Labour Relations at the Entreprise Level in Western Europe

This is one of the fundamental differences between North American and European labour relations systems.

Whereas on this continent the heart of trade unionism and of industrial relations as a whole is at the establishment level, because of our decentralized collective negotiation system and of the official recognition of the local trade union directly related to parent organizations (particularly professional and industrial confederations), in Europe, labour legislation and industrial practice generally do not recognize the presence of official trade unionism in enterprise.

For all of the countries under review, except Scandinavia, and to some extent Great Britain and Belgium, workers themselves, independently from their respective labour affiliations, are granted rights in relation to labour representation with enterprise management.

From the North American point of view, there is no doubt that this derives from a traditional weakness in European labour movements. However, an explanation could be the « political » nature of trade unionism in several European countries, the mainly regulatory nature of measures taken for the protection of labour and social security, the ideological fragmentation of labour classes and management's resistance to the introduction of trade unions in enterprise. It can therefore be said firmly that in most of the countries under review, until the last world war, there existed very serious deficiencies in industrial democracy, which were reflected in most cases at the level of labour representation in the establishment.

Some attempts were made to remedy the situation in certain countries such as France and Germany even before the last war.¹ On the other hand, England, in spite of the centralized nature of negotiations, already has a system allowing the « presence » of unions at the local level, that is to the appointing of shop stewards. In Sweden and Denmark, there were no institutionalized enterprise councils, but, because of employer acceptance and a high degree of organization, unions were effectively present in spite, there also, of the centralized structures of the social partners at the level of branch activity and the economy in general.

The Second World War marked a turning point in Europe by generalizing the institution of enterprise councils representing wage-earners at the local level. This was an effort to democratize enterprise which, while respecting traditional institutions, nevertheless constituted perhaps the best modern characteristic of labour relations systems in Europe. It should be noted that this democratization of enterprise in Europe was not solely intended to facilitate claims within the establishment, but was primarily designed to achieve greater co-operation in several fields where trade unions had not penetrated before: Discussions on the economic situation of the enterprises, labour and product market problems, financing methods, economic forecasts, etc.

Personnel representation in enterprise varies considerably from one country to another in its objectives, structures, forms and results.

PERSONNEL DELEGATES

France has two types of institutions: Personnel delegates on the one hand, and enterprise or works committees, on the other hand. Both have their own functions. Personnel delegates, first appointed in 1936, and reinstituted by statute on April 16, 1946, are representatives elected by wage-earners, whatever their labour affiliation, in establishments employing more than 10 workers. Although these delegates are not, in law, labour representatives and are in no way responsible to labour organizations, these organizations naturally exert a strong influence on their election and their behaviour, since very often they are militant labour supporters and, in any event, can only be elected from lists submitted by labour organizations, on the first ballot.

« Delegates are asked to present to the employer all individual and collective demands which could not be dealt with directly in matter of salary rates, trade classification and the application of the labour code or other statutes and regulations regarding labour protection, sanitary conditions, job security and social assistance. Where there are no enterprise or works councils, they can also propose the introduction within the enterprise of technical improvements suggested by personnel. »²

Belgium is comparable to France in that it has a distinct legal institution for enterprise councils, designed to represent personnel.³They are trade personnel delegations which go back to the Labour Conference of June, 1947. However, in Belgium, the status of these trade delegations can only be implemented upon a decision of branch parity commissions. They predominate in numbers in mining and in the steel industry, as well as in metal construction.

While in France trade unions have a priority in submitting election lists for the personnel delegation, in Belgium only lists originating from the unions can be submitted, prorated according to the members of each organization in the enterprise. Furthermore, trade delegations only represent organized wage-earners, which is not the case in law for French personnel delegates.

Personnel delegates in France and union delegations in Belgium constitute the "claims" function at the local level, which is distinct from the function of enterprise councils in the same countries, i.e., the functions of co-determination in social matters and consultation in economic, financial and technical matters. In Great Britain, Sweden and Denmark, this « claims » function at the local level belongs to shop stewards whose status is generally derived from labour collective agreements rather than from statutes.

