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Still ‘Regime Competition’?Trade Unions and Multinational Restructuring in EuropeLes syndicats et les restructurations dans les multinationales en EuropeLa concurrence entre les régimes nationaux est-elle inévitable ?¿ Existe aún « la competencia entre regímenes » ?Sindicatos y reestructuración multinacional en Europa

  • Valeria Pulignano

…more information

The paper draws from a ETUI-REHS research project on “Trade Unions Anticipating and Managing Change in Europe” funded by Art. 6 Innovative Measures – European Social Fund.

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Trade unions are currently experiencing a growing disadvantage in coping with the international products market. Transnational political and economic integration have turned out to be the innovative challenges facing labour in the last decades. Pressures towards economic integration have been particularly greatest within groups of countries pursuing a common policy of regional integration. Accordingly, multinational companies are able to integrate production, distribution and marketing across diverse territories by taking advantage of socio-economic and political geographical differences.

This is particularly evident if we look at the current restructuring activity of multinationals. They are engaged in new investments in different regions and localities, while searching to maintain competitiveness by reducing costs and improving performance. Specifically, more intense international competition is placing pressure on both wage and non-wage costs and it creates the conditions in which social dumping and relocation to countries outside (and within) Europe become a potential threat (Marginson, 2006). More importantly, an implicit threat to relocate is bound up with the “coercive comparisons” of labour costs and performance across sites and countries (Coller, 1996). Poorly performing sites are threatened to receive low investments as the effects of relocating production activities to better performing sites in other countries or regions. These comparisons are deployed by management to place pressure on local workforces and trade unions. Specifically, the ability of trade unions to respond to the process of transnational corporate restructuring is weakened because of the playing off multinational capital generates between workers within more regulated labour market economies, with traditionally high labour costs and rigid working conditions on one hand, and those in less regulated labour markets with more flexible working conditions on the other. This generates “competitive whipsawing” (Katz, 1985; Kochan, Katz and McKersie, 1986) in accordance to which trade unions are threatened to concede flexibility and cost cutting in return for job protection in one location against another.

Ulman (1975) argued that historically, as markets expanded, trade unions had to enlarge their strategic domains to keep workers from being played off against each other, undermining wage and labour standards. In Europe, this practice became widespread in the 1990s with the programme of European integration and the implementation of the European economic and monetary union (EMU). Literature reflected on the extent to which European integration may give trade unions strong reasons to develop European wide capacities due to the higher level of regulation in comparison to the rest of the global economy. In particular, strong attention has been focused on significant institutional innovation in European-level company-based industrial relations, such as the establishment of European Works Councils (EWCs) as the result of the EU’s 1994 EWCs Directive.

Studies on EWCs have investigated the factors that influence the outcomes of cross-border management decision-making. Specifically, research highlights ‘agency’ (Lecher et al., 2001) and ‘structure’ (Marginson et al., 2004) as relevant elements, which are able to create ‘active’ EWCs by enhancing their influence on management decision-making in cases of multinational restructuring. By drawing from this theoretical framework, the paper pursues the objective to understand and to assess the ability of ‘active’ EWCs to develop wide capacities for the European trade union movement. This is pursued by examining the capacity of ‘active’ EWCs to stop employer whipsawing of local unions in the case of cross-border restructuring as well as to analyse the conditions (or lack of) associated with it. This empirical research offers many contributions. In particular, it illustrates that, although structural and agency factors affect the capacity of employee representatives within EWCs to influence the outcome of transnational management decision-making, the handling of the process of restructuring is strongly affected by the strategic capacity of the local union to control competition over wages and working conditions across-borders. In other words, networking, coordination and consultation activities between employee representatives within EWCs, or with management, which generate negotiation of European-level agreements, seem ineffective at controlling or preventing inter-union competition in cases of transnational restructuring. Thus, European-level structures demonstrate to apparently have little effect on plant level settlements. In most respects, this can be explained through the fact that EWCs have not formally gained collective bargaining capacity at company-level, which is currently left in the local management and employee representatives’ hands. This implies that European negotiations—when they take place in the form of the European framework agreement by the EWC—are ‘voluntary’, and without formally coordinated trade unions influence at the European level. Thus, trade unions still have to act in national arenas, where the formal negotiation process takes place, and where differences in the bargaining structures, labour market policies and union traditions usually reflect diversity in union strategies and local union interests. This contributes to creating a context where “competitive whipsawing” is facilitated and the pressure by management for “concession bargaining” is reinforced.

We will evaluate this argument by reference to the case of transnational restructuring of General Motors (GM) in Europe in 2004. The paper begins with a brief discussion of the theoretical issues. We then introduce the case study and we illustrate the European metalworkers’ union approach towards the GM plan of restructuring, such as using the EWC to stop “plant closure.” Finally, we examine how and why, in spite of the reduction of the challenge to plant closure, this approach meant no elimination of management’s attempt to whipsaw union across borders in local negotiations.

