The rejection of the EU Constitution in France and the Netherlands was not only a clear reaction against the pace of integration and enlargement, which was rushed and poorly communicated. The disastrous "No" vote also shows that the usual silent acquiescence and the traditional reasons for that acquiescence (peace, prosperity, security) have faded away.
]]> Not only did Europe's so-called political elite recognise this fact too late, but it also failed to provide any justifications other than the repetition of known truths. If European enlargement and globalisation create uncertainty above all else, then the EU and the Constitution in particular are unable to provide convincing answers.The superficial nature of the response to fears and uncertainties is shown by the European social model's mantra of protecting and defending against liberalised markets, portraying itself as a paragon in comparison to Anglo-Saxon capitalism. Just as there is no fully-fledged Anglo-Saxon model, so the continental social model is very weak. Given that social security systems are developed and determined nationally, the 70 or so EU directives produced over the last 30 years on health and safety at work, working conditions, non-discrimination and equal opportunities do not really constitute a socio-political bonanza. In the section on "solidarity", the draft Constitution itself merely reiterates the universal human right that has long been established under the International Labour Organization (ILO), namely core labour standards.
When criticising capitalism, it has become very popular in Germany to (gratuitously) champion worker participation as a winning socio-political export both inside and beyond the EU.
In actual fact, the State and the trade unions are operating with tools that are no longer appropriate for the new realities of the information revolution, the loss of solidarity, European eastward enlargement and globalisation. The result is a sense of powerlessness, leading to a sense of being under duress, of losing the ability to shape decision-making.
More specifically:
1. The German worker participation debate revolves around the question of a model for success versus location risks; the argument goes that not only does worker participation not bring any competitive disadvantages, it actually contributes significantly to industrial peace, structural change and cost-cutting by virtue of its cooperative nature. This argument has been confirmed by various surveys which indicate record levels of support. The reasoning is that "worker participation is a future-proof opportunity, but only if it proves that it is both more humane and also economically more productive."1) So the simple question is: surely, from a trade union point of view, the distinctive feature of worker participation must be its efficient networking of employees?
2. The broad consensus on worker participation, even in sections of the political and business world, and its high level of legal and institutional structures and “agents” (legislation, jurisprudence, institutes, training institutions, consultancy firms, journals, etc) raises the question of why so much effort goes into establishing its legitimacy. The battery of arguments indicates that we need to defend an island model against hostile attacks – from Anglo-American corporate (non-)culture, the European Union, globalisation and neoliberalism. This is the reason behind the trade unions' defensive stance, whereby the employers are told that continuing with worker participation will work to their advantage, and what is more, that worker participation is not fundamentally incompatible with the shareholders' desire for higher returns.2)
3. In historical terms, worker participation is one of the last remaining trade union concepts of society: the call for industrial democracy. From 1945 onwards (if not before), it was clear that the German participation model had clearly decided in favour of involvement and co-determination and against control by industrial domination from outside.
4. In Europe (and of course in other significant portions of the world) other, often conflict-based management models and participation policies have developed. The main reason for the German corporate model was the failure to undertake necessary reform and the increasingly repressive position of the State in the 19th and early 20th centuries. As the trade unions became more radical and powerful, the State was ever more interested in complying with their demands. This was particularly true for legislation (worker participation and legally defined industrial relations) in Germany after both world wars. Thus we find a monist management structure in the UK (management board vs. shop stewards as trade union representatives in the company) as opposed to the German dualist model (management board and supervisory board vs. works council and trade unions). The German structure provides a suitable foundation for both a works constitution and worker participation through the supervisory board.
5. The first interim conclusion is that it is hard to see how the German worker participation model could be exported. In addition to the historical diversity of working conditions in the EU of 15, there are two further factors. Firstly, the creation of European Works Councils in the mid-1990s has not led to harmonisation of the various European situations. We cannot reasonably speak of extending European Works Councils to other parts of the world.
