A REPORT COMMISSIONED BY THE PARTNERSHIP RESOURCE CENTRE
Erling Rasmussen, Paul O’Neil, and Paul Chalmers – August 2006
“Globalisation and the wider application of new information and communication technologies are commonly cited as the key drivers of change in workplaces in both the advanced and newly developing economies. There is no doubt that the changes in the way that work is organised and managed are significant, but should we attribute all of the shifts to international market and technological forces? What role are employers and employees playing in shaping contemporary employment practices and the future of work?” (Nolan 2005: vii).
The objective of this report is to “document international workplace partnership approaches and experience and couch it in terms of its interest and relevance to New Zealand’s employment relations policy and practice” (PRC, 24 May 2005: 1). While workplace partnerships have not had a major influence on New Zealand employment relations (except in the public sector), it is not a novel approach to workplace (re)organisation (Emery & Thorsrud 1976) and it has started to establish itself as a mainstream practice in many countries in the European Union. In a slightly different version, workplace partnership has also been part of Japanese employment relations for several decades (Dore 1973, Tachney 2000). In general, partnership approaches fit with attempts to transform traditional patterns of production and service delivery to enhance productivity and quality levels. By seeking broad employee participation and involvement in the workplace, it is hoped that the elusive ‘knowledge economy’ can be achieved – in other words, an economy characterised by high productivity, high skill, and high wages. Thus, workplace partnerships are about seeking organisational performance through productive employment relationships.
Therefore, this report intends to examine workplace partnerships within this international trend towards transforming traditional production and service delivery methods to achieve sustainable productivity gains. It will be stressed that there are several ways of achieving this transformation, and that the organisational and employment relations changes are often specific to the individual organisation. The report tries to illustrate the diversity of workplace partnerships by drawing on experiences from particular countries and specific workplace examples. It is intended that these illustrations be inspirational, rather than examples to be copied. With the current focus on partnership approaches and high performance workplaces (Guest & Peccei 2001, Roche & Geary 2002, Appelbaum et al. 2000), it is probably not a question of whether workplace partnership will become a new way of organising work; rather, it is a question of what particular forms of workplace partnership will be constructed in New Zealand workplaces.
There is evidence that New Zealand already forms part of this international leaning towards employee involvement and more employer-employee collaboration through the recent ‘Europeanisation’ of New Zealand employment relations (Rasmussen 2004). There have been several public policy initiatives supportive of more collaborative relationships. These have included the Employment Relations Act 2000 (particularly the enhanced provisions of good faith behaviour and bargaining) and the amendments to the Health and Safety in Employment Act 1992, requiring joint employer-employee participation on health and safety policy and practice. Other initiatives have included the employer-union collaboration on improved productivity, the Partnership for Quality agreements between the major state sector union (the Public Service Association), the Government and certain New Zealand state employers, and the bipartite and tripartite arrangements in social policy areas such as the Pay and Employment Equity Task Force. The attempts to create partnerships and more collaborative efforts are clearly a major theme in current public policy, as stressed by Prime Minister Helen Clark:
“We seek to build partnerships for growth which are inclusive of business and unions, regions and communities, and of all ethnicities in our multicultural country with its sizeable indigenous population.” (Clark 2003).
However, extending the practice of partnership in New Zealand is problematic as:
“…a tradition of adversarial industrial relations compounded by enterprise focused and contractual-based relationships fostered by the Employment Contracts Act, together with the effects of the Public Finance and State Services Acts in the public service, have created a culture where management prerogative has become deeply embedded.”1
Thus, there is some way to go before employee involvement and partnership become an established part of the New Zealand way of ‘doing business’ and the predominant form of dealing with workplace change. Still, there are several positive signs. Survey and case study evidence suggests that there has been a considerable increase in intra-organisational communication, there are more consultative approaches in many organisations, and multi-skilling and teamwork have become standard across workplaces (Haynes et al. 2005, Rasmussen 1996). Further, there is some evidence from employer and employee perspectives that the Employment Relations Act contributes towards more trusting employer-employee relations, towards more employer-staff communication, and generally, most employers and employees are quite happy with their work relationships (Department of Labour, 2003). In this context, and with more public policy attention and resources being put into partnerships, the international experiences of workplace partnership that form the body of this report can provide some inspiration, ideas, and the possibilities available for New Zealand’s employment relations.
In line with the project objectives, our initial research has focussed on four countries with a high degree of relevance for New Zealand employment relations. There are the three small, open economies – Ireland, Denmark and Norway – all of which have been very successful over the last 15 years and the United Kingdom (UK) with its ‘third way’ philosophy under Prime Minister Blair.2 We have also applied the definition of partnership that has been established by the Partnership Resource Centre:
“Workplace partnership is about an active relationship between unions and employers to deliver outcomes that benefit the mutual interests of both parties.” (see Appendix One for a more detailed description).
This focus on union participation and mutual benefits means that we bypass the many examples of high performance workplaces found in the US and Canadian literature (see Appelbaum et al. 2000; Kochan & Osterman 1994, Murray et al. 2002). In many of these examples, the influence and participation of employees and unions, as well as the distribution of benefits, are often unclear (Danford 2003, Fairris & Tohyama 2002, Osterman 2000). High performance workplaces can cover both union and non-union workplaces, though American research of high performance workplaces has seldom alluded to the kind of formalised participation structures found in the European countries we analyse in this report, such as works councils, employee board representatives, minimum information, and consultation entitlements.
Our choice of countries was influenced by these countries having had some experience with the implementation of employer-union partnership and provide good illustrations of new, as well as embedded, forms of partnership given their varying employment and partnership traditions. We also agreed that the project should avoid detailed analysis of economic benefits associated with partnerships, as this would require an additional project.3 However, we will comment on the perceived outcomes associated with the various workplace examples discussed in the report and the benefits and outcomes reported in the literature on each of the countries studied.
The report will start with a general overview of the discussions and findings uncovered in our research on international experiences of workplace partnership. The general overview is separated into three main areas covering three different levels: the global or general level, the national level, and finally workplace partnerships. First, the general strategic choices regarding work organisation will be presented and how these choices are influenced by employment relations traditions. Second, there will be a focus on the employment relations context conducive to partnership, including ‘social dialogue’, mutual interests and legislative prescription. Third, there will be a more specific discussion of workplace partnership experience drawing on the case studies detailed in the four country reports. On this background, in the fourth section we draw some tentative lessons for workplace partnerships in New Zealand. This general overview will be followed by four separate reports on the countries studied: Denmark, Ireland, Norway, and the United Kingdom (more on these later).
The current emphasis on workplace partnership has its origin in the fundamental economic changes that many OECD countries have faced since the early 1970s. Many OECD countries experienced severe macro-economic problems, such as economic stagnation and inflation (stagflation), the breakdown of the traditional monetary system, and external balance problems. The macro-economic problems put pressure on welfare state arrangements and were often associated with high levels of unemployment. While these macro-economic problems varied in their intensity and timing, they often prompted extensive re-thinking of macro-economic and political approaches and led to searches for new approaches or ‘models’.
In the 1980s, there seemed to be a fundamental clash between two types of public policy responses: either a neo-corporatist approach (with Sweden, Germany, and Austria being the main examples) or a neo-liberalist approach (with the USA, the UK and, later in the 1980s, New Zealand being the key examples).4 This clash was important for this report since public policy recommendations often created a link (implicit or explicit) between employment relations and economic performance. There was also a growing focus on institutional arrangements surrounding decisions on employment arrangements and conditions. This prompted, for example, the OECD (1987) to suggest that it was preferable to have either highly centralised bargaining systems or highly decentralised bargaining systems.5
However, the substantial changes in economic performance of some of the countries used as examples have meant that the ‘evidence’ has pointed to shifting directions. As some of the so-called neo-corporatist countries performed less well, the neo-liberalist approach, with an emphasis on deregulation and a flexible labour market, had substantial credibility in many OECD countries in the 1990s. However, recently, the success of small economies has been noted, having pursued a neo-corporatist form of approach to economic, social, and labour market changes (Auer 2000, 2001). This emphasis on small, successful countries is important for this report as some of these countries (Ireland, Denmark, and Norway) will be analysed. It is also important because Haworth (2004) has argued that a so-called ‘Europeanisation’ of New Zealand economic, social, and labour market policies has taken place post 1999. This has included a focus on public-private collaboration, enhanced welfare state measures, changes to employment relations legislation, and a rise in individual employment entitlements (Haworth 2004, Rasmussen & Lamm 2005). Overall, these changes align New Zealand with the success of these countries where partnership arrangements are often seen as an integrated part of economic performance.
“In many ways, several of the smaller European countries have strengthened their neo-corporatist approach to public policy and labour market reforms. Currently, this can arguably be said about Austria, Denmark, Finland, Ireland, Norway and the Netherlands (Jørgensen 2000, Visser 1998). In the labour market area, the protection of employment rights, collective bargaining and employee influence has constituted an important element of this revival of neo-corporatism.” (Rasmussen & Lind 2003: 160).
While a distinction between neo-corporatist and neo-liberal approaches may highlight some important differences, often there is a blend of approaches. This is important in the discussion of partnership as the influence of neo-liberal thinking has seen a growing focus on workplace level arrangements (as opposed to national or industry arrangements). As discussed below, while this has prompted ‘hybrid’ forms of partnership, it is often the role of trade unions which becomes the defining feature.
“World market liberalisation and technological change have forced attention to the micro-institutional conditions within which firms operate. From that perspective, what is of interest is that economies in which business was well organised at the start of the period have maintained – albeit reshaped – relatively coordinated institutional frameworks, in which unions continue to play an important role; and those in which business was not well organised have moved towards substantially deregulated frameworks from which unions have been more and more excluded.” (Soskice 1999: 119).
At an organisational level, the shift from the industrial to the post-industrial service society (Bell 1974) and the availability of new technology have meant that traditional work organisation and organisational structures have been under siege (see Table 1). Competitiveness has become increasingly based on such determinants as quality, product differentiation, production delays, and the capacity to react quickly to consumer needs. In many organisations, traditional bureaucratic and ‘conveyer-belt’ techniques have been questioned (see Table 2). This has prompted a focus on popular management ideas about the impact of globalisation, increased flexibility, Japanese production techniques, and the knowledge economy. These influences will be briefly overviewed in the following paragraphs.
| Competition/Markets | Labour Force | Operating Environment |
|---|---|---|
|
|
|
Source: National Centre for Partnership and Performance 2004: 9.
| Product innovation/marketing | Production technology/cost containment |
|---|---|
|
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| Production technology/cost containment | Structural |
|---|---|
|
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Source: National Centre for Partnership and Performance 2004: 10.
The impact of globalisation on organisational change is frequently mentioned but seldom agreed upon. However, the growing international market, the rise in multinational enterprises, and the dispersion of production and service facilities across the globe have seldom been disputed. Likewise, the importance of outsourcing and off-shoring is growing and these possibilities continue to shape organisational strategies. Off-shoring is often considered when the organisation is in crisis, and it can be an alternative to partnership. Likewise, outsourcing can be used in the public sector as an alternative to reducing costs and increasing flexibility through partnership arrangements.
Globalisation is also important for partnership in other ways. For example, it can be problematic to pursue partnership in overseas owned organisations. This has been a problem in New Zealand where overseas owners have suddenly decided to reduce their presence or may be relocating production to other plants (see Perry et al. 1995, Mealings & Rasmussen 2000). There is also the tension between the human resource management systems of a multinational enterprise and the local employment relations norms (McGraw 1998). For instance, it is well-known that many American companies have little enthusiasm for unions and formalised, legislative employee participation structures. As Royle (1999, 2000) has described, McDonald’s has gone to great lengths to curb union activity and formalised employee participation in some European countries.
The popularity of the flexibility concept has seen a number of new flexibility models and typologies emerge. The ‘flexible firm’ model and the distinction between core and peripheral types of employees started a discussion of how employers could achieve the optimum level of capabilities and flexibility (Atkinson 1984, 1985, Pollert 1988). Flexibility typologies distinguished between different forms of flexibility and this highlighted that certain forms of flexibility could be more favourable for employees - for example, functional flexibility as opposed to numerical flexibility (OECD 1989, Rimmer & Zappala 1988). It also became clear that flexibility could have drastic impacts on job security, working time patterns, and income stability. In the labour markets with high unemployment, the focus became centred on employer-driven forms of flexibility. This has started to change as global skill shortages and low unemployment have become prominent and there is now more focus on employee flexibility - for example, how to achieve a better work-life balance (Felstead & Jewson 1999). Thus, the flexibility debate has raised questions about the types of flexibility pursued, how flexibility should be implemented (by managerial fiat, inducements or negotiated solutions), and what would be the effect on organisational performance.
Since Japanese production techniques and their quality implications were ‘discovered’, they have become part of most managers’ toolkits and have been applied across a range of industries (Perry et al. 1995). Japanese production techniques promote internal and functional flexibility through teamworking and multi-skilling and attempts to mobilise employee skills and knowledge. These techniques have featured in so-called ‘lean production’, ‘Toyotaism’, and ‘high performance work organisations’ that some researchers have advocated as more efficient production systems (Appelbaum et al. 2000, Seligman 2005).6 Although Western experts and manufacturers have studied Japanese production techniques, there have been many reports of how these techniques are often less successful in other countries (Grant 1999). Besides issues of inferior quality levels and production costs, they have been implicated as highly stressful workplaces where the outcomes for employees are insecure and substandard (Danford 2003, Fairris & Tohyama 2002, Osterman 2000). There have also been concerns over tendencies to pursue non-union involvement or single-union sites.
Finally, the so-called ‘knowledge economy’, the ‘war for talent’ and the ‘brain drain’ are all concepts which indicate that employers have to take the famous dictum more seriously about ‘employees being the most important resource’ (Capelli 2000, Florida 2005, O’Reilly & Pfeffer 2000).7 This has raised the profile of human resource issues and increased managerial support for communication, delegation of responsibilities, teamwork, and new incentive schemes. In that sense, partnership is part of the mainstream approaches which have sought to develop more efficient people management practices. However, there are two major hurdles to overcome. First, there are normally considerable costs associated with ‘walking the talk’ in human resource management, and this can lead to either an inability to fully pursue a high quality HRM approach or restricting certain (expensive) approaches to particular segments of the workforce (Boxall & Purcell 2000, Cappelli 2000). Second, there are many HRM approaches which score high on union avoidance and clearly make partnership an unsuitable solution for such employers.
Although there have been strong converging forces and seemingly similar kinds of approaches have surfaced (Micklethwait & Wooldridge 1997), the following management ideas contain their own contradictions, and they have often been overlaid with different public policy approaches and embedded in different institutional arrangements. Thus, there have been diverse forms of implementation and success, which probably illustrate the complexity of these issues and the disagreement on how to solve them:
Therefore, how to develop a flexible, high-performing organisation with a focus on quality and innovation and a committed and highly skilled workforce is an open question. In the debate, there has been a tendency to paint three different stereotypical patterns: the American, the Japanese, and the European employment relations models (Rasmussen & Boxall 1995).8 These models highlight that there are certain stereotypical patterns when it comes to facilitating organisations which balance employer and employee interests in the quest for improved organisational performance. The stereotypical patterns can influence managerial thinking and this may impact on how a high-performing organisation is envisaged and the strategies applied (Pot 2000).
In this report, we will focus on the European model, portrayed as having high levels of union influence, comprehensive employee rights, strong employer-employee communications, extensive employee consultation, and formalised participation structures (Brewster & Larsen 2000, Brewster et al. 2004, Larsen & Mayrhofer 2005, Mayrhofer et al. 2000). The influence of unions and state regulations is noticeable, as is the development of consensus-based productive workplace relationships and high levels of employee participation. Interestingly, although adversarial employment relations has characterised Irish and British employment relations, the integration in the European Union (EU) of these countries has been associated with a tentative shift towards more consensus-based workplace relations.
There is no doubt that the EU has had a major impact on the development of workplace partnership among its member countries (for a more detailed description, see Appendix 2). Since the 1980s, the attempt to create a ‘single market’ for capital, goods, and labour has resulted in a strong focus on the so-called ‘social dimension’. This has included increased EU-wide regulation of the labour market where both legislation (directives and communications) and direct collective bargaining between unions and employers’ organisations have been a high priority during recent years. The regulation of work and employment conditions has been ambitious and aims to introduce common standards throughout the member states. The member states are committed to implementing the directives into national legislation (or collective agreements). Such directives now cover a variety of issues such as equal treatment, working time, part-time work and temporary contracts. The coverage of employment issues is expected to be expanded over time.
In terms of partnership, there are now several EU directives that stipulate some sort of employee participation in key workplace decisions (Knudsen 1995). The most important influences are linked to directives on: European Works Councils (EWC), European Company Statute (SE), information and consultation of employees, transfer of undertaking, and collective redundancies (see Appendix 2). This ‘web of directives’ has had particular influence on Ireland and the UK as these countries had no tradition of prescribed employee influence on workplace decision-making. As part of the EU process, Ireland and the UK have implemented substantial enhancements to employee rights concerning information, consultation, and formalised participation structures. Although these changes have only recently been implemented and actual changes to workplace processes and outcomes are still unfolding, there is no doubt that the ‘web of directives’ will constitute an independent influence, constantly encouraging further participation and partnership in the two countries (Taylor 2005, Gilman & Marginson 2002). As Danish and Norwegian employment relations have had such employee rights for some time, the EU Directives have had less impact there, but they now overlay the traditional employee participation rights and structures.
As employers have become more pro-active and strategic in their employment relations choices, this has prompted a diverse range of employment relations patterns. Katz and Darbishire (2000) have argued, based on their international study of the telecommunications and automobile industries in several OECD countries, that there is often convergence across national economics (as strong industry-specific patterns dominate) and divergence within national economics (as industries and workplaces develop their own employment relations patterns). Their study suggests that certain patterns of workplace practice can be found across national economies, but there are also considerable choices available to employers allowing for a variety of workplace practices as well as ‘hybrid’ combinations. Table 3 below illustrates some of the dominant patterns found by Katz and Darbishire (2000). The table shows that partnership is aligned with the pattern of joint team-based workplace practices, and it is stereotypically associated with rather different approaches than those found in other patterns.
| Type | Low Wage | HRM | Japanese-Oriented | Joint Team-Based |
|---|---|---|---|---|
| Work Practices | Managerial Discretion with Informal Procedures | Corporate Culture and Extensive Communication | Standardised Procedures | Joint Decision Making |
| Hierarchial Work Relations | Directed Teams | Problem Solving Teams | Semi-Autonomous Work Groups | |
| Low Wages with Piece Rates | Above Average Wages with Contingent Pay | High Pay linked to Seniority and Performance Appraisals | High Pay with Pay-for-Knowledge | |
| High Turnover | Individualised Career Development | Employment Stabilisation | Career Development | |
| Strong Anti-Union Animus | Union Substitution | Enterprise Unionism | Union and Employee Involvement |
Source: Katz and Darbishire 2000: 10.
Thus, the discussion above suggests that there can be certain (very general) hallmarks associated with partnerships. The same can be found in the patterns proposed by Katz and Darbishire (2000) in Table 3. As indicated by the table (and our definition), it involves employer-union collaboration of some kind. The other hallmarks are:
While Katz and Darbishire (2000: 10) have included joint decision-making as a crucial hallmark, we are cautious about promoting this as a key characteristic. Our research has found that genuine joint decision-making seldom happens. Instead, management will consult, communicate, and take into consideration employee and union interests in many instances. However, even in Scandinavian countries, the final responsibility for private sector decision-making is normally vested in employers, the board or managers. This may explain why collective bargaining and workplace partnership often co-exist even in countries where workplace partnership is well developed. By keeping a dual system, unions can protect their independence if they are forced to accept some management decisions, which may be detrimental to union or employee interests.9
Employment relations are deeply rooted in national cultures and traditions, and employment relations practices often have a long intricate history. Considering this, it is obvious that employment relations processes and outcomes are not ‘transferable’ from one country to another. However, it is possible to get a fair amount of inspiration by studying the employment relations changes of other countries (Bamber et al. 2004).
This section focuses on the national employment relations systems of four countries: Denmark, Ireland, Norway, and the United Kingdom (UK). There are a variety of reasons for focusing on these countries, besides these countries having been frequently mentioned in New Zealand discussions of employment relations changes:
As will become evident, consensus-based employment relations has a long tradition in Norway and Denmark, both at the national and workplace level. These countries are also high-wage/high skill economies – something to which New Zealand aspires. Although both countries represent national variants of the Continental European model, the countries differ in that Denmark has belonged to the European Union (EU) since 1972, whereas Norway has decided to stay outside the EU.
While the United Kingdom is a very large economy and its economic structures have less affinity with those of New Zealand, there have been close historical links in terms of employment relations, industrial, and social development. More recently, the move towards a ‘third way’ political agenda under Prime Minister Tony Blair has provided some inspiration for the post-1999 policy changes in New Zealand. Historically, the UK has had a ‘voluntaristic’, adversarial employment relations system, but this has been influenced by the country’s membership of the European Union and an influx of overseas companies. In light of these changes and the importance of the ‘third way’, an examination of the employment relations system in the UK and its relationship with workplace partnership has some relevance for the path of workplace partnership in New Zealand.
Ireland has become an economic success story and it provides an interesting comparison. In addition to being a small open economy (sharing structural similarities with New Zealand), the Irish employment relations system is currently seen as being placed between ‘Boston and Berlin’. That is, historically, the employment relations system in Ireland has been based on an adversarial United Kingdom model but influenced by the influx of overseas companies – mainly American multinational enterprises – and Continental European influences from the membership of the European Union. Since 1987, its employment relations system has also been impacted by a series of national level social partnership agreements. Ireland is, therefore, an interesting ‘hybrid’ case from which New Zealand can learn.
In the following sections, there will be a focus on employment relations traditions, and national-level ‘social dialogue’. We then turn our attention to what is ‘workplace partnership’ specifically and why employers and unions opt (or not) for workplace partnership.
Denmark has a very long history of compromise and collaboration between employer organisations and unions. It can be traced back to the 1899 General Agreement11 which established the unions’ right of employee representation and workplace influence, but it also made employer interests, including organisational performance, something for union representatives to consider. Furthermore, the General Agreement became the start to a voluntarist-based employment relations system where employer organisations and unions developed comprehensive employment relations norms and institutions. With an overall union density currently around 80 percent, unions have been/are very strong, and this has probably influenced employers’ willingness to compromise. Furthermore, employer interests are at the core of these compromises with the unions having a strong focus on general economic conditions and organisational performance (Olson 1982). State involvement, including legislative frameworks, happened over the years, though predominantly employers and unions have been the leading actors.12 While the General Agreement and collective bargaining play the primary role in shaping workplace partnership, there are also strong legislative underpinnings. Legislative intervention has become more important post-1990 as EU regulations have started to influence Danish regulations.
In Norway, consensus-based employment relations has a long history, tracing back to the 1935 Basic Agreement where employers and unions agreed upon collective bargaining regulations and co-operative behaviours. Since 1935, the Basic Agreement has normally been re-negotiated every four years and, with collaborative input from the State and leading organisations, a comprehensive employment relations system has been developed with relatively close tripartite collaboration. Compared to the Danish model, this has included frequent and comprehensive state intervention in employment matters. Still, employer organisations and unions have considerable strength (union density of around 53 percent), and they have played a major role in public policy. National collective agreements have a major impact on employment and working conditions, and workplace partnerships are embedded in the context created by these national agreements.
In the United Kingdom, the employment relations system is a deeply embedded adversarial system where management’s ‘right’ to manage is continually contested by organised labour seeing a legitimate voice to represent and advocate employee concerns over pay and conditions of work. While union power grew up to the late 1970s, this changed during a long period of Conservative governments from 1979 to 1997. The de-industrialisation and privatisation under the Thatcher governments increased unemployment and weakened trade union power (see Appendix 3). Such power was further weakened by several rounds of union legislation, restricting unions’ rights to enforce ‘closed shops’, enforcing ballots on unions, and promoting individual employment agreements. In addition, large numbers of tripartite bodies involving unions, employers, and government were abolished with little consultation.
The election of a Labour government in 199713 brought change within certain well-defined limits. The New Labour Government kept some of the restrictive legislative approach enacted by the Conservative governments, but it also promoted a ‘third way’ between the neo-liberalism of Thatcher and the social democracy of the ‘European’ continental model of tripartism and co-determination. Unions were given new recognition rights in the Employment Relations Act of 1999, but ‘orderly industrial relations’ was the watchword, strong managerial prerogative was maintained, and union participation was only sought in training initiatives and work re-organisation. Despite new recognition rights, union membership has stagnated as unions struggle to increase their membership in new industries (see Appendix 4). Thus, the employment relations system in the UK differs considerably from the continental ‘European’ model.
As mentioned, Ireland’s employment relations system is currently seen as being placed between ‘Boston and Berlin’ because of its mix of British, American, and Continental European employment relations traditions. Historically, employment relations followed the voluntarist-based adversarial British model and the current legislative framework follows that tradition. Despite its more ‘Europeanised’ approach towards employment relations, the British tradition of limited direct regulation of workplace relations remains in Ireland. The strongly embedded adversarial relationship between employers and unions often surfaces at workplace level where unions have to struggle to obtain legitimacy and voice. This legacy of ‘voluntarism’, whereby individual or collective actors are relatively free to work out employment issues among themselves, was attractive to American multinationals who could pursue the form of employment relations they were more used to in Ireland.
However, there are clearly changes happening in Irish employment relations with several social partnership agreements in place and a tentative increase in employer-union collaboration. Neo-corporatist incomes policies have dominated collective bargaining with trade-offs between wage increases, tax cuts, and increased social entitlements. Social partnership has strengthened trade unionism in Ireland, particularly the strength and unity of its lead organisations. While union density is down, membership has increased to over 500,000 (see Appendices 3 and 4). In order for national level consensus-based employment relations to filter down to workplace level, recent social partnership agreements have incorporated workplace partnership. There have also been moves to enhance union recognition and collective bargaining. While American multinationals are influential in their reluctance to foster employer-union collaboration, there has been considerable change toward a more Continental European form of employment relations over the last two decades.
The development of national-level social dialogue has been found to be very important for workplace partnership.14 As discussed below, Denmark, Ireland, and Norway are heavily engaged in ‘social dialogue’, and this has fostered and sustained workplace partnership. In contrast, social dialogue has received taciturn support from the Blair governments, despite the ‘third way’ policy platform. Social dialogue refers to:
“…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. It 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. Concertation can be informal or institutionalised, and often it is a combination of the two. It can take place at the national, regional or at enterprise level. It can be inter-professional, sectoral or a combination of all of these.” (ILO 2005: 1).
As consensus-based employment relations has a long tradition in Denmark, social dialogue is firmly based (though only recently has the notion become part of Danish vocabulary). The bipartite employer-union collaboration still constitutes the backbone of the ‘Danish model’, but there has been extensive tripartite collaboration in public policy formation since the 1930s. Employer organisations and unions have featured in most public policy debates and, in terms of labour market policies, they have frequently been the pro-active actors. As a small open economy, external balance problems have often demanded various types of incomes policies. National framework agreements have often been concluded with an eye on ability to compete internationally. The national agreements and national employer-union collaboration set the boundaries for workplace negotiations and partnership. It is the strong link between national and workplace agreements and the managed flexibility at workplace level (Crouch 1995: 73) which both facilitates and controls workplace partnership.
However, there are limits to compromises and ‘social dialogue’. The ‘Danish model’ is getting tested by the expansion of European Union regulations. In general, EU regulations are below the minimum norms of the Danish labour market – be it employment conditions or employee participation rights – and, as such, they have less impact on employment conditions and norms in Denmark (as compared to, for example, the UK). However, EU regulations constitute a different regulatory approach and, more importantly, the opening of the Danish labour market could spell trouble for the Danish model. There are two thorny issues: how to regulate ‘cheap labour’ in areas where collective bargaining coverage is weak, and how to overcome the frequent reluctance of multinational companies to support collective bargaining and employee participation.
In Norway, as in Denmark, social dialogue is embedded in the long-running status of consensus-based employment relations. Norway has an exceptionally strong tripartite tradition with interest groups being immersed in public policy-making and the State frequently intervening in national collective bargaining. Social dialogue has been dominated by the alliance between the leading employer and union organisations (NHO and LO) and strong social democratic governments.15 Workplace partnerships are embedded in the context of national agreements and facilitated by funding and resources being made available by the ‘social partners’ and the State. This has placed, together with large-scale experiments of work re-organisation, Norwegian workplace partnership at the forefront of the debate about workplace reform.
Ireland has also engaged in social dialogue, but it is of a more recent vintage. Beginning in 1987, a tripartite social partnership agreement has facilitated consensus among government, employers, and unions about the re-direction of economic and social development. Social partnership agreements are renegotiated periodically, every three years, and they now involve 19 social actors, representing employers, unions, farmers, and the social sector. These agreements have been based on prior consensus-seeking discussions, but they have also been the subject of ferocious disagreement between the ‘social partners’. While this recurring disagreement and the apparent fragile state of social dialogue indicate that there are different philosophies and interests at play, it is also noticeable that social agreements have existed for nearly 20 years and delivered substantial economic success.
Social dialogue has yet to take hold in the United Kingdom. The Blair governments have always had a sceptical approach to the European idea of social dialogue and a similar position has been taken towards EU regulations in areas of employment relations and employee participation. There has also been considerable animosity on the employer side and unions have been lukewarm in their support. However, the TUC, the lead union organisation, has strongly supported the social dialogue idea but without getting much traction with the Government and employers. As national collective agreements have declined in the last 15 years, there is limited employer-union collaboration at the national level. Thus, workplace partnership has developed without a fully supportive national context.
The meaning of ‘partnership’ has been debated by Anglo-American practitioners and academics since the mid-1990s, although arguably, it has antecedents in the history of Scandinavian and other Continental European countries. In order to influence the debate, the UK’s Trades Union Congress (TUC) has offered a definition which includes the following ‘necessary’ features (TUC 2001: 3):
It is apparent that these principles are at a highly general level. Although academics have debated the term’s meaning intensively, they appear to have provided limited clarity – rather, generating rival definitions often reflecting the researchers’ own ideological positions (Kelly 1996, Bacon & Storey 2000, Guest & Peccei 2001, Martinez Lucio & Stuart 2005). As a short cut, we conclude, in agreement with other researchers, that the term is essentially a vague and flexible one, with practices ranging from employer-driven quality and human resource management techniques to formalised employer-union arrangements, facilitating employee consultation and participation. Normally, the term ‘partnership’ is used as an umbrella to describe:
“…a variety of new co-operative trade union-employer relationships…(that) centre on a shift away from adversarial employment relationships and towards mutually co-operative and harmonious relationships, usually with the aim of improving organisational performance and competitiveness.” (Oxenbridge & Brown, 2003: 1).
Thus, this is a generic and imprecise term, and that very imprecision may allow a welcome flexibility for some of the key players. For example, the various partnership initiatives in the UK have been driven by a diverse set of rationales and intentions. Even in Scandinavia, where partnership arrangements have been pursued for decades, the more general concepts of co-operation or collaboration are normally used and again, these terms can cover a multiplicity of processes and outcomes (see Table 4 below). Anyway, the descriptors offered by Oxenbridge and Brown above - consensus-based employment relations, employer-union collaboration, improving organisational performance and competitiveness - have been at the heart of Scandinavian trends for a very long time.
Table Four: Comprehensiveness and building blocks of partnership.
Source: National Centre for Partnership and Performance 2003: 65.
The recent changes in production and service delivery methods have changed the role of employees and made partnership a more plausible option. New production techniques lead to teamwork and employee involvement as high fixed capital costs and complex integrated production flows make interruptions costly. The automation of production processes leads to fewer employees, but these employees often have a wider span of control and input. This input can enhance process and product innovation and can facilitate informal and formal co-operation between teams and team members. Likewise, the ‘knowledge and service economy’ leads to a stronger emphasis on having committed employees with self-motivation and suitable behaviours. Even when it comes to highly prescriptive, Taylorist service work (such as can be found in the fast-food industry, call centres or the ‘back offices’ of the financial retail sector) there is now a strong emphasis on teams, fun, and behaviour management (Hunt 2004, Regini et al. 1999, Royle 2000). This also includes the use of ‘emotional labour’ and ‘aesthetic labour’ where, from the viewpoint of the customer, the employees’ behaviour effectively becomes the organisation (Hochschild 1983, Nickson & Warhurst 2005).
