Fitzgerald, Ian

Miller, Doug

Stirling, John

English

Northumbria Research Link

European Works Councils in the Regions: A Case study of the North East ofEnglandJohn Stirling, Ian Fitzgerald & Doug MillerDivision of Government & PoliticsUniversity of NorthumbriaNewcastle upon TyneNE1 8STjohn.stirling@unn.ac.ukEuropean Works Councils in the Regions: A Case study of the North East ofEnglandBackgroundIn September 1994 the European Union (EU) adopted Council Directive 94/45/ECplacing a requirement on multinational enterprises with a workforce over 1000 andtwo subsidiaries with over 150 employees in at least two member states to negotiateprocedures for information and consultation with their workforce. The Directive wastransposed into UK law on 15th January 2000 following the new Labour government’ssigning of the Amsterdam Treaty. It is now estimated that 587 European WorksCouncil agreements have been signed under the terms of the Directive. Of these 92cover UK based multinationals (EIRR 2000). Findings from our research in the NorthEast of England found 220 multinationals based in the Region and covered by theterms of the Directive of which 124 had agreements. In all there were 416 subsidiariesregionally and we were able to identify a total of 50 European Works Councildelegates.Our research aims were fourfold. Firstly, to establish a Regional database ofcompanies in the North East covered by the Directive. Secondly, to examine theorganisational structures that had been developed in agreements, particularly inrelation to modes of representation. Thirdly, to review attitudes towards the EWCsfrom the participants in terms of their roles and in relation to their effectiveness.Finally, to assess what support European Works Council participants needed andwhether and how that was being provided. In addition, we wanted to place thesedevelopments in a Regional context in contrast to the broader, speculative analysis(Streeck 1997) and the company focussed case study research (Royle1999). It is oftenargued that labour occupies ‘place’ and capital ‘space’ (Wills1998) so whatsignificance might EWCs have for a global economic outpost?The North East RegionBy the end of the 1990s the last remnants of traditional North East manufacturingindustry were fading to be replaced by a ‘flexible’ regional economy no longerfounded on secure regional employers but on a branch plant orthodoxy (Beynon et al1994; Richardson and Marshall 1996; Pike 1998). The North East was able to supplya workforce with a catalogue of skills obtained in the heavy industries of coal,engineering, shipbuilding and steel. This offered an invitingly flexible workforcewhich teamed with financial incentives attracted new entrants to the region. As newemployers successfully entered the region they in turn helped to attract newcompanies, acting as exemplars of success and, for example, in Nissan’s case as partof a supplier network.The North East branch plant economy is now characterised by a diverse range ofcompanies engaged in increasingly competitive markets (Stone 1998) and exhibitingnew forms of work organisation (Garrahan and Stewart 1992; CSO 1996). It hasbegun to rely on ‘attracting mobile investment from national and internationalsources’ consolidating the ‘branch plant economy’ (Pike 1998, p5). A largeproportion of this regional investment is foreign direct investment (FDI)1 with localstate, regional development agencies and the delegates of labour facilitating inwardmovement. However, it now ‘remains overtly dependent upon the power of a handfulof multinational employers’ (Pike 1998, p5) creating an imbalance of power betweencapital and local agencies including labour.These power relations are expressed not only at the workplace but in transnationalssusceptibility to shifts in global markets with investment decisions geared towardsshort-term returns leaving the region increasingly sensitive to company restructuringand closures. In the past three years this has led to devastating plant closures at GroveCranes’ Siemans and Fujitsu whilst ICI, Kvaerner and Nestle have announced the saleand corresponding downsizing of large parts of their regional businesses. Forexample, in 1993 ICI employed 10,000 workers in the North East, by May 2000 thishad evaporated to under 800 because of a number of restructuring programmes whichmoved the company into the speciality chemicals market. It was within thisenvironment that the project team undertook the development of a regional databaseof both companies covered by the European Directive and their EWC delegates.Constructing the UNN EWC DatabaseThe regional database was considered an essential tool not only for academic researchbut also as an adjunct to developing local contacts and support, and underpinningtraining programmes. Without an information base, European Works Councildelegates are in danger of remaining isolated and ineffective, and rooted to ‘place’.Thus, the development of the UNN EWC database had the practical aim of providingbasic data on the extent of EWC ‘penetration’ in the North East, by (a) determiningthe number of companies covered by the EWC directive; (b) identifying companieswhich are covered by an existing EWC agreement and where the workforce isrepresented by a delegate to that forum; and (c) identifying companies governed by anagreement but which do not send a delegate to the EWC meeting.A long sequence of company cross referencing began with regional commercial andpublic databases (e.g. Dun and Bradstreet; local government and the NorthernDevelopment Corporation) examined against the ETUI’s database, which contains aninventory of MNCs (and their subsidiaries) covered, or potentially covered, by theDirective. At this stage, very little primary work has been carried out on North EastMNCs not identified by the ETUI database. Although, it is important to note thatKnudsen and Bruun (1998: 137) do suggest that the ETUI database underestimates thenumber of companies in the Nordic countries covered by the Directive and we arebeginning to find similar examples in the region.The database construction stage also necessitated identifying which companies had anEWC agreement in place and cross-referencing this with the TUC list of UK seats tobegin the process of finding UK EWC delegates. This information was thendistributed to trade unions at a national and regional level to obtain assistance with theidentification of EWC delegates. This stage has helped to build an extensive list ofover 430 UK delegates 55 of whom are based in the North East. Significantly as with1 The Region is now a leading UK FDI location (Stone 1998).the company database this tool is hampered by a changing branch plant economywhich has left 14 of the 55 identified delegates no longer on an EWC after plantclosures or restructuring (e.g. ICI has over the last year shed four of its five regionaldelegates). However, the database has allowed the beginnings of regional researchinto the EWC experience, discussed next, and the mapping-out of company structuresand sites at a local level.The Research FindingsThe research has been developed as a two-stage process with postal questionnairessent to all European Works Council representatives (24 out of 39 were returnedcovering 17 companies) and semi structured interviews with a sample from just undera third of the MNCs with representatives in the region. Interviewees were asked aseries of questions that covered areas ranging from the problems they areexperiencing, the type and extent of support they had received, through to the overalloperation of their EWCs.Of the questionnaires returned covering 17 companies, 15 were in manufacturingindustry, six were USA owned, five UK owned and one each were Canadian, Finnish,Norwegian, South Korean, Swedish or Swiss. The manufacturing bias is large andtypical of the industrial structure of the Region but it is not substantially out of stepwith other findings on sectoral distribution (Marginson et. al. 1998, p9). The sample ismore distinctive in the number of North American firms represented which is overtwice that found in European wide studies (ibid., p5) and the consequently smallernumber of EEA companies at less than 50 per cent compared to almost two thirds(ibid.).Of the representatives themselves, almost 80 per cent were trade union members (ofwhich six were GMB, four GPMU and three TGWU). Just over half therepresentatives had been elected directly or indirectly whilst a significant proportion(37.5 per cent) had been appointed. Seven of the representatives had nationalconstituencies, four represented other Regional sites and 14 represented their ownsites (there was some overlap on the answer to this question).Four key areas of concern were identified from the empirical data (Fitzgerald et. al.1999). Firstly, what we might generally describe as ‘cultural issues’ and this includedlanguage, different national industrial relations systems and different attitudes towardsmeetings. Secondly, there were ‘business issues’ that related the relationship withlocal management and to the quality of the information received, its timing, itsinterpretation and its confidentiality. The third issue was that of ‘representation’which included the methods of election or appointment and the mechanisms forreporting to other employees. Finally, there were issues relating to ‘support structures’which included questions of training and the role of trade unions.Language and CultureIt is unsurprising that this is a key area for delegates although UK representativeshave the advantage in that English is becoming the dominant European WorksCouncil language. Marginson et al’s analysis of agreements suggests that a third ofcompanies have opted for a single language and in three-quarters of them it is English(ibid., p56). The language problem is not fully represented here