6. Secondly, not only has eastward enlargement brought in completely marginalised trade unions, it has also introduced countries which either have no - or only rudimentary forms of - bilateral industrial relations. It has also become apparent that trade unions in the CEECs often see works councils as competition and a loss of power, and are either not interested in establishing dual industrial relations and/or are not capable of doing so. The experience of the transformation countries has also demonstrated that the State-dominated tripartite system in place for the last 15 years was not conducive to establishing bilateral industrial relations and, if anything, the trend towards corporate syndicalism has strengthened. Simply copying European Works Councils in the CEECs would exacerbate that trend and further weaken the trade unions.
7. In international terms, there is another question: what can be done to respond to the increasing importance of financial markets, the global emergence of transnational companies, the reduced scope for national welfare states and for them to develop into national competition states (wages, taxes, welfare systems, etc.), and constantly rising unemployment rates? In short, given the development of global markets, how can national or European influence be used to establish democratic industrial relations? This question can be refined to produce the second interim conclusion: how could the participation model help counter the lack of international industrial relations and the erosion of regional and national systems? This would certainly only be possible if there were evidence that the instrument was capable of breaking the spiral of rocketing profits and falling employment.
8. In this context, a realistic analysis is needed when looking into the national benefits and the Eurocrats' political alternatives. Discussing democracy in the world and revival of the western democracies must inevitably include a discussion of the economic "constitution". Instead of tentatively defending a so called European social model or holding technical discussions about the niceties of revising the “Directive on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees”, what is needed is:
at national level, a debate about how we want to live and what citizens, the government and the economy can contribute to shared values;
at European level, we need to clarify the extent to which existing instruments have strengthened or weakened the trade unions and the representation of workers' interests;
in international terms, we need to recognise that the wave of national deregulation now has to be followed by transnational regulation, and that governments and transnational companies must recognise and respect universal human rights around the world, i.e. the ILO core labour standards.
9. Such a strategy has far-reaching operational, structural, political and organisational consequences. The lack of international industrial relations and the truly derisory enforcement of minimum social standards has put massive pressure on existing national systems and EU legislation in a globalised world. This has been exacerbated by European eastward enlargement, as the European Works Council and the European Limited Company require legal and institutional structures and systems which do not actually exist in the new Member States. Both the German/Austrian/Dutch and the European participation models will only survive, within their own limits, if national trade unions become more European and more international. In the future, key factors will be:
how European companies act in the rest of the world, i.e. whether corporate social responsibility is more than a PR exercise,
whether the structural divide between trade unions in the EU of 25 can be bridged,
how effectively mobilisation campaigns can attract new members in key strategic companies and industries,
whether the European Works Council can develop the tools and political will to counter wage dumping, outsourcing and offshoring within companies, and
how campaigning potential can be developed through effective social alliances, which make the trade unions more socially relevant and also initiate a forward-looking, pro-active debate.
10. In view of the drastic organisational changes and membership losses experienced by most European trade unions, this will not be a purely academic exercise. When taking stock, the central question has to be whether, and to what extent, the worker participation instruments – which in Europe means social dialogue and European Works Councils – have contributed to strengthening the trade unions and worker representation in companies. There is no way around this question, because first and foremost these tools have to improve the organisations' clout and representational powers. A great deal of time has already been lost, which is extremely dangerous. It is not so much the European social model that is in jeopardy, but rather the very existence of the European trade unions. Any solutions to the crisis must be able to be implemented fairly promptly, but will inevitably entail political discussions and a change of direction. The key elements in such a strategic shift can be summarised by the following questions:
Are the European Trade Union Confederation (ETUC) and its affiliated trade unions ready to undertake a critical review of the results of the social dialogue and of European Works Councils?
Can we identify the political will within the European trade unions to move towards active integration in the international trade union movement?
Do trade unions in Western Europe understand the danger of the trade union malaise in the new Member States and will they be able to agree on joint mobilisation campaigns?
Can European Works Councils be used to devise practical measures and effects to counter wage and social dumping within companies?