While there is a strong drive for employers to have flatter organisational structures, more teamwork, and employee involvement, this does not imply that they will seek partnership arrangements. In fact, most Anglo-American employers appear to be philosophically opposed to such arrangements given they involve an adjustment of the managerial prerogative and management strategies. Generally, there appear to be two situations where partnership is sought by employers. First, an acute ‘crisis’ forces a re-thinking of traditional approaches. This may include an accommodation with union and employee interests. The importance of ‘crisis’, as well as national level partnerships, is frequently mentioned in reports on Irish and British workplace partnerships. Second, the strength of union influence means that bypassing unions will be inefficient and a block for positive employer-employee relationships. Over time, this may become the dominant mode of management thinking, as illustrated in the Scandinavian countries.
There are clearly major benefits for employers when partnerships are functioning well at workplace level. This is illustrated by the impressive economic performance of Denmark, Ireland, and Norway. The organisational performance described in the workplace partnership case studies provides another, more specific type of illustration (see below). There are many examples in the literature where superior organisational performance is associated with partnership (see Appendix 5). This is also stressed in Table 5 below.
| Overall Performance | Efficiency | Innovation | Worker Benefits | Change |
|---|---|---|---|---|
|
|
|
|
|
Source: National Centre for Partnership and Performance 2003: 57.
There are two major explanations of why unions opt for workplace partnership. The first explanation emphasises either union weakness or union strength. The importance of union weakness is discussed explicitly in our UK report where it is pointed out that partnership notions surfaced in the 1930s when unions encountered endemic unemployment and declining wages. The current interest among British and Irish unions can be directly linked to the dire experience of Thatcherism and declining union density. There was “nowhere else to go”, as one union leader commented. This also explains the frequent emphasis on stronger workplace presence and increased union membership found in the Ireland and UK case studies.
The emphasis on union strength is associated with situations where workplace level influence makes it difficult for employers to bypass unions. It is interesting that in some of our case studies, employers considered non-union (‘de-recognition’) options before they opted for employer-union partnership. These employer choices were driven by the uncertain outcomes associated with a union avoidance strategy because of the unions’ negative influences. There are also positive union influences where union support of workplace change can facilitate more effective and low-risk organisational adjustments (Bryson 2000, Crouch 1995, Navrbjerg 2003).
The second explanation is associated with the long-running collaboration between Scandinavian employers and unions. This collaboration, including the legislative underpinnings developed over time, has developed a collaborative mindset among employers and unions. This implies that unions have fewer barriers to overcome, but they also have to be more protective of employer interests - a notion which can be difficult for Anglo-American union representatives to comprehend. Still, Scandinavian unions can point to impressive achievements in terms of union density and membership levels, productivity and organisational performance, employee entitlements, and workplace influence. The Scandinavian union model and strategies have already had some influence in Australia and New Zealand, as it has influenced the adoption of concepts such as strategic unionism and workplace reform (Deeks & Rasmussen 2002).
While there are arguments and scenarios which favour partnership, it is also important to acknowledge that there are often valid reasons why employers and unions are reluctant to participate in partnerships. It is necessary to take these reasons into account in the development of partnership. The philosophical managerial opposition can also be associated with more fundamental interest protection. For example, it is a common theme that middle management is often opposed to partnership because it tends to undermine or bypass their organisational position. When one’s livelihood or future career is on the line, it can be difficult to be enthusiastic. Likewise, many employees are adverse to changes in work organisation which upset their routines and which may threaten their jobs. Unions are often concerned that they will be embroiled in managerial decision-making which can be detrimental to their organisational (union) interest over time. This is the case, in particular, if they have to take joint responsibility for strategies over which they have had limited decision-making power and where there is a fundamental tension between the employees’ and the organisation’s interests.
This can explain why employers and unions have frequently preferred a tentative, slow developing form of partnership, as there are philosophical barriers to overcome, major organisational interests at stake, and outcomes are long-term and uncertain. Partnership demands continuous compromise and reconfirmation. For example, it can be difficult to understand, in light of the phenomenal economic success of Ireland in the last two decades, why some Irish employers and unions still have reservations about continuing the partnership approach (see Begg 2005, McLaughlin 2005). Finally, it is important to acknowledge that partnership is associated with constrained strategic choices, especially when partnership has been prompted by some form of ‘crisis’. As the Norway and Denmark reports show, sometimes even the embedded Scandinavian partnerships are faced with difficult choices and unpleasant outcomes for employers and employees.
The contrasts between, on the one hand, the Denmark and Norway case studies and, on the other hand, the Ireland and UK case studies highlight the differences between the ‘old hands’ of workplace partnership and the ‘newcomers’. In the two Scandinavian countries, workplace partnership exists as the common or normal practice, while this is not the case in Ireland and the UK. This difference makes the Scandinavian countries interesting when it comes to describing what such a common, embedded practice implies. Meanwhile, Ireland and the UK can provide examples of ‘path-breaking’ behaviour and the successful fostering of workplace partnership.
What are the interesting features about Danish and Norwegian workplace partnerships? First, there has been a positive context and strong national support for the development of workplace partnership. The framework agreements in Denmark and Norway prescribe that each side has to be supportive of the other side’s interests. These framework agreements have been enhanced subsequently by more specific agreements (for example, regarding occupational health and safety) and legislatively prescribed participation structures and rights. Interestingly, there appears to be limited conflict between collective bargaining and employee participation mechanisms; the two processes operate side-by-side and have slightly different functions.
Second, the long-standing nature of workplace partnerships has made them more robust as they have become the normal way to ‘do business’. This is partly supported by strong employer organisations and unions which can effectively resource and police workplace partnerships; it is also partly based on the formalised nature of partnership arrangements, either through national agreements or through legislative prescription. Overall, the long-standing nature of workplace partnerships has influenced management and union thinking and this attitudinal change will further alter the boundaries for work organisation and employer-union relationships over time.
Third, the dynamic, multi-faceted approach to workplace partnership appears to be associated with several types of participation structures being available and with continuous experiments with collaboration and participation. The different participation structures have been developed over the years to take care of different sets of issues. It is interesting that similar structures, covering similar sets of issues and with fairly similar functions can be found in both Denmark and Norway (as well as other European countries). Applying similar structures with similar functions across workplaces creates a homogenous approach making it easier to embed partnership arrangements. While these arrangements can be further developed through participation in and use of partnership processes, a continual attempt to develop partnership through experimentation, networking, and information dissemination creates extra strength and dynamics. It is noticeable how strong networks of firms, research institutes, and government resources exist in Norway and how these networks are crucial in the continuous attempts to enhance the coverage and the depth of workplace partnerships.
Both Ireland and the UK have to overcome their adversarial employment relations tradition. So far, it appears that Ireland has been more successful in fostering workplace partnerships. Undoubtedly, the national support through social partnership agreements, as well as support from national employer organisations and unions, has played a crucial role. In Ireland, the Government and key organisations have gone beyond ‘buying into’ the concept and have begun to provide resources to gain broader social acceptance of the concept at the workplace level through, for instance, the National Centre for Partnership and Performance and Educational Training Services.16 Similarly, third parties have been helpful in facilitating the development of workplace partnership in the UK.
The notion of ‘crisis’ has probably also given the Irish government, employers, and unions some urgency to overcome their differences and create some kind of solution.17 Similarly, workplace partnership is often initiated because of organisational performance problems. While this is sufficient to prompt employer and union rethinking, it takes more than just tacit acknowledgement of a different approach. In both Ireland and the UK, we found very few formalised agreements or well-defined partnership structures. The case studies indicate that overall support for partnership is rather shallow and there is substantial resistance among managers, particularly among middle managers. In several case studies, there has been a considerable amount of resource put into the partnership processes by organisations and unions over an extended period of time purely to engage the ‘hearts and minds’ of managers and employees. Despite these considerable efforts, most workplace partnerships appear fragile.
In the Ireland and UK reports that follow, a number of ‘drivers’ have been identified which can assist the move towards workplace partnership. These drivers include:
These drivers demand a lot of positive support from employers and unions and they assume that employers will not travel down the union-avoidance route. This probably indicates why it is necessary to have a positive context, national support mechanisms, and third party facilitation to foster sustainable partnerships. In the absence of formalised agreements and partnership structures, there is an awful lot hanging on positive employer and union attitudes.
Overall, Ireland provides an interesting ‘hybrid’ case, transitioning from an adversarial to a consensus-based employment relations system. Ireland can boast several interesting workplace partnerships and considerable backing and resources have been applied in support of partnership. While workplace partnership has yet to become part of mainstream Irish employment relations, it is too early to make any predictions about future progress. In the UK, there is less ground for optimism: social dialogue has been limited to (in effect) non-existence and there are only a few workplace partnerships. The reported case studies of workplace partnerships have worked sufficiently well with positive outcomes for both employers and unions. However, this may mark the high tide of partnership given that new workplace partnerships have been scarce and the enthusiasm among union leaders seems to be waning (Stuart & Martinez Lucio 2005).
The concept of workplace partnership is not new to New Zealand. Deeks and Rasmussen (2002: 233-235) note that workplace partnership has surfaced at different times and with different labels from as far back as the early 1920s. More recently, workplace partnership was promoted in the late 1980s during the Commission of Inquiry into Industrial Democracy. The early 1990s saw the establishment of Workplace New Zealand, with representation and sponsorship from employer and union groups and some (limited) government support, with the intent of promoting workplace reform (Deeks & Rasmussen 2002, Mealings & Rasmussen 2000, Perry et al. 1995). Since 1999, the State has engaged in limited social partnership projects, such as the Health Forum and Aged Care Forum and the Pay and Employment Equity Task Force (Deloitte 2005). In 2004, workplace partnership re-surfaced more directly in the form of the Partnership Resource Centre – an entity funded by the State but governed in partnership with employer and union groups.
In the past, when the partnership concept has arisen, there has been insufficient broad social support for workplace partnership. The State, employers and unions have consistently failed, either independently or as a group, to support the concept. Unlike continental Europe, the support among key actors and the social base for workplace partnership in New Zealand has been, and probably continues to be, either absent or extremely shallow. It is necessary to develop a wider understanding and support for partnership for the concept to flourish in New Zealand. This is one of the many lessons that we take from our international study; other lessons are presented below:
These lessons cover a wide range of topics and we will limit our comments to a few areas.
The international review indicates that for workplace partnership to develop and become embedded within the workplace, supporting mechanisms are needed and the social base supporting partnership needs to be deep. Ideology or new (human resource) management practices are insufficient on their own to foster broad-based change; to develop partnership practices, there needs to be some ‘encouragement’. This ‘encouragement’ can take many forms. The early national agreements between employer organisations and unions in Denmark and Norway initiated a comprehensive partnership process linking national partnerships with workplace partnerships. Similarly, the recent Irish social partnerships have been complemented with workplace partnerships over time. The notion of ‘social dialogue’ is important. Ireland and the Scandinavian countries have engaged in social dialogue at the macro-level in order to construct consensus-based national level economic and social planning. This kind of planning and macro-level consensus has previously existed in New Zealand and it may be timely to re-consider this approach.
As the country studies show, it usually takes time for workplace partnership to become embedded as normal practice. The building of robust structures and trust relationships is a slow process. In that sense, there is a certain amount of ‘path dependency’ and new partnerships are, by their nature, more fragile. Yet, as demonstrated by the Irish example, such practices can be constructed relatively quickly from quite different, adversarial practices, so long as there is continuous moral and ideological leadership at the political level. The speed with which social partnerships have influenced the Irish economic and social make-up has been truly amazing, as have been the associated economic results.
There is no doubt that legislation is an important ‘encouragement’ which has the advantage of instituting partnership arrangements across workplaces. Legislative interventions are important because they can short-circuit the slow process of building trust relationships and they can prescribe standard partnership structures. Still, legislative prescription can only adjust behaviours if employers and employees see them as practical and fair. Therefore, there are constraints on how far legislation can foster partnerships on its own. In Denmark and Norway, legislative intervention came after trust relationships had been allowed to take root. In New Zealand, legislative intervention is common in employment relations (for example, the arbitration and conciliation system or statutory minima), but legislative support of participation has been avoided for a long time. However, the recent legislative support of health and safety committees and the emphasis on good faith are two examples of legislative-based employee participation which signal that legislative support of partnership and employee participation may be an option. In light of the co-operation committees in Scandinavian countries, it may be time to have another look at the recommendations of the 1989 Committee of Inquiry into Industrial Democracy.19
In order to facilitate the development of partnerships and to maintain the ongoing dynamic of partnerships, it is necessary to provide sufficient resources and allow for continuous experimentation. Norway is most advanced in this regard with the State financing the facilitation of workplace partnerships together with strong learning networks. The learning networks involve specialist research units, monitoring of practices, and learning from successes and failures. There is also support provided for innovative practices.
In Ireland and, to a lesser extent, the UK, third parties have been active in facilitating the formation of partnerships. Third party facilitation is probably more important in Ireland and the UK as partnership is new and sits uneasily with the traditional adversarial nature of employment relations. It is probably also necessary as union density in Ireland and the UK are lower than union density in Scandinavian countries with the resulting limited union capacity to drive the partnership process. In New Zealand, union density is even lower than Ireland and the UK and is particularly low in the private sector. This implies that unions, particularly in the private sector, will need to draw on third party support if they are interested in engaging in partnership approaches. This may be a crucial future role for the State funded Partnership Resource Centre.
Workplace partnership, as defined in this report, cannot happen without employer-union collaboration. Many employers are philosophically opposed to the concept of partnership and these employers often regard the alternatives as superior. There appear to be two major ways of engaging employers in partnership – either by persuading through inducements (including legislative requirements) or by persuading through stealth. In most cases, it appears to be a mixture of these approaches. Persuading employers that this is a good idea is probably the hardest part of fostering and embedding partnership. It can be done as witnessed in Scandinavia, but it is also very difficult as witnessed in Ireland and the UK. Economic success and improved organisational performance are not enough (though it helps) as many Irish employers are still reluctant participants, despite a phenomenal turnaround for the national economy and in many organisations.
Finally, the rather lacklustre development of British partnerships raises a few warning signals. While there are many ways of promoting and sustaining partnership, it is clearly difficult if:
In such circumstances, it is still possible to develop the odd workplace partnership, but it is unlikely that that this will become a mainstream approach. There is an interesting resemblance between the current status of partnership in the UK and the fate of workplace reform in New Zealand in the 1990s. This resemblance indicates that it takes considerable effort to make a path-breaking shift in employment relations.
These lessons will be illustrated by the four reports that follow on the countries studied: Denmark, Ireland, Norway, and the United Kingdom. The country reports are separated into three main sections. First, the employment relations context for partnerships is presented. This section will focus on employment relations traditions, legislative regulations, collective bargaining, and employer-employee collaborations. The second section provides an overview of partnerships, both at the national and workplace levels. Finally, case studies of workplace partnerships are presented in the third section. In selecting the case studies, we have tried to pick significant partnership examples and we have also focused on service sector examples (retail, banking and hospitality sectors). The latter is partly a reaction to the many previous analyses of workplace reform that have tended to focus on the manufacturing sector.
Jens Lind and Erling Rasmussen
“There are many good reasons why the ‘Danish model’ should be of interest to New Zealanders, not at least that it has been a highly successful economy. According to Asp (2001: 7), the Danish gross domestic product per head of population was around 20 percent higher than the equivalent New Zealand one in 1984. This difference nearly doubled over the next 15 years. The Danish economy is also an aspiring ‘knowledge economy’ where free tertiary education goes hand-in-hand with advances in bio-technology, pharmaceuticals and software development. Both countries have a small population, an industry structure influenced by the traditional strength of agriculture and the predominance of small organisations. Historically, they have had a well-developed welfare system and an extensive public sector. The strong role of the state has shaped employment relations in both countries. While there are similarities there are also differences: the stability and high level of collective bargaining and unions clearly set the Danish model apart from New Zealand.” (Rasmussen & Lind 2003: 162)
In Denmark, partnerships are not an add-on to employer-employee relationships; they are the core of Danish employment relations. Since 1899, when the employer organisation and the trade unions concluded the General Agreement (‘Hovedaftalen’), the employer-union collaboration has formed the nucleus of employment relations and driven the development of institutional and public policy changes.20 The so-called ‘Danish model’ has been adjusted several times since the original agreement in 1899, and there is now a comprehensive array of framework agreements, collective agreements, and employment legislation (Due et al. 1994). Besides the European Union types of legislation, the various forms of employment legislation have been prompted by initiatives of employer organisations and unions (what the Danes call the ‘social partners’) or developed in consultation with employers and unions.
An important feature of Danish employment relations is high union density (see Appendix 7).21 It is currently around 79 percent and has been above 70 percent for the last 20 years (EIRO 2005, Rasmussen & Lind 2000, Scheuer 1998). The high union density, along with the underpinnings of comprehensive collective bargaining, institutional structures, and legislation (see Appendix 8) makes partnership the dominant form of employer-union collaboration. It also provides an explanation of why employers often do not consider other arrangements as they have fairly limited choice in the Danish labour market. As discussed below, research has indicated that many managers have limited interest in a totally different approach, as the Danish economy is based around a high-wage, high-skill economy with flat organisational structures (Navrbjerg 2003). Employee involvement has become part and parcel of employment relations in many organisations, because everyday service delivery and/or production often rely on tight staffing of costly (highly paid) employees.
However, it is important to stress that this is not a Danish fairytale - there are many threats and shortcomings. First, the reliance of collective bargaining can be problematic with only around 60 percent of private sector employees covered by collective agreements (though these agreements set the norm for other employees). As key working conditions, such as wages and working time, are almost entirely regulated by collective agreements (for example, there is no statutory minimum wage), this can leave employees on individual employment agreements in a vulnerable position. Second, the labour market is part of a dynamic, constantly changing system, as new market challenges, different forms of work organisation, legislative changes, and new employee perceptions are continuously questioning the ‘Danish model’. The high-wage, high-skill approach demands a continuous focus on ‘upskilling’ which can be a daunting task when new technology and market opportunities are changing fast.
There are also certain flaws in a system anchored by employer-union collaboration. This makes it vulnerable to non-organised employers and employees undercutting the collectively agreed wage and employment conditions (see discussion below). The influx of cheap labour from Eastern Europe, as well as the growing impact of foreign multinationals, brings new pressures to the workplace. Since the early 1990s, another major challenge is a different regulatory approach from the European Union. There are signs that the ‘Danish model’ is becoming more legislatively codified as these EU employment standards become more pervasive (Knudsen & Lind 1999). All these pressures and constraints imply that partnerships are often faced with some sharp choices and trade-offs as shown in our discussion of partnerships below.
The 1899 General Agreement set the tone for employer-union collaboration. This collaboration is complex and requires significant willingness to compromise; it tries to protect both the employer prerogative and union and employee interests and it relies on negotiated solutions and collective action. While the concept of good faith bargaining does not appear in Danish employment relations, this is clearly implied in the General Agreement. As stipulated in the 1993 General Agreement (the latest version):
“As it is desirable that questions on wages and working conditions are solved through the conclusion of collective agreements....the main organisations and their members are obliged, neither directly nor indirectly, to prevent employers and employees from organising within the organisational frames of the main organisations.” (Article 1).
“Employers exercise the right to manage in accordance with the provisions contained in the collective agreements and in co-operation with the employees and their shop stewards in respect of agreements in force at any time between the LO and the DA.” (Article 4; our emphasis).
Over the years, there have been continuous adjustments and extensions of the employer-union relationship through new General Agreements, collective bargaining, partnership dialogue, and legislative initiatives. While major disagreements and industrial disputes have occurred, the ‘Danish model’ has continued to be based on negotiated solutions by the ‘social partners’. It is this ability to drive institutional and legislative change which places the so-called ‘dialogue of the social partners’ at the heart of Danish employment relations.
For example, conflict resolution mechanisms and institutions were developed originally when employer organisations and unions agreed that change was necessary. In 1908, a conflict in the printing industry escalated, prompting the establishment of a tripartite committee with the aim of working out rules for the prevention and regulation of industrial conflict. This led to two important developments. First, two institutions, a labour court and a conciliation and arbitration body, were created. Second, a comprehensive peace obligation was introduced, based on a distinction between conflicts of interest and conflicts of rights.22 The key point is that these changes were driven by the ‘social partners’ and it further enhanced their role: the various employer organisations and unions were made responsible for their members’ actions. This provided a major incentive to promote internal organisational discipline and increase available measures of centralised control.
The high union density is clearly a fundamental hallmark. Initially, strong union representation and density were important for union recognition across industries and occupations. This is still the case though the key collective agreements tend to set the basic norms across the economy. Union membership has fluctuated somewhat over the last 20 years (EIRO 2005), but despite a minor recent decline in members, overall union density is still around the 80 percent level. This can be partly explained through the crucial role of collective bargaining and workplace presence. Additionally, Danish unions have relied on three other ‘levers’23: involvement in training and education, membership services, and involvement in the unemployment insurance system.24
Since the mid-1980s, there has been a decentralisation of collective bargaining. While this has pushed the influence away from the employer and union confederations and towards major employer organisations and union cartels, it has not implied a fundamental shift from national to workplace bargaining. In fact, the integration of different bargaining levels has always been strong; framework agreements will normally stipulate key guidelines or parameters for negotiating changes to employment conditions. This means that workplace arrangements can seldom be seen as stand-alone, as they are encased in industry and national arrangements, as well as in an array of supporting institutional structures. However, the development of more pro-active human resource management approaches has prompted more flexible and independent workplace arrangements (Rogaczewska et al. 2003) though, in most cases, they are still influenced by the controlling interest of employer organisations and unions.
Although the ‘Danish model’ is essentially voluntarist in nature, it has been complemented by various legislative interventions (see Appendix 8). Pragmatism often decides whether a regulation turns out to be a matter of legislation or based upon a collective agreement. Traditionally, the borderline between the ‘social partners’ and the State has been drawn in a way that gives organisations the initiative in collective bargaining and the State the initiative in other matters of labour market regulation. General issues on employment service, unemployment, training and education, health and safety, and the protection of special groups are legislative matters. The changes in legislation, however, are almost always negotiated and heavily influenced by the main employer organisations and unions and often these organisations also influence the implementation of legislation.
There are two areas which have particular importance for this report. First, the General Agreement and legislation have had a major role in underpinning the partnership ‘channels’ at the organisational or workplace level (see next section). Second, European Union regulations have started to stipulate a European-wide approach to employee information and consultation with European Works Councils (EWCs) being the most obvious example. The so-called ‘subsidiarity principle’ has played a major role in the acceptance and recommendations of EU integration by employer organisations, unions, and the Government, because it is supposed to guarantee that EU directives can be implemented as collective agreements in Denmark. Interestingly, most directives have been subject to legislative implementation and this may indicate that employer organisations and unions have started to change their position and become more accepting of legislation in terms of the minima prescribed by EU directives.
The workplace representatives of Danish employees are able to represent the interests of employees and to participate in management decisions through four different channels:
Shop stewards (‘tillidsrepræsentanter’) are elected by the members of the individual trade union present at a particular workplace and they constitute the principal channel for interest representation. While shop stewards have a very important function in Danish employment relations, there is no legislative foundation for their role; instead their role and functions are defined in the General Agreement. Shop stewards were not mentioned in the 1899 agreement that had employers and trade unions as subjects, but the role of shop stewards was introduced in the 1900 metal industry collective agreement. The 1900 agreement stated that, apart from being the spokesperson of the workers in relation to grievances and demands towards the employer, the shop steward has a duty to “do his best in order to maintain and further a good and smooth co-operation in the shop” (Christensen et al. 1974). Since then, they have had a dual obligation: to represent their fellow workers vis-à-vis management and to further co-operation between management and employees. This is a duality that sometimes can be difficult to achieve (Navrbjerg et al. 1998).25
There is normally one shop steward for every 50 employees and they have extensive information and consultation rights. Often they are involved in managerial decision-making (see below), though joint decision-making is normally not the rule. The shop steward can progress individual grievances, as well as collective interests. The latter involves ensuring that national collective agreements are implemented and adhered to locally, but this can also happen through the negotiation of workplace specific wage agreements or other forms of workplace agreements supplementing the national agreement. Sometimes officials from the local union branch are also involved in such negotiations. Co-ordination between the shop stewards internally usually takes place through a joint employer-union committee or through informal meetings; often the group of shop stewards elect a ‘joint shop steward’ (‘fællestillidsrepræsentant’) to represent them all.
Interestingly, shop stewards have extensive protections against dismissal, although the provisions vary between the various national sector collective agreements. Generally, these agreements grant a longer notice period for shop stewards and, in cases of redundancy, the shop stewards are the last ones to be dismissed within a given occupational group (Nielsen 1996). Furthermore, shop stewards often have time off to attend meetings and to perform other duties. In some major workplaces, being the joint shop steward can be nearly a full-time position.
Co-operation committees (joint consultative committees) have existed since 1947 when the employer and union confederations (DA and LO) signed the Co-operation Agreement (‘Samarbejdsaftale’). The latest Co-operation Agreement is from 1986, though minor amendments were made during the 1990s. Since the beginning of the 1970s, co-operation committees have also existed in the public sector, in accordance with agreements covering the State sector and local government respectively. There are only minor differences between the three agreements (Knudsen 1995). Thus, these committees can be found in the public sector and in most organised private sector firms with more than 35 employees. However, according to the Co-operation Agreement, regardless of firm size, employer-employee collaboration “shall be pursued” in all enterprises and workplaces.
Article 1 of the DA and LO Co-operation Agreement sets out the dual goals of co-operation:
“The main organisations agree that a steady improvement of the competitiveness of the establishments and the work satisfaction of the employees are a precondition for the continuous development of the establishments and for greater well-being and job security for the employees.”
The committees are composed of an equal number of management and employee representatives (the latter normally selected among the shop stewards). While the chairperson is always an employer representative, the vice-chairperson is an employee representative. The total number of committee members varies from four in organisations with less than 50 employees, to 12 members in organisations with more than 500 employees. In the case of major firms with subsidiaries, it is recommended that an over-arching group committee is formed (‘koncernudvalg’).
The co-operation committee is expected to have six ordinary meetings per year. Its main functions are defined as to:
Under these broad headings, the committees cover a wide range of issues: work environment, training and new technology, planning of work, human resource and privacy matters, incentive systems, and general business trends and strategies. However, it is important that the committees are not allowed to interfere with issues which are settled through collective bargaining or local wage agreements. Still, the committees are closely attuned to managerial decision-making:
“Employers are required to inform the committee, ‘in plain language’ and in good time, of the firm’s financial position and future prospects, the employment outlook, and any major changes contemplated, including the application of new technology.” (Burgess, 1991: 29).
Overall, the committees have contributed to an expansion of management-employee co-operation, despite the fact that committee performance and co-operation have varied considerably across organisations (Knudsen 1995). In most companies and public sector organisations, the committees meet on a formal basis and exchange information, but in some organisations, these committees have also been the key forum for the development of new organisational initiatives. The most recent (1995) survey of committee members found that:
“…the co-operation committee is seen as a common (shared) tool for both management and employees and there is a belief among the majority of the employees that they do not just have a minority part to play, but that their participation makes a difference.” (Agervold 2002: 96).
The co-operation committees are an expression of the Danish consensus approach. In fact, the Co-operation Agreement envisages that consultations on the various issues will lead to agreements among the committee members. There is no procedure for arbitration or conciliation in instances where the employer-employee members fail to agree on substantial issues. Only where employers fail to follow the procedures of the Co-operation Agreement can the employee representatives take a case to arbitration. If there are disagreements over substantive issues, then the employer has the final say. Thus, employee representatives do not enjoy a genuine right to co-determination and they are not entitled to use collective action in connection with matters dealt with by the co-operation committees (Nielsen 1996).
Still, joint decision-making can happen. The 1995 survey (mentioned above) found that joint decision-making was most frequent in relationship to welfare arrangements (15%), working time arrangements (11%), health and safety measures (10%), and new wage systems (8%). Interestingly, the survey also found that employee representatives thought that the co-operation committee was of limited importance when it came to the working environment and ‘employee friendliness’ of the workplace. Instead, employee representatives favoured a number of alternative influence channels such as meetings between shop stewards and management, joint information meetings, health and safety committees, or informal contacts.
Since the Danish Work Environment Act of 1975, employees in organisations with at least five employees have been able to elect a safety representative who enjoys the same protection as a shop steward. Organisations with 10 or more employees must establish a safety group and all companies with 20 or more employees must have a safety and health committee.
The health and safety representatives should be informed about and provided with an opportunity to participate in the planning of all changes to work organisation, new technology, and all other matters relating to health and safety issues. The safety committee must meet at least four times a year.
However, the actual functioning of the health and safety committees varies widely between workplaces. A study of these committees in the engineering and retail industries found that nearly 25% of workplaces had not established a health and safety committee (Langergaard 1991). The difficulty in finding employees interested in being safety representatives has become a real problem. Even though health and safety has a high priority among trade unions and the fact that there has been a publicly sponsored campaign to improve Denmark’s occupational health and safety record, it is still difficult for unions to convince their members to take an active part in health and safety work.
In some areas, such as the building and construction sector, health and safety measures cannot always be sufficiently controlled because of the many small firms and contractors involved. In this situation, respecting the standards often relies on the individual employee who may find that some health and safety measures obstruct or slow down the work process. In such cases, the safety representative plays an important role because it is nearly impossible for the employer to provide sufficient control and accident/injury prevention – even though the legislation stipulates that it is the employer’s responsibility that standards are respected. There is an expectation that there will be another government push to make health and safety committees more effective. During the 1990s, there have been further extensions of health and safety measures (partly to comply with new EU standards). An important feature of these extensions is that all companies must produce a health and safety report (‘arbejdspladsvurdering’ or APV). A 2004 legislative change has also stipulated that there will be a mandatory screening of all workplaces every seven years. However, the higher safety and health thresholds cannot work effectively without stronger employer-employee collaboration in the health and safety committees.
Company board representation was introduced by the Companies Act 1974 and it regulates employee representation at the supervisory board level. In limited liability companies with at least 35 employees, it is a statutory right for employees to elect employee representatives (at least two but less than half the number of shareholder representatives – Burgess 1991). Thus, employee representatives will always constitute a minority compared to shareholder representatives. Furthermore, the right to be represented on the supervisory board is only triggered if an initial election shows that at least half of the employees are in favour of it; in a majority of companies, mainly smaller ones, the employees have actually abstained from using their right to be represented.
Employee representatives have the same rights and duties as shareholder representatives and they serve on the board for four years. They are important in the communication process between supervisory board and employees. However, they
“…do not seem to have any significant repercussions for management practices. Their main effect has undoubtedly been to contribute to an increased knowledge and understanding of management goals and strategies among employees.” (Knudsen 1995: 91).
Disagreements between employee and owner representatives on the board are infrequent. A 1992 study found that 80% of the employee representatives were satisfied with the information they got and the influence they had. Yet, at the same time, about 40% agreed with the statement that power was concentrated in the hands of the chairperson of the board or other “strong personalities” on the board. One third or respondents thought that the secrecy obligation prevented them from informing colleagues on essential issues (Alhøj 1992).
The recent Danish debate on corporate governance has put new focus on employee representation on company boards. Some of the reports tend to be critical of this form of employee participation, because employees are not considered to be independent members of the board.26 However, there have also been arguments in the opposite direction: employee representatives are important because they tend to include stakeholder values in their activities on the board, while employers and managers traditionally tend to focus more on shareholder values (Rose 2005).
The Danish private sector provides a number of large employers which are neither overseas owned (as in Ireland) nor totally reliant on one major firm (as Nokia in Finland). Still, overseas owned companies have started to become a latent threat to the Danish model of employee participation, as these companies prefer to implement other forms of management approaches. There are now several cases where overseas owned companies have implemented their own employment relations system in their Danish subsidiary. For example, IBM has no collective agreements and runs its own human resource management systems, even though the official company policy explicitly states that the company will refrain from interference if employees want to be trade union members. The Danish unions are clearly concerned about this tendency, but they often take a strategic approach to overseas companies and tend to target certain companies in their organising campaigns. For example, there was a very long dispute between the unions and the McDonald’s fast food company over the conclusion of a collective agreement in the 1980s. After continuous pressure over a long period of time, the company agreed to the unions’ demand for collective coverage and its fast food outlets have since been covered by a collective agreement (Royle 2000).
