alternative storiche alla produzione di massa’, Stato e mercato, 5. Schumann, M., Baethge, V., Neumann U. and Springer, R. (1989) ‘Trendreport Rationalisierung in der Industrie’, Soziale Welt, 4. Streeck, W. (1986) ‘Il management dell’incertezza e l’incertezza dei managers: imprenditori relaziono sindacali e riequilibrio industriale nella crisi’, Prospettiva sindacale, XVII: n. 59. Streeck, W. and Sorge, A. (1986) Industrial Relations and Technical Change: The Case for an Extended Perspective, Berlin: WZB-IIMV. Voskamp, U., Wittemann, K.P. and Wittke, V. (1989) Elektroindustrie im Umbrich. Zur Veränderungsdynamik von Produktionsstructuren. Rationalisierungskonzept und Arbeit. Zwischenbericht, Gottingen: SOFI.

7 PATTERNS OF WORKING HOURS IN LARGE-SCALE GROCERY RETAILING IN BRITAIN AND FRANCE Convergence after European Union? Abigail Gregory To what extent will the development of the Single European Market allow the integration of societies and economies with different structures, laws and traditions? Will it encourage the convergence of organisational and institutional patterns across member states? By examining patterns of working hours in large-scale grocery retailing1 in two member states—Britain and France—this chapter explores aspects of these questions. Based on comparative fieldwork carried out over the period 1986– 932 it shows that patterns of working hours currently differ in terms of patterns of part-time hours—levels of use, length of contracts, shift lengths and patterns —and types of flexibility in working hours. It seeks to explain these differences in terms of the dissimilar social policies and industrial relations frameworks relating to part-time work and to working hours more generally in the two countries. Large-scale grocery retailing is the focus of study because in Britain and France it is both a growing part of the service sector and of food retailing and is becoming an increasingly important employer. It is in particular a major employer of women in low-skilled work and as such may be considered an industry which typifies the employment of large numbers of women today in Britain and France. Part-time work, and working hours more generally, are examined because they are one of the keys to efficient operations in the service sector. Their use may also be considered to reflect women’s role in society. Working hours thus provide a worthwhile axis for comparative analysis. The chapter speculates on the possible effect of the Single European Market on large-scale grocery retailing as part of a wider assessment of factors likely to influence patterns of working hours in this sector after 1992. It finds that there may indeed be some pressures towards convergence in working hours as a result of commercial, technological, national social and Euro-social policy measures, with major implications for employers and for women’s patterns of employment. It suggests, however, that in the short to medium term past national specificities will continue to maintain existing differences. In the first section there is a brief summary of the similarities in the development of food retailing and in patterns of working hours in this sector in

LARGE-SCALE GROCERY RETAILING IN BRITAIN AND FRANCE 159

Britain and France. The second describes key differences in patterns of working hours in food retailing in the two countries and seeks to explain these differences. The final section speculates on the changes in patterns of working hours in the sector post-1992. SIMILARITIES IN PATTERNS OF WORKING HOURS IN FOOD RETAILING IN BRITAIN AND FRANCE Broad similarities exist in the development of food retailing in Britain and France since the 1960s in terms of the organisational, operational and structural changes which have taken place (Dawson, 1982). Although differences exist in the nature of food retailing today in Britain and France,3 both countries have nevertheless seen the growth of multiple chains running increasing numbers of supermarkets and hypermarkets in self-service operations to the detriment of the small independent grocery retailer. Food retailing in both Britain and France has been subject to globalising trends, although to differing degrees in each country. These trends include the saturation of product markets leading to the sale of higher proportions of high value value-added goods, automation (scanning, just-in-time delivery, direct product profitability), and the move to out-of-town sites (see, for example, Burt, 1989). In addition, food retailers in both Britain and France have been confronted by the problems of high labour costs and low labour productivity relative to industry. They have also been faced with similar manpower planning problems in the form of lengthening trading hours and the shorter full-time working week, and peaks and troughs in customer flow (Maruani and NicoleDrancourt, 1989; NEDO, 1985). Today shop opening hours among large-scale grocery retailers are very similar, and in both countries a substantial difference— nearly eighteen hours—exists between the average number of working hours laid down in collective agreements for a fulltime employee and the hours of opening (Lallement, 1993:19). Longer opening hours, particularly as a result of more widespread Sunday opening, are likely in both Britain and France.4 The development of self-service operations has enabled retailers to reduce the strength of the service relationship—the necessary relationship which exists between retailer and consumer, in which the provider of the retail services is dependent on the physical proximity and involvement of the customer (Smith, 1983). Self-service permits reorganisation of labour in shops to reduce, but not entirely to eliminate, the customer control of the labour process. The effect of self-service in enabling the division of tasks has, in both Britain and France, stimulated the removal of functions from the retail outlet (Fulop, 1964; Messerlin, 1982). This, in turn, has resulted in the removal of the traditional skills of the shop worker and enabled employers to reduce labour costs by

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recruiting, and giving minimal training to, employees with few formal qualifications (Faivret et al., 1980; Fulop, 1964). Where the installation of new technology takes place, for example in electronic point-of-sale (EPOS) systems —and to date this has been mostly in supermarkets and hypermarkets—there seems to be an increased polarisation of the workforce, into a body of ‘unskilled’ shopworkers and an increasingly skilled body of management (Sparks, 1987a). This polarisation is being accentuated, especially in the British case, by increasing centralisation in decision-making processes associated with the technological developments (Lees and Worthington, 1989). Another major development in the pursuit of higher labour productivity and reduced labour costs in food retailing in both Britain and France has been the use of part-time work. A major component of a general strategy to carefully control working hours, part-time working has been introduced primarily to develop a flexible group of employees whose employment can enable a closer match of staff hours to weekly or daily patterns of trade (IMS, 1986). Also, employing individuals for only a few hours can achieve genuine economic gains, lower sickness and labour turnover, in addition to higher productivity per hour, where the work is routine and boring and coincides with discontinuities in customer flow. In both countries the development of part-time work in food retailing, and particularly in largescale grocery retailing, has been predicated on the existence of self-service operations which enable the interchangeability of employees with few skills or qualifications and requiring little training. Indeed, in Britain and France a very high proportion of staff in large-scale grocery outlets have few or no formal qualifications (CEREQ, 1990; Sparks, 1987a). For all these reasons part-timers tend to be used in both Britain and France in lowskilled jobs directly responsive to customer demand: on checkouts, freshfood counters, and in shelf-filling. They constitute the main vehicle for flexibility, particularly through their ability to offer supplementary hours, referred to often as ‘overtime’ (Gregory, 1991c). Thus there are general similarities in labour use in food retailing in Britain and France. However, there seem to be major national differences in social policies and in industrial relations structures relating to part-time work and to working time more generally. These factors play a role in creating significant dissimilarities in patterns of working hours in this sector.


Table 7.1 Rates of part-time work in the UK and France, 1991 (per cent)

Source: Labour Force Survey, Eurostat, 1991, Table 33; persons in employment by professional status.

DIFFERENCES IN PATTERNS OF WORKING HOURS IN FOOD RETAILING IN BRITAIN AND FRANCE Levels of part-time work Part-time work has developed more rapidly and to a greater extent in Britain than in France (Dale and Glover, 1990; Garnsey, 1984). The difference in the overall levels of part-time work in the two countries has been explained in terms of the different speeds of inter-industrial change (Garnsey, 1984), the dissimilar legislative frameworks (Travail et Emploi, 1984), and the different way in which women have been integrated into the workforce (Beechey, 1989). Although levels of part-time work have risen over the 1980s, for relatively similar female activity rates—46.2 per cent in France against 51.6 per cent in the UK (Eurostat, 1991)—the proportions of women stating they worked parttime in Britain was approximately double the proportion in France (see Table 7.1). However, an increase in the use of part-time work can be expected in France as a result of new government measures to stimulate the growth of this form of work.5 Similarly in food retailing broadly comparable statistics shown in Table 7.2 suggest that levels of part-time work are much higher in Britain, whether the proportion of women or the entire workforce is considered, even though the similar gap between trading and working hours might lead one to expect little disparity in levels of part-time work. However, levels of up to 40 per cent have been found towards the end of the 1980s in fieldwork in French retailing (Gregory, 1991b). Explanations for the differing levels of part-time work in retailing in Britain and France would seem to lie partly in the impact of differing institutional frameworks for part-time work. In France, the effect of a traditionally less conducive legislative framework for part-time work, combined with lower levels of competition in the industry, and hence less pressure on costs, has favoured the greater use of full-time work until the early 1980s. In addition, a greater concern with protecting part-timers has been reflected in the long-time establishment of a minimum contract length of sixteen hours for part-timers in the sector’s collective agreement.6 This, in turn, has encouraged the use of

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Table 7.2 Levels of part-time work in food retailing in Britain and France, 1993 (per cent)

Source: Employment Gazette, July 1993: Table 1.4; Enquête sur l’emploi, 1993: Table PA 12. Note: French statistics cover those in, and available for, work; the British only employees in employment. The definition of ‘part-time’ is also different. In France the respondents define whether they are so employed; in Britain it must be thirty hours per week or less.

longer weekly contracts and lower levels of part-time work; although not directly comparable the most recent statistics show that in 1993 only 2.4 per cent of women employees in retail distribution in France worked less than fifteen hours a week compared with over 45 per cent of women employees in food retailing in Britain in 1991 (Enquete sur l’emploi, 1993, Table PA 14; Census of Economic Activity, 1991, Vol. 2, Table 10). An agreement has recently been reached between signatory companies in large-scale grocery undertakings to increase the existing minimum sixteen-hour contract to twenty-two hours. The agreement has been made with the aim of reducing the precariousness of part-timers’ employment position and protecting full-timers who wish to switch to full-time work (EIRR, 1993). This measure comes in the wake of legislation encouraging the growth of part-time work, discussed below. In Britain, by contrast, hours falling below about sixteen hours a week have been popular because of the cost advantages of avoiding National Insurance charges. In recent years there has been a significant increase in both food and non-food retailing in the proportions of women working zero to eight and eight to sixteen hours, and a reduction in the proportions working in all other hours categories. This trend has been particularly marked in food retailing (Gregory, 1991c, 1993). Similar disparities in parttime working hours are also found at a national level (see Maier, 1991). The differences in the proportions of women working part-time in retailing, as well as at a national level, in Britain and France can also be explained partly in terms of women’s different patterns of activity over their working lives. In Britain where the norm is still that a mother should stop full-time work after childbirth in order to devote herself primarily to bringing up her children, and where child-care facilities are among the worst in Europe (Meulders et al., 1992), a realistic assessment of the alternatives leads many women to work parttime. Although the proportions of mothers working full-time have increased substantially over the 1980s (Harrop and Moss, 1994)7 it still tends to be only the most highly educated or the most financially needy who continue to work full-time after the birth of a child. The decision to work part-time is widely perceived in British society—even in sectors of the economy such as food


retailing, where only part-time work tends to be available—as women ‘choosing’ to work hours which will enable them to reconcile their double lives. The high levels of satisfaction which British women in low-skilled jobs such as those in retailing, have with their part-time jobs (Sparks, 1987b; Trinder, 1986) may be interpreted as a reflection of the difficulties for women in Britain of reconciling paid employment with family (Martin and Roberts, 1984; Watson and Fothergill, 1993). In France, by contrast, low levels of part-time working among mothers in France correspond with a much greater continuity in activity among French women over the family formation period. The reasons for the Franco-British dissimilarity in patterns of activity are too complex to attempt to explain in detail here but would seem to relate in particular to the interaction of differing fiscal, women’s employment and family policies (see Barrère-Maurisson et al, 1989; Dex et al, 1993). In France, also, part-time work is perceived to be the preferred form of employment for only a minority of part-time workers, notably those in public sector employment.8 Indeed, there seems to be widespread demand among French women for part-time work under the conditions provided for this form of work in the public sector: regular hours, four-day working, opportunities to return to full-time work (Hantrais, 1990; Marimbert, 1992). However, it would seem that in low-skilled occupations such as retailing—where contracts are much shorter, hours are irregular, and there is little opportunity to move to full-time posts—a large proportion of female part-timers would prefer full-time work (Gregory, 1991b; Guelaud et al, 1989; Lehmann, 1985; Maruani and Nicole-Drancourt, 1989). Furthermore, unlike their British counterparts, it would seem that parttimers in French retailing are not specifically seeking unsocial working hours which enable child-care to be provided by partners (Clausener, 1990a), even though a larger proportion of the female workforce in French retailing is in its family formation stage (aged 25–44) (see Table 7.3).9 Overall, it would seem that satisfaction with part-time work in low-skilled occupations such as retailing is considerably greater in Britain despite a number of factors suggesting part-time working in France would be more satisfying. These include longer weekly parttime hours in France than in Britain and a greater formal opportunity for workers to affect their Table 7.3 Proportion of employees by age group in retail distribution, 1990/1

Source: 1991 Census of Economic Activity, Britain, Vol. 2; OPCS, Table 9: Recensement de la population de 1990 population active, résultats du sondage au quart, INSEE, Table 1412.

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working hours through trade union intervention, works committees and selfexpression groups. A contributory explanation for this difference in satisfaction levels may be that more French women are forced into part-time jobs in this sector because unemployment rates for women in France are higher than those in Britain: 13 per cent in France compared with 8 per cent for the UK in 1993 (Eurostat, 1994). An important consequence of this difference in reasons for working parttime for French retailers is that labour turnover and absenteeism are very high among part-timers (see, for example, Clausener, 1990a; Guelaud et al., 1989) compared with what appears to be a generally greater stability among this group in Britain (Trinder, 1986). This factor has also contributed to the retention and development of fairly long contracts, twenty-five to thirty hours a week, among many French retailers. The range of current practices in part-time contracts has been more fully explained elsewhere (Gregory, 1991b). In addition, it appears that such differences in labour supply characteristics also have a bearing on the development of quite distinctive shift patterns for part-timers in the two countries (Gregory, 1991b). French retailers, particularly where opening hours are long (usually 8 a.m. till 10 or 11 p.m.), make extensive use of rotating shifts for part-timers, which have replaced the fixed morning, lunchtime and evening shifts more commonly found in Britain. These arrangements stem from severe labour turnover problems among part-timers working fixed evening shifts, many of whom are women with children, who often do not want to work parttime and, in particular, do not want evening work. In Britain, by contrast, it is usually only full-timers who work rotating shifts, in order to share Saturday work, and, even though there are regional variations in women’s willingness to work evenings, part-time evening shifts tend not to be problematic. This is because evening work suits women with pre-school children in particular, who often constitute a large proportion of workers on these shifts.

Work-time flexibility and policy In both Britain and France working hours have been falling during the postwar period both nationally (Afsa and Marchand, 1990) and in retailing (Gregory, 1989, 1993) under the influence of lengthening paid holidays, shorter working weeks and rising levels of part-time work. Nevertheless, there have been significant differences in the development of working-time policy in Britain and France. Although Britain, owing to its earlier stage of industrialisation was early to legislate for working time in the nineteenth century (Blyton, 1985), working time in the twentieth century became the


object of collective bargaining and minimal state intervention. In France, by contrast, working time has been the focus of much greater legislative intervention since 1936 when the French state introduced very progressive legislation—notably the introduction of the forty-hour week and statutory paid annual leave—and a very strict framework controlling working time. The French Socialist government of 1981–6 was elected after reopening the debate about working time normally associated with left-wing parties in France. It campaigned for election on a policy of employment creation via reductions of the working week and subsequently legislated for changes in working time. At the same time, however, the framework controlling working time has been increasingly relaxed and French practices have moved nearer to the British. This Socialist government encouraged employers to decentralise negotiations on working time (Intersocial, 1985) in order to make agreements with workers to reduce working hours and to introduce more flexible workingtime arrangements. Despite this, legislative control over working time is still much more in evidence in France than in Britain. In the early 1980s the Socialist government actively promoted, as part of its working-time agenda, increased flexibility in working arrangements by means of the positive encouragement of part-time work, job sharing and other flexible arrangements. The priority given to developing greater flexibility in working time was then seen by the government not only as a response to the economic requirement for restructuring but also to a growing desire among men and women for ‘improving the quality of nonwork time, and consequently of family and social life’ (Hantrais et al., 1984:309) The objective was given practical application in a Ministry for Free Time which only lasted for thirty-eight months before amalgamation with the Youth and Sport Ministry. It was encompassed in a concept, developed by the Socialist government, known as ‘temps choisi’. This concept held that the fundamental nature of flexible working time was the ability to adapt one’s hours to one’s own needs. The result of this development of working time in France was that time was ‘brought to the attention of the general public and society seems to have been made aware of its importance in everyday life and its place in new value systems’ (Hantrais et al., 1984:310). Work and non-work time became of much greater popular interest in France than in Britain. In France, in the 1980s and 1990s, articles about time and time structuring became widespread in the popular press and time became the subject of sociological analysis. Over this period, and particularly up to 1987 when the government made efforts to deregulate working time and companies were given active encouragement to experiment with working time, many innovative working-time systems were

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developed in French businesses (see, for example, Documentation Française, 1985). The nature of the working-time debate changed in France in the late 1980s and social aspects of changes in working hours were subsumed by economic motives. Nevertheless, working time remained at the forefront of government policy and pieces of working-time legislation, notably the Séguin Act (19 June 1987), have sought to make working hours more flexible. In the early 1990s, under conditions of rising unemployment, the working-time debate has resurfaced in France and the working-time policies of government of the left and right have been motivated by both social and economic considerations: the debate over four-day-week working (Le Monde Dossiers et Documents, 1994) has given rise to an experimental agreement to encourage substantial increases in staffing levels (at least 10 per cent over six months) where there is a reduction in working time (at least 15 per cent) and the introduction of annualised working hours (Liaisons Sociales, 1994). In addition to this the Loi Quinquennale sur l’Emploi introduces further flexibility in working time10 and both this law and La loi sur la famille introduce numerous measures to encourage the use of part-time work. The new working-time measures are presented as seeking to recognise explicitly the flexibility needs of both employers and employees. Similarly in French food retailing (Clausener, 1990b; Gregory, 1991b; Intersocial, 1984), a number of developments such as the use of ‘semiautonomous teams’ on French checkouts, and the availability of annualised hours and flexitime schemes (Gregory, 1989, 1991b) bear testimony to an apparently greater experimentation with working time and awareness of non-work issues in French retailing; as well as to a greater concern with allowing ‘employeeoriented flexibility’. Schemes allowing this type of flexibility contrast with those which only offer flexibility to management and which will be referred to as ‘management-oriented’ schemes (De Lange, 1986:104). For example, semiautonomous teams of part-time checkout assistants were popularised by French retailers in the early 1980s in the ‘temps choisi’ framework. In these schemes team members set their own work schedules around a core number of fixed hours within parameters established by management, in preference to complete management determination of working hours. In British food retailing, by contrast, it appears that formal flexibility is mainly ‘management-oriented’, allowing little or no consideration of employees’ needs (Gregory, 1989, 1991b; IMS, 1986). For example in Britain flexibility initiatives seem to be limited to the operation of ‘on call’ type systems on a formal or informal basis.11 The more widespread use of part-time work in the industry compared with France does not appear to reflect a deliberate policy by British employers to take non-work issues into account,


rather it would seem to reflect the outcome of a combination of demand and supply factors which encouraged its growth (Gregory, 1989, 1991b). The higher national profile given to working time in France is also reflected in the wider range of working-time measures provided by legis lation and collective bargaining. In British food retailing, for example, minimal constraints on working hours are provided by the 1950 Shops Act—which is currently under threat of repeal—and by a small number of company agreements. Sectoral negotiation is traditionally very weak and the industry’s collective agreement, the Multiple Food Trade Joint Committee Agreement, has been defunct for several years.12 In France, by contrast the industry is covered by much more extensive legislation: in addition to detailed provisions relating to working time stipulated in the Code du Travail, a collective agreement—la Convention Collective Nationale des Magasins de Vente d’Alimentation et d’Approvisionnement Général applies, in theory at least, to all employers in the sector. This is supplemented by narrower agreements such as the sector’s recent agreement on part-time working (EIRR, 1993) and an increasing number of company agreements. The greater coverage of working-time issues in food retailing is partly a reflection of the different industrial relations frameworks in the two countries: sectoral negotiations have traditionally been favoured in France compared with company-level bargaining in Britain, and greater legislative support for collective bargaining is provided in France so that collective agreements can be extended by law to apply to whole sectors, hence providing notional coverage in sectors such as retailing where unions are weak. Furthermore, French unions differ from their British counterparts by having a legal right to stewards and to negotiate on behalf of staff. French unions also now have a legal obligation to annually negotiate wages and working time at company level (Caire, 1985); this legislation formed part of a movement to encourage the decentralisation of bargaining down to companies and plants begun with the Auroux laws of 1982/ 3. Indeed, in the area of working time, derogations at plant level to workingtime legislation and to higher-level collective agreements were also legislated for, in 1982, in the name of encouraging greater flexibility in working time. This move was generally welcomed by the trade unions. Only the CGT opposed the measure which it saw as undermining workers’ conditions by leading to inequalities from one workplace to another. It now seems that in a context of weak sectoral-level bargaining, company agreements on working time in food retailing are becoming widespread and increasingly threatening the basic conditions established in the Convention Collective (Lallement, 1993). In addition to these measures French employers must negotiate plans for more flexible working hours with the unions represented at the company or outlet, or in their absence with worker representatives.

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As a consequence of the operation of the French industrial relations system and the legal provisions regarding working time French unions are, in theory at least, able to discuss at many levels—national, company and plant—the working-time questions which arise more naturally from the French context where working time is a more high-profile issue. The combination of these factors would seem to contribute significantly to the different patterns of working hours found in British and French large-scale grocery retailing. For example, the French preoccupation with defending part-timers’ working conditions is reflected in the collectively-agreed minimum twenty-two-hourweek contract for part-timers in signatory companies, for which there is no equivalent in Britain. Another example is in the area of flexibility initiatives. Although retailers in both countries have developed flexibility initiatives French unions seem to have been involved in negotiations about these initiatives to a much greater extent than their British counterparts, reflecting the French legislation requiring union or worker representative involvement. In Britain where the legal framework puts employers under no such obligation, retailers tend only to draw unions into negotiations on flexibility initiatives where union membership is strong.13 Consequently, the majority of flexibility initiatives in Britain are unilaterally introduced by retailers. This difference in the level of union involvement would seem to help explain the more employee-oriented nature of flexibility initiatives in France. It is important to add, however, that despite the evidence of greater union intervention in relation to working hours in France, in both France and Britain the application of agreements is extremely variable depending on union strength in particular companies and outlets. In France poor working conditions —high levels of part-time work and temporary contracts, maximum use of parttime work, etc.—would seem to prevail (Lallement, 1993), most notably, in the ‘independent’ sector. Here outlets are run by operators who are not in chains or cooperatives but who tend to belong to common purchasing organisations, a sector which is growing in importance and is not signatory to the national collective agreement. In general the day-to-day influence of unions over working hours would seem to be limited or non-existent. CONVERGENCE IN PATTERNS OF WORKING HOURS POST-1992? A wide range of factors, both resulting from the single market and from intraindustry change, seem likely to have a bearing on patterns of working hours in grocery retailing in Britain and France after 1992. However it is difficult, on the basis of the scant information available about these factors, to assess their relative importance.


The effect of European Community instruments What instruments deriving from the European Community are likely to influence patterns of working time in retailing in the foreseeable future? Perhaps the most important will stem from the Community Charter of Basic Social Rights, known as the Social Charter, adopted by eleven member states on a non-binding basis (except the UK) in December 1989, or the Social Protocol, containing the Agreement on Social Policy, supported by all member states of the EC, except the UK. This Agreement was made at the Maastricht European Council in December 1991 and came into force on 1 November 1993. However, at the time of writing, major questions remain over the form which European social policy will take over the next decade, and indeed over the wider issue of European Union. Prior to the Maastricht meeting of the Council of Ministers some progress had been made in promoting a social dimension for the Community through the Social Charter, albeit in a considerably diluted form. This Charter proposed that wide-ranging fundamental rights should be established for all workers and for certain marginalised groups of people throughout member states (Gold, 1992). The accompanying action programme proposed forty-seven individual measures grouped under thirteen headings such as labour market, employment and remuneration, vocational training, equal opportunities and safety and health. As suggested below, a number of the instruments derived from the Charter could have a bearing on patterns of working hours in food retailing. These instruments include the draft Directive on atypical work, and proposals relating to equal treatment and to initial and vocational training; although the first of these, as is described below, may not affect retailers in the short term as it may be the subject of a UK opt-out under the provisions of the Protocol on Social Policy. These instruments are in addition to the provisions which already exist through the application of Article 119 of the Treaty of Rome and the application of the Directives recently agreed on the protection of pregnant women at work and the organisation of working time. The Social Charter has proven controversial not only at the level of the individual measures proposed but also at the procedural level where it has stimulated debate about the role of social interventionism of this type and the democratic procedures for enacting such legislation: notably unanimity or majority voting. It has also led to the isolation of the UK which has, in particular, opposed a number of the measures proposed in the action programme on the basis that enhanced social provisions would be damaging to the international competitiveness of UK business. It has been on this basis that the UK also refused to sign the new ‘Social Chapter’ of the draft Treaty on Political Union. This was designed to facilitate the implementation of the social action programme deriving from the earlier Social Charter. In particular it sought to do so through the extension of qualified majority voting to cover the adoption

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of measures relating to working conditions and information and consultation of workers. As a consequence of this refusal the twelve member states agreed the Protocol on Social Policy which allows the UK to stay out of the new Social Chapter of the Treaty following its formal application. Britain’s theoretical optout from the Social Chapter has only recently seen practical application: the EU-11 route was taken for the first time in September 1994 when the British Government rejected the Directives on paternity leave and European Works Councils (The Times, 1994a). However, it remains possible for the Commission to opt directly for the EU-11 route and each issue will be dealt with on a caseby-case basis (IDS European Report, 1994a). Nevertheless the Social Affairs Commissioner Flynn indicated an intention to favour the progress of proposals within the terms of the Social Chapter of the Treaty of Rome, which would be binding on all twelve member states. Even though the opt-out is operating in practice its legal basis may still be threatened on the grounds that it is unconstitutional. Although this is a very complex legal matter there would seem to be prima facie evidence that this may be the case, first, in terms of the infringement of the principle of nondiscrimination of workers: if the UK is excluded from the social measures of the other eleven member states, UK workers will not benefit from equal protection before the European Court of Justice. A second constitutional obstacle could be EC competition law. Application of the Protocol would also appear to conflict with the notion of citizenship of the European Union written into the new Treaty at Maastricht (Gold, 1992). Nevertheless, while there may be some short-term dislocation between the application of social measures in the other eleven countries and in the UK, it is believed, by at least some senior politicians (Brittan, 1992) that there will be a move towards convergence in the positions adopted by the twelve member states over social issues. This may, however, lead to a dilution of the proposed social measures, particularly if membership of the Community is widened and social measures are levelled downwards rather than upwards. The reasons for convergence as the situation stands would be threefold. First, Britain would be likely to join with its partners on voting in measures it considers ‘acceptable’. Second, the other eleven members would not wish to lose out by introducing social provisions which would make them very much less attractive than Britain to foreign investing companies. Third, all twelve members of the Community are apparently uneasy with some aspects of the Protocol and want to reduce dissent in social policy so as to limit the use of the Protocol (Brittan, 1992). Additional pressures towards convergence are likely to arise from: the practical difficulties for the UK of ‘ring-fencing’ social policy while being involved in other key policy decisions, the growing pressures towards convergence in social policy arising from the free movement of


persons throughout the Community, and the risks involved for the UK in the development of a ‘two-speed Europe’ (Kleinman and Piachaud, 1992). Indeed, it is thought likely that the UK will join the Social Chapter by the end of the decade and then be forced to accept the measures decided by the other member states. As the German Chancellor Helmut Kohl said at the end of the Maastricht meeting: I am certain—this is my prediction—that at the latest when monetary union is achieved, in 1997 or 1999, that in social matters there will not be 11 participants but 12. (Independent, 1991:10) Alternatively, a differing institutional framework for social issues may be developed to replace the Protocol (Brittan, 1992; IDS European Report, 1994b). This would almost certainly be the route taken if there were a change of government in Britain. In the short term if the UK takes a posture of isolation it is thought possible that some of the European measures may very gradually come in through the back door as multinationals extend European conditions to its UK companies (Gardner, 1991), possibly in response to concerted panEuropean collective bargaining within companies with EC-wide operations. This may increasingly be the case in British retailing, as the internationalisation of food retailing has undoubtedly increased over recent years; a point which is discussed more fully below. Another route for the application of social measures rejected by the British Government might be through the voluntary agreement of the CBI and TUC. The Agreement on Social Policy gives an enhanced role to agreements concluded by these social partners. Social partners are consulted on proposals and are now allowed to enter into negotiations on the issue should they wish. A resulting agreement can be implemented at member state level in accordance with national practices, rather than by means of a binding Council decision. The role of the social partners in the consultation process in the light of the UK opt-out is rather ambiguous. In theory, as part of UNICE and ETUC, the CBI and TUC will have the same consultation rights and opportunities as social partners from the other eleven states. In principle, it would also be open for the CBI and TUC to decide to apply a negotiated agreement on a voluntary basis (IDS European Report, 1994a). Despite the uncertainty over the development of a ‘social’ Europe the view widely expressed that the UK will ultimately join the process begun by the other member states, or will in any case be affected by the other members’ social measures, justifies examining in greater detail the social provisions which could have implications for patterns of working hours in retailing. Furthermore, such an examination is also justified in a recent study of the