Could reasonable measures be identified with a view to developing a European collective bargaining policy that would establish directives, basic conditions and standards both at company (European Works Council) and industry (social dialogue) level?
Could this lead to synchronised and coordinated Europe-wide collective bargaining in certain sectors and/or companies?
Is it really feasible for a European Works Council to see and deal with the individual company in its global context, i.e. will companies' actions outside the EU be put on the agenda?
Any future-proof participation model must be measured in terms of whether and how it contributes to the development of international industrial relations and meets global challenges. This effectively means that the European trade unions need to rediscover their ability to fight, to mobilise and to engage politically. In other words, Europe and the European trade unions have to forget the special role that they used to have, and which has long since been lost in practical terms. They are now part of globalisation, and no longer just onlookers. If old or revised European instruments can help, so much the better. But a European social model capable of responding to these challenges has yet to be developed.
]]>That is a clear lesson to be learned from last week's disruption at Heathrow Airport.
The action taken by British Airways employees in support of the workers sacked by the Gate Gourmet catering firm was unlawful, and was repudiated by the T&G.
Everyone must regret the misery caused to many passengers - but the buck for the disruption firmly stops with Gate Gourmet's managers, whose cynical plot to get rid of their workforce provoked this confrontation.
I sympathise with the view attributed to one member of the travelling public that it is better to have a disrupted holiday than to be summarily sacked.
The question that needs to be addressed is - why should solidarity action be illegal? Elsewhere in Europe, where labour law conforms to the International Labour Organisation conventions, it is not.
]]> Britain, despite being a signatory to the ILO convention, flouts those provisions which recognise that supportive action has a proper role to play.This is not to argue in favour of the sort of "wildcat" action taken last Thursday. But I believe that it is time to bring solidarity action within the framework of the law - define its legitimate scope and make it subject to the same regulations on balloting and notice which regulate other industrial disputes at present.
For too long employers have been able to take advantage of a lop-sided legal framework which makes securing justice for even the most exploited workers hugely difficult. The current dispute illustrates some of the difficulties.
It has now emerged that Gate Gourmet secretly planned for over a year to get rid of its unionised workforce. A scheme to provoke employees into a strike was carefully hatched, on the principle that sacking is cheaper than redundancy payments.
One of the company's directors established a labour sub-contracting firm to supply a replacement - and cheaper - workforce; the sort of "gangmaster" operation which has led to such abuse of migrant workers elsewhere.
And the workers themselves finally saw their jobs dispatched by means of a megaphone announcement. Those off sick and on holiday were likewise fired, although the company appears to have retreated on this outrage.
Some of this may be open to legal challenge, but most of it appears to be within employment law, as laid down in the Thatcher years and kept in place to this day.
The dispute also highlights the iniquities of the contracting-out culture that has gripped many British businesses. Gate Gourmet was BA's in-house catering arm until the company decided to sell it off in 1997.
BA has since used its muscle to attempt to impose cuts on the contractor which it could never have contemplated when it ran the business itself.
It has sought an enormous £50 million plus reduction in catering costs over the duration of the contract, with year-on-year productivity improvements of three per cent.
Incredibly, the contract makes no allowance for even the most modest inflation-linked increase in wage costs over the years since 1997. And this from a company presently making record profits.
It is not to excuse Gate Gourmet's management to point out that this irresponsible contracting-out, with little object in mind other than cutting labour costs, is bound to stir up strife.
Most BA workers still regard Gate Gourmet employees as part of "the family", with considerable justice - the great bulk of the catering company's work is done for their airline, with contracting-out more a legal nicety than an operating reality.
All of these issues have been ignored in much of the predictable anti-union huffing and puffing we have heard over the last few days. Barry Sheerman's ill-informed comments were a particular disappointment, coming as they did from a Labour MP.
He appeared to have not a thought for the Gate Gourmet workers - mainly Asian women earning just £12,000-a-year sacked in an instant. And his suggestion that the dispute was deliberately targeted by the workforce for August would be laughable were the situation not so serious.
