The context and consequently the nature of industrial relations in Europe have undergone major changes in the past decade. Although not simultaneously, all countries have found it necessary to overcome recession while at the same time maintain or improve the efficiency of their economies. Macroeconomic forces, changing financial market structures and technological advances are just some of the forces that have exerted pressure on industrial relations. The impact of these changes has been felt internationally and, particularly in Europe, raising the issue of convergence.
The convergence debate argues that the effects of internationalisation in general and the role of the European Union will give rise to an increasingly similar system of industrial relations within Europe. In order to critically assess the likelihood of the development of a distinctive European system of industrial relations I will adopt a comparative approach, examining the existing industrial relations system within Europe. I will also attempt to explain the reasons why industrial relations models differ from country to country by looking at the social structures and political traditions from which they emerged. National industrial relations are formed by the relationship between the three main actors: capital, the state and labour. Much interest centres around the issue of how centralised an industrial relations system is, however, it is also important to consider the social relations the actors have with each other too. These relations vary dependant on the country and can be divided into three broad classifications: corporatism, bilateral and state-centred systems.
Corporatism is a three-part system where the state, employers associations and trade unions work together to organise and regulate the labour market. Within a bilateral system of industrial relations power lies between two of the actors. For example, between employers and employees; the state and employers; or between the state and trade unions. In a state-centred system it is the state alone that regulates the labour market by way of legislation. Each of these systems has their own advantages and drawbacks.
For example, while state centred systems may be perceived as strong they may actually be weaker from a social perspective due to their weak labour market connections. In contrast, corporatist industrial relations systems create stability due to the close connections of all the industrial relations actors. The structure of industrial relations systems in European societies is established by the social structure and political traditions that form the basis for the organisation of trade unions. Therefore, if a country has a strong social cultural or religious belief they are most likely to have a divided trade union movement and hostile relations between employers and employees. This is a common scenario in a state-run system. Conversely, in countries where the social structure is homogeneous and political traditions favour compromise between employers and employees it is likely that they will have corporatist systems of industrial relations.
In Europe, the southern countries such as Italy, Spain and Greece tend to be the most state run while Nordic countries such as Sweden, Finland and Norway are more corporatist inclined. European core countries such as Germany, the UK and Switzerland tend to have bilateral systems of industrial relations. Italy has strong but divided trade unions and their industrial relations system is weakly institutionalised. Spain and Portugal both have decentralised, conflict oriented systems of industrial relations where the state is very important. Greece is unique due to its state paternalism. Both the UK and Ireland have divided trade unions and conflict oriented industrial relations.
However, the Irish system is more centralised and places greater emphasis on co-operation than the British system. One of the main reasons why Britain's system remained decentralised for so long is because, in comparison to other countries, labour law had less of a governing role. However, this has changed since the election of the Labour government in 1997 who signed up to the Social Chapter. I will discuss this in greater detail further on in the essay.
Germany's bilateral system of industrial relations is stable and quite centralised, with collective bargaining taking place at industry level. The French state is an important actor due to the decentralised industrial relations system. The Netherlands is now developing a more bilateral system of industrial relations, having previously been corporatist. The corporatist system has decentralised over a period of time with the state leaving the system. This is also the case with Belgium whose corporatist system is also de centralising.
Switzerland is unique within European industrial relations, as it has succeeded in creating a highly decentralised, bilateral structure whilst having harmonious industrial relations. The Nordic countries: Sweden, Denmark, Finland, Norway and Iceland all have centralised industrial relations systems. They are mainly all corporatist systems, although the role of the state differs between each country. The homogeneous characteristics of many of the Nordic countries have created this centralisation.
From examining the characteristics of industrial relations systems within these European member states it is evident that industrial relations have formed differently in different social settings. While the Nordic countries have created a centralised system through unitary social structures and less political conflict, south European countries have created a state centred or divided system due to intense class conflicts and a history of dictatorships. Between each extreme lie the core European countries. This shows how different social structures and political traditions have affected the formation of industrial relations. With regards to social equality, it is apparent that the countries with centralised, corporatist industrial relations have better social equality.
This is in comparison to countries with decentralised, conflictual or state centred systems. For example, when looking at gender equality, women have the strongest labour market position in the Nordic countries and the weakest in the south European countries. In addition, the equality of incomes is better in more centralised corporatist countries. The exception to this being Austria where the dispersion of earnings is large even though theirs is a very centralised system of industrial relations. However, it is difficult to distinguish between whether it is the centralised systems that have promoted this social equality or whether the societal structures and political traditions have created the centralised systems and welfare states etc. that have caused the creation of equality policies.
This issue has been researched most notably by Huber and Stephens (1993) who found that social democracy; union density and corporatism are strongly linked with the de commodification and redistribution effects of the welfare state. An important factor in European integration is the extent to which individual countries have been affected by international forces. For example, a countries industrial relations system is apparently affected by its location in the international system. In south European countries, foreign capital has a strong position and these countries have been associated with low labour costs. Historically, this has held them back from creating a stable system of industrial relations.
They have been unable to create an integrated, independent national economy. Within the core, west European countries, the 'social partnership' approach to industrial relations has aided them in strengthening the coherence of a national economic system. The fact that the leading industries in collective agreements are mainly strong exporting industries such as engineering shows the impact of international influences. Having analysed the characteristics of each country I can now begin to assess what kind of system could actually develop in Europe by looking at the European society as a whole rather than the individual nation states. One consideration is size. Europe may be much larger than any single European nation-state.