In European terminology, these are purely « social » functions granted to personnel delegates, shop stewards or trade delegations, i.e., functions without any responsibility in economic, financial or technical matters, which fall under the sole jurisdiction of enterprise or works councils.

In the other countries, Italy, Germany and the Netherlands, shop stewards are not recognized by statute; generally their functions are the responsibility of enterprise councils, whose jurisdiction extends to several fields and is often very extensive.

JOINT CONSULTATION IN GREAT BRITAIN

It should be repeated once more that there are works councils in all of the countries under review, especially since 1945.

They are more or less widespread according to the experience undergone in each country. It is in England, notwithstanding the fact that joint consultation at the local level exists since at least the First World War, that such consultation is least institutionalized and meets most opposition: distrust on the part of trade unions for what could become an instrument for management domination and could weaken labour influence or even lead to « shop unionism », apathy on the part of employers who did not take kindly to sharing their responsibilities for the operation of their enterprise, etc. Joint production commissions were successful during the First and especially the Second World War in England, and consultation was more than « relatively successful », but with the return to peace conditions and the changes they brought to the nature of economic and social problems, the great majority of employers as well as of workers did not feel as intensely the need for co-operation within enterprises and the number of joint production commissions decreased rapidly. There was a return to the old concept and some trade unionists held that it was not their business to formulate suggestions designed to increase profits for the employers, while some employers felt that workers should not meddle with the management of enterprises. ⁴ The same attitude, and this we were able to ascertain on the spot most recently, still prevails in Great Britain and is still being transferred, as far as the participation of the social partners is concerned, to the effort initiated by the public powers in economic development and planning. From this point of view and several others, labour relations in England are more similar to those in North America than is the case for the other European countries.

ENTERPRISE OR WORKS COUNCILS IN EUROPE

Their Establishment

For European countries other than England, enterprises varied considerably as to the establishment, the composition, the role, the powers and the status of enterprise or works councils.

Without studying in detail these particular features, it can be underlined that, in Sweden and Denmark, enterprise councils are not established under statute but result from agreements for this purpose entered into by the social partners themselves. In Sweden, they were established by the 1946 Agreement on Works Councils between the S.A.F. and the L.O. They are, in fact, an extension of the Basic Agreement of 1938 and of its spirit and represent more or less, as was pointed out by Johnston in Collective Bargaining in Sweden the third phase in the discussions on industrial democracy. ⁵

Also in Denmark, works committees resulted from the Agreement on Works Committees of June 6, 1947, entered into by the Danish Employers Confederation and the Danish L.O.

In England, as already noted, joint consultation, although favoured by the public powers since the Whitley reports in 1916, only exists on a voluntary and fragmentary basis and is not covered by any important general agreement between the confederations.

Much greater stress was laid on joint industrial councils which exist at the national level without much reference to production and co-determination problems and job security problems, which are left to shop stewards and therefore to the traditional labour claims action, somewhat as in Canada and the United States. In all European countries, enterprise councils or works councils, whatever they may be called, are established under legislation. In some cases, the legislation is mandatory for the parties while in others, it only applies on a request by one or both parties.

The Composition

The systems vary from one country to another as to composition. It is interesting to note that in Sweden, only organized workers can become members on the « employee » side and that only organized workers are entitled to elect labour representatives on the council. In that country a trade union basis is therefore one of the principles of enterprise councils. It is really the trade union which co-operates with management. Furthermore, a council can only be set up in enterprises where at least 50% of the workers are members of the trade union which has accepted to form such a council. Works or enterprise councils are not mandatory in Sweden but can be instituted in enterprises employing at least 50 workers at the request of the employer or the local trade union. The councils are paritary councils in that management is entitled to a maximum of seven representatives and has the « de facto » right to appoint a chairman.