The timing of this crisis is entirely down to Gate Gourmet's management, which sacked hundreds of workers at a moment's notice. Happily, all those Labour MPs in the Heathrow area have recognised this and been very supportive.
Solidarity among workers facing adversity is as natural as breathing. It is the very foundation stone of the labour movement. Of course, it needs to be exercised responsibly.
But the treatment of our members at Gate Gourmet is the clearest signal that the law has to change. It must take account of the iniquitous consequences of sometimes bogus "contracting-out" by big business. It should ban the crude union-busting techniques of Gate Gourmet bosses - an abuse of process if ever there was one.
And, above all, it should recognise the impulse to solidarity - "secondary action" in the jargon - by bringing it within the scope of the law.
Criminalising those who acted in support of exploited Asian workers brutally sacked last week, and their union, is not only wrong in principle - it is also the route to still worse workplace relations.
Published in the British newspaper The Guardian on 16 August 2005
]]>The decline shows itself in a variety of ways. The global tendency over the last two decades (again, with individual exceptions which don't, however, negate the trend) is one of declining membership, declining employment in the IUF sectors in those countries where union membership was greatest, a decline in the number of permanent jobs, and a general decline in workers' share of national income alongside the growth of structural unemployment and poverty. Politically, this decline is manifested in a general inability to reverse the movement towards deregulation, the dismantling of social welfare and social security systems, and the creation of global trade and investment regimes which give unprecedented power to transnational corporations.
Some 25 years of rapid growth in the world capitalist economy, roughly from the onset of the Korean War through the global recession of 1973-4, and a favourable political environment, led to real growth, high employment levels, stable employment relations and an increase in union bargaining strength. Wage increases took place in parallel with the growth of profits and productivity, enabling the expansion of social welfare systems and a politics of social compromise, at least in the capitalist democracies. Unions benefited enormously from this conjuncture, but it came to an end, and nothing during this period of expansion prepared the labour movement for what was to follow.
One of the most significant features of the subsequent decades has been the delinking of the established relationship between wages and productivity. Productivity continues to grow but wages no longer keep pace with profits and productivity. In the OECD countries, wages have stagnated or declined. In the case of China, the greatest magnet for foreign investment in manufacturing over the last decade, the delinking of wages from profits is complete (this is after all one of the purposes of dictatorship!). The relationship in the rest of the world falls between these two poles. This delinking has negative consequences for society as whole.
The growth of international money market funds and the unprecedented capital mobility which is both driving and benefiting from the global deregulatory project has brought about the financialization of manufacturing, services and even agriculture. Investors in these sectors now demand rates of return equal to those obtainable in global financial and stock markets, rates unthinkable even a decade ago. The head of Deutsche Bank recently stated that return rates of 20% on investment should be the eventual target for investors. The example of Danone - a company which recognizes the IUF - is typical. The company invested a considerable part of its considerable profits last year in buying back its own stock, an operation designed for no other purpose than to boost its share price. These unprecedented rewards for investors are the flip side of "jobless growth" and the vanishing wages/productivity/job creation link.
Financialization and deregulation mean that workers are being squeezed in ways which traditional bargaining strategies have been powerless to resist. The ability of corporations to reap inflated profits through downsizing, production transfers, joint ventures which elude regulatory requirements, the casualization of employment relations, union-busting and simple speed-up on a global scale, in the context of a global rollback of labour, social and environmental standards, has proven difficult to resist. Unions fight back, but their energy and mobilizing power is dissipated in an endless series of defensive struggles. As a result, labour's industrial and political agenda has tended, for understandable reasons, to contract at a time when new strategies, new programs and new alliances are an urgent matter of survival. Jobless growth may work for employers, but for unions, operating in a situation of declining strength, deepening inequality (both between and within countries) and a radical shift in the global balance of social forces, it is simply not an option if we are to deliver permanent gains for our members and hope to shape the wider social and political agenda.
