Strategy of effective management of change · 2017-12-17 · POLAND Związek Zawodowy Przemysłu...

With support from the European Union

Strategy of effectivemanagement of change

EN

elaborated within the framework of a project

This copy is free

This copy is free

Związek Zawodowy Przemysłu Elektromaszynowego

La Confederazione Generale Italiana del Lavoro Lombardia

Federación de Industria de Comisiones Obreras

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The hereby publication is an effect of cooperation of trade unions from Poland, Spain and Italy, within the Framework of the project “Effective Change Management: Information, Consultation and Participation”.

The project was granted financial support from the Euro-pean Commission, budget line 04.03 03 03, and was imple-mented by Zwiazek Zawodowy Przemyslu Elektromaszy-nowego (Trade Union of Electromechanical Industry) from Poland, in partnership with Federación de Industria de Co-misiones Obreras from Spain and Confederazione Generale Italiana del Lavoro Lombardia from Italy.

The publication contains conclusions with the view to a better management of change, based on a joint discus-sion and analysis of the economic situation of individual partner countries, within the context of globalization, eco-nomic crisis and restructuring of undertakings. The conclu-sions are a contribution of European trade unions to elabo-rating of the model of social solidarity and management for a sustainable growth and employment.

The sole responsibility for the content of the publication lies within the authors. It does not necessarily reflect the opinion of the European Commission. The European Com-mission is not responsible for any use of the information contained therein.


La Confederazione Generale Italiana del Lavoro Lombardia


2012

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Table of Contents

Introduction 7

POLAND Związek Zawodowy Przemysłu Elektromaszynowego 9

A bit of history of economic changes (macro view) 10

Major ways of restructuring Polish undertakings 11

Labour movement’s position on the five steps of change management 11

Ways of restricting social effects during the introduction of economic changes 12

The results of the liberalization of the Polish labour market 13

How to limit the negative results of changes? 14

Elements of the Polish social security system regarding unemployment 14

SPAIN Federación de Industria de Comisiones Obreras 17

Prologue 17

Introduction 18

Current situation in Spain 18

Labor market. Labor Law Reform 3/2012 20

Change Management (Collection of Employment Regulations – ERE) 22

The right to information, consultation and participation 27

Goals and Recommendations 31

ITALY Confederazione Generale Italiana del Lavoro Lombardia 37

Introduction 37

The present normative system 39

Strong and weak points of the present system and the attempts of reforms 43

CGIL union proposals for the social security 46

Conclusion 49

Conclusions from the discussion between the project’s partners 49

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Introduction

The main axis of the discussion and presentation, carried out during the project en-titled “Successful change management: information, consultation, and participation” was determined by the global economic crisis and its acute consequences which – since 2008 – have been experienced by societies of practically all countries of the Eu-ropean Union. The crisis has made both European societies and European trade unions realize how fragile and unsteady the base of the so-called social Europe is, where hu-man relations are grounded on dialogue, safety, and peace.

Sharply rising unemployment, deepening stratification of individual income, creation of new social class of the excluded – the so-called precariat – are dangers which require fast preventive measures, yet the recipes offered by particular governments and the Union as a whole, proposing “tightening the belt” – lowering wages and social ben-efits, and liberalization of labour law with negative consequences for employees – not only has not brought the expected results, but in at least a few countries of the EU cre-ated an explosive situation in danger of the eruption of social unrest.

The above context set the line of the discussion between trade union partners from Poland, Italy, and Spain, which started with the comparison of national social security systems regarding the negative effects of unemployment. And unemployment – as agreed by all the partners – is one of the main causes of economic changes brought about by globalization and the consistent introduction of the so-called liberal economy.

The analysis has irrefutably shown that social security in the countries of the so-called “old Union” is being consistently restricted, yet it still provides a particular “protective umbrella” which allows – in case of job loss – to maintain social security. In Poland, however, where liberal economy has been dominant since the end of communism (in 1990), social security in case of job loss is minimal. The loss of job in Poland equals deg-radation – not only social, but biological as well.