Multinational companies have also been targeted by the 1994 EU Directive on Europeans Works Councils (EWCs) (Deeks & Rasmussen 2002: 244-247, Knudsen 1995). This directive applies to an estimated number of 40 companies in Denmark with more than 1,000 employees in European countries. So far, it has been estimated that the Directive on European Works Councils has not had any significant influence on partnership in Denmark. This is probably because of the strong Danish partnership culture. This would be in line with the general experience throughout Europe:
“There is no unambiguous answer to what impact an EWC has – nor its influence on management decisions. At one end, there are EWCs where the activities are limited to the annual meeting with the management. At the other end, there are EWCs which, through development of the internal communication and common strategies, [….] have proved to be able to be a serious player regarding management decisions.” (Knudsen 2005:89)
Danish employers appear to have a positive attitude to union activity. Seen from an employer’s perspective, it is important for employers’ acceptance of both national and workplace collective bargaining that unions have proved over the years that they support and respect company interests. In this respect, unions are aligned with their members’ interests, as they know that they cannot recruit or retain members if they exert a strongly adversarial attitude to company interests. Survey information indicates that employees often identify strongly with their workplace. If their union does not respect this, it would force employees to choose between loyalty to their company and their union, and this could have a negative influence on union membership. As employer-union collaborations go beyond core bargaining matters, there are many issues where the unions can be helpful or supportive of employer interests. This is quite obvious in the training and development area, where employers and unions have collaborated for many years. It can also be seen in areas such as environmental, cultural, and local planning issues. Finally, it is in the interests of mainstream employers that sub-standard employment situations are ‘policed’ effectively by the unions.
The positive employer impression of union activity is supported by many surveys, particularly by the recent research conducted by the research institute, FAOS (see footnote 25). In-depth interviews of managers found that all of them described (unprompted) shop stewards as ‘sparring partners’. Also, Table 6 below illustrates how Danish shop stewards think that managers have a positive attitude towards them. Two-thirds of the surveyed shop stewards believed that management either had a positive or a very positive attitude to the work of shop stewards (Navrbjerg, 2003). Besides the above positive outcomes of union activity, because of high union density and employee participation structures, the fact is most managers have little choice; they have to collaborate with shop stewards and other employee representatives. Over time, this has just become an accepted part of management practice and an approach that is often promoted as ‘best practice’.
| Positive/very positive | Neutral | Negative/very negative | |
|---|---|---|---|
| What do you think management’s position is on shop steward work? | 65% | 26% | 9% |
Source: Navrbjerg 2003: 14
This alignment of employer and employee interests also has a number of reciprocal advantages at workplace level. It is part of the employee representation channels that employee representatives are charged with looking after the firm’s interests and its competitiveness. Competitiveness has to be understood in a broad sense: international competitiveness, business survival, reasonable levels of compliance costs, facilitating training and education, and so on. For example, employee representatives in the co-operation committees are explicitly charged with looking after the well-being of the company.27 The dual responsibility to promote both employee and employer interests sets a form for a ‘good faith’ behaviour standard which facilitates the containment of diverse employer-employee interests.
On their part, managers’ acceptance of ‘third party intervention’ can be justified from an efficiency angle: with flat organisational structures, expensive machinery and/or customer service interface, and with team based production, it is necessary to have highly skilled and well-informed staff. This, together with the democratic aspects, means that information, consultation, and (to a limited degree) joint decision-making can be seen as ‘best practice’.
While institutional channels are important, it is also clearly necessary to have adjustments in managerial, union, and employee thinking. This is in line with research of good faith in the New Zealand banking sector which found that a personal trust relationship was very important to facilitate productive relationships between management and union negotiators (Treanor & Rasmussen 2003). The importance of personal trust between employer and union representatives is well-documented in Danish employment relations, where employer and union negotiators often meet on a regular basis over many years (Due et al 1994, Due & Madsen 1996, Larsson et al 1985). Based on their thorough study of collective bargaining in the public sector from 1987 to 1995, Due and Madsen (1996) emphasised the importance of informal personal relationships based upon trust, mutual understanding and respect. They concluded that “the negotiation system cannot function without informal contacts between the parties” and that “the personal ‘chemistry’ can have major importance” for solving complicated interest conflicts (Due & Madsen 1996: 22, 38).
The emphasis on attitudes and norms is important in order to understand the day-to-day workings of partnership. As described above, the Danish labour market is very organised with a kind of power balance between employers and unions and with a lot of common ground, as employer and employee interests are fine-tuned into the various participation channels. Although employees and unions have an array of pressure points and have considerable (de facto) influence on management decisions, it is important to emphasise that, in formal terms, this is mainly about information and consultation. There are no real co-decision or co-determination rights guaranteed by legislation or collective agreements. Employee representatives may try to exploit the comprehensive consultation rights given to them, but in the end, the employer has the right to decide. The actual content of participation becomes, then, to a large extent dependent on local factors: on the one hand, the commitment of managers to a participative management style and, on the other hand, the priority given to participation by employees, their representatives, and their trade union.
It is crucial that the strong and stable interest groups in the Danish labour market are committed to relationships based on co-operation rather than confrontation; this provides an influential context for the practical workings of the different ‘channels’ for access to and participation in management at workplace level. This context, and particularly the attitudes of the ‘social partners’, explains the relatively important role played by participation in Danish workplace relations – probably more than the role played by the formal rules. The important role of collaborative norms can be detected through the survey responses from employee representatives involved in the co-operative committees; these representatives clearly regard many of the decisions taken as being part of joint decision-making (see the discussion on co-operative committees above). While (in principle) there are no co-determination rights, the reality appears to be slightly more fuzzy when it comes to decisions on core employment standards; in these areas, unions and employees seem to have considerable de facto influence on management decisions.
It is a characteristic of employee influence and participation models that there is a quid pro quo for influence: when unions have obtained influence, it implies that they have to start taking on responsibility for the firm/organisation’s well-being. In Danish, this has been coined by the concept of ‘joint responsibility’ (‘medansvar’). Often, there are situations where unions have to take some rather tough decisions which are often far from their traditional role of negotiating on behalf of their members. In Western capitalist systems which have become internationally integrated and where public sector reforms are common, the long-term development of an organisation may become an issue: adverse organisational trends can prompt employment decisions which can be portrayed as a choice between two forms of deterioration in employment conditions. For example, it can be a choice between outsourcing (losing jobs) and a cut in wage levels in order to restore profitability levels or adhere to publicly-funded budgets. It could also be a choice between lower/stagnant wages or longer working hours. It could also be a form of flexibility (for example, flexible hours) as a trade-off for wage rises or cuts in standard weekly hours. In Anglo-American countries, this can happen as part of so-called ‘concessionary bargaining’, while it often becomes part of partnership agreements in the Northern European countries.
There are numerous examples of such ‘Hobson’s choice’ where unions agree to temporary or permanent reductions in certain employment conditions in particular workplaces. It has happened recently in the German car industry, where partnership arrangements at Volkswagen included a temporary wage stop and longer weekly working hours as part of the November 2004 agreement (EIRR 2005). It has happened at the Danish IT company, Topnordic, where the employees agreed to a wage reduction and wage flexibility for at least one year when the firm was faced with dire economic prospects.
“All employees – staff as well as top executives – made a collective choice in 2001 to accept a wage reduction for a year, the executives by 14 percent and employees by 5 percent. If the firm’s annual surplus would be below 5 million Danish Kroners in October 2002 then there would be no bonuses. If the result was between 5 to 8 millions then there would be a 5 percent bonus for all staff. The result was 6.6 million.” (Breinstrup 2005: 5)
As Topnordic has become a major IT company and is currently expanding overseas, this trade-off has become part of the company’s history and it became a one-off arrangement. However, the choice can be even starker as shown in the case of the Danish Crown meat factory in Ringsted, as it became a choice between wage cuts or the closure of the workplace (for details, see the case study below). It must be stressed that these cases are rather atypical, as wage reduction is not a common solution in Denmark. The relatively low job security, with limited redundancy payments and notice periods, means that outsourcing or workforce reductions are often implemented instead.
However, these kinds of ‘Hobson’s choice’ show that partnerships have to function in both good and bad times – ‘for better and for worse’. These are difficult situations, but they can best be pursued within a strong historical tradition of partnership. It can also be facilitated by having supporting structures or agreements which go beyond the individual organisation or workplace. While it might be a ‘Hobson’s choice’ between two negative outcomes, it is important to stress that it is a choice and that the decision is often made based on comprehensive information about a firm’s situation. Nevertheless, it indicates that, in some situations, partnerships arrangements may become part of solutions that can lead to a permanent decline in employment and working conditions.
Pressalit is a highly specialised production firm with its sole product being toilet seats in approximately 100 different models. It was established in 1954 and has now around 400 employees of which 300 are production workers. The product is produced in serial batch and is mainly for export – over 90 percent of the total output. The company has had a stable growth pattern for many years and there is little seasonal deviation in demand and production output.
The production is based on relatively new technology with advanced robotics doing significant parts of the work. This implies that production workers are predominantly controlling the production flow and taking remedial action if something goes wrong. Most of the production workers are semi-skilled, and the dominant mode of work organisation is semi-autonomous teams. These teams have a high degree of self-management. The workforce has a high degree of stability, with low staff turnover and an average length of tenure of around 10 years (in 2001).
Employment relations and work organisation are based on negotiation and consensus-seeking discussion and they are rather stable over time. Instead of relying on numerical flexibility and a high level of labour turnover, management has openly made it clear that it has a preference for a stable workforce with a willingness to embrace functional flexibility and to adjust working time when incoming work fluctuates.
“Since the early 1980s, the company has automated parts of the production. A keyword for this process was employment security. Management emphasised that the automation would not result in redundancies. In return, the employees must be prepared that many job functions would change. /…../ There were areas where further introduction of new technology was possible, but management decided, nevertheless, not to implement it because some employees wanted to keep their job function.” (Navrbjerg 1999: 227)
This policy of applying functional flexibility instead of numerical flexibility is accompanied by a relatively high emphasis on investment in education and training.
The company has built a high public profile based on two key features: first, its innovative product development and second, a strategy of good employment relations and socially responsible behaviour. During the years, the company has won a number of prizes because of its investment initiatives, and its innovative product development, and, in 1999, it was elected as ‘Employer of The Year’ by the Trade Union for Semi-skilled Workers (then the SiD, now the union is called 3F). Since then, the company has been nominated and received prizes for ‘social responsibility’ and its efforts to integrate immigrants within its workforce. The company has been very active in promoting its ‘good employer’ profile as part of its marketing strategy.
The company’s wage levels are relatively high compared to other companies in similar industries or located in the same geographical area. The starting salary for a production worker is DKr 123 (around NZ$31) per hour and the company is deliberately trying to keep wage differentials limited. The company is a member of the industry employer organisation, all work is covered by collective agreements, and most workers are trade union members. While employment conditions are covered by national agreements, these agreements only set the minimum standards. The national agreement is supplemented by local agreements that are bargained between management and the shop stewards. Thus, in this company, as in many similar companies, the actual wage levels and working time arrangements are negotiated at enterprise level. These negotiations will normally involve the local union representatives (though this is not necessary in principle) and the national ‘framework’ agreements constitute a strong central control over enterprise settlements. In order for enterprise settlements to be applied, they will have to be acceptable to the national employer and union organisations. This is not a major problem at this company as there has been limited conflict or disagreement among managers and shop stewards. It has also been helped by a general trend towards less prescriptive national agreements.
The fact that the company is paying significantly over the minimum level stipulated by national agreements is not causing any problems - at least not from the trade union side. However, there are some limits for wage increases: the industry employer organisation does not allow for the percentage rise in total payroll of the single employer to exceed the percentage pay rise set by the national collective agreements.
“Both the employer and the employee side are very sceptical regarding the wage statistics produced by the national organisations – according to the management and the shop stewards they do not indicate what level which is relevant for the company. Instead the shop stewards are very observant about the general economic situation of the company and adjust their demands to these conditions. This means – according to both management and the shop stewards – that the demands tend to be reasonable. None of the two sides puts forward unrealistic demands, and this is an important pre-condition for relatively peaceful negotiations.” (Navrbjerg 1999: 232)
So, national agreements define the rules of the game and membership of a national employer organisation (as is the case for Pressalit) set the bargaining parameters. It involves an acceptance of a ‘framework’ for enterprise bargaining. As national agreements and national unions also influence and control their members’ activities at enterprise level, there are limits on what local union representative can negotiate. Thus, while the platform for the development of the partnership at company level appears to be defined by management and employees, there are strong legislative and national collective bargaining influences.
Partnership at this company is characterised by a high level of trust between the parties and a widespread use of oral instead of written communication and agreements. The trust has been built up through many years and is, to a great extent, personal:
“An oral agreement settled with a person you have known for many years and who has never let you down is seen as being just as binding as a written one.” (Navrbjerg 1999: 225).
This informality has become a general company policy: everybody should be able to contact anybody within the organisation who is relevant for solving a problem. This ‘flat’ structure is used to solve all issues smoothly by means of direct involvement by the people concerned and thus avoiding the escalation of problems by involving too many. In practice, this is not always easy, as some middle managers may feel that they are set aside if they are not involved. Putting aside middle management resentment, there appears to be a general satisfaction with the informal communication system. However, there are concerns that it may face some problems in the future. As it is dependent on existing personal relationships, this may change when the persons involved retire or leave.
Issues that are a bit more complicated are handled in another semi-formal environment. Shop floor meetings take place regularly instead of handling the problems in a trade union ‘club’ which is the normal way to do it in a company of this size. The shop stewards take part in such meetings, and if it is a problem of a more significant nature, it may be taken up in the co-operation committee or bargained with management. In some cases, the local union will be involved, and this involvement is completely sanctioned and accepted by management. The local union plays an important role as a support for the shop stewards; this is the prime contact with the union, its resources, and its policies and allows the shops stewards to develop workplace initiatives in line with the national union’s policies and campaigns.
Finally, the human resource (HRM) policies that management applies are not seen as alternatives or in competition with the formal and informal channels of employee involvement. Rather, it is an appreciated supplement as management has an explicit policy of stable employment relationships, employees are appreciative of direct and indirect support for their work-life balance, and there is a very strong emphasis on training and education. The latter was part of a major shift in management strategy towards so-called ‘soft’ HRM a couple of years ago. It was realised that many employees had a huge potential for self-management and further skill development. In this sense, employees are really considered the most valuable asset of the company. This is further supported by individualised rewards on top of the locally negotiated wage rises.
This tool producing company has been part of a multinational UK-owned company since the 1980s. The production consists of metal components for machinery and it is largely divided into four different product types. Although the production is predominantly based on export orders, there are relatively stable production patterns because of the specialised nature of products and being part of a multinational company. Around 75 percent of the production is exported and the company’s share of the world market is 10-12 percent, while its main competitor has around 40 percent. Total costs are largely made up by the cost of raw materials, while labour costs constitute only a minor share of total costs (estimated to be around 10 percent).
The total number of employees is 335, with production workers amounting to around 200. The latter are doing fairly traditional production work, and although the company does not apply very advanced production technology, it demands a relatively high level of skilled labour. The work is organised in teams which are paid according to a bonus system based on time studies. This bonus system has caused some tensions and internal conflicts recently (see below). This is not surprising given that the bonus system prompted a pay reduction for the majority of employees and only a minority received higher wages. Furthermore, the system has put a greater pressure on middle management who have been criticised for their inability to plan the production flow properly.
Before the introduction of the new bonus system, the moderate fluctuations in production patterns coincided with a relatively stable workforce with low staff turnover (around 5-7 percent per a year). The production fluctuations could be accommodated by means of working time flexibility, but management has also made considerable use of numerical flexibility - partly to limit expensive overtime payments. The bonus system and the reduction in pay for some workers have prompted a rise in voluntary staff turnover, creating some staffing problems recently. The company has experienced difficulty in attracting suitably skilled labour, as average pay levels are relatively low and the production work is rather tedious (work itself provides limited job motivation). The turnover problem has been compounded by the lack of appropriate staff development policies. Although the cost of training can be very high (it is estimated that to train a new employee costs around DKK100,000 or NZ$25,000) the company has no formalised training and development policies. Instituting a formal training and development strategy, as well as the investment implications of such a strategy, has been extensively debated in the management team given the plans to further increase functional flexibility among production staff.
The company is a member of the large manufacturing employers’ organisation, Danish Industries (DI), and all employees are union members. Thus, there are strong sectoral controls on workplace bargaining, and national collective agreements provide background and guidelines for enterprise agreements. In particular, the ‘room’ for enterprise pay bargaining (normally the main issue in enterprise bargaining) is dictated by the national agreements. Additionally, the national agreements provide the institutional arrangements for handling conflict and co-operation in the company’s employer-employee relationship. When management and shop stewards start negotiating at enterprise level, both sides know almost exactly the limits and opportunities which are available and what the final enterprise-based agreements will look like. Additionally, the bargaining process has also been well-rehearsed. Consequently, enterprise-level negotiations rarely lead to conflict.
On the management side, the mandate is set by the national agreements and the British owners’ strategies. Management is very conscious that the shop stewards are faced with a more complicated situation: it is difficult for them to represent a variety of interests among the workers. They also have to take into account the interests of the local union. Navrbjerg (1999: 250) has suggested that:
“Management are consciously ensuring that, from time to time, the shop stewards can present some successes because they are then, at other times, in a better position to ‘market’ initiatives from management to the employees.”
At this workplace, managers and employee representatives appear to share the same overall values, and a high level of mutual trust between the parties has been built over time. However, there are some difficult barriers to overcome. As mentioned, the new bonus system based on time studies has been a major source of dissatisfaction. It influences all aspects of the work, including the way work is organised and the social relationships in the workplace. The production workers see it as a sign of mistrust and a managerial instrument to control and limit pay. The fact that the shop stewards have accepted the bonus system has resulted in some tensions between staff and their representatives. The company managers introduced the bonus because of demands made by the British owners and it is questionable whether all managers have supported the new payment system wholeheartedly.
This case demonstrates the difficulties in creating embedded partnerships in a traditional production company, where all the basic relations between management and employees are defined by the formal collective system and, to some degree, by the strategies of the overseas owners. While the General Agreement encourages co-operative relationships, the national agreements are negotiated solutions overlaying adversarial interests. In this company, management and workers’ representatives share a significant amount of trust in each other built on long-term personal interactions; it is similar to trust between two business partners having a long-standing working relationship. There are clearly different employer-employee interests and both management and shop stewards are under pressure because of dual obligations. Management is faced with firm-specific costs and market pressures and it has to align company strategies with the strategies of the multinational company, while shop stewards are often questioned by staff: are they caretakers of the company interests or representatives of the workers?
The current problem in this company is first and foremost the bonus system, and the fact that it has not been placed within a comprehensive staffing strategy. Further staffing initiatives are needed, particularly in terms of training and development. This would be a clear sign that the company has a long-term strategy of investing in staff. However, the bonus system is only a temporary, current issue. It is probably more of an issue that the employer-union partnership will be faced with constant cost and technological pressures. In this situation, the company’s long-term survival will depend on joint solutions to these complex market pressures, as well as its ability to fit with the long-term strategies of the multinational owner.
Owned by farmers, the first Danish co-operative pig slaughterhouse and bacon factory was established in the town of Horsens in 1887. During the next 40 or 50 years, a large number of bacon factories were established. From the 1960s onwards, the large number of factories prompted a rationalisation process with mergers among the co-operatives and the closure of factories. In 1998, a series of mergers resulted in Danish Crown becoming the biggest Danish producer, comprising around 90 percent of the Danish pork and bacon production. Around 13,000 workers were employed at 27 factories with most of the production being exported globally.
The production work in bacon factories is based on Taylorist principles. The repetitive work is very hard and demanding, and the result is often early retirement or a change to another job because the workers are simply worn out. A main reason is the very high tempo due to a piece rate pay system. The pay system allows production workers a relatively high take-home pay, but the physical nature of the job means that most workers can only do it for a limited number of years. Consequently, labour turnover is relatively high among the production workers. Interestingly, employers and the health and safety authorities have tried to change the work organisation and the pay system several times during recent years. However, they have met resistance among staff and their unions as they fear a reduction in income. At some of Danish Crown’s factories, new systems have been implemented - this has changed the workload and the employment relations situation radically.
Besides being tough working places, bacon factories are also well known for being workplaces with a high level of industrial conflict. There is a running battle over piece rates, and management and unions are often negotiating over relatively minor adjustments. Both sides are well organised (high membership), they are part of the national union and employer organisation, and national agreements set the main terms and conditions.
In recent years, a major issue has been the closure and restructuring of factories because of increased international competition and the relocation of production facilities. Danish factories have been closed down and new factories are being opened in other European countries such as in (the former Eastern) Germany and Poland, where labour costs are much lower.
This case study highlights two examples from Danish Crown. The first example describes some bacon factories that have changed their work organisation and created better employment relationships between management and employees. The other example illustrates the way workplace and national partnership is working in a situation where management demands concessions to avoid factory closure.
A 2004 study by Møller and Hasle focused on some of the Danish Crown bacon factories that have changed the conflictual relationship between management and workers to a relationship based on trust. The three factories included in the study have basically the same technology, applying the same pay system and work organisation used in other Danish Crown factories, including some job rotation. The change to a partnership approach is based upon a conscious decision among managers and shop stewards to develop joint employer-union strategies and, especially, to reduce conflicts and absenteeism.
The factories have the same regulatory system as other factories. Through Danish Crown, the factories are all members of the employer organisation and all workers are unionised, so the formal, standard system of partnership (prescribed by the regulations in collective agreements and legislation) has been present for some time. Still, the conflictual workplace relationships indicated that improvements were necessary and, on this basis, both parties agreed on developing a stronger and more harmonious partnership approach.
In two of the three factories, this development took place almost overnight. It took a considerably longer time in the third factory, as the employer-union parties sought a more dramatic transformation of their relationship. Besides a more consultative approach, the new relationship has heralded a more individualised work and attitudinal focus: management has clearly become more concerned about the workers’ well-being and has been ready to take much more individually based considerations of employee needs, health, and social problems. The individual worker has also got much more influence on planning and controlling their work: management asks and listens to work organisation proposals from the employees. This change of attitudes has fertilised the soil for the shop stewards and it has become easier to maintain a communicative relationship with management. It has also countered a traditional employee complaint that collaboration and employer-union compromises are just about ‘concessions’.
The interesting aspect of this change is that it has taken place as part of a conscious, well-planned action among workplace managers, shop stewards, and employees; these ‘actors’ were all clearly dissatisfied with workplace relationships and the work environment. One very important reason for the success of this change is that both management and the shop stewards share the same vision. Neither side claims that they were the initiators, and recent interviews with managers and shop stewards indicated that they do not feel that the ‘other side’ are dragging their feet on the partnership process (see Hasle & Møller 2005). As both managers and shop stewards feel that they have a relatively secure and strong bargaining position, it is seen as two equal parties collaborating and developing trust relationships.
The tradition of a so-called strong ‘workers’ co-operative’ (Lysgaard 1961) was and still is very significant in bacon factories. The long tradition of conflict and detailed work regulation has created strong unions and a high level of solidarity among the workers. There is no indication that the partnership approach has undermined the traditional collective focus and employee participation patterns, neither has there been any instance where managers have tried to weaken the traditional workplace collectivism. The partnership approach appears to be complementary to traditional collective arrangements and, most importantly, the partnership approach still prevails in setting the agenda for joint employer-union strategies at the three workplaces.
Since November 2001, 19 Danish bacon factories have closed and 3,000 workers have lost their job in the food processing industry. Nearly two-thirds of these workers were still without a job two years later and unemployment increased by 40 percent among meat workers in just three years (though unemployment has started to fall during 2005). A reason for these closures has been the rationalisation of production with a new major factory being opened in the Danish provincial town of Horsens. However, there has also been considerable outsourcing or off-shoring to European factories, where labour costs are cheaper. For example, in a Danish Crown factory in the German city of Oldenburg, some of the production work has been subcontracted to other companies who have imported cheap labour from Poland. Some reports describe cases of Polish workers enduring 14-hour working days, with pay levels of €5-7 per hour being quite common. This pay level is considerably below that of Danish and German workers: average Danish pay is around €20 per hour and the normal pay for German workers in Oldenburg is around €15.
It was against this background and management’s warnings that outsourcing of production was being considered that saw negotiations between management and union representatives at one of Danish Crown’s factories result in the acceptance of substantial pay reductions. In November-December 2004, around 300 workers at the factory in Ringsted, Zealand agreed to a 15 percent pay reduction as a way of avoiding factory closure. This decision was based on considerable knowledge of the factory’s and company’s financial situation, and the union representatives and the employees had no doubts that the factory closure would proceed without a considerable reduction in labour costs.
The trade union, Nærings-og Nydelsesmiddelarbejder Forbundet (NNF), who organises workers in the food processing industry, had warned the local union representatives and the employees against such an agreement. NNF considered that an agreement on wage reduction would be contravening the national agreement, and it could have flow-on effects for employees at other factories. Despite the NNF’s warnings, both management and union representatives proceeded and, contrary to NNF’s opinion, the national employer organisation maintained that the factory agreement was not contravening the national agreement.
When the new agreement was published on 8 December 2004, some 1500 workers in other bacon factories went on strike. When strike activity expanded to most of the Danish Crown factories over the days that followed, employer and union representatives at the Ringsted factory started negotiating again. These negotiations resulted in another agreement being signed by union representatives on 12 December. Compared to the previous agreement, it reduced the pay cut to 14 percent and included adjustments to the pay systems.
To outside commentators and Danish Crown employees, it was rather difficult to see any substantial difference between the original agreement and this new one. It prompted a further escalation of strike activity at Danish Crown factories. On 14 December, around 4,000 workers went on strike. On the same day, employees at the Ringsted factory rejected the agreement in their ballot. With the non-ratification of the agreement, all workers started working again on 15 December.
The main reason why the employees at the Ringsted factory changed their mind was the fierce reaction from their colleagues in other factories. Their reaction had convinced them that, eventually, their concessions would be imposed on other employees at Danish Crown factories. Based on their knowledge of company plans and the financial situation, the Ringsted employees knew the closure was a near-certain outcome. And so it proved: immediately after the rejection of the pay reduction agreement, Danish Crown announced that the factory would be closed.
While employees had a choice, it was clearly a ‘Hobson’s choice’ between two bad alternatives. Still, it is a different situation from a traditional collective bargaining situation. Danish employees and their representatives had a fuller information basis on which to make this decision – financial and other types information associated with restructuring and outsourcing are available through the formal employee participation ‘channels’ mentioned above. They also have the ability to discuss various options with management. This example clearly shows that partnerships and employee participation are not a panacea for the ups and downs of modern capitalism, but they allow unions and employees to make more informed choices as they are involved in some of the decision-making, and they have comprehensive information made available to them.
Paul O’Neil, Dave Feickert, and Erling Rasmussen
“The 1990s have witnessed a radical change in the fortunes of the Irish economy. Ireland has moved from being one of the low-performing economies of Europe to being hailed as the “Celtic Tiger”, registering rates of economic and employment growth far ahead of OECD countries and attracting levels of foreign direct investment envied by competitors. Spectacular and unexpected economic success has brought in its train a literature seeking to interpret the Irish story. A number of themes recur in the literature: the role of a plentiful supply of well-educated labour; the increasing irrelevance of peripheral location for industries based on information technology; the benign effects of neo-corporatist concertation on cost competitiveness and employer-union accommodation; and somewhat more prosaically, the advantages accruing from Ireland’s prodigious success in garnering EU structural funds.
“But figuring prominently also in this literature is an “upbeat” account of both the ways in which the productive base of the economy has been changing and the potential for further change as new forms of work organisation and new approaches to industrial relations and human resource management gain ground. Ireland is often now represented as a place where innovative approaches to work organisation, based on teamwork and flexible forms of work organisation, are common; where various forms of direct employee involvement are extensive, and where “partnership” arrangements between management and unions at workplace and enterprise level are becoming more common and face a generally positive climate.” (Roche & Geary 2000: 2).
The amazing turnaround of the Irish economy, the ‘Irish miracle’, has been well-documented. From being a below-par economic performer, the Irish economy has recorded strong economic growth, strong employment growth, and an expansion of ‘high-tech’ jobs. Like New Zealand, Ireland was facing a severe economic crisis in the early 1980s and a radical political shift occurred which facilitated a programme of extensive economic and social reforms. As a small state whose timing for economic reform coincided quite closely with New Zealand’s and whose political regime was relatively similar, Ireland provides a useful comparison with New Zealand.
However, in contrast to New Zealand, national accords and ‘social partnership’ arrangements have featured prominently in this economic success story. It has set a neo-corporatist context in which economic reforms could be pursued with the political support of the major social partners; these social partners were initially employer associations, trade unions, and farmers. Recently, a ‘fourth strand’ has been added, representing civic associations. The development of a series of tripartite national agreements has influenced economic, social, and employment relations change over the last 20 years, as the Irish economy has become ‘globalised’ and integrated into the European Union. As part of this process, notions such as ‘social partners’, ‘social dialogue’, and ‘sustainable progress’ are frequently mentioned, indicating that thinking and behaviours may have adjusted substantially. This process has also created an environment where experiments with new approaches to work organisation and with workplace partnerships have been encouraged. For example, workplace partnership has been promoted explicitly since the 1996 national social agreement, a national partnership institute has been established, workplace partnerships are promoted by the ‘social partners’, and case studies and surveys of partnership arrangements have flourished.
Our report focuses on the practice of workplace partnerships. This interest is prompted partly by the economic success and partly by workplace partnerships being a new ‘path-breaking’ approach to Irish employment relations. Irish employment relations has a history of ‘voluntarism’ and adversarial employer-union relationships. It has been based on the British employment relations tradition, where there is limited direct legislative regulation of employment relations and instead collective and individual actors negotiate agreements on a range of employment issues and processes. Within this tradition, the clash between the managerial prerogative and union influence on workplace arrangements has left limited space for co-operative workplace relationships. The promotion of collaboration and partnerships sits uneasy with traditional employer and union thinking and, thus, the advocacy of workplace partnership is a significant departure from the dominant practice of workplace regulation in Ireland.
Despite this significant departure from historical practice, there is evidence that workplace partnership is widening as a form of workplace regulation in Ireland, even though it remains essentially ‘voluntarist’ and dependent upon workplace or enterprise agreement between employers, unions, and employees. For instance, the website of the Irish National Centre for Partnership and Performance (NCPP) has over 50 case studies of different partnership arrangements from a wide range of sectors, both public and private. The motivations for workplace partnership seem to be developed out of a provisional willingness to develop a ‘shared understanding’ by employers, unions, and employees. Sometimes this common understanding is prompted by organisational performance problems and/or market failures, or it can just be a way of responding to the continuous challenges of increased international competition and uncertainty.
The lack of long-term experience with workplace partnership makes these partnerships rather fragile and experimental. Partnership arrangements vary across organisations and sectors, and they have a different degree of success and ‘stickability’. Over the last decade, there has been considerable debate among commentators and researchers about the extent of changes in work organisation and in workplace partnership. While the evidence seems more supportive of a general trend towards more collaborative workplace relationships, there is little agreement on the scope and depth of these relationships. As we discuss, there seem to be two different positions among commentators: there is the optimistic view that such practices are now widespread, and then there is the pessimistic view that workplace partnerships and increased employee participation has been overstated, and partnership arrangements only exist in relatively few workplaces.
These tensions in the literature are also reflected in our presentation of insights from the case studies and surveys on workplace partnerships in Ireland. While workplace employment relations has started to move away from a traditional, deeply held adversarial approach to employment relations, there is clearly some way to proceed before workplace partnerships become part of a mainstream approach. The broad picture is one of an iterative, piece-meal tendency towards workplace partnership, but there are also examples of reversals or break-downs in partnerships. The new, tentative nature of Irish partnerships is reflected in the case studies that we have reviewed. There appears to be no ‘ideal type’ but a wide range of partnership ‘types’ with varying degrees of formality. There appears to be more of a focus on the operational rather than the strategic level. There has also been variation in the use of ‘third parties’ to progress workplace partnership beyond the idea stage. Finally, there is also a wide range of ‘gains’ which employers, unions and employees believe occur and, in several case studies, it has been unclear what kind of ‘gains’ the various parties actually did receive.