The Methodology

This article is based on a case study research on GM in Europe. Data for the case study were collected by using primary and secondary sources: 25 semi-structured interviews with European and local level union officers in the plants under investigation, and employee representatives as members of the EWC were developed. Analysis of update European and local union policy papers have been also used for data collection. Documentary data on company restructuring and management-labour relations, and copies of national collective agreements were collected at the workplace. The use of the case study method strongly supports the research aims and objectives, such as to better understand and assess the impact of ‘active’ EWC practices, which generate the European-level new regulatory framework, on plant settlements and to explain the conditions accompanying the use of such practices. Despite the constraints in terms of the difficulty of drawing analytical generalizations, case study analysis greatly increases our ability to examine the impact of ‘active’ EWCs on plant level regulation. This means to examine the extent to which local unions can use ‘active’ EWC to reduce whipsawing by management. Secondary sources were also used to collect supplementary data. These are the European Observatory of Industrial Relations (EIRO), the European Industrial Relations Review (EIRR) and the European Monitoring Centre for Change (EMCC).

International Market Competition and Cross-National Regulation: The European Experience

The last twenty years have seen a greatly increased transnationalization of economic, political, social and cultural relations. By detaching from the golden era of capitalism, which was primarily national in character and developed under the new international division of labour (Schoenberger, 1989), the new era of globalization sets the scene for the emergence of international markets. This is seen as part of the increased importance of multinational companies and international trade. Specifically, multinational enterprises are considered the genuine movers in the transnational markets. They provide economic coordination for development on a world scale by restructuring their activities while operating as transfers of resources and production from one country, sector or market to the other in order to maximize their profit.

In particular, multinational enterprises are at the forefront of a segmented production process that sequences stages of manufacturing in different national and/or regional territories by potentially contributing to generating “social dumping.” Generally speaking, the extent to which multinationals have to start with nationally embedded differences depends on the growing ability they have to move across borders by establishing inter-linkages between diverse domestic economies. As a result, the latter become increasingly interdependent and they offer scope to achieve the highest level of profit in more beneficial geographical areas versus less advantageous territories. Restructuring in the form of relocation of resources driven by market pressures forces worker and government competition in so far as it takes advantage of the diverse regional social and labour conditions. The implications for labour are that the bargaining power of workers and unions is undermined because of the erosion of the material base of traditional re-distributive solidarity in the welfare states (Streeck, 1999).

Trade unions, and particularly those from the most economically advantaged countries and more regulated economies, are fearful of the increased international competition. They worry that capital mobility entails further competition between countries, and trade unions across countries, on the basis of differences in labour standards. The relocation of production units to lower wage countries stimulates a downwards spiral of labour standards with a wave of concession agreements as the way for national unions to secure jobs. Katz, Lee and Lee (2004) argue that local unions seem to be willing to grant concessions employers desire on restructuring since they feel more direct pressure from workers threatened by employment losses.

In Europe, the creation of the EMU has generated a debate about the prospect for a regional (European) system of industrial relations (Streeck, 1998; Marginson and Sisson, 2004). At the base of such an assumption is the search for cross-border coordinated strategies of social regulation, which are able to manage the widespread restructuring and rationalization of industry that the single market is expected to trigger (Marginson and Schulter, 1999). An example of cross-border regulation is the EWC directive 94/45/EU. It aims at establishing in community and scale companies, information and consultation rights for employees’ representatives from the countries of the European Economic Area (EEA). A debate here has been generated in the literature, which focuses on the problem of creating cross-border employee representative arrangements, mostly due to the diversity of regulation in different national industrial relations systems, and the union fear of feeling ultimately threatened by wage sharing on one hand (Marginson and Schulter, 1999). On the other hand, the national and company-level trade unions’ willingness to preserve their sphere of autonomy in regulating labour issues while establishing linkage with the European level, have also been considered to influence the extent to which collective representative coordination within EWCs is achieved within the context of European integration. Hence, the practice of EWCs and their influence is illustrated to vary considerably. EWCs range from ‘symbolic’ EWCs, involving a low level of information provision and no formal consultation, and little or no contact between employee representatives, or with management, whose role is largely confined to a ritual annual meeting, through more ‘active’ bodies involving ongoing networking activity on the employee side and regular liaison with management, to those that exert a measure of influence over management decision-making and even engage in negotiation of joint texts or framework agreements with the company (Hall and Marginson, 2005).

