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The Cyprus EU Presidency: Commitments to support the social dialogue

06.10.2012 Speech by Mr Georgios Markopouliotis, Head of the European Commission Representation in Cyprus, at an event co-organised by EZA, the European Centre for Workers' Questions and DEOK, on Saturday, 6 October 2012, 09:15 at the Hilton Park Hotel, Nicosia.

Dear Mr Iakovou,
Dear Mr Sciacqua,
Ladies and Gentlemen,

I would like to welcome you in Cyprus and thank the organizers for inviting me to address this international studies seminar. In my speech today, I will tackle the issue of social dialogue in Europe. I will explain how the European Commission promotes this inherent element of the European social model and of the Europe 2020 strategy, our roadmap on where we want to be in 2020.

In the Member States of the EU, organisations representing employers and workers play an important role, influencing developments at the workplace and in the wider economy and society. The nature and extent of this role varies considerably from country to country. It includes setting pay and employment conditions through collective bargaining at various levels, expressing opinions to governments and other public authorities through consultations, thereby helping to shape law and policy in areas such as employment.

It also includes jointly managing or overseeing areas such as social security, training or health and safety, or simply discussing issues of mutual interest. These processes can be formal or informal, and can be limited to workers’ and employers’ organisations or can also include the government and other public authorities.

Organisations representing employers and workers — employers’ associations and trade unions — are known in many Member States as the ‘social partners’. The interactions between them, and with the public authorities, are often referred to as ‘social dialogue’.

This term is sometimes used more widely to include dialogue at individual workplaces, whereby employers inform, consult and negotiate with their employees and their representatives on employment and business-related issues.

The International Labour Organisation (ILO) defines social dialogue as ‘all types of negotiation, consultation or simply exchange of information between, or among, representatives of governments, employers and workers, on issues of common interest relating to economic and social policy’. The dialogue can ‘exist as a tripartite process, with the government as an official party to the dialogue or it may consist of bipartite relations only between labour and management (or trade unions and employers’ organisations), with or without indirect government involvement’.

Social dialogue has developed at the level of the European Union, reflecting its widespread practice in the Member States. Forms of social dialogue were present at the inception of the European Communities, and today social dialogue is enshrined in the Treaty on the Functioning of the European Union and features across many areas of EU policy and action.

In the EU context, social dialogue involves a set of processes and arrangements whereby European- level organisations, representing employers and workers conduct discussions and negotiations, undertake other joint work, and are jointly involved in EU decision- and policy-making. The dialogue takes two basic forms and occurs at two main levels. Its form can be either:

• bipartite, involving only the social partners (organisations representing employers and workers); or

• tripartite, involving both the social partners and the EU institutions.

The two main levels of dialogue are:

• cross-industry, which means a dialogue whose scope covers the whole EU economy and labour market, and all sectors; and

• sectoral, covering one specific industry across the EU.

The organisations that participate in the dialogue vary depending on the level. At cross-industry level, trade unions are principally represented by the European Trade Union Confederation (ETUC), and employers by BusinessEurope (broadly, private sector employers), CEEP (public services employers) and UEAPME (small and medium-sized enterprises).

At sector level, the social partners are organisations bringing together national unions and employers’ associations operating in a particular industry across Europe. Bipartite social dialogue occurs at both cross-industry and sector levels.

Social dialogue committees, supported by the European Commission, have been set up at cross-industry level and in 40 sectors. In these committees, the social partners can, on their own initiative, discuss matters of mutual concern, carry out joint work, and negotiate agreements and other joint texts.

The Commission consults the cross-industry and sectoral social partners on a wide range of issues, and the partners can develop joint responses through the social dialogue committees. On issues of employment and social policy, the Commission has a duty to consult the social partners on possible EU action, such as a piece of legislation, giving them the opportunity to respond individually or jointly and, if they wish, to negotiate agreements on the issues in question, which may in certain circumstances be given legal force by an EU directive.

Tripartite dialogue occurs mainly at cross-industry level. It involves various institutions and processes that enable the social partners to discuss matters with the EU institutions, and contribute to debate and policy in areas such as the economy and employment.

The EU also has a role in promoting European bipartite social dialogue in individual companies. Legislation enables European Works Councils (EWCs) to be established in multinational companies operating in the EU, providing a forum for management and employee representatives to hold a dialogue on transnational topics.

Now let me turn to the issue of why we need social dialogue at EU level.

The countries of Europe have developed a distinctive way of organising their societies and economies, which has become known as the ‘European social model’. There is general acceptance that this model at least includes sustained economic growth, a high and rising standard of living, high levels of employment, high-quality education, comprehensive welfare and social protection, low levels of inequality and high levels of solidarity, and — crucially in the current context — an important role for representatives of workers and employers, and the dialogue between them. Social dialogue is considered to be integral to the European social model.