Since the 1980s, there have been several rounds of national social partnership agreements. These agreements have changed the roles and interactions of the State, employer organisations, and unions. These agreements have also shaped the broad regulatory environment for employment relations and, together with the economic success of Ireland, they have created a different ‘Irish model’. While the broad regulatory environment of employment relations is becoming more ‘Europeanised’ with an increasingly neo-corporatist approach30 shaping employment relations, there is also a strong ‘Irish’ innovation in the process and outcomes of social partnership which provides a unique context for employment relationships and workplace partnership.
As is now widely understood, the Irish economy was in deep crisis in the middle of the 1980s prompting a new economic and social strategy from 1987 onwards. The strategy was facilitated within the tripartite National Economic and Social Council (NESC); the NESC is an advisory body, in which employers, trade unions, farmers, and senior civil servants analyse policy issues and seek to develop a consensus strategy. NESC’s 1986 Strategy for Development formed the basis on which the new Haughy Government and the social partners negotiated the first social partnership, the Programme for National Recovery (PNR). The Programme for National Recovery was in place from 1987 to 1990. Since then, five further social partnership agreements, each for a three-year period, have been negotiated:
The negotiation of each of the above agreements has been preceded by a new NESC report setting out the shared perspective of the social partners. The NESC report outlines the parameters within which a new programme should be negotiated (O’Donnell 2001). The evolution of social partnership has seen the NESC membership being enhanced, and representatives for community and voluntary organisations have been included since 1996. Currently, there are 19 ‘social partners’ represented in the NESC. There has also been an extension of NESC’s perspectives and analyses. Initially, the NESC focused upon creating macro-economic and political stability to overcome economic crises and facilitate economic growth, as the Irish economy became more open and integrated in the European Union. Over time, the content of social partnerships has gradually been extended to cover a wide range of social as well as economic issues.
While the various agreements can appear to be part of a linear change process started in 1986-1987, there has been considerable debate and conflict over each of these agreements. The agreements are based on hard-fought compromises and the possibility of the collaborative process being derailed is always present. Although the economic success of the social partnership approach provides it with some momentum, it has to be renewed and rekindled constantly. As expressed by David Begg, General Secretary of the Irish Congress of Trade Unions:
“Some time ago I heard a respected Irish industrialist say in a radio interview that, while social partnership had served the country well, we went two agreements too far. My understanding of what social partnership should be about is completely different. It is an extension of the European idea of social dialogue, a way of doing things. It is not something that can be turned on or off as it suits people. The extent to which our respective constituencies have internalised concepts of the common good of society and social solidarity over the past 18 years will be the ultimate arbiter of whether social partnership continues beyond the end of this year.” (Begg 2005: 4-5)
The social partnership approach has been widely acknowledged by key players as the driving force behind Ireland’s economic recovery and subsequent unprecedented period of economic success over the last two decades. For instance, the Irish Prime Minister, Bertie Ahern stated:
“Since the late 1980s, there has been a transformation, which has seen Ireland move from stagnation and crisis to become the most consistently successful economy in Europe. This could not have happened without the benefits and opportunities provided by EU membership. It has also been due to the development within Ireland of a distinctive approach to key economic and social issues, based on the principle of social partnership.” (Ahern 2005: 14)
The exceptional economic performance can be captured in a few statistics. Between 1990 and 1996, the average annual Gross National Product (GNP) of Ireland grew by 4.5 percent, and between 1995 and 2000, the average annual GNP growth rate increased to around 7 percent (Fitzgerald 2000: 43-44). This has shifted Ireland’s position among the European countries remarkably: in the decade from 1987 to 1997, the Irish GNP per head increased from 59 to 88 percent of the EU average and, accordingly to Bradley (2000: 12), before the deduction of net capital transfers, Ireland’s GDP per capita had increased from 63.7 percent of the EU average in 1986 to 111 percent in 1999 (based on purchasing power parities).
There is little dispute that the stability offered by the partnership agreements was instrumental in this success, particularly in making Ireland an attractive place for foreign investors in the 1990s. The direct causality between the partnership agreements and the dramatic change in Ireland’s fortunes though is less clear. For example, O’Hearn (1998) and McSharry and White (2001) have argued that much of Ireland’s spectacular economic performance through the 1990s was underpinned by a relatively small number of American high technology firms in a few sectors such as computing, chemicals, electrical engineering, and internationally traded services. O’Hearn shows that predominantly American multinationals in three industrial sectors “were directly responsible for 45 percent of Irish economic growth” from 1990 to 1996, arguing that the “…Irish tiger economy boils down to a few American corporations in computers and pharmaceuticals.” (1998: 72-73)
While overseas direct investment was clearly influential in igniting the ‘Irish Miracle’, it is unclear whether overseas companies are still playing a similar role in Ireland’s recent growth spurt. However, overseas companies do play a crucial role in the transformation of current Irish employment relations, as discussed below. On this background, it has been an important component of recent social partnership agreements to diminish dependency on a limited number of overseas companies and, instead, widen the competitive economic basis by enhancing the capacity and productivity of domestic manufacturing and service organisations. This has been done while focussing on the continuation of export oriented growth (mainly towards the European Union markets) and facilitating the growth of supporting capabilities for future technological and organisational innovation (Government of Ireland 1997: para 1.2).
Social partnership has clearly influenced relationships among the major employer and union organisations. However, social partnership is overlaying the historical forms of employment relations which are largely in the British tradition of voluntarism - in other words, a tradition of limited direct legislative regulation of workplace employment relations which basically allows collective actors to work out agreements on employment matters among themselves (Gunnigle, McMahon, & Fitzgerald 1999). Such relations have traditionally been adversarial, focusing on negotiations over core employment conditions and, in terms of work organisation, based upon a contest between the managerial prerogative and union influence on workplace arrangements.
The current legislative framework for employment relations in Ireland is the Industrial Relations Act of 1990. This act superseded the British Trades Dispute Act of 1906 which remained in effect after Irish independence in 1937 (Gunnigle et al. 1999). Boucher and Wickham (2002: 20) have argued that as new legislation was not passed to supersede the 1906 Act, Irish employment relations remained “based on the British model of voluntarist individual and collective bargaining between employees, trade unions and employees on the labour market with limited state intervention.” While various pieces of legislation were introduced between the 1930s and 1990, these acts were mostly “designed to deal with the perceived problem of trade union multiplicity” or “to provide for the establishment of industrial relations institutions such as the Labour Court to mediate disputes.” (Gunnigle et al. 1999: 56)
Until 1975, wage agreements revolved around bipartite employer-trade union agreements with the Government mainly participating as a public sector employer. In 1975, the State became more directly involved in the agreements, for the first time explicitly linking the wage agreements to the State’s fiscal and taxation policies (Gunnigle et al. 1999). The State’s involvement continued to increase in two ‘national understandings’ in 1979 and 1980, participating more as a full tripartite state actor and less as a public sector employer, explicitly linking the agreements to the “economic development of the country” (Gunnigle et al. 1999: 200). While this process of social dialogue collapsed into a ‘free-for-all’ of decentralised bargaining during the 1981-1986 period (Boucher & Wickham, 2002), it is important to note that there were signs of neo-corporatist incomes policy understandings before the current social partnership agreements became part of Irish political landscape.
Although there were signs of tentative changes in the 1970s, the post-1987 social and workplace partnerships are rather different because their suggestion of long-term consultation and collaboration reverse or confine the traditional voluntarism and adversarialism of Irish employment relations. This would constitute a major shift in employment relations, and it is unclear how much change there has actually been. For example, Boucher and Wickham (2002: 21) have argued that the institutional or legal structures for workplace partnerships are less part of the continental European neo-corporatist tradition but more of an “Irish modification to an essentially “British”-based system of collective bargaining”. While the social partnership agreements have broadened and expanded over time and incorporate recognisable features of the European neo-corporatist model, the British based employment relations tradition still appears to dominate mainstream employment relations in Ireland.
Shifting ingrained employment relations attitudes will take some time, but several interesting employment relations changes are notable:
These changes are discussed in detail below.
What is perhaps not widely understood is that each social partnership has been based on centralised pay bargaining. The deliberations of the National Economic and Social Council (NESC) and the subsequent negotiations of national social partnership agreements shift the frame of reference away from adversarialism towards common, agreed solutions and involve broader collective interests.31 This creates a ‘framework agreement’ which stipulates the boundaries for employers and employees in their sectoral or workplace negotiations. When Hardiman overviews the contribution of social partnership, it sounds more like neo-corporatist incomes policy than British voluntarism:
“Real increases in disposable income were delivered by keeping industrial conflict at low levels; inflation was curbed effectively, at least until early 2000; the national finances were transformed. The national framework of pay bargaining made it possible for the far reaching trade-offs between wage moderation and tax reform to take effect…. Once growth began in earnest, the pay agreements helped to ensure that the gains were not dissipated by wage inflation and industrial conflict.” (2000: 219).
While social partnership places centralised constraints on workplace bargaining, it is important to note that many union and employer interests have already been met as part of the outcomes associated with the social partnership agreements. For example, minimum increases to basic pay rates are agreed as part of social partnership, thus a large part of the distribution of any expected gains of economic growth has already been agreed at the national level. The social partnership agreements have also involved considerable increases in social welfare measures and these can be seen as trade-offs for pay rises. Employers have benefited from moderate wage rises in a tight labour market, several rounds of tax cuts, substantial investment in infrastructure and, probably most importantly, a stable political, economic, and employment relations environment. As put succinctly by McLaughlin:
“While workers have gained through rising living standards, the biggest beneficiaries of the Irish success have been employers, and in particular MNCs.” (McLaughlin 2005: 153).32
It is also important that workplace partnerships appear to have expanded in Ireland. The promotion and development of workplace partnership has to be understood in the context and evolution of social partnerships. Explicitly, workplace partnership was first agreed between the social partners in the 1996 agreement (Partnership 2000 for Inclusion, Employment, and Competitiveness). Enhancing the implicit tendency of the previous two social partnership agreements, the 1996 agreement “increased the focus of these agreements by incorporating the issues of partnership within enterprises and the modernisation of the Public Service” (Partnership 2000 Agreement). The actions agreed upon were “to promote enterprise-level partnership, to establish the publicly-funded National Centre for Partnership, located in the Prime Minister’s department, to promote involvement and partnership, monitor developments and to provide technical assistance” (op cit).
Despite this higher profile for workplace partnership in recent social partnership agreements, no parts of the five social agreements, including the agreement to move towards workplace partnerships, have been legally binding on the Government, employers, or trade unions. “They are essentially voluntarist collective agreements whose parts can be ignored, unimplemented or broken by any of the five parties involved.” (Boucher & Wickham 2002: 22). This may partly explain the tentative, piece-meal fashion towards developing workplace partnerships. Workplace-level parties, used to concessionary bargaining as the ‘normal’ arrangement for regulating employment relations, are likely to use partnership in a strategic sense to secure, obtain, or defend their own interests, rather than seeing partnership in the light of the collective interest. The voluntary nature of workplace partnership may also be open to more experimentation. Several case studies of workplace partnership have pointed to an expansion of different forms of partnership over time.
While the above trends can be seen mainly as supportive of workplace partnership, the role of multinationals is more ambiguous. The voluntarist nature of Irish partnerships has allowed overseas companies to pursue their own work organisation and HRM practices if they so wished. This is particularly so for American multinationals who appear to have had a limited buy-in to workplace partnership arrangements. As McLaughlin (2005) points out, this is probably based on the fact that many multinationals have an ‘anti-union’ philosophical position and tend to discourage union recognition and collective bargaining. Many overseas multinationals appear quite concerned about increased union access and involvement in workplace relationships. Not surprisingly, our overview of workplace partnerships found that there were very few multinational companies involved in employer-union partnership arrangements. Seeing this change in light of the EU directive on information and consultation and the development of EU mandated European Works Councils seems an unlikely and distant possibility at the present time.
As discussed above, the development of social partnership agreements was prompted by economic crises. Initially there was a macro-economic policy response focusing on neo-corporatist trade-offs, encouragement of direct overseas investments, and employer-union collaboration. Within this context, there has been a growing interest in workplace partnerships. The spread of partnership arrangements across sectors in Ireland has been facilitated by the inclusion of partnership at work in the three social partnership agreements since the mid-1990s. While the extension to workplace partnerships can be regarded as a natural progression, the rationale for workplace partnership has changed over time. The progressive shift in the rationale for including workplace partnerships in the three social partnership agreements reflects the developmental dilemma of the Irish economy: how to move beyond a successful low-wage, low cost development strategy to one more amenable to higher wages and social costs.
As shown in the following, the wording of the various social partnership agreements indicates that the route envisaged is inspired by other more well-established neo-corporatist systems in Continental Europe. In particular, there appear to be three hallmarks of this ‘high road’ to higher productivity and international competitiveness:
In the 1996 agreement (see Government of Ireland 1997: para. 1.2), the need for partnership for work is understood in the context of “a rapidly changing environment in which continuous technological and organisational innovation are imperative…both within and between firms in the private sector, within the public sector and in the role of government itself”. The ‘size and openness of the economy’ are also cited as factors requiring ‘rapid responses to change’ and the ‘necessity for positive flexibility’.
The initial understanding of how to maintain Ireland’s competitiveness appears to follow the previous route of macro-economic planning by establishing the fiscal ‘space’ for public funding and overall wage rises:
“…determined by relative performance on pay, taxes and public expenditure but also, and equally, by other factors such as productivity, innovation, education and training and the cost and quality of services provided by the state and state sponsored bodies.” (Government of Ireland 1997: para. 1.2).
However, there is also another dimension associated with increased competitiveness as it is directly linked to the need to improve “social solidarity, increase ‘social inclusion’” and contribute to the “society’s overall efficiency and cohesion”. These aims are directed, in turn, to the ‘challenge’ of making “competitiveness and social solidarity, self-sustaining” (ibid). It is suggested that making competitiveness self-sustaining can happen through “continuous innovation, flexible working methods, highly skilled labour, and life-long learning” (ibid). Thus, there are clearly ideas about flexible learning organisations and continuous upskilling underpinning the search for more productive workplace relationships and thereby increased competitiveness for the Irish economy. While this may be the future path for the Irish economy, there are still overtones of neo-corporatist incomes policy as the national agreement “emphasises the close link between this framework for enterprise partnership and a national partnership which guarantees continued wage moderation and competitiveness” (Government of Ireland 1997: para. 9.2).
Concepts such as partnership and flexibility are intertwined in Irish national and organisational discourse about changes to labour market structures, employment relations, and work organisation in both the private and public sector. For example, the Partnership 2000 agreement regards the ability to achieve ‘positive flexibility’ as a major factor in achieving success at both the organisational and national levels.
The intertwining of partnership and flexibility is also seen in the private sector. A common theme through the workplace examples is the perceived need by management that the ability to compete depended upon ‘innovation and the knowledge of employees’, that ‘the old command and control model was not working’, because management need the co-operation of employees in order for production to adapt to new competitive pressures. However, the best examples of the partnership-flexibility linkages can probably be found in the linkage between the public sector’s strategic management initiative, ‘better government’, and partnership processes from 1997 onwards (Government of Ireland 1996). The Government wants to create high performance work organisations in the public sector by reorganising the ‘production’ process of public service delivery and better management of human resources. This includes the direct and indirect participation of the employees and trade unions in the partnership process in the civil service, local authorities, health boards, and state sponsored bodies (see below).
Partnership itself is defined broadly enough to encompass private, semi-state and public sectors, indigenous and foreign-owned capital, SMEs33 and large firms, and unionised and non-unionised firms. While the intertwining of partnership and flexibility suggest a ‘European’ approach to flexibility, competitiveness, and social cohesion, the breadth of the partnership concept can also incorporate the practices of American forms of high performance work organisations (HPWOs) and human resource management (HRM) into the Irish setting:
“An active relationship based on recognition of a common interest to secure the competitiveness, viability and prosperity of the enterprise. It involves a continuing commitment by employees to improvements in quality and efficiency; and the acceptance by employers of employees as stake-holders with rights and interests to be considered in the context of major decisions affecting employment…. Partnership involves common ownership of the resolution of challenges, involving the direct participation of employees/representatives and an investment in their training, development and working environment.” (Government of Ireland 1997: para. 9.2).
According to O’Donnell and Teague (2000: vi), the broad definition of partnership indicates an assumption that “the elements and requirements of successful partnership are similar in both the public and private sector”. However, they appear to be overly optimistic with a high threshold for successful partnership which may be difficult to fulfil in the first stages of new workplace partnerships:
“Successful partnership in either sector requires: meaningful dialogue which establishes shared understanding of organisational objectives among managers and employees/unions; partnership sub-groups or teams undertaking projects; a focus on both internal and external issues; direct involvement of employees in the design and evaluation of their work; effective systems of human resource management; a positive relationship between problem-solving, joint deliberation and action (or ‘partnership’); and industrial relations.” (O’Donnell & Teague 2000: vi)
As we will discuss in the following section, our reading of the case study evidence indicates a large variety across workplaces. Workplace partnerships are probably characterised more by their diversity in terms of processes and outcomes, including what elements are involved in the partnerships.
The breadth of understanding of workplace partnerships can be useful because it allows a certain degree of experimentation and it is open to workplaces to address their particular issues in ways which fit their workplace culture and structure. There has clearly been a remarkable amount of experimentation with work organisation as direct investments, growing export sectors, and a shift towards high-tech and service firms have been driving economic success. However, the evidence on organisational change is far from clear, particularly with respect to workplace partnerships and the development of functional flexibility (Boucher & Wickham 2002).
There is an ongoing debate in the academic literature about the level and extent of firm workplace partnerships in Ireland. On the one hand, Sabel (1996) and McCartney and Teague (1997) argue that firms in Ireland have significantly reorganised their workplaces and greatly increased the level and extent of workplace partnership initiatives, such as job rotation, quality circles, total quality management, and teamworking. Specifically, McCartney and Teague claim: that some 90 percent of the respondents to their survey reported using at least one HPWO practice to some degree; that “more intensive HPWO adopters were also making complementary adjustments to their HRM systems”; that many, mostly American, multinational corporations (MNCs) “are actively diffusing advanced employment systems in Ireland, giving a further boost to workplace reform”; and that “Irish exporters seem sensitive to and influenced by the organisational reforms pursued by foreign competitors” (McCartney & Teague 1997: 396).
In a deeper review of both their previous study and other empirical studies into the depth and scope of innovative work organisation, McCartney and Teague (2003: 101) confirm a “high degree of experimentation with innovative work practices” but also an “a la carte nature of workplace reform in most companies”. Echoing the debate on how these findings should be interpreted, the positive interpretation is that Irish establishments are experimenting widely with more participatory forms of work organisation. This experimental view is reinforced by a survey undertaken by Williams et al. (2003) of employers’ views and experiences of the changing workplace. In this survey, the incidence of explicitly labelled formal partnerships was just over 4 percent but increasing to 19 percent of employers in respect of ‘informal partnership practices’ and increasing further to 60-70 percent, when the definition of partnership was expanded to include “much more loosely defined participative processes” (Williams et al. 2003: 11). McCartney and Teague’s view is that few firms fall into an ‘ideal type’ of wholesale organisational transformation; rather, most firms iterate through various hybrids and experimentation in the search for an improved model of production.
However, the more sceptical interpretation is that both the level and extent of workplace partnerships have been overstated. For instance, Gunnigle (1997) argues that the limited empirical evidence at the time overwhelmingly shows that workplace partnerships in Ireland are predominantly focused on:
“…employment involvement initiatives aimed at facilitating the involvement of individual employees and small groups on issues of immediate work relevance” and are “predominantly concerned with encouraging greater employee ‘voice’ on workplace issues rather than employee ‘influence’ on higher-level management decision-making.” (Gunnigle 1997: 195).
Roche and Geary (2000) are also less upbeat in their interpretation of the empirical evidence, rejecting the position that an economic ‘transformation’ has occurred in Ireland “realised through various forms of collaborative production” (Roche & Geary 2000: 33), stressing that workplace participation is dominated by “exclusionary forms of decision-making” more characteristic of “Anglo-American institutional systems” (ibid).
The variety of opinion may be explained through the variety of processes and outcomes, as indicated by existing case studies. We stress the same in the next section. This variety, as well as the intertwining of partnership and flexibility, can be exemplified by two public sector cases: Dublin City Council and RTÉ (the national public service broadcasting organisation). In the Dublin City Council case, “the threat of privatisation galvanised a joint union management approach to waste collection which has been transformed into a flexible twenty four-seven style service incorporating recycling initiatives and managed by smaller, more productive crews” (Dublin City Council 2005: 1). A Partnership Forum and joint management-union committees concerned with staff issues provided the avenues through which ‘flexibility’ in work practices was implemented. In the RTÉ case, the organisation was facing increased competition, increased costs due to technological upgrades, and declining revenues from licence fees. A Partnership Steering Group evolved out of an organisational review of this situation, out of which ‘agreed corporate objectives’ were established within its public service remit. These objectives set a vision where RTĖ “envisages providing its services in the most efficient manner possible by adopting the most effective technologies, structures, and work practices in partnership with its staff” (RTÉ 2005: 2).
The important point is that the two public sector organisations differ in their processes and evaluation. In the Dublin City Council, management and union representatives agree that they have “not bought into partnership”, whereas in RTÉ, the management and union representatives have a totally different view: partnership is embedded in joint decision-making from the strategic to the operational levels. However, for RTÉ this turned out to be a false dawn as the partnership broke down in 2005 when the partners could not agree on how to solve a looming financial crisis.
Thus, the available case study evidence can be interpreted either pessimistically or optimistically, but it does seem supportive of a gliding, tentative shift from a ‘voluntarist’ form of collective bargaining to new hybrid forms of workplace partnership. There is clearly a search for new, more productive models and nobody appears to dispute the high level of experimentation. A particular issue with the voluntarist character of workplace partnership, certainly from the trade unions’ perspective, has been the encouragement of union recognition and involvement in workplace changes within multinational firms. While the Government has introduced a set of tax incentives to encourage union recognition within multinational firms, employers have blocked more ambitious proposals to extend workplace partnership (Hardiman, 2002b). Noting the extremely low rates of union recognition among the multinationals (about 25 percent), Gunnigle writes that the voluntarist system of workplace partnership remains “more rhetoric than reality” (Gunningle 1998: 195).
Workplace partnership still has some way to go before it becomes established as the dominant form of work organisation in Ireland. However, it is possible that out of the iterative, experimental search for new models of production an Irish form of partnership may evolve out of the traditional structures of collective bargaining. This would allow a ‘hybrid’ form of partnership which would sit between the high performance work organisations without the union influence found in North America and the more comprehensive, legislative based union-management co-operation found in workplaces in some Continental European countries.
The case studies discussed below broadly demonstrate that workplace partnerships are a successful strategic response in workplace relations when firms or plants are exposed to international competition and are faced with crisis. Wyeth and Aughinish Alumina Ltd were both in economic crisis, facing an environment of international competition (see detailed case studies below). Both firms have survived as they have become more competitive, partly driven by their respective partnership arrangements. Underpinned by improved organisational performance, the partnership arrangements have coincided with better job security, enhanced terms and conditions of employment, and more interesting work experiences for employees. Likewise, Aer Rianta was faced with a challenging environment where market changes and a squeeze on revenue sources clashed with substantial demand for new investments. The partnership processes facilitated a number of strategic and operational changes to overcome environmental challenges, however, the partnership succumbed finally when wide-ranging politically determined changes aligned with organisational strategy changes.
In these circumstances, the case studies also demonstrate that workplace partnership is a particular response to the challenges of fierce competition and ongoing technological and market changes. Wyeth, Aughinish Alumina, and Tesco are good examples of such firms where competition often demands multiple forms of responses or performance improvements: in addition to continual pressure to compete on costs, such firms have also to compete for flexibility in supply and quality. If an organisation tries to avoid a one-dimensional cost-cutting strategy, then the involvement of employees becomes critical to competitive success. The case studies show that changes to work organisation, increased level of functional flexibility, and more harmonious workplace relationships can be achieved through the involvement of employees through various forms of employer-union partnership. This is not an easy option as it takes time, considerable adjustments in attitudes, and the willingness to try new participation structures. However, this is a preferred option compared to the traditional adversarial employment relations approach, according to managers and union officials interviewed as part of our case studies.
On the other hand, the case studies also demonstrate the challenges and difficulties of moving from a traditional, adversarial form of workplace relations to one of more negotiated co-operation. Because traditional forms of workplace employment relations are normally deeply embedded in unionised sites, our case studies illustrate how change towards partnership is often piece-meal, provisional, iterative, and closely tied to bargaining. For example, in Aughinish Alumina and Wyeth, partnership discussions were closely tied up with negotiations over redundancies.
Employer-union agreed ‘experiments’ in workplace partnerships occurred in all case studies, which were then re-evaluated as the people involved ‘learned’ from the experience. Sometimes, partnership experiments broaden as people learn; sometimes there is limited progress or outright failure. The case studies generally present a view of a gradual broadening in workplace partnerships out of initial ‘experiments’. In Aughinish Alumina and Wyeth, the success of ‘experiments’ with production teams in limited areas of the firms’ plants were gradually extended to other areas of the plants. In Aer Rianta, more comprehensive strategic and operational issues were tackled as the partnership was faced with major organisational issues. The Aer Rianta case study is interesting as it is one of the few examples of formal partnership, and where union involvement occurred across strategic and operational decision-making levels.
It appears significant that there is no legislative underpinning of workplace partnership, and there are seldom formal employer-union agreements to stipulate the principles and structures for the development of partnership processes. Together with the relatively new nature of partnership, this may explain why there is often a tentative approach. On the one hand, parties do not wish to move too far from traditional forms of employment relations until workplace partnerships are proven to be an improvement over traditional forms. There appears to be a provisional acceptance to ‘wait and see’, and if new workplace arrangements do not work out, it is relatively easy to return to traditional forms of employment relations. On the other hand, the movement towards workplace partnerships is one movement from low-trust relations to high-trust relations. The lack of formal workplace partnerships may reflect the difficult and uncertain process in forming relations based on high trust. Trust is developed out of an initial willingness to co-operate, but it also has to be reinforced with practice which complements the expectations of the parties involved in this trust. The case studies demonstrate the slow and fragile nature of the trust building process. A common feature was a long process of initial engagement, facilitated by a third party, during which parties learned and developed skills to engage in ‘social dialogue’, and out of which develops a ‘shared understanding’ underpinning high-trust strategies.
In the case studies, these high-trust relations are then reflected in changes in workplace practices which reflect high-trust relations. In both Wyeth and Aughinish Alumina, high performance practices such as teams were introduced; teams were largely autonomous, with minimal supervision, and they were often responsible for managing their own ‘budgets’ and work allocations. Furthermore, issues with overtime were addressed, facilitated by pay increases, and at Aughinish Alumina gain-sharing was introduced. The development of training programmes has become an ingrained part of partnerships. Investment in training and education reinforce trust and collaboration as it is clearly seen by unions and employees as a significant move towards establishing organisational performance on a high skill, high wage approach. Training and development appears to be the one area where employer and employee interests match each other - though the supporting reward structures also need to be in place. The Tesco case provides an example of where other human resource practices, particularly continued low wages, have yet to consistently reinforce and complement workforce training in the move towards high-trust relations. The Aer Rianta case shows that it is difficult to keep partnership processes on track if the focus on quality service, staff training, and functional flexibility is not aligned with commercial strategies.
Wyeth is a company with around 560 employees. It is a subsidiary of a US-owned multinational which has around 55,000 employees and has activities in a range of sectors: pharmaceuticals, consumer healthcare, and animal healthcare products. This global company operates research and production facilities in most regions of the world. The Irish plant manufactures mainly infant nutritional formulas. There are three trade unions representing employees: the Technical, Engineering and Electrical Union (TEEU), SIPTU, the largest Irish industrial union (production workers) and AMICUS, the UK-based amalgamated union (white-collar and some fitters).
The workplace partnership operating at Wyeth is not formally described by the leading participants as ‘a workplace partnership’ and there is no formal employer-union agreement. Instead, it is referred to as ‘constructive participation’ or ‘doing business differently’. According to interviews, the workplace partnership is influenced by the context of the Irish national social partnership agreements but operates independently of them.
The company faced an economic crisis because of strong internal and external competition; it is part of the multinational company’s global production strategy that there is strong competition between the various national Wyeth plants. It is also part of the global strategy that all plants have to be ‘low cost’, irrespective of widely varying parameters, such as wage levels, taxation, and environmental constraints. In this situation, it was clear that the Irish plant would have difficulty competing on low costs – for example, the Irish plant cannot compete in terms of laboratory costs with the other five similar international sites. However, it could compete on the basis of innovation and through exploiting the knowledge of its employees. There is also a strong emphasis, especially in an era of high energy prices, to save energy and reduce waste. Surprisingly, according to interviews, Ireland’s lower corporation tax costs (relative to other EU member states) were not that much of an advantage when the plant was compared with plants in other non-EU countries.
Therefore, it was decided that new working relationships would be developed at the plant. Traditionally, there had been ‘adversarial’ employer-union relationships and fairly strong managerial prerogative in determining work organisation. In the context of social partnership agreements, a collaborative change programme was initiated.
The initial change programme was facilitated by Educational Training Services (ETS) and its skilled ‘facilitators’. This training company had previously been established by the TEEU union and it has aided similar change processes in other Irish companies. According to management interviewees, it was felt that the success of the change programme depended to no small degree on the involvement of ETS and the fact that it had been proposed by the union. The training programme (consisting of six modules, in two-day sessions over a six-month period), which formed a key part of the change process, involved 10 percent of the workforce from senior management down. They worked in mixed groups.35 The course had six modules with the objective of drawing up ‘constructive alternatives’:
According to interviews, the evaluation stage seems to have been particularly detailed.
Perhaps the key achievement of this process was to enhance communication, free up information, and build trust. This was seen as the fundamental prerequisite for success. The process had its doubters on both sides, but once people were involved, they appear to have become more committed to the change programme. The training programme was not compulsory and yet no one left during the six-month training period.
The change process focussed on key barriers for innovation, high productivity and enhanced employee participation. Among the issues dealt with by the change process, were excessive overtime use, work organisation, the role of supervisors, and future manning levels. Overtime was rife at all production levels and it was agreed to replace the overtime system by annualised hours with a system of ‘reserve hours’ that can be used sparingly. The new working time system was facilitated by an effective pay increase. Teamwork became the dominant form of work organisation and the traditional supervisory structure was replaced with facilitators, shift managers, and self-directed teams. According to interviews, this has “unlocked the knowledge of employees” and seen as enhancing quality and efficiency. The change process resulted in severances: there were about 40 redundancies.
There is more consultation and involvement than before. For example, the managing director outlines the company situation to the whole workforce twice a year and, at the shopfloor level, teams are involved in ‘signing off ‘departmental budgets. Consultation takes more time, but the overall impression is very positive - in terms of the perceived success and the future for the plant in a highly competitive environment – from managers and employees alike. The interviewed managers stressed that their financial benchmarks are clearly demonstrating cost savings, in line with the business plan. Interviewed union representatives suggested that the constructive participation had given their members greater job security and improved conditions. There is also a mechanism for consultation and involvement.
Lastly, along with Aughinish Alumina (see case study below) and other firms in the area, there is an informal, regional link-up between firms taking similar approaches with a view developing among interviewees that a Mid-West Ireland phenomenon is in the making. Participants are interested in how to make the project sustainable in the region and, in particular, how to communicate its results to others. It is worth noting that, apart from the Dublin area, it is the West of Ireland that powers the ‘Celtic Tiger’.
Aughinish Alumina is a company of 435 employees in the Limerick area. It produces aluminium oxide from imported bauxite. The plant is part of the Glencore Group with a total workforce of 50,000 employees. The Glencore Group is a Swiss-based natural resources company with 22 plants in 14 countries, including two other alumina refineries. The three unions representing workers are: TEEU, SIPTU, and AEEU/AMICUS.
In the early 1990s, Aughinish Alumina was losing $1 million per week and the company was facing considerable financial difficulties. Prior to 1993, employment relations at Aughinish Alumina was characterised by a climate of adversarialism, similar to that existing at the Wyeth case study. The crisis situation in the early 1990s concentrated minds on how to develop a company-wide restructuring plan in which the cost per tonne needed to be reduced significantly to achieve medium and long term survival.