In terms of identifying the conditions that facilitate the emergence of an ‘active’ rather than a ‘symbolic’ EWC, Lecher and Rub (1999) and Lecher et al. (2001) take an ‘actor-centred’ approach, which emphasizes the organizational capacity of, and effective networking between the employee representatives, the strong links between the EWC representatives and those at national and local levels, the close relations with the trade unions providing resources and expert assistance as well as co-operative, high trust relations with central management as important factors in explaining variations in EWC capacity to act on one hand. On the other hand, structural factors, in particular the degree of internationalization and integration of the business operations of the companies concerned, are also considered crucial elements in affecting the capacity of EWCs to influence the outcome of transnational management decision-making (Marginson et al., 2004). Specifically, management structure and management policy are considered important. It is illustrated that how far EWCs are ‘active’ rather than ‘symbolic’ depends on whether there is a European level management structure. Moreover, EWCs are more likely to exercise influence where management’s approach to the EWC is proactive, seeing it as a mechanism that can be utilized for management purposes, such as improving management understanding of the rationale for business decisions and hence the legitimacy of management actions. The nature of pre-existing structures of employee representations is also important in facilitating the development of employee-side organization and activity. In particular, the reference here is to the existence of representative structures at national group level in the main countries of operation and/or a pre-existing international network among employee representatives on which the EWC can build. Finally, it is reported that the existence of all these factors facilitate EWCs ability to exercise a strong influence on management decision-making, engaging both in formalized consultation and in the negotiation of European-level agreements with central management on the handling of transnational restructuring (Hall and Marginson, 2005). This is supported by a recent study of the European Foundation for the Improvement of Living and Working Conditions (2004), which illustrates that the capacity of EWCs to effectively influence decision making in multinationals seems to be often directly linked with the possibility to affect the dynamics of restructuring in those companies. Accordingly, joint agreements have been negotiated by the ‘active’ EWC to handle aspects of European-wide restructuring.[1]

In this paper, we argue that a further examination of the impact of European-level agreements on plant level should support the analysis on the EWC practices. As the next paragraphs illustrate, in the case of GM Europe the European-level framework agreement which was negotiated between the European Employee Forum (EEF)—which was set up in 1996 as one of the most ‘active’ EWCs negotiating on issues related to cross-border restructuring—and the central management did not eliminate the scope for management to use “regime competition” to whipsaw trade unions.

GM and the 2004 Plan for Cross-National Restructuring in Europe

GM is one of the world’s largest automotive groups with headquarter in the United States. In Europe, GM opened its first assembly plant in Denmark in 1923, and one year later in Belgium, in Antwerp. The group acquired Vauxhall Motors in Luton, in Britain, in 1925 and the Adam Opel AG in Russelshëim in Germany in 1929. Amongst the most recent developments in Europe, in 2000 GM Europe took full ownership of the Saab Company in Trollhättan in Sweden, following a joint venture agreement between Saab-Scania AB and GM. This followed the setting up of the new European GM group headquarters in Zurich in 1986, which signed the automotive corporation moving towards greater centralization of its operations in Europe.

The management approach followed by GM in Europe has been very much keen to emphasize organizational change in the direction of increased flexibility coupled with cost-cutting as the way to increase competitiveness under a regime of lower costs and lower priced goods. Accordingly, manufacturing in Europe has been organized in ‘platforms’ for different models as the way to increase the company’s flexibility by exchanging models, and production volumes within the same platform from one plant to the other. Moreover, the organizational change implied a shift to cross-national and cross-company alliances and cooperation with other potential competitors, such as the attempt to create a joint venture with Fiat in 2000. Table 1 indicates the distribution of GM plants, employees, car models, platforms and vehicles produced in Europe in 2004-2005.

Since the mid-1990s, restructuring has been a key issue in GM in Europe. Central management explained the restructuring plan as the result of the crisis which affected the US-based automaker. Company data illustrate a steep reduction of the market share within the GM group (including Opel/Vauxhall, Saab, Chevrolet and others) with a loss of around 5% from 1994 to 2004 in comparison with the other auto makers in Europe (e.g., Volkswagen, Peugeot, Japan makers). Excluding Fiat, Renault and Rover, there has been a slight increase between 1 and 3% in sales and revenues for the remaining automakers in Europe. Data for GM in 2005 illustrate an increase of only 1% in the volume of production due to the sales for Chevrolet (see table 2).

Table 1

GM Plants, Employees, Car Models per Platform and Production in Europe and Russia (2004-2005)

Country

Plant

Employees

Car Models

(platform)

2004

(x 1000)

2005

(x 1000)

Belgium

Antwerp

5,300

Astra (Delta)

231.6

253.1

Germany

Bochum

9,700

Astra (Delta)

59.8

71.3

 

 

 

Zafira (Delta)

183.9

172.6

 

Eisenbach

1,900

Corsa (Gamma)

144.9

115.2

 

Russelshëim

6,700

Vectra (Epsilon)

146.0

144.8

 

 

 

Signum (Epsilon)

18.5

16.5

Poland

Gliwice

1,800

Agila (Delta)

 

34.2

 

 

 

Suzuki Wagon (Delta)

 

2.9

 

 

 

Astra Classic (Delta)

 

63.1

 

 

 

Zafira (Delta)

 

28.3

 

 

 

TOTAL

116.6

128.8

Portugal

Azambuja

1,200

Combo (Gamma)

66.4

73.8

Russia

Togliatti

 

Chevrolet Niva

54.0

49.7

 

 

 

Chevrolet Viva

0.2

2.1

 

 

 

TOTAL

54.2

51.8

Spain

Zaragoza

8,400

Corsa/Corsavan (Gamma)

225.7

204.4

 

 

 

Meriva (Gamma)

195.9

181.9

 

 

 

TOTAL

421.6

386.3

Sweden

Trollhättan

6,600

Saab 9-3 (Epsilon)

64.5

74.2

 

 

 

Saab 9-5 (Epsilon)

37.5

29.1

 

 

 

Cadillac BLS

 

0.1

 

 

 

TOTAL

102

103.4

Britain

Ellesmere Port

4,000

Astra (Delta)

102.1

188.8

 

 

 

Vectra (Delta)

27.8

 

 

Luton

1,600

Vivaro (Delta)

53.0

58.5

 

 

 

Renault Trafic (Delta)

36.0

31.9

TOTAL VEHICLES

1,782,200

1,796,700

Source: ACV-Metaal; EMF (2005).