A shared belief in this model was reflected in the European Communities, formed by six Member States in the 1950s, and the treaties establishing the Communities. As the Communities grew and became more integrated over the next 50 years, and eventually became the European Union, the European social model’s values became ever more firmly enshrined in successive treaties. Social dialogue is one of these values. Because social dialogue plays an important role in the Member States (especially in the founding Member States and those that joined up until the end of the 20th century), it was included in the institutional and policy-making machinery and processes that these countries constructed at European level.

Social dialogue forms part of the European social model, because it reflects the democratic principle (included in Article 11 of the Treaty on European Union — TEU) that representative associations should be able to express their views, to be consulted by, and hold dialogue with the public authorities, as well as the view that it is fair that workers and employers should be involved in decision-making on issues that affect them closely.

The Charter of Fundamental Rights of the EU also enshrines the right of workers to information and consultation within the undertaking (Article 27) and the right of collective bargaining and action (Article 28). However, the European social model also includes social dialogue because this dialogue brings concrete benefits, and not just for the organisations involved. The social partners have unrivalled knowledge and experience of the realities of the employment and social situation ‘on the ground’, and consulting and listening to them can therefore improve governance in this area.

Furthermore, the social partners are uniquely well placed to address work-related issues — such as employment and working conditions, working time, equality, health and safety, and training — through the dialogue and negotiation processes that characterise their relationship. By reaching agreements, they can achieve compromises and balance their interests in a way that legislation often cannot.

The benefits of social dialogue have long been widely recognised. As the European economy and labour market have become more integrated, and the EU has developed an enhanced employment and social policy role, the EU institutions and Member States have increasingly taken the view that similar benefits can be achieved through social dialogue at European level.

Ladies and gentlemen,

The social dialogue does not exist in a vacuum. It is shaped by its wider institutional, political, economic and social environment. It is clear that since 2008 the environment has been dominated by the financial, economic and debt crisis that has racked Europe. Dealing with the crisis has been a major theme in social dialogue in many Member States, and the process has illustrated very clearly the varying nature and capacities of national dialogue systems. At EU level, though, the social dialogue’s response to the crisis has arguably been less marked.

Across the Member States, the social partners have expressed their views on the crisis to the public authorities and coordinated their responses through the various national advisory and consultative processes. During the depths of the crisis between 2008 and 2010, there were efforts in at least 16 Member States to reach bipartite or tripartite national cross-industry agreements on a package of measures aimed at addressing aspects of the economic crisis. Some form of agreement was reached in 11 countries — Belgium, Bulgaria, the Czech Republic, Estonia, France, Latvia, Lithuania, the Netherlands, Poland, Slovakia and Spain (in the case of a bipartite agreement).

In the case of the Baltic states, the Czech Republic and Poland, these agreements represented a novel development in national social dialogue. The agreements dealt with issues such as short time work, wage moderation, employment-related tax/social security measures, employment schemes and assistance for unemployed people, workplace flexibility and training/lifelong learning.

In countries, such as Austria, Denmark, Germany and Slovenia, where no anti-crisis agreements were reached, the social partners were nevertheless heavily involved in the specific area of amending existing short time working schemes (whereby workers temporarily reduce their compensation for loss of pay, as an alternative to redundancy) or introducing new ones.
However, existing cross-industry social dialogue arrangements were not always able to deal with the crisis. Talks over crisis response agreements were unsuccessful in Finland, Hungary, Ireland, Luxembourg, Slovenia and Spain (in the case of a tripartite agreement). Indeed, in Ireland, Slovenia and Spain, the stresses caused by the crisis, and differences over how to react to it, led to a collapse (at least temporary) of long-standing cross-industry bipartite/tripartite arrangements. Tripartite arrangements also came under severe pressure in Bulgaria.

There was little or no joint cross industry social partner response to the crisis in countries such as Cyprus, Greece, Malta, Portugal, Romania, Sweden and the UK. The national social dialogue at sector level has also played a role in responding to the crisis. Between 2008 and 2010, there were examples of specific sectoral agreements on matters such as short-time work, or the inclusion, in regular collective agreements, of crisis-response measures such as support for redundant workers, or allowing greater flexibility and/or decentralisation in pay setting.
These sectoral responses were patchy, in both national and sectoral terms. Agreements were largely restricted to Belgium, Denmark, France, Finland, Germany, Italy, the Netherlands and Sweden, and were notably absent in many of the Member States that joined the EU in 2004 and 2007.

Agreements were also much more common in the manufacturing industry — and especially metalworking — than in the services sector. An example of a sectoral response was an agreement in March 2009 covering the entire Swedish manufacturing sector. This deal temporarily allowed for the introduction of short-time working, which is normally not permitted in Sweden, to prevent redundancies during the downturn. The use of short-time work required a local agreement. The employees affected received at least 80 % of normal pay, and the local agreements could provide for training during the unworked hours.