The discussion has unambiguously shown that the European labour movement will not allow a human being to be treated instrumentally as an employee, even though labour is treated as a commodity. A human – a citizen of the EU – is still a subject on the labour market and we believe this fact to be our advantage over other, non-European economies. Nowadays the main challenge the Union faces is to maintain the long-term advantage at the same time managing to fulfil the requirements of the short-term competition with the countries that are rapidly developing.

It has been stated during the discussion that Europe does not have to imitate anyone, that it should follow its own path, applying the model of social development that has been worked out throughout years and proved to be working. However, further effort is necessary for the construction of a transnational system, built on the idea of civic solidarity, to once again become a model for the world to follow.

The labour movement does not negate the necessity of changes that have to be introduced to national economic systems. These changes are necessary. Nevertheless, they have to be based on social consensus and not on one-sided diktat or administrative pressure.

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The 21st century is becoming the age of innovation, which requires long-term planning and time for its implementation. That is why trade unions do not accept the conclu-sions of short-term analyses, where the main factor taken into consideration is profit. Economy and market are not self-supporting entities. They are strongly connected to the quality of life and health care, administrative and educational efficiency, level of security, and efficient judiciary.

Europe does have well-tried recipes for long-term growth, which it has passed on to the countries admitted to the EU in 2004 and in the following years. Effective change management must resist crisis panic and the decisions must not be made as a result of short-term assessments that result in long-term effects.

Exchange of information, trade unions’ joint work on the assessment of change man-agement systems on micro (undertakings) and macro (national economies and Union economy) levels has not only increased the knowledge about the ways to prevent the negative effects of economic changes, but it has also enabled trade unions to know one another and allowed for personal relations to be built, thanks to which it is going to be easier to build a Europe based on solidarity.

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The European Union (EU) has entered the second decade of the 21st century carrying not only a bag of old, unresolved issues we could not solve using the means provided by the Lisbon strategy, but also a range of new issues. Nowadays, not only do the exist-ing labour market models in the EU not prevent the increase of economic inequality, but they even deepen it. The countries of the so-called “old Union” rather fast (in fact faster with every day) start abandoning the model of Social Europe, while the countries accepted to the European Union after 2004 have never reached the similar social status.

Undoubtedly, the current global economic crisis has resulted in serious problems in corporate order and crisis management in the European Union. The financial crisis has become economic crisis with huge increase of unemployment in Europe due to the restructuring, relocation, and budget cuts implemented by corporations worldwide. Employees in Europe have to pay the price of previous excesses and “ingenuities” of investors and financial markets. It is no longer possible to efficiently defend the corpo-ral model of management in the EU, based mainly on the Anglo-Saxon model where stress is put on shareholders’ profits.

Nevertheless, the economic crisis may become an incentive and opportunity for em-ployees’ stronger engagement through different activities: increased access to infor-mation, real consultations, employees’ participation in management. It may also result in the reduction of income disproportions that are still growing, but it will depend on the determination of the interested parties. Will the European labour movement have enough force to break through?

In Poland, the unfavourable legal system, imposed organization structures, and liberal norms forced on social politics have had a decisive influence on the condition of the labour movement. Its structural weakness has been also influenced by the constant restructuring of economy, including the liquidation of many branches of industry, mass bankruptcies of undertakings, significant shift of human resources from industry to services or their complete expulsion from the labour market. The dual model imple-mented by trade unions, where mass negotiations are mainly conducted on company level, and intermediate and central levels are devoted mostly to the emanation of po-litical activities, is in addition weakening the labour movement’s structures – intra-or-ganization flow of information and consultancy – and drives part of union personnel into a strictly political activity.

In such an organization-legal environment, the Polish labour movement must deal with permanent (at some times fundamental) economic changes: the change of politi-cal system and shift from central planning to market economy; privatization of vast ma-jority of undertakings; numerous bankruptcies; mergers and takeovers; different forms of bankruptcy, etc. It is probably worth taking a closer look on how the Polish labour movement has handled economic changes during the last twenty years.

Poland

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A bit of history of economic changes (macro view)

The end of the 1980s marks the departure from central planning in economy, which resulted in the division of large economic structures. The slogan applied at that time, “small is beautiful”, influenced the atomization of trade unions as well – according to the law at that time, the division of large economic structures was followed by the dis-membering of trade unions.