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impact of the SEM on employment in the UK (Lindley, 1992) where it was concluded that some of the main employment effects would be likely to arise out of Community efforts to harmonise employment and regulate hours of work and that the effects of these Directives on employer costs and employment structures ‘will be particularly felt in an industry employing large numbers of women, part-timers and temporary workers and where shift work and “flexible” hours, including night and Sunday work, is significant’ (Walsh, 1992: 123). However, examining the potential effect of social provisions is necessarily speculative and the scope for nation-state specification of implementation based on the principle of ‘subsidiarity’ must be noted. Hence the intentions expressed in the draft Directives may be overtaken by political processes before publication, or not be realised in practice. The measure stemming from the Social Charter which potentially has the most important implications for retailing is the draft Directive on atypical work. This updates the two draft proposals for Directives made in 1982 concerning voluntary part-time work and temporary work and fixed-term contracts, which were never adopted. However, this draft has been successfully stalled since its adoption by the Commission in 1990. It is now only likely to be applied in the short term by the eleven member states, excluding the UK, under the conditions of the Protocol. Nevertheless, in the longer term, for the reasons outlined above, the Directive could have implications for British retailing. The draft Directive on non-standard work derives from the amalgamation in July 1993 of the draft Directive on atypical work and the Directive on distortion of competition relating to atypical workers. It has made little progress since autumn 1993, and may ultimately be a candidate for implementation through the Social Protocol of all European Union countries except Britain. The Directive seeks to improve the conditions of employment for those with contracts other than those of a full-time nature and an indeterminate duration. It would give these workers the same rights, such as training and holidays, as normal staff. Those working more than eight hours a week would also gain the right to social security benefits and both the part-time employee and the employer would be obliged to pay National Insurance contributions (see also Economist, 1990). The improvement of working conditions resulting from such a directive would be of particular relevance to British food retailers14 who rely heavily on part-time work and whose use of part-time work and preference for short contract lengths is influenced considerably by National Insurance considerations. Implementation of the Directive could cause some British retailers to increase numbers of staff working less than eight hours a week (Walsh, 1992), although the associated administrative and training costs of such a move, not to mention the problems of hugely complex staff allocation systems, would be likely to militate against it.


Furthermore, in assessing the impact of such measures in the shorter term in Britain some consideration must be given to the impact of demographic pressures on retailers, although its effect should not be overstated given the potential counter effect of high employment rates: over the period 1985–2000 the percentage drop in the number of 15–24-year-olds is expected to be in the order of 27 per cent in Britain, compared with only 12 per cent in France (Booz, Allen and Hamilton, 1989). Until the very recent increases in unemployment and dramatic cost-cutting by some employers (Milne and Donovan, 1992) British retailers had begun to respond to these changes in many ways, including making efforts to attract minority groups, the retired and women returners (Lennon, 1990), many of whom seek rather longer hours of work than those currently offered in retailing. In this context an increase in the cost of part-timers through an improvement in their rights to such benefits as holidays—and indeed pension and redundancy rights—could exert additional pressure on British retailers to employ more full-timers or part-timers on longer contracts. Moreover, a fall in part-time levels could ultimately drive British retailers to seek greater flexibility through the adoption of French models for full and part-time flexibility, although this would depend upon British women being willing to work other than fixed hours. This scenario would apply particularly if conditions develop for improving working conditions more generally in retailing as recent trends in the major multiples suggest (USDAW Today, 1990). Indeed, recent assessments of the impact of the SEM for the distributive trades (Lindley, 1992) suggest that a quality-oriented scenario is probable. According to this scenario a growth in consumer expenditure combined with more sophisticated consumption patterns and more leisure time may all lead to a demand for higher quality services, with knock-on effects for employment. It is envisaged that some additional full-time jobs and jobs with a higher skills content will be created where women may be deployed, although it is considered likely that the widespread use of part-time work will remain (Walsh, 1992). It is unlikely that the draft Directive on non-standard work would have a significant impact on French retailers. This is because French legislation, introduced in 1982, already accords part-timers pro rata rights to those of fulltimers and because the French national insurance system provides no financial incentive for employing part-timers. A number of other social measures may also have a bearing either directly or indirectly on patterns of working hours in retailing in Britain and France. The draft directive on working time—COM (90) 317 final of 5 December 1990 and amended proposal COM (91) 130 final of 23 April 1991—was finally adopted in diluted form by the Social Affairs Council in November 1993. This prescribes intervals between working periods (IDS Report, 1992:3), but seems unlikely to improve substantially on the conditions provided by legislation and

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collective agreement in Britain and France. Furthermore, Britain is currently challenging the legal basis for the Directive (majority voting) and so the Directive may not ultimately be implemented. If implemented there would be a considerable impact on individual rights at work, but little on patterns of working hours because considerable flexibility has been left in the application of the limits and derogations are possible through legislation or collective bargaining for a number of causes. These are wide-ranging and include: security, where continuity of production or services is essential, unforeseen increase in workload, seasonal work, shift changeovers or split shifts and ‘force majeure’. In sum it would seem that even with the introduction of Europe-wide legislation governing working hours, considerable flexibility to modify working hours would remain. British grocery retailers could still be expected to retain much greater flexibility in the organisation of working hours compared with their French counterparts because the institutional network governing working hours in France would almost certainly remain more limiting than the British measures. This is because harmonisation of collective bargaining frameworks seems unlikely and Europe-wide bargaining remains a very distant prospect. However, British retailers who use night shifts for shelf-filling in larger stores, may be affected by the draft Directive’s proposal to limit night working— likewise in retail distribution. French retailers are less likely to be affected by this, as early morning shelf-filling tends to be the norm. Proposals relating to the equal treatment of women in Europe seek to facilitate the combination of work with family responsibilities for men and women through the improvement of maternity rights and child-care provisions and to improve women’s opportunities at the workplace. These may all encourage the development of patterns of employment for British women which are more akin to those in France. These measures include the Commission’s recommendation of 31 March 1992 concerning childcare (COM (91) 233 final of 28 August, 1991), the third Community Action Programme on Equal Opportunities for women 1991–5 (COM (90) 449 final, 6 November, 1990), which was the subject of a Council Resolution on 21 May 1991, and the Directive on rights for pregnant women at work (COM (90) 406 final of 17 October, 1990 and amended proposal: COM (90) 692 final). This was applicable in October 1994 and gives all women, regardless of contract length or length of service, an automatic right to a minimum fourteen weeks’ paid maternity leave (Guardian, 1992a). These measures are unlikely to affect France where maternity and child-care provisions are already better than average in Europe and fulltime working for mothers is increasingly the norm. In Britain the combination of such measures may act together giving additional impetus to what appear to be significant long-term changes in women’s working patterns: notably, the growth in women’s employment. By


2006 women are expected to represent 46 per cent of the workforce by comparison with 44 per cent in 1993 (Employment Gazette, 1993). There was an increase in women with children working both full and parttime—between 1981 and 1989 part-time employment among mothers increased from 29–35 per cent and full-time employment from 17–21 per cent. A greater availability of child-care facilities15 in addition to the impact of the development of voluntary programmes (Opportunity 2000, Fair Play for Women, supported by the Department of Employment) designed to improve the position of women in the workplace could be expected to have some effect on women’s working patterns, particularly since qualification levels seem to be a key factor in the development of more continuous fulltime working patterns for women, and women are increasingly outperforming their male counterparts in academic terms (The Times, 1994b). Major consequences for women’s working patterns in Britain could be expected if these developments were combined with a breakdown of traditional feminine and masculine roles as envisaged by many young people (18–34-year-olds) today (Wilkinson, 1994). However, there are no grounds for excessive optimism: strong regional differences persist in women’s working patterns and Britain still remains in the middle rank of EU countries for mothers’ employment (Harrop and Moss, 1994). Furthermore, firmly entrenched ideas about the role of women in child-care (Brannen and Moss, 1988) are unlikely to be swept away easily. It is clear, however, that a move towards more full-time, continuous patterns of working among women in Britain and the greater availability of childcare facilities could affect women’s preferences in terms of working hours and hence, as in France, patterns of hours in retailing. The application of Article 119 of the Treaty of Rome, setting out the principle of equal pay for men and women, may in itself have a major impact on retail employment long before the effects of the third Community Action Programme on Equal Opportunities for women are seen. This is because the definition of pay under Article 119 has been widened through a series of legal cases at the European Court (i.e. Rinner-Kuhn vs FWW SpezialGebaudereiningung GmbH & Co.; Bilka-Kaufhaus GmbH vs Weber Von Hertz; and latterly the Dutch cases of Vroege and Fisscher). The definition of pay now includes ‘pay’ benefits such as occupational pensions and sick-pay provisions even if this contravenes national legislation (see Industrial Relations Legal Information Bulletin, 1989). However, it may be possible for employers to argue successfully to an industrial tribunal that there is an ‘objective’ reason for excluding parttimers from a scheme, for example if turnover in this group is very high (The Times, 1994a: 29). USDAW, the main shopworkers’ union in Britain, is seeking to use these cases to gain parity in part-timers’ ‘pay’ through negotiation and/or legal

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action, and this could have major implications for staffing in retailing (DIY Superstores, 1990). USDAW anticipates that this may be more effective in gaining parity in part-timers’ working conditions than the proposed Directive on atypical working because previous Directives have proven very difficult to apply in practice. Furthermore, it is now very likely that the British Government will be forced to amend its employment legislation relating to part-timers: on 3 March 1994 the House of Lords upheld the case brought by the Equal Opportunities Commission that the provisions of the Employment Protection (Consolidation) Act 1978 on redundancy and unfair dismissal as regards parttime workers working less than sixteen hours per week were discriminatory and contrary to European Community Law. The combined effect of these decisions is that the cost of employing part-timers relative to full-timers has been increased. With the direct costs of employing full and part-timers increasingly being equal, retailers are more likely to pay greater attention to quality of service provision criteria in their determination of staffing levels, particularly if a quality-oriented scenario prevails in the development of retailing. In addition to these areas where European social policy may influence working hours in retailing, there is some speculation within retailing as to the possible longer-term implications of measures to widen vocational training and to facilitate the free circulation of workers in the Community (Gray, 1989). The increasing employment of full-timers in Britain could also be encouraged in the longer term by measures to widen vocational training in Europe. The ongoing drive to allow all people initial and continuing vocational training stems from the application of Article 128 of the Treaty of Rome and the Social Charter, and has recently (June 1993) been given substance by the adoption of the recommendation on access to continuing vocational training by the European Council. Improving access to initial and continuing vocational training could ultimately raise training costs for British retailers who currently spend a smaller proportion of their total costs on training and other indirect costs than their French counterparts (Gray, 1989:28).16 However, little evidence currently available permits accurate estimations of potential cost increases and the sector may benefit, in terms of training development, from its inclusion in the European FORCE Programme. It is nevertheless possible that British retailers could, at least when unemployment rates fall, be given an incentive via rising training costs to reduce labour turnover. This may be achieved through a combination of more attractive working hours—full-time and/or longer part-time. Finally, the possibility remains that pressure towards harmonising working conditions and practices may be brought to bear in the longer term as a result of measures enabling the free circulation of workers in the Community. Some


progress has been made in recent years in this area through a series of measures seeking to facilitate the mutual recognition of qualifications,17 to encourage the exchange of young people and workers, and to facilitate the exchange of job vacancies at Community level as well as access to this information. The implications of such changes can only be the subject of speculation at this stage. It seems, however, that the free circulation of workers at shopfloor level within the Community is a very distant prospect (see Teague, 1990). Any harmonising of employment conditions seems more likely to stem from movement of management within European groups of retailers. None of these changes at European Community level will work in isolation, and predicting their combined effect is difficult. At this early stage, signs are that the effect of the Single Market, in combination with other trends nationally and in retailing, might be to encourage some alignment of British working-time practices on the French model: notably lower levels of part-time working. This scenario would depend on retailers abandoning longstanding practices of part-time working and on substantial changes in attitudes towards women’s role in child-care and in women’s working patterns. Even if greater harmonisation in working patterns were to occur, significant differences would be likely to remain owing to both the different national industrial relations systems, both generally and relating specifically to working time, and to the differing national awareness of working-time issues. Views are mixed as to the future of industrial relations systems in the European Community. As far as the prospect for Europe-wide collective bargaining is concerned on the one hand some suggest that Europe-wide trade unions and collective bargaining may in the long term arise from the conditions created by the operation of the Single European Market, in particular from competition with countries outside the Community (Sylvia, 1991). Others (see, for example, Coldrick, 1991, at the ETUC) see an inevitable move to European collective bargaining. This would result, among other factors, from the pressures of new social measures, in the short term probably from only eleven member states, of the process of European monetary union—if this ultimately takes place—and of the development of increasing numbers of Europe-wide companies. However, Hyman (1991) offers a more pessimistic scenario by which adverse social consequences of 1992 may lead to a popular movement for renewed social regulation after the year 2000. On a more positive note there is clear evidence that the European trade union body, ETUC, is strengthening its European organisation and that there is increasing consensus among national unions that they must play an active role at EC level (Milner, 1991). Also, the agreement at Maastricht to give the European social partners a greater role in formulating social policy may be considered a step towards greater Europelevel bargaining, although the CBI’s apparent reluctance to be involved in ‘social dialogue’ may marginalise Britain in this process (Guardian, 1992b).

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The importance of the social partners may be particularly heightened if the Commission continues to adopt the position that its role should be diminished in favour of EC-wide collective bargaining. It seems that the Commission also favours a move to the application of subsidiarity as far as social policy is concerned: its role would be to set ambitious objectives while member states would be allowed to go about achieving them in their own way (Economist, 1992). This is a surprising turnaround in the Commission’s position given that application of the Maastricht Treaty would give the Commission the right to propose laws on working conditions and worker consultation, which ministers will decide by majority voting. It may also mean that the instruments of social policy discussed above could be further diluted before they are finally applied in the UK. On the other hand, less optimistic views—including those from other contributors in this book—have been aired about the chances of increased organised labour action at European’ level on social issues (Economist, 1990). Many of these suggest that declining membership and disparities in national membership levels are likely to lead to reduced union effectiveness in negotiations nationally and to reduced transnational solidarity. However, a move to some European-wide collective bargaining, with potential implications for working time within retailing, seems much more likely than any harmonisation in national industrial relations systems. The unqualified right to strike, recognised in the original draft of the Social Charter provision on Freedom of Association and Collective Bargaining, has been diluted. Its circumscription by existing national legislation and collective agreements is proof positive of the continued importance of the national systems and the application of the principle of subsidiarity in this area. THE EFFECT OF CHANGES IN BUSINESS PRACTICES ON FOOD RETAILING Within retailing two key changes in business practices currently influencing working hours in Britain and France are likely to continue to affect working hours into the next century: the introduction of new technology associated with more centralised decision-making processes, and the development of more service-based retailing associated with increasingly competitive conditions. However, the possible internationalisation of retailing (Alexander, 1988; Commission of the European Communities, 1991), early signs of which are being seen already,18 may have a bearing on working hours through the transfer of national practices across borders, although this is considered unlikely (Walsh, 1992). Other variables such as demographic change and changing labour market conditions may also be expected to influence working hours.


The development of new technology in large-scale grocery retailing, associated with the increasing centralisation of decision-making processes first developed in the USA, now seems to be following similar patterns of development in Britain and France.19 In an environment of increasingly efficient information, product and staff management, EPOS systems are increasingly being used to provide data for more precise labour scheduling at checkouts and in other areas on the shopfloor, a trend which tends to encourage the use of part-time work (Cosyns et al., 1981; European Foundation, 1985). This trend may be particularly accentuated in Britain where EPOS data is being combined with the widespread use of work-based scheduling packages adapted to individual outlets. Such arrangements appear to have already encouraged the use of part-time work by showing that short bursts of work in many shopfloor jobs are the most productive. These packages are also developing in France (Gregory, 1989) which may also stimulate the use of part-time work there. A major change in business practices associated with increasingly competitive conditions in Britain and France has been the new emphasis on improving customer service. In Britain this approach characterises the top food retailers— Sainsbury, Tesco, Asda, Argyll, Co-op, Isoceles—and does not exclude also seeking to compete on price; see the Sainsbury’s ‘Essentials’ campaign. The approach is wide-reaching and includes not only more carefully matching working hours to customer flow, thus stimulating the use of part-time work, but also providing better training and service levels to customers. In attempting to provide better service British (and French) retailers have long since offered longer working hours to part-time staff, hence reducing part-time levels (see Gregory, 1989). Furthermore, the SEM is in itself likely to bring about qualityoriented prospects for retailing as a whole with more full-time jobs involved in offering better services such as in-hours chemists and bakers, although it is thought that a high reliance on part-time work will remain (Walsh, 1992). In France, the development of competition on the basis of quality service has been more restricted given that large swathes of food retailing are now run by independent retailers (e.g. Leclerc, Intermarché) operating discount operations where competition is almost exclusively on price (see Lallement, 1993; LeCorre, 1992).20 These retailers have used aggressive staffing policies involving high levels of part-time work and high labour turnover. In this context while a number of retailers belonging to chains or cooperatives have gone some way to adopt a quality-oriented approach, which has included improving service by reducing part-time levels, this has often been half-hearted. In view of the growing importance of the independents in France it would seem likely that part-time levels will continue to rise in the sector, even if there is some pressure towards improving quality deriving from the operation of the SEM. Indeed in a CEREQ survey in 1989, 66 per cent of the twenty-seven supermarket firms

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responding predicted an increase in part-time employment, 30 per cent no change and only 4 per cent a decline (Lallement, 1993). An increase in part-time work is particularly likely given the government’s recent measures to encourage this form of employment. CONCLUSION This chapter has shown that there are currently similarities in patterns of working hours in large-scale grocery retailing in Britain and France. However, it has also shown that there are significant differences in terms of the use of parttime work—length of contracts, shift lengths and patterns and in the flexibility of working hours. It has been suggested that these differences can be explained to a large extent by societal factors, notably in terms of the differing social policy and industrial relations structures in relation to part-time working and to working time more generally. These findings give support to the view that the management of similar organisations in different national contexts are currently subject to a ‘societal effect’, as outlined by Maurice in Chapter 1. Although the future of a ‘social Europe’ remains uncertain, and any discussion looking to the future remains speculative, the second half of this chapter has explored how patterns of working hours in this industry may change after 1992 in view of the effects of the single market and intraindustry trends. In particular it has investigated the extent to which societal specificity is likely to be eroded under the movement towards European integration. It has been suggested that there may be some pressures towards convergence over the longer term in working hours in retailing as a result of commercial, technological, national social and Euro-social policy measures. The pressures towards convergence deriving from intra-industry factors to some extent suggest in themselves some common logic of industrialism. In Britain a number of factors would seem to be coming together to favour a reduced use of part-time working in retailing in the longer term: the increasing cost of part-time work combined with signs that new patterns of women’s employment may be developing under the pressure of rising female aspirations and improvements in child-care provisions and the continuing ‘serviceoriented’ approach of the major food retailers. These pressures may lead British retailers to develop more full-time working and longer part-time contracts, as well as patterns of working hours—rotating shift patterns, greater full-time flexibility—which are more akin to those found in France. These developments would be likely to take place in conjunction with measures to improve training and working conditions more generally in retailing. In France, by contrast, a number of factors suggest that there may be pressure to increase part-time levels in food retailing: a national framework which is actively encouraging the use of part-time work, growing competitive pressure


from the independent sector in food retailing where cost-cutting strategies prevail, and the probable growth of new technology across the sector, including that of workstudy-based labour scheduling packages. Clearly, this trend towards convergence in working hours may also be seen to some extent in other service industries, such as catering, where working hours are key operations. More generally, improvements in the conditions of parttimers in Britain and in women’s maternity and childcare provisions deriving from national social and Euro-social policy could, in the longer term, encourage major changes in British women’s patterns of employment, although such changes would be dependent on changes in entrenched attitudes about women’s role in child-care and the workplace. At the very least they would have the potential to stimulate a demand for more full-time continuous patterns of employment along the French model, with far-reaching implications for men and women in paid work and in the home. However, the analysis in this chapter suggests that dissimilar socioeconomic and political contexts in the two countries are likely to maintain differences in patterns of working hours in retailing up to and beyond the time when homogenising forces deriving from national and Euro-social policy, commercial and technological changes are fully in play. In particular, the effects of differing industrial relations systems in retailing are likely to persist in the longer term as harmonisation in this area is barely in view. Outside retailing too, the continuing national specificity of industrial relations systems is likely to help conserve national patterns of working time for many years to come. NOTES 1 The definition of a large-scale grocery outlet has been taken as starting at 10,000 square feet, which is the minimum size of a supermarket as defined by the Institute of Grocery Distribution and Euromonitor. 2 The fieldwork involved: first, interviews with store managers and company personnel managers from respectively seven and eight major retailers specialising in large-scale grocery retailing in Britain and France, and second, interviews with officials and members from all major unions in large-scale grocery retailing in the two countries. The British situation was updated first in 1990–1 as part of research into new technology and work organisation in retailing (see Gregory, 1991a) and again in 1993 as part of research into working time in retailing (see Gregory, 1993). Further comparative work is due to take place in 1995. This chapter is based on an earlier article published in December 1991 in Work, Employment & Society in which the findings from this body of research are described in greater detail. 3 The small independent retailer has retained a larger proportion of food sales in France than in Britain, which is reflected in the lower proportion of sales made through supermarkets in France (the proportion of food sales through hypermarkets is very similar). Also, British food retailing is more highly concentrated than French food retailing and the operators of large-scale grocery outlets are mainly major chains

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4

5

6

7

8

9

and cooperative societies. In France the independent sector, operating through purchasing organisations, is much more significant (for an overview of these differences see Gregory, 1991b). In France, Sunday opening is still governed principally by legislation dating from 1906 which gave all employees (with certain exceptions) a right to Sunday off work. Over time further exceptions have been added to those provided in the law and statutory provision exists for alternative arrangements for workers. Owners of small shops can open on Sunday mornings and larger retail outlets can be opened three Sundays a year with the agreement of the local authorities. The beginning of the 1990s saw renewed debate about Sunday opening under pressure from (nonfood) retailers who regularly breached the existing legislation. It resulted in a new decree in 1992 which reinforced existing fines for breaking the law and extended Sunday opening to nineteen new areas (see Lallement, 1993). In Britain, Sunday opening has, until recently, been restricted by the 1950 Shops Act. Since the late 1980s pressure was also brought upon the Government to amend the Act. The result has been the Sunday Trading Act, which came into force on 26 August 1994. It allows shops to trade in all goods on Sundays but restricts most larger shops to six hours’ trading (Employment Gazette, 1994: 270). Following on from measures to stimulate the use of part-time work in the late 1980s and early 1990s the Balladur Government has sought to create more parttime jobs by substantially reducing or totally cutting the equivalent of national insurance contributions for part-time workers (Lettre de Matignon, 1993a), facilitating the transfer to part-time work where redundancies would otherwise be necessary and allowing part-time hours to be annualised (Lettre de Matignon, 1993b) and improving the conditions for taking part-time work in the public sector (Lettre de Matignon, 1994). In addition, the Congé Parentale d’Education (a form of paid leave recently made available to families with two or more children to enable a partner to stay off work until the youngest child is aged three), previously only possible on a full-time basis, has now been extended to those wishing to work part-time. For eligibility to sick pay and maternity pay, workers (with the exception of students) must have worked in both cases for at least 200 hours over three months or 600 hours over six months, and in the case of sick pay for at least 1,200 hours over twelve months. In order to ensure that part-timers were protected by satisfying these conditions, retailers and unions agreed a minimum weekly contract of sixteen hours. Then if employees worked normal amounts of overtime they would have been taken over the effective working hours’ threshold of twenty hours a week which gave them a right to claim for these benefits. During the period between 1981 and 1989 employment rates in Britain rose more rapidly for women with children (46 to 57 per cent) than for other women, corresponding with an increase in the proportion of dual-earner families. Dualearner families became the majority group (57 per cent) among two-parent families in 1989 (Harrop and Moss, 1994:343). For a detailed explanation of the conditions under which part-time work is used and perceived in one public-affiliated sector in France—retail banking see the work by O’Reilly (1992, 1994). Table 7.3 shows that in retailing fewer British women were likely to be in their family formation stage (25–44 years), than in France.