On a general level, collective bargaining, and social dialogue at all levels and across Europe, has reacted to the crisis with widespread moderation in pay settlements.

Ladies and gentlemen,

Fundamental to the EU’s approach for getting through the crisis is the Europe 2020 growth strategy, adopted in 2010. The aim is to create a smart, sustainable and inclusive European economy, with high levels of employment, productivity and social cohesion. The strategy contains targets on employment, seeking an EUwide employment rate of 75 % by 2020), research and development, greenhouse gas emissions and energy, education and poverty reduction. The Member States have adopted their own national targets based on the EU targets, and national reform programmes to implement the strategy.

The delivery of Europe 2020 is also supported by seven EU flagship initiatives, such as the ‘Agenda for New Skills and Jobs’, and the ‘Youth on the Move’ initiative aimed at improving the education and employment of young people.

The involvement of the social partners is seen by the European Commission as a key element of implementing Europe 2020. This is most clearly set out in the Agenda for New Skills and Jobs. The Agenda for New Skills and Jobs is a package of measures aimed at modernising labour markets, with a view to raising employment levels, and helping people to acquire new skills. This should enable the workforce to adapt to new conditions and potential career shifts, reduce unemployment and raise labour productivity. To implement the Agenda, the Commission is seeking to strengthen the capacity of social partners and make full use of the problem-solving potential of social dialogue at all levels (including the EU level).

The Commission has involved the EU-level social partners in areas such as defining and implementing further flexicurity measures, and implementing lifelong learning principles (including consultation of the partners on developing an initiative of their own in this area). It has also emphasised the role of social partners in delivering the Youth Opportunities Initiative launched in December 2011, e.g. through building up workplace learning schemes. The Commission has established a ‘Tripartite Social Forum’ specifically to enable the EU-level social partners to participate in the implementation of the Agenda for New Skills and Jobs, and of the Europe 2020 Strategy more generally.

The cross-industry social partners made a joint statement on the Europe 2020 strategy in June 2010. The statement recommended policy priorities for the EU and Member States in areas such as employment, macroeconomic policy, public finances, investment, taxation, public services, social security, education, training and research. It called for stronger involvement of the social partners at all levels in the design and monitoring of European and national reform strategies, and support in developing the social partners’ capacity where needed. In particular, the social partners need to contribute actively to the design and implementation of flexicurity policies.

Flexicurity is an approach to employment policy that combines flexibility in labour markets, work organisation and employment relations with employment and social security. Through a joint analysis of European labour market challenges, the cross industry social partners made a major contribution to EU-wide principles on flexicurity, adopted by the Council in 2007, which guide EU employment policy.

As part of their 2009-2010 work programme, the cross-industry partners produced a joint study on the role of social partners in implementation of these principles.

In November 2011, the Commission and social partners took stock of the implementation of flexicurity policies at a stakeholder conference. The Commission is counting on the social partners’ contribution to and support for future action in this area, in the context of Europe 2020 and of the Employment Package that was presented by the Commission last April.

With regard to the environmental strand of Europe 2020, the cross-industry social partners have already conducted a first joint study on the employment consequences of climate change, and their work on this topic is likely to continue, boosted by the creation of a consultation mechanism on climate change involving various Commission departments.

Ladies and gentlemen,

Since its inception over 50 years ago, EU-level social dialogue has grown enormously in its scope and in its importance in EU decision- and policy-making. It is now deeply embedded in the Union’s treaties and institutional arrangements. It has resulted in nine Directives and a similar number of agreements implemented by the social partners themselves, bringing concrete benefits to millions of workers across Europe. It has also produced a wealth of other instruments that have helped to disseminate best practice and high standards across Europe.

The dialogue has enabled the voices of Europe’s workers and employers to be heard in the crucial debates over the EU’s development and future. Sectoral dialogue has spread to industries employing three-quarters of the EU workforce, and made a significant contribution to the development of many sector specific EU policies.

However, the growth and strengthening of social dialogue has not been a smooth or linear process. Over the years, as well as successes, advances and periods of intense joint work, it has known lulls in activity, failures, deadlocks and crises. This uneven progress has resulted from a complex and ever-changing set of factors, including the political and economic environment, the differing priorities and objectives of employers’ and workers’ representatives, and the EU institutions’ agendas and approaches.

Another key factor is that the extent to which national trade unions and employers’ organisations have ‘invested’ at the European level has varied over time, and there have been periods when their main focus has been at the national level.

Experience indicates that the social dialogue is robust enough to survive periods of relative inactivity and setbacks. Where dialogue fails on a specific issue, the process continues nevertheless.