At the beginning of the 1990s, our country entered the period of economic changes dictated by politics, the period of total liberalism in economy, which resulted in con-stant protest actions. In 1992 alone, the National Labour Inspectorate registered over 30 thousand strikes in undertakings. At that time bankruptcy became the main way an undertaking was restructured. As a result, unemployment rose alarmingly – reaching 22% – and all negative social consequences followed. Poland found itself on the brink of chaos. In 1992 the government decided to initiate negotiations with trade unions, who proposed the introduction of a set of social protection measures for the army of unemployed. Moreover, institutions for social dialogue were created, forms of protest became more civilized. As a result, the number of strikes dropped significantly and un-controlled bankruptcies were restricted. The government introduced a few legislative and organizational solutions, thanks to which undertakings in difficult situation, who were planning restructuring, were offered help.

Since Poland’s accession to the European Union, unemployment has rapidly dropped (from 22% to 12% during the first two years after the accession). There are two main reasons for that: migration for purposes of employment and inflow of foreign capital. Trade unions began the consumption of Union directives, including the right of asso-ciation in European Works Councils. On the other hand, the introduction to the Polish law the directive on general rules of informing and consulting with employees resulted in difficulties with its implementation by trade unions, for the government followed the German model requiring works councils to be established, which in Polish context created a competitor for trade unions, often used by employers to diminish the posi-tion of trade unions in an undertaking.

In 2009 and 2010 Polish economy began experiencing the results of the global crisis. Economic growth has been strongly slowed down, the labour movement has been forced onto the defensive. Nevertheless, the relentless campaign for raising the mini-mum wage has led to raising its actual value (now it equals about 249 euro). On the oth-er hand, the labour movement’s fight against extending the working period necessary for one to retire has ended in failure. The Polish Parliament adopted a law to level and extend (to 67 years) the age allowing both men and women to retire (before, women were allowed to retire at the age of 60, and men at the age of 65).

The scope of restructuring changes during the last 10 years in Poland has been practi-cally revolutionary, especially in the metal industry. Practically all industry branches were restructured, most of them a couple of times. The smelting industry was thor-oughly privatized and restructured (nowadays it is mostly owned by the global con-cern ARCELOR – MITTAL), as well the vehicle, engine, aviation industry (now owned by global concerns FIAT, GM, VOLKSWAGEN, GE), and the shipbuilding industry (most-ly through liquidation). Employment in these sectors has decreased by over 60%,

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the defence industry – by law marked as a separate business – has been constantly restructured since 2002 and employment in that sector has decreased by about 70%.

Major ways of restructuring Polish undertakings

Political changes that took place at the beginning of the 1990s resulted in a doctrinal transformation of national undertakings into State-owned companies, for according to the economic “gurus” at that time the structure of a company allowed faster im-plementation of changes. And indeed – companies either transformed, developing their own capital base (privatization), or went bankrupt. Bankruptcy was usually the first stage of privatization, ensuring workers’ meekness, allowing trade unions to be disbanded, and keeping the price relatively low. In Poland, companies were not sold for a symbolic price (as it was the case in Germany – for one mark!), yet many transactions at that time were considered – by public opinion – a sign of blatant corruption. It was both the case of undertakings sold to foreign and Polish capital. The least shady was the form of privatization where an undertaking was listed on the stock exchange and sold to employees’ companies.

Labour movement’s position on the five steps of change management

The change management theory divides the whole process into five stages: the rec-ognition of the reason necessitating change, definition of the end point, plan of the change, implementation of the change, and ensuring that the change will last and bring the expected effects and positive results.

The labour movement observes all economic changes, both on micro – undertakings – and macro – macro region and country – level, with anxiety and attention, making sure that the labour market and social laws remain stable on both of these levels. It may be noticed that unions’ evaluation of economic restructuring processes has significantly evolved throughout the last years.

Firstly – the leftist labour movement had to support political and economic changes initiated in the 1990s by the so-called first non-communist Polish government – fol-lowing society’s widespread demand – Polish society at that time was convinced that the transition to free market economy equalled entering the realm of prosperity. The popular example was German economy with its numerous social benefits. That sup-port and an attempt to explain the necessity of economic and political change ensured at that time relative social stability during its implementation.