The plant is an intensive energy user, and energy costs were a major issue for the restructuring plan. Now, departmental teams have budgets regarding waste and energy use, operating with agreed targets. The company has a 100 MW gas fired combined heat and power plant which sells surplus power into the national grid and provides heat for its own refining process. Current high energy prices mean that there is constant monitoring of heavy fuel oil and gas prices with fuel switching used as a cost-saving device when prices vary.
As in the Wyeth case study, there is no formal partnership agreement, but a process was embarked upon, with the help of Educational Training Services (ETS), similar to that as described above for the Wyeth plant. An important part of the context in which the partnership process unfolded was the perception among managers and union representatives that a series of employer-union agreements, based on the old command and control model, were not working. According to interviewees, the atmosphere in the country nationally helped to stimulate an attitude locally that ‘people had an opinion and should be asked’. For the company, the process was seen as ‘experimental’.
A team-based structure was introduced, and the old hierarchy was reduced to three levels. A new internal strategy was introduced to ensure that business targets could be met. Task groups or teams, as distinct from the production teams, were established to achieve objectives and then disbanded on completion. A co-operative ethos emerged from the former conflictual one. The Irish Productivity Centre was peripherally involved at the beginning, but most of the new elements have been added by Aughinish Alumina managers and employees together (with the help of ETS facilitators in the initial stage).
Trust is seen as central to the partnership arrangements. There is very little information in the organisation that is seen any longer as ‘confidential’. The old authorisation process was disbanded and the overall philosophy is now one of ‘facilitation’ by management rather than ‘command and control’. Generally, the teams decide how to move forward. For example, teams select someone to monitor expenses and time returns. In allocation of jobs, at the beginning there was rotation between all tasks; now the teams decide how to rotate or whether it is necessary to do so. This change was partly influenced by the fact that some people find rotation less satisfying than staying on one job.
As an organisation, Aughinish Alumina has become more competitive as production costs per ton have stabilised, and the company has strengthened its competitive position in the marketplace. Improved organisational performance has underpinned better security of employment and enhanced employment terms and conditions. The employment relations climate has stabilised, and negative indicators, such as the number of grievances, have decreased significantly.
The benefits to both management and the employees are significant:
Overall, the roles and responsibilities of employees have changed considerably and, within the team-based structure, employees now have much more input into the decisions that affect them and their organisation.
Tesco Ireland is part of the huge UK-based Tesco global retail company. In terms of employment, it is also the largest private sector firm in Ireland with 10,000 employees. Of these, 95 percent are members of the union, MANDATE, while the remainder are mainly members of SIPTU. Tesco Ireland was an acquired business (one of the first overseas acquisitions by the UK parent company), but it operates purely in the local market and its HR strategy is also determined ‘locally’.
After a major strike in 2001, there was a joint recognition that the old system of adversarial employment relations was not working. An ‘enormous process of change’ followed. Both sides broadly interpret developments in the national context of social partnership and they play a role in their respective employer and trade union centres. However, MANDATE has often voted against national agreements, feeling that its low-paid membership of mainly women and many part-time workers has tended not to benefit from national wage agreements under the Irish ‘pacts’. These have been based on percentage increases under which it is felt that the low paid lose out.36
For management, an ‘Irish business’ required modernised, local solutions. The subsequent framework agreements, presented in the detailed pack, ‘Working Together’ and signed by Tesco, MANDATE, and SIPTU, were designed by the parties to herald a co-operative, consensus approach. The agreements sought to broaden the employment agenda, remove conflict inherent in the old system, provide recognition for trade unions, and establish a social welfare and childcare agenda. In retail, one management respondent stressed, competition is local rather than international and “local application of the process is seen as the key”.
In facilitating the setting up of the new consultative structure, the involvement of facilitators from Educational Training Services (ETS) was seen as a key factor in developing a co-operative, consensus approach, the right consultative structures, and sufficient training of participants (as in the cases of Wyeth and Aughinish Alumina). There are four forum levels in the consultative structure:
It is likely that a European Works Council will be set up in the near future because of the EU European Works Council Directive. The UK-based parent company has operations in the UK, Ireland, Poland, and Hungary which are now all EU member states. While respondents felt that the company’s consultation structure more than met the requirements of the EU Directive on information and consultation, the Irish proposals on this have yet to be adopted formally.
At the time of writing and overall, it is too early to quantify the cost/benefit equation exactly, though it appears that both costs and revenue have increased. For the company, the process is apparently more ‘costly’ as the costs are more open and transparent now. This includes the costs of training staff and the days off required for staff to take part in groups (forums at stores, regional, and national levels). However, the ‘hidden costs’ of the old method (‘the war of attrition’), such as suspension costs, employment appeals tribunals, and labour court costs (as well as turnover costs) are much reduced. In terms of revenue, it is generally known in retail that high morale among staff normally leads to higher sales, while low morale leads to lower sales. So far, the company’s revenue has followed the upward path of the parent company, as it seeks to position itself as a quality retailer and employer.
For the unions, there have been several clear advantages: union recognition, the widening of the employment agenda, and the establishment of a ‘twin track’ employment relations approach (based on collective bargaining on the one side and information and consultation on the other side). There is some flow-through of benefits from both sides of the twin-tracks. However, the real test for the union members remains the fact that retail is a ‘low wage’ industry, and that low pay is yet to be resolved as a broad issue. For many employees, ‘the jury is still out’. This is a major issue for union officials, and there seems to be little option other than supporting the partnership approach. The other model of retail development, as represented internationally by Wal-Mart, is seen as very unattractive given it is ‘anti-union’ and based systemically on low wages. The unions would like Tesco to be seen as ‘an employer of choice’, both in terms of its partnership and its wage levels.
The company has been more active in training staff and it has put several comprehensive training schemes in place. The company has established graduate and school leaver programmes and an international management scheme. The union felt that there needed to be a national system of accreditation set up. However, it was a major concern that being part of a multinational company would allow the possible transfer of workers from Tesco operations in other countries, particularly Poland. In 2005, serious disputes have arisen in the ferry and construction industries over the displacement of more costly Irish workers by cheaper East Europeans.
In summary, the aims of the forum structure are seen as being achieved. These aims were:
Whether the partnership arrangements can tackle the thorny issues of low pay and the possible transfer of overseas staff remains to be seen.
Aer Rianta is an example of a genuine attempt to establish a sophisticated partnership initiative at various levels in the company, from the shop-floor to company level but which ultimately failed. From 2000 onwards, the cumulative effect of a series of difficulties debilitated partnership. The final blow emanated from the Government’s decision in 2003 to break up Aer Rianta into independent airport authorities within public ownership. The partnership arrangements ceased formally in 2004.
Aer Rianta was a state-owned company and enjoyed a monopoly status managing Ireland’s main airports at Dublin, Cork, and Shannon. At the end of 2002, it employed over 3,000 people and it had two subsidiaries, Aer Rianta International and Great Southern Hotels which operated duty-free shops in airports and hotels. While Aer Rianta faced largely stable commercial conditions during the 1980s and early 1990s, it faced a turbulent economic environment from the mid-1990s.
From the late 1990s, the company and the unions experienced a number of changes:37
Heralding what ultimately happened, the break-up or privatisation of Aer Rianta had been firmly placed on the political agenda, and the company also faced significant strategic choices with its income being squeezed and an increased demand for capital intensive development. Interestingly, Roche and Geary argue that this situation improved the context for employer-union collaboration:
“As a consequence of these challenges, management’s need for co-operation from the unions increased substantially. The dramatic growth in traffic volumes and the tight labour market importantly provided scope for responding to the loss of duty-free while observing the employment security injunction set down in the Compact.” (Roche & Geary 2002: 671).
Until its end in 2004, partnership in Aer Rianta had been developing for nearly two decades, involving a number of significant initiatives and participative processes (see also Geary & Roche 2003, Roche & Geary 2006). Aer Rianta had instituted employee board directors and a joint management-union committee at company group level, specific strategic and operational issues had been analysed by joint management-union committees, and regular work groups had facilitated full participation at the immediate place of work. These initiatives had often coincided with formalised agreements and new participative structures. While the positive achievements make this case study interesting, there had also been interesting hurdles to overcome: internal divisions had existed among both managers and unions, line or middle level managers had been reluctant participants in the change process, and their union only joined the joint management-union committee in 1999.
The process of more employee involvement and participation has been under way for some time. From 1988 onwards, three employee directors were elected to the Aer Rianta board (as in the case of other boards of state owned enterprises or SOEs). During 1994-5, the Joint Union Company Group (JUCG) facilitated a new framework known as the framework for ‘constructive participation’ (CP) which proposed a partnership process for Aer Rianta. The content of the CP was stipulated in two key documents, the Compact and the Requisite Arrangements. These documents are rather remarkable as they formalise principles and structures of the partnership process, they allow the partnership process to co-exist with traditional employer-union bargaining, and they seem to balance employer and union interests fairly evenly.38 The Compact set out a series of partnership principles, while the Requisite Arrangements set out a series of structures and measures to be put into place to facilitate the realisation of partnership.
“The CP framework envisaged multi-level and multi-stranded partnership arrangements in which employees and unions would be accorded a role in decision-making, spanning task participation, department and business unit strategy and competitive strategy for the company as a whole. The company received assurances from the unions that they would assist in improving the economic performance of each of its constituent units. The parties pledged that Aer Rianta would seek to compete on the basis of service quality and work-force skill rather than on the basis of cost minimisation and low pay. There was also a pledge to provide training covering all aspects of engagement with CP.” (Roche & Geary 2002: 667)
The main unions in the company: Services Industrial Professional Technical Union (SIPTU), Technical Engineering and Electrical Union (TEESU), and the Union of Retail, Bar and Administrative Workers (MANDATE), supported CP. From what can be read from the Compact, unions’ motives for supporting CP centred upon gaining representative capacity and influence within the organisation at a time of considerable uncertainty, particularly uncertainty regarding future employment and employment conditions.
Still, there was some resistance among union representatives. In particular, the Irish Airline Executive Staff Association (IAESA),39 the union representing middle managers, did not support the CP framework before 1999. This changed in 1999: the IAESA became part of the JUCG, and thereafter it supported, at least publicly, the partnership process. Interestingly, the worker directors were also not supportive of CP, and they were heavily involved in the later demise of the partnership arrangements. This may be understood in terms of the partnership processes being seen as competing with traditional board responsibilities. It is probably also indicative of the different opinions regarding the partnership arrangements among managers, union representatives, and employees.
The Joint Union Company Group (JUCG) had an interesting and key role during the CP arrangements. The JUCG drew from a cross-section of managers and union representatives. It had the explicit support of the CEO and the responsible minister, and it could act as a strategy catalyst and, in the case of disputes, it could also act as an arbitrator. The strategic and co-ordinating capacity of JUCG was crucial in promoting the notion of partnership and overcoming reluctance among managers and union members. The support of the CEO was probably crucial as was the union support: the General Secretary of the Irish Congress of Trade Unions voiced his support, and a union representative worked full-time on the partnership arrangements. Overall, Aer Rianta put a substantial amount of resource and goodwill into sustaining the partnership process.
Aside from being an example of a ‘formal’ partnership, this case study is also interesting because it illustrates the barriers and adverse attitudes that partnerships need to overcome. Despite having been adopted as official policy by the company and union groups, CP encountered significant obstacles. Senior managers had different opinions about the value of partnership: a minority supported CP, and most of its proponents occupied staff rather than line management roles. Additionally, relations between the employee directors and the CP framework had always been uneasy, and the employee directors had been among its most ardent opponents of the framework. Importantly, however, the chief executive was supporting the process: the original CEO (in office up to 1998) was a supporter, and the new CEO provided even more active support. In the post-1998 period, the CEO’s support altered the balance in favour of the CP framework at a time when the process began to engage with major commercial issues.
It is more difficult to determine whether the level of co-operation offered by the unions in partnership forums was matched by a similar level of co-operation from management. While progress was achieved in some strategic areas, notably in addressing the duty-free issue and the future status of the company, there was constantly pressure on the organisation’s long-term survival. The impression is ‘crisis management’ and continuous adjustments within and to partnership arrangements. Despite this insecurity and scepticism regarding management commitment, Roche and Geary (2002: 682) found that union officials and activists within Aer Rianta were generally supportive of CP and believed that partnership arrangements have been to the advantage of unions and employees in a number of areas. These include:
The period of the late 1990s appears to represent the ‘high water mark’ of partnership in Aer Rianta. From 2000 onwards, the CP ran into a series of difficulties, the cumulative effects of which were to debilitate partnership. The final blow emanated from the Government’s decision in 2003 to break up Aer Rianta into independent airport authorities within public ownership.
Two sets of pressures led to the unravelling of CP. First, at an operational level, partnership processes and groups began to engage in a series of restructuring initiatives within the company, with variable outcomes. In airport cleaning and maintenance, partnership processes were successfully utilised to achieve significant changes in work practices and pay arrangements, effectively subsuming established industrial relations channels. In retailing, the parties had engaged on a partnership basis to address post duty-free retailing. This process was not entirely successful and the parties reverted to traditional industrial relations channels, with much recrimination with respect to mandates and authority to proceed on a partnership basis on issues surrounding pay and conditions. A similar dynamic was evident in the airport police and fire service, where an early partnership phase in restructuring talks gave way to traditional industrial relations postures. The negative consequences engendered by the failure of CP in these two large departments were detrimental to partnership, and they ultimately contributed to the partnership process drawing to a halt across the company as a whole.
Compounding these operational-level problems, were new pressures at the summit of partnership in Aer Rianta. Through partnership, management and unions had agreed a joint vision of the company’s commercial future which had involved part privatisation through an Initial Public Offering (IPO) of shares. However, for a time the Government remained undecided on how to proceed, putting the strategy agreed within partnership into suspense and exposing its partnership champions to critics within the company. An aviation regulator was appointed by the Government. This move introduced an independent party that mediated between Aer Rianta’s quality-focused commercial strategy and its market. The new regulator was unconvinced about aspects of what was soon portrayed as Aer Rianta’s ‘gold plated’ investment strategy for airport facilities. As mentioned above, the Aer Rianta worker directors had been excluded from the design and operation of CP. In the context of plans to part privatise the company and the difficulties encountered when partnership processes were engaged in restructuring, some worker directors raised questions and criticisms concerning the mandates on the union side to reach accommodation through partnership with the company.
A problem of succession also arose in the retirement of key champions of partnership on the management and union sides. At a time when partnership came under these formidable challenges, its principal architects departed the scene. Thus, summit-level pressures interacted with operational pressures and their cumulative impact effectively halted partnership in the company.
In spite of such significant setbacks, it seems that parties on both sides remained committed to rebuilding partnership. Before this could be attempted, a new Minister announced the Government’s intention to break Aer Rianta up into separate authorities for Dublin, Cork, and Shannon airports. Faced with this acute crisis, the parties reverted to lobbying and threats of industrial action in unsuccessful attempts to stave off the break-up of the company. By the end of 2005, the partnership process has become unstuck, but it is still unclear what the final outcomes will be of the ongoing organisational restructuring.
Sol Skinnarland, Bjørne Grimsrud, and Erling Rasmussen
Norway has a long tradition of employer-union collaboration, of tripartite co-operation, and of extensive employee participation at workplace level.
There are many well-established partnerships in Norway, both at industry and workplace level.
The tradition of partnerships goes back to the 1935 Basic Agreement41, where employers and unions agreed on collective bargaining regulations and collaborative behaviours. Since then, the Basic Agreement has been re-negotiated on a regular basis and it has been enhanced considerably. It has also been supported by other collective agreements and legislation has enshrined bipartite agreed arrangements and instituted employee participation structures (Dølvik & Stokke 1998).
While the Basic Agreement is a key influence on collective bargaining and workplace employee participation, the State’s influence through conciliation, arbitration, and direct intervention, is considerable. Public sector employment is also extensive. Norwegian employment relations is characterised by the pervasive influence of the State (including local government) and the central position played by national collective agreements. Thus, the central actors of the State, local government, and major employer and union bodies play a strong directive and controlling part; workplace partnerships cannot be understood without taking into account this ‘context’ (Johnsen & Joynt 1989). This context includes the financial and other resources with which these central actors can facilitate partnership processes.
There are several channels for partnership and the level of information and employee consultation is very high. The partnership channels have been in place for decades through a mix of bipartite agreements and legislative interventions. As detailed below, survey information confirms that employers and employees are using the partnership channels at workplace level (Engelstad et al. 2003). While partnerships are embedded, recent evaluations in 2003-2005 have estimated that partnership arrangements vary in their importance across organisations and sectors. There are clearly some organisations which have invested more time and resources in partnerships than others. These organisations are also better prepared to participate in further developments of partnerships (Grimsrud et al. 2005).
Workplace reform has been pursued across most sectors, and when it comes to research on different forms of work organisation, Norway is arguably the leading example among the OECD countries. It is noticeable that several long-term national projects have driven workplace level experimentation with employee participation and work organisation; there has been a constant attempt to develop highly productive and participative forms of work organisation. Through these projects and its associated practices, Norwegian organisations have practiced for some time what many current management texts consider to be ‘hot’ innovative practices. Such practices include networks, learning organisations, continuous improvement and testing of work arrangements, the transferability of knowledge and, of course, partnerships.
Norway is clearly a country which charts its own path and it has not joined the European Union, despite its Scandinavian neighbours joining. It has also continued with extensive public-private partnerships when other countries and commentators have advocated less state or local government interventions as the way to encourage more productive employment patterns. It has followed a tradition of seeing employee participation as integral to productive employment relationships. Finally, Norwegian practitioners and researchers have continued ‘to push the envelope’ in terms of employee participation and partnerships in several large-scale projects, experimenting with new forms of work organisation.
In the coming sections, the employment relations context of partnership will be sketched. While the fundamental role of the Basic Agreement and employer-union collaboration is stressed, we also highlight the significant role played by legislation and government intervention.
“As a small, open economy based on natural resources, Norway is increasingly dependent on international economic development and integration. This has encouraged a consensual industrial relations system, historically characterised by relatively close tripartite collaboration based on both collective agreements and legislation, centrally concerted but resting on local workplace activity.” (Dølvik & Stokland 1992: 143).
The political influence on Norwegian employment relations has been pervasive with the country’s late independence42 and the German occupation during the Second World War influencing attitudes to collaborative employment relations and employee participation. The ‘partnership for reconstruction’ after the Second World War included the first collaborative workplace committees (see below). Collaborative employment relations has also been influenced by the strong position of the State in employment relations, with the Labour Party having a dominant political position and providing parliamentary stability in most of the post-war period. Additionally, other important factors include attempts to minimise reliance on overseas investment, the prevalence of small and medium-sized enterprises, and the relatively small manufacturing sector.
Thus, state intervention in employment matters has a long history in Norway. The Labour Dispute Act of 1916 provided a comprehensive framework for dealing with collective disputes, including mediation and arbitration.43 The distinction between disputes of interest and disputes of rights has continued to this day, and there have been many examples of state intervention in collective bargaining over the last two decades. There have also been numerous examples of tripartite initiatives or agreements, and it is custom for employer organisations and unions to be consulted over public policy areas. In some cases, these changes have been initiated by employer organisations or unions. As stressed below, this has happened in respect of employee participation structures. It has also been quite common for tripartite support to be forthcoming in terms of funding or other resourcing when large-scale changes or research projects have been implemented (see below).
Besides interventions in collective bargaining, the State has developed a comprehensive legislative framework. This is the case, for example, with the Worker Protection and Working Environment Act (‘Arbeidsmiljøloven’ - first enacted in 1977). This act covers areas which are often covered by several pieces of legislation in other countries, but it also very important in terms of partnership. The pervasive impact of the Worker Protection and Working Environment Act is clearly stipulated in this description:
“It regulates matters such as employment protection (appointment, dismissal, leave of absence), protection against discrimination, and employee rights in relation to transfers of undertakings. The Act also establishes general requirements with regard to the working environment, including health and safety. Other issues regulated by the Act include working time and temporary employment (fixed-term contracts).” (EIRO 2004b: 1).
A particular public policy issue is the question of EU membership which has been on and off the political agenda for nearly 30 years. In the 1972 referendum, the Norwegians voted against following their neighbours, Denmark and the UK, into the then European community. Likewise, Norway voted against EU membership in 1994 when Sweden and Finland decided to join.44 As Norwegian employment standards are very high and employee participation rights are comprehensive, it has been debated whether EU membership could contribute very much to improving employment standards or participation rights. However, it has influenced key areas of workplace arrangements, such as employee consultation on collective redundancies and information and consultation in transnational companies (Dølvik et al. 1997: 66).45
Norway is a member of the European Free Trade Agreement (EFTA) which has a special agreement (the European Economic Area Agreement) with the European Union. Through that agreement, Norway is aligned with EU’s attempts to create a single European market, and Norway has to follow through with the EU regulations on the free movement of goods, services, labour, and capital. This could have a significant impact, as the EU is joined by several low-wage countries in Eastern Europe (see FAFO 2005). Thus, Norway has an interesting alignment with the EU – a peculiar ‘in-between-position’ - which will have indirect and direct influences on Norway’s employment regulations in the coming decades.
While state intervention has a long history, it was the conclusion of the Basic Agreement in 1935 between the two major union and employer organisations which laid the foundation for employer-union collaboration. This collaboration has been at the centre of Norwegian employment relations ever since. The mode of collaboration has been expanded several times, as the Basic Agreement is normally re-negotiated every fourth year. The Basic Agreement sets the basic employment relations regulations for all employers and unions belonging to the employers’ confederation, NHO, and union confederation, LO. Besides coverage of members of the two lead organisations, the Basic Agreement has a norm-setting influence on employment conditions and regulation across the economy.
The Basic Agreement is also crucial in terms of partnerships (see next section). Part B of the Basic Agreement (the Co-operation Agreement) applies to members of the two lead organisations, NHO and LO. The object of this agreement is to strengthen and further develop co-operation between employees, their representatives, and the management in the individual enterprises and groups of companies. The lead organisations have jointly funded business-level development projects to help establish and improve workplace partnerships and broad employee participation in Norwegian enterprises. This joint co-operation has been organised through HF (‘Hovedorganisasjonenes Fellestiltak’ or ‘HF’ - the lead organisations’ joint measures for development of enterprises).
All businesses and employees in the businesses covered the Basic Agreement pay a monthly levy to a trust set up for the development and education of employees. The partnership development project run by HF is funded through this trust. HF creates a national framework for all unionised firms. Funding from HF can be activated locally through initiatives embedded in the work councils. However, the HF activities have a wider scope than union members: the HF activities at workplace level cover all employees (as long as they pay towards the trust), regardless of whether these are union members or not.
As other Scandinavian countries, Norway has a high level of union density and collective bargaining sets the prevailing minimum norms of employment conditions. The current union density is around 52-53 percent, and while there has been a recent decline in union density in the late 1990s, it is still much higher than in most other OECD countries (EIRO 2004a).46 The union density level probably underestimates the overall union influence, as union negotiations set the employment norm for many employees (there is a considerable flow-on effect from collective agreements), and unions are active participants in public policy formation and implementation. Unions have considerable resources at their disposal, including having several academic educated researchers employed. Interestingly, the unions established a major research institute (FAFO – Institute for Labour and Social Research) to undertake commissioned research projects (see FAFO 2005a). Mirroring Norway’s particular collaborative approach, FAFO became an independent research institute in 1993 with equity capital provided by unions and several large businesses. Over the years, FAFO has undertaken a considerable amount of commissioned research for employers and, currently, employer organisations are just as important as buyers of FAFO’s commissioned research as unions are. These kinds of research capabilities allow unions, often in collaboration with employer organisations, to participate in most of the major public policy debates in Norway.
However, there are several indications that union influence and collective bargaining could be changing. The high level of union density and dominant impact of the union confederation (LO) can no longer be taken for granted. The recent decline in union density is a clear warning that structural changes towards a service economy, changing employee perceptions, and new employer choices could undermine the foundation of high union membership. It is also important that unions belonging to other union confederations have become more important. Still, actual union membership has increased slightly over the last decade (but not as fast as the workforce has expanded) and over two-thirds of all union members are members of unions who belong to the LO confederation. Equally important is the split on the employer side, where the lead employer organisation (NHO) is no longer totally dominating. There are a few major service sector employer organisations who are standing outside the NHO and this could prove crucial over time because of the strong employment growth among non-affiliated service sector organisations. Overall, this implies that the traditional NHO-LO axis could become less representative of employers and employees, and this would undermine the traditional neo-corporatist, consensus-based employment relations.
While unions are important in pushing for partnership, it is interesting how Norwegian employers have supported this approach. This is probably less of an expression of support for unionism than it is an expression of how employers envisage how collaboration with unions could lead to a high skills, high wage, and knowledge economy. In a recent survey, it was found that around 80 percent of managers include unions in change projects to ensure compliance among employees. Managers also stressed that another rationale for including unions was the perceived value of input from the union (Grimsrud et al. 2005). This is probably also a reaction to the outcomes associated with partnership: Norwegian partnerships and work organisation experiments have focused on developing productive capabilities and, thereby, supporting organisational performance. Thus, it is important to stress the long-standing focus on productive employment relationships: the LO and the NHO “have a long tradition of peaceful co-operation in the promotion of economic growth through productivity improvements and the introduction of new technology at firm level” (Dølvik & Stokland 1992: 145). Over the years, it appears that the emphasis on productivity and organisational performance has become stronger (see below).
Many Norwegian researchers and commentators have frequently expressed concern over the continuous ability of maintaining the ‘Norwegian model’ of employment relations with its strong roots of egalitarianism, employee participation, and tripartite arrangements.
“The egalitarian legacy may be subject to erosion from three directions: from ‘above’, owing to the reduced scope for ensuring full employment, given the constraints imposed on macro-economic policy-making by internationalized capital markets; from ‘below’, as a result of increasing pressures from market competition, both nationally and internationally; and from ‘within’, owing to changes in the social and occupational structure which have altered the balance of power and the perceptions of group interests, (class) identification, justice and solidarity.” (Dølvik & Stokke 1998: 119).
There have been many articles recently that deal with this erosion of the political and social basis for the Norwegian model (Østerud 2005). There are clearly a number of important economic and social changes that will make the Norwegian model less stable and will demand considerable adjustment. This indicates that it takes a continuous struggle to keep and develop the Norwegian model and its partnership processes. In particular, management initiatives and the pursuit of ‘strategic choices’ may put considerable pressure on traditional relationships. These pressures are intensified through shifts towards service sector and more flexible jobs and the growing importance of overseas-owned organisations. However, the expressed concerns appear to non-Norwegian commentators as somewhat exaggerated; it seems to involve a certain amount of ‘angst’, as the distinctive Norwegian model seems firmly in place. Thus, the Norwegian model has produced spectacular results, but there are clear warnings signals – including recent changes in union membership. Only the future can tell whether Norwegian employment relations will continue along its own particular path.
Currently, Norwegian union and workplace representatives have a number of representation channels based on the Basic Agreement and legislation. These representation channels have been developed over many years as Norway has constructed a very comprehensive partnership approach. Among the key partnership influences have been:
These agreements and legislative initiatives have been developed over the years, and there have been several important changes to both collective agreements and legislation. As recently as June 2005, the Working Environment Act has been amended to include new regulations on information and consultation (see EIRO 2005). Collective agreements and legislation have also been supported by a number of large-scale projects to develop more productive employment relationships and work organisation at workplace level. Thus, there have been continuous improvements in terms of employee rights and work organisation.
As in Denmark, employee representatives can represent the interests of employees and participate in management decisions through four different channels:
While legislation now plays a significant role in determining employee participation rights, it is the Basic Agreement and national collective agreement that have been the key drivers, underpinning employee participation at workplace level. Collective bargaining is still crucial in settling key employment conditions, such as pay levels and working time, and union representatives are crucial in making co-operation and health and safety committees function effectively (Bosch 1997: 221, 224).
“Collective agreements providing shop stewards and company-level trade unions with the right to information, consultation and negotiations in a range of areas are probably the most important form of representation in the day-to-day running of companies.” (EIRO 2003: 1-2).
The Basic Agreement has also included the development of workplace level co-operation committees (similar to works councils in other Continental European countries). From 1966, the Co-operation Agreement (a part of the Basic Agreement) has stipulated how these committees could be formed. The co-operation committees/works councils cover all the medium-sized and large organisations (with more than 100 employees) covered by a collective agreement. The committees have extensive information and consultation rights. The Basic Agreement (section 12.8) prescribes that:
“Matters that are of material importance for the employees and their working conditions, which relate to the activities of the enterprise, substantial investments, changes in systems and methods of production, quality, product development, plans for expansions, reductions or restructuring, shall be submitted to the council for its opinion before any decision is made.” (EIRO 2003: 2).
Health and safety officers and working environment committees have been developed as part of the Basic Agreement and the Working Environment Act. As stipulated in the Basic Agreement 2002-2005, section 7.3:
“The parties wish to emphasize the importance of preventive work in regard to the working environment and health in the enterprises. When under the rules of the Working Environment Act an enterprise is required to have safety and health (HSE) personnel, it shall secure the assistance of such personnel. If no offer of such a service is available, the enterprise and the shop stewards jointly shall work actively with other enterprises to seek to establish systems that satisfy the Working Environment Act Regulations relating to HSE personnel. The duties of the HSE personnel shall be set forth in the documentation of the enterprise in accordance with the Regulations relating to systematic health, safety and environmental work in enterprises (Internal Control Regulations).”
As described above, the Working Environment Act is important in stipulating individual employee rights. Still, many Norwegian commentators have emphasised how the Working Environment Act has fostered the development of the partnership approach in Norwegian workplaces (see Johnson & Joynt 1989). The Act can conceptually be linked to the 1960s ideas about workplace change (Dølvik & Stokland 1992, Rehnstrøm & Gustavsen 1989) and this fits with the Working Environment Act’s emphasis on work-life quality. In June 2005, the Norwegian Parliament amended the Working Environment Act. The main changes dealt with temporary work, part-time employment, and working time, but the amendments also implemented the 2002 European Union Directive on information and consultation (EIRO 2005). The amendments prescribe which companies are covered, on which issues the employer has to inform and consult employees, and what processes should be used. However, in line with Norwegian labour market traditions, the amendment also allows for that information provision and consultation processes to be instituted through collective agreements.47
Employee representation on the company board was established following ongoing debates both in the political system, as well as among employer organisations and unions. Following unsuccessful attempts to establish board representation through collective agreements, it became institutionalised with the Joint Stock Companies Act in 1976.48 Following its amendment in 1989, the Act prescribes representation for companies with more than 50 employees. There may be board representation in organisations with 30 to 50 employees. Employee board representatives can constitute a maximum of one-third of all board members. These representatives play the same role as other board members, and they have the same duties and rights (SEEurope 2005). Employee board members have special protection from dismissal as prescribed in the Basic Agreement.
Surveys show that there is a high level of participation in employee board representation and this increases with the size of the organisation (see Table 7 below). Overall, the employee involvement in various representative bodies is impressive. A comprehensive 2001 survey of workplace participation found that over 70 percent of employees reported that such representative structures could be found at their workplace. There was also high employee involvement with 45 percent of employees reporting that they were or have been a member of a representative body and 38 percent had been member of the company board (or a similar form of decision-making structure) (EIRO 2003a).
| Type of structure | Provisions applicable to: | Employees covered by such entitlements |
|---|---|---|
| Works councils | Companies with collective agreement and with more than 100 employees | 33% of all employees, 76% of whom are covered by collective agreement |
| Health and safety officer | Companies with over 10 employees | 81% |
| Working environment committees | Companies with over 50 employees | 43% |
| May be raised as a (mutual) demand in all companies | ||
| Representation on company boards | Companies with over 50 employees | 43% |
| Companies with 30 - 50 employees | 11% |
Source: Engelstad et al 2003, EIRO 2003a: 3.
The description of the four employee participation ‘channels’ illustrates the importance of the long-standing employer-union collaboration and the progressive development of legislative support structures for workplace employee participation in Norway. However, it also important to allude to the fact that the support for partnerships has also been achieved through other channels. In particular, the building of research capabilities and continuous experimentation with partnership initiatives has given the Norwegian approach to partnership a special flavour.