10 In addition to the measures described in note 5 above, relating to the use of parttime work, the law also sets a legal framework for collective bargaining over working time. These negotiations would allow reductions in working time in exchange for greater flexibility in working time. 11 A similar difference in approaches taken to flexibility was also found in a FrancoBritish comparison of working hours in retail banking (see O’Reilly, 1992, 1994). For a detailed Franco-British comparison of the use of part-time work in banking and retailing, see Gregory and O’Reilly (1994). 12 It is something of an achievement that the shopworkers’ union USDAW has recently successfully negotiated with a number of the major food and non-food retailers (Tesco, Sainsbury, Argyll, Boots, Kingfisher, Asda, Dixons, W.H. Smith Group) an agreement to protect working conditions for Sunday workers. 13 Although accurate comparable membership figures are not available, the unions are weak in this sector in both Britain and France. However, unions in both countries have close relationships with a small number of the major retailers. These have developed for historical reasons between USDAW and the Co-op in Britain and personnel policy reasons between USDAW and Tesco, and GMBATU and Asda in Britain, and between the CFDT and Carrefour in France. 14 Indeed some British retailers have begun to prepare for the possible improvement in part-timers’ conditions of employment through European legislation by improving part-timers’ benefits and rights. Retailers have, in particular, given part-timers rights to holiday pay and eligibility for occupational pension schemes. 15 At the time of writing the Conservative Government had just made a conference commitment to extending nursery care to all four-year-olds whose parents wanted to use it. Furthermore, the Employment Department began a scheme in April 1993 to provide out-of-school and holiday child-care for parents. The aim of the scheme was to provide 50,000 places over three years. The Labour Party has also promised to improve child-care facilities when it next returns to office by extending nursery care to all three- and four-year-olds. 16 Indeed, a commitment and a framework for training in the retail sector has been agreed in recent years between EuroFIET and CECD, the European Retail Employers’ Federation. This agreement establishes among other things: vocational training for all those working or wishing to work in the retail sector, further training whether workers are full or part-time; special attention to the retention and career prospects of women working full and part-time in the retail trade (USDAW, 1989). 17 Notably the Council Directive of 21 December 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years’ duration. The later Directives proposed a general system of professional education and training which came into force on 4 January 1991. The Council agreement of 19 December 1991 agreed in principle the objective of mutual confidence in national qualifications without prior coordination of training being necessary. In June 1992 the European Council adopted a ‘Second Diplomas’ Directive, for implementation by member states from June 1994. This allows those with vocational qualifications—NVQs and SVQs up to level 4—to be recognised throughout the Community for the knowledge and experience they represent. Thus the academic qualifications element will not prevent individuals from practising their occupations throughout the EC (Employment Gazette, 1992).

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18 A number of new trends are emerging in the distributive trades which suggest that ‘Europeanisation’ of retailing is taking place; for example, the trend to larger distribution companies gaining holdings in companies in other member states, the growth of links, formal or informal, with retailers in other member states, and the growth of voluntary chains among some of the largest wholesale companies (Commission of the European Communities, 1991). However, a number of major barriers to cross-border operations remain, such as differences in commercial structures and in commercial methods. 19 See, for example, CEREQ (1990) for a discussion of general trends, and Pearson (1989) and Points de Vente (1988) for a description of trends in the introduction of EPOS in Britain and France. The author has recently completed a project with a team at Paris Dauphine and at Bath University on behalf of the French Ministry of Employment and Training. The project investigates the negotiation of new technology in large-scale retailing in Britain and in banks and insurance companies. 20 Forty per cent of sales in large-scale food retailing in France is made through independent retailers, most of whom run ‘discount’ operations (Lallement, 1993). Although it is difficult to make direct comparisons it would seem that discount operators (e.g. Lo-Cost, Netto) have a much smaller share of the British market—8 per cent (Branton, 1992). This difference reflects the dominance of the ‘big-five’ food retailers in Britain.

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Kleinman, M. and Piachaud, D. (1992) ‘Britain and European Social Policy’, Policy Studies, 13(3): 4–12. Lallement, M. (1993) ‘France—The Case of Retail Trade’, Paper presented at the meeting on ‘Flexible Working Time Arrangements: The Roles of Bargaining and Government Intervention’, Paris: OECD, 3–4 May. LeCorre, S. (1992) Le monde de l’hypermarché: identités professionnelles et identités sociales, Paris: Atelier de Travaux Sociologiques, February. Lees, R. and Worthington, S. (1989) ‘Achieving Above-Average Profitability’, International Journal of Retailing, 4(2): 17–34. Lehmann, A. (1985) ‘Le travail a temps partiel de 1978 a 1983’, Travail et emploi, 26, December: 47–58. Le Monde Dossiers et Documents (1994) ‘Le temps de travail, February. Lennon, P. (1990) ‘Facing the Demographic Challenge’, Employment Gazette, January: 41– 4. Lettre de Matignon (1993a) ‘Soutenir l’activité économique et preserver l’emploi’, No. 400, 18 January: 1. Lettre de Matignon (1993b) ‘Pour une dynamique durable de l’emploi’, No. 420, 20 September: 2–3. Lettre de Matignon (1994) ‘Vers une nouvelle organisation du travail’, No. 441, 21 March: 3. Liaisons Sociales (1994) ‘Concention FNE de reduction de la durée du travail’, No. 7079, 26 July. Lindley, R. (1992) Women’s Employment: Britain in the Single European Market, Manchester: Equal Opportunities Commission, HMSO. Maier, F. (1991) ‘The Regulation of Part-Time Work: A Comparative Study of Six EC Countries’, Discussion paper FS101–9 Wissenschaftszentrum Berlin für Sozialforschung, Berlin. Marimbert, J. (1992) Situation et perspectives du travail a temps partiel. Rapport au Ministre du Travail, de l’emploi et de la Formation Professionnelle. Rapport présenté le 18 mars. Martin, J. and Roberts; C. (1984) Women and Employment Survey: A Lifetime Perspective, London: OPCS, HMSO. Maruani, M. and Nicole-Drancourt, C. (1989) La flexibilité a temps partiel: conditions d’emploi dans le commerce, Paris: Documentation Française. Messerlin, P. (1982) La revolution commerciale, Paris: Collection Economie Française, Bonnel. Meulders, D., Plasman, R. and Vander Stricht, V. (1992) La position des femmes sur le marché du travail dans la communauté européenne: evolution entre 1983 et 1990, Bruxelles: Commission des Communautés Européennes. Milne, S. and Donovan, P. (1992) ‘Gateway Faces Heavy Job Cuts’, Guardian, 11 February: 10. Milner, S. (1991) ‘Workers’ Rights in Europe: Implications of 1992 for Social Policy and the “social actors” ’, Workers’ Rights in Europe, Cross-National Research Papers, new series: The Implications of 1992 for Social Policy’, No. 5, CrossNational Research Group, Aston University. NEDO (1985) Employment Perspectives and the Distributive Trades, London: HMSO. O’Reilly, J. (1992) ‘Banking on Flexibility: A Comparison of the Use of Flexible Employment Strategies in the Retail Banking Sector in Britain and France’, The International Journal of Human Resource Management, 3(1): 35–58.

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O’Reilly, J. (1994) Banking on Flexibility in Britain and France: Towards a Gendered Societal Approach, Aldershot: Gower. Pearson, J. (1989) Food Retailing ‘89, A Review of Food Retailing Structures and Trends, Watford: IGD. Points de Vente (1988) ‘La lecture optique: un bond en avant pour de nouveaux défis’, 352: 44–50. Smith, D. (1983) ‘Service Workers in the Class Structure: The Case of Shopworkers,’ DPhil, Oxford. Sparks, L. (1987a) Training and Skill Levels in Superstores, Report No. 4, Institute for Retail Studies, University of Stirling. Sparks, L. (1987b) An Analysis of Part-Time Employment in Superstores, Report No. 13, Institute of Retail Studies, University of Stirling. Summers, D. (1989) ‘Law on Part-Time Workers Challenged’, Financial Times, 21 June: 24/2. Sylvia, S.J. (1991) ‘The Social Charter of the European Community: A Defeat for European Labor’, Industrial and Labor Relations Review, 44(4), July: 626–43. Teague, P. (1990) The European Community: The Social Dimension. Labour Market Policies for 1992, Cranfield School of Mangement Monograph No. 4, London: Kogan Page. The Times (1994a) Paternity Policy Works Faster Without the Portillo Factor’, 27 September: 29. The Times (1994b) ‘Girls Closing Gap in Landing the Top Jobs’, October 24:5. Travail et Emploi (1984) ‘Le travail a temps partiel’, 19:31–6. Trinder, C. (1986) Young People’s Employment in Retailing, London: DTEDC, HMSO. USDAW (1989) 1992 and the Single European Market, Statement by the Executive Council to the 1989 Annual Delegate Meeting. USDAW Today (1990), April: 1–2. Walsh, T. (1992) ‘European Economic Integration: Employment Effects in the Distributive Trades’, in R. Lindley (ed.), Women’s Employment: Britain in the Single European Market, Manchester: Equal Opportunities Commission, HMSO, 113–27. Watson, G. and Fothergill, B. (1993) Part-Time Employment and Attitudes to Part-Time Work’, Employment Gazette, May: 213–20. Weston, C. (1991) ‘You’re Alright, Jacques’, Guardian, 24 May: 26. Wilkinson, H. (1994) No Turning Back: Generations and the Genderquake, London: Demos.

8 HOW YOUNG PEOPLE ARE MARGINALISED IN ENGLISH AND GERMAN LABOUR MARKETS Alan Brown and Martina Behrens

INTRODUCTION In recent years much significance has been attached to the relationship between a country’s education and training system and its industrial performance (Worswick, 1985; Cassels, 1990; Stevens and Mackay, 1991). Arguments for an increasing harmonisation in approaches to training (Hayes, 1989) point to changes in transnational developments in work organisation, and their consequent effect on the patterning of skills (Sainsbury, 1991). Such changes may produce some convergence in the training of highly skilled workers, but for others the convergence may be illusory in that the patterns of education, employment and training as experienced may still be sharply different. Indeed such differences are clear not only between the operation of national systems in practice, but also within them because of the influence of local labour markets. To focus attention on the convergence at a systemic level runs the risk that the influence of the different cultural traditions and underlying values may be overlooked: that is, elements of systems may look similar but their meaning needs to be contextualised. Additionally, a systemic focus can ignore the variations in the way the system operates in different regions and especially in different economic conditions. Analysis and comparison needs to take more cognisance of how education, employment and training are experienced by young people. This is particularly the case for those whose longterm prospects are uncertain. This chapter draws upon a study of vocational preparation in contrasting labour markets in England and Germany from 1985 to 1990. The research compared the experiences and attitudes of 160 16–20-year-olds in each of four towns. The young people were matched in terms of route and destination with those from a town twinned on the basis of the state of the local labour market: Liverpool and Bremen (contracting); Swindon and Paderborn (expanding). In each town the sample comprised forty young people from each of four trajectories. The first two trajectories covered those on academic or formally skilled routes with good prospects and who appeared at this stage of their

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careers to be making successful transitions into employment. The other two trajectories comprised those following more uncertain routes, undertaking lessskilled work or without formal vocational qualifications or with less secure prospects and those who had either been unemployed and/or spent considerable time on government ‘warehousing’ or remedial schemes. Both the general findings and those relating to progression to skilled work are presented elsewhere (Bynner and Roberts, 1991; Evans and Brown, 1990). This chapter, however, concentrates upon those with more uncertain prospects. In both countries certain patterns of experience can leave young people with fairly bleak prospects. Overall then, it is our intention to show that in each of the four contexts there are clear, but differentiated, patterns whereby some young people are increasingly marginalised in the labour market. Before embarking on our analysis of young people outside formally skilled routes, some key features of the local contexts should be summarised. LOCAL CONTEXTS Swindon was at the time in the heart of one of Europe’s fastest growing areas (Cecchini Report, 1988). Its buoyant local economy, particularly from 1985 to 1990, meant there was an expanding demand for youth labour. Although service and clerical employment led the boom, there were still significant opportunities in manufacturing (Bassett et al., 1990). Youth unemployment was markedly lower than the national average. Employment structures remained sufficiently open to offer a degree of choice to nearly all young people. Indeed, direct entry into the labour market remained an option for school leavers and increased in significance as the demand for labour strengthened. Liverpool has experienced both population loss and a severe contraction in employment since the 1960s. Unemployment has been consistently higher than the national average, particularly for the 16–19 age group. Labour market prospects in Liverpool for both young and older workers were bleak throughout the 1980s. Many Liverpool 16-year-olds continued in full-time education, and competition for jobs, or even for Youth Training Schemes (YTS) places with some prospects of being kept on (Raffe, 1988), was fierce. Due to the weakness of the labour market, non-firm YTS schemes were widespread (Roberts and Parsell, 1988), although subsequent prospects were poor. Paderborn, a town in North Rhine-Westphalia, experienced a slow but continuing increase of population and industry. It has an important infrastructural role in its region, in provision of education, health and social services. It also had a wide variety of trade and industry, with fairly static traditional industries alongside fast growing new-technology businesses. The labour market eased and with the growth in employment and training

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opportunities, youth unemployment (under 20) declined from 10.1 per cent in 1980 to 4.3 per cent in 1988. More students stayed on at school, and more training opportunities were available, although many apprenticeships were in the older trades. As a consequence some people had labour market difficulties upon completion of their apprenticeships, but these problems did not become manifest until they were in their twenties. The city-state of Bremen is the smallest Land in Germany. It had the highest rate of unemployment throughout the decade, the unemployment rate 1983–7 was 12.7 to 15.3 per cent, while nationally it was around 9 per cent. The most important reason for the decline of employment in Bremen was the structural crisis in ‘old’ industries like shipbuilding and steel, which was only partly offset by jobs in the public sector and in ‘new’ industries like electronics and car production. There was an increase in special schemes which meant problems were often deferred. Hence young adults, between 20 and 25, leaving ‘warehousing’ schemes or vocational training with few prospects, faced increasing risks of unemployment, parttime or temporary employment (Stegmann and Kraft, 1988). GERMAN TRANSITIONS The education and training of young people in Germany is dominated by the Abitur, for those following an academic route, and the dual system of apprenticeships comprising firm-based training with corresponding vocational education. Indeed, with the exception of some forms of specialised training, all other formal routes have as an aim the introduction or return of young people to apprenticeships. It is very difficult to operate outside formal routes, and to do so would mean giving up virtually all hope of regular, permanent employment for the foreseeable future. There are three alternative routes for young people not in an apprenticeship. They could follow vocational courses at college, undertake a general prevocational course or participate in a scheme. The success of these routes in (re)integrating young people into the dual system will be critically examined. However, to use this as an indicator of success overlooks the paucity of education and training in some less popular apprenticeships. Indeed for some, participation in an impoverished apprenticeship may be a prelude to subsequent problems where they are increasingly marginalised in the labour market.

Vocational education at college In general the specialised vocational schools were set up for occupations which were not covered by the dual system and because the dual system could not absorb all those who wished to enter it. It therefore exists as a partial alternative


to and a means of later entry into the dual system. Vocational schools like Handelsschule operate as a filter for the ‘apprenticeship market’, in that they are seeking to improve students’ basic skills and school-leaving qualifications, with the subsequent aim of achieving particular vocational qualifications. Applicants for clerical apprenticeships can apply after leaving school, typically Hauptschule or Realschule at 16 or 17, or after leaving Handelsschule typically after one or two years further study. In both towns most pupils had applied for apprenticeships and then only decided to attend the Handelsschule when their applications were unsuccessful. Overall then, provision in specialised vocational schools helps to regulate entry into the dual system (Duerrer-Guthof and Kazemzadeh, 1984) and facilitates the extended transitions into employment common throughout the German system. General prevocational education (BGJ) Attending Handelsschule may still be a positive choice, even though it is likely to be an intermediate goal in the search for an apprenticeship. In contrast, accepting a place on a general prevocational course (Berufsgundschuljahr: BGJ) is nearly always a ‘fall-back position’, usually after failure to get an apprenticeship. The BGJ was introduced for youngsters without a school-leaving certificate and was an attempt to ‘crack’ the dual system and offer the possibility of a broader foundation to subsequent education and training (Taylor, 1981). The attempt to break the dual system mould has not worked, and the vast majority of BGJ entrants sought apprenticeships at 16 or 17, and few are using it as a genuine orientation phase. Thus young people see it as a ‘way out’ if no other plans materialise. Both explicit comments from the young people in our samples, and the declining numbers of participants in both towns as relatively more apprenticeships became available, reinforce this point (see Table 8.1). Although the general education and training received may help some students, problems may remain. Thus of the 219 young people who completed the BGJ in Paderborn in 1987, 42 people were still unemployed at Table 8.1 Participation in Berufsgrundschuljahr

Note: Decline in school leavers over same period was approximately 24%.

the end of the year, while many of the others had taken less popular apprenticeships, which offered limited prospects. The BGJ provision itself is invariably workshop-based, comprising a broad orientation to practical work in fields such as woodwork, metalwork, carpet-laying and catering. Initially, BGJ was successful in creating flexible learning skills (Weissker et al., 1979), but the


initial innovativeness seems to have been lost and young people in our samples were more likely to feel that particular skills had been developed. This appears to be partly due to the resistance of employers, who refused to acknowledge BGJ as equivalent to the first year of an apprenticeship in the dual system (Russell and Neale, 1983). In both towns BGJ is accepted as a means of sustaining morale while acting as a ‘holding pool for surplus, but aspirant, potential apprentices’ (Russell, 1985). It varied with the state of the labour market, expanding in the mid1980s and then going into decline. Special schemes Those on BGJ still hope for an apprenticeship eventually. Such hopes are unrealistic for those on schemes (Weidman, 1987), even though this may be the professed aim (Casey, 1984). These typically ‘mop up’ those who would otherwise be unemployed and are of greater significance in depressed labour markets. The Bremen young people in this trajectory of our sample were drawn primarily from a job-creation scheme Arbeitsbeschaffungmassname (ABM) seeking to integrate vocational and basic skills. Although some entered schemes from school or unemployment, others dropped out of apprenticeships. Most were realistic in believing that their prospects would be bleak even upon completion of the scheme. Indeed, aggregation of initial instability and time spent upon the scheme meant that problems would likely be cumulative. They were unlikely to get apprenticeships with prospects, and for those without skilled training many other employment avenues would be closed. Many had already lowered their sights and were seeking unskilled work. The picture was similar in Paderborn, where schemes were still required for those dropping out of other vocational education and training (VET). Schemes such as Arbeiten und Lernen sought to help young people to improve their basic education. Many were just waiting till they could get unskilled jobs, while others hoped for apprenticeships, but less than one in six of the 578 on schemes in 1987–8 achieved this. Even then they still had to complete their apprenticeships, which were often in areas with little chance of being kept on so very few would make a full recovery to skilled work. Time spent on schemes, especially if coupled with an unstable employment record and/or spells of unemployment, could greatly reduce the chances of young people finding permanent employment. This was partly due to employer prejudice. In employers’ eyes, young people on schemes were identified as having had problems with education and/or employment, and employment decisions were made on such generalisations, not what particular individuals achieved. A vicious circle results, whereby those from schemes continue to face problems in the labour market and this reinforces beliefs that those young people completing such schemes are themselves problems. Even


where some employers worked with schemes, the resulting opportunities were nearly always for unskilled jobs. There were three ‘typical’ careers for those joining the schemes. First, those who leave or are sacked by the scheme face a bleak future. Second, there are those who return to the labour market, only to struggle again without the counselling and extra social support they receive on the scheme. Finally, some secure and retain employment, although invariably in unskilled jobs. Thus even the successes of schemes were likely to operate on the margins of the employment structure even in a fairly buoyant labour market (Brown and Behrens, 1991). Links to the dual system All the ancillary routes described share a common feature: their very essence is determined according to their relations with the dual system. The specialised vocational schools regulate entry into the dual system, with BGJ operating an even clearer role as a ‘holding pool’, and finally schemes cater for those unable to get or complete an apprenticeship. Most young people outside the dual system are then still hoping to enter it. However, what are their views on the quality of the education and training they are getting? Are they developing a fund of general work-related competences which will help them get and complete an apprenticeship? One set of our research questions tried to discover the extent to which young people felt they ‘owned’ valuable skills, carried out important tasks or roles and generally felt involved in or challenged by their experiences in post-16 education and training. The findings were striking (see Table 8.2). Those on formally skilled routes (II) saw their experience as much richer than their counterparts outside the dual system (III and IV). Taken overall, young people within the dual system (II) see their training as a valuable and enriching experience. Those who stayed within the education system, hoping to effect a later entry into the dual system (III), generally felt a sense of achievement and that they were developing new skills and abilities. In other respects, their development was much more mixed, but as they had realistic hopes of subsequent entry into the dual system, such development could come at a later date. Of more concern was the way those on schemes, particularly in Bremen, were much more negative about the skills they owned. The Paderborn schemes did have a measure of success in getting people to use their abilities, work as a member of a team and feel a sense of achievement. Although the degree of challenge was much more limited, and this was in line with the schemes’ pragmatic aim of equipping most of the young people for unskilled employment. Those outside the dual system often already have lower educational attainment; although this relationship is partly disrupted by employers choosing more boys for apprenticeships (Zinnecker and Fuchs, 1981) even though girls


Table 8.2 Perceptions of ownership of skills of those within and outside the dual system

Notes: Responses are ‘quite often’ or ‘very often’ (A), ‘never’ or ‘rarely’ (B). Total cell size in each case is 40; the remainder answered ‘sometimes’.

in general have higher educational attainment. It would appear they are falling further behind their contemporaries with apprenticeships. The approach to


learning for those young people outside the dual system appears rather sheltered: they are rarely given responsibility, able to use their initiative, feel challenged or able to work as a member of a team. This relative lack of learner involvement could also make it more difficult for them to become more selfdirected, and the widening ‘gap’ between them and their contemporaries may be difficult to bridge. Certainly entry into unskilled employment is not a conveyor to subsequent internal promotion to skilled work. Of those without qualifications who do manage to get unskilled jobs at 18 or 19 only 8 per cent are subsequently trained for skilled work (BMBW, 1991a). Does this matter—if they have fallen behind in the race to secure skilled, permanent employment, can they not settle back and just look for semi-skilled employment, which is reasonably secure and well-paid? This is unlikely because many large employers offering permanent’ and well-paid semi-skilled employment may insist that vacancies are filled only by those who have completed an apprenticeship, although not necessarily in a relevant trade (Heseler and Roth, 1988). The employers argue that they can give specific training, but they are looking for people with perseverance and a willingness to learn’. Such qualities, along with others, have been demonstrated by completing an apprenticeship. The employer is then confident that the workers will have the flexibility and adaptability not only to retrain as required, but also to respond if unexpected problems arise. This means that the completion of an apprenticeship has a general labour market utility (Heinz, 1985) even if work is sought in a completely different occupational sector. The dual system then in practice, notwithstanding the rhetoric about preparation for skilled work, performs a number of labour market allocation functions across a wide range of employment. Indeed those completing apprenticeships not only fill skilled jobs, but they also act as a reservoir of talent from which employers can draw for their other ‘core’ employment requirements. Knowledge of this in turn ‘locks in’ many young people into apprenticeships with companies, where both their immediate and longer-term prospects are poor. Marginalisation processes within the dual system So far young people appear to be in danger of being marginalised if they remain outside the dual system. However, in both towns most young people would get an apprenticeship eventually. Indeed the demographic decline of numbers of school leavers coupled with a tightening labour market meant that by 1990 training place supply exceeded demand by about 5 per cent in Bremen and over 10 per cent in Paderborn (BMBW, 1991b). As a consequence all routes outside the dual system were being progressively squeezed. Does then the prospect of near-universal coverage of the dual system by all who wish to enter it mean that we have identified problems of the late 1980s which will


subsequently disappear? Unfortunately not—because processes of marginalisation are also evident in the differentiated patterns of experience of young people within the dual system. First, the extended transitions into the dual system (Evans and Heinz, 1991; Wallace, 1991) were themselves sometimes a pressure, in that they postponed the effective financial independence of some young people well into their twenties. Second, some apprenticeships appeared to young people like ‘trial by ordeal’: they felt they were effectively being used as cheap labour, working long hours but with little or no chance of being kept on. Unsurprisingly such apprenticeships are unpopular and many trainees quit. In Bremen, almost half the craft apprentices who started in 1989 quit before they completed their training. About half of these were switching to another apprenticeship, but the rest did not stay in the dual system. Those dropping out invariably interpreted this as individual failure rather than as a systemic problem. The dual system then operates to sort and indeed define young people as suitable for skilled employment, other core employment and for peripheral employment, with the latter group feeling that they have been given a chance at skilled training, although in practice an unequal chance in that training opportunities were widely differentiated. The less popular apprenticeships often offered poor quality training, especially for young people with low-level school qualifications, who needed more not less support. The third marginalisation process related to the gendering of training opportunities, with training for women shorter, less likely to lead to further training and giving access to lower status, less well paid jobs (Mayer et al., 1983). In 1990 the most popular female apprenticeship in Germany was in hairdressing (7.3 per cent), and apprenticeships as either doctor’s or dentist’s receptionists accounted for 1.1.6 per cent of the total (BMBW, 1991b). Despite substantial attrition during the apprenticeship, clearly most of those completing their training are going to struggle to get skilled work. Even for those who do, pay and longer-term prospects are often poor. The way the system operates in practice, and the lack of challenge to initial choices, it is hard to escape the conclusion that many women were actually being equipped for entry into a secondary labour market. Overall then, perhaps 30 per cent of those who were at one time on skilled routes are progressively marginalised. That nearly everyone will have been given a chance at skilled training at some stage means that ‘failure’ is internalised, and critics are neither vocal nor visible. Indeed, the marginalisation processes operating before, during and after apprenticeship mean that many expectations are gradually ‘spiralled down’, especially for young women.