-> See the list of tables

Table 2

Market Share (%) per Automaker Groups in Europe

Group

1994

1999

2000

2001

2002

2003

2004

2005

BMW

3.3

3.2

2.9

3.7

4.3

4.3

4.5

4.5

Daimler Chrysler

3.5

5.5

6.2

6.4

6.6

6.6

6.2

6.2

Fiat

10.8

9.4

10.0

9.6

8.2

8.2

7.6

6.6

Ford

13.4

11.0

10.8

11.1

11.4

11.4

11.3

10.9

GM

13.1

11.9

10.8

10.8

9.9

9.9

9.6

10.5

Japanise Makers

10.9

11.3

11.4

10.4

11.5

11.5

13.3

13.5

PSA

12.8

11.9

13.1

14.4

15.0

15.0

14.5

13.7

Renault

11.0

10.8

10.6

10.6

10.7

10.7

10.2

10.2

Rover

3.2

2.0

1.3

1.1

1.0

1.0

0.8

0.3

Volkswagen

16.0

18.5

18.7

18.9

18.4

18.4

17.7

18.9

Korean Makers

0.0

2.5

3.4

2.8

2.7

2.7

4.0

3.9

Source: ACV-Metaal; EMF (2005).

-> See the list of tables

In a recent report, the European Metalworkers’ Federation (EMF) identifies two specific reasons behind the economic crisis of GM Europe: the inconsistency of GM management strategies, and transformations in the European car manufacturing industry in recent years (EMF, 2005). In GM’s European operations, these financial difficulties led to important job cuts. Specifically, in a range of different restructuring efforts, GM cut about 21,000 jobs in Europe from 1998 to 2001. Amongst the workforce reductions, the one at Opel in 2000 led to the reduction of 6,000 jobs, of which 2,000 in Luton (Britain). In 2001 management announced that a further 10,000 jobs would be cut between Zaragoza (Spain), Bochum and Eisenach (Germany), and Antwerp (Belgium). Moreover, the alliance between GM and Fiat in 2000, followed by the outsourcing into two joint venture companies, risked to affect over 14,000 workers in GM and almost 15,000 in Fiat in Europe and Brazil (EMF, 2005).

In early September 2004, GM announced through the media, without proper prior information and consultation of the EWC, that it would progress in cutting a further 12,000 jobs involving the three main brands GM owns in Europe, that is Opel, Saab and Vauxhall. According to management, this would lead to the closure of one entire plant with Germany or Sweden as the countries which would carry the heaviest burden.[2] Specifically, at the beginning it was not clear from the GM’s announcement which site would have been primarily affected by the closure. As a result, a lot of pressure was put on the employee representatives at the GM sites in Trollhättan (Sweden) (Saab) with around 6,000 employees, and Russelshëim (Opel) and Bochum in Germany with almost 17.000 workers in total. The Financial Times commented: “General Motors has pitched the headquarters of its loss-making German and Swedish units against each other in a competition to build the next generation of its mid-sized Opel and Saab cars” (Financial Times, 3 September 2004). The announcement of job losses led to an unofficial strike at Bochum, which halted production in other plants, because the German plant is supplier to the Belgian and British GM plants (Bartmann, 2005).

The climate of pressure on employee representatives and trade unions is aptly captured by the description of Hakan Scott—union official at Trollhättan plant—of GM’s threat “to shift production of the Swedish plant’s main model, which at that time made up almost two-thirds of the 115,000 cars built annually” (Financial Times, 3 September 2004). The scenario of “regime competition” which developed in GM and its implications for employment has been traditionally the focus of extended debate. Hancké (2000) provides a vivid description of the “coercive comparisons” deployed by GM management on its European operations in the late 1990s. The aim was to place pressure on local workforce, works councils and local unions, and through local negotiations to lever cost-reducing and flexibility concessions as the result of a round of concessions bargaining. In that period, the European Employee Forum (EEF) decided that there must be a European framework agreement as the basis for the different plant-level agreements in Europe. The first European agreement was signed in July 2000 and the second in March 2001 (the so-called Olympia plan) and they both were accompanied by days of action at local and European levels. The intention was to prevent any plant closure and redundancies by creating “safety fences” (EIRO, 2001).