The building of research capabilities has been underway for a long time in Norway. In the following section, we focus on the role of the Work Research Institute (‘Arbeidsforskningsinstituttet'), but this institute is part of a wider network of research institutes and research initiatives. For example, the unions and employer organisations employ many researchers across a range of public policy fields and these researchers are involved in various partnership projects - either as support persons or involved in documenting and dispersing knowledge about the outcomes of these projects.49 There are also academic researchers, consultants, and public sector employees involved in these networks. In the current large-scale partnership project, VS 2010, the Norwegian Research Council is a key player.
The diverse and encompassing nature of research on work and work organisation has provided the proponents of partnerships with a solid knowledge about the kind of interventions and methods that function in a Norwegian context.
The Work Research Institute (‘Arbeidsforskningsinstituttet’ or ‘AFI’), previously called the National Works Institute, was established after the Second World War to improve enterprise productivity and enhance Norway’s economic recovery. Its importance for workplace partnership increased dramatically in 1964 when Einar Thorsrud was appointed director and the workplace experiments or Co-operation Project got underway. This project on workplace reform was effectively the start of several projects; it prompted subsequent employee participation legislation, and it created a network of researchers interested in working life and Tavistock Institute’s so-called ‘socio-technical approach.51
“The so-called ‘Co-operation Project’ from the beginning of the 1960s until the early 1970s has attracted considerable attention in relation to the development of Norwegian industrial democracy. It was a tripartite project, financed by the two main confederations and, in the final phase, by the state. The aim was to reduce the alienation of workers by introducing forms of autonomous group working and promoting democracy at the workplace, as well as to improve economic performance. The project was based on the Tavistock Institute’s ‘socio-technical’ approach. /…./ There is a direct line from the socio-technical approach to the Work Environment Act of 1977, with its focus on employee participation and workplace control over health and safety questions.” (Dølvik & Stokland 1992: 154).
The Work Research Institute was involved in the roll-out of works councils under the Working Environment Act. It was also a key actor in the so-called HABUT project in the 1980s and 1990s (see below). In this project, as well as the subsequent BU 2000, the State and the lead organisations, NHO and LO, were the main sources of funds. The Work Research Institute has tripartite representation on its board and tends to split its activities between the private and public sector. Besides its emphasis on competence and a quality work environment, it is probably best known for its attempts to build networks and learning organisations. In this work, the Institute is aided by its close public-private sector relationships. The Institute aims to:
“...evaluate different methods and models for the development of competence, adaptability, and innovation in enterprises. Great weight is put on the development of networks between companies and local centres of competence. In this way insight is developed into how organisations and enterprises must adapt to each other to be able to cooperate. Several of the projects are in co-operation with the main trade union and employers organizations and with competence centres. The institute also conducts research on rehabilitation and other labour market measures.” (Work Research Institute (AFI) 1998)
While the initial work of the Work Research Institute focused on improvements in work experiences through job rotation and job enrichment, there were also attempts to promote semi-autonomous work teams. It also advocated organisational culture change through increased self-management, dialogue conferences, and more extensive work re-design in its HABUT and BU 2000 projects. Through its continuous advocacy of employee participation and exploration of new forms of work organisation, the Work Research Institute has provided, together with other research institutes, practical examples of the many ways in which productive employment relationships can be developed. As mentioned above, this is also the key objective for the collaboration between the lead employer and union organisations, NHO and LO.
Since the mid-1990s, the Work Research Institute has faced a number of challenges. It has gone through an adjustment phase, where it has become less reliant on public funding, and it has moved towards more consultancy type of interventions. This has included a re-organisation in 2005, where the Institute changed from being the research wing of the Labour Ministry, to becoming a limited liability company owned by the Ministry of Education. It is also faced with situation where there are many other research institutes which can compete in the Institute’s core areas of expertise, and where overseas multinational enterprises may be more reluctant to pursue alternative routes to organisational performance and work organisation. These challenges are partly illustrated by Table 8.
| Achievements | Challenges |
|---|---|
| AFI has raised awareness both in enterprises and among academics that alternatives to the scientific management paradigm exist, and these alternatives are at least as productive, if not more. | Recently, AFI has gone through a period of what has been described as ‘bureaucratic suffering’ or ‘routinisation’ which has led to less dynamism and risk-taking. |
| AFI has encouraged a strategic approach for adoption both at public policy and at enterprise levels. | AFI is facing problems recruiting high calibre staff (as are other institutions, such as trade unions and universities). |
| AFI has remained relevant to Norwegian working life. It has continued to evolve by continual self-reflection, external and internal audits, and programme evaluations. | As Norway’s economy becomes more market driven, issues arise regarding what influence MNCs and international competition will have on employment practices. |
Source: Mealings and Rasmussen 2000: 76
As stated above, the 1964 experiments are important for their subsequent impact on employee participation legislation, but they are also the starting point for large-scale
Norwegian workplace reform projects. As Johnsen and Joynt (1989: 66) have argued, these projects have become recognised as a milestone in Norwegian employment relations. The firm-level field experiments were considered relatively successful, and they attracted a fair amount of overseas interest (Gustavsen & Hunnius 1981). Its job redesign methods and introduction of team-based work organisation were in line with other workplace experiments (Deeks & Rasmussen 2004: 200-206). However, Mealings (1998: 96) argues that the expected ripple effect to other organisations did not happen, and unions continued their efforts to enhance employee participation through collective agreements and legislation. Nevertheless, large-scale development and research projects have continued to be a significant feature of Norwegian partnerships:
The HABUT programme was based around a number of so-called ‘search or dialogue conferences’ and associated changes to work organisation. The conferences were the starting point for ‘framing organizational development innovations’ (Engelstad & Qvale 1994). The aim of the conferences was to start a discussion about work organisation and employee participation among managers and staff, and on basis of this discussion, changes to work organisation and organisational structures could then be pursued:
“The practice was intended to ensure that organizational development projects were grounded in the needs and experience of employees and managers rather than excessively influenced by external consultants or organizational development theorists.” (Engelstad & Qvale 1994).
While the HABUT programme was located in individual organisations, the Work Research Institute also pursued another work change programme in parallel, where the emphasis was on industry or regional programmes. Of the 500 enterprises involved in the Work Research Institute’s change programme, only around 25 private sector organisations were involved in workplace specific projects; all the other enterprises were involved in industry or regional programmes.
The Joint Collaboration Programme, which is based on the Basic Agreement, is still on-going. It seeks to improve profitability and working life through collaboration between managers, union representatives, and employees (Grimsrud et al. 2005: 5). The programme facilitates and supports networks on collaborative practices, promotes courses and conferences on partnerships, and a newsletter on workplace reform is published. There is now a larger emphasis on organisational development and performance which has been signalled through the appearance of the concept of productivity in the Basic Agreement in the 1990s (Bosch 1997: 221). The Joint Collaboration Programme cuts across and co-ordinates employer-union efforts in the other change and research programmes (for example, BU 2000 and VS 2010). In this way, HF becomes a caterer and provides funds for other workplace partnerships. This ensures that employer-union collaboration forms a major platform for workplace change.
This enterprise development programme was implemented in the period from 1994 to 2000. This was a concept-driven programme for productivity development and organisational renewal in working life. The programme aimed at facilitating business development in the private sector: specifically, the stated goal was to improve wealth creation and secure employment. The main objectives were to develop knowledge needed for organisational development within companies and in networks, such as strategies, methods, practices, and infrastructure (Lindøe 2002). It mainly involved organisations covered by the Norwegian employer confederation (NHO) and the Norwegian confederation of trade unions (LO). As the project focussed only on private sector organisations, a separate programme for public sector organisations was developed. The Research Council of Norway and the two confederations jointly funded the programme. The size of the project is implied by the Research Council’s overall project budget of 9.8 million Euros (see TrendChart 2005). According to an international evaluation in 1999, “the programme has succeeded in developing and modernising the pattern of co-operation” (TrendChart 2005: 2). This has included the introduction of new forms of participation, increased the importance of health, safety, and environment in business strategy, and provided better integration in networks. Overall, the programme has been found to contribute to improved competitiveness.
The Value Creation 2010 Programme is a continuation of previous programmes though with a strong emphasis on value creation and learning networks. Attempts are made to integrate the resources of research institutes and researchers, as well as building industry and regional networks to support workplace change in individual enterprises.
“The programme Value Creation 2010 /…/ was initiated in 2001 and will go on until 2010. The main objective of this programme is to encourage and contribute to organisational development and innovation, both within individual enterprises and in learning networks between enterprises, based on new forms of co-operation between the industrial (social) partners and other actors of significance in the value creating processes. This is done by active use of researchers as development partners.” (Norges Forskningsråd 2005: 1).
In light of criticisms of previous workplace change projects, there is a strong emphasis on dissemination of information and best practice across organisations. As this programme was still unfolding at the time of writing, it is too early to assess its impact. However, at the very least it does herald another step in organisational change and productivity enhancement with its comprehensive collaboration between research institutes, employers, and unions.
Overall, there have been some important shifts as the various programmes have unfolded. In particular, there has been a stronger focus on productivity and organisational performance. There has also been a shift from demonstration projects and dialogue conferences in individual organisations to taking a more industry or regional approach. This has coincided with a growing awareness of the importance of instituting networks where organisations can learn from each other and support organisational development in other firms in the same industry and region (see case study below). This emphasis on networks can also be found among the participating research institutes and researchers where the latest programme, the VS 2010 programme, involves an impressive array of research collaboration and many research projects. This is prompted by a stronger emphasis on research and knowledge dissemination in recent workplace programmes. The Norwegian Research Council is now heavily involved in these research projects, and it takes care, together with the participating research institutes, that there is a national and international dissemination of research findings (see Norges Forskningsråd 2005).
It is always critical how employers regard partnership projects and Norwegian employers, particularly the NHO, have been involved in partnership collaborations for a long time. This may simply be a rational decision in face of high union density and political support for such collaborations. It was also suggested above that this may be explained as a chosen path towards a high skills, high wage economy. It is noticeable that there has been a long-standing focus on improving organisation performance and productivity. Productivity councils at enterprise level were agreed shortly after the end of German occupation in 1945, and the projects of the Work Research Institute can be seen in the same light. It has been argued by Mealings and Rasmussen (2000) that there has been a shift in project aims over time; this shift has further ensconced the emphasis on productivity and organisational performance in Norwegian partnerships.
“The initial programmes established by Thorsrud and Emery in 1964 were slightly contradictory in their aims. On one hand, they were positivistic in nature with clear and measurable objectives and, on the other hand, they contained the aim to increase employee participation even at the cost of enterprise effectiveness (Emery & Thorsrud 1976). These aims shifted somewhat during the next generation of programmes (Gustavsen & Engelstad 1986). They had no research outcomes per se and were based more on enterprise development rather than democratisation of the work process. More recently, research has shifted once again with a growing interest in the process of enterprise change and development in order to produce better enterprise outcomes.” (Mealings & Rasmussen 2000: 76).
Despite the increased focus on productivity and organisational performance, unions regard employee participation as a major benefit for union members. Benefits identified include better and safer workplaces, more influence on working conditions, improved information and, ultimately through higher productivity, more job security. It has also become part of union campaigns to increase membership. For example, the Finance Union (‘Finansforbundet’) stresses that it is a:
“…consultation body for the Ministry of Finance and other public authorities and holds regular meetings with the Finance Committee of the Storting (the Norwegian Parliament).” /…../ and “….through the employee representatives on the company’s Board of Directors, you can participate in influencing the company’s development and strategies.” (Finansforbundet 2005: 2). Furthermore:
“The shop stewards participate in all important decisions in your company. /…./ The shop stewards participate in an annual review of the employees’ wages and salaries. In connection with this review, they only consider pay increases and bonuses for those who are members of the trade union.” (Finansforbundet 2005: 5).
There is very little doubt that employee participation and partnerships are well-established in Norway. Results from the very comprehensive 2001 survey of participation (‘Medborgerundersøgelsen’) confirm this impression. Table 7 above provides a snapshot across the major partnership channels and points to the high levels of participation, as well as a significant union influence.
“In this survey, a number of people were asked about their views on participation in working life, and on the existence of participation structures within their own workplace. Around 60% of employees claimed to be represented on the company decision-making bodies in some way or another, while 70% of the employees stated that representative bodies are present at their workplace (whether working environment committees, works councils etc.). Of those with representative bodies in their workplace, 70% said that they had participated in the election of representatives to boards or various other company representative structures. With regard to their own participation in such bodies, 45% of employees stated that they had been members of a representative body, and as many as 38% claimed to have been a member of the company board ( or other similar decision-making body).” (EIRO 2003: 5).
These survey respondents record a higher level of participation than often found in previous surveys. Going back to the Norwegian research of Holter (1965), it has often been suggested that many employees may be interested in having participation in, or influence on, changes to their own job, but they are probably less interested in higher-level, more indirect types of participation.52
While Norway has been a trendsetter in the development of workplace partnerships, it is important to stress that there is still considerable room for improvement. This is why development and research projects are still undertaken. Our case studies also show that partnerships are distributed unevenly across the economy. In particular, the emphasis has mainly been on medium-sized and larger organisations and on particular sectors. What will happen in service sectors with growing employment (such as retail, hospitality and personal services)? Our case study of workplace partnership in the hotel and restaurant sector indicates that employers are reluctant to engage in partnership arrangements. There may be formal partnership structures, driven by legislation or national collective agreements, but these structures have very limited meaning and effect if there is no active participation from unions and employees.
Thus, employer-union conflicts, employer reluctance, or employee disinterest to engage in partnership processes are still barriers for expanding partnerships further in Norway and why there are constant attempts to experiment with workplace change and participation. The long-standing Joint Collaboration Programme of the major employer and union organisations has provided considerable resources, as well as given the workplace interventions philosophical, political, and practical clout. This has meant that collective bargaining has co-existed with formal and informal employee participation at workplace level, and employer-union collaboration has also been an important influence on the research community and the attempts to improve knowledge networks and dissemination.
Since the Second World War, the lead employer and union organisations (NHO and LO) have jointly funded business-level development projects to help establish and improve workplace partnerships and broad employee participation in Norwegian enterprises. This joint co-operation has been organised through the Basic Agreement’s section on HF (‘Hovedorganisasjonenes Fellestiltak’ - the central organisations’ joint measures for the development of enterprises).
In the businesses covered by the Basic Agreement, all employees pay a monthly fee to a trust through deductions from their pay. This trust is set up for development and education of employees, and the LO and NHO administrate the trust in accordance with the HF. The partnership development project discussed in this case study has been funded through this trust. The HF creates a national framework for all unionised firms. Funding from HF can be activated locally through initiatives embedded in the co-operation committees. Although based in an agreement between the social partners, when implemented at enterprise level, the HF activities cover all employees and potentially all recognised unions in that enterprise. Therefore, there is a wide reach across the labour market. Unions at enterprise level will be covered, regardless of whether or not the union is a member of the national union confederation which has agreed to the Basic Agreement. Furthermore, even employees who are not union members will gain from this trust as it covers all employees, regardless of union membership status.
The data for this case study was collected as part of a larger evaluation project concerning HF and the joint enterprise development effort between the main employer and labour organisations in Norway (Grimsrud et al. 2005). This empirical study is based on both quantitative and qualitative data. A representative survey was conducted among the 7,000 businesses covered by the Basic Agreement. Project reports and previous evaluations were investigated. Sources of qualitative data were semi-structured interviews with key informants, in-depth studies of five projects in 10 businesses, and a review of materials and documents concerning recent HF development projects.
The case study presented here describes the ‘New Possibilities’ project, a partnership project between employers and unions in the hotel and restaurant industry. The initiative for this project was taken on the national level53, but the actual project was implemented at a workplace level, comprising three hotels and two restaurants. The project’s main aim was to improve employment relationships. The participating businesses wanted to raise business performance through improved operational efficiency and working conditions, improving workers’ skills and the quality of customer service, and enhancing communication and problem-solving on the job. In the following discussion, we will present the goals, processes, and outcomes of the project.
The case studies are based on five organisations within the hotel and restaurant industry.
As in other service sectors, there has been a relatively low level of union membership in the hotel and restaurant industry: an average of approximately 12 percent54 compared to an average of 37 percent in the private sector in general (Nergaard & Stokke 2005). Generally speaking, this has combined with management having a rather hostile view of unions, and as a result, there is a low level of co-operation. Up until 10 to 15 years ago, hotels and restaurants in Norway were mainly small businesses, characterised by local (family) ownership and entrepreneurial attitudes. Often, unions were regarded as a political, third-party, and intervening nuisance by management. The relationship between national level organisations, the Norwegian Hospitality Association (RBL) and the Hotel and Restaurant Workers’ Union (HRAF), has also been difficult, reflecting the conflictual, inferior employer-union relationship found in many businesses.
During the last two decades, there has been a shift in the hotel and restaurant industry towards a more regulated and international business structure. First, there has been extensive growth, resulting in more than 3 percent of the total Norwegian workforce being employed by the industry. Second, large national and international chains have replaced many small and family owned businesses. However, the hotel and restaurant industry is still seen as problematic in terms of quality jobs and careers. The industry is characterised by having many part-time workers, relatively low wage and labour standards, high levels of stress, and high turnover, as well as low levels of union membership (Lund & Friberg 2004). Overall, union membership is low, and few businesses in the hotel and restaurant industry base their competitive strategies on employer-union partnerships.
The standard minima have been agreed at national levels, and for example, the standard wage level seems to be applied to businesses regardless of union membership. (Nergaard & Stokke 2005). For businesses with low union membership, researchers found that there is a high probability of the Basic Agreement’s employee participation mechanisms being applied directly when the enterprise is a member of an employer organisation. If either management or the union request that a co-operation committee be set up, then the Basic Agreement demands that this is implemented. Other regulations stipulated by the Basic Agreement are: a certain number of union representatives on co-operation committees and employee board representatives, organisational decision making processes, and particular issues covered by the representative bodies.
Employment relations in the hotel and restaurant industry are often built on the premise of an adversarial relationship. The five businesses in this case study all decided to take part in the partnership project with the intention of transforming their employment relations system into a more co-operative one. Still, the businesses’ rationale for being involved with the partnership project varied, and two different groups of companies could be identified.
First, some businesses described their employment relationships as being unproductive; management and employees seemed to be constantly at war with each other. There was a perceived need to replace conflicts and mistrust with trust and openness. The hierarchical command and control structures resulted in employees being afraid to raise issues. Many employees reported that they experienced rejection and exclusion tactics; there was limited contact between management and employees, and low awareness of work environment related issues on both sides.
Second, other participating businesses reported that before the project started they had reasonably good employment relations, but they wanted to develop it further. There was clearly some room to improve on employment relationships. Following a major strike in 2002, the relationship between management and the union was poor in all businesses.55 All the businesses participating in this case study had faced strike action in 2002.
It is important to stress that another business rationale was at play. In management and employment relations literature, it is commonly argued that the renewed interest in employee participation in decision-making is part of a number of corporate organisational changes being trialled by firms in response to increasing competitive pressures (Markey & Monat 1997). Our analysis found that employer participation in this partnership project was partly driven by pressures arising from growing competition and more demanding customers. Many managers had realised that inferior performance was partly caused by a lack of organisational co-operation between management, employees and their shop stewards. This had resulted in logistics problems, such as tasks being carried out twice or not at all, and an unproductive working environment which undermined employee motivation and their will to take on responsibility. This was reflected in sub-optimal customer satisfaction. In our interviews, managers emphasised the need to see the business as a whole, rather than elements to be treated separately. In this perspective, customer service should be integrated with people management, and thus processes and practices needed to be established which embraced, at the same time, employees’ desires for better working conditions and improved customer service.
Local trade union representatives embraced this project for many reasons. Interviews revealed that union representatives wanted to increase their influence and become more involved in business decision-making and performance. This included a wish to establish a partnership with the employer in order to improve communications, both with management and among employees. Improved communication and co-operation within and between departments were considered critical success factors to a better working life and increased influence on one’s own work situation. Employees were also eager to take part in the partnership project to ensure a sustained competitive advantage, thus seeking more influence on the competitive practices of their employers and to take advantage of their ability to respond to the competitive climate of the hotel and restaurant industry.
The measure of a ‘robust’ partnership lays in the capacity of union representatives to contribute to concepts or ideas at the earliest practical stage in the decision-making process. This is similar to the findings of Oxenbridge and Brown (2004), who note that early union involvement in planning and consultation, particularly concerning change initiatives, is perhaps the most important partnership behaviour.
All participating businesses previously had co-operation and working environment committees where the unions were represented. However, as part of the project, these committees were energised and became more consultative in form. Very few new committees were established to cater for the partnership project; existing committees strengthened their commitment to partnership, improved their performance and as such, helped build trust and respect. From our interviews, it is clear that both management and the union have played an active role in initiating and implementing the project. Even though management and union participation was a criterion for funding, both sides emphasised the active contribution of the other side as an important factor for the positive outcomes of the project.
Work environment opinion polls were conducted before the project started and mid-way through the project. These investigations determined which activities would be focused on. The project also started with a two-day ‘kick off seminar’ in each business (except for one business). In the seminar, senior and line managers, union representatives, and employees developed the ‘rules of co-operation’ together with external facilitators.
Each of the five businesses decided upon the activities suitable to the particular businesses’ needs and challenges. As mentioned, a common activity was developing a set of rules which would stipulate co-operation processes. The rules were interpersonal behaviour guidelines, with the emphasis being on improved communication; for example:
The local rules were developed through a process in which the management, union representatives, and a cross-section of employees all contributed. They were based on a set of values, such as respect, humour, attentiveness, generosity, clarity, and courage, which subsequently led to the development of rules of behaviour. They were then presented to the rest of the organisation, and after considerable discussion, they were practised as part of daily tasks in the various departments. This process of involving different employee groups within the organisation in the project was regarded as important by the interviewed managers and union representatives.
As part of embedding these behaviour rules, the form and the agenda of departmental meetings changed. Previously, these meetings had mainly consisted of management sharing information with the employees. Now these meetings became an arena for discussions concerning strategic and work environment issues. Furthermore, where these meetings had previously been held randomly, they were now scheduled to be held every six weeks.
Besides the joint development of behaviour guidelines, there was a high degree of variation and experimentation associated with the workplace changes. While there was a strong focus on performance improvements in terms of targeted outcomes, the issues varied across the businesses. These included: overtime costs, high staff turnover, and reduced sick leave. In order to achieve mutually beneficial outcomes, all businesses signed an ‘Inclusive Working Life’ agreement which was an extension of a tripartite national agreement.56 The emphasis on mutually beneficial outcomes was also regarded as crucial in improving the vital employee-customer dynamics.
In one business, the focus was on limiting overtime payments which had considerable cost implications. An annualised approach to working time was agreed on, based on an average yearly estimate of working hours, with fluctuations across busy and less busy periods. This made it possible to balance a heavy workload in the Christmas period with the quiet period of the following weeks. As the employer-union agreement was developed as a voluntary offer, some departments accepted the offer, while others turned it down.
The businesses all had high turnover figures and there were various strategies developed to improve the working environment and job satisfaction (including job rotation, see below). In one of the businesses, a work group, comprising equal numbers of management and shop floor stewards, prepared a list of prioritised improvements in people management and job tasks. An important outcome was better induction processes for new employees.
As mentioned, the project had a strong focus on employer-employee communication. Two businesses had experienced difficulties with their internal communication facilities and working groups discussed and presented a proposal for safer communication channels. As a result, new and improved systems were then installed. In one business, the main focus was on positive manager-employee feedback conversations. With a history of distrust and a lot of tension in the workforce, there was a perceived need to co-operate on developing the business and customer relationships. The feedback approach was chosen to re-establish the level of trust and openness. According to interviewees, the change in employment relationships was a big step forward from the conflictual environment previously experienced.
Job rotation has been a standard part of attempts to improve working life (see Deeks & Rasmussen 2002, Wills et al. 2001). Job rotation works particularly well with small and medium-sized enterprises, as it can increase both the business skills base and enhance functional flexibility. Several businesses introduced a job rotation programme, with employees from all departments taking part in the programme implementation. Job rotation worked well in many situations. It provided the ability to quickly take over an absent colleagues’ job. Employees gained a better understanding of the overall operations of the business, and thus, could make more informed decisions. There was also an increased understanding of co-workers’ work situations and this fostered respect and tolerance among employees.
In one restaurant, the job rotation attempt failed after a few weeks. A radical attempt was made to establish a preferred rotation shift schedule. Employees could fill in their names on a schedule, even choosing which department they wanted to work in during a particular shift. By this arrangement, management wanted to give all employees the possibility of taking on responsibility for developing a work schedule based on individuals’ preferences regarding job content and working hours. This radical arrangement only lasted a few weeks because of a mismatch between employees’ work interests on one side, and on the other side, their skills and existing employment conditions. It turned out that the drivers57 wanted to work as chef-assistants and waiters, but chefs-assistants and waiters did not sign up as drivers! The chefs-assistants, waiters, and drivers also had different wage systems. Our study found, however, that even though this attempt failed, it did demonstrate to union representatives and employees that management had the will to accommodate employee interests.
From a union perspective, it is important which employees take on an active role in a partnership project. Even though this was a joint employer-union project, both unionised and non-unionised employees could take part in the project. Generally, it is important to recruit a person with an ability, will, and stamina to influence all employees and embed the ‘rules of co-operation’ across departments. One would feel intuitively that, as long as there is an improvement to employer-employee collaboration and this flowed on to mutually beneficial improvements in organisational performance and working environment, then the process of selecting employees should not be important. However, this has been shown not to be the case, as it is often decisive for the medium- to long-term outcomes of workplace change that it is established firmly within employer-union structures.
The employer-union structures are important for two reasons (Grimsrud et al. 2005). First, relying on individual employees runs the risk of the co-operation faltering if this individual changes her/his mind about partnership, shifts to another job role, or takes a job elsewhere. This can be prevented by the partnership agreement being based on a management-union relationship utilising formalised employee participation structures.
Second, having a national agreement or a joint national employer and union organisation backing the workplace changes provides considerable stability, and it also allows the flow-on of information and building of networks across workplaces and businesses. In the New Possibilities project, the national employer-union backing also provided access to the considerable funding and knowledge vested in the long-term collaboration, HF, among the lead organisations.
The participating businesses all stressed the importance of having sufficient financial funding to run the project activities. Even though they put a considerable amount of time and money into the project themselves, the external funding (from the HF fund) was necessary to keep the momentum going. This was essential to implementing and improving the partnership project. In particular, the external funding allowed the use of external facilitators and provided workplaces access to research and knowledge networks. Furthermore, it facilitated the dissemination of successful practices and research findings beyond the participating workplaces.
As in most workplace changes, middle managers played a vital role. Middle managers were crucial in the overall process of ‘persuading’ employees that it was important to practise the ‘rules of collaboration’. To convince middle managers that they too would gain from the outcomes of the project, they were invited to project meetings, so that they could have more influence and impact over the project activities. Most middle managers welcomed this opportunity by further committing themselves to the project, while those (very few) who still refused to commit to the partnership process were told that at least they should not oppose the content of the activities. This generally happened as the ‘uncommitted’ middle managers worked on their usual daily tasks and let the rest of the organisation carry on with the project. However, the effect of overt non-compliance by one middle manager was that the entire department of that hotel was dysfunctional in terms of the partnership process and delivered inferior performance.58
A project co-ordinator was engaged by the joint national employer and union initiators (HRAF and RBL) to assist in the implementation of the project. The main tasks for this facilitator were:
The project co-ordinator assisted the participating businesses throughout the project. Other external facilitators were brought in by the national employer and union organisations to provide support and motivation to both managers and employees. One of these, a well known motivational speaker with experience from sport motivation, brought in the ‘rules of co-operation’. He stressed the importance of the daily practising of the ‘rules’, and that it was necessary for everyone to take a personal responsibility for practising these rules and supporting the results which would follow.
During the project, there was an increased focus on communication and knowledge sharing. Managers, union representatives, and involved employees were invited regularly to seminars and network meetings. These seminars and meetings had a major impact on the sharing of knowledge and experience. According to our studies and interviews, both management and union representatives reported that these seminars were helpful throughout the project as feedback arenas and as a way of stimulating communication and enthusiasm about the partnership approach.
It is a core assumption of the literature on partnerships that partnership brings benefits to the partners in terms of the outcomes of interest to the partners (Guest & Peccei 2001). Partnership may be expected to lead to benefits such as higher employee commitment to the organisation, a greater willingness to contribute to the organisation, superior performance, and lower levels of absence, labour turnover, and industrial conflict (see Applebaum & Batt 1994, Arthur 1994, Becker & Gerhart 1996, Delery & Doty 1996, Guest & Peccei 2001, Huselid 1995, Kochan & Osterman 1994). From an employee perspective, the benefits of partnerships might be expected to include opportunities to exercise greater autonomy (Guest & Peccei 2001), as well as a more positive psychological contract (Rousseau 1995).
In the project, practising the ‘rules of co-operation’ resulted in a more collaborative climate between management and unions, as well as an improved culture across the entire business. There was a shift from an ‘us versus them’ culture to an ‘us’culture. The union representatives reported that they experienced an improvement in communication and in the way they interacted with their colleagues and employees. These were part of a number of changes, and in the interviews, union representatives and management agreed on the following outcomes:
Several of the outcomes listed above are informal rather than formal in nature. No new formal participation structures, such as joint consultations committees or employment security commitments, were formalised during this project. However, new working practices and improved participation were strengthened, including more involvement of union representatives in organisational decision-making processes. Both management and union representatives took part in a project closure conference. The general theme was that the New Possibilities project had had a great impact on the co-operative climate at the workplace level. In an industry with traditionally low levels of workplace co-operation and high levels of conflict, the project proved that enhanced partnerships can be made possible by undertaking small actionable steps towards a change in attitude and behaviour of management, union, and employees. This can then influence the culture of the entire organisation and result in mutually beneficial outcomes for employers and employees. The project has also proved that having formalised structures is not enough in itself; it is necessary to increase the activities undertaken within these formal structures and also having them supported by informal practices and behaviours.
The trade union had a proactive involvement in the project in all of the participating businesses. The trade union participants reported that their active involvement in the project was yielding a number of positive outcomes for the project. This understanding appears in line with the suggestion of Wood and Fenton-O’Creevy (2005) that unions may act as a coercive and normative pressure on management to inform and consult via representative channels. On the other hand, co-operative relations can lead union representatives to feel isolated from members. When managers discuss sensitive information with union representatives, the representatives’ enhanced understanding of the reasoning behind management proposals can lead them to develop more moderate positions. This can then lead to divergent interests between representatives and the represented employees.59 We do not have opinion polls of employees, but the issue was raised in our interviews, and union representatives were conscious of their balancing roles: trying to faithfully represent employee interests and views and being a strategic partner during management-union collaboration.
The partnership project has not culminated in a formalised partnership agreement between management and local trade unions. The lack of a written partnership agreement can make the achieved gains vulnerable, as the commitment to the co-operation is not formalised. The co-operative spirit just gained may easily falter if one of the parties (following a conflict as part of collective bargaining, for example) decides to end this agreement. However, the parties have been brought together through the project, including extensive education and training programmes on how to improve co-operation. According to the reported outcomes from managers and union representatives, the project has managed to improve co-operation and this has resulted in improved organisational performance and better working conditions for employees.60 In the Norwegian context of strong formalised participation structures, it may turn out that the positive outcomes of the project and the increased collaboration will provide a stronger impetus for cultural change than if it has been vested in a formalised partnership agreement.
This case study overviews a workplace partnership in the public transport industry.61 This presents an example of how workplace partnership can improve organisational performance and be utilised in an attempt to build a sustained competitive advantage within a highly competitive industry. As the public transport industry has experienced significant issues surrounding the work environment, this has had a major impact on organisational performance. Thus, this case study addresses the general question of whether profitability and a good work environment in the public transport sector can be compatible.
The public transport industry has been faced with a number of strategic issues which can make it difficult to create high performance organisations. As the main part of the workforce consists of bus drivers, the organisations in the industry tend to employ relatively low skilled and low paid workers. The job itself is monotonous and sedentary as the bus drivers carry out their job sitting down most of their working day. Historically, the industry has been characterised by high turnover figures, increasing sickness absence, and extensive use of disability pensions. In turn, this has negatively influenced the competence level and the reputation of the industry (see Gunnes 2003, Hagen 2003).