ENGLISH TRANSITIONS When moving from a consideration of young people’s transitions in Germany to England two immediate differences should be signalled. First, the lack of regulation about skilled employment presents a stark contrast to the German approach. The diversity of routes into skilled employment with formal vocational qualifications is coupled with the possibility of reaching de facto skilled status through work without the necessity of achieving formal qualifications. Second, local labour market conditions have greater significance: hence the contrast between the unregulated market-led vocational preparation of Swindon and the array of institutional transitional schemes in Liverpool designed for an intensely hostile labour market environment. The underdevelopment of formal routes to skilled status could reflect a systemic weakness: a ‘training gap’, whereby far more young people in England entered jobs either without training or with just on-the-job training (Finegold and Soskice, 1988), although taking the perspective of the young people, this lack of regulation may mean that they have a wider range of ways of ‘getting on’, provided there are sufficient opportunities in the first place. Indeed the possible entry into skilled employment without formal qualifications can provide a powerful incentive for some making an early entry into the labour market (Evans and Brown, 1990). The focus of this chapter is upon the processes of labour market marginalisation. Prolonged spells of unemployment are the most obvious way of being marginalised (White and McRae, 1989), and seventeen of the Liverpool sample already measured their unemployment in years. How far though did other routes also lead to labour market marginalisation? The main areas to be investigated are other education (that is, not following highor intermediate-level academic or vocational qualifications), YTS and unskilled employment. In each case local labour market differences mean that apparently similar experiences are invested with very different meanings. In the unregulated English VET system the local labour market contexts influence how young people are marginalised. Education Other educational routes such as prevocational education programmes remained very much a minority option in Swindon. Those with higher academic attainment joined higher-level academic or vocational routes, while most of those with lower educational attainment preferred employment at 16. Arguments about the value of a broader foundation for education and training proved no match against the immediate financial benefits, although casehistories showed that ‘other’ educational routes could be utilised to build bridges to further education and/or skilled employment. Indeed there is an irony in that prevocational schemes work best when the labour market affords a


high degree of choice, but they are most prevalent where the opposite is the case. In Liverpool for those with low educational attainment staying on was only likely to improve job prospects if it increased the number of marketable qualifications you possessed (O levels, higher grade GCSEs) (Roberts et al., 1989). The young people often recognised this and had applied for many jobs, but the depressed youth labour market had left them with few alternatives. Even attainment of substantive vocational qualifications was no guarantee of employment in an unchanged labour market (Rees et al., 1989). Those with moderate or low educational attainment at 16 in depressed labour markets faced a long road before staying on paid dividends in terms of enhanced employment prospects. This was also dependent upon them eventually being successful— just staying in the education systcm and amassing a few peripheral qualifications was unlikely to effect a change in prospects. In the English context such provision is being primarily used as ‘warehousing’ in depressed labour markets and as ‘temporary bridges’ into employment, often with little prospect of further education and training, in more buoyant ones. If local labour markets pick up then, following the Swindon example, much thinning will probably take place on full-time educational routes for those with modest educational attainment. Youth Training Scheme (YTS) An almost identical picture emerges from a consideration of YTS not based on the firm. As in Germany training not based on the firm tended to attract those who had been unsuccessful elsewhere. Indeed whatever the ‘official’ view about the place of such education and training, in the eyes of young people in both countries they were on a ‘scheme’ and a residual one at that. Once again local labour market influences were marked. In Swindon, even some firmbased YTS schemes were difficult to fill. There were only two general YTS schemes not based on firms. These fulfilled important roles, in that they were willing to offer young people additional support. The young people were generally quite positive, not least because they had reasonable job prospects. The work itself was usually unskilled, but both the scheme organisers and the young people were likely to see this as a significant achievement given their initial difficulties. By contrast in a depressed labour market, while valuable help may be given in improving basic skills there is often very little chance of youngsters gaining employment at the end of such schemes, and this severely compromises the value of the vocational preparation. There were also marked inequalities by race, with young black people being much less likely to get either employment or firm-based training (Banks and Ullah, 1987; Connolly and Torkington, 1990). In Liverpool most YTS not based in firms must realistically be regarded as ‘warehousing’ schemes (Roberts et al., 1989): an


inadequate substitute for employment, not a pathway into it. Firm-based training will be similarly judged by young people not in isolation but according to future prospects (Banks and Evans, 1989). In Swindon, young people seldom entered YTS unless it was in a chosen occupational area and/or had reasonable prospects, although some used it as a temporary measure before finding a job. In Liverpool, firm-based YTS was much more significant, and the proportion of young people in Liverpool leaving school and entering all types of YTS in 1988 was 45 per cent. The number of employed status trainees were always in a minority (usually less than 25 per cent), and even where employers intended to recruit they were likely to use YTS as an ‘extended probation’ (Brown and Behrens, 1990). In other cases the chances of being kept on were remote or non-existent: ‘indeed risks of unemployment now increase as each cohort moves beyond YTS and outgrows juvenile jobs and wages’ (Roberts and Parsell, 1988). Overall then, in a buoyant labour market such as Swindon YTS could be a direct route into skilled employment or part of a two-step transition into employment, but the route was of little significance. Whereas where it was significant, as in Liverpool, young people found that firm-based training was much less likely to lead to skilled status, or indeed any type of employment. Some attained some, mostly low-level, vocational qualifications. These were, however, likely to prove very perishable if they were not supplemented by further qualifications and/or a stable employment record. In Liverpool, as elsewhere with significant YTS provision, there was a marked gendering of training (Cockburn, 1987; Stafford, 1991). Completion of YTS did not confer any continuing value or general labour market utility as would completion of an apprenticeship in Germany. In certain occupational fields in buoyant labour markets even quite modest training can launch a career, but in depressed labour markets training that does not lead to substantive vocational qualifications has a very limited shelf-life. Indeed the pattern of careers of our samples shows that it is difficult to perceive that this type of training has much effect on long-term prospects. YTS responded directly to the state of the labour market: in Swindon it could be a route into permanent, possibly even skilled, employ ment, whereas in Liverpool YTS provision was much more differentiated. For a minority it was part of a two-step transition into permanent employment, which for some could subsequently lead to skilled employment. For the majority, however, prospects were much more uncertain. They were being marginalised, but if they could get employment quickly, there could still be hope of recovery, including in some areas relatively skilled employment. The chances were remote, but there were no formal barriers, just the labour market ones.


Employment Despite the widespread lack of job opportunities for 16-year-olds, a number of the Liverpool sample had managed to get jobs at 16. Most of these were low paid and had poor prospects, but youngsters were hanging on, in some cases rather grimly, because they had jobs. Very few looked as though they may make the transition to regular partly skilled employment. Indeed only a minority looked as though they would have opportunities even for regular unskilled employment (Behrens and Brown, 1991). Such work, was modestly paid and lacking in prospects, and also lacked job security. Such young people were already on the margins of the labour market. There were, however, many opportunities for permanent unskilled jobs in Swindon. Some young people were disgruntled, but others seemed content with such work, even with the lack of training and prospects. This could be regarded as unproblematic, indeed many unemployed elsewhere would regard it as enviable. However, such workers were vulnerable if the state of the labour market changed, and several did become unemployed in the wave of redundancies accompanying the recession. Their prospects were then very bleak. The lack of access to training for young people in England if unskilled and employed was one of the classic problems associated with English VET (Finegold and Soskice, 1988). In both towns, although particularly in Swindon, some young people had had spells of employment mixed with unemployment. The type of employment, temporary, seasonal or contract work, was invariably unskilled. This meant that they were building up an employment record, which itself was likely to keep them on the margins of the labour market, the development of a ‘poor’ employment record itself operating a powerful barrier to gaining permanent employment (White and McRae, 1989). Those with few qualifications need to recover quickly from employment setbacks if they are not to be marginalised. If not, as unemployment records lengthened they were likely to be deemed unsuitable for ‘core’ employment. Employers also seemed to prefer using other methods (employment of part-timers, especially on evening mini-shifts, or temporary workers) to going below their ‘bottom line’ in the search for core workers (Dale, 1989). For other than school leavers, a stable employment record was almost a prerequisite to being taken into ‘core’ employment. While employment at 16 in Swindon could be a ladder into skilled employment, this was likely only if the job was initially identified as having such prospects and substantive training was given. As a result employers offering such jobs tended to recruit school leavers with reasonably high levels of educational attainment. In Swindon, particularly, but also in Liverpool, recruitment into unskilled employment led to internal progression only in exceptional cases. Those going into unskilled employment at 16 may have considered themselves lucky at the time, but by 20 many had had considerable problems, and nearly all were confined to the margins of the labour market.


Prospects for progression The market-led vocational preparation in Swindon in the late 1980s could perhaps be portrayed as ideal from the perspective of young people. There was relatively little unemployment and the flexibility inherent in the system allowed movement between jobs. There were a wide range of VET opportunities and there was the possibility of acquiring skilled status through the on-job acquisition of skills (Tuxworth and Ciechanowski, 1987) and being well paid. There were also employment opportunities without further education or training. In practice, the bifurcation of the labour market meant that although there was movement within both the relatively skilled and unskilled sectors, there was relatively little movement between them (Bassett et al., 1990). Hence those who went into unskilled employment at 16, or dropped out of other employment and training subsequently, were on a path whereby they became increasingly marginalised in the labour market. Even in a buoyant labour market there had been little prospect of progression. For some there had been the illusion of security, but by the age of 20 even that had gone. There was an even clearer bifurcation in labour market opportunities in Liverpool. Those with substantive academic or vocational qualifications took not only all the skilled jobs with prospects, but squeezed others out of many less favourable jobs too (Raffe, 1988), although this did not necessarily hold for well-qualified young black people who might still find it difficult to get a job (Clough et al., 1984). Experience of work for the less well qualified was likely to be through marginal employment or on a scheme. Hence in both towns, those outside skilled routes had different patterns of experience from those on skilled routes. However were they developing skills to give them prospects of progression? The early exposure to work (mostly in Swindon) or work experience (mostly in Liverpool) associated with the accelerated transitions of young people in the English system meant that they were confident they possessed a fund of workrelated competences (see Table 8.3). Despite being outside the mainstream employment, education and training routes many felt that, despite all the limitations, they had made some form of personal progress. This is explicable in that even those on schemes would often be given significant responsibilities in work. The young people may have had valuable experiences and the highly positive response on most dimensions in Table 8.3 seems to indicate that significant personal development can take place. The tragedy is that such development is not built on in a systematic way. Thus while the initial experience of ‘work’ is seen as highly significant and beneficial by the individuals concerned, this is largely negated if the ‘transition’ leads into unemployment or employment without prospects. Doubts remain that the English pattern of vocational preparation is preparing young people for jobs with low skill demands and these will be increasingly rare in future (Raffe, 1991). The skills developed were nearly always in areas with low skill demands


Table 8.3 Perceptions of use of skills of those outside formal skilled routes

Notes: Responses are ‘quite often’ or ‘very often’ (A), ‘never’ or ‘rarely’ (B). Total cell size in each case is 80; the remainder answered ‘sometimes’.

and/ or poor longer-term employment prospects (Ashton et al., 1988). The lack of substantive training meant their basic education and training was still underdeveloped. They were not only currently marginalised, but they would require considerable further education and training for their position to change. The systemic weaknesses and relative lack of commitment to education and training in England were exemplified by the experiences of young people in different ways. In Liverpool young people were well equipped to carry out jobs for which they have had some experience but for which permanent vacancies do not exist or are very scarce. By contrast, the ‘Swindon experience’ showed how jobs without training may leave workers vulnerable to economic changes. In neither case were young people developing experience or qualifications


which had a wider labour market utility. The labour market influenced the likelihood of being able to get unskilled work, but in neither labour market would such work help young people build up patterns of experience or qualification which would give them secure longer-term prospects. Additionally, such unskilled work reflected a labour market segmentation by gender, with many unskilled jobs particularly in Swindon being widely perceived as ‘women’s work’. ANGLO-GERMAN COMPARISONS In Germany VET-systemic factors are most influential in the processes whereby some young people are increasingly marginalised in the labour market. That is, most of those who are marginalised will be those who fail to complete apprenticeships and/or complete apprenticeships with few opportunities for skilled employment (Herget et al., 1987). Now the state of the local labour market clearly affects the availability of employment with prospects, but this is masked by the ability of the VET system to hold young people in extended transitions till the labour market does pick up. Both employers and young people expect young people to be involved in VET (Bynner and Roberts, 1991). Indeed, the impossibility of an ad hoc acquisition of skills on-the-job or elsewhere being recognised without the requisite vocational qualifications means labour market position is clearly bounded, without a skilled qualification (Behrens and Hurrelmann, 1991). Whereas in England there appears to be a direct relationship between provision and the state of the labour market. In Swindon’s unregulated marketled system one can achieve skilled status through almost any combination of education, training and employment, provided only that the initial point of entry into employment has the possibility of progression. There were, however, also considerable numbers of unskilled jobs available for young people. Though the initial rewards seemed high, this route invariably led to marginalisation in the labour market: with spells of employment punctuated by unemployment or else confirmation in unskilled employment with few prospects. In contrast, the much greater scarcity of either type of employment in Liverpool meant there were an array of institutional measures offering some form of education or training. In practice, there was sharp differentiation between different types of provision from the outset. Some gave substantive training, with access to valued qualifications, and hence gave people some chance of gaining employment. On the other hand, there was ‘warehousing’ provision with little substantive training and no marketable qualifications. In such circumstances, the marginalisation process was virtually transparent, with young people recognising that their possibilities of progressing through to


permanent employment were scarce, and the chances of getting skilled employment almost non-existent. Those outside the skilled routes in either country generally have lower educational attainment, yet the very different forms of work, work experience or vocational preparation in the four towns shared a common characteristic: they were narrow. That is, the particular work or specific vocational preparation made their experiences ‘perishable’, if transition to permanent employment was not speedily accomplished. Indeed for youngsters in both countries, the time horizons of providers appears very short: success is seen as getting a job in England and getting into firm-based training in Germany. This perhaps does a disservice even to those who are successful but it can be a disaster for those who are not. In both countries the careers of youngsters outside the skilled routes serve to emphasise the start of a labour market segmentation, where these youngsters are interfacing with a largely different, and greatly impoverished, set of employment, education and training opportunities than those on skilled tracks. They started behind those who went into skilled routes at 16 or 17, and by age 20 they had invariably fallen further behind. In both countries, even in buoyant labour markets, those with poor educational achievement or unstable initial employment records may struggle to gain permanent employment. Those who meet both criteria may from an early age (18/19 in Germany, and possibly even earlier in England) be destined to be continually vulnerable: unskilled, unqualified, subject to periodic unemployment and whose employment opportunities are likely to be limited in both type (very routine work) and duration (contract, temporary, part-time work). The problems in Bremen and Liverpool are obviously much more acute, but the creation of such marginal workers even in Swindon and Paderborn are significant in that they are clearly signalling that changes in demography and employment opportunities will not mop up all the problems associated with youth unemployment. Indeed labour market segmentation, with rewards in the secondary labour market not always keeping pace with those in the primary labour market, has meant such young people may be put on the periphery of the employment structure rather than outside it altogether. In Bremen and particularly in Liverpool, periods of unemployment and broken employment records were the most obvious way young people were marginalised in the labour market. However, any lengthy period of time spent on impoverished schemes, again particularly in Liverpool but also in Bremen and Paderborn, was also likely to be fatal to prospects of anything other than unskilled employment. In Swindon, and to a much lesser extent Liverpool, entry into unskilled employment at 16 or 17 was also a likely guarantor of subsequent marginalisation. The above meant that considerable numbers of young people aged around 20 were marginalised, with poor short-term and


long-term prospects. In Swindon, the comparatively sanguine short-term prospects of the unqualified had turned sour with the recession: their long-term prospects were poor. In Bremen and Paderborn, however, at this age there were the first signs that the apparent comprehensiveness of the dual system is partly illusory. A trickle of young people had given up all hope of getting an apprenticeship. However, their numbers will be progressively swelled by others failing to complete their apprenticeships and to some extent also by those completing apprenticeships in trades with diminished prospects who have also been unable to secure other permanent employment. The key point here is that the apprenticeships from which the bulk of the ‘failures’ will come are largely predictable, and hence the process of marginalisation is a systemic one, despite many perceiving it as a process of individual failure. CONCLUSIONS There are differentiated patterns in the four labour markets whereby young people are increasingly marginalised in the labour market. In Swindon, early entry into jobs without training left young workers vulnerable to subsequent change in employment structures and the labour market. In Bremen and to a lesser extent Paderborn, provision through workshopbased vocational preparation was limited and undemanding, leaving young people ill-equipped to enter and complete apprenticeships. In Liverpool, training schemes whether based on work or work experience mainly prepared young people for undemanding jobs, which were scarce today but likely to be even more so in future. In all the above cases, time horizons of providers were short, whereby young people may develop the specific work-related competences to perform undemanding work, but would be ill-equipped for further progression in education, training or employment. Gains in personal development were seldom built on subsequently and other experience was often highly perishable in the labour market. The experience of English young people was most worrying in that between 30 and 50 per cent of the population, depending upon the state of the labour market, could be marginalised in this way. This coupled with the minimalist approach to training for some jobs seemed likely to lock the English economy into a ‘low skills equilibrium’ (Finegold and Soskice, 1988), with the focus of training being current jobs rather than jobs for the future. In Germany, the number of young people marginalised without any experience of skilled training is very small (probably less than 5 per cent in Paderborn, 10 per cent in Bremen). Experience of unemployment or on schemes or in unskilled employment play a much more significant role in ‘spiralling down’ the expectations of the increasing numbers of young people who fail either to go on to complete an apprenticeship or to get skilled employment (probably around 30 per cent).


The differential access to training with long-term prospects, particularly for young women, ensures that some skilled training is de facto equipping young people for employment outside the primary labour market. From a systemic point of view, however, Germany has a large pool of workers who have considerable experience of skilled training. They can then be rapidly mobilised if the economy picks up, such that skill shortages rarely occur. From the perspective of the young people this means that in Germany, those that have completed skilled training but not found skilled employment, do at least have the possibility of recovery into permanent semi-skilled employment. Those who give up trying to achieve a skilled qualification know that they will be pushed to the margins of the labour market. Overall then, in each of the four contexts, it is possible to identify differentiated patterns of employment, education and training experiences which were leading to the marginalisation in the labour market. It is salutary then to consider that even if there is increasing convergence in types of skill training and patterns of work in formal employment structures in both countries, the prospects of those outside those routes are likely to remain poor, and as a consequence their integration is likely to remain problematic. REFERENCES Anderson, J. and Ricci, M. (1990) Society and Social Science, Milton Keynes: Open University Press. Ashton, D., Maguire, M. and Sillsbury, M. (1988) The Changing Structure of the Youth Labour Market, ESRC Report, Leicester: University of Leicester. Banks, M. and Ullah, P. (1987) ‘Youth Unemployment: Social and Psychological Perspectives’, Department of Employment Research Paper 61, London: Department of Employment. Banks, M. and Evans, S. (1989) ‘Employment and Training Orientations as a Function of Gender, Careers and Labour Markets’, ESRC 16–19 Initiative, Occasional Paper 9, London: City University. Bassett, K., Boddy, M., Harloe, M. and Lovering, J. (1990) ‘Economic and Social Change in Swindon’, in J. Anderson, and M. Ricci (eds), Society and Social Science, Milton Keynes: Open University Press. Behrens, M. and Brown, A. (1991) ‘Routes to Nowhere?’ in J. Bynner, and K. Roberts (eds), Youth and Work: Transition to Employment in England and Germany, London: AngloGerman Foundation. Behrens, M. and Hurrelmann, K. (1991) ‘Die neue Wanderschaft. Vorbereitet auf den Arbeitsmarkt Europa?’ Wege nach Europa, Friedrich Jahresheft, 9. Brown, A. and Behrens, M. (1990) ‘Routes to Skilled Work in England and the Federal Republic of Germany’, Paper presented to Sixteenth British Educational Research Association Conference, Roehampton. Brown, A. and Behrens, M. (1991) ‘Comparative Failures: Peripheral Workers in the Making in England and Germany’, ESRC 16–19 Initiative, Occasional Paper 40, London: City University.


BMBW (Bundesminster für Bildung und Wissenschaft) (1991a) Daten und Fakten ueber Jugendliche ohne abgeschlossene Berufsausbildung, Bonn: BMBW. BMBW (1991b) Grund- und Strukturdaten 1991/92, Bonn: BMBW. Bynner, J. and Roberts, K. (1991) Youth and Work: Transition to Employment in England and Germany, London: Anglo-German Foundation. Casey, B. (1984) ‘Governmental Measures Promoting Part-Time Work for Young Persons: Case-Studies from Belgium, France, Germany, Great Britain and Sweden’, IIM/LMP Discussion Paper 18, Berlin: Wissenschaftszentrum. Casey, B. (1990) Recent Developments in West Germany’s Apprenticeship Training System, London: Policy Studies Institute. Cassels, J. (1990) Britain’s Real Skills Shortage, London: Policy Studies Institute. Cecchini, P. (1988) European Challenge: 1992. The Benefits of a Single Market, Brussels: European Community Commission. Clough, E., Drew, D. and Wojciechowski, T. (1984) Futures in Black and White: Two Studies of the Experience of Young People in Sheffield and Bradford, Sheffield: University of Sheffield. Cockburn, C. (1987) Two Track Training: Sex Inequalities and the YTS, London: Macmillan. Connolly, M. and Torkington, N. (1990) ‘Black Youth and Politics in Liverpool, ESRC 16–19 Initiative, Occasional Paper 33, London: City University. Crouch, D. and Heath, A. (1991) Social Research and Social Reform, Oxford: Oxford University Press. Dale, A. (1989) ‘Part-Time Work among Young People in Britain’, ESRC 16–19 Initiative, Occasional Paper 3, London: City University. Duerrer-Guthof, F. and Kazemzadeh, F. (1984) Berufliche Ausbildung—Alternative im Studium? Hannover: HIS. Evans, K. and Brown, A. (1990) ‘Progress into Skilled Employment’, ESRC 16–19 Initiative, Occasional Paper 36, London: City University. Evans, K. and Heinz, W. (1991) ‘Career Trajectories in Britain and Germany’, in J. Bynner, and K. Roberts (eds), Youth and Work: Transition to Employment in England and Germany, London: Anglo-German Foundation. Finegold, D. and Soskice, D. (1988) ‘The Failure of Training in Britain: Analysis and Prescription’, Oxford Review of Economic Policy, 4. Hayes, C. (1989) An Integrated Vocational Education and Training System for the Future, London: FEU. Heinz, W. (1985) Hauptsache eine Lehrstelle, Weinheim and Basel: Beltz. Herget, J., Schoengen, K. and Westhoff, G. (1987) Berufsbildung Abgeschlossen was dann? Bonn: BMBW. Heseler, H. and Roth, B. (1988) The Impact of De-industrialisation and Reindustrialisation on Local Labour Market Processes: The Case of the Shutdown of the Shipyard AG “Weser”’, Labour and Society, 13(4): 375–87. Hurrelmann, K., Kaufmann, F. and Losel, F. (1987) Social Intervention: Potential and Constraints, Berlin: De Gruyter. Lauglo, J. and Lillis, K. (1987) ‘ “Vocationalisation” in International Perspective’, in J. Lauglo and K. Lillis (eds), Vocationalising Education: An International Perspective, Oxford: Pergamon. Mayer, C, Krueger, H., Rabe-Kleburg, U. and Schuette, I. (1983) Mädchen und Frauen: Beruf und Biographie, Munich: DJI Materialen-Verlag. Muench, J. (1986) Vocational Training in the Federal Republic of Germany, Berlin: CEDEFOP.


Raffe, D. (1988) The Status of Vocational Education and Training; The Case of YTS’, Research on Employment and Unemployment Workshops, London: ESRC/ Department of Employment. Raffe, D. (1991) The “Mixed Model”: Social Research and the Case for Reform of 16–18’s Education in Britain’, in C. Crouch and A. Heath (eds), Social Research and Social Reform, Oxford: Oxford University Press. Rees, G., Williamson, H. and Winckler, V. (1989) The “New Vocationalism”: Further Education and Local Labour Markets’, Education Policy, 4:227–44. Roberts, K. and Parsell, G. (1988) ‘Opportunity Structures and Career Trajectories from Age 16–19’, ESRC 16–19 Initiative, Occasional Paper 1, London: City University. Roberts, K., Siwek, M. and Parsell, G. (1989) ‘What are Britain’s 16–19 Year Olds Learning?’ ESRC 16–19 Initiative, Occasional Paper 10, London: City University. Russell, R. (1985) ‘A Comparison of YTS in the UK with Vocational Foundation Training in Germany’, in G.D. N. Worswick (ed.), Education and Economic Performance, Aldershot: Gower. Russell, R. and Neale, M. (1983) Experiments with the First Year of Apprenticeships, Blagdon: FESC. Sainsbury, D. (1991) ‘Industry Needs New Attitudes’, in R Schulze and J. Willman (eds), Post-Fordism, New York: Friedrich Ebert Stiftung. Stafford, A. (1991) Trying Work, Edinburgh: Edinburgh University Press. Stegmann, H. and Kraft, H. (1988) ‘Erwerbslosigkeit in den ersten Berufsjahren’, Mitt AB, 21:1–15. Stevens, J. and Mackay, R. (1991) Training and Competitiveness, NEDO, London: Kogan Page. Taylor, M.E. (1981) Education and Work in the Federal Republic of Germany, London: AngloGerman Foundation. Tuxworth, E. and Ciechanowski, C. (1987) Skilled Workers as Trainers in Industry, London: CGLI. Wallace, C. (1991) Young People and Youth Policies in Germany’, Youth & Policy, 32:20– 9. Weidman, J. (1987) ‘lntervention in the Transition from School to Work for Early School Leavers’, in K. Hurrelmann et al. (eds), Social Intervention: Potential and Constraints, Berlin: De Gruyter. Weissker, D. et al. (1979) Erprobung schulischer Berufsgrundbildung in Abstimmung mit der betrieblichen Fachbildung, Berlin: Bundesinstitut für Berufsbildung. White, M. and McRae, S. (1989) Young Adults and Long-Term Unemployment, London: Policy Studies Institute. Worswick, G.D. N. (1985) Education and Economic Performance, Aldershot: Gower. Zinnecker, J. and Fuchs, L. (1981) Jugend ‘81: Lebenswuerfe, Alltagskulturen, Zukunftsbilder, Hamburg: Shell.

9 HUNGARY’S EMPLOYMENT SYSTEM ON THE WAY TO A MARKET ECONOMY In 1990 and afterwards1 Lajos Héthy

INTRODUCTION Since 1989/90 eastern Europe has become and still is the world’s fastest moving target. Soon after Gorbachev’s Perestroika started in the USSR, Poland and Hungary began their march on the road of ‘peaceful transition’, the hardline communist regimes collapsed one after the other: in Czechoslovakia, in Bulgaria, in the GDR and finally in Romania. Pluralism, free elections and parliamentary democracy were put on the agenda. In Hungary the Conservative Antall-Boross Government (1990–4) took office. The political change opened up possibilities for economic reforms and extended a broad welcome to the once-taboo ways of the western market economies, although economic reform had been started in Hungary and Poland many years ago, before the political change. The development of a market economy appears to be the major direction of transformation for the future. Privatisation is looked upon as a prerequisite to reform. In Hungary a forerunner in this process—a two-level banking system was developed, the inflow of foreign capital was encouraged and even a stock exchange - the epitome of capitalist institutions—was established as early as the end of the 1980s. There were conscious efforts to reduce the state’s control and intervention (deregulation) in the economy. Earlier, sharply criticised concomitants of the market economies, such as strikes and unemployment, were legalised. Hungary and the rest of eastern Europe badly needed economic transformation: their national economies had been faced with acute problems of disorganisation and mismanagement, with structural rigidity, insufficient technological innovation and a lack of competitiveness in the world market. In fact eastern Europe’s share in the world trade has kept shrinking for the past decade. To show the extent of change I shall discuss the following aspects of Hungary’s employment system: the state and labour relations; the labour market and employment; skills and vocational training; wages and wage organisation; and business organisation and policies. The final section presents

HUNGARY’S EMPLOYMENT SYSTEM 211

an overview of the impact of these changes in the period of most recent reforms: 1990–4. STATE AND LABOUR RELATIONS Until 1989/90 the concept of industrial or labour relations was unknown to ‘scientific thinking’ and ideology. Or it was branded as a bourgeois marketeconomy category and therefore as unacceptable in Hungary, and in eastern Europe. Despite lacking the concept, eastern Europe had always had its own labour relations system(s) corresponding to its political system(s) and ‘command’ economy. Historically, one can speak of a sequence of four models of very differing kinds: 1 In 1945–9 a market-economy model of labour relations was functioning in Hungary, and in most countries of eastern Europe. 2 In Hungary from 1950 until the economic reform of 1968, and in several eastern European countries—like Czechoslovakia, the German Democratic Republic, or Romania—until the political changes of 1989/ 90, the traditional ‘socialist’ model of labour relations was dominant. – The theoretical basis of this model is the assumption of the homogeneity of interests in the national economy and the whole society. – The party state dominates the regulation of the relationship between workers and employers; relying almost exclusively on legislation and law enforcement. – The functions of the state, employers and workers, as well as of their representative organisations are not separated: the employer is a state bureaucrat, the trade union is a ‘transmission belt’ handing down the will of the party state to the workers. – Collective bargaining and agreements become instruments of plan fulfilment, formulating tasks for working collectives and of ‘mobilisation’ to overfulfil the plans. – Collective disputes of labour (particularly of interests) are not seen to exist and, if they still occur, e.g. in sporadic strikes, they are looked upon and treated as ‘subversion’ against the state. – Labour law is reduced to a means of disciplining the disobedient worker (s). 3 In Hungary the period 1968–88 resulted, as a consequence of the economic reform of 1968, in a healthy but slow progress in labour relations: the classical ‘socialist’ model was considerably liberalised. The main features of this process may be summed up as follows.