However, there is little evidence to suggest that large societies are more diversified, weakly integrated or have greater conflict than small societies. For example, Germany has a centralised industrial relations system even though it is the most populated west European country. In contrast Finland and Portugal are small societies but had conflict ion industrial relations for a long period of time. Therefore, it could be assumed that the size of the European society is not much indication of the nature of it. Another factor is identity. European identity is a lot weaker than national identity.
However, there is evidence to suggest that a weak European identity does exist, as Europeans tend to view other Europeans as being more familiar than people from other continents. In the same respect, European society as a political, economic and cultural unit lacks a strong political and organisational centre. Nation states are, in a formal sense, equal entities however, due to their great variance, it is difficult to compare them as such. For example, some are large, powerful and central to international society while others are small or peripheral. The leading forces of European society and it's integration are the European core countries such as Germany, the UK and France while the Nordic countries seem to play lesser roles in the process of integration.
Despite the importance of national actors an the relative weakness at the European, there are certain developments that have led to greater social and political integration for the European Union's member states. The European Social Charter has been described as a 'sort of constitution' for the European labour market (Due et al) with the main objective being to ensure the organisational benefits gained from the single market post -1992 are shared with the employees. It's provisions include the following: fair remuneration and decent rates of pay for all in employment; the right of trade unions to organise, be recognised, negotiate and undertake industrial action; and the development of employees rights to information, consultation and participation. One of the four guiding principles set out by the European Commission in 1994 stated that convergence within Europe must also respect diversity within European societies. The Treaty of Amsterdam (1997) further enhanced this by including the Employment Chapter, committing governments of all the member states to promoting high employment levels and coordinating their employment strategies. However, individual member states are not under any binding legal obligation with regards to employment policy.
Under the Maastricht Treaty, matters relating to pay, the right of association and the right to strike or lockout remain outside the scope of European regulations. Therefore, each member state can determine their own rules. Furthermore, through the Social Dialogue, social partners at intersectoral level must reach their own agreements which are then implemented by the European Council and at sectoral level, joint committees in the rail and maritime sectors have negotiated a European agreement on working time, having been excluded from the regulations set out by by the Working Time Directive. The European Commission group on industrial relations and change issued it's first report in March 2002. It highlighted the role of the social partners and social dialogue at all levels in developing the agenda for industrial relations in the future.
It identifies six main challenges for industrial relations in Europe. These are as follows: globalisation, the Economic and Monetary Union, enlargement, technological change and the knowledge economy, changes in the labour market and demographic trends. The report states that the European dimension of industrial relations can play an active part in enhancing industrial relations at local, regional and national levels. It highlights three issues which must be addressed in order to improve the European dimension: the interaction between European industrial relations and the national and local level; the interaction between bipartite and tripartite processes at European level; and the interaction between the sectoral and intersectoral levels. It also lists a number of key recommendations including: the social partners are invited to put forward proposals for reform of institutional framework governing the bipartite social dialogue, including proposals to modify the Treaty; the social partners should continue with their suggestion, contained in a joint declaration to the European Council in 2001, to create a new committee at the highest political level and to establish a multi-annual work programme. In addition, it also recommends that social dialogue and EU level consultation should be used as a tool to promote successful enlargement and to address the challenges of the post enlargement years.
Enlargement should be mainstreamed into all levels of European social dialogue. Furthermore, the report recommends that technical assistance should be provided at European level to help the social partners to develop industrial relations. It notes that the interaction between the European and national levels is currently the weakest link in industrial relations and that in order to develop a 'benchmarking' approach to industrial relations, appropriate indicators should be established to measure and assess the quality of industrial relations. These could be built on the relevant Employment Guidelines developed as part of the European employment strategy launched in Luxembourg in 1997.
As the organisational structure, economic position, working methods and payment methods still differ so much between the different industries it is most unlikely that multi-sectoral collective agreements will develop within Europe. However, there is greater possibility of single industries having enough similarities between countries to create the homogeneous conditions necessary for multinational collective agreements. As previously mentioned, this has already occurred in certain industries such as the rail and maritime industries and previously in the agriculture industry. However, there is greater incidence and likelihood of development of collective agreements being made within single multinational firms due to better national unity and external influences that could help forge a harmonious relationship between the parties to it. For example, Margins on suggests that certain coherent structures in multinational firms provide favourable conditions for agreement at organisational level. These are: the firm has unified management structures at European level already in place, it has established it's international operation through new, greenfeild operations as opposed to acquisition and mergers and it's production activities are organised across borders where the same activities are being carried out in different countries.
However, most multinational companies work by taking advantage of the different structures and working conditions that are present in the different European countries and therefore avoid European level agreements that would take these advantages that they experience through the inequalities that still exist in Europe away from them. In general, it is apparent that European diversity may be too wide. The diversified and weakly integrated European society provides poor preconditions for a European industrial relations system to develop and satisfy the inherent needs of all the member states sufficiently enough. Rather, the European dimension to industrial relations may be the only possible situation and, at present this is what is happening. The two tier system of industrial relations where the nation state and Europe work together allows each country to retain it's own identity whilst the European element works towards greater harmony between each member state. As I have noted, there are various changes to the European society as a whole which are due to happen over the next few years and, most significantly, enlargement will be a great test for the unity of the EU.
However, by being aware and setting in place the plans to cope with these changes there is a greater possibility of the creation of a distinct system of industrial relations within Europe, and of a positive contribution being made to the future of Europe as a society in it's own right.