There has been a major change in the competitive situation over the last two decades, as there has been a growing use of public tenders in the public transport sector (Gunnes 2003). Organisations are increasingly being exposed to a more fierce market situation in their competition for winning public tenders. These employment consequences include:
These negative employment consequences are associated with a ‘survival syndrome’ among the bus companies, as they need to win public tenders in order to stay in business. This competitive market situation has driven the bus companies to present tender bids with low profit margins in order to win tenders. This is a recognised problem across the Norwegian public transport industry, as well in other countries. In Sweden, for example, where a similar market situation applies, it has been decided that contracts must also consider ‘soft values’, including negative employment consequences. This can include, for instance, how the bus drivers perceive their work (Kommunal Yrkesforum 2002). The case study discussed below presents another way: how to improve both organisational performance and work environment through a management-union partnership. Our research shows that operating in this kind of competitive environment was a key factor in motivating managers to participate in a ‘development project’ through a management-union partnership.
This case study of workplace partnership discusses workplace changes at AS Sporveisbussene, a bus company which is fully owned by AS Oslo Sporveier. AS Oslo Sporveier is owned by the Oslo Municipality. The company operates a network of bus routes serving the Oslo area under contract to AS Oslo Sporveier. Sporveisbussene operates a fleet of approximately 330 buses which service local bus routes, as well as coaches available for private hire. The company has around 80 percent of the Oslo bus transport market, as measured by the number of travellers. Ticket sales provide the company’s main source of income and the company has an additional subsidy income which currently constitutes around 10 percent of the income from ticket sales. The company employs over 900 people,62 of whom approximately 85 percent are bus drivers. Of the bus drivers, approximately 85 percent (around 650 employees) are members of the union, Yrkestrafikkforbundet. This union is a member of the Confederation of Vocational Unions (YS) which is the second largest national trade union confederation after the LO.
Sporveisbussene is a work-intensive organisation where organisational performance, work environment, and work effort are considered inter-linked. As expressed by the managing director:
“Sporveisbussene is continually aiming at reducing the amount of sick leave; improve quality of work life and to increase motivation. These are critical success factors that mutually interact with each other in a positive way and result in a satisfying work environment. This further leads to reduced costs and increased income. In the long run, this will lead to a sustained advantage in the competitive environment of tendering in the public transport industry.”
Before the start of the ‘development project’, the industry-wide characteristics of high staff turnover and high levels of sickness absenteeism also applied to Sporveisbussene. As a result, cost levels were considered to be too high. Both management and union agreed, therefore, that there was a need for a cost-effectiveness programme which targeted staff turnover and sickness absenteeism. As this case study will show, this organisation stands out from the trend by committing to break with the ingrained patterns of turnover and absenteeism.
At AS Sporveisbussene, there was a close relationship between management and shop stewards. This was also confirmed by our interviews. Since the establishment of AS Sporveisbussene in 1997, a close management-union co-operation has existed. A healthy relationship is viewed by both management and union as a critical foundation for the company’s sustained competitive advantage. Even before the start of the project, a wide range of bipartite arrangements existed at the company:
The systematic health, environment, and safety (HES) activities are organised through a HES-steering group led by the managing director. This group consists of shop stewards, team managers, an occupational doctor, as well as the elected health and safety officer. The steering group meet every six weeks to discuss and decide upon activities to help reduce sickness absence and to find solutions to help bring employees back to work.
The managing director was appointed to his current position in 2001 and entered the organisation with a view that work environment issues were closely related to profitability figures. If the employees were experiencing a sound and good working life,63 then profitability figures would be positively influenced. Furthermore, the managing director also thought that in order to improve the existing performance, the management and the union needed to co-operate. Overall, it is fair to say that management, particularly the managing director, were taking the initiative to develop a stronger workplace partnership.
As mentioned, the main goal was to improve the competitive advantage through working in partnership to reduce sickness and improve workplace relationships.64 There was a joint management-union decision that ‘we need to do more’. Early in the change process, an HES steering group was established, where both management and union were represented.65 As part of discussions in the HES steering group, management and union representatives identified which actionable steps needed to be taken in order to intensify the effort to reduce sick leave absenteeism. As part of the overall commitment, a range of activities was launched:
Sporveisbussene applied to become a pilot company (one of six companies) in a large national development project to decrease sickness absenteeism. The national employer and labour organisations in the public transport sector initiated a project, Friskbuss, which was partly funded by HF (the joint collaboration programme funded by the major employer and union organisations). Taking part in the HF-project was one of many internal decisions concerning activities to decrease sick leave absence and improve the work environment.
The HES steering-group initiated and implemented management training and development programmes at all management levels. The aim was to ensure that the team leaders were empowered to take on the responsibilities previously held by the personnel department, as well as managing the operations of their particular bus route. The restructuring of the organisation was also aimed at nurturing leadership presence. Leadership presence can be understood as both an organisational infrastructure to enable contact between employees and their team leaders, and also as a way of consciously exercising the manager role to motivate for results, build relations to enhance co-operation, and to enhance leadership communications to inspire those you lead (Halpern 2003).
Previously, the work was organised in a manner where the middle managers were involved in driving themselves. As the bus drivers’ working day starts at different pick-up points throughout the city, there could be (in the worst case) weeks between face-to-face contact between managers and employees. Following the organisational restructuring, all team leaders are operating either from the company’s headquarters or from one of the company’s five depots. With all team leaders in-house, the employees can easily get in touch with their managers to discuss matters of operation or their work situation.
As part of the changing management and organisational structures, the shift work schedule was altered. The shift schedule was aligned to fit with the body’s internal biological clock (a ‘circadian rhythm’). This biological clock regulates all bodily functions within a 25-hour periodicity and making the shift work schedule rotate with the clock should (in theory) make it easier for shift workers to adjust to changing working times (O'Neill & Cushing 1991, Kleiven 2001a, 2001b). While the adjustments to the shift work schedule were based on medical advice, there was one downside: drivers would have less free time at the weekends. This prompted a difference of opinion between bus drivers and their shop stewards. The bus drivers did not support the shift work schedule change, especially the senior employees who expressed strong dissatisfaction with the new way of organising the shifts. Shop stewards took another position and supported the change based on the potential long-term positive health effects. This was a rather difficult situation for union representatives and management. In order to diffuse the conflict and facilitate the change, senior staff were given the chance to choose their work schedules first. This situation shows how shop floor stewards can have a semi-autonomous representative role and can function as moderators on issues from both long and short-term perspectives.
Working within the public transport sector can be something of an isolated and lonely experience (Gunnes 2003). As is well-known, social contact is important for human beings, and social interactions at work can also improve learning skills and act as a motivating source. As Schein (1999) has argued, it is through social interactions that organisational culture (‘the-way-we-do-things around here’) develops and this provides an important part of organisational performance. In Sporveisbussene, restrooms were set up where drivers could meet their colleagues and managers at lunch breaks. Seminars for all employees were being held frequently. While the seminars were free to employees, they would be scheduled as part of their off-time. These seminars have proved to be very popular among the drivers of all ages and all nationalities.67
The tripartite agreement to create a more inclusive working life (IA) aims to reduce sickness absenteeism, facilitate a longer working life (delay retirement), and increase employment of people with disabilities. One of the concrete effects of being an IA-registered company is changing the standard sickness absenteeism reporting practice to one of self-certification of absenteeism, without a doctor’s certificate. Employees in IA-registered companies would have the right to ‘extended self-reporting’, allowing them to be off work for up to eight days at a time (maximum 24 days off per year) without a doctor’s certificate.
The regulations for senior employees were also based on positive results from a similar project in Oslo. As part of a recent study of the major public transport operator in Oslo, AS Oslo Sporveier, a project was implemented where senior employees were offered to work less, in order to lessen their amount of sickness absenteeism. The sickness absenteeism levels for the target group changed radically during the trial period. The year before the trial period, the target group had substantially higher sickness absenteeism than the average level of employees in the public transport operator. During the trial period, sickness absenteeism was reduced considerably (Hagen 2003). It is unknown whether Sporveisbussene would have implemented their senior regulations regardless of the Oslo study, but it shows how a positive attitude and an interest in using research results from other organisations can facilitate workplace planning and organisational change.
Bus drivers are exposed to robbery and violence on the job, with employees’ safety being threatened especially during evening and night shifts (Lavik 1998). In the initial internal employee survey of 2002 on work environment issues, the employees made it clear that a fear of being attacked while at work led to high stress levels and anxiety. As a high level of stress undermines attempts to create a good working life (Byrkjeland 1998), various steps were taken to reduce the likelihood of such episodes (see Kleiven 2001a, 2001b). In particular, safety cameras were installed on all buses.
Many bus drivers have an unhealthy lifestyle, as they have a sedentary job and many are also smokers (Kleiven 2001a, 2001b). Bus drivers are now part of a non-smoking work environment and as a public transport organisation, Sporveisbussene applies no exemptions to the non-smoking rules. Unfortunately, bus drivers have limited chances to take small breaks for exercise and relaxation. The combination of limited exercise, a one-positioned work situation, and smoking results in an increased health risk for bus drivers (Kleiven 2001a, 2001b). To reduce the health risk, several actions were taken:
From the two work environment surveys, it is clear that employees generally find that the work environment has improved. This general feeling of improvement is supported by outcome measures. In particular, sickness absenteeism has reduced from 13.5 percent in 2002 to 8.5 percent in 2004. Furthermore, management reports significant financial improvements as reductions in costs have coincided with strong organisational performance. The cost reductions have been related to:
Sporveisbussene has improved its ‘brand’ as being a good employer by receiving public recognition of its organisational changes. The company has won two awards for being the best Inclusive Working Life business (Inkluderende Arbeidsliv, IA). In May 2004, Sporveisbussene was appointed the leading IA company in Oslo. Also in 2004, Sporveisbussene was awarded ‘the Inclusive Working Life Company of the Year’ in Oslo by the National Insurance Administration, together with the main labour organisations in Norway (NHO, LO, and YS). The award was given based on the following: comprehensive training and development of middle managers who have line manager responsibility for staff, proving an exceptional level of information to employees, and for working systematically and continually on improving the work environment. Furthermore, there were a number of other company achievements mentioned, such as a healthy dialogue in the company, as well as productive co-operation between management, shop stewards, and safety officers.
In the introduction section of this workplace example, we asked whether profitability and a good work environment in the public transport sector are incompatible. As shown by this case study, profitability and a good working environment can be compatible: the management concerns regarding profitability and employees’ interest in a healthy work environment are really two sides of the same coin. By committing to a management-union partnership, Sporveisbussene has managed to achieve positive results on both accounts.
The process of selecting workplace changes has been firmly located within the union-management partnership agreement. The comprehensive process and level of partnership executed in this organisation shows the importance of bringing the partners ‘to the table’ - not only for negotiating purposes but also to cater for the joint concern of building a sustained competitive advantage for the organisation. Having a devoted managing director seems to have further enhanced the partnership relationship. The managing director’s positive attitude towards a bottom-up-approach when it came to handling the various challenges ahead proved crucial to the process of improving the work environment. There had been management-union co-operation prior to the arrival of the new managing director, but this co-operation was extended considerably under the new managing director.
It is also a critical success factor to have full involvement of union representatives and employees. In a recent national survey in the private sector (Grimsrud et al. 2005), it was found that around 80 percent of managers had included unions in change projects in order to ensure compliance among employees. Managers also stressed that another rationale for including unions was the perceived value of input from the union.
Workplace partnership is further buttressed by the lesson from these changes. By nurturing a productive partnership between management and the union, working to reduce sickness absenteeism can be good business development, if done in co-operation with the employees. There are also further downstream advantages as the ‘good employer brand’ is associated with reduced recruitment costs, staff delaying retirement, and a positive customer image.
The two Norwegian workplace partnership examples presented demonstrate partnership on two different developmental levels. In the hotel and restaurant industry, a partnership programme was established to facilitate a learning arena for co-operation. As employment relations was conflict oriented, it was necessary to first build trust and a climate for co-operation. There was a need to establish a productive partnership and to learn how to co-operate instead of meeting only when conflicting situations had already emerged.
In the organisation within the public transport industry, partnership has been taken one step further. Not only does management welcome the union co-operation, they even rely on this relationship to function well in order to stay in business. In the public transport case study, good relations already existed between the management and the union. In this organisation, they wanted to secure better organisational performance and an improved working environment by leveraging the already well-established workplace partnership.
In our view, the prospects of a positive long-term effect of the partnership arrangement vary considerably between the two cases presented. An obvious obstacle to a fruitful partnership in the hotel and restaurant business was the business environment and the prevalent use of atypical employment patterns. Overall, this partnership seemed to be a lot more fragile and dependent on continuous employer and union support and developing positive attitudes towards partnership among staff. Whereas in the public transport case, partnership seems to be embedded in the organisation’s culture – ‘in the way we do things’ – and it can draw on a stable history of positive employment relationships. We expect to see more positive long-term effects from the way co-operation is embedded within the partnership structures. This is in line with the recent study of HF-supported projects (Grimsrud et al. 2005), where it was found that established forms of co-operation through partnership channels facilitated better and more sustainable outcomes. Where management and union actively utilise the formal system and structures, this enhances the prospect of strengthening workplace partnerships, and, in turn, this allows for smoother, more efficient workplace change.
Richard Croucher and Erling Rasmussen
The United Kingdom has the oldest trade union movement in the world, and its unions have developed across two centuries in a continuous process unbroken by totalitarianism. These unions were and remain characterised by their ‘bottom-up’ nature and reflect an extremely varied set of workplace, local, and sectoral realities. Their recognition by employers and the State has been characterised by pragmatic responses; the result is less a ‘system’ like the German employment relations system, but more a complex set of ‘muddling through’, de facto and ad hoc arrangements. This situation is symbolised in the non-existence of trade union rights provisions in the (itself unwritten) British constitution. While trade unions have certain ‘immunities’ from prosecution when carrying out their functions, until recently, their main functions and roles were bypassed by legislative initiatives. The Blair New Labour Government’s support for partnership has been stamped by this history, in that it is not a support reflected in any legislative sense. The New Labour Government has not adopted 1970s-style corporatist or tripartite arrangements, and the Trades Union Congress (TUC) has had few opportunities for tripartite discussion with the State and employers’ organisations. In short, the TUC is on the outside looking in.
One consequence of this overall situation is that ‘partnership’ has been, in common with many other developments, patchy in its coverage and ad hoc in its implementation. It has been supported but not strongly driven by the central union co-ordinating body, the TUC. This is simply because the TUC has little influence on individual unions in comparison with, for example, its Irish equivalent. Moreover, British unions have a strong sense of their independence from the TUC. This has developed through both their long histories and their recent mergers to form large ‘super unions’ that have increased their specific weight in relation to the national centre. Therefore, recent research has focused more on employee representatives and employees involved in workplace partnerships (Danford et al. 2005, Martinez Lucio & Stuart 2005). This has shown that representatives’ attitudes on the effectiveness of partnership differ. Some union representatives see it as ‘working the system’ or as a necessary evil, others as a way of modifying the worst aspects of management initiatives before they are introduced. Many union representatives frequently complain that this sort of activity is not seen by the unions’ members and, therefore, is discounted by them. In general, however, few union representatives see any alternative.
The UK is the OECD’s fourth largest economy after the USA, Japan, and Germany. It is a member of the European Union (EU), although as we illustrate below it has had a somewhat ambivalent relationship to EU collaboration, particularly in the area of welfare and employment regulation. Following changes to EU decision-making procedures, the UK has been slowly dragged into ‘European’ employment relations as regulations on employment minima and European Works Councils (consultative bodies for larger European companies) have started to influence British approaches to employment regulation. This has been further facilitated by the shift to the ‘third way’ public policy under Prime Minister Tony Blair and the economy’s integration to the Single European Market. EU membership has provided an important basis for expanding the market for British services and products. However, it is debatable how much direct impetus the ‘third way’ approach of the Blair governments has given to collective bargaining and workplace partnership approaches (Smith & Morton 2005). The rather tentative approach to partnership is almost certainly because of the Government’s refusal to enact any law restricting management prerogative.
The last couple of decades have seen volatile growth patterns in the economy and geographical dislocation of employment. A deep economic downturn at the beginning of the 1980s accelerated a long decline in traditional extractive and manufacturing industry, including coal mining, steel, and shipbuilding. At the same time, there has been an expansion of services, notably financial services, IT services and education (now a major British export), but this process has not aligned geographically with the decline of older industries. Therefore, there has been a divide between the more dynamic service-based sectors of the South East and less prosperous older industrial areas, such as Wales and the North East of England. Despite the political discussion of an ‘entrepreneurial society’, employment has remained important in the British economy, with self-employment actually declining in the 1990s.
Since 1992, the UK has experienced a long period of steady growth with falling unemployment and inflation held below 4 percent for 13 successive years, and in turn, this has produced labour shortages in parts of the economy. December 2004 brought the 50th successive quarter of economic expansion - an unprecedented period of expansion. Despite this economic development, it is still being discussed whether Britain can be viewed as something of a sustainable economic ‘success story’ or whether there are temporary influences at play - such as North Sea oil and gas or the relatively low value of the pound because of non-membership of the Euro currency zone. What the impacts have been of this relatively de-regulated labour market is also discussed. Regardless of which explanations are preferred, it is noticeable how little collective bargaining and partnerships feature in public policy discussions and evaluations. While the long period of economic growth has kept demand for labour relatively high and even created labour shortages, it has seldom been associated with collective bargaining changes or workplace partnerships, probably because of unions’ political weakness.
In the following discussion, partnership will be viewed from three different angles. First, partnership will be placed within its economic and employment relations context, with special emphasis given to the role of the State. The ‘third way’ has signalled changes in the role of unions, the development of employment relations legislation, and more ‘European’ forms of workplace relationships. While the Blair governments’ ‘third way’ is substantially different from the neo-liberal confrontational policies of the 1980s, it has been tentative when it comes to unionism and collective bargaining, comprehensiveness of employment relations legislation, and in developing employee participation and workplace partnerships. On this background, the fact that this has not been an easy or unproblematic path for unions to take is also discussed. While some unions have made membership gains as a result of partnership, others argue that if the union had announced from the beginning that it would compromise, then management simply moves the goalposts and demands more. They further argue that members have to see their union stand up for their interests. Recently, this position has increasingly gained ground, and it is arguable that in the UK ‘partnership’ is an initiative that is running out of steam - at least in so far as unions are concerned.
In the second section, we focus on workplace partnerships. In our analysis of partnership, we will try to establish the key trends, themes, and issues surrounding the various partnership approaches. In particular, this section aims to:
Finally, we illustrate some of the key themes and issues through the presentation of some workplace examples of partnership. These examples cover the retail and finance sectors, where partnerships have been relatively well developed and indeed publicised.
A long period of Conservative governments (1979-1997) opened Britain (within the limits imposed by EU membership) to the world economy and started the European Union integration. These changes had major impacts on employment relations and union membership. During that period, its overall socio-economic model moved from a relatively state-centred system and towards a much more private-sector and business-driven one. This was reflected in policy towards nationalised industries which were privatised (in a process later emulated by many other countries world-wide), closed down, or reduced to tiny industries, such as the coal industry.
British coal mining capacity had been continuously reduced prior to the Thatcher Conservative governments, but this process was accelerated in the 1980s. The defeat of the miners in the 1984/85 strike simultaneously removed a major focus of union opposition to the Government, inflicted a symbolic defeat on the British union movement, and curtailed what was still a large source of employment. The symbolic defeat of the miners paved the way for major changes to the ‘welfare state’ and, in particular, unemployment benefits in order to effect a shift towards a more ‘entrepreneurial’ approach. Part of this approach were several rounds of union legislation that restricted unions’ rights to enforce ‘closed shops’ (union-only workplaces), enforced ballots on unions before strikes, and so on. In addition, the Conservative governments abolished large numbers of tripartite bodies involving unions, employers, and government representation and carried out very little consultation with the TUC or individual unions (Smith & Morton 2004). This cut the TUC off from the corridors of power, and this situation continues to the present day.
The frontal attack on collective bargaining and unionism by the Government placed union strategists in a quandary. Some unions could not see any scope for accommodation when the Conservative governments and major employers remained in an adversarial mood, while other unions such as the electricians promoted ‘single union agreements’ and workplace collaboration. The latter type of unions was often accused of signing ‘sweetheart deals’ with employers and gaining members at the expense of other unions. The strategy disagreements also surfaced in respect of the European Union and legislative-based employee participation structures. However, the Trades Union Congress started to promote more of a pro-European approach following the election of John Monks as General Secretary in 1993.
The election of a Labour government in 1997, which still remains in power after winning its third successive election, brought change within certain well-defined limits. The new Government did not repeal any of the legislation enacted by the Conservative governments. It also announced that it would not go back to the ‘bad old ways’ of the 1960s and 1970s, whereby trade unions exercised what came to be seen as undue influence on government. Tripartism was not to be embraced. Rather, it would follow a ‘third way’ between an untrammelled US-model and a ‘European’ continental model of tripartism and workplace co-determination. The meaning of this ‘third way’ for unions was explained in the Government’s 1998 document ‘Fairness at Work’, where it was explained that the Government had a “programme to replace the notion of conflict between employers and employees with the promotion of partnership” (DTI 1998: 3). Importantly, it denied any special status to trade unions, as employment relationships:
“…are sometimes provided by a partnership between employers and trade unions which complements the direct relationship between employer and employee. On the other hand, some organisations achieve effective working relationships in other ways” (DTI 1998: para. 2.5).
Unions were given new, carefully circumscribed recognition rights in the Employment Relations Act of 1999, but ‘orderly industrial relations’ was the watchword (Smith & Morton 2005). The law gave unions a statutory recognition procedure embodied in Schedule 1 of the Act and implemented from June 2000. It also allowed the election of a new type of union representative in workplaces: the Union Learning Representative (ULR), which we expand on below. Overall, however, the Government’s enduring concern was to maintain managerial prerogative. Unions were to be supported when carrying out functions the State considered useful, such as being involved in training initiatives or work re-organisation in the workplace.
In particular, training and development initiatives have been strongly encouraged by the Blair governments: Union Learning Funds have been established to which unions may apply to support educational projects, and Union Learning Representatives (ULRs) can facilitate educational opportunities for workers. ULRs have the right to paid time off work for both their own training and to carry out their own duties. There are currently some 10,000 ULRs, and it has been estimated that by 2010 there will be 22,000 of them, attempting to open up educational opportunities for their members and employees more generally (Hope et al. 2003). In short, the Government has taken the opportunity to bend unions’ educational traditions to their purpose of attacking two significant historic problems: British employers’ reluctance to train their employees and its history of a long ‘tail’ of under-qualified workers.
It has been argued that these initiatives are part and parcel of ‘partnership’ because they offer unions an alternative to militancy; that is, a co-operative focus for their activities (Munro & Rainbird 2000). The Government has furthered these ends by three other main means. First, it has established funds for both developing partnerships and union learning to which unions may apply. Secondly, it has encouraged union involvement in ‘best value’ tendering processes for public services. Thirdly, it has advocated partnership approaches politically. This means that some researchers see the Government as a significant agency in the support and development of partnership, especially through its residual role as ‘model employer’ in the public sector.
The ULR initiative has not generally been met with enthusiastic support from employers, who have often been reluctant to provide good facilities for ULRs. Recently, there have been some signs that this may change, when unions show their capacity to raise employees’ take-up of training. The TUC has enthusiastically supported the initiative and there is no doubt that ULRs are increasingly common in workplaces. The most successful local model of this sort of activity has been based on a local coalition of ULRs and further education colleges, such as the unique Bedfordshire Union Learning Link (Bedfordshire Union Learning Link 2005). This provides a structure for ULRs to meet, together with education providers, and gives them a cross-workplace forum where they can exchange experience. Led by a highly experienced trade union studies tutor, it takes a ‘bottom-up’ approach where most other ULR initiatives have been led by London-based union headquarters or regional TUC structures. It has provided unionists with a clear focus of activity and renewed their links with members, and though it has not always been linked to formal partnerships, it may provide a future route of development for the partnership concept in practice.
Economic re-structuring and Conservative politics had major consequences for trade union membership and which are still influencing union structures, membership levels, and strategies today. They reduced union membership from about 12 million in the late 1970s to about 7.3 million currently. This means that union density is moderate in European terms: comparable to German union density, lower than the Scandinavian countries but higher than France.
Since the late 1990s, favourable economic conditions and a Labour government have been a positive background, but unions have found it difficult to reverse the downward trend in membership and have made little progress with organising attempts in new industries. The TUC reported a slight increase in membership in June 2000, but this proved a false dawn: the one million new members predicted by the TUC and justified by its organising efforts at that time have not materialised. Overall, trade union membership remains static and union density is almost exactly 30 percent, according to the Labour Force Survey of 2004 (see also Appendices 3 and 4). This membership is concentrated in the public sector where white-collar trade unionism among teachers, nurses and civil servants is still strong. The fastest-growing union is the Public and Commercial Services Union (PCS), 90 percent of whose members work in the public sector. The growing membership among certain public sector unions is almost certainly related to increased state expenditure in their areas.
On the other hand, union membership in the private sector is only about 20 percent of the workforce, meaning that British trade unionism has become a largely public sector phenomenon.68 However, within the private sector, trade unionism remains significant within larger companies by employment. Membership in fast-growing new industries, such as IT services, is very weak, particularly when ‘residual’ trade unionism remaining from a previous history in the public sector is discounted. Some 46 percent of trade unionists are women. Although women are slightly under-represented in unions in comparison with their workforce presence, the under-representation is much less marked than in some other European countries. The same is true of members of ethnic minorities, who are represented at a level roughly proportionate to their workforce presence.
Membership stagnation formed an important component in the drive towards ‘partnership’ in some workplaces in the late 1990s, because it pre-disposed unions to a more co-operative stance. It was not the only tactic used by unions to improve their membership, rather it went hand-in-hand with a more ‘organising’ approach to trying to win new members (Heery 2002). Many unions took the view that, as they were seeking to adopt a more co-operative attitude to employers and to project a new image, they should also seek to gain recognition by stressing this. However, first they had to recruit members, and to do this, they took a rather different stance: to train union recruiters to bring new members in by targeting specific groups in already-unionised workplaces (‘in-fill recruitment’) or indeed by targeting whole new workplaces. So far, these efforts have not succeeded in raising overall union density.
A second important complement to partnership has been the strong tendency for British unions to merge; this was evident throughout the 20th Century, and the trend to seek economies of scale through mergers has continued in the 21st. The creation of a few ‘super unions’ has greatly reduced the significance and status of the Trades Union Congress. Thus, partnership should be seen in that wider context as part of an attempt by unions to maintain or improve membership levels. This is also crucial as a way of improving the unions’ financial position because, in international terms, British unions are heavily dependent on subscription income.
However, it is possible, that the partnership deals around the turn of the century will prove the high water mark of support for partnership among unions. In recent years, those general secretaries who were particularly supportive of such policies have largely been removed in elections by their members (for example, Sir Ken Jackson of the engineering union – formerly the AEEU, now Amicus). They have been replaced by a new generation of union leaders labelled variously as ‘the awkward squad’ by the Government or the ‘New Left majority’ by leading unionists. These union leaders are less uniformly ‘left’ than strongly membership-sensitive. They all have stronger links to ordinary members than their predecessors (some, such as Mark Serwotka of PCS, were directly elected from the workplace), and they are well aware that partnership will have to be seen to deliver concrete benefits to members in the near future.
Most trade unions are currently ambivalent about ‘partnership’; despite the new leaderships, many partnership agreements remain in force. In a few cases, unions have remained publicly ‘pro-partnership’. Notably, this has mainly been those unions that were relatively weak in relation to employers (for example, the retail union USDAW, whose partnership with Tesco remains central to its fortunes). Other unions have explicitly rejected a ‘partnership’ model. Chief among these is the large ‘left wing’ general union, the Transport and General Workers’ Union, led by Tony Woodley. Recently, this union has started to call itself ‘the fight back union’. There are two other indications of dwindling support of partnership. First, there have been a few bitter industrial relations disputes in recent years. For example, the TGWU was involved in a tough confrontation between Gate Gourmet, a catering contractor to British Airways and a large part of the BA workforce. Second, there has been a steadily increasing level of employee-initiated cases at the Employment Tribunals and this has coincided with survey evidence of declining job satisfaction over a considerable period, on a number of indicators (Rose 2005).
As described in the Overview, the term ‘partnership’ is a generic and imprecise one, and that very imprecision may allow a welcome flexibility for some of the key players. In other words, the imprecision is convenient as it allows flexible interpretation by those involved.
A key reason for the imprecise use of the partnership term is that the various partnership initiatives have been driven by a diverse set of rationales and drivers. As a ‘liberal market economy’, the broad British employment relations context for partnership is much less supportive of partnership than the ‘co-ordinated market economies’ of most other West European countries (Hall & Soskice 2001). The broader industrial social and political links characteristic of ‘co-ordinated market economies’ are lacking, and there are no strong traditions of employer-employer or employer-union co-ordination; nor are there embedded social networks supporting the broad idea of ‘social partnership’ both within and beyond the workplace (Hall & Soskice 2001). A reliance on external labour markets (‘hire and fire’) to regulate employment relationships is unsupportive of co-operative management-union-employee relations. In particular, despite low levels of unemployment, this reliance on external labour markets co-exists with high levels of redundancy and job insecurity within firms and undermines employees’ willingness to share information with employers (Whitley 1999).
Unions have tried to overcome the neo-liberal and workplace-centred nature of the British system largely by emphasising the EU social participation agenda, by stressing the importance of EU regulations, such as the Directive on Information and Consultation, and by trying to make these work at industry and workplace level. They have made little effort to resurrect sectoral bargaining where it no longer exists - seen as a lost cause because it requires employer-employer co-ordination that the employers clearly reject. However, the unions have defended national collective bargaining arrangements where they still exist (as in the education sector). The difficulty is national collective agreements are becoming rare and without national agreements, there is often insufficient support for workplace partnership.
The rationales for partnership differ between the principal industrial relations actors: the European Union, the Government, employer organisations, and individual employers, unions, and so-called ‘third parties’. These differences can be demonstrated through a short overview.
The European Union is a key player which has, through its Directives and notably the most recent Directive on Information and Consultation, tried to spread the European model of consultation with employee representatives to Britain. The European Company Statute has been another example of an EU initiative in this area. The information and consultation dimension is being standardised (‘harmonised’) by the European Union. One aspect has been legislation on European Works Councils in companies operating in more than one EU country; however, it is notable that at least half of the British-owned companies subject to this legislation have not in fact implemented it (Hall 2005). The British Government has, as required by the EU, translated the EU Directive on Information and Consultation into British law, requiring information and consultation mechanisms in companies with more than 50 employees. The latter begins to come into effect in 2005, but its introduction is phased through to 2008. It requires employers to provide:
A wide range of issues will theoretically be subject to this process (for example, the introduction of new technology, skill upgrading, job redesign, new pay systems). Yet there are no significant penalties for non-compliance by employers. The legislation is typical of ‘light touch regulation’ practised by the Blair Government and represents a much diluted version of the consultation models in force in France or Germany. The Government has consistently passed such EU Directives into British law in the most attenuated form possible, because, as it argued in 1998:
“…some aspects of the social models developed in Europe before the advent of global markets have arguably become incompatible with competitiveness” (DTI 1998: 10, para. 1.10).
The TUC expected the new workplace rights to form a powerful new basis for a reinvigorated employment relations system in the UK, because they will apply to all workplaces, unionised or not. By establishing a culture of collective representation on workplace issues, the TUC felt these regulations would create a favourable atmosphere for increasing trade union membership and resources. However, the research evidence has shown that such hopes have been over-optimistic, as it is now clear that the new regulations have had relatively little impact at workplace level. Employers’ attitudes to these workplace rights are in line with their historic stances and are supported by hostility to ‘EU red tape’ by the British Press. Moreover, there are no workable penalties for simply disregarding the regulations. Many employers have disregarded the European Works Council legislation, while unions themselves have some ambivalence, because they fear replacement of their role by non-union representatives (Hall 2005).
The New Labour Government’s rationales are a peculiar mixture of ideas, though it has a strong ideological basis, rooted in the ‘third way’ concept. It embraces the American idea of ‘mutual gains’ bargaining, where this is made necessary and appropriate for employers by continued union power. It also embraces the idea of employee involvement, but strictly on management terms as a way of tapping into employee ‘tacit knowledge’ and understanding of the productive process. As Blair has said:
“Those who have learned to cherish and foster the creativity of their whole workforce have found a resource of innovation and inventiveness that drives their companies forward…” (DTI 1998: 3).