The decades of growth and expanding employment in the OECD countries also saw a continuous process of concentration and the rise to dominance of the agrifood transnationals. Once the political balance of power and regulatory environment shifted against labour, these companies were in a position to qualitatively advance their market positions and power through mergers, acquisitions, greater horizontal and vertical integration, "global branding" strategies and strategic alliances along the production chain. Concentration in the agrifood industry has always existed, and has historically even been seen as an aid to union organizing. There can be little doubt, however, that the ability of these companies to exercise their concentrated, oligopoly power on a global scale gives them a capacity to impose conditions along the food chain on a scale which is qualitatively greater than anything seen in the past. More recently, the global expansion of the retail giants has added to this pressure on both food workers and, further back along the supply chain, agricultural workers and small farmers, as the enormous buying power of the retailers leaves little room for negotiation or resistance to suppliers of primary or semi-processed goods. Global fast food chains, which along with supermarkets are now the primary buyers of raw or semi-processed products, exert a similar downward pressure. Exploited and abused migrant labour, in the OECD countries as well as in the developing world, thus not only continues to play a significant and even expanding role in agricultural production, where it is traditional. It is infiltrating into traditionally unionized sectors such as meatpacking.
A mere handful of companies now utterly dominate global processing, food production, and commodity trading. A similar situation applies in agriculture, where inputs have come under the domination of a handful of seed, pesticide and biotech conglomerates (often in fact the same companies) and the global traders set prices at the farm gate. The corporate agenda has been boosted significantly by the WTO's Agreement on Agriculture, which deprives countries of the tools they need to protect food security and domestic food production from the transnationals; by the WTO GATS, which has helped clear the way for the globalization of the transnational retailers; and by the WTO TRIPS Agreement, which gives the corporations the right to impose their GM seeds (and the pesticides that go with them) and consolidate their monopoly of agricultural inputs. Patents have always served as primary tools for constructing cartels. What is new is the ability of the "life science" corporations to patent life, and the imposition of TRIPS rules which make it illegal for countries to, for example, produce the drugs they need to save lives at a cost their peoples can afford.
Finally, we can observe that the consolidation of corporate power along the food chain is both the result of technical/organizational changes in the way food is produced and an engine for driving this process further. Concentrated, hyperintensive production techniques, both in agriculture and food processing, are highly destructive of rural livelihoods, the environment, working conditions for food workers and ultimately employment in the food sector. The destruction of small and medium enterprises, the transportation of primary, processed and semi-processed foodstuffs over long road and air routes, and the destruction of local food systems under the impact of cheap, subsidized imports are destroying employment in both developed and developing countries. Even where union organization remains strong, the employment figures show a steady decline. If present trends continue - which is to say if the IUF and its members are not able to take on the employment-destroying aspects of the system as a whole, a task which is not the same thing as fighting individual plant closures - we will be increasingly unable to secure decent jobs for our current and future members. It is not only a question of the IUF's, and the broader labour movement's, responsibility to society, though that is a commitment the IUF has always taken seriously. It is a question of basic survival.
Over the last two decades, the HRCT sector has experienced employment growth - at times quite rapid, though we can expect employment growth to slow - but a general degradation of working conditions. Heavy reliance on migrant, seasonal and casual labour, insecurity, high turnover and a general lack of skills training characterize employment. While HRCT does not share the job-destroying characteristics of food and agriculture described above, it does show a trend towards consolidation and concentration of ownership on a parallel scale. The social, political and industrial challenges confronting HRCT workers therefore consist in bringing under control the unregulated nature of a sector whose uncontrolled expansion threatens to undermine and ultimately destroy the natural and social basis of the tourism industry.
Two basic conclusions emerge from this analysis. First, agricultural and food workers must be able to more effectively confront and constrain through collective action the transnational companies which are driving the corporate globalization of food and agriculture. Getting the companies to the negotiating table by gaining international recognition - not through illusory "codes", "compacts" and "social responsibility" exercises but through recognition and negotiation - must continue to be a priority. We need to give life and substance to international organizing by attempting, with the resources we have, to bring the isolated struggles our members are engaged in into a more coherent and effective global force. This aspect of our work is further elaborated under items 4, 6 and 7.