When in 2004 GM announced the intention to close a production plant for overcapacity in Europe, a European trade union coordination group was set up with participants from the EMF, representatives of the national trade unions concerned and members of the EWC. The trade union presence in the coordination group was crucial to support the EWC in the negotiation process with management and to ensure integrity and social cohesion to the group as well as strengthening cross-border workers’ solidarity. The European trade union coordination group agreed on common basic demands for a clear commitment by the local trade unions of no negotiations at national level but the obligation to demand for bargaining a European framework agreement to deal with the employment effects of restructuring. Moreover, the agreement would set up minimum standards regarding redeployment and social measures to adopt for the sites affected by restructuring. This demand follows the EMF approach regarding “social responsible company restructuring”[3] with the need for international labour cooperation as a possible way to control competition over wages and working conditions. The aim is to narrow the scope for management to whipsaw local unions while generating a downward spiral of working conditions through putting pressure for concession bargaining.

The Copenhagen declaration, which was signed by the German (IGMetall) and the Swedish (Svenska Metall, SIF and CF) trade unions the 1st of October 2004, manifested the unions’ rejection of any managements attempt to use the national-level industrial relations system to negotiate the outcomes of restructuring. By contrast, they expressed the interest to rely on the EWC as a critical institutional vehicle for this. The union leaders made clear that “plant closure, mass redundancies and violation of collective bargaining agreements do not contribute to regaining success” (“Copenhagen Declaration by trade union leaders from IGMetall, Svenska Metall, SIF, CF and EMF in respect of GM Europe restructuring,” FEM 41/2004). Trade union leaders examined the devastating effects on employment of the national negotiations which were undertaken in 1997 in Germany, and by mid-1998 in Spain, Belgium, and Britain. These cases were used to illustrate how the agreements in one country or plant affected the others, thus forcing all to negotiate similar concessions, and ultimately destroyed the initial advantages that individual unions had secured. In a public interview Franz Klaus—chair of the GM EWC—commented that “it was a mistake what German unions made in 1997, when they hit the unions in Antwerp and Luton with concessions on wages and working time flexibility” (May, 2005).

On the 14th of October, the European trade union coordination group organized a European action day against the GM closure decision, which involved the participation of over 50,000 employees in all GM plants across Europe. As a result, in December 2004 management representatives of GM Europe and the GM EEF signed a European framework agreement on restructuring and cost-cutting. The agreement aims to put into place a framework within which the restructuring at GM European facilities can be managed according to the EMF principles of “social responsible restructuring,” such as to minimize the social consequences of industrial change for employees and the wider community. As such, the framework agreement was seen as representing the trade unions’ common attempt to manage the downward pressure on wages by using the EWC as a strategic tool to help keeping job security while soliciting cross-border trade union networking, coordination, and solidarity. The main point of the agreement is to resist “forced redundancies and plant closure.” Hence, Reinhard Kuhlmann—former EMF General Secretary—described the outcomes of the negotiation as the “victory of reason” (EMF newsletter 8 December 2004).

As a result of the agreement, GM management agreed to keep the Opel Russelshëim plant open till 2010. It was also agreed no forced redundancies and no plant closure for the Saab Trollhättan plant. Generally speaking, the European-level agreement created a framework within which negotiations in Germany and Sweden as well as in the other countries affected by restructuring (i.e., Belgium, Britain and Spain) could take place. The agreement states that job security is guaranteed in return for early and partial retirement schemes as well as voluntary redundancy. Thus, a total of 9,500 jobs will be cut through voluntary severance in Germany (including Russelsheim, Bochum and Kairserslautern), and 2,000 employees will be made voluntary redundant among the other GM’s Swedish, Belgian, Spanish, and British plants. Other measures indicated in the agreement as relevant to reduce overcapacity are the use of outsourcing, such as asking employees to go to work for future joint-ventures with Opel suppliers, and voluntary transfer. Accordingly, most of the jobs will be moved to so-called transfer agencies where employees can receive further training to facilitate their outplacement (EIRO, 2004). Paradoxically enough James Mackintosh reports that as a result of this operation GM Europe will be able to cut off almost 12,000 employees in Europe and save 500 Million Euro in total (Financial Times, 5 March 2005).

The European-level agreement followed the management decision to base production of the new Vectra and Saab model cars at the German rather than the Swedish plant. As the next paragraph will illustrate, the transfer of production to Opel Russelshëim coincided with a new wage and flexible working-time moderation deal with GM employees in Germany. This reflects the German union strategy, such as to prevent job cuts and forced redundancies by bargaining concessions and negotiating through the works councils better conditions than the minimum set by law for those who will leave the company. Moreover, this strategy is combined with the use of industrial action. Specifically, the strike at Bochum was used by the German unions to put pressure on management to bargain locally job guarantees in exchange for concessions on wages and flexibility. The cross-national diversity in trade union strategies generated a situation of inter-union competition. This is reflected in the different content and functions of the local agreements. Despite the ‘save fences’ created by the European framework agreement, bargaining was developed locally by unions and works councils in order to gain local advantages versus European objectives.