Therefore, the aim is to reshape part of British trade unionism at low cost. The Government’s rationale also reflects a pragmatic response to the European Union’s drive to extend the ‘European model’ (Smith & Morton 2005). The minimalistic implementation of EU directives enacted by the Government has encouraged the view that they are anxious above all to keep legislative intervention in this matter to a minimum, because it constrains management’s freedom to act.
The rationales of employer organisations and employers are essentially pragmatic. In many cases, partnership has constituted an alternative to union de-recognition when it became apparent that workforces (including non-union workers) viewed de-recognition with fear and hostility; de-recognition was, therefore, seen as de-motivating to all workers (Guest & Peccei 2001). It has often been the case that partnerships have been the result of a crisis in the organisation’s history which has engendered an ‘all hands to the pumps’ approach (Oxenbridge & Brown 2003). Often the initiative has been taken by a small number of individuals in the companies affected and is, therefore, driven by a relatively narrow social base within organisations (ibid). In common with the Government, employer rationales represent a pragmatic approach to trade unionism where this is otherwise difficult to avoid.
Additionally, they reflect a management view that in unionised situations, all possible channels of communication should be maximised (Wood & Fenton-O’Creevy 2001, 2005). This is in line with the general trend towards employers seeking to obtain ‘commitment not compliance’ from workforces through their HR practices (Brewster et al. 2004). Unions are not permitted to be the sole route of management communication with workforces, as the unions insisted they should be in the 1970s. Still, collective or union-sponsored communication channels must be used by managers in unionised workplaces.
For some years, the idea of successful union-management partnerships has been pushed by the annual AnUMan conference, a commercial operation bringing management and unionists together on an annual basis to promote joint approaches to shared problems, including partnership. Professional bodies, such as the Chartered Institute of Personnel and Development (CIPD), have been careful not to take a position on partnership, though much of their literature is certainly compatible with such ideas. Those companies that have forged successful partnerships attend the AnUMan annual exchanges of experience. Typically, they involve an HR manager and a senior union representative talking about their experience. Companies involved include well-known and long-running cases of co-operation, such as the cement company, Blue Circle, or the highly profitable retail chain, Tesco, as well as many public sector organisations. The companies involved in partnerships do not show any clear characteristics, and while retail and finance companies feature among them, there is no strong sectoral pattern, though almost all of them have relatively heavily unionised workforces.
Union rationales reflect union decline in the UK in the 1980s and 1990s, where membership decline encouraged the search for new bargaining and recruitment strategies (Croucher & Brewster 1998). At various times, most notably between the First and Second World Wars, unions and managers moved in a more co-operative direction. However, this period was soon abandoned at the outbreak of the Second World War, when labour markets became much tighter (Croucher 1982). This has led some researchers to suggest that ‘partnership’ is part of a cyclical movement towards more co-operative relationships occurring in periods of union weakness but then receding again as the labour market improves union fortunes (Kelly 1998). In this view, cyclical union weakness is a key driver for partnership.
Third parties have flourished in the partnership area, and they themselves constitute a driver of partnerships: successful partnerships are often built with the help of third parties. A significant player in terms of advocacy of the partnership idea and a major facilitator of partnerships is the Industrial Participation Association (IPA) headed by the industrial relations expert, Willy Coupar. The IPA publicises successful partnerships, publishes a regular newsletter, holds courses, and facilitates partnership development in companies. The IPA has long experience in the area and has ‘oiled the wheels’ of many partnerships. Other players in the same market include the TUC’s Partnership Institute and private consultancies. However, managers often view the TUC Partnership Institute with suspicion, despite the Partnership Institute’s attempts to play a more independent role. Most private consultancies have not been involved in partnership; they rarely have the expertise required to help managements create successful partnerships, as they usually have little practical experience of unions and formalised partnership agreements.
Extensive case study work carried out by a team of researchers from Cambridge University showed that partnership takes a number of forms in the UK (Oxenbridge & Brown 2002, Oxenbridge & Brown 2003, Oxenbridge et al. 2003). First of all, it may take the form of a formalised agreement. Secondly, it may be an informal arrangement that is not embodied in an agreement. Thirdly, some partnerships were shown to be in the process of formalising their relationships. In addition, the researchers showed that, in the United Kingdom, there were two types of relationship between management and unions which they called ‘robust’ and ‘shallow.’
In the ‘robust’ category, managers nurtured collective bargaining and developed relationships centred on informal, largely harmonious dealings, high levels of unionisation, active workplace representatives, and broad and deep union recognition and membership recruitment rights. Such relationships resulted from an existing tradition of strong employer-union relations, often used as a mutual resource after threats to the company’s survival. In these situations, management had a strong need for workers’ co-operation to pull the company round. Workers shared this view, realising their common concern with company success. Both sides, in extremis, saw the union as an institution which might be used to help. This did not mean in many cases that it was the only possible solution, but rather that it was one among others and, given the situation, none could be rejected.
The second type of case (‘shallow’) were service sector employers seeking to contain unions. These agreements generally emerged as employers realised union involvement was inevitable for some reason (e.g. negative employee reactions to initial moves towards union de-recognition). Management strategies in these organisations included a refusal to deal with confrontational union representatives, choosing alternative representatives seen as more co-operative, and restricting union recruitment of new members. In the ‘robust’ relationships, all parties agreed that there was considerable consistency of practice and clarity in interactions embodied in the agreement. In ‘shallow’ relationships, managerial motives for partnership were generally opportunistic. In these cases, Guest and Peccei (2001) note that partnership may just be a long-term union marginalisation policy.
It may be added, from our practical experience, that managements have occasionally ‘exited’ from partnership arrangements when conflict occurred. Failing to recognise that partnership cannot simply abolish elements of conflict, they have simply ‘pulled the plug’. The consequences have been that management then had a major task in re-building trust with the workforce. This highlights the risks involved in going into partnership without adequate preparation.
Thus, two main types of partnership arrangement were discerned, and these acted rather independently of whether the arrangements were formalised or not. The key consideration in the British context was whether or not there was a history of high-trust relationships in the workplace between management and unions prior to embarking upon partnership. In many cases, these high-trust relationships simply did not exist. This is entirely consistent with the account already given of the wider context for partnership. Unlike in the Irish context, for example, major symbolic defeats had been inflicted on the trade union movement prior to partnership being mooted. In this respect, it was entirely similar to the 1920s when the Mond-Turner talks only began after the defeat of the General Strike in 1926. These confrontations not only weakened unionism, they were a simultaneous rejection of an alternative strategy in which unions would play a powerful role as interlocutors of management and the State. Thus, ‘partnership’ was seen by many as a combination of unions ‘raising the white flag’ in abject ‘surrender’ but also as ‘living to fight another day’, and as a way of their buttressing their institutional position as responsible partners of management and the State. It is frequently pointed out in national newspapers that Tony Blair’s Labour Government, now in its third term, has reversed none of Thatcher’s legislation, and that its main fear is being seen as New Labour is in reality (as the Conservative Press represents it) ‘Old Labour’ - that is, effectively run by the unions.
What results has partnership had on company performance in the UK? The issue of the relationship between different types of HR practice and company performance is a vexed and controversial one. More complex HR systems are generally called ‘best practice’ or ‘high performance work systems.’ The UK debate has been influenced by American HR experts who have argued that ‘High Involvement Management’ (HIM) is essential to strong organisational performance, and that intensive communications with the workforce is an important element of this (Pfeffer 1998). There are also other elements within the bundles of HR practice that at least coincide with high-performing companies. These bundles typically include systems of financial involvement, teamworking, regular written communication to all levels of employees and not just certain ‘key’ categories, and regular employee surveys with actions that are reported back; these often coincide with traditional methods, such as suggestions schemes.
Numerous empirical studies have shown that firms with a consistent set of high performance HR practices outperform other firms (Becker & Huselid 1998). Many of these practices, notably high levels of communication and involvement, also represent the goals of partnership. Therefore, this might be a solid foundation for concluding that partnership is likely to be associated with high performance. However, the direction of causation has often been debated. Currently, the state of the evidence is insufficient to rule definitively on this issue. UK research has found that there are many problems with this line of research (Stuart & Martinez Lucio 2005). One is that the components of the bundles of best practice are described differently by different researchers. Secondly, the direction of causation is unclear; that is, it may well be that high-performing companies use coherent bundles of high performance practices, rather than vice versa.
Overall, UK researchers have been cautious about the positive tenor of the literature on high performance workplaces: many of the studies involved are American, they rarely concern unionised companies, and their application in a UK employment relations setting may prompt reverse reactions. The most recent British survey data also shows that bundles of high involvement practices are consistently found in high performing companies (Cully et al. 1998). These findings are consistent with the case studies conducted by Oxenbridge and Brown (2003). In these case studies, the direction of causation appeared to be that high performing companies used high involvement practices. The fact that the researched case studies involved companies with a high level of union penetration may have also had an impact. In addition, there is a problem with measuring ‘high performance’ in service sectors, where service quality often becomes the benchmark of performance. This is especially the case in the public sector where service levels are notoriously difficult to measure reliably. In short, there is a distinct need for further research.
Nevertheless, some preliminary conclusions can be drawn. First, it would be difficult to argue that ‘partnership’ is necessary for high performance, given that many of Britain’s most successful companies, notably in the service sector, have very low or non-existent levels of unionisation. Secondly, the important Workplace Employment Relations Survey data does show an association between ‘bundles of involvement practices’ and companies that show relatively high performance in comparison to otherwise similar companies. This appears to be confirmed by the latest results from this survey, though the survey results have yet to be fully analysed and published (Kersley et al. 2005). Therefore, it may be that partnership simply expresses these practices, possibly strengthening them in the inevitable processes of collective debate that precede its institution and agreement.
In summary, we can conclude that there is a considerable need for further research on the actual benefits of partnership per se, in terms of organisational performance. The academic debate has tended to polarise around proponents and opponents of partnership, and it has been rather separate from discussions of organisational performance. The latter discussions have been about the ‘bundles of practice’ that are associated with high performance, and these have not included management-union partnerships.
If ‘bottom line’ benefits are unclear, there is, nevertheless, a good deal of evidence that management derives considerable advantage from management-union arrangements - especially where unions assist managers in implementing and legitimising large-scale organisational changes (Guest & Peccei 2001). Further management gains included improved employee ‘buy-in’ to management initiatives and more harmonious working relationships. Other researchers have argued that there are clear benefits to management in playing an active role in shaping collective methods for employee voice. Most non-collective bargaining based structures for participation and involvement at least partially separate voice from power; this may make the mechanisms less effective for employees unless a power dimension is re-introduced in some or other manner (Addison & Belfield 2004, Hoell 2004). Power in British workplaces and in society, more generally, is widely perceived as having swung back from unions and towards management. This may be important to Guest and Peccei’s finding that benefits accrued to both unions and management in partnership arrangements, but that they were skewed towards management.
Considerable benefits have been reported by unions in terms of improving recruitment in some companies (Haynes & Allen 2001). Other researchers have found that unions can suffer from issues of identity under partnership. In other words, their role as representatives of the workforce (rather than as low-level change managers) suffers in their constituents’ eyes (Croucher & Mitchell 2001). Furthermore, it has been argued that the benefits of highly consultative management styles accrue differentially within workforces. Thus, some employees (normally the higher skilled or professionally qualified) may ‘capture’ the consultative process, while less skilled and qualified workers may suffer proportionately (Croucher & Singe 2005). Therefore, the effects on unions are contested.
An example of the ‘capture’ tendency has been found during research in a major utilities company. In this company, management established ‘single-table’ bargaining and consultation arrangements immediately after privatisation in 1990. Five unions were brought together at national and local levels, but the key positions on committees and those who presented workforce issues to management were the representatives of the small niche union representing graduate engineers (now called Prospect). The reason for this appears to be that this union’s members are far more adept at operating in ways acceptable to management than those of the manual unions. It appears that it may be more widely true that the benefits to management and more highly skilled workers are clearer than those to other stakeholders in partnership arrangements.
Academic debate has generated real insights, but it has also centred on the balance of benefits and has followed lines that are predictable (if one is familiar with the researchers’ initial viewpoints). For this reason, we draw on practical experience in facilitating partnerships69 which indicates a range of critical success factors:
As these critical success factors are rather comprehensive, and as they cut across traditional British employment relations approaches, it is not surprising that partnerships have been slow to take root and are continuously in danger of dismantling in the UK.
The current position of partnership in the UK may now be briefly summarised. Over one hundred partnerships, formal and informal, exist across the UK. Precisely because they reflect the nature of long-run relations between managers and workers, these vary greatly between workplaces. Despite the Blair governments’ ambivalent attitude to union power and workplace partnership, partnerships have been supported by significant state initiatives since the late 1990s, including the DTI’s Partnership Fund and, arguably, the adjacent legislation on Union Learning Representatives. The 2005 legislation on information and consultation (to be fully implemented in 2008) may create more possibilities for unions, but the legislation is relatively weak, and many commentators are pessimistic because of management’s negative attitudes.70 Management commitment to partnership has usually been reluctant, and often because they saw no alternative to accepting some form of engagement with unions. Management often sought to reshape trade unionism in a less conflictual sense and to channel it in acceptable directions. Unions have also been tentative about partnership; while some have regarded it as a necessary tactic to ensure institutional survival in a hostile climate, most have more recently become increasingly sceptical.
While workplace partnership is still very fragile and new partnership initiatives have stalled, there is a small ray of hope. The development of Union Learning Representatives, in a large-scale development compatible with a partnership perspective, may yet provide a route for partnership’s further development as initially indifferent managements see the value of this activity. If unions build on that, partnership may yet develop further.
Tesco is Britain’s leading retailer. Founded in 1924 and floated on the Stock Exchange in 1947, the company started to become a major supermarket player in the 1980s and had an upward trajectory in relation to its competitors in the 1990s. It has successfully expanded into Eastern Europe and currently employs 236,000 staff in the UK. Its partnership agreement with the Union of Shop, Distributive, and Allied Workers (USDAW) began to be negotiated in 1998. It is now the most high profile partnership arrangement in the UK and could justifiably be called partnership’s UK ‘flagship’. The agreement covers more workers than any other partnership agreement in the private sector in the UK. The agreement’s fame is partly because the company itself is remarkably successful in relation to its competitors, with over a quarter of the UK groceries market share in comparison to its nearest rival, Asda/Wal-Mart, which has just over 16%. Its annual results for 2003-4 showed profits of £1.6 billion, including an impressive performance from its online business, a business other retailers have found difficult to master quickly.
USDAW has undoubtedly gained from the partnership agreement. The union, a politically moderate organisation in the context of British unions, lacking strong traditions of workplace power, was suffering a decline in membership in the company in the 1980s and early 1990s. By the late 1990s, the company was considering de-recognition but felt this was a high-risk strategy. Eventually, the company decided to enter into discussion with the union to try to reach an agreement. The stakes for the union were high, because Tesco was a major membership group. As a result of the agreement, the union has sharply increased its overall membership in the company.
The union now has some 110,000 Tesco members, and this is estimated to represent some two-thirds of those employees likely to join that union (other employees are more likely to join white-collar unions rather than the predominantly blue-collar USDAW). The union has at least doubled its number of representatives in the company to some 2,300, of which about 800 are involved in consultation with senior management outside of their stores. Though the agreement has certainly benefited the union, the benefits for employees are not quite as unequivocal. Although pay stands at 50p an hour higher than at the nearest competitor, Asda, (which in turn is slightly higher than at other competitors) the company has used the agreement to make other changes, such as tightening up sick pay schemes to employees’ detriment.
The partnership deal is now well embedded at Tesco, and it has recently been extended. But how did it begin? It is important to recognise that it started in a tentative and slow fashion with much reservation on both management and union sides. Senior company and union officials spent many days working together with Cranfield School of Management in the late 1990s to hammer out a number of difficult issues. Two of the key issues were as follows. First, it was a well-known fact that certain groups of the firm’s employees (transport, for example) were much less likely than the retail staff to accept any such approach, as they felt they did not need any ‘sweetheart deals’. Secondly, the company was adamant that it wanted to abolish USDAW members’ right to vote on annual pay deals.
The approach taken was to ‘park’ these issues and to take an incremental approach, building on areas of agreement and leaving disagreement to be tackled later. Eventually an agreement was reached. The agreement gave the company the union’s acceptance of employee forums, elected directly by employees, in every store. These forums were designed to discuss any issue raised by employees and existed at different levels, culminating in a National Forum. USDAW membership was to be encouraged by management, and union representatives were, therefore, allowed to participate in new employees’ induction meetings for union recruitment purposes. The agreement has been consolidated by a programme of joint management-union training at every level. More recently, the agreement has been extended so that the union now has facilities agreed for the election of Tesco recruitment and development representatives, with the remit of improving union organisation. Management reason that this will help extend the union’s representation and, therefore, extend the usefulness of the partnership itself.
The agreement has been criticised by trade unionists as a ‘sweetheart deal’, but it is also well-regarded by many external commentators. Certain key features of the situation are probably important to its success. First, during the period of the deal, the company has not been in the position of other companies who have had to make employees redundant, and this has, of course, undermined relationships at these companies. The business and employment contexts have, therefore, been positive. Secondly, the company has long had a tradition of centralised management, and there is no tolerance for local managers who do not ‘buy in’ to the agreement. Thirdly, the union has been anxious to maintain its independence as a separate trade union - a goal that would have been very difficult to reach if this agreement had not allowed them to improve their membership levels without the expense of employer-opposed organising campaigns. Therefore, the union has a large stake in the arrangements’ success. Finally, the sector is not noted for the militancy of its employees.
Britannia Building Society (BBS) is one of Britain’s largest building societies. Building societies historically existed mainly to help families fund house purchase. This remains a central purpose, but they are either conventional companies or ‘mutual’ organisations (i.e. formally owned by their members, those who save with them).
In recent years, building societies have become much more ‘all-round’ finance companies and offer a wide range of financial services that compete with banks and finance houses. Therefore, in the 1990s, many ‘de-mutualised’ and became conventional companies, run for the benefit of shareholders. In most cases, this occurred by existing members demanding de-mutualisation against the wishes of management in order to receive payments for loss of their share in the organisation.
However, some managements, like that of BBS, actively fought this process. The partnership arrangements with the BBS union partly originate in this campaign since the management sought staff support. A second process was also occurring: that of company merger in the sector - although BBS continues to exist as a separate company at the time of writing. It has also succeeded in retaining its mutual status which it now uses as a selling point. It recently acquired the Bristol and West Building Society, significantly extending its branch coverage to take it to over 250 branches fairly evenly spread across the UK. For some years, it has been a profitable company, growing profits from £131.9 million in 2000 to £140.4 million in 2004.
The partnership arrangements in BBS are not the subject of a formal written agreement, but they are nevertheless acknowledged by both the company and the union, the Britannia Staff Union (BSU). In this respect, the arrangements are typical of those in less militantly unionised companies. The BSU is also typical of a certain type of finance trade unionism in that it is limited to one company which it identifies with strongly. This is reflected in the BBS management structure, because the Management Board uniquely contains two union officials. Previously in existence as a staff association, the BSU did not seek to register as an independent trade union until 1976. The BSU’s General Secretary is a former BBS branch manager. Membership of the BSU is relatively high, with 2,303 members among the BBS’ 3,300 employees in 2004. The union retains elements of the culture of a ‘staff association’, although it rejects this label and sees itself as a trade union since it affiliated to the Trades Union Congress in July 1999. However, it is perhaps not surprising that such a union should be party to an unwritten partnership arrangement. Both the company and the union acknowledge that the arrangement has yet to involve staff in any real depth, as it essentially exists at the level of management and union officers.
BBS’ HR Management explains the rationale for partnership as follows: achieving change at BBS poses significant problems, as staff are relatively ‘set in their ways’. There is a need for staff to understand the need and rationale for change in the way that the Building Society and its employees operate in a rapidly changing market for financial services. Staff perceptions of senior management could be improved, and their understanding of genuine dilemmas faced by them is currently seen as inadequate. The union accepts these issues and argues that their involvement in and access to senior management is unique in the sector. Union involvement ensures that the staff voice is heard prior to decisions being finalised.
The arrangements have a number of key components. The first is a high level of union representation on management bodies; the union presence on the Management Board has already been noted, but the union is also represented on the key sub-committees used by management for executive purposes, such as the finance and change management sub-committees. A second key feature is union membership on policy-making committees, such as the Customer Service Steering Group where staff input is obviously helpful to management in improving sensitivity to customer needs. This is a competitive customer-facing industry, where competitive advantage may be derived from such involvement, and management is well aware of the potential there. There is also a range of ad hoc projects on which the BSU participates aimed at the constant improvement of services. A third component is departmental consultative committees, a project that has been piloted in selected departments and is being gradually rolled out across the company. These committees involve staff at all levels discussing a range of issues, including staff problems, as well as operational issues. A final component is extensive briefings for the union’s Executive Committee on the state of the business overall, conducted quarterly and involving the company’s Chief Executive Officer and Directors. Thus, there is a high level of engagement with the company’s constant improvement agenda. However, this is at the expense of union identity as a workforce representative body, and there is little doubt that many employees see it as little more than the lowest level of management.
These arrangements might be characterised as little more than an amalgam of good HR and employment relations practices well adapted to the particular company ethos of involvement. Nevertheless, both the company and the union insist that it is seen as a ‘partnership’ by both parties. It has undoubtedly brought the union better information from the company, but it remains to be seen whether it can be extended beyond a relatively narrow participatory base. One staff member remarked that “it is not worth the paper it isn’t written on”, but the verdict, though witty, is also perhaps a little too readily dismissive of a fruitful union-management institutional relationship with some benefits for employees more generally.
Many of the themes identified above are illustrated in our case study of a major British insurance and finance company, Legal and General (L&G). The financial services industry (like retail, the public sector, and manufacturing) has been an important sector for partnership agreements.
The company was traditionally hierarchical and bureaucratic, but it has been affected by regulatory change requiring a new approach. In 1998, a formal partnership deal was struck. Union density remained unusually high in the company, even increasing after 1999, although the relationship between this increase and partnership is unclear, as it resulted from recognition in one new workplace.
The employer agreed to the partnership arrangement for a number of reasons. First, management had little choice but to recognise trade unionism as a reality in the company. Secondly, it is in a customer-facing business and issues of employee commitment loom large. Thirdly, it helped management create a ‘compliance culture’. By providing a degree of protection for representation, it could allow issues about company compliance with financial market regulation to be raised more easily by employees. Finally, it gave management an opportunity to shape workplace representation: by granting generous time off to a small group of representatives, it could routinely schedule and manage relationships with this relatively small group.
The partnership agreement required the employer to pay for increased time off for union duties and union training, and all representatives have access to company office an electronic facilities at all sites. The result has been to shift employee representative-management interactions in a more consultative direction. There is little negotiation, including on pay as pay is determined by a ‘market-based’ formula. Such negotiation (as exists) is on individual grievances, an area that takes up an increasing amount of employee representatives’ time. Many representatives report a considerable increase in these grievances since the agreement. The nature of trade unionism has changed with representatives becoming more professional grievance handlers. The union has used the ‘partnership’ experience as an organising strategy, with some minor success in terms of recruitment.
Management expresses considerable satisfaction with the deal and the way it has worked. ‘Difficult’ workplace representatives have either resigned their roles or been marginalised, and conflict has been reduced.
Workplace partnership is about an active relationship between unions and employers to deliver outcomes that benefit the mutual interests of both parties.
A successful workplace or industry partnership results in mutual gains for both employers and workers through changes that can include increased innovation, productivity and improved services resulting in improved organisational viability. At the same time, these changes address the interests of employees through improvement in the quality of working life. This can include: greater employment security, training and development opportunities, more participation in how work is carried out, greater influence over work and workplaces, greater autonomy, and pay and pay systems that meet the needs of both the organisation and the employees.
By recognising the value of different perspectives the partners – union and employer - bring, workplace partnership can provide a framework and catalyst for sustainable improved workplace performance, more widely shared ownership of outcomes and improved rewards to the partners.
Embarking on a partnership approach requires:
Over time, successful partnerships develop:
(Partnership Resource Centre, Wellington, 24 May 2005).
After years of debate, the establishment of European Works Councils (through Council Directive 94/95/EC of 1994) represents probably the best know EU regulation on information and consultation. It is directed at multinational enterprises operating in various European countries and it gives employees the opportunity to co-operate across various enterprise units and countries and to receive up-to-date information about management decisions. While the directive allows for considerable flexibility in the actual implementation at company level, there are a number of key requirements specified (Knudsen 1995: 133; Deeks & Rasmussen 2002: 246):
In 2004, it was estimated that the directive should cover around 2,200 companies and these companies would have a total of 20.4 million employees. However, it was found that so far around 700 companies, with 13 million employees, had implemented a European Works Council (European Foundation 2004). A selection of case studies showing the diversity, the limitations and the prospects of European Works Councils can be found on the website of the European Foundation (EIRO 2005).
While the implementation process has been more protracted than anticipated, there has also been considerable debate about the efficiency of the Councils and what can be expected in the coming decade. The optimists look at the European Works Councils as an important platform for learning and development of employer-employee partnerships (Gilman & Marginson 2002), while the pessimists evaluate the current contribution and future prospects as being much more constrained (Keller 2003). The distinction between optimists and pessimists has also a geographical angle: researchers and practitioners from countries without prior regulation on work councils tend to be more optimistic than researchers and practitioners from countries with a well-established tradition of works councils. For example, Waddington (2003, 2004) found that union representatives from the UK and Ireland had high expectations regarding the European Works Councils bringing about more influence on company decisions, while union representatives from Continental Europe – and in particular Scandinavian union representatives – expressed a certain amount of scepticism regarding the effect of European Works Councils.
Since 2001, the European Company Statute has stipulated the regulations surrounding a European company (‘Societas Europeae’ or abbreviated to SE). This statute is complemented with a further directive (Council Directive 2001/86/EC) which covers employee involvement in European Companies. This directive allows for employee board representatives if the company is set up as a European Company. Before the creation of a European Company, management and employees can negotiate provisions for employee involvement. If an agreement cannot be reached in these negotiations, then the provision contained in the directive will apply. The directive ensures that major companies cannot avoid national legislation on employee representation at company board level by seeking to become a European Company.
A general framework which stipulates information and consultation rights for employees has been implemented in 2002 (Council Directive 2002/14/EC). The directive establishes minimum standards for information and consultation of employees in all EU companies with at least 20 employees. In line with previous directives on information and consultation, it covers the economic and financial situation of the company, the likely employment changes within the company, and any decisions which may affect the employment relationship. However, the directive is drafted in fairly broad terms: it allows member states considerable leeway when it comes to implement its provisions.
Again, the adoption of the directive will impact differently across the EU member states. It will probably have very limited importance in countries with existing information and consultation rights. In these countries, “it will force an adaptation of existing rules with a view to developing an anticipative approach and the strategic information and consultation provided for in the directive.” (European Commission 2004: 109) But other countries, like “the United Kingdom and Ireland, as well as the new Member States which joined the EU in 2004, will have to introduce considerable changes to their industrial relations and labour law systems, as they do not have general and permanent mechanisms for informing and consulting employees, nor a statutory general entitlement for stable employee representation at the workplace.” (European Commission 2004: 109).
In the case of collective redundancies, the European Union has a long tradition of affording better protection for employees. Already in 1975, a Council Directive (75/129/EEC – later enhanced through Council Directive 98/59/EC of 20 July 1998) stipulated procedures to be followed by organisations in cases of mass redundancies. The intention is to secure a dialogue between management, employees, and the labour market authorities in order to reduce the social implications of the redundancies. As part of this protection, the directive also provides a period of notice of 30 days. “Any employer contemplating collective redundancies must hold consultations with the workers’ representatives, with a view to reaching an agreement. These consultations must at least cover ways and means of avoiding redundancies or reducing the number of workers affected and mitigating the consequences, in particular by recourse to accompanying social measures aimed at redeploying or retraining those workers made redundant.” (European Union 2005: 1)
The European Union is a strong promoter of developing tripartite and bipartite partnerships. Twenty years ago, in 1985, at Val Duchesse in Brussels, the then European Commission President, Jacques Delors, formally launched the bipartite European Social Dialogue between the European lead union organisation (ETUC) and lead employer organisation (UNICE). The Maastricht Treaty, which came into force in 1993, recognised the social partners’ right to negotiate binding Europe-wide framework agreements which are either formalised into EU legislation as directives, or implemented ‘autonomously’ by the partners at European and national levels. There has been substantial activity in the area of social dialogue since the early 1990s (see overview in Appendix 6). Bipartite and tripartite have covered a number of key social and employment issues, and since 1985, sectoral social dialogue committees have been set up in 31 different industrial sectors. The European social partners have adopted over 40 cross-industry and 300 sectoral joint agreements.
Article 138 of the Treaty provides for the consultation of social partner organisations at European level on a range of issues concerning employment and social affairs (which are set out in Article 137 of the Treaty). Article 138 provides for a compulsory two-stage consultation procedure: at the first stage, the Commission consults the social partners on the possible direction of an initiative; at the second stage, the focus is on the content of an initiative. If neither stage of the consultation results in a decision by the social partners to enter into bipartite negotiations, but the Commission still considers that Community action is desirable, the Commission will undertake the preparation of a Community initiative.
The bipartite social dialogue is seen by the EU Commission as a necessary and highly appreciated way of regulating the labour market, but critics would maintain that sufficient organisational conditions are not there. At European level, the employer and employee representatives are very weak and can hardly be considered legitimate partners in collective bargaining. Furthermore, the lead employer organisation, UNICE, has had a very reluctant attitude to regulation at all. This has changed a bit during the recent years, but it seems to be very difficult for the two parties to come up with common regulations except joint agreements on particular employment issues.
| Country | 1980 | 2000 | Change1 |
|---|---|---|---|
| Austria | 57% | 37% | -20 |
| Belgium | 54% | 56% | 2 |
| Denmark | 79% | 74% | -5 |
| Finaland | 69% | 76% | 7 |
| France | 18% | 10% | -8 |
| Germany | 35% | 25% | -10 |
| Ireland | 57% | 38% | -19 |
| Italy | 50% | 35% | -15 |
| Luxembourg | 52% | 34% | -18 |
| Netherlands | 35% | 23% | -12 |
| Norway | 58% | 54% | -4 |
| Portugal | 61% | 24% | -37 |
| Spain | 7% | 15% | 8 |
| Sweden | 80% | 79% | 1 |
| Switzerland | 31% | 18% | -13 |
| United Kingdom | 51% | 31% | -20 |
| United States | 22% | 13% | -9 |
| OECD Average 2 | 32% | 21% | -11 |
Source: Knox 2004: 28 (based on OECD information).
| Country | 1993 | 2003 | Change1 |
|---|---|---|---|
| Austria | 1,616,000 | 1,407,000 | -12.9 |
| Belgium | 2,865,000 | 3,061,000 | 6.8 |
| Denmark | 2,116,000 | 2,151,000 | 1.7 |
| Finland | 2,069,000 | 2,122,000 | 2.6 |
| Germany | 11,680,000 | 8,894,000 | -23.9 |
| Ireland | 432,000 | 515,000 | 19.2 |
| Italy | 10,594,000 | 11,266,000 | 6.3 |
| Luxembourg | 97,000 | 139,000 | 43.3 |
| Netherlands | 1,810,000 | 1,936,000 | 7.2 |
| Norway | 1,325,000 | 1,498,000 | 13.1 |
| Sweden | 3,712,000 | 3,446,000 | -7.2 |
| United Kingdom | 8,804,000 | 7,751,000 | -12.0 |
Figures for both years where not available for France and Spain
Source: EIRO 2004a.
| Summary | Description | Impact on Productivity |
|---|---|---|
Scenario One
|
|
Productivity baseline |
Scenario Two
|
|
Productivity decreases by 15% below baseline |
Scenario Three
|
|
Productivity increases 11% over baseline |
Scenario Four
|
|
Productivity increases 20% over baseline |
Source: National Centre for Partnership and Performance 2003: 27.
Source: http://europa.eu.int/comm/employment_social/social_dialogue
Apart from the acts regulating conflict solving, the Industrial Court Act and the Act on Conciliation in Industrial Disputes, legislation on the various elements of labour protection are significant for political regulation. These are outlined below:
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