European Union issues HR Management

Within the European Union (EU) the central platform for HRM issues has been the Social Charter and the Social Action Programme to implement it. The main concerns here have been the debates over the form and content of the Social Charter, how to integrate its provisions within the existing employment relations systems of member states, and how to harmonise aspects of the Charter’s provision across the Union.

These debates have taken place in the context of ideological positions within and between member states concerning degrees of regulation. The main issue to the forefront of the European Union social agenda has been unemployment, which increased considerably across the Union in the 1990s. It is particularly high among certain social groups, such as young people, ethnic minorities and women, and in regions undergoing structural change.

Other issues have concerned ‘social dumping’(see section on ‘The regulationists’) and recently the impact of European Monetary Union. Single issues such as the minimum wage in the British context provoked some controversy when adopted by the Labour government in 1998 along with the UK’s signing up to the Social Charter. There has also been the long-festering issue of TUPE (the Transfer of Undertakings (Protection of Employment) Directive (see later in this chapter), and more recently the debates over degrees of employee voice that include, most importantly, the issue of the form and powers of works councils.

There has also been considerable work on general labour market trends and a concern with issues such as trends in flexibilisation, decentralisation of bargaining, the role and strength of unions, the changing nature of corporatism and collective bargaining generally, and the growth in size and influence of multinational corporations. We shall deal with these issues later under the heading of HRM and labour market trends. Most of these issues have been debated within the ideological context of deregulation and regulation, which will also be examined in greater depth later in this chapter.

  • The European Union: origins and development

It is neither possible nor appropriate to cover the historical origins of the EU in detail in this book, but a brief outline of the relevant events should help students new to the subject to put into context some of the factors that influence European human resource issues. The European Union arose out of the wreckage of the Second World War. There was a consensus among most politicians that the devastation wreaked upon Europe should never be repeated, and that cooperation between nations was one important way to prevent conflict.

Partly towards this end, and to help war-torn economies to revive, the European Coal and Steel Community (ECSC) was set up between France, West Germany, Belgium, the Netherlands, Italy and Luxembourg in 1952. The general aim was to dismantle tariff barriers between these nations, affording a single market for iron, steel and coal. Robert Schuman, one of its prime architects, anticipated that one day the ECSC would broaden into a movement towards economic and even political unity.

The success of these early attempts at cooperation led to the forging of stronger links, and after a number of preliminary reports and meetings the six ECSC countries formed the European Economic Community (EEC) under the Treaty of Rome 1957. The aim of the Treaty was to create a ‘common market’ among its members, although it was accepted at this time that political union was a long way off. The Treaty of Rome also established the European Atomic Energy Community (EURATOM), which still influences many aspects of EU legislation.

The positive progress of the EEC influenced other European states to become members, and Britain, Denmark and the Republic of Ireland joined in 1973. In 1981 Greece joined, and in 1986 Spain and Portugal. In 1995 Sweden, Austria and Finland were granted membership of what by then had become the European Union (EU), although after a referendum Norway decided to stay out of the Union.

This makes 15 member states in all, but in April, 2003 another ten countries were accepted for membership at an accession meeting in Athens: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. This will expand the number of member states to 25 and add a further 75 million people, making a total of 450 million people in the EU by May 2004.

This will also have considerable influence on future political, economic and social issues of the EU. Turkey has also been given time to meet the requirements for membership within the next five years. Such an enlargement will constitute a much more representative bloc of European states.

  • A chronology of the EU

1952European Coal and Steel Community founded (Belgium, France, Italy, Luxembourg, the Netherlands and West Germany)
1957 Treaty of Rome sets up the European Economic Community or ‘Common Market’
(Belgium, France, Italy, Luxembourg, the Netherlands and West Germany)
1957 Treaty of Paris sets up European Atomic Energy Community (Belgium, France, Italy, Luxembourg, the Netherlands and West Germany)
1958 EEC and EURATOM come into being
1972 Paris Summit gives commitment to action in social field
1973 UK, Denmark and Republic of Ireland join EC
1974 Commission’s ‘Action Programme’ comes into being
1981 Greece joins the EC
1986 Spain and Portugal join the EC
1987 Single European Act passed
1989 Social Charter ratified by 11 states except the UK
1991 Austria, Norway and Sweden apply to join the EC
1992 Hungary, Poland and the former Czechoslovakia express a desire to join
1992 Maastricht Treaty signed but UK insists on separate protocol for the Social
Charter (Chapter). The European Community is renamed the European Union
1995 Austria, Finland and Sweden join the EU
1997 Treaty of Amsterdam incorporates the Social Charter into four pillars of employment
policy: employability, entrepreneurship, adaptability, equality of opportunity
1997 Agenda 2000 reviews the criteria for membership of aspiring states
1999 European Monetary Union
1999 Treaty of Amsterdam came into force 1 May
2000 Lisbon Special Council – Towards a Europe of Innovation and Knowledge
2001 Stockholm Council
2003 Accession of 10 states at Athens Conference
2004 Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia formally admitted to the European Union.