In Denmark, councils are constituted of an equal number of representatives for the employer and the various categories of organized labour on the one hand and of non-organized workers in the other hand (technical and commercial employees who do not belong to any trade union).

In all Common Market countries under review, trade unions, even though they have rather extensive privileges in some cases, do not have a monopoly in representing employees within enterprise councils. In France, for instance, representative trade unions monopolize the submission of lists of candidates, but only for the first ballot. Also in Belgium, the right that representative trade unions have to submit the names of candidates is even stronger since it is an exclusive right. In the Netherlands, representative trade unions have in fact a similar privilege. However, the fact remains that « the status of elector and eligibility are not subordinated to trade union affiliation ». ⁶

In Germany, trade unions do not have this right of submitting lists, which privilege is reserved to workers and individual employees. It should be noted, however, that in practice German trade unions control to a high degree enterprise or works councils, and this was stated to us on several occasions during our investigation in that country.

Also in connection with the composition aspect, it must be noted that in Sweden, Denmark, France, Belgium and the Netherlands, management is represented on these enterprise councils and one of its representatives is always chairman.

Two countries, Italy and Germany, only allow workers as members of enterprise or works councils (internal commissions in Italy), and management is not represented on them. In those countries there are no joint organizations. Their organizations are therefore labour « representation » and « claiming » groups in contrast to the joint formula used in the other countries.

Powers

As for powers, without elaborating on the functions of the works or enterprise councils, it could be said that in general they only play a consultative role with management in most of the countries under review. This is particularly the case in Sweden and Denmark where councils have no power of decision on any point relating to their functions. They are primarily co-operation organizations for various problems, channels of information, notice and discussion in economic, technical and financial matters, job security,. working conditions, discipline, personnel training, etc. Labour representatives can also, obviously, make suggestions to employer representatives in these matters.

In France, enterprise committees and establishment committees are parties to the decisions and responsible for the administration of social matters (for example, the social services of the enterprise) and are only consultative in economic and technical matters (organization problems, economic and financial date of the enterprise). In Belgium, the situation is comparable to France.

In the Netherlands, enterprise councils have no co-decision rights.

In Italy internal commissions more or less cumulate consultation powers on the technical plan with co-decision in the management of social matters, but they have no influence on economic and financial matters. Instead they play the same role as personnel delegates in France and therefore associate their consultation powers with « claiming » powers in personnel matters.

In Germany, enterprise councils have « co-determination », « co-decision » and « co-management » rights. The basic statute in this respect is the Act governing the status of enterprises passed on October 14, 1952, and more particularly Section 49 of this Act, which states the official policy of the public powers on co-operation between the social partners and on industrial peace: « Employers and enterprise councils co-operate in confidence within the framework of existing legislation or collective agreements. They must promote the interests of the enterprise and of the wage-earners, in co-operation with the trade unions represented in the enterprise and with employer associations, and taking into account the general interest ». ⁷

Nowhere else have enterprise councils been granted such co-decision powers as in Germany and nowhere else, in our opinion, was their status defined as elaborately.

It is important to recall that enterprise councils in Germany are only composed of wage-earners and where an enterprise or works council is entitled to co-decision, the employer cannot make a decision by himself. This implies that in Germany, at least on these matters, enterprise councils actually act as negotiators with management. It follows that « many questions of co-management are settled by the fact that employers and enterprise councils enter into formal enterprise agreements, ⁸ and this can be done in each establishment.

Therefore, in matters for « co-decision », especially social and personnel matters as well as certain economic questions, covered in an eight-point catalogue imposed on all the enterprises and considering more particularly working conditions, it is in fact an actual collective agreement system at the level of enterprise or the establishment.

It appeared of greater interest, for the purposes of this study, to lay greater stress on the formula of the enterprise or works councils in Europe than on the other structures of co-management in purely economic matters, even though much could be said on this.