as the majority ofrepresentatives stated that the company working language was English and in sixcompanies UK representatives held the majority of seats. Respondents also noted theuse of interpreters at meetings, although arrangements may have been ad hoc with inone case this being initially provided by a senior human relations manager and inanother by a teacher from a nearby school. A number of representatives also statedthat many European representatives spoke English although a third of respondentsstill recorded language barriers as a problem. Translation of documents andcommunications between meetings was more problematic and, again, arrangementsappeared to be largely ad hoc.Problems with understanding differences European industrial relations systems andtraditions were also encountered and there was a tendency to regard other models as‘better’ than the UK in terms of information made available to European counterparts.Cultural differences around the conduct of meetings was also an issue but as there wasa tendency for meetings to be dominated by top down information flows rather thaninteractive discussion this was not raised as a particularly problematic issue.Business IssuesIn general, local managers at representatives’ workplaces were either supportive orindifferent to their role of the European Works Council with no one recording openhostility. However, the practical realities of participation did provoke problems withover a third recording difficulties with local management attitudes to the need fortraining and time off and to the access to information that was not available to them.However, there were a number of responses that suggested that the informationsupplied at meetings was ‘too little, too late’ and that questions of restructuringremained outside the scope of Works Council meetings. The cloak of confidentialityfor commercially sensitive information was commonly cited as the main managementargument for non-disclosure from management.This has led to disenchantment with the meetings with respondents describing them as‘a waste of time’ or with ‘nothing of any consequence’ resulting from the meetings.By contrast, some respondents recognised the opportunities for developing EWCs andaccepted that they were in the early stages of development.Representation‘Feedback on the content and outcome of European Works Council meetings toemployees and their representatives within the company, beyond the European WorksCouncil members, is vital to establishing EWCs as ongoing working bodies. If therole and significance of EWCs is not clear to the wider workforce, they risk becomingmarginal structures of little influence’ (ibid. p57). Critical to the success of EWCs inthis respect are the mechanisms for organising representation and developing effectivecommunications systems. We found that effective systems of communication betweenrepresentatives and between delegates and their constituents was developing rapidly.Twenty of the 24 respondents had established communications with the other UKrepresentatives outside of meetings; 17 communicated with their Europeancounterparts outside meetings and five said they had communications with delegatesfrom other EWCs. Twenty of the 24 also ‘reported back’ to those they represented.Some used more that one method and seven strategies were noted including two -branch meetings (5 respondents) and shop stewards' committees (9) - that wereconfined to trade union organisations. Of the others, 8 recorded workplace meetingsand 11 the use of newsletters. Whilst we have no direct data on the reception to thereport backs the qualitative interviews suggest, unsurprisingly, that EWCs appearmore effective and are more valued when report back systems are in place andsupported by management.Trade union organisation was more likely to encourage reporting back though notnecessarily increasing employee interest. For example two respondents who were alsofull time union officials recognised the need to improve the situation with one arguingthat strong membership apathy towards EWCs combined with a lack of EWCrepresentatives meant that resources were being channelled elsewhere.Support StructuresTrade Unions also have a potentially key role in providing support structures for‘their’ representatives and training was another key issue for respondents in thisrespect (Miller & Stirling 1998).Representatives were asked what was being done to alleviate these problems and whattraining had been available prior to the commencement of EWC membership. Theoverall answers on training are disappointing but unsurprising given the absence of asteer in the Directive on this issue. Of the seven respondents (30 per cent) who hadreceived training, it had been provided by the trade union in five cases, jointly in oneother case and by ACAS and the employer in the final case.Only six respondents (a third of the unionised respondents) felt that their