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– In its ideology the ruling Communist Party recognised the objective existence of differing and conflicting interests, although the party and the state themselves were still presented as an esoteric political force with exclusive prerogatives to represent all-social interests. – Along with their traditional function as a ‘transmission belt’, the trade unions took on the role of representing workers’ interests, but they remained dependent on, and closely controlled by, the ruling Communist Party. – With the expansion of enterprise autonomy, the employers’ function became easier to define; yet their representative organisation, the Chamber of Commerce (now the Chamber of Economy), remained a state organ until the 1980s. – Collective bargaining and agreements, existing only at enterprise level, got rid of functions alien to their nature—like the promotion of production and plan fulfilment—but their contents remained limited by strict bureaucratic rules. – At both national and enterprise levels there emerged new institutions opening up possibilities, at least in principle, for consultations between the labour relations partners of differing or adverse interests, such as enterprise-level institutions of participation like shop steward committees, Enterprise Councils. – Although labour law continued to ignore the existence of collective labour disputes, labour court practice refrained from treating the sporadic strikes as criminal law cases. 4 In 1988–9 changes were accelerated in the Hungarian system of labour relations, paralleling the disintegration of the party state, and pointing to a modern market economy model through the following developments: – Continued state withdrawal from labour regulation. – The traditional trade unions declared their exclusive function to be the representation of workers’ interests, and proclaimed their independence of the political parties; independent trade unions emerged on the scene. (Independent unions in Hungary—unlike Poland—were mostly white collar with a stagnating membership of tens of thousands, in a dozen unions.) – The redefinition of the functions of the employers’ representative organisations continued: the Chamber of Economy, and the organisations of cooperatives, re-evaluated their tasks and new organisations appeared—such as the militant National Federation of Entrepreneurs uniting the small entrepreneurs of the 1980s.


– Initiatives were made to establish a mechanism of real collective bargaining embracing the relationships between workers, employers and the state in wage determination at enterprise and national levels alike; this National Council of Coordination of Interests will be discussed in more detail below. – Collective labour disputes over rights and interests were legalised; the Parliament adopted a Strike Act in March 1989, the second one in eastern Europe after the Polish Strike Act of 1982.2 Despite positive industrial relations developments preceding 1989/90 there existed a set of serious doubts and dilemmas. The country faced the following questions: • What was the space for ‘free collective bargaining’ in an economic crisis situation when crisis management called for short-run emergency measures to be repeatedly adopted by the Government to cut living standards? • What were the prospects of labour relations in a budding parliamentary democracy in which lack of traditions meant even left-wing parties, like Socialists and Social Democrats, had limited, if any, affinity with industrial relations; while conservative free-market illusions—‘the interests of capital automatically integrate the interests of labour’—survived? • What were the real possibilities for nation-wide tripartite bargaining if the possible partners, primarily employees and employers, were still poorly organised at all levels—from enterprise to branch and national levels—and membership had limited control over them? • Could both the ‘official’ and new independent workers’ organisations maintain their unity of action or were they facing fragmentation? • Would employers’ organisations be able to embrace new-type employers joint ventures, joint-stock companies? LABOUR MARKET AND EMPLOYMENT In the ‘socialist’ eastern Europe the labour market was ignored and denied. Its functioning had been paralysed by extensive and strict detailed labour force planning and by bureaucratic administrative control. Despite all this, a labour market—even if in a limited and distorted form—had always existed and had its impact felt in the centrally planned economies. It could be seen in various symptoms: the repeatedly condemned labour turnover, the enterprise’s chronic ‘overdemand for labour’, ‘labour shortages’, the divergence of wage—and especially earnings—structures from the centrally-fixed wage scales, and so on. In these decades, the state’s bureaucratic administrative control of the labour market took direct and indirect forms. The typical direct means are well known. They include bureaucratic manpower planning, setting bureaucratic

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quotas for the structure of labour employed by the enterprises, definite instructions—e.g. ratios of administrative personnel—setting bureaucratic obstacles to labour turnover. The indirect means are less well known. The most important among them certainly was bureaucratic wage determination by the state. Transformation into a market economy necessitated the lifting of all these barriers in the labour market. Employment policy targets, although there were shifts in them over time and from one country to another, were basically similar: (a) to maintain ‘full employment’—a major ‘achievement of socialism’; (b) to support industrialisation with qualified labour—the realisation of this objective meant partly the mobilisation of labour reserves in agriculture and in the households; (c) to maintain a balance between the economy’s needs for labour and the supply of labour; (d) to fight ‘economically harmful behaviour’ on the part of the labour force such as ‘harmful labour turnover’, loose work discipline, etc. With the collapse of the ‘command’ economy the eastern European countries had to give up, openly or tacitly, full employment. In the early 1990s eastern Europe faced the imminent danger of mass unemployment: despite this fact the governments of the individual countries seemed to be unaware of, and unprepared for treating this problem. Out of almost 5 million active earners Hungary had, in 1989, 12,000 people receiving unemployment benefit, and, in the first quarter of 1990, 20,000 such people.3 This rate indicated that the earlier level of full (over) employment was still maintained; that is, structural changes had not yet affected Hungary’s national economy. At that time estimates as to future unemployment were not, and could not be, reliable: they varied in the range from 100,000 to 1 million people; i.e. from 2.5 to 20 per cent of all active earners. What unemployment Hungary was really to have, in between these two extremes, depended on future trends in the national economy and in economic policy. Possible sources of unemployment for the future? Emergency measures to manage the economic crisis could involve grave consequences for employment in two respects. First, restrictive monetary (financial) policies by the Government could lead to the financial collapse of many enterprises. Second, to cut the increasing budgetary deficit, the Government had to resort to radical restrictive measures. Yet an important group of enterprises has simultaneously faced the consequences of the collapse of trade in the USSRdominated Comecon trading bloc—an indication of which was the freezing of exports to the USSR by the Hungarian Government at the beginning of 1990. • Emergency measures, however, cannot be discussed separately: only in the context of the stabilisation programme, for which, in principle, two alternatives existed: a ‘shock therapy’ as followed by the Polish Mazowiecki


Government, and ‘gradual reforms’—preferred by the Hungarian Antall Government. • The Polish stabilisation programme included a liberalisation of prices, a wage freeze, a radical cut in state subventions to enterprises, restrictive financial measures and so on. As a result, as is widely known, inflation has slowed down somewhat, real wages declined, industrial production has radically decreased and the rate of unemployment started to grow rapidly. ‘Gradual reforms’ promised to be less negative for employment, but do not by any means exclude unemployment. Economic and technological restructuring—that cannot be reduced to the elimination of non-profitable production and enterprises and the support of profitable ones —was to have unpredictable consequences for employment and labour. As illustrated by the past experience of the industrialised market economies, earlier skills and qualifications are devalued and disappear and new ones are needed. It was an obvious illusion in Hungary that resulting tensions in employment could be solved by a simple retraining of the labour force and ‘converting’ it into the jobs of the new structures, i.e. seating coal or uranium miners in front of computer screens. Such simple conversions had at least two obstacles. First, the labour force over the age of 40–50 could not be retrained, and those unemployed were mostly unqualified and uneducated. Second, the overspecialised, over-centralised rigid state school system of vocational training was unable to adapt even to the existing economic and technological structure and was unlikely to serve as a solid basis for retraining. Privatisation and marketisation: the impact of these processes, speeded up by the Antall Government, could be contradictory for employment. On the one hand, already in the 1980s, the development of the private sector had contributed to the creation of new jobs. On the other hand, big business organisations of the state and cooperative sector were still the employers of the vast majority of the labour force. In this sphere—if we accept the estimates as well founded—the underutilisation rate of the labour force, in terms of working hours lost, was 15–20 per cent, a level that was similar in the state sector to the rest of the eastern European countries. Privatisation and the exposure of the remaining state-owned and cooperative enterprises to market pressures, was likely to enforce a rationalisation and reduction of the costs and an elimination of the reserves adding to the costs, including reserves in the labour force. In this way privatisation and increased market pressures could render probable a 15–20 per cent unemployment rate, i.e. between 750,000 and 1 million out of work. Demographic trends unfortunately coincided with the economic transformation and its probable consequences for employment, in the parallel appearance of new generations of large numbers in the labour market. In the mid-1970s, a

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demographic boom meant the number of the new generation born amounted to 185,000–195,000; in contrast to the normal range of between 125,000 and 135,000. Britain experienced a similar situation in the early 1980s. Migration of people of Hungarian origin from Romania was also to add to the tensions of demographic origin. What was done to fight possible unemployment in Hungary? Already the governments before 1990 had worked out and established a set of so-called ‘instruments’ of employment policy to serve this end; such as: manpower service offices, state subventions for retraining, for job creation, a restart credit scheme, an early retirement scheme, public utility works, an unemployment benefit system. An employment fund had also been created for financing them. Their effectiveness was, however, questionable. • Some instruments had already demonstrated dysfunctions; the restart credit, for example, had appeared to substitute missing preferential credits for starting small private undertakings. • The instruments had not adapted properly to the social composition of the unemployed, unqualified and uneducated and often socially handicapped people, and young school leavers. • They had tried to support centralised state efforts, although unemployment was primarily a regional or local problem, and it could have been treated on the spot by the joint efforts of the social partners: local selfgovernment, employers’ and workers’ organisations. • The application of the instruments was not backed by a consistent concept of employment policy, nor supported by a reliable information system. • Employment policy targets were far from being clear and they were not integrated with the general programmes of stabilisation, economic and technological restructuring, of the development of vocational training and so forth. Despite these weaknesses, in the eastern European context, Hungary appeared to have a relatively advanced position in its efforts to fight unemployment. SKILLS AND VOCATIONAL TRAINING The vocational training systems of the centrally planned economies traditionally shared a few key features. There was a high level of institutionalisation, particularly where the initial training of youth was concerned. There was a determination to make vocational training, at least in its major streams, an integrated part of the state school system. Vocational training was centralised


and state agencies (government agencies and governmentbased development and research institutes) predominated in its operation. This system proved to be beneficial in many respects. For example, it turned out masses of qualified labour to support industrialisation. However, it had obvious costs. High-level institutionalisation and centralisation limited the autonomy of actors—training institutions, enterprises and other organisations employing school leavers etc.— and led to an insensitivity of the system to labour market processes, to even the modest changes in the structure of the economy and technology. Training programmes often proved to be ineffective and too expensive. The weaknesses of Hungary’s vocational training system could be summed up as follows. 1 Secondary vocational training was overspecialised. It offered more than 300 different qualifications while at the same time enterprises were complaining that the system did not produce ‘ready usable’ workers. This contradiction could be explained by the structure of employment in Hungary which— because of a relatively low level of technological development—was characterised by a predominance of simple manual jobs; in 1984 this was 60 per cent of all jobs. In addition, in a situation of continuous shortage, enterprises had a great interest in workers with practical experience who were themselves able to improvise and to solve shortage problems, involving materials, machines and so on. 2 The control structure of vocational training although heavily centralised, was very heterogeneous. The major responsibility for the control of vocational training lay with the Ministry of Education but was shared with a couple of other ministries and central agencies. The Ministry of Education had responsibility for only thirty-four qualifications, compared to 361 for the Ministry of Industry, 143 for the Ministry for Agriculture and twelve for the Hungarian Post Office, to give only some examples. The schools themselves were run by the local councils, which were the lowest level of the administrative system. In a very few cases schools were run by enterprises. 3 Both its specialisation and its centralisation made the system rather rigid and difficult to change. It did not adapt flexibly to new developments, such as the forthcoming structural changes between production and services, nor to the use of new technologies and new forms of production. In secondary-level vocational training, microelectronics, computer science, biotechnology, information on modern materials and flexible manufacturing systems were all subjects which showed a deficit. With the exception of technician training in 1984, the curricula of the vocational secondary schools had dated back to 1978/80. In the field of skilled workers’ training they had been elaborated in the 1970s. The structure

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of the skills and knowledge taught at skilled workers’ schools had remained virtually unchanged since 1971. Training materials had been largely drawn up in the 1970s and reflect the technological state of the art and organisational principles of that time. Some sources estimated that the contents of vocational training were lagging behind even the moderately advanced level of technology in Hungary by as much as a decade. 4 Secondary vocational training was not properly supported by the system of general education. Vocational training for the majority of students was a negative choice, and especially the skilled workers’ schools felt that they recruited the ‘poor quality’ applicants. At the same time these schools were dead-ends, not offering a possibility in practice for the continuation of studies at higher levels. Accordingly the dropout rates were considerable: 44 per cent in textile and metallurgical vocations. However, dropout in electrical engineering and car repair, were only 4 and 11 per cent, respectively, indicating the existence of jobs with lower and higher status and earning possibilities. 5 The position of educational institutions in the bargaining for a share of the state budget was weak and had sharply deteriorated during the crisis of the late 1980s. In addition, the share of vocational training in the educational budget had gone down. This caused the practical situation, of schools, equipment, teaching materials and so on, to grow worse than it already had been before. 6 Enterprises, as a result of their financial problems, became increasingly reluctant to engage seriously in state school vocational training. Costs and immediate returns had become important arguments for the enterprises— when the state tried increasingly to rely on their resources in vocational training. To promote better relations between schools and enterprises a Vocational Training Fund was created: to which enterprises either contributed or, instead, financed schools directly. Training courses—providing initial and further training—appeared to have the obvious function of complementing vocational training in the state school system and, to a certain degree, of compensating for its insufficiency and rigidity. Training courses were highly specialised: in 1986 there were 397 training courses leading to manual and 385 training courses for nonmanual occupations. Most of these courses were run by economic organisations— enterprises, cooperatives, etc.—or by training centres. These facts illustrated the commitment of enterprises and other economic organisations to this form of vocational training. In the critical stage of the reform process that the country entered in 1989/ 90, there were indications of a need for increased attention to the problems and requirements of the educational system. The Government seemed to share the


view that such problems went far beyond the immediate need for financial and commercial skills at the managerial levels. They would imply a much broader and more comprehensive reform of the whole system in order to ensure that Hungary’s labour force is able to carry out the restructuring of the economy and is prepared to master the middleand long-term challenges of Hungary’s further integration into the world market. Some tasks of the urgent reform of the vocational training system appear to be mainly self-evident, others still were mostly obscure: • It was most likely that the highly institutionalised, centralised and bureaucratic state control of vocational training had to be pulled down. • What was much less clear was how a more flexible vocational training system, a system more responsive to structural changes in the economy and technology, and to labour market processes, could be built up. WAGES AND WAGE DETERMINATION In communist eastern Europe wage determination was a basically bureaucratic, administrative, process dominated by the state. The central plan determined the level (volume) and structures of wages. Wage determination itself was almost exclusively dependent on the targets of the state’s economic policy, as well as on its political and ideological considerations. Central regulators, such as the regulation of the ‘wage fund’ of the enterprises, the central job evaluation and wage scales had a decisive role. At the same time bureaucratic administrative wage determination had both a rigid and a flexible model. In the USSR, and several other countries until 1987, the individual earnings for definite jobs had been determined—at least in principle—by central instructions. On the other hand, in Hungary after 1968, state regulations had become indirect—wage increases by enterprises had been linked with certain ‘success indicators’ such as enterprise profits, and enterprises had been given the right to decide about their payment systems, piece rates and so on. Bureaucratic administrative wage determination by the state, whether in direct or indirect forms, proved to be a failure, for it could not meet the essential economic and social requirements it faced; that is to create a wage level and wage structures that were rational and equitable. Its negative consequences can be summed up as follows: • Paralysed by central instructions, or at least limits, enterprises could not adapt their wages flexibly enough to the needs of production, or of the labour market. That is they could not attract, keep and motivate their labour force, leading to a general restriction of performance and contributing to such problems as the underutilisation of labour.

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• Wages could not be treated by enterprises as normal costs. They were a specially ‘labelled’ and isolated item in their structure of costs and overvalued by the scarcity of labour; leading to a general wasting of resources and the actual wages as well. • Central wage policies, often based on political and ideological considerations, led to grave distortions in wage structures: to a general deprecation of non-manual work and non-material activities—such as education, health service, scientific research—in wages, and to unjustified wage differentials among manual workers. • Central limits on wages, and on consumption in general, were established to concentrate resources for economic policy targets, such as industrialisation or keeping international solvency, and led to wage levels that did not cover the reproduction costs of labour. In fact average wages came close to the basic costs of living. By 1988/90 it became evident that wage determination by the state, either direct or indirect, did not fit into the emerging market economy in eastern Europe. A new up-to-date model was needed. Experimentation with ‘wage reforms’ had started early in Hungary and Poland. In Hungary it had led to a breakthrough: the adoption of the most liberal wage determination system in eastern Europe at that time. Going back to the roots of a market economy, wage determination became based, in one respect, on the labour market—even if a crippled and segmented one. Its other basis was collective bargaining and agreements among those social partners—the Government, the employers’ and workers’ organisations—which had an interest in it; even if the legitimacy of the latter was questionable. The new model of wage determination From 1 January 1989 enterprises could raise their wage funds without any limitation, if a 50 per cent tax and social security duty of 43 per cent were paid for the increments. In addition, enterprises were exempt from taxation if their wage growth was less than 50 per cent of value-added growth. Small undertakings and most joint ventures were also exempt from taxation. Exemptions from taxation as well as guaranteed minimum wages were determined by a tripartite body: the National Council for Coordination of Interests (NCCI), established in October 1988. The NCCI also adopted recommendations for the maximum and minimum wage increases by the enterprises: guidelines that enterprises were not obliged to follow. The NCCI included among its members: the Government, the Chamber of Economy (the biggest employers’ organisation), the national associations of industrial, agricultural and consumer cooperatives, the representative organisation of small entrepreneurs, those of private craftsmen and retail traders, and the National


Council of Trade Unions (SZOT). Its meetings were chaired by the three major partners (the Government, Chamber of Economy, SZOT) on a basis of rotation, all of them having a right of veto. This new system of wage determination was, without doubt, a step forward from the model of the ‘command’ economy to the market economy. As might be expected, it had its achievements and weaknesses. First, it opened up more space for the business organisations to treat wages as normal costs. Second, as enterprises still functioned in a quasi-market their wage policies were not dependent so much on their business strategies but on their market positions: raising wages via raising prices was an open possibility for those being in a monopolistic position in the home market, especially if the share of wages in their structure of costs was low. Third, wage differentials in the productive sphere increased, even in identical jobs, depending on the positions of the enterprises: small private undertakings and joint ventures—contradicting the assumptions by dogmatic Marxism - were paying 30–40 per cent higher wages than stateowned enterprises. Fourth, the gap between the productive sphere (enterprises) and the nonproductive sphere of the national economy, financed from the budget, kept increasing. The liberalisation of wage determination, however, was hindered by several conditions: • there were no guarantees that it did not contribute to inflation; • in Hungary, and in several other countries, the economic difficulties related to imbalances of payment and budget urged restrictions in wages and consumption; • the elimination of distortions in wage structures, such as the deprecation of non-manual work, required a direct intervention by the state; • the extent to which the partners of industrial relations (employers’ and workers’ organisations) were genuine and legitimate representatives of their membership, was much debated. The liberalisation of wage determination, although conforming with the general trends of economic transformation, might come into conflict with management of the economic crisis. Unsurprisingly, such practices have been much criticised in Hungary and several attempts have been made to restore, in a modernised form, the earlier practices of bureaucratic administrative wage determination on the pretext of ‘fighting inflation’. Other countries have followed differing practices (such as stricter state control over wages) as a part of their stabilisation programme.

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BUSINESS ORGANISATIONS AND POLICIES Privatisation has become a central policy in both Hungary and the rest of the countries in eastern Europe. Yet the legacies of the ‘command economy’ period have been substantial. The Antall Government aimed to privatise 50 per cent of the national economy. When it took office Hungary was still dominated by the state sector and its big business organisations: 2,000 large enterprises with three to four plants each. The internal structure of enterprise organisations has remained mostly unchanged for decades: enterprises still keep to the traditional ‘pyramid’ structure and there were very few signs of any appearance of more flexible ones. This structure was an outcome, and a factor contributing to the preservation of the preceding system of economic guidance: • absence of market pressures, with the exception of a few enterprises exposed to them, justified adherence to the traditional hierarchy; • product life cycles were long, restructuring of production slow or absent; • stronger bargaining positions of larger organisations made them better able to stand up to dominant state agencies; • large enterprises were important political units as the ruling Communist Party was built up, until 1989, on enterprise-level, and not on territoriallocal organisations; • the guidance of the economy had been bureaucratic: the enterprises had been forced to maintain a large staff to meet these bureaucratic duties. Business organisations adapted their structure primarily to the philosophy (needs) of the given system of bureaucratic central guidance. The approach of central agencies kept fluctuating as to the ‘optimal’ structure of business organisations. In some periods large organisations, like the East German Kombinats—called trusts in Hungary—had been preferred, in other periods the same organisations had been broken down into their components (such as Hungary’s Meat Industry Trust, Brick Industry Trust), in the 1980s. Such waves of reorganisations were motivated not so much by the requirements of flexibility or competitiveness, but by abstract philosophies or pragmatic administrative considerations of economic guidance. They did not, and could not, involve a real transformation in business policies and practices. Yet even in the most rigid types of eastern European economic guidance of the command economy, enterprises had always had their ‘business policies and practices’. They had very often been sophisticated and adequate to face the challenges of their special economic, and social and political, environment. To speak in very simple, maybe somewhat oversimplified, terms, in the market economy countries ‘market’ still appears to be the single, or major, focus for the formulation of business policies and practices, while in the eastern European


economic model, as Oskar Lange put it, ‘the functions of the market are performed by the central state planning agencies’. To meet the challenges of the market calls for working out one definite set of actions, while to meet those of central state agencies requires quite another. In the ‘command’ economy, denying the role of the market, the enterprises’ major focus in formulating their ‘business policies’ was their relationship to central state agencies. If they succeeded in securing ‘favourable’ plan directives and/or pumped out abundant resources from the budget—usually in a process of informal bargaining—they proved to be highly successful, by overfulfilling plan targets. Those in a strong bargaining position usually proved to be successful: i.e. connected with sensitive areas of the economic policy such as exports, military production or being ‘strongholds of the working class’— concentrating on a large number of workers. However, the cost of their ‘success’ appeared in low productivity, rigidity, wasting of resources (materials, energy, manpower, etc.) and in imbalances in the market. Often their products could not be sold even on the home market, let alone the world market, while at the same time, the home market was characterised by acute shortages and state subventions caused imbalances in the budget. To move away from this model, as Hungary’s example shows, was far from easy. Hungary’s economic reform in 1968 put an end to directive planning, considerably increased the autonomy of enterprises—in investments, production, marketing, etc.—opened up some space for a market and restored profits as the major ‘success indicator’ for business organisations. Despite these moves, enterprises in Hungary remained much more dependent on their relationship with the central state agencies than with any other possible agents, such as the market or the labour relations system. Conditions created by these close relations determined the possibilities for business policies when political change occurred. For example, in 1988 an average of 82 per cent of firms’ profits were still taken by the state budget leaving them with very modest resources for development. A major economic, social and political dilemma in 1989/90 was: what to do with the big state-owned companies—with these dinosaurs of the ‘command economy’? Despite all movements on the surface they still had their strong positions and seemed to be a major obstacle to the necessary changes in business policies and practices. Yet in the organisational composition of the Hungarian economy in 1990, already 96 per cent of the business organisations belonged to the category of small and medium-sized enterprises (SMEs). This structure had several causes: • the development of classical private small-scale business, the number of private craftsmen and retail traders dramatically increased in the 1980s;

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• the growth of new small undertakings promoted by the state since 1982, comprising state, cooperative and private businesses; • the disintegration by governmental decision of several big state-owned companies. Even so, SMEs had only about a 10 per cent share in employment—much below their share before the war or in the western market economies and only about 3 per cent share in fixed assets. Thus, while Hungary could boast of the growth of SMEs, big state-owned enterprises still dominated its national economy in reality. Eastern Europe has to work out (sweat out) its own new forms of business policies and practices—for production, technology, marketing and so on—that suit its potential and at the same time help overcome its lagging behind its European neighbours. There is no other way: if economic and political transformation—including transition in business—fails, eastern Europe will be marginalised in the continent and in the world. The past has provided menacing signs of this prospect. The market economies have been transformed by the globalisation of the business community, the international geographical restructuring of production, the appearance of ‘niche’ strategies, the growth of competence-based business systems, the shortening of product life cycles, and so on. All developments which have mostly passed eastern Europe by. Despite its geographical situation, its trade links with, and technological dependence on the industrialised market economies, eastern Europe under the umbrella of Comecon continued to be a loose conglomeration of separate national economies, with business concepts and systems that could be traced back to the period of their industrialisation. THE NEW PERIOD OF TRANSFORMATION The initial period of transformation—since the political change in 1990 till today—has brought a great number of new developments in the employment system of Hungary. Trends which were present in the transitional period seem to have continued, while gaining impetus from the new political set-up. The state of affairs in the national economy has served as a major contributor, as well as constraint to further changes. Hungary, like the rest of the countries of the region, has tried to cope with various economic difficulties: • a GDP drop, estimated to be 20–25 per cent in 1990–3; • a sharp decline in industrial output; • hefty international debt and difficulties in the balances of trade and payments;


• overexpenditure by the budget related—among other things—to the highlevel and ineffective social expenses; • two-digit inflation, of an average 20 per cent; • rapidly growing and high-level unemployment—which has so far peaked at about 700,000, or 12–13 per cent, in 1993; • declining real wages and growing poverty with about 2–3 million people with incomes below the minimum costs of living; • a vast informal (black) economy, amounting to an estimated 20–25 per cent of the GDP. In labour relations, after a relatively short period of fragmentation and internal struggles in the trade union movement (1991–2) a period of consolidation of both the actors and institutions has taken place. There are seven new national trade union confederations—most of them ‘successor’ unions of the previous National Council of Hungarian Trade Unions (SZOT), while others were newly formed unions. Conflicts have occurred amongst these about the issues of legitimacy and representativeness, as well as the thorny problem of the redistribution of assets. While a negotiated settlement of these problems appeared on the horizon, a New Labour Code was passed (1992) laying down the foundations for, among other things, genuine collective bargaining—on both enterprise and sectoral levels - and for new practices of workers’ participation within the enterprise. The national-level tripartite body—the National Council of Reconciliation of Interests—has not only survived the political changes, but has had an incremental growth: its authority has been widened to cover—beyond wage negotiations—the preparation of social and labour legislation. It has also had an impact on public policy formulation in the field of wage, income, employment and social policies. National-level tripartite agreements in 1991, 1992 and 1993, have been concluded in these fields to provide a smooth path for transformation. Hungary has remained one of the most peaceful spots in the region: except for a large-scale demonstration of ‘public disobedience’—the taxi and truck drivers’ blockade in October 1990—no significant national conflict cases have occurred, while local industrial actions have also remained limited and sporadic. Hungary has retained its pioneer role in the elimination of administrative wage determination by the state: after the promising start in 1989 the liberal regulation was maintained for another two years (1990–1), it was suspended— after pressure by both the trade unions and employers, in 1992, and finally eliminated in 1993. This step was made possible, without obvious risks for inflation, by two major conditions. In the period referred to above, those stateowned companies which had not resisted wage-claims by the workers were mostly faced with grave financial difficulties; many of them survived on the verge of bankruptcy and many others had already gone bankrupt. At the same

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time a strict personal income tax was introduced, as early as 1988, which proved to be a much more powerful instrument of income policies than any administrative wage determination by the state. In this process enterprise, sectoral, as well as national-level wage negotiations and agreements, have had a growing and decisive role. Political response for employment and training policies has been inadequate and ineffective as yet. The explanation lies in a set of interrelated conditions. Instruments which have been more or less effective in the western market economies, e.g. active employment policy measures, have proved to be mostly ineffective in the context of a radical GDP drop. Unemployment has tended to add to budgetary expenses while the budget has suffered from shrinking revenues. The essential economic processes, such as privatisation, marketisation and restructuring, have had a detrimental impact on employment—the Government at the same time has not prepared policies that could minimise and counterbalance such negative consequences without hindering the badly needed changes in the economy. The Government—as a result of its withdrawal from the guidance of the economy—has had a weakening control over employment and unemployment: its role, however, has not been substituted by coordinated action of all those who had a growing influence in this field: local self-governing organisations, employers, unions, workers, unemployed and so on. In Hungary privatisation has made considerable progress: its basic philosophy being to sell state assets under close control by the Government (the State Property Agency). Until the end of 1992 most state-owned enterprises—except for a number engaged in essential public services were transformed into jointstock or limited liability companies and many of them sold to home and foreign investors. In 1993 the private sector had an estimated 30–40 per cent of GDP and 50 per cent in employment. In 1990–3 a considerable inflow of foreign capital took place: in this period Hungary had an almost 60 per cent share of the total foreign investments in the region. The transformation, including the disintegration and privatisation of the old, large, state-owned enterprises, has eliminated their predominance of the economy. SMEs, amounting to more than 100,000, are becoming its backbone. At the same time an increasing number of multinationals, such as General Electric, Ford, General Motors, Audi, Nestlé, McDonald’s, Suzuki, etc., have also appeared on the scene by the purchase of former Hungarian state-owned companies, or by ‘greenfield’ investments. Business organisations, and employers, are still in flux but they will obviously have a decisive influence in further developments of the whole employment system.