However, organizing for recognition, even if we succeed in using that recognition to facilitate the further organizing which is the goal, is not sufficient. Global deregulation - a world in which the corporations increasingly write the rules - means we need to struggle for a new global regulatory framework to affirm our rights and to put in place the kinds of social and environmental safeguards which the WTO, the international financial institutions and the regional and bilateral trade and investment regimes are so rapidly undermining.
If the global consequences of increased corporate power are evident, the tools we need to fight back are considerably less so. But here as well, we must first recognize that we are losing. The drive to include sweeping corporate investment guarantees against current and future public interest legislation to protect workers, consumers and the environment did not die with the Multilateral Agreement on Investment (MAI) in the OECD. It is being implemented through regional and bilateral investment agreements negotiated by the US and the European Union, all "social" rhetoric to the contrary. It continues to haunt the WTO "development" round negotiations. These treaties are then used to ratchet up the pressure at the WTO, just as NAFTA helped shape the first WTO investment rules and bilateral negotiations paved the way to the TRIPS.
Union "lobbying" of the WTO and the international financial institutions, if we are to be honest, has not slowed down the companies' drive to radically rollback society's capacity at the local, national and regional level to regulate through legislation the activities of transnational investors. We are handicapped by having to follow an agenda which is not ours, confined to tinkering with a program which is fundamentally, radically anti-democratic and designed to lock workers and the poor into a position of permanent inferiority vis-à-vis the transnationals. Voluntary agreements to allow the affordable production of anti-retroviral drugs to treat HIV/AIDS patients keep falling apart for the simple reason that the pharmaceutical companies have an international treaty (the TRIPS Agreement) which effectively outlaws the kinds of measures that could save millions of lives. Syngenta recently tried to patent the process by which plants produce flowers, thus giving them an effective global monopoly of many of the world's major food crops. They failed, but they and others will be back, and we need to confront this global power grab. Brazil can win a case against the US on illegal cotton subsidies, but there will be no compensation under WTO rules for millions of small farmers and workers who have been crushed by over a decade-long decline in commodity prices which has taken many crops to their lowest prices since the Great Depression. The agrifood transnationals, on the other hand, have helped create the commodity glut and have profited handsomely from it. There is a thick net of international rules, regulations and treaties which confirm their power to do so, but nothing - as yet - that would give us the power to reverse the trend.
If we know the goals - reshaping the food system by fighting for our rights - and we know the problems, we also have to admit that traditional remedies are no longer adequate. Regulating and constraining corporate power can't be accomplished with traditional tools, because that power has changed - it is now global, and more highly concentrated. We need to confront, rather than lament, the financialization of the IUF sectors and their subordination to the demands of investors in the financial markets. We need to ask if traditional anti-trust/anti-competitive measures, for example, are adequate in today's context, whether we need new tools (we almost certainly do), and what those tools might be. Concentration as such is not the only issue. Wal-Mart was busting unions long before it went global. Conversely, there are global companies which can be dragged to the bargaining table, but which pose issues for the IUF's global membership which go far beyond the traditional collective bargaining agenda because they impact on workers backwards and forwards along the supply and retail chains and on the food system as a whole. How do we formulate these demands? How do we fight for them?
In short, the basic challenge confronting IUF members and the labour movement as a whole is to confront and to roll back global deregulation and the corporate trade and investment regime by opposing to it a coherent global project of our own. While the challenge may appear daunting, we must never forget that the historic gains of the labour movement - gains which profoundly transformed the world we live - seemed scarcely realizable when we first began to fight for them. We fought and we won. There was nothing inevitable about the corporate advances of the last two decades. We were simply out-organized at all levels, or, failed to organize because we didn't appreciate the significance of what was taking place.