Implications for Local Negotiations in Europe

Though Opel Russelshëim in Germany and Saab Trollhättan in Sweden are the only plants where formal agreements securing employment and production location have been explicitly negotiated under the 2004 European framework agreement, similar deals have been concluded in other plants in Germany as well as in other countries in response to the German and Swedish initiatives. Table 3 presents some features of these agreements with indication of the employment arrangements in the five main GM car-producing countries in Europe: Germany, Sweden, Britain, Spain, Belgium.

By setting up the rules for “no forced redundancy and no closure”, the framework agreement acted as an umbrella under which the above-mentioned rules become binding for all follow-up agreements at plant level. On the other hand, formally the local agreements address the local interests and strategies trade unions and works councils developed to respond to the challenges of restructuring. These strategies reflect the different institutional situation, such as the bargaining structure and national labour market policies as well as the diverse union traditions in the context where the agreement was concluded. For example, the strategies of German works councils and trade unions reflect the existence of a national bargaining system, which is highly company-centred and where “employment security agreements” play a major role. Bartmann (2005) defines the employment security strategy pursued in Germany as a “two embankments strategy.” The first ‘embankment’ means that the conclusion of employment security agreements prevents job cuts in the short-term by reducing wages and increasing working-time flexibility. Specifically, works councils make concessions concerning wages at the company level, which implies the reduction of surplus payments in relation to the national or branch-level collective agreement. This can be explained by referring to the German ‘dual’ system in accordance to which works councils are formally not involved in collective bargaining at company level, which is usually left at the branch level, but actually they massively deal locally with surplus payment. In return for the reduction in surplus payments and working-time flexibility, employers give a job security guarantee which means compulsory redundancies are foreclosed for a certain period. The second ‘embankment’ deals with long-term problems, such as huge overcapacities. In this case, compensation programmes, such as early retirement schemes and transfer agencies, are combined and should prevent forced redundancies. The German agreement (Zukunftsvertrag), which was negotiated at GM with the local works council, follows the “two embankment strategy.” It indicates zero per cent wage increase for 2005 covering the workers at Russelshëim. After 2005, there will be a cut of 1% of the company’s premium pay negotiated in the national collective agreement. Conversely, the employees at Bochum, Kaiserslautern and Eisenach will suffer a zero per cent wage increase till 2010. Moreover, the agreement lowers the Christmas bonus for all the workers and increases the working-time up to 40 hours a week and 15 extra days per year (including Saturday) at Bochum and Kairserslauter without increase in pay. The latter will be fixed at the normal hourly rates till 2010. In return, GM underwrites sites open in Germany until 2010 and undertakes to make no compulsory redundancies by moving the mid-range car models production to Russelshëim. Additionally, the agreement introduces social measures, such as employee mobility, outsourcing and retraining for those who are transferred to outsourced joint ventures.

Table 3

Local agreements on production and employment at GM plants in Europe

 

Germany

Sweden

Spain

Britain

Belgium

Sites

Russelshëim, Bochum, Kaiserslautern, Eisenach

Trollhätan

Zaragoza

Ellsemere Port

Antwerp

Employment arrangements

9,500 job losses by 2007: 6,000 (1,500 in Bochum) through voluntary redundancy, early retirement, outsourcing, transfer of employees; 3,500 job extra loss by early retirement and working time reduction by 2007

 

Job security till 2010; Saab 9-3 to be produced in Russelshëim

 

Reduction of production capacity at the press-shop in Bochum but introduction of the production for the Cabrio-Astra

540 job losses by 2005; 10% of the total workforce through voluntary redundancy and early retirement

 

Vague promise of job security till 2008; ‘open competition’ with Russelshëim

618 job losses by 2006 through retirement, early retirement, voluntary redundancy, disability

 

Job security since September 2006

> 300 job losses by 2005 through outsourcing, transfer of employees

 

No job security

524 job losses by 2005 through increase in productivity, extension of working time, transfer of employees, outsourcing and in-sourcing

 

Extension of production capacity: new press-shop at Antwerp but loss of pat of the production of the Cabrio-Astra

Working conditions

 

 

 

 

 

Pay

No wage increase in 2005 in Russelshëim (1% between 2005-2010); no wage increases in Bochum, Kaiserslautern, Eisenach; reduction of the Christmas bonus

75% pay increase for early retirement

Company’s bonus on early retirement and voluntary redundancy; employment guarantees

No company’s bonus on early retirement and voluntary redundancy

No company’s bonus for absenteeism; reduction of social guarantees for employees (i.e. family social activity)

Working time

Bochum, Kaiserslautern: 40 hours a week and extension of 15 days production time (including Saturday)

 

 

 

Extension of the night shift from 7 to 8 working hours

Organization of production

 

 

 

 

Reduction of the speed of the production line. Productivity and flexibility increase through new continuous improvement; reduction to 2 team meetings per week