CONCLUSION We are aware that changing the employment system is no easy thing; especially ongoing systematic change. Hungary and eastern Europe live not only in the age of breathtaking reforms but also of widespread illusions.4 Hungary is among those countries in eastern Europe which have achieved most progress in the transformation of their employment system since the political changes of 1989/90. Its emerging new labour relations system, labour market practices and institutions and vocational training system have moved in the direction of market-economy models. These changes have had their solid foundation in the process of economic trans formation—deregulation, mobilisation and privatisation—as well as in the whole of democratisation. The changes which have occurred have had their special features, such as the appearance of a special kind of institutionalised tripartism. The country’s intention to join the European Union—an Agreement on Associate Membership was signed in 1991—is also a factor in this progress. At the same time, we recognise that to change an entire employment system is not an easy matter: especially the pursuit of multi-dimensional change in a context of economic crisis and stabilisation. A new employment system in Hungary does not appear as an overnight miracle: its difficulties cannot be overestimated. NOTES 1 The original paper was written in 1990 and updated in 1994. 2 In 1989 Hungary had a dozen strike cases, partly involving previously privileged and unprivileged groups of labour. These involved miners and teachers, or related to the restructuring of enterprises. 3 This and subsequent statistical references are derived from Hungarian-language documents of the Central Statistical Office (Budapest), the Hungarian Ministry of Labour, the National Labour Market Centre (Budapest) and the Institute of Labour Research (Budapest). 4 Speaking about economic reforms, an expert of the American Hudson Institute described the typical country profile in this part of the world in 1990, as follows: The typical country has a very high debt, widespread poverty, widely hidden unemployment, systemic disorganisation, cynicism on the failure of past or abandoned reforms, and a naive thinking about what reforms can do, such as that a few changes can make another Sweden. These countries tend to have fuzzy ideas about the new economic system they plan to install. Nevertheless they expect it to: (1) create abundance, (2) promote efficiency, and (3) be dynamic-receptive to technological innovation, all the while preserving the gains of socialism.

10 WORKERS’ RIGHTS AND EUROPEAN INTEGRATION An external view from the Nordic area Michael A.McDaid

INTRODUCTION Since the second half of the 1980s and with the end of the ‘Cold War’ division of Europe in the 1990s, the entire political social, economic and military fabric of Europe is being refashioned, although new institutions and practices have yet to take final shape. A new urgency has been given to the consideration of the consequences of the European economic integration process; not only for the European Union (EU) and the eastern and central European states, but equally for the Nordic and ‘Alpine’ members of the European Free Trade Association (EFTA). This chapter is about the new European architecture that is in the making. It addresses the interrelation of social regulation and economic expansion within the current EU integration debate. The integration process itself is made up of several key developments. First, the liberalisation of economic relations and the growth in the importance of multinational enterprise associated with the construction of the single market means further substantial interdependence of national economies in Europe. Second, a step-by-step expansion of Union competence in the economic, social and political fields may be expected, both as a result of treaty revisions, such as the Single European Act and the Maastricht Treaty and the 1996 review of the Union, and the legal precedents from the EU Court of Justice. Third, the continued geographical expansion of this integrated area via trade and association agreements, membership of the European Economic Area (EEA), and further EU membership enlargement seems set to continue. The Union could comprise twenty or more members by the turn of the century. Fourth, these developments are occurring under the considerable political influence of market-oriented economic doctrines in many parts of Europe. Fifth, and more controversially, a mixture of technological, organisational and competitive challenges seems to be encouraging broadly similar tendencies of change in European industrial relations systems, work organisation and employee participation.

WORKERS’ RIGHTS AND EUROPEAN INTEGRATION 229

How should this evidence of regional integration within Europe be viewed? Not surprisingly perhaps, such developments and trends have revived interest in the notion of societal convergence in Europe (see Maurice, Chapter 1, this volume). My principal concern here, however, is not so much with the shape or status of any unified EU market or polity of the future as with the possible impact of EU proposals for economic and political integration upon industrial relations and working life within the EU and, especially, the implications for the traditionally more corporatist systems found in the Nordic countries (Pekkarinen et al., 1992). To assess the meaning of integration from a Nordic standpoint, requires an overview of the trajectories of economic development and social regulation in the EU and Finnish-Nordic cases. The first two sections will therefore examine the economic context, and social rights and ‘social dialogue’ developments in the EU. The third section is devoted to the Nordic and Finnish situation. SHAPING THE ECONOMIC DIMENSION OF EUROPEAN INTEGRATION EU integration strategy: from a ‘common’ to a ‘single’ market At one level, the EU’s choice of the single market programme as the linchpin and locomotive for the integration process was hardly novel. The aims of economic and political integration are firmly established within the founding articles of the 1957 Rome Treaty establishing the European Economic Community as it was then known (EC Doc., 1988:9). During the early years of Community building the six original members of the ‘EEC’ set about creating a truly ‘common market’ principally through a process of dismantling tariff barriers to cross-border trade. With the more or less successful completion of a common customs union towards the end of the 1960s, the centre of Community focus subsequently shifted to an emphasis of measures relating to indirect taxation (e.g. the 6th VAT directive, 1977) and the harmonisation of standards and regulations. These successes, it should be noted, were achieved largely under conditions of rapid economic growth and expanding international trade (Beretta, 1989: 7–8). After its first enlargement to the ‘European’ Community in 1973, political and economic obstacles to integration began to mount: deteriorating economic conditions; oil price shocks and international recession led to increasing levels of unemployment within member states. To deal with the crisis governments adopted divergent national ‘fire-fighting’ policies: controls on capital, state subsidies to ailing industries, a greater resort to non-tariff barriers to protect markets and so on. As a consequence the Commission’s strategy of establishing

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a progressive harmonisation of conditions through Community-level measures was isolated. The Treaty of Rome1 gave member states (via the Council of Ministers) individual veto powers on Commission proposals which ‘directly affect the establishment or functioning of the common market’ (Art. 100). And the socalled principle of unanimity was further enshrined in Council decision-making in the mid-1960s by the adoption of the Luxembourg Accord (Nicoll, 1985). As the recession worsened EC governments increasingly resorted to these powers to block Commission proposals affecting important domestic interests (NFS, 1989:42–4). By the end of the 1970s further progress in Community integration had almost stopped. 1992: from pressures for convergence to divergent outcomes? In the transformed economic situation at the Commission’s relaunch of the single-market idea in the mid-1980s, much of Europe had experienced sustained economic difficulties during the 1970s and early 1980s; with rising unemployment, inflation, budget deficits and declining growth and company profitability. This climate provided ideal conditions for a new conservative mood within the political and economic establishments of the member states. It also helped to legitimise new monetarist and laissez-faire nostrums: individualism, privatisation and the deregulation of financial, capital and factor markets. The monetarist ‘supply-side’ creed affected Britain most acutely, but influenced other EC countries’ policies and the very philosophy and mechanics of the Community’s own ‘economic dimension’. They have also shaped the attempts at an effective Communitylevel framework of social regulation. As Standing (1986) notes, an integral part of the post-war social consensus, that characterised western Europe up until the 1970s, involved a broad acceptance of a number of labour ‘rights’. These rights typically involved a commitment to the goals of full employment, equal wage legislation, progressive taxation, insurance-based social security, the inclusion of trade unions within the policy-making process, protection against unfair dismissal and in the event of redundancy, rights to adequate health and safety at work, regulations governing maximum and unsociable working hours and a tolerance of demarcation rules and occupational restrictive practices. These ‘social rights’ were more deeply developed in Finland and the Nordic societies than in Europe generally. Heightened concern over the international performance and competitiveness of European capital, combined with the general rightward shift in political consensus, lay behind a series of frequently acrimonious struggles over the role and extent of social regulation within the Community and member states during


the 1980s. However, the relationship between the onset of the crisis within Europe and attempts to unravel these social rights of labour was neither immediate nor direct. Indeed, initially at least, a desire to manage economic disturbances within the context of an enlarged and more heterogeneous ninemember EC (which included the newcomers Denmark, Ireland and the UK) ushered in a more interventionist phase in Community-level social policy. Echoing the new approach, the 1972 Paris Summit of the European Council formally proclaimed its objectives in the social sphere to be of equal importance to its economic and financial objectives (Szyszczak, 1991). The Community’s embrace of limited social dirigisme led to both the setting up of the European Regional Development Fund (ERDF) to complement the work of the European Social Fund (ESF), and to the launching of the Community’s first Social Action Programme (SAP) in 1974 (Hepple, 1977; Northrup and Rowan, 1988; Pipkorn, 1984). A number of Community instruments followed on the basis of the SAP including legally binding recession-inspired Directives covering workers’ rights in the event of redundancy (1975), the transfer of an undertaking (1977) and company insolvency (1980). Several Directives designed to promote an improvement in equality between women and men in the labour market were also adopted, covering rights to equal pay (1975), equal treatment in employment (1976) and equal treatment in respect of social security (1978), as were various Directives connected to health and safety issues (cf. Burrows, 1980; Docksey, 1986; Hepple, 1977, 1982; Teague, 1989). The favourable environment for interventionist labour market policy also affected the practices and institutional responses of individual member states, in similar ways. At the onset of the crisis, economic difficulties were, by and large, treated as short-term problems of adjustment. A relatively favourable social environment was thus preserved throughout most of the 1970s, facilitating the consolidation of advances in social welfare, income distribution and industrial relations within the member states. Gradually, however, as the protracted nature of the crisis became more apparent, many employers and governments came to reassess and, in varying degrees, to challenge the basis of this post-war settlement (Baglioni, 1990; Boyer, 1988). As recession and processes of company restructuring and rationalisation accelerated, employer-led demands for greater ‘flexibility’ in the use of labour and the organisation of working time grew almost everywhere (OECD 1989). As a consequence, employer-based calls to ease legal and trade union restrictions on the employment contract and working practices have received sympathetic responses from governments in many member states; especially under conditions of high and rising unemployment (Petit, 1988). Pressure has also grown across the continent for cuts in the ‘social wage’ (notably, health and social welfare spending, and pensions), for a greater decentralisation of pay and collective bargaining and, less universally, for a relaxation of regulations


concerning part-time, temporary and other forms of so-called ‘atypical’ employment (Mückenberger 1989). Keynesian and social democratic models of regulation and elements of indicative planning have been abandoned to a greater or lesser extent in favour of free market remedies to ‘Euro-sclerosis’: chronic unemployment and sluggish growth. New priorities—the crusade against inflation, rising budget deficits, ‘labour rigidities’ and the control of wage costs—came from many governments and conservative ‘think-tanks’ (Baglioni, 1990; Boyer, 1987; Grahl and Teague, 1989; Lebrun, 1990; Oechslin, 1985). A further constraint on the extent, nature and desirability of Community-level regulation, were disagreements reflecting differences in labour market systems as well as government politics, and a social policy impasse within the Council of Ministers by the early 1980s. Despite the commitment of the 1972 Paris Summit to the idea of worker participation’, no progress was achieved throughout the 1980s on a range of measures that provided for employee participation structures. The most important of these measures are the Statute of the European Company (1970), the proposed Fifth Company Directive on the structure and administration of public limited companies (1972), and the socalled Vredeling-Richard draft Directive on the procedures for informing and consulting the employees of undertakings with complex structures (1980). SAP proposals to regulate the extent of flexibility on the labour market which were also blocked included draft Directives on part-time work (1982), on temporary work (1982), on parental rights (1983) and for the ‘reversal of the burden of proof’ in sex discrimination cases (1983) (Warner, 1984). Concern with the cost of Community social policy within the member states also resulted in the modest nature of two other SAP-related equal treatment Directives - for occupational social security schemes and for self-employed workers - adopted by the Council of Ministers in 1986. Yet the mid-1980s did see a remarkable turnaround in the wider fortunes of the European Community, mainly through the adoption of a more liberal, market-oriented approach to integration by the Commission and the Council of Ministers. This new ‘neo-liberal’ integration strategy was embodied in the Commission’s 1985 White Paper on Completing the Internal Market, of which the main goal was to bring forth a unified Community market through a programme of ‘negative’ integration: involving a partial deregulation of economic life at the level of the member states. It contained some 279 detailed proposals on matters ranging from the free movement of Community citizens and the mutual recognition of academic, vocational and professional qualifications, to the liberalisation of broadcasting, financial services and public procurement. The logic of the 1992 programme is outlined more fully in a report of a Commission study into the ‘costs of non-Europe’ led by Paolo Cecchini. The report argued that the mosaic of standards and practices


governing national markets was detrimental to intra-EC trade, competition and economic performance, as well as to overall growth and employment creation. Using assumptions that are themselves controversial (cf. ETLA et al, 1990:46– 51; Wise and Gibb, 1993), it concluded that the achievement of a single unified market would be likely to trigger a Virtuous circle’ of economic activity within member states with the potential to realise significant ‘economic welfare’ gains for the Community as a whole (Cecchini et al., 1989:83). The Commission’s agenda, set out in a preamble to the White Paper, was the removal of all physical, technical and fiscal barriers to the free movement of capital, labour, goods and services by 1992, and the adoption of those social measures necessary to safeguard this aim (White Paper 1985: paras. 10–23). However, while numerous detailed proposals for the ‘freeingup‘of trade were outlined in the White Paper, corresponding measures to reintroduce an adequate regulatory framework to protect workers from the effects of the large Euromarket were conspicuous by their absence (Staedelin, 1990). The national governments, represented in the Council of Ministers, seem to have made concessions on the principle of unanimity in decision-making mainly because of the Commission’s approach to deregulation. The Council of Ministers accepted provisions in the Single European Act (SEA, 1986) for qualified majority voting on a limited number of areas covered by the single market programme. As a successor to the failed ‘harmonisation’ of Communitywide standards—defeated by national interests invested in competing technical claims and institutional structures—greater emphasis was now placed upon the ‘mutual recognition’ of existing national standards and the ‘approximation’ of legislation; for acceptance of a minimum floor of Community rules and regulations. This approach appealed to the Commission on wider ‘anti-protectionist’ grounds and because it would quicken decision-making on single market proposals. Implementing mutual recognition poses fewer problems of an administrative or technical nature, which thereby reduces political delays. As important from a social policy point of view, however, is the longerterm impact of a proposal on European markets. Most social policy was restricted by not being attainable through the majority voting procedure. However, removing trade barriers without first coordinating the regulatory framework, increases the danger of ‘social dumping’—i.e. the weakening of social regulations in member states with comprehensive regulatory systems, to avoid losing too much competitive advantage to business in less closely supervised national environments (NFS, 1989:49). As Teague points out in Chapter 2 above, poorly regulated integration of European markets also poses serious problems for workers in low-wage, low-productivity regions. By definition, market forces are ill-equipped to ensure the equal distribution of the burdens and benefits arising from the adjustment pro cess. Cecchini acknowledges as much


by stating that among the social and political ‘costs of free market Europe’ are to be included major employment shifts, sectoral restructuring, new requirements in the area of labour mobility and training, as well as regional imbalances. The ‘road to market integration’ he concludes soberly, means ‘hard decisions rather than easy options’ (Cecchini et al, 1988:104). Thus, the economic bias in EC decision-making competences, combined with the deregulatory dynamic of the ‘1992’ programme, could reinforce free market pressures for integration, by pitting industries, member states and regions against each other in competitive struggle. Before considering some of the consequences of Cecchini’s ‘hard decisions’ for the Finnish variant of the Nordic labour market system, we need to examine the detail of the EU social policy responses to the single market and their potential to promote a convergence of labour market conditions throughout such an integrated market. ‘SOCIAL REGULATION’ AS A STRATEGY FOR CONVERGENCE Social policy: a market corrective or a marketing ploy? The ‘Social Dimension to Community Integration’ predates the 1985 Commission White Paper by a long way. Yet the exact role of the social dimension initiatives for the integration process remains controversial (Richard, 1985; SLB, 1989). In the previous section it was argued that laissez faire economic considerations have been both the dominant ‘motor’ of the integration process so far; and, as a result, a major influence on its direction and character. Social considerations seem destined to remain of secondary importance in the EU’s overall ranking of priorities. According to Mosley (1990), Community legitimacy in the social field has always suffered from a tendency in practice to regard social policy as either ancillary to other forms of EC/EU endeavour or, simply, as the prerogative of national governments. Right up until the adoption of the single market programme, the competence of EC institutions in social matters was handicapped because the Treaty of Rome did not provide a legal basis for Community-wide initiative and member states could not agree which powers should be centralised. Original Treaty articles on Community social policy (Arts 117–222) also confer few direct rights upon EC citizens (see Watson, 1991). Even well-defined Treaty rights have more often been motivated by the economic imperatives of the integration process. Treaty Article 119, to uphold the principle of equality of remuneration between women and men, was promoted primarily as a distortion of competition issue rather than one of equality (Warner, 1984), as was the ‘factor mobility’


reasoning for the rights of migrant workers (e.g. in respect of social security provision, Arts 48–51), industrial training and education (Art 128), and the functioning of the European Social Funds (Arts 123–127). The Commission’s White Paper on Completing the Internal Market continues this treatment of social issues, including regional policy, in terms of adjustment to single market pressures. The Cecchini Report explicitly refers to business and government as the two main actors in the integration process. Opponents of ‘excessive deregulation’ within the EU, such as the Belgian employment minister, were forced to balance the assertion that ‘flexibility without labour relations and bargaining…. A policy of flexibility devoid of consultation cannot be effective’ (Hansenne, 1987:372) against an admission that ‘Flexibility was needed, particularly on the labour market…’(ibid.: 369). Moreover, as noted above, the Council of Ministers have frequently blocked Commission commitments to initiatives with important social repercussions. Yet the social dimension is not simply a marketing ploy or adjustment mechanism. Different interests and actors, not only ‘the two sides of industry’, but also within and between the Council, Commission and European Parliament, have contested its essential character. A contest reflected in deliberations such as the Commission working party interim report: The Social Dimension of the Internal Market (DG V, 1988). This tried to steer between acknowledgement of the failure of the old harmonisation strategy of the 1970s —the ‘normalisation approach’ in the Report (DG V, 1988:64)—and its own criticisms of the ‘decentralised’ approach to Community social policy formation (DG V, 1988:15, 61, 63). Social dialogue, the Social Charter and its action programme In the mid-1980s the Commission reformulated social and labour market policy to try to facilitate initiative in the social policy field. The basis was an attempt to review and reinvigorate the old ‘dialogue between the “social partners” of European employers and trades unions’, known more simply as the ‘social dialogue’, to promote a consensual approach to Community legislation and collective agreement in the social policy area. Harmful disputes over social initiatives would be avoided by bringing the trade unions, through the ETUC, and employers’ organisations (UNICE and CEEP)2 at European level into the decision-making process at an early stage. The approach has obvious parallels with the doctrine of subsidiarity, which allows the Union to act in the legislative field only if common objectives cannot be achieved adequately at a lower level. Originating with the formal launch of the social dialogue, at the Chateau Val Duchesse at Brussels on 12 November 1985, forums were established on the Commission’s employment-generating measures, industrial relations problems


arising from the introduction of new technologies (SLB, 1987a, 1987b), other organisational aspects of the labour market, initiatives in the fields of education and training and geographical mobility; with permanent joint committees as part of a sectoral social dialogue covering certain industries—such as transport, agriculture, coal, steel, etc.—and ad hoc working groups covering different sectors—for example, banking and insurance (De Paz, 1988:8–12; EC Doc., 1989, 1993a). For the Commission the dialogue was a small but crucially important first step in the direction of a European Industrial Relations Area (DG V, 1988:65–74) aimed at transforming the dialogue into a regulatory instrument in its own right. The logic of the social dialogue initiative is explained in other chapters in this book (cf. Teague, Chapter 2; Ramsay, Chapter 4). Here it is only necessary to pinpoint certain key features. The social partners were given the authority to initiate their own opinions on issues of concern to them, with the ultimate aim of European collective agreements, convergence in national legal and institutional conditions, and a coordination of industrial relations systems at the various Community and national levels (DG V, 1988:70–2). Article 118b of the Single European Act has enshrined social dialogue within the Treaty of Rome, with a corresponding procedure incorporated in the Social Protocol Agreement to the Maastricht Treaty. Thus the dialogue was treated as an integral part of a strategy for a rather vaguely defined, future ‘European social and industrial relations area’. Tactically it formed a pragmatic response to the impasse in Community social policy existing since the early 1980s. Lack of concrete results, and growing concerns about the dangers of social dumping, soon stimulated concern and alternative approaches. The launch of the single market programme, and the accession of the poorer southern European countries of Greece (in 1981), and Spain and Portugal (in 1986) raised fears that competitive erosion of wages, employment rights and general social protection would occur without sufficient EC regulation. Thus, ‘Mediterranean’ enlargement meant more divergence in living standards and work and employment conditions within the Community, and a new impetus and urgency to developing both a framework of EC social rights, and stronger regional development policies. Various sources, the ETUC and European trade unions, the European Parliament, and the Commission itself, sought to revive an activist social policy, which began with the Belgium presidency of the Council in 1987, when Michel Hansenne proposed a platform of basic social rights of workers to accompany the creation of the single market (Hansenne, 1987: 372–3), partly to try to counterbalance British Government efforts in 1986 for social deregulation and labour market flexibility in Community policy. Shortly afterwards, in November 1987, the social partners and other interest groups called—in a report and ‘own initiative opinion’ from the Economic and Social


Committee (ESC) on the Social Aspects of the Internal Market—for a legally binding ‘framework Directive’ from the Council of Ministers on the basis of a qualified majority, to advance all the Community social policy measures held up by the Council’s highly restrictive decisionmaking rules (Beretta, 1989). The ESC argued that the interdependence of the social and economic dimensions to European integration made social consensus and sustained economic growth inseparable. A year-long process of consultation, lobbying, horse-trading and compromise after the June 1988 Hannover meeting of the European Council of Ministers, led to the adoption of Community Charter of Fundamental Social Rights of Workers (or EC ‘Social Charter’) by all EC governments, except the British, on 8 November 1989 (Soisson, 1990:10). The twelve headings of the Charter’s twenty-six articles covered thirteen themes: • • • • • • • • • • • •

freedom of movement within the Community; employment and remuneration; living and working conditions; social protection; freedom of association and collective bargaining; vocational training; equal treatment of men and women; rights to information, consultation and participation; health and safety; the protection of young persons; the protection of elderly persons; and the protection of persons with disabilities

(EIRR 192, 1990:11–14; Bull. EC 5, 1989) The Charter provoked contrasting reactions of support and opposition, especially in Britain (see Ramsay, Chapter 4) and the slightly more cautious appeal for a ‘balance of social rights and economic responsibilities’, with the ‘imperatives of competition’ as the guiding line from UNICE (EIRR 187, 1989; Tyszkiewicz, 1989; Wedderburn, 1990:7). The years since have shown that both the warnings of charter opponents and the hopes of its supporters were considerably exaggerated. The major flaw from the proregulation stance is that it was presented to the EC Council, and adopted in the form of a ‘solemn proclamation’ to consider action in the social policy areas outlined in the charter, but its adoption was without legally binding effects (Bull. EC 5, 1989). Furthermore, the content of the charter was repeatedly diluted, in ultimately unsuccessful attempts to win over the British Government. To realise the non-bimlmg broad objectives of the Charter the Commission eventually proposed a social ‘action programme’ (SAP) of almost fifty proposals


organised into thirteen subject chapters; Twelve chapter headings corresponded to the main social charter topics, with an additional chapter directed to labour market measures (COM 568, 1989). The programme resulting from renewed lobbying, controversy and conflict between the social partners, and Community governments and institutions, was surprisingly unclear and imprecise about its aims and their means. The EC’s very limited legal competence in the social field exacerbated the lengthy gauntlet of scrutiny by Community institutions, which exposed each proposal to possible amendment or obstruction at every stage (VogelPolsky, 1990). Legal restrictions on the Council of Minister’s majority voting in the fields of social policy and labour law, and the Commission’s greater sensitivity towards the least enthusiastic members of the Council meant more revisions. Proposals on matters such as childcare and a Community minimum wage were proposed as non-binding opinions and recommendations. Charter commitments on the right to strike and to free association and collective bargaining were effectively abandoned (Wedderburn, 1990). Relatively noncontroversial measures like the draft Directive on the ‘health and safety of temporary workers’, were adopted by qualified majority voting. However, such proposals as the statutory rights and allowances of ‘atypical’ workers, a proposal on the rights of pregnant women and women who have recently given birth, and a working conditions proposal, have been blocked, severely diluted and/or delayed by legal challenges to the Commission’s case for their implementation. So whereas the 1974 social action programme improved a number of social rights, most 1989 social charter and action programme proposals only set minimum requirements promising only marginal impacts upon conditions in most member states. Some Directives and proposals, like those on the organisation of working time, and workers posted to another member state, may even be regressions in some member states (Pochet, 1993:73). Assessments that the social charter and action programme was a’palpable failure’ in achieving its own aims (Pochet, 1993:71), and that UNICE emerged ‘from the Strasbourg summit as the real winner’ (VogelPolsky, 1990:67) are therefore realistic. The social charter saga did, however, improve the future of EU social coordination. It helped a widening of qualified majority voting in the social field. Despite the British opt-out and legal ambiguities in the attendant compromise agreement, the Maastricht Treaty on the European Union, and its social protocol and agreement on social policy decisively changed the EU’s social dimension (Bercusson, 1994). It made social and labour market issues— covering health and safety at the workplace, working conditions, employee information and consultation, gender equality and the integration of persons excluded from the labour market—subject to majority voting on the Council of Ministers.