In France, and especially in Germany where true co-management in economic and financial matters was established not only in nationalized enterprises as in France but in all share and limited enterprises and more particularly the steel industry and important mining concerns, enterprise or works committees and trade unions have certain powers in the appointment of labour representatives on administrative councils (supervising councils in Germany) of these companies, as well as of labour directors in steel and mining firms.

EVALUATION

Enterprise or works committees in Europe, as we have just described them, go beyond and often far beyond our North American system of collective agreements as to their possibilities of valid co-operation in labour relations, at the enterprise level. There can be no doubt that they constitute one of the most important attempts made by European countries to promote industrial democracy which, until the last World War, was for all practical purposes non-existent in enterprise. However, such industrial and local data do not include — and this could not be otherwise — all the factors required for an objective evaluation of the operation and practical results of this formula.

In those countries where enterprise or works councils resulted from free agreements at the summit between the social partners, such as Sweden and Denmark, and to a certain extent Belgium, results appear to be positive. They seem to operate better where co-operation « at the summit » is stronger and better structured between the social partners at the national level.

In France, and in Italy until now, as well as in Germany until the immediate post-war years, some attempts were made to change enterprise or works councils into political confederations, such as the C.G.T. in France and the C.G.I.L. in Italy. For instance, the French C.G.T., since 1947, when it came under the domination of the Communist Party, attempted to use enterprise councils as « instruments for the struggle of the classes ». ⁹ This was not difficult because it held the majority of the representation in numerous cases.

In general, trade unions in France and Italy, while they did try to promote to the maximum their own interests in enterprise or works committees, very soon adopted a critical attitude towards this formula which, according to them, prevented labour from expressing themselves more directly in the factory. The lack of training of labour representatives, the negative, obstructive and paternalistic attitude of management towards enterprise committees or internal commissions, because they saw in these councils a Troy horse introduced within the precincts of their traditional rights, all these factors resulted in the fact that in these countries at least the formula did not give in practice the results that legislators had intended. It is therefore not surprising that in France and Italy labour organizations have demanded and still demand a « labour section » at the enterprise level in order to play a direct roll in the promotion of the interests of their members at the local level. In Germany, according to the testimony we were able to gather, the Confederation of German Trade Unions states that it is most interested in introducing co-management and enterprise councils which it could use extensively according to what they told us.

(1) In France, the 1936 Act on collective agreements instituted personnel delegates and made this a compulsory clause in agreements. In Germany, the 1920 Act on enterprise councils brought to a definite end a whole series of discussions and fragmentary legislation on labour co-decisions, by imposing under certain conditions the establishment of enterprise councils for the economy as a whole. This act was maintained until 1933.

(2) GERHARD, BOLDT, « La représentation des travailleurs sur le plan de Ventreprise dans le droit des pays membres de la C.E.C.A. » by G. Boldt, P. Durand et al:Droit du Travail, Vol. III, Coal and Steel European Committee, Luxembourg, 1959, p. 62.

(3) Italy has « enterprise commissions », but when the enterprise is not big enough to warrant such a commission, one person is appointed to represent personnel.

(4) International Labour Bureau,La Situation syndicale au Royaume-Uni, report of an I.L.B. commission, Geneva, 1961, p. 95.

(5) T.L. JOHNSTON,Collective Bargaining in Sweden, George Allen and Unwin Ltd., London, 1962, p. 217.

(6) G. BOLDT,op. cit., p. 42.

(7) Act governing the status of enterprises, October 14, 1952, (BGB1. I, p. 681); Section 49 (extract).

(8) Dr. ALFONS KLEIN, « Cogestion, statut des entreprises et représentation du personnel », Collection on social policies in Germany, Federal Department of Labour and Social Order, No. 23, Essen, 1963, p. 17.

(9) J.-D. REYNAUD,Les syndicats en France, Collection U, Armand Colin, Paris, 1963, p. 212.