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The Swedish unions, in contrast, have traditionally rejected job guarantees. Instead, they implement a strategy aimed at securing employment opportunities for workers by improving the operation of the labour market. This strategy is boosted by the active labour market policies in Sweden, which aim at full employment. This is demonstrated by the relatively low unemployment rate (around 5%) and the wide opportunities offered by the Swedish labour market system for further training and re-skilling. Thus, workers representatives in Sweden are much more likely than their German counterparts, to accept job cuts where there is surplus capacity. This is supported by a particular structure of the bargaining system in Sweden in accordance to which the decentralization process occurred after the 1980s, with the correspondent emergence of two bargaining levels (branch and company level), entailed to the formal shift of the competence for the unions to bargain payment locally under the requirements of the national collective agreement. Thus, Swedish works councils are not usually involved in concluding agreements on the reduction of the payments negotiated at the branch level. Active labour market policies and branch-level centralized bargaining structure explain why Swedish unions did not use the strategy of wage reduction and flexible working time to prevent job cuts at the Swedish plants. Hence, management was clear in declaring its intention to keep open competition between Trollhättan and Russelshëeim by reducing the guarantee for job security at the Swedish in comparison to the German site. Local trade unions in Trollhättan negotiated no plant closure in 2005, with an initially vague promise by management it might be extended till 2008. This reflects the local union strategies to bargain social protection for the people involved in restructuring without lowering their working conditions in return for job guarantees. In an interview, Paul Akerlund—chairman of the works council in the Trollhättan plant—states: “the aim of the Swedish local negotiation in GM restructuring was to save people and not jobs” (29 June 2005).

The Spanish and the British agreements are union responses to specific crisis, such as the drastic reduction of the labour force at Ellsemere Port and the cut off of 618 employees at Zaragoza in 2004. The different content of the agreements illustrates country-based diversity concerning bargaining structures and union traditions. In December 2004, the Spanish works councils negotiated job security for the employees at Zaragoza till September 2006. Job security was guaranteed by derogating the provisions of the pre-existing local agreement, in accordance to which the employer could unilaterally decide on employee dismissal in case of company restructuring. The derogation of these provisions avoided job cuts by allowing the people who were almost aged 60 to go on retirement. The local agreement is the combined effect of the articulated bargaining structure and the political tradition of Spanish unions. As Martinez Lucio (1998) reminds us, since the mid-1990s, the bargaining system in Spain explicitly defines the issues to be reserved to each level (i.e. inter-professional, branch, company level). Therefore, likewise in Sweden, Spanish works councils have formal competence to bargain at company level, pay rates and working time under the umbrella of the requirements indicated in the higher-level agreement. However, conversely to Sweden, trade unions in Spain used industrial action to accompany the bargaining process. In an interview, Jose Fernando Moya—member of the Spanish works council—considers the Spanish local agreement as a “local success because of the mobilizing capacity demonstrated by the Spanish unions while negotiating no concessions on working time flexibility and wage reductions with management” (27 June, 2005). Conversely, the very deregulated nature characterizing plant-level bargaining in Britain, in accordance to which plant bargainers are constrained to operate within parameters determined by corporate management, weakened the unions and increased the scope for the employer to cut off more than 300 employees in Ellsemere Port, without recurring to bargain any form of job guarantees. In a deregulated industrial relations context and weak unionism, the European-framework agreement generated positive effects for employees. In an interview, Steve Hart—T&G union officer—argues that “despite we lost the argument to ask for voluntary redundancy and early or partial retirement, the framework agreement gave to us the scope to explore alternatives to the drastic solution to lay off people. Without a framework agreement, we would have expected restructuring to take place much quicker and without information. Perhaps we would have heard about it on the radio as happened in the case of Luton plant and it would have involved more forced redundancy” (27 June, 2005).

Finally, the plant-level agreement in Belgium, in marked contrast to the other countries, was concluded within the frame of management’s intention to build up a new press shop in Antwerp, including the transfer of part of the production capacity from the Bochum plant. As a result, the Belgian local unions negotiated an increase in productivity and costs savings (for an equivalent of 30 Million Euro) in return for the guarantee of the company to invest in Belgium. The chair of the works councils in Antwerp—Rudy Kennes—in an interview states: “We have paid for the press-shop” (18 July 2005). Similar to the German works councils, the Belgian agreement offered concessions in return for further investments and job guarantees. It included the reduction of the speed of the production line (from 56 to 52 jobs per hour), the extension of the night shift from 7 to 8 working hours and the enhancement of organizational flexibility through continuous improvement. The agreement also provides job guarantees for 226 out of the 524 employees (60 out of 226 workers are aged below 26). The remaining 298 will go on retirement or will be transferred to other GM plants in Belgium. Because of the concessions to work on Saturday made by the German unions in Bochum, the creation of the new press-shop in Antwerp coincided with the transfer of part of the production of the new Astra from Antwerp to Bochum.