Maastricht therefore promises a degree of potential EU social protection that the Nordic countries need to assess carefully for its compatibility with their own highly developed social regulations. The final sections of this chapter examine integration and convergence issues between the EEA and EU, both before and after Maastricht, with specific reference to the Nordic viewpoint. EUROPEAN INTEGRATION AND THE NORDIC MODELS The Nordic countries of Denmark, Finland, Iceland, Norway and Sweden share a common labour market and a long-standing political, cultural and scientific cooperation. The term ‘Nordic model’ is often used to describe the distinctive common elements of their systems of social welfare provision, economic steering, labour market regulation and industrial relations; and their complex articulation at the national level (Alestalo and Kuhnle, 1984; Bruun et al., 1992; Kjellberg, 1992; Schiller, 1994). However, apart from these important characteristics and a clear tradition of policy emulation within the Nordic area, there are many important differences, reflecting the historically specific national environmental influences on the developments and strategies within each country (Ahrne et al., 1988; Andersson, 1993). Thus it has been the national rather than the Nordic context which has predominantly determined the development of industrial relations systems within the Nordic area (Jensen et al., 1994). So explanations of continuity or change in Nordic industrial relations or differences in industrial relations structures and practices between Nordic countries must first begin from an analysis of the national context and the impact of external factors upon it. Such reasoning might question whether the concept of the Nordic model denotes anything other than a pan-nationalistic idea (Mjoset, 1992). The concept does, however, have descriptive validity if used in a limited way as an ideal-typical or heuristic device to highlight or compare the nature and extent of Nordic commonalities and between Nordic and non-Nordic societies (Bruun, 1994; Jensen et al., 1994). It is in this latter sense that the concept will be referred to below. In fact, despite the numerous variations in the different national ‘Nordic models’, from a broader European perspective these variations are comparatively minor. For all of these reasons, and its former geopolitical proximity to eastern-bloc ‘socialist’ societies, Finland is a useful case for considering prospective convergence through European integration. Finland: an economic and political profile The Finnish ‘model’ is probably less well known internationally than other Nordic models including, especially, the much debated Swedish model. Because this neglect has tended to narrow understanding of the richness of


Nordic societies and also because many aspects of the Finnish labour market and industrial relations are of genuine interest in their own right, I will begin with a brief historical overview of the country. The modern development of Finland is closely bound up with its historical ties to the rest of the Nordic area as well as with its rather unique post-war position as an ‘interface periphery’ between east and west (Alapuro, 1980). Dating from around the 1870s, the industrialisation process began later in Finland than in Sweden and many other European countries. Despite considerable economic growth both prior to the Finnish civil war of 1918, as well as during the 1920s and 1930s, the country was still predominantly rural and agricultural at the close of the Second World War. As late as 1950, over 45 per cent of the economically active population worked in agriculture and forestry (Alestalo and Toivonen, 1977). The 1960s and 1970s were a time of major industrial development and structural change in Finland. Foreign trade was increasingly liberalised, large firms diversified, substantial demographic movements occurred and the pace of urbanisation and economic growth accelerated (Andersson, 1989). Between 1973 and 1985 the average annual rate of growth of gross national product (GNP) was well above the European average. By the second half of the 1980s, mining and manufacturing, trade and commerce, and services3 together employed (in roughly equal proportions) about three-quarters of the economically active population, while the shrinking agricultural sector offered a livelihood to less than 11 per cent (Humphreys, 1988:29–30; Toivonen, 1989: 9). Many writers have linked the emergence of a Nordic ‘social’ or ‘democratic’ corporatist model of labour market regulation in Finland with this rather turbulent period in its economic development. The labour marketrelated aspects of Finnish social corporatism up to 1993–4 included: (a) a relatively egalitarian social and economic-industrial order; (b) relatively high levels of labour market participation among women, totalling 48 per cent of the full-time workforce in Finland in 1986; (c) relatively low levels of part-time and temporary working, which distinguishes Finland from Norway, Sweden and Denmark, and from many non-Nordic, EU member states;4 (d) high levels of trade union membership, with around 72 per cent of wage earners covered by collective agreements, and membership of about 90 per cent of the wage-earner population with the inclusion of retired, student and non-due-paying categories (Kauppinen, 1994); (e) centralised union-employer bargaining structures organised around national wage agreements rather than plant-based negotiations;


(f) tripartite, union-employer-government, establishment of state economic and social policies; and finally, (g) an extensive ‘universal’ welfare system of publicly funded services and monetary transfers, largely based on citizenship rather than labour market status. Social corporatism was slowly and painfully constructed during the 1960s and 1970s, but it reached its most developed form only during the 1980s (Andersson, 1989; Pekkarinen et al, 1992). However, following the trend in the other Nordic countries, serious strains began to appear in the fabric of the model from the latter part of the 1980s. Several interrelated sources of increasing tension may be diagnosed. Structural changes in the Finnish economy and society since the 1960s are one source of pressure. In common with other Nordic countries, the growth of new industries, including private services and the expansion of the public sector and the welfare state in Finland, has led to a greater diversity of employment and occupational groups and interests, as well as to a marked gender segmentation of the labour market. As a consequence of these combined trends the state, employers and unions have had more difficulty in agreeing and implementing coherent policy objectives. A second source of pressure on the system is the increasing globalisation of trade and economic relations, and concomitant pressures for the deregulation and liberalisation of markets and trading practices, particularly as manifested in processes of regional integration within Europe. The EU’s 1992 programme has been the driving force of this latter movement. The importance of the process of economic globalisation and regional integration for Finland may be indicated by a few simple economic statistics. Finnish exports are equivalent to nearly 30 per cent of GDP—a figure in line with the export performance of Germany and Britain, Finland’s most important EU trading partners. By far the greater part of Finland’s foreign trade is carried out within Europe. Around two-thirds of it is undertaken with member countries of the EU, or EFTA5 (notably Sweden), as against approximately onesixth with the countries that make up the former Soviet Union/ Commonwealth of Independent States. However, with nearly 70 per cent of Finland’s ‘west’ European trade already with EU countries the centrality of any future ‘single market’ to the Finnish export sector is clear. Moreover, the Union’s share of total Finnish exports has been growing during the 1980s, while the share taken by the ClS/former Soviet Union and EFTA (excluding Sweden) has been declining. Indeed, in 1987 exports to the former Soviet Union declined a full 17 per cent in real terms (Humphreys, 1988:63, 67–9). Finland’s combined ‘east trade’ with the former CMEA group of countries fell from a peak of 24 per cent of total foreign trade in 1980 to below 10 per cent in 1990 (Leppänen, 1991).


As crisis has gripped those industries traditionally associated with the ‘east trade’ (e.g. clothing and shipbuilding), Finland has become even more exposed in its asymmetric trade relations with the EU. A concern with EU-oriented internationalisation is not, however, a particularly new phenomenon in Finland. Western Europe has long been the principal market area for the core sector of Finnish industrial development: paper and pulp. With the drive to diversify in the 1960s and 1970s, other related sectors became increasingly export oriented. By the mid-1980s three of Finland’s most important industries (the paper and forest products, metal and engineering industries) were export centred. The only major industries that remained domestic in character were energy, agriculture and food products (Alasoini, 1990; Mieskonen et al., 1990). However, most of the internationalisation thrust of Finnish industrial strategy during the 1970s and early 1980s was directed towards the export of products produced in Finland. The growth of transnational company production and marketing structures elsewhere in Europe, and the launching of the EU single market appears to have been a catalyst for a major rethink of the traditional export approach in many Finnish company boardrooms. Worries, for example, that Finnish companies might be at a competitive disadvantage should they remain outside the Union appear to have encouraged substantial Finnish foreign direct investment (FDI) in the EU. FDI increased from a few hundred million marks in the early 1970s to nearly FIM 8 billion (around 1.3 billion ecu) by 1988; between 1989 and 1993 it more than doubled. This growth in outward investment compares with a much smaller net direct investment inflow of just over FIM 4 billion in 1993 (Bank of Finland, 1989, 1994: appendices 2, 4). The net export of direct investment capital by the Finnish corporate sector in 1993 was more than 3 per cent of Finnish GDP, equivalent to more than 40 per cent of companies’ fixed investment, in Finland. Some 73 per cent of net FDI by Finnish firms is in the EU, while their net direct investment in the EFTA area actually declined from just under FIM 3 billion to just over 2.2 billion (Bank of Finland, 1994:1, appendices 2, 4). Not surprisingly the number of Finnish companies operating within the Union has increased dramatically in recent years alongside the expanded flow of Finnish direct investment. Of the 2,500 Finnish companies operating abroad in 1988, around 1,000 were located within the EC, with manufacturing as the biggest sector (Räsänen, 1989; Saralehto, 1989). This represents a potentially massive reorientation of business strategy with consequences for the domestic economy and industrial relations which are only beginning to be appreciated. A third, more recent source of pressure on the coherence and manageability of the social corporatist system is of more recent origin. This is the problem of the emergence of a structural crisis of employment within Finland since 1991. Between 1990 and the first quarter of 1994 the rate of unemployment in Finland rose spectacularly from just 3.4 per cent to 20 per cent of the labour


force (Finnish Labour Review, 1994). Real gross domestic demand (GDP) in Finland fell by around 10 per cent between 1991 and 1992 and domestic demand fell by 13 per cent during the same period (Bank of Finland, 1992). The recession that gripped the country after 1990 has been linked by economists both to the collapse of the east trade and to the bursting of a domestic credit-based boom. Liberalisation of the financial and capital markets during the 1980s, unsound bank lending practices during the boom, and ill-judged foreign acquisitions by the Finnish corporate sector anticipating the 1992 internal market worsened the extent of the subsequent crash (Andersson et al., 1993; see also below). As well as the severe shock to the banking system, rescued by huge amounts of public money, the recession also wiped out property values and caused a double crisis of public expenditure: falling tax receipts despite higher personal taxation—combined with increased unemployment payments to force up public borrowing and the budget deficit. The ratio of Finnish net foreign debt to GDP increased from about 20 per cent of GDP in 1988 to 48 per cent in 1992 (Bank of Finland, 1993:9). This in turn led to mounting pressure on the centre-right Government of Prime Minister Esko Aho for extensive cuts in public spending, with cuts in social benefits and welfare provision implemented from 1992. Direct clashes with the Finnish trade union movement have twice since brought the country to the brink of a general strike following employerbacked government proposals for cuts in unemployment and other social benefits and allowances. Furthermore, the weight of the recession and wider turbulence in European exchange rates in 1991 soon undermined the Government’s policy of promoting a strong and stable currency linked to the Exchange Rate Mechanism (ERM) of the European Monetary System (EMS). Under pressure from speculators and from the country’s powerful but hard pressed export sector, the country’s central bank was forced to devalue the Finnish mark by 12.3 per cent in November 1991 and to allow the currency to float in September 1992 (Bank of Finland, 1992). Following the devaluation and floating of the mark, which produced a 20–30 per cent drop in its value against EU currencies between 1991 and 1993, a recovery has begun to gather pace in the export sector, but there seems little prospect that the large-scale shedding of labour carried out during the crisis will be reversed to any major extent during the coming years. Demand for labour is also likely to remain weak in the domestic sector of the economy because depressed consumer demand and fiscal pressures are likely to rule out significant job creation in the public sector. A fourth pressure confronting social corporatism is more ‘political’ in nature and concerns the philosophy and strategic priorities of the central actors within the labour market system. In ways that are markedly closer to the situation in


Sweden than Norway or Denmark, key Finnish employers in the Confederation of Finnish Employers and Industries (TT) have called for greater employee flexibility on the labour market and in the enterprise and for a substantial decentralisation in the level of collective bargaining in Finland for many years (see Bruun, 1994). Employer demands for the decentralisation of collective bargaining and agreements came to a head in November 1993 as TT and central organisations of employers representing central (VTML) and local government (KSV) refused to engage in negotiations with Finland’s three trade union confederations, the mainly blue-collar Central Organisation of Finnish Trade Unions (SAK), the predominantly white-collar and public sector Finnish Confederation of Salaried Employees (STTK), and the Confederation of Unions for Academic Professionals in Finland (AKAVA). As a result, the bargaining round ending in the spring of 1994 was conducted at union level and produced a wide variety of settlements. An interesting feature of this ‘decentralised’ collective bargaining round has been the establishment of cartel-like groups of unions within and between the central trade union organisations to help coordinate union demands. It is perhaps too early to say whether this represents a new form of ‘centralised-decentralisation’ as witnessed in Denmark (Jensen et al., 1994), or whether the pendulum will swing further in the direction of decentralisation over the next few years. Whatever the outcome of the collective bargaining strategies of the labour market actors, it is clear that a fragmentation of interests has been growing within the system for a number of years for all of’ the reasons outlined above, and that these trends are likely to have a major and lasting impact on the future of Finnish corporatism. EFTA, the EEA and the EU: integration choices and implications A striking feature of Finnish integration policy in the post-war period has been its focus on the practicalities of adapting to changing external conditions. This approach has generally been followed in an effort to avoid economic exclusion, which may cause small countries disproportionately severe problems. Such strategic thinking influenced the country’s decision to become an associate member of EFTA6 in 1961 and to enter into a bilateral free trade agreement (FTA) in 1973 with the newly enlarged EEC (now containing the former EFTA countries of Denmark and the UK). Similar FTAs were also agreed between the EC and the remaining EFTA countries but the renewed pace of market integration within the Community during the early 1980s soon revealed the inadequacy of these agreements. This realisation produced a further shift in the emphasis of Finnish and EFTA policy.


Continued access to the European Community’s projected single market became a consistent aim of all EFTA countries in the early 1980s. A desire to play an active part in shaping a closer relationship between EFTA and the expanding Community prompted Finland to become a full member of EFTA in 1981 (Antola, 1988). The 1984 Luxembourg declaration provided for talks to lay the basis for a more structured multilateral relationship between the EC and EFTA (Laursen, 1990; CEC, 1986). But as the process had clearly become bogged down by early 1989, fresh discussions were held between Commission President Jacques Delors and Norwegian Prime Minister Gro Harlem Brundtland that resulted in a new initiative for a joint EC-EFTA European Economic Area (EEA). The final EEA agreement allows the EFTA countries some possibility to collectively influence the detail of policy formation within the EEA they are able, through various joint-bodies, to influence decisions on the EEA that are ultimately made by the EU. However, they do not have a formal role in promulgating rules and deciding upon policies that could directly affect the autonomy of the EU (CEC, 1992; Church, 1990). As a result of this situation, the EFTA members of the EEA have had to accept the wholesale adoption of EU norms and rules on all areas covered by the EEA agreement without having any real power to determine their content. The idea of an EEA was originally promoted by the Commission and many EFTA states as an alternative to an over-hasty enlargement of the Community. The EFTA ‘neutrals’—Austria, Finland and Sweden—were especially concerned about the foreign policy implications of EC membership. Meanwhile the EC was engaged in a bruising debate about the nature of the EC and the relative merits of deepening the integration process before contemplating further enlargement, a strong French preference, and the alternative view of giving priority to a widening of the Community, championed by the UK. Support for widening among the Mediterranean member states was also uncertain because of concern that enlargement might undermine the position of the Community’s poor southern ‘periphery’. These attitudes quickly began to alter following the opening of the Berlin Wall and the collapse of the Soviet Union: two events that simultaneously placed both of these integration objectives on the European agenda. Frustration with the course of the EEA negotiations after 1989 combined with the new situation in Europe, and the new willingness of the EC to contemplate further enlargement, also increasingly led EFTA countries to reappraise their attitude to full membership of the European Communities.6 Austria was the first EFTA country to change tack and submit an application for EC membership in 1990. The Austrian move created a snowball effect in favour of membership among the continental Nordic members of EFTA: Sweden applied for EC membership in 1991, and Finland and Norway joined


the lengthening queue (which also includes Turkey, Malta and Cyprus) in 1992. CONCLUSION: LABOUR MARKET SYSTEMS AND LABOUR MARKET REGULATION AFTER MAASTRICHT In 1995 at least two Scandinavian countries will join Denmark in the Union, with a mini-EEA or similar arrangement maintaining the impact of the integration process throughout the Nordic area. What lessons might the first enlargement of the EC in 1973 have for the Nordic entrants? One is that different labour market systems have extremely complex political, religious, ideological, institutional and legal structures and dynamics, and that they are thus very difficult to harmonise. Trade unions, and not just employers or governments, in Denmark and the UK have tended to encounter specific, although by no means unique, difficulties with Commission proposals for Directives in the area of labour law, because of the differences between the Romano-Germanic, Anglo-Irish and Nordic ideal types of labour market system, which are defined in the Introduction to this book. The Commission encountered similar problems with its 1970 and 1975 drafts of a Regulation for the European Company Statute. The original proposals would have made a two-tier administrative/supervisory board structure obligatory for the European company along with compulsory employee representation on the supervisory board and a European Works Council. Not surprisingly, employer-led opposition to these proposals was especially forceful and further discussions on the ECS proposal were suspended after 1982. The proposal for an ECS was finally resurrected by the Commission in a modified form in 1988 and 1989 that was very similar to that found in the 1983 draft Fifth Company Directive (COM 268, 1989: 70–1; Cressey, 1993:88– 97; EIRR 223, 1992:25). Nonetheless, neither of these proposals has yet been adopted by the Council of Ministers. Differences in European labour market systems also help to explain why Denmark has been particularly keen to see a greater use of the social dialogue to establish a basis for labour market regulation within the EU. Prior to the Maastricht Treaty, although the constitutional status of the social dialogue in Article 118b of the Treaty of Rome (as amended by the Single European Act) was vague, the Commission made known, in 1990, that appropriate Directives flowing from the Social Charter Action Programme could be implemented at the national level on the basis of collective agreements, provided member states remain legally responsible for guaranteeing the adequacy and coverage of such agreements. As the chapters by Gregory and Ramsay show, this approach has been considerably strengthened by the Social


Protocol and the agreement on social policy annexed to the Maastricht Treaty on the European Union. These extend the range of social and labour market issues, and also allow for decisions to be taken unanimously in various labour market and industrial relations issues (EC Doc., 1993b: 8–10), and establish consultation and joint bargaining arrangements between the social partners at European level on the possible direction and content of Commission proposals, which may then be implemented either through ‘the procedures and practices specific to management and labour and the member states’, or by a Council Decision on a proposal from the Commission (CEC, 1993:196–201). Although trade unions in Denmark and the other Nordic countries have been among the strongest supporters of the negotiated route laid down in the Protocol, some ambivalence remains about the problems that hinder the pursuit of social and labour market regulation through the channels of collective bargaining. These problems include suspicion that UNICE signed the agreement preceding Maastricht as a tactic rather than a conversion to European collective bargaining, and the example of the draft Directive on the European Works Council. The latter case illustrates ‘bargaining in the shadow of the law’ (Bercusson, 1994), where employers will seek distance from, and unions parity with, Commission proposals set up to encourage voluntary agreements. In addition, formulation of common policy positions needs much common ground between the social partners. To move further towards adoption and possible enforcement of European agreements requires organisational abilities, authority and representativeness to put Brussels agreements into effect at national levels. UNICE has new liaison links with around eighty branch federations of European employers, and in 1991 ETUC reorganised and incorporated the European industry committees of the international trade union secretariats. Yet basic disagreements from deep-seated differences of philosophy and policy between employers’ organisations and the ETUC (EIRR 187, 1989: 15– 16; Tyszkiewicz, 1989), have resulted in vague and minimalist opinions, with little practical value (EC Doc., 1993b). National employers’ groups have been generally reluctant to see ‘another tier of bargaining’ above existing levels within the member states, and particularly unwilling to allow the dialogue to be transformed into an instrument of social regulation, a position forcefully transmitted by UNICE to the Commission and the Council of Ministers during the 1980s (Lapeyre, 1990). Nordic trade unions see national differences in trade union movement traditions, organisational structures, coverage, bargaining strength and political influence as problematic when it comes to the implementation of European agreements through negotiating machinery (Dolvik, 1993). In the wake of the crisis of the Exchange Rate Mechanism of the European Monetary System in 1991 and 1992, a danger now exists of the emergence of


core-periphery relations within the EU. The idea that integration can lead to relations of domination and dependence is not a new one. Earlier EC debates have thrown up a large number of core-periphery concepts: two-speed Europe, multi-speed Europe, concentric circles, graduated integration, variable geometry, Europe a la carte, etc. (Langeheine and Weinstock, 1985; Nicoll, 1985). In any case, the commitment of member states to budget and fiscal prudence, required for the achievement of the convergence criteria for economic and monetary union by the turn of the century, is likely to be yet another factor inhibiting expansive social policy measures in the EU in the current period. In summary, it is clear that the hoped-for benefits of integration hinge on continued Nordic and EFTA country access to Union markets on equal terms with EU member states, while the potential costs flowing from the membership of the EU or the EEA are likely to stem from increased pressures for internal and external liberalisation. In particular, further integration is more likely than not to promote trends towards the decentralisation of economic decisionmaking, in the sense of collective bargaining, and to induce a certain centralisation of political decision-making, at national, EFTA and EU/EEA levels and within transnational enterprises. As such, integration, and the forms of ‘convergence’ it may engender, pose many problems for the long-term development of social corporatism and the Nordic model. Such pressures may result in a further fragmentation and erosion of the models and greater diversity within and between Nordic societies, or even attempts to find new models based upon Nordic structures and traditions. Either way, the outcome need not be convergence, with some presumed EU model, in the sense implied by the Euro-term ‘harmonisation’. If convergence is to be limited to the same rigours of economic competition then the danger exists that regime competition between European social and labour market systems (Streeck, 1992) could lead to a competitive devaluation of wages and conditions in order to maintain or attract capital investment (Wedderburn, 1990). In the face of the gigantic force of intraEuropean mergers and acquisitions that the single market has set in trail, much hinges on the equality, social protection, working conditions and industrial democracy proposals contained in the EU programmes, as it also does with trade unions and their considerable difficulties in dealings with transnational companies. The current attempts by European labour, discussed by Ramsay, to forge formal cross-national links to mirror the new capital structures, are also significant. Nordic countries like Finland may be especially dependent on both such initiatives if their levels of social regulation are not to be further reduced by economic convergence.


NOTES 1 Under the Treaty of Rome five basic types of policy instrument may be adopted by the Commission or EC Council of Ministers. Three of these instruments the Regulation, the Directive and the Decision—have legally binding effects. The remaining two instruments—Recommendations and Opinions—are nonbinding. 2 The European Trades Union Confederation (ETUC) is the largest and most representative European-level trade union organisation. UNICE, the Union of Industrial and Employers’ Confederations of Europe, covers companies in the private sector. CEEP, the European Centre of Enterprises with Public Participation, represents public sector employers and enterprises with state holdings. All three organisations are pan-European in membership, with affiliates drawn from the EU, EFTA countries and, increasingly, from central and eastern Europe. 3 Finance, insurance, property and business services are included under the heading of ‘trade and commerce’ in Nordic statistics. Combined, the categories of trade and commerce and services represented close to 50 per cent of the economically active population in 1985, while transport, storage and communications employed a further 7.6 per cent (NSS, 1989:47, Table 18). 4 While most of these features have been prominent, in varying degrees, in the other Nordic countries, the relatively low levels of part-time working and the related high incidence of full-time, ‘permanent’ employment among women in Finland is a significant departure from working patterns found elsewhere in the Nordic area. 5 EFTA was founded in 1960 by Austria, Norway, Sweden, Switzerland, Denmark and the UK (until 1972), and Portugal (until 1985). 6 To be more accurate, there are three legally distinct European Communities, of coal and steel (the ECSC, formed in 1951), atomic energy (the EAC, formed in 1957), and economic relations (the EEC—later the EC, formed in 1957), linked together under the terms of the 1965 merger treaty, by a set of common institutions. These have now been augmented by the post-Maastricht ‘European Union’. However, for the sake of simplicity the term EC is used in this discussion, to denote all three, pre-Union, communities.

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INDEX

Abitur 190 ABM: (Arbeitsbeschaffungmassname) 192 Afsa and Marchand 164 Aglietta, M. 30 agriculture 214 Aho, E. 243 Ahrne, G. et al. 239 Aix-en-Provence 3, 24 Alapuro, R. 240 Alasoini, T. 242 Alestalo, M. and Kuhnle, S. 239, 240 Alexander, N. 178 Allianz 108 ‘Americanisation’ 44 Amin, A. and Dietrich, M. 4, 113, 116 Andersson, J-O. 241 Andersson, J-O, et al. 243 Anglo-Irish legal tradition 11 anomie 45 Anselme, R. 141 Antall-Boross government 209, 214, 221 anthropology 32 Antola, E. 243 apprentices 149, 153, 191, 192, 194, 196, 203, 205, 206 Argyll Stores 179 Arkin, A. 82, Artis, M. 42 artisans 179 Ashton, D. 202 Asia 139, 148, 156 Atkinson, T. 45 atypical work 9, 20, 59, 59, 60, 62, 172, 175 Audi 226

Auroux Laws 167 automation 144, 145, 149 Baden Fuller, C. 125 Baden Wurttemberg 46 Baethge, M. 145 Baglioni, M. 152, 231 Bank of Finland 242, 243 balance of payments 44, 224 balance of trade 122, 224 banking industry 144 Banks, M. 199 Barnett, R. 46 Barnouin, B. 110, 116 Barrère-Maurisson, M-A. 163 Bassett, K. 189, 201 Beechey, V. 160 Behrens, M. 7, 18, 23, 193, 199, 200, 203 Bendier, B. 77, 78 Belgium 84 Benetton 125 Bercussen, B. 58–59, 103, 104, 116, 238, 247 Beretta, D. 228 Bertrand, O. 7 Betriebsrõte 151, 152 Beynon, H. 3 BGJ (Berufsgundschuljahr) 191–192, 193 Biffignandi, S. 139 blue-collar workers 147 Blyton, P. 164 BMBW 194, 196 Bonazzi, G. 148 Bonnet, J. 139 Boyer, R. 30–30, 31, 52, 230, 231

255

256 INDEX

Booz, Allen and Hamilton 173 Brannen, J. and Moss, P. 175 Brown, A. 189, 193, 197 Brazil 127 Bremen 19, 188, 190, 192, 204, 205, 206 brewing industry 45 Britain 2, 5, 19, 24, 122, 124, 215 Brittain, L. 170, 171 Brown, A. 7, 18, 23, 193, 200 Bruntland G-H. 45 Brusco, S. 132 Bruun, N. 11, 239, 244 Bulgaria 209 Bull, A. 5, 14, 15, 46, 139 Bull Computers 82, 83, Bundesbank 42, 54 Burgenmier, B. and Muchielli, J.L. 116 Burt, S. 158, 184 Burton Group 124 Busch, G. 110, 116 business policy 222, 224 business strategy 152; see also management, firms Butera, F. 148, 149 Butt-Phillip, A. 58 Bynner, J. 189, 203 Caire G. 167 Caizi, B. 139 Campbell, A. et al. 16, 143 Cantwell, J.A. 117 car industry 85, 142–144, 148, 156, 190; mechanics 156; moulding tasks 156; painting 156 Carew, A. 110, 116 Casey, B. 192 Cassels, J. 188 Cayez, P. 139 CBI (Confederation of British Industry) 103, 114, 171 Cecchini, P. 5, 109, 116, 117, 121, 189, 231, 232, 233, 234 CECD (European Confederation for Retail Trades) 87 CEDEFOP (Centre for the Development of Vocational Training) 7, 24

CEEP (European Public sector Employers Organisation) 103 centrally planned economy 215 CESI (European Confederation of Independent Unions) 103 Chambers of Commerce 138 chemicals industry 129, 142–144, 148, 152 childcare provision 180 China 127, 128 Ciechanowski, C. 208 Clausener, M. 163, 164, 166 Clegg, S. 119 Clough, E. 201 coal industry 137 Coats Viyella 124 Cockburn, C. 199 codetermination 10, 18, 57, 81, 155 Cohen, R. 92, 116 Coldrick, P. 113, 116, 117, 177 Cold War 227 collective bargaining 1, 5, 6, 10, 12, 13, 20, . 25, 42, 44, 59, 62, 63, 76, 89, 106, 155,’ 160, 167, 174, 210, 211, 213, 225; decentralisation of 230; international 76, 82, 89, 110–113, 174, 177 Comecon 91, 214, 224 command economy 210, 214, 221, 223; see also centrally planned economy commerce sectors 144 Common Agricultural Policy 56 Como 15–16, 121, 127–128, 129, 132, 133, 134, 135, 136, 138, 139 competition policy 56 computers 148 Confederation of Finnish Employers 243 Connolly, M. 199 consultation 12, 13, 57, 59, 63, 63, 78, 79, 80–85, 86, 89, 96, 101, 102; see also participation convergence viii, 1, 69, 88, 89, 120–121, 131, 134, 138, 139, 155, 188, 228, 233– 239, 248; functional 3, 6, 20, 22; see also economic convergence cooperatives 211, 220, 223 Co-op Supermarket 179 Cool, K. et al. 116, 117,