We must also not forget that significant reforms have never come about by tacking a wish list on to the employers' program. Labour must regain the coherent vision and the independence of thought and action which have always been the force behind genuine reforms. So much slippage has taken place that the very notion of "reform" is today monopolized by the right, and inevitably applies to one or another deregulatory move. If it is certain that we can only meet the challenge by organizing, mobilizing and campaigning, it is also certain that we are dealing with vital questions which demand efforts and resources which would strain the resources of an organization many times greater than ours.
]]>We shall describe below the genesis of the western European social model and the socio-political reality of central Europe. We shall adopt a trade union perspective and make plain that, unless trade unions and industrial relations can be thoroughly Europeanised and internationalised, Europe's unique social policy approach may soon be a thing of the past.
Arrival
The political upheaval of 1989/90 was widely perceived in central and eastern Europe as a “return to Europe": back to the rule of law and pluralist democracy; away from Moscow's sphere of influence. The decisive majorities in the EU referendums should be viewed in this light but also, in the context of NATO membership, as an unambiguous vote for a Europe of peace and prosperity. In this sense 1 May 2004 provisionally concluded a process which propelled central Europe back into the heart of European politics. Critics, on the other hand, maintain that accession is incomplete and comes at a high social price.
The new EU citizens’ low turnout at the European Parliament elections - only about 26 percent - is hardly surprising since considerable disenchantment set in during the accession process. The central European countries' desire for accession always did derive more from perfectly comprehensible national interests than from Euro-euphoria. Wherever would that have come from?
The scale and speed of the accession process were determined by the fastest and most comprehensive privatisation and deregulation possible. The establishment of social institutions, social security provision and industrial relations ranked far behind the all-pervasive turbo-capitalism and the all-consuming acquisitions by foreign investors.
While the transformation from a command economy to a market economy has just been completed at breathtaking speed and the societies of central Europe are struggling to organise themselves politically and socially, they look on with astonishment as western European society delivers itself up to individualism and post-materialism, dismantling social security systems and benefits. No sooner have the 75 million new EU citizens escaped from Real Socialism and drawn closer to the alternative, promising model of a market economy than the welfare state disappears before their very eyes. This is not what they had expected.
Protagonists in the building of civil society in central Europe are witnessing a retrenchment of the welfare state and attempts by western European society to defend itself against several threats simultaneously. Firstly the challenge of globalisation, which seems unstoppable in its drive to subject the entire world to economic dominance and turn social standards into disadvantages in terms of cost and location. Then there is the European Union which, driven by industrial interests, first established the largest internal market in the world and then brought about European monetary union. To make matters worse, eastward enlargement also fuels internal fears and potential threats which are unscrupulously exploited in the popular press: here the threat of migration; there the spectre of a "brain and care drain".
With wages and labour costs in central Europe more than two thirds lower than in the west, there are growing fears of social dumping and the transfer or relocation of production to countries where taxation and non-wage labour costs are lower. This has led at the eleventh hour to helpless outbursts of local patriotism and to equally unrealistic demands for European tax harmonisation so as to create "fair minimum tax rates".
Even the simplest economic facts are ignored in this collective bout of European social Darwinism. For example, the fact that productivity in central Europe is actually rising by around 4% per year, which represents a positive development if the much-dreaded wave of migration is to be forestalled. Yet despite this trend, the level of productivity in the accession countries - at US $14.50 per hour - still lies well below that in the EU of 15, at US $ 36.20. Nor is much notice taken of the fact that the huge profits made from export trade with the accession countries create jobs in the west.
The fall of the Berlin Wall increasingly exposed western Europeans to media-orchestrated social dumping, aimed at safeguarding company sites and preserving the welfare state, whilst in central Europe, on the other hand, the trade union structures required to take defensive action or even launch a proactive pan-European campaign do not exist. All of this is taking place against the background of organisational malaise among central European trade unions and industrial relations which can be depicted - perhaps rather too schematically - as follows:
The reputation and condition of trade unions after 1945 and 1989 could not have been more different. The end of fascism left behind a morally and politically invigorated trade union movement, whereas after the end of communism even social-democratic policy-making bears the stigma of despised, outdated collectivism.