One may argue that as the result of the European framework agreement, the different local negotiations were undertaken with the respect of the guarantee of “no closure and no forced redundancy” for all the countries involved as the demonstration of a strong fate of union trust and solidarity across borders. On the other hand, the different content and functions of these agreements highlight also that there is still weak scope for transnational coordination. Specifically, the European framework agreement negotiated through the ‘active’ EWC in GM had little effect on controlling inter-union competition and on stopping the whipsawing. This is illustrated by the national trade unions’ aim to benchmark their respective local agreements across borders, rather than to integrate them in an effective coordinated effort. The study demonstrates that the different country-based bargaining structures and labour market policies complemented by a focus on the variety of national interests and traditions of the organizational actors (in particular the local unions) affected the union strategies to respond to restructuring.

Conclusions

This paper examines the trade unions’ attempt to use the EWC as an ‘active’ tool to influence the outcome of transnational restructuring in a large multinational corporation within the motor industry in Europe. Specifically, this implies that the EWC will engage in negotiation of European-level agreements with central management on the handling of industrial change. Research on EWCs has suggested that variations in EWCs’ “capacity to act” should be associated with structural and agency elements. More importantly, these studies have argued that management structure and policy, the level of internationalization of the business operations of the firm, the existence of pre-existing structures of employee representation as well as close links between the EWC representatives and national and local unions, and networking between the EWC members are important in facilitating the development of employee-side organization and activity, which is found to have the greatest impact on management decision-making concerning multinational restructuring.

The results found in this study generally support the importance of these factors. GM is a highly internationalized firm, with operations spread across more than one country and with highly integrated production activities across European borders. Additionally, the European Employment Forum (i.e. EWC) was very active in developing a strong negotiating role, which was undertaken with the support of the trade union coordinating group in GM Europe. By drawing from past experience, the national trade unions and the EWC members drew up a joint text aimed at maintaining all current production sites in order to promote a “socially responsible restructuring,” without forced redundancies and plant closure. A joint Europe-wide industrial action supported the negotiation process.

Nevertheless, when we examine the impact of the European-level agreement on plant-level settlements, research findings illustrate that having developed “socially responsible” responses in accordance to requirements contained in the European negotiation does not automatically imply effective cross-border coordination in bargaining matters. Specifically, the EWC’s “capacity to act” is reduced. This is indicated by the weak effect the European-level agreement had on stopping whipsawing by management through the EWC links and networking. The different local negotiations which were concluded under the European framework agreement account for these difficulties. They reflect diversity as the result of the cross-national differences in bargaining structures and labour market policies as well as diverse union traditions. We noted this concurs to address different union strategies and local interests across borders. For example, in Germany, local negotiation resulted in considerable concessions over pay and working time in return for job security. This reflects the strategy of German works councils and trade unions, which is based on the capacity to negotiate employment security agreements with management at the local level. They also often use industrial action to guarantee the negotiation of the employment security agreements. Conversely, Swedish works councils are supported by a branch-level bargaining structure, which lays down the framework of requirements for company-level bargaining. Thus, works councils in Sweden did not negotiate the reduction of surplus payment at local level. Moreover, strong in their active labour market policies, Swedish unions did not negotiate concessions on working time flexibility or wage reduction in return for a guarantee on job cuts on one hand, and they did not use strikes as a relevant tool to put pressure on management for job guarantees on the other hand. Likewise to the Swedish case, and in contrast to the British, the outcomes of the Spanish local agreement were influenced by the articulated nature characterizing the bargaining system. This was complemented by the conflictual approach followed by the Spanish unions who, conversely to the weak British ones, were able to use industrial conflict to bargain job guarantees without concessions on wages and flexibility. By contrast, local negotiation in the Belgian plant reflects the specific local unions’ interest to concede flexibility in return for the company’s promise to expand production capacity. The tradition of rather weak articulation characterizing the Belgian industrial relations system, in accordance to which it is at the branch level that industrial relations activities are mostly conducted, offered the scope for works councils to make further concessions at the local level as the result of their strategy. This is explained by a labour market in Belgium where labour costs, in particular in the automobile industry, are becoming relatively high in comparison to Germany because of the concessions developed by the German unions in the last years. Thus, Belgian unions are pushed to follow the German example of bargaining concessions to avoid job losses.

In summary, although the national unions claimed some success at bargaining through the European-level agreement as a way to keep their plants open, this was done through the creation of competitive concessionary local agreements. This illustrates that the European-level agreement negotiated through the intervention of an ‘active’ EWC as the demonstration of the inter-union cooperation across borders was not able to stop whipsawing. Hence, the results of this study indicate a need to move beyond a simple picture of a single, unidirectional relationship between company- and actor-based factors while explaining the EWC “capacity to act” in case of transnational restructuring by attempting to establish inter-union links. The EWC’s “capacity to act” will also depend on how and in what context it will be able to produce coordinated results. There are important differences between unions, industrial relations institutions and companies’ strategy across borders. Future research needs to explore these differences and integrate them into the study of the factors affecting the variety in EWC practices. More generally, this requires that research on EWCs should be accompanied by the study of the impact of top-down European-level institutions and approaches with a focus on the bottom-up effects produced by this impact. It is clear from this argument that, to what extent trade unions in Europe will be able to use EWCs as a tool to influence corporate decision-making will be the integrated product of these dynamics.

Appendices