INDEX 257

Corah, N. 130 Cosyns, J. et al. 179 Courtaulds 124, 130 Council of American Chambers of Commerce in Europe 106 Council of Ministers 5, 75, 86, 101, 229, 231, 232, 234, 236, 238, 246, 247; qualified majority voting 57 Craddock, T. 66 craftsmen 220, 223 Cressey, P. 5, 36, 38, 120, 246 cross-cultural approach 28, 35 cross-national 34 Culliton Report (Ireland) 53 culturalism 35 customers 133, 134 Czechoslovakia 209, 210 Dale, A. 202 Dale, A. and Glover, J. 160, 185 Daniel, W.W. 4 Danone/BSN 83 Danthine, J.P. 44 Dawson, J. 158, 185 decentralisation of production 155 De Grawe, P. 48 Delors, J. 94, 101, 102, 114, 117 demographic change 22, 196, 204, 214 De Montfort University 138 Denmark 11, 229 Department of Employment 175 De Paz, A. 235 deregulation 2, 22, 209, 227 design functions 149 De Lange, W. 166 De Vos, T. 106, 117 Deutschmark 48 Dex, S. 163 DGB (Deutsch Gewerkschaftbund) 152 Dicken, P. 114, 117 disorganised capitalism 4 Docksey, C. 230 Documentation Française 165 Dolvik, J-E. 247 dual system 190, 192, 193, 194, 196, 205 Due, J. et al. 8, 93 Duerrer-Guthof, F. 191

Dumont, L. 28 Dun & Bradstreet 108 Dunlop, J.T. 35 Durkheim, E. 31 Durkin, J. 51 Ecole des Annales 39 Economic and Social Committee (EU) 236 Economic and Social Research Council 24 economic convergence viii, 22 economic rationality 30, 31 economics 27 economies of scale 124 Economist, The 172, 177, 178 education 1, 3, 22, 36, 37, 39, 189, 220 EEC/European Union 68, 69, 72, 77, 79, 88, 91, 101, 104, 157, 227, 227, 236; enlargement 245 EFTA (European Free Trade Association) 227, 241, 244–245 electro-technical industry 142, 144–145 electronics 190 Emerson, M. 117 Emilia Romagna 46, 152 employee relations 5; British 3; French 3 employee representation 11, 57, 152 employers: organisations 1, 12–13, 21, 49, 57, 62, 211, 213, 220 employment: practices 3, 192; security 6; systems viii, 1, 3, 8, 11, 22, 23, 38, 226 Employment Gazette 160, 174 Employment Protection Act 176 England 14, 138, 197, 200, 201, 202, 210, 203, 204 equal opportunities 1, 20, 57, 58, 59, 60– 60, 63 Equal Opportunities Commission 176 EPOS (Electronic Point of Sales) 159, 178, 179 ERDF (European Regional Development Fund) 230 ETLA et al. 232

258 INDEX

ETUC (European Trade Union Confederation) 13, 62, 78, 89, 93, 100, 103–106, 109–113, 114, 116, 117, 171, 234, 235, 247 ETUI (European Trade Union Institute) 112, 117 EuroFIET (European White Collar Trade Union Federation) 85, 87 European Commission (CEC) viii, 2, 5, 6, 8, 9, 10, 11, 68, 74, 78, 79, 80, 81, 85, 88, 139, 231; Directives 6, 58, 59, 69, 85–87, 92, 94– 96, 168, 230, 231; Directorate-General V 111, 234, 235; Directorate-General X 111, 114; Social Affairs Council 173 European Company Statute 231, 246 European Council 176, 236 European Court 170, 227 European Economic Area 227, 245, 246 European Foundation 84, 179 European Industrial Relations Area 92, 104, 69, 80, 88 European Industrial Relations Review 160, 167, 236 European Integration 227, 228 European Metalworkers Federation 81, 85, 87, European Monetary System 247 European Parliament 114, 234, 235 European Social Fund 229, 234 Europeanisation 8, 12, 22, 23, 24, 27, 28, 31, 32–34, 37, 38 European Round Table of Industrialists 5, 81 Euro-Sclerosis 231 European Works Council 85–87, 96, 100, 101, 104, 108, 114, 170, 246, 247; Special Negotiating body 86, 100 Eurostat 123, 124, 160, 164, Evans, K. 189, 196, 197 Evans, S. 199 ex-Communist states 2, 20, 27, 30 Exchange Rate Mechanism 41, 48, 49, 53 exports 133 Falck di Sesto 152

fashion 123 Faivret, J. 159, 185, FDI (Foreign direct investment) 106–109, 226 federalism 40, 44, 48; see also integration Fianna Fail 51 FIAT 148, 149, 152 fibres, ‘man-made’ 44 Fifth Directive 94, 100, 231 Finegold, D. 18, 19, 197, 200, 206 Financial Times 93, 114, 116 financial participation 79 Finland 11, 23, 228, 229, 239–248 Finnish Labour Review 242 firms: British 3, 131, 135, 137, 178, 179; Danish 63, 66; Dutch 63, 66; Finnish 63, 66, 239–244; French 36, 63, 66, 131, 178, 179; German 3, 63, 66, 150; growth 134, 137; Hungarian 218, 221–224; Irish 62–63, 66; Italian 62–63, 66, 131, 150; Japanese 36; Norwegian 63, 66; Portuguese 63, 66; as social entities 32, 37, 150; Spanish 63, 66; strategies 131 Fitzpatrick, B. 104, 117 fiscal transfers 45, 46 flexible accumulation 4 flexible manufacturing systems 148, 216 flexible production 4, 10, 133, 134, 148; competitive 10, 14, 20, 21, 22, 24; constructive 10, 14, 20, 21 flexible specialisation 14–15, 23, 72–73 147, 149, 154 Flynn, P. 170 footwear industry 139 FORCE Programme 176 Ford Motor Company 3, 226 Fordism 10, 14, 30, 148 Fowler, N. 114 France 2, 14, 36, 108, 157–188;

INDEX 259

textile sector 5, 122, 124; retail distribution 125, 157–188 French: government 13, 165; industrial relations 164–168; multinationals 13 Fuchs, L. 194 Fulop, C. 159, 185 Gallie, D. 3 Gardner, D. 171 Garibaldo, F. 5 Garnsey, E. 160 GATT (General Agreement on Tariffs and Trade) 122 GCSE (General Certificate in Secondary Education) 198 GDP (Gross Domestic Product) 123, 224, 225, 226 gendering 196, 199 General Electric 226 General Motors 226 German Democratic Republic 20, 94, 209, 210, 222 Germany 2, 4, 7, 10, 14, 16, 23, 36, 54, 84, 108, 142, 143, 204; textile-clothing firms 126; training system 18, 190–197, 203; wage determination 42 Geroski, P.A. 116, 117 Giovanni, S. 152 globalisation 240 Gobbo, F. 139 Gold, M. 6, 11, 114, 116, 117, 169, 170 Goodhart, C. 48 Goodman, E. 139 Gomez, A. 74 Grahl, J. 5, 46, 59, 94, 231, 232 Granovetter, M. 39 Grant, W. 106, 117 Gravazzi, F. 49 Gray, D. 176 Greece 53, 235 Gregory, A. 5–6, 18, 19, 23, 157–188 grocery 157; see also food retailing Guardian, The 174, 177

Guelaud, F. et al. 163, 164 Gunnigle, P. 59 Hall, M. 114, 116, 117 Hamil, J. 116, 117 Handelsschule 191 Handy, C. 4 Hanson 108 Hantrais, L. 163, 165 Hansenne, M. 234, 235 Harbison, F. 35 Hardiman, N. 51 Harrison, B. 46 Harrop, A. and Moss, P. 161, 175 Hauptschule 191 haute couture 125, 129 Harvard Business Review 74 Haworth, N. 114, 116, 117, 119 Hayes, C. 188 health 189, 220 health and safety 5, 6, 57, 59, 60–60, 62, 63 Heinz, W. 194, 196 Hepple, R. 230 Herget, J. 207 Heseler, H. 194 Héthy, L. 20, 21, 23, 30 hierarchical structures 4 historicism 27 history 27, 30, 31 Hobbesian problem of order 45 ‘holistic’ methodology 32 homeworkers 130 Honeywell/ Bull 83 Hong Kong 130, 139 Hoover 6, 101 hosiery 130 House of Lords 176 Hudson Institute 227 human resources: management 4, 5, 13, 62, 63, 66; policies 1 Humphreys, P. 240, 241 Hungary 20, 21–22, 23, 209–227; Antall-Boross government 209, 214, 221; balance of payments 224;

260 INDEX

balance of trade 224; Central Statistical Office 227; Chamber of Commerce 211; Communist Party 210, 222; Institute of Labour Research 227; National Council for Coordination of Interests 220, 225; National Labour Market Centre 227; Social-Democratic Party 213; Socialist Party 213; SZOT (National Council of Trade Unions) 220, 225; wages 224 Hurrelmann, K. 203 Hyman, R. 24, 111, 112, 118, 177 ICI 108, 108 IDS (Incomes Data Services) 104, 118, 170, 173 ILTE 152 ILO (International Labour Office) 76, 83, 88, 111, 118 immigration 130 IMS (Institute for Manpower Studies) 159, 166, 186 Independent, The 171 individualism, methodological 32 industrial democracy 5, 248 industrial districts 15–16, 18, 128, 142 industrial orders 120, 142, 147, 151–155 industrial policy 46, 137–138, 154 ‘industrial logic’ of convergence 3 industrial strategies 127–131 industrial relations 1, 2, 3, 10–13, 22, 23, 36, 37, 41, 42, 44, 45, 46, 59, 62–63, 210–213, 221; British 157, 164, 171–173; Finnish 242–243; French 167, 168, 173; German 151–153; Italian 153–154; law 1, 11; Nordic countries 11, 23; trajectories 11 inflation 44, 48, 224, 225 informal economy 224 information technology 146

INSEE 129 integration, European: ‘augmented intergovernmental model 9, 56, 59, 63, 66; ‘federalist’ model 9, 41; ‘intergovernmental’ 40, 41 Internal Market 231 International Trade Secretariats 92 Intersocial 165, 166 Intermarche 179 insurance industry 144 investment 132, 134, 135 Ireland 9, 41, 48, 229; competitiveness 53; farmers 52; GNP 48; industrial relations 53, 62–63; inflation 48, 224; labour law 59–62; real wage gap 50 Irish Business and Employers’ Confederation 51 Irish punt 48, 53 iron and steel industry 147, 148, 152; see also steel industry Industrial Relations Services 118 Italy 4, 5, 7, 11, 14, 16–17, 23, 24, 139, 142, 146–149; industrial relations 17, 18; retail distribution 125; textile sector 5, 122; training 17 Isoceles 179 Jacomet, D. 125 Japan 31, 108 Japanese: employment practice 17; designers 125; techniques 4 Jenkins, J. 118 Jenson, C.S. et al 239 job creation 57 job design 5 job structure 3 Joint opinions 102 Joint Ventures 114 Jones, B. 5, 15, 36, 38, 120

INDEX 261

Julius, D. 106, 118 Jurgens, U. 4 just-in-time production 4 Kauppinen, T. 240 Kazemzadeh, F. 191 Kay, N.M. 116, 118 Kerr, C. et al. 3, 14, 35 Kern, H. 4, 7, 14, 16, 23, 142, 143, 148, 156 Keynsianism 30, 231 King, R. 139 Kjellberg, A. 239 Kleinman, M. and Piachaud, D. 170 knitwear 130, 132 Kohl, H. 171 Koning, C. 72 Kombinats 222 Kraft, H. 208 Kruse, W. 4 Kujawa, D. 118

Lennon, P. 173 Levinson, C. 116, 118 Liaisons Sociales 166 liberal-pluralist model 28 Lille 130 Lindley, R. 171, 173 Lipietz, A. 46 Liverpool 19, 188, 197, 198, 200, 201, 203, 204, 205 Locke, R. 46, 147 logic of industrialism 30 Lorenzoni, G. 139 Lombardy 138 London 46 Loveman, G. 15–16 Lucio, M. 112, 118 Lutz, B. 30 Luxembourg Accord 229 luxury goods 126, 127 Lyon 6, 16, 121, 127, 128, 132, 133, 134, 135, 136, 138, 139

Labasse, J. 139 labour: free movement of 6; internationalisation 92; law 59, 59–62, 210, 211 Labour Force survey 160 labour markets 1, 2, 10, 18, 19, 22, 23, 44, 57, 188, 189, 190, 192, 193, 194, 196, 198, 200, 203, 213–215, 216, 219, 226; segmentation 204 Labour Party (Ireland) 51 Labour Research 112, 114, 116 Laferrère, M. 139 Lallement, M. 158, 167, 168, 179, 186 Lane, C. 14, 16, 120 Langeheine, B. and Weinstock, U. 247 Lapeyre, J. 247 Layard, R. 42, 44 Lebrun, J-F. 231 Leclerc Supermarket 179 LeCorre, S. 179 Leeds University 138 Lehmann, A. 163 Leicester 15, 121, 130–130, 131, 132, 133, 134, 135, 136, 137, 138, 139

Maastricht summit: Treaty agreements and Social Protocol 6, 7, 9, 24, 40, 41, 42, 46, 48, 53, 57– 58, 59, 59, 60–60, 62, 63, 66, 68, 79, 89, 91, 93, 94, 98, 99, 106, 169, 172, 235, 238, 246, 247 MacShane, D. 92, 116, 118, 169, 177, 178 McDaid, M. 6, 21, 23, 99, 227–254 McKiernon, P. 106, 118 machine tools: industry 142, 143–144, 146; numerically controlled 149 McDonalds 226 Mackay, R. 188 Macrae, S. 197, 200 Madrid 46 Maier, F. 161 maintenance functions 143, 144, 148 majority voting 57, 59 manpower planning 214 manufacturing 91 Marimbert, J. 163 Maruani, M. and Nicole-Drancourt, C. 158, 187 marginalisation 196, 203, 204, 205, 206

262 INDEX

marketing 135, 146, 149, 224 Marks and Spencer 15, 124, 126, 138 Marsh, D. 18 Martin, J. and Roberts, C. 163 Marxism 93, 114 mass production 145, 153 Matsson, L.G. and Stymme, B. 118 Maurice, M. 3, 7, 8–9, 24, 35, 39, 180, 228, Mayer, C. 196 Mazowiecki, L. 214 mechanical engineering 129, 147 Melfi 149 Messerlin, P. 159, 187, metallurgy trades 218 metalworking: plants 3 methodologies, research 17, 27, 149–151 micro-electronics 146, 147, 148, 216 Mieskonen, J. et al. 242 Migrant workers 234 Milne, S. and Donovan, P. 173 Milner, S. 7, 24, 177 miners 227 minimum wage 220 Mjoset, L. 239 Modenese firms 149 monetary policy 21, 44 monetary union 9, 42, 45, 48, 63, 66 Montedison di Ferrara 152 Moorhouse, B. 24 Morgan, M. and Blanpain, R. 81 Morris,]. 114, 118 Mosley, H.G. 233 moulding 156 Mountfield, P.R. 141 Mueller, F. 39 Meulders, D. 161 Mückenberger, U. 231 Multi-Fibre Agreements 121 Multinational Business Forum 114, 118 multinational firm(s) 2, 3, 8, 12–13, 81–85; MNCs 3, 5, 23, 63, 69, 70–75, 91–113, 114 Myers, C. 35 nationalism 34

Neale, M. 192 neo-Confucianism 38 neo-Fordism 38 neo-liberalism 93 networks 4 Neuberger, H. 116, 118 new production concepts 4, 16–17, 23, 142, 143–149, 151, 155 New Right 93 Newly Industrialising Countries (NICs) 121, 130 New Technologies 78 Newman, B. 139 Nicoll, W. 229, 247 Nielsen, R. 24 Nordic countries: Area 2, 21, 69, 228, 229, 234 239–245; entry to EU 20, 21, 91, 239; industrial relations system 11,23 North Rhine-Westphalia 189 Nothrup, H.R. and Rowan, R. 116, 118, 229 Norway 11 Oberbeck, H. 145 occupational structures 30 O’Donnell, R. 41 OECD (Organisation for Economic Cooperation and Development) 2, 79, 88, 111, 118, 230, Oechslin, J-J. 231 office work 145 O’Kelly, K. 5, 12, 100 Olivetti 148 Olle, W. and Schoeller, W. 116, 119 Opportunity 2000 175 Orluan, A. 30 Ornati, D. 139 Paderborn 19, 188, 189, 191, 192, 196, 204, 205, 206 Palloix, C. 30 Panic, M. 119 Papandreou, V. 114 Paris 46 Paris Summit 229 Parsell, G. 189, 199

INDEX 263

part-time work 19–20, 23, 59, 60–60, 63, 158, 159–164, 190, 200, 204 participation 4–5, 6, 11, 23, 59, 63, 152, 211 Pechiney 84 Pekkarinen, J. 228, 240 Perestroika 209 petro-chemicals 3 PHARE 20 Philips 108 Pichierri, A. 4, 7, 14, 16, 23 Pieper, R. 4 Piore, M. 14, 15, 139 Pipkorn, J. 230 Pitt, M. 5, 14, 15, 30 Pochet, P. 238 Poland 20, 209, 211, 214, 220 Polanyi, K. 39 politics 4 polyvalence 147 Portugal 53, 54, 69, 235 post-Fordist industry 4, 10 post-modernism 38 Prais, S. 16 Press, M. 119 Price-Waterhouse/Cranfield Survey 63, 66 poverty 224 printing industry 152 privatisation 21, 209, 214, 226 production systems 36, 144 Policy Studies Institute 24, 143 Programme for Economic and Social Progress 49, 52, 62 Public sector 190 Purkiss, C. 73 qualifications 196, 197, 206, 214, 216; mutual recognition 7; as skills 147, 149 quality: control 143, 144; improvement 4, 149; management 4 race 199 Raffe, D. 189, 201, 202 Rainbird, H. 24

Ramsay, H. 5, 12, 13, 91–120, 235, 236, 246, 248 Ranjault, P. 45 Räsänen, K. 242 Realschule 191 Rees, T. 198 Regini, M. 147, 148 regions: institutions of 9, 137, 138, 150, 154– 155; convergence 16; industrial relations 45, 46, 52, 151; specialisation in 46, 121, 142, 147, 154– 155 regulation 5, 6, 7, 8, 10, 19, 20, 23, 24, 30, 31, 38, 59, 60–60, 225 religion 154; see also Roman Catholic retailing sectors 6, 23; department stores 125; food 18, 19; hypermarkets; supermarkets 125 RETEX scheme 137 Richard I 233 Richards, E. and Stevenson, D. 77 Rhône-Alpes 138 Rhône-Poulenc 129 Rieser, V. 149 Roberts, I. 119 Roberts, K. 189, 198, 199, 203 Roche, W.K. 52 Rochet, P. 44 Rodrigues, M.J. 1 Roman Catholic doctrine 44, 45 Romania 209, 210, 215 Romano-Germanic legal tradition 11 Rose, M.J. 5, 24 Rose, R. 18 Roth, B. 194 Russel, R. 192 Sabel, C. 14, 15, 30, 139, 147, 148, 154 Saralehto, S. 242 Sainsbury 179 Sainsbury, D. 188 Saren, M. 15

264 INDEX

schools 154, 191, 214, 216, 218 school-leavers 215 Schmitter, P. 40, 44, 114, 119 Schumann, M. 16, 142, 143, 146, 148, 156 scientific management 5; see also Taylorism Schiller, B. 239 Scotland 6 Siemens 108 Seguin Act 166 Sengenberger, W. 15 seniority 3 service sector 189; see also tertiary Shepherd, G. 122 Servan-Schrieber, J-J. 114, 119 Shiftwork 164 shipbuilding industry 137, 190 silk production 15, 127–129, 138 Single European Act 12, 58, 68, 87, 69, 78, 91, 94, 109, 232, 235, 246 Single European Market 5, 10, 13, 157, 171, 173, 179 Sisson, K. 108, 119, 177 skills 4,78, 137, 138, 142, 154, 157, 159, 192, 193- 194, 201, 202, 206, 214, 215– 219 small firms 5, 14, 15–17, 23, 131, 133; see also SMEs 137, 142, 147, 150, 220 Small and Medium Sized Enterprises (SMEs) 15–17, 120, 128, 139, 223 Smith, D. 159, 187 Smith, R.C. and Walter, I. 116, 119 Social and Labour Bulletin 235 Social Action Programme 13, 59, 59, 68, 79, 94, 99, 101, 234, 236–239 Social Chapter 7, 24, 57, 68, 89, 93, 99, 170, 234 Social Charter 59, 62, 63, 79–80, 94, 99, 108, 111, 169, 171, 176, 234, 236, 238, 246 social democratic 2 Social Dialogue 58,78, 79, 81, 84, 87, 89, 101, 102, 104, 177, 234–239 Social Dimension 94, 233, 234 social dumping 55, 59, 60–60, 232 Social Europe 180

social partners 12, 13, 44, 46, 58, 62–63, 102, 103, 104, 215, 220; see also trade unions, employers organisations social policy 1, 18, 22, 23, 57, 58, 59, 62– 63 social security 57, 220 social services 190 social space 30 social welfare 1, 19, 20, 21 socialism 227 societal analysis/societal effects 3, 8, 19, 28, 32, 34, 36, 37, 38–39 sociology 14, 27, 31 SOFI (Soziologisches Forschunginstitut) 16, 143, 145 Sorge, A. 3, 14, 39, 154 Soskice, D. 18, 19, 197, 200, 206 Spain 54, 84, 235 Sparks, L. 159, 163, 187 Spaventa, L. 49 Staedelin, F. 232 Stafford, A. 199 Standa 125 Standing, G. 229 state planning 222 states 37 Steedman, H. 16, 18 steel industry 137, 190; see also iron and steel Stegmann, H. 190 Stevens, J. 188 Stopford, J.M. 114, 119, 125 Storey, J. 137 Streeck, W. 44, 114, 116, 119 153, 154, 248 strikes 57, 209, 210 Structural Funds, of the European Community 52 sub-contracting 15, 131, 132, 133, 137, 142 subsidiarity 9, 32, 42, 44–48, 53, 172 supervisors 144, 146 supermarkets 158; self-service 160; working hours 159 Suzuki 226 Sweden 10, 11, 227

INDEX 265

Swindon 19, 188, 189, 197, 198, 199, 200, 201, 203, 205 Sylvia, S.J. 177 Szyszczak, E. 229 system controllers/regulators 16, 144, 153, 156 Szarka J. 5, 14, 16 taxation 44, 52, 130, 220 Taylor, P. 56 Taylor, M.E. 191 Taylorism 14, 16, 22, 145, 148 Teague, P. 5, 9–10, 11, 14, 42, 44, 46, 57, 59, 94, 99, 104, 114, 116, 177, 230, 232, 235 teachers 227 team working 4 technology 3, 224; change in 4, 21, 35, 216, 219, 227; information 20; transfer 38 technicians 149, 216 Teichova, A. 108, 120 temporary work 59, 59, 60–60, 63, 190, 200, 204 Termoli 148 tertiary sector 142, 144–145 Tesco 179 textile-clothing sector 5, 121, 122–127, 139, 147; and trades 218 Thatcher, M. 91, 93, 96 Thomson SA 74, 81, 82, 83 Thomson, D. and Larsen, R. 116, 120 Third Italy 142, 147, 154 Third World: competition 15 Times, The 170, 175 Toivonen, T. 240 Tolliday, S. 3 Tomaney, J. 119 Torkington, N. 201 Totterdill, P. 125 Toyne, B. et al. 125 trade associations 138 trade unions 1, 12–13, 20, 21, 24, 37, 42, 49, 57, 58, 62, 148, 151, 152, 153, 155, 210, 220, 221, 226; AFL-CIO 110; CDFT French 83;

CGIL Italian 110; CGT French 110, 167; ICFTU 110, 111; International 77, 78; Metalworkers Federation 111; SAK, STTK, AKAVA Finnish 243; USDAW British 173, 175; WFTU 110, 111 training 1, 3, 5, 6, 7, 17, 39, 137, 138, 142, 149, 188–206, 215–219, 225 training systems 18–19, 22, 38, 153, 154, 188, 214, 226; see also specific countries Travail et Emploi 160 Treaty of Rome 58, 94, 104, 169, 175, 176, 228, 233, 235, 246 Trinder, C. 163, 164 trust relationships 46 ‘two-speed Europe’ 41, 53 TUC 94, 109, 112, 120, 171 Tuloup, A. 125 Turin 152 Turner, L.M. 114, 119 Tuscany 152 Tuxworth, E. 208 Tyszkiewicz, Z. 103, 236, 247, UITA (International Federation of Food, Catering and Allied Workers) United Kingdom 41, 83, 108–109, 229; Conservative policies 138; employers 10; government 9, 10, 44; monetary union 53; retail distribution 125; Social Protocol 62; textile sector 5, 122, 124, 135; training system 18 Ullah, P. 206 UMIST 138 unemployment 21, 44, 59, 66, 164, 189, 190, 191, 192, 199, 200, 201, 202, 203, 204, 206, 209, 214–215, 224, 226 UNICE (Union of Industrial and Employers Confederation of Europe) 13, 100, 102–113, 114, 171, 234, 236, 238, 247

266 INDEX

United Nations 88, 106–120 unification 27, 28, 32, 37 United States 3, 4, 30, 31, 35, 106, 108; businesses 12; Industry Coordinating Group 74 universalism 34, 35 Upim 125 USSR 214, 219 Val Duchesse Process 78, 102, 234 Venturini, P. 102, 114, 120 voluntarism 59 Vogel-Polsky, E. 236 Volkswagen 84 Voskamp, U. 144 Vredeling Proposal 94, 231 wage determination 9, 42, 44, 46, 49, 55– 56, 214 wage systems 30, 78, 219–221, 229, 232 Watson, P. 233 Watson, G. and Fothergill, B. 163 ‘web of rules’ 14, 21 Waddington, J. 119 Wallace, C. 196 Walsh, T. 172, 173, 178, 179 Warner, H. 231, 234 Wedderburn, Lord 236, 248 Weidman, J. 192 Weissker, D. 192 Weisz, R. 124 Wells, F.A. 139 Weston, S. 112, 118 white-collar workers 146, 147, 149, 211 White, M. 197, 200 Whitson, C. 119 Wilkinson, H. 175 Williams, Tennessee 91 women 18, 19, 23, 196, 203, 206; working patterns 175 work organisation 1, 4, 14, 16–17, 22; see also ‘job structure’ working hours/time 6, 19, 23, 57, 60–60, 63, 157, 158, 164–168; convergence of 168–178, 180; ‘saturation’ of 148, 174 Workers rights 227, 229

works councils 62, 151, 152 Worswick, G.D.N. 188 Young, S. 116, 120 youth training schemes 19, 23, 189, 197, 198- 200 Zeitlin, J. 125, 154 Zinnecker, J. 194 1960s 3, 4, 6, 28, 32

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