  • The institutions of the EU

There are four main institutions that govern the European Union:

  • the European Council or the Council of Ministers (based in Brussels);
  • the Commission (based in Brussels);
  • the Court of Justice (sits in Luxembourg);
  • the Parliament (based in Strasbourg).

The European Council

The European Council (or Council of Ministers) consists of the heads of each member state, who usually meet twice a year to give overall direction to the EU’s programme. The European Council is made up of one representative, usually a government minister or highly placed politician, from each member state, and is presided over in turn by each state for a six-month period. The Council is the EU’s main decision-making body; it acts on proposals by the Commission. Decisions are taken on a unanimous vote, although majority voting was introduced via the Single European Act for some issues.

The Commission

The Commission is composed of 20 members or commissioners, and is made up of two representatives from each of the larger countries (France, Germany, Italy, Spain, the UK) and one from the rest. Commissioners are appointed for four years, and act only in the interests of the Union. The President serves for a four-year period on a renewable basis. The Commission proposes and executes EU policies, and acts as a mediator between the 15 governments of the Union. It also has the power to bring legal action via the Court of Justice against member states that it deems to have violated EU laws.

It is ultimately subservient to the Council of Ministers. Under the Treaty of Nice (December 2000) there will be only one representative or commissioner for each member state. This will come into effect in 2005.

The European Court of Justice

The European Court of Justice comprises one judge from each member state assisted by advocates-general, who rule on questions of community law. Judgments are by majority vote, and directly binding on all parties. This is the final court of appeal for member states, and is often used by individuals, groups and organisations to challenge national laws or rulings that are perceived as being in contravention of EU law. It has become increasingly important in enforcing EU regulations by adjudicating individual, group and company cases brought before it, such as interpretations on the application of TUPE (see below).

The European Parliament

The European Parliament has 626 members: 99 from Germany, 87 each from France,taly and the UK, 64 from Spain, 31 from the Netherlands, 25 each from Belgium, Greece and Portugal, 22 from Sweden, 21 from Austria, 16 each from Denmark and Finland, 15 from Ireland and 6 from Luxembourg. Under the Treaty of Nice 2000 the number of seats will be restricted to 732 allotted between present and future member states and will come into effect for the 2004 elections.

Members of the European Parliament (MEPs) are directly elected by citizens of their countries for a five-year term. The last election took place in June 1999. The European Parliament does not have the same power as the Council of Ministers or a national parliament, but very few proposals can be adopted without its opinion being sought. It also has the power to dismiss the Commission on a two-thirds majority vote. While its powers are limited, under the Treaties of Amsterdam and Nice its powers of veto were further extended.

  • Other institutions concerned with human resource issues

Economic and social committee

This is an advisory body that is consulted by the Commission and Council. It is made up of representatives of employers, trade unions, and other interests including consumers, small firms and professions. It provides detailed information and advice in the following areas:

  • agriculture;
  • transport and communications;
  • energy and nuclear questions;
  • economic and financial questions;
  • industry;
  • commerce, crafts and services;
  • social questions;
  • external relations;
  • regional development;
  • protection of the environment, public health and consumer affairs.

European Foundation for the Improvement of Living and Working Conditions

This is a body set up primarily for investigating and disseminating information on living and working conditions in the EU, including health and safety, environmental protection, industrial relations, restructuring working life and assessing new technologies and the future of work. It is based in Dublin.

Employer and employee representative groups (the Social Partners)

EU-wide groups were set up to represent the interests of employers and employees. These included the European Trade Union Confederation (ETUC), the Union of Industrial and Employers Confederations of Europe (UNICE), and the European Centre for Public Enterprise (CEEP), which represents public sector employer interests. In addition, the national ‘peak’ organisations of employers and employees are regarded as the Social Partners at the level of each member state. Thus for the UK, the Social Partners are the Confederation of British Industry (CBI) and the Trades Union Congress (TUC).