unions hadgiven them any support. A range of comments were given including 'the union did notseem aware that we had an EWC', through to 'I didn't know there was any training'.The most telling comments, though, came from the full time officers interviewed whowere honest in their assessment of the situation; 'I don't think the (union), or any othertrade union, are up to it in terms of training for EWC representatives' with bothofficers acknowledging, one explicit and one implicit, that EWCs were at present lowon the trade union agenda.ConclusionOur research is based on EWCs in a branch plant economy where subsidiaries andworkplaces can become peripheral to the core multinational activity leaving themvulnerable to restructuring and potential closures. This was demonstrated clearly inthe rapidly changing nature of our database as parent companies moved out of theRegion and closed or sold workplaces which remained open with new owners and,potentially, new EWCs (e.g. Kaeverner and ICI).This raises a number of key questions for EWC representatives in relation to theircontinuing membership or membership of new EWCs, their communications systemsand their views on the effectiveness of their EWC. There is a danger that the role ofEWCs is dismissed as representatives conclude that they had little input or impact onrestructuring decisions. However, as one respondent argued:“whilst I am personally disappointed at what was actually achieved, I felt it was anunbelievable opportunity for shop floor representatives…we have to start somewhereand build on what we have”.ReferencesBeynon, H., Hudson, R. and Sadler D. (1994) A Place Called Teeside: A Locality in aGlobal Economy, Edinburgh University Press.CSO (1996) Central Statistics Office, Regional Trends, HMSO, London.European Trade Union Institute (1997) Multinationals Database, Brussels.EIRR (2000) European Industrial Relations Review, 315, April 2000.Fitzgerald, I, Miller, D & Stirling, J (1999) Representing the Global Outpost:European Works Councils in the North East, Northern Economic Review 29, 46-62.Garrahan, P. and Stewart, P. (1992) The Nissan Enigma, Mansell, London.Knudsen, H.and Brun, N. (1998) European Works Councils in the Nordic Countries:An Opportunity and A Challenge for Trade Unionism, European Journal of IndustrialRelations, 4:2.Marginson, P., Gilman, M., Jacobi, O. and Krieger, H. (1998) Negotiating EuropeanWorks Councils: An Analysis of Agreements under Article 13, European Foundationfor the Improvement of Living and Working Conditions and the EuropeanCommission, Interim Version, March, Dublin.Miller, D. and Stirling, J. (1998) European Works Council Training: an OpportunityMissed?, European Journal of Industrial Relations, 4:1, 35-56.Pike, A. (1998) The politics of factory closures and task forces in the North EastRegion, Regional Studies, forthcoming.Richardson, R. and Marshall, J.N. (1996) The growth of telephone call centres inperipheral areas in Britain: evidence from Tyne and Wear, Area, 28:3, 308-17.Royle, T. (1999) Voices off? McDonald’s and the European Works Council, paperpresented to International Labour Process Conference, Royal Holloway College, 29-31 March.Stone, I. (1998) Inward investment in the UK, in A.G. Atkinson (ed) Developments inEconomics, Causeway Press, Ormskirk.Streeck, W. (1997) Neither European nor works councils: a reply to Paul Knutsen,Economic and Industrial Democracy, 18, 325-37.Trades Union Congress (1998) EWCS in UK Companies, http://www.tuc.org.uk/.Wills, J. (1998) Uprooting tradition: rethinking the place and space of labourorganisation, European Planning Studies, 6:1, 31-42.

A Place Called Teeside: A Locality in a Global Economy,

Central Statistics Office, Regional Trends,

European Works Council Training: an Opportunity Missed?,

European Works Councils in the Nordic Countries: An Opportunity and A Challenge for Trade Unionism,

Inward investment in the UK,

Multinationals Database,

Negotiating European Works Councils: An Analysis of Agreements under Article 13, European Foundation for the Improvement of Living and Working Conditions and the European Commission, Interim Version,

Neither European nor works councils: a reply to Paul Knutsen,

Representing the Global Outpost: European Works Councils in the North East,

The growth of telephone call centres in peripheral areas in Britain: evidence from Tyne and Wear,

The Nissan Enigma,

The politics of factory closures and task forces in the North East Region, Regional Studies,

Uprooting tradition: rethinking the place and space of labour organisation,

Voices off? McDonald’s and the European Works Council, paper presented to International Labour Process Conference, Royal Holloway College,

European Works Councils in the Regions : A Case Study of the North East of England

European Works Councils in the Regions : A Case Study of the North East of England

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