Topics can even return to the agenda after an earlier failure of dialogue and, in more propitious circumstances, the social partners can make a meaningful contribution the second or even third time around. The influence that the EU level dialogue affords the social partners is too important to them to let it falter for too long.

Still, social dialogue faces major challenges for the future. These include the following:

• The link between the EU and national levels of social dialogue needs to be strengthened. Evidence suggests that there is a close relationship between the effectiveness of dialogue at the two levels, and that each influences the other.

• Social partner capacity and the social dialogue structure in some countries are, and continue to be, weak, especially in Central and Eastern Europe, making the implementation of autonomous agreements and process-oriented texts uneven across the EU and unsatisfactory in some Member States.

Implementation of such instruments can also depend heavily on whether they fit with the agendas of national governments.

• The link between the cross industry and sectoral dialogue is relatively weak, and links between dialogues in different sectors, while they exist, are underdeveloped. Strengthening these links could make the dialogue more coherent and enhance its impact.

• The outcomes of EU-level social dialogue are not always well known or understood at national and company level.

• According to the findings of an EU-level cross-industry partners commissioned research, some social partners are concerned that recent developments are weakening the role of social dialogue in policy and decision making. In their view, the cross industry partners should be consulted not only on employment and social issues, but also on an increasing range of EU policy proposals with a potential employment impact, while the Commission is increasingly launching wide-ranging consultations of all stakeholders.

• The social partners may have to find ways of tackling more contentious issues in the future if the dialogue is to retain its influence. Related to this, the European-level organisations may have to take a more active role in engaging their respective memberships.

Ladies and gentlemen,

Evidence over the past five decades of European integration has shown that EU-level social dialogue plays an essential role in advancing the European social model, delivering benefits for employers, workers, and for the economy and society as a whole. In October 2011, we celebrated the 20th anniversary of the social partners’ agreement, which was later enshrined in the Maastricht Treaty. It established procedures for close involvement of management and labour in shaping and implementing EU employment and social policies.

Social dialogue has also played a crucial role in building the Single Market. Today it has an irreplaceable role in strengthening economic governance and building an economic union. It is vital that the EU and Member States invest in strengthening social dialogue at both EU and national levels, if we are to prevent divisions between capital and labour, a fall in Europe’s growth and employment potential, greater macroeconomic imbalances and growing economic exclusion of certain territories or groups in the context of the current economic crisis.

We need cross-industry and sectoral dialogue, as well as dialogue within individual enterprises.

Social dialogue is autonomous, but the social partners have an important responsibility to address the key structural challenges facing Europe in the years ahead.

The experience of the crisis so far has shown how social dialogue can help to alleviate the effects of economic downturn, provide stability and resilience, and preserve or even improve competitiveness. At national level especially, social partnership has helped to tackle the crisis in many countries. Member States with strong social dialogue mechanisms have weathered the storm best. National cross-industry negotiations have developed in response to the crisis in a number of countries with little tradition of such dialogue.

The road to Europe’s recovery consists of mutually reinforcing actions for economic modernisation, environmental improvement and social investment, as set out in the Europe 2020 Strategy. EU-level social dialogue institutions and the close involvement of social partners in preparing and implementing National Reform Programmes are essential in ensuring that fiscal consolidation is carried out in a way that strengthens Europe’s economic performance. Social dialogue also helps to ensure that reforms of labour markets and social protection systems are fair and effective, and that Europe succeeds in its transition to a resource-efficient, low-carbon economy.

Some urgent responses to the economic crisis, notably in countries with macroeconomic stabilisation programmes, may frustrate existing forms of social dialogue and collective bargaining. But if Europe is to maintain healthy economic and social structures, and address longer term challenges, it must strive to emerge from the crisis with more, not less, social dialogue.

We will not reach the Europe 2020 targets, nor will Europe be able to maintain the participatory character of its economy and society, without strong dialogue between management and labour, and the institutional capacity to make it work at all levels.
The reality, however, is that social dialogue remains weak in many of the Member States that joined the EU in 2004 and 2007. There is also a tendency, in some cases, to erode, downgrade or even eliminate tripartite structures. Undermining collective bargaining and other social rights may form part of implicit ‘social dumping’ strategies. Such approaches are bad for Europe and bad for the countries concerned, and they are economically and socially unsustainable.

Trust between the participants of social dialogue may also be limited due to underdeveloped institutional capacity. At national level, this has in some cases translated into failures to develop joint bi- or tripartite responses to the crisis. At EU level, such weaknesses can reduce the legitimacy of economic governance processes and undermine policy implementation.

This is why the Commission provides support for social partner capacity-building through the European Social Fund and through various transnational projects. We encourage social partners and governments to take up this assistance and to work together to foster a stronger, more robust dialogue across the EU.

Thank you for your attention.

Additional information

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