Farewell to the social model?
In keeping with the principle of subsidiarity, the social model is clearly limited in scope. Since social security systems have developed along different lines, the EU lacks competence in this area.
Directive 94/45EC on the establishment of the European Works Council (EWC) was long regarded as the operational showpiece of the social dialogue. Ten years on, however, the intended Europeanisation or even internationalisation of EWCs in transnational companies has evidently failed to materialise, repeatedly thwarted by straightforward language barriers but also by competition between different national sites. This is particularly worrying because such competition will take on dramatic proportions in the EWCs of the 25-member EU, with its striking east/west wage differential. It will not only erode wage levels in the west; we know of instances where, allegedly to safeguard particular sites, workforces in central Europe have agreed to pay freezes or even to work unpaid. Wage competition comes from Ukraine and Moldova, but the undercutting knows no borders since just beyond Moldova lie the next low-wage and low-tax countries: Russia and China.
Just as social policy still falls under the auspices of national governments, wage policy remains the exclusive prerogative of national trade unions. Let us summarise and attempt to compare the reality in central and western Europe.
While criticism in western Europe is levelled at regional sectoral collective agreements and wage cartels, collective bargaining in central Europe is confined to company agreements or, worse still, to bargaining-free zones in prospering SMEs.
In this precarious situation, trade unionists in central Europe will look at the position in western Europe and ask: has the social model in the west safeguarded jobs, improved workers' rights, preserved social security systems and strengthened the trade unions through increased membership? And if the west answers “no”, trade unions in both west and east will have to wave goodbye to some cherished beliefs and unrealistic expectations.
Searching for a new direction
Clearly, eastward enlargement will challenge the existing European social model. This should be seized as an opportunity for a Europe-wide debate and review of the social dimension in the EU of 25. A realistic, targeted strategy must take account of the following truths:
Industrial relations are still determined nationally 95% of the time, so strong local and national trade unions are a prerequisite for action at European level. At least two conclusions can be drawn here: firstly, attention must be focused at sectoral and at national level on strategic companies and sectors, with a view to conducting effective recruitment campaigns in the foreseeable future. Secondly, relations between workplace representatives/works councils and sectoral trade unions must develop into a constructive strategic alliance.
Eastward enlargement is by no means complete following accession. On the contrary, it lacks a social dimension reflecting the disparities between east and west and offering realistic tools for a harmonisation of industrial relations. The "social deficit" of eastward enlargement has already had an impact on taxation and wage policies, social security systems, labour law and the role of trade unions in society.
Possible solutions
One could simply wait for economic performance and growth in central Europe to catch up and bring about a harmonisation of living standard and working conditions within one or two decades, thereby aligning wages and social benefits. That would be a fatalistic approach and would wreak havoc in social policy terms: the longer the trade union vacuum lasts in the east, the lower the eventual level of social policy harmonisation will be.
A proactive approach consists of a Europe-wide trade union strategy. As well as reviewing the social model, the standards ratified at accession must be rigorously implemented and enforced. The problem in many cases is not low-wage countries but low-cost countries. Norms, standards and legal provisions are simply not applied or even monitored, obviously leading to cost advantages and lamentable working conditions.
The second - and much trickier - aspect consists in overcoming the contradiction between European rhetoric and the reality of trade union organisation. If transnational companies are regarded as the flagships of globalisation and worldwide standard-setting, work within them is an indispensable part of the much-needed internationalisation of industrial relations. Only in that way can regulatory mechanisms and minimum standards be created to put an end to cutthroat downward competition.
The success story of the EU in the post-war period lay in its creation of prosperity and the absence of war and violence. Now, after the end of the Cold War, Europe's social value system must ensure acceptance and integration. That would make the European trade unions part of - or even the driving force behind - an urgently required debate between politicians and citizens, not in a spirit of resignation but looking to the future.