Talks between employer and employee representatives of member countries concentrated on examining macroeconomic policy and employment, and new technology and work. From these talks two committees were formed, which deal with training and labour market issues. In recent years there has been concentration on examining flexibility and adaptability of the workforce. These meetings also led to the creation of the European Framework Agreement, which proposed that the Commission would consult the Social Partners at European level before putting proposals forward.

This could have important ramifications in creating controversy between those states that have relied on negotiations at the workplace (Denmark, Ireland and the UK)and those that rely on centralised regulation in their industrial relations systems (Germany and Sweden) (Lockhart and Brewster, 1992).

  • The legislative process

In simplistic terms, legal proposals emanate from the Commission and are sent for consideration to the Council, which seeks approval from the Parliament and advice and information from the Economic and Social Committee. The Commission then has the right to amend the proposal in the light of these opinions and return it to the Council for acceptance or rejection. There are four types of EU legislation, as follows:

  • Regulations are binding on all member states without any further process of confirmation by national parliaments.
  • Directives are binding on all member states, but leave to national discretion how these laws are to be complied with. Target dates are also set for implementation.
  • Decisions are binding on those to whom they are addressed (member states, enterprises, individuals).
  • Recommendations and opinions are not binding. These are not laws as such, but may help to encourage particular responses. ‘The Commission places emphasis on using such Recommendations to achieve “convergence”, i.e. to move towards harmonization of policy and practice’ (Hughes, 1991).

Regulations are generally used when an identical law is required across the Union, often where none has existed in member states previously. Directives are more appropriate as a mechanism where the method of implementation may vary at national level and has to be related to existing laws. This incorporates the principle of ‘subsidiarity’, that is, that legislation should be passed by the lowest level of government competent to enact it. There are four procedural routes through which EU legislation can be enacted:

  • Consultation Procedure is the traditional legislative procedure set out in the original

Treaty of Rome. Commission proposes legislation and consults with Parliament,Council, the Economic and Social Committee and the Social Partners. Legislation has to be approved unanimously by the Council of Ministers before it can be implemented.

  • Co-operation Procedure was created by the Single European Act 1987. Under this procedure the Parliament has further consultation rights and legislation can be approved on the basis of a majority vote in the Council of Ministers.
  • Co-decision Procedure was introduced in 1991 in the Maastricht Treaty. Under this procedure the European Parliament has certain rights to veto legislative proposals on the basis of a majority vote of Members of the European Parliament.
  • Protocol Procedure was also introduced in the Maastricht Treaty. Its aim is to encourage social dialogue between the Social Partners.
  • The open method of coordination and benchmarking

The Amsterdam Treaty 1997 introduced a new procedure for coordinating and monitoring the implementation of the employment policies of member states. This is known as the Open Method of Coordination (OMC). The OMC is an alternative to the legislative forms and procedures described above. In place of substantive legislation on specific issues, strategic objectives and operational guidelines are set for member states and monitoring procedures put in place to assess their performance. Under the provisions of the Amsterdam Treaty, member states are required to draw up National Action Plans for achieving progress under four strategic ‘pillars’ (see below).

The Council of Ministers establishes annual employment guidelines for member states to incorporate into their plans, and is empowered to conduct an annual examination of member states’ employment policies.* This annual examination and evaluation provide a way of calling governments to account where they are failing to make sufficient progress towards objectives and an opportunity to learn from each other’s experiences of successes and failures of policy. On the basis of this examination the Council may make specific recommendations to member states in areas where policy development or outcomes are seen to be deficient (Sisson et al., 2003).

legislation procedure

legislation procedure

The OMC can be seen as an application of benchmarking practices. Sisson et al. (2003) believe that benchmarking practices first undertaken in a formal and structured way by multinational corporations in the 1980s have been adopted as a tool for convergence of HR and IR practices in the EU. In the 1990s the then President of the European Commission, Jacques Santer, strongly advocated the benchmarking approach as a way of avoiding over-reliance on legal measures to create harmonisation of policies across Europe by presenting ‘best practices’ as a model for countries to copy.

While there are considerable problems with the benchmarking approach in that it does not suit all sectors or specific national conditions, its advocates claim that it has proved successful in moving member states closer to convergence criteria. Teague (2001) believes that the advantage of benchmarking from the point of view of integration is that it helps to keep issues in the forefront of attention, fuelling the process of ‘Europe learning from Europe’ (cited in Sisson et al., 2003: 26).

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