Secondly – after the political system collapsed in 1990, only the labour movement (OPZZ and NSZZ “Solidarność”) and the Church had solid organization structures able to create a new social and political order. The NSZZ “Solidarność” and the Church cre-ated the political right wing. The trade labour movement became, out of necessity, the origin of the left wing political party, which restricted its actions (it is difficult to criticize one’s own government) and blurred unions’ objectives, especially when – during the left wing government’s rule (SLD) – unemployment rose to over 22% and many regu-lations limiting employees’ rights and concessions for capital were introduced under the pretext of fighting unemployment. That situation forced trade union centres to revise their attitude to politics and trade union representatives’ involvement in politics

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(similar – negative – conclusions about the direct involvement in politics were drawn by the NSZZ “Solidarność” in the years 1997-2001).

Thirdly – by avoiding direct involvement with political parties, we speak loudly that trade unions are no longer a protective umbrella for governments. We build our own vision of social development, rooted in a hundred-years-old tradition of struggle for workers’ rights.

Nowadays the situation slowly starts to change – the labour movement in Poland stars building its own assessment of the logic of the economic system, rebuilding the val-ues of the economic model, choosing long-term perspective over short-term manage-ment. Of course it will lead to the clash of different ideas, the disturbance of negotia-tion system and the need to redefine the necessity of change according to the model forced through by the government.

The change of point of view shows that it is going to be more difficult for trade unions to reach agreement, especially in case of liberal governments, about the so-called end point. The Polish unions stop seeing economic growth and the criteria of its measure-ment as a fetish. We are rather talking about the need to stabilize the standard and quality of living, or the restriction of the wage differential. That is why all union centres in Poland stress the necessity of raising the minimum wage, stating firmly that it has to be raised to the amount of 50% of the average wage in economy (which would be about 450 euro). In the background there is also a postulate to introduce a separate tax rates for the wealthiest.

Ways of restricting social effects during the introduction of economic changes

The ways of restricting the negative effects of change experienced by employees have significantly changed during the last twenty years. During the years following the transformation, unions’ main goal was to secure civilized ways of group lay-offs and provide minimal security during unemployment. The government at that time believed in providing the largest amount of people possible with social benefits by providing them with social security payments. About 4 million employees were given the benefits – and almost million of them were deprived of the right to benefits after a few years as a result of a strict verification of medical certificates.

In the middle of the 1990s the labour movement tried to secure employees’ interests by making the law more strict: it became more difficult to dismiss employees, employers had to pay compensation for dismissal, the period during which the unemployed received benefits was prolonged (to a year in the areas where unemployment exceeded the na-tional average). When an undertaking was being privatized, it became a rule to create and accept social benefits packages in which the continuity of employment was guaranteed. With unions’ approval, many employees were granted pre-retirement benefits.

A method commonly accepted by all parties of the dialogue was to restructure em-ployment through the so-called voluntary terminations – one was offered a one-time, relatively high in Polish context, gratuity for voluntary termination, which allowed em-ployment to be reduced virtually without conflicts, and the vacant positions were filled with new employees who were offered much worse contracts.

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The dismissed were usually first-class, well-paid specialists with contracts of indefinite duration and protected by the Labour Code.

New employees became a new, fast-growing class (precariat) – young people without perspectives for promotion and prosperity. Trade unions point to the problem of de-creasing quality of work, vanishing employees’ sense of identity with a workplace and responsibility for work, which may lead to the vanishing of work ethics – one of the main developmental qualities of free market economy.

The thesis, propagated by the Polish trade unions, stating that the decreasing of in-come inequality will boost economic growth and stabilize economy, is mostly ignored by both employers and governing parties. Nevertheless, the Polish government has re-alized that low wages are a problem and a large part of society is forced to live beneath their previous standard of living, and started carrying out unions’ postulate calling for the correction of labour law’s pathologies by restricting the system of “self-employ-ment” and fee-for-task agreements.

The results of the liberalization of the Polish labour market

The introduction and dissemination of new forms of employment as a means of fight against unemployment – including fixed-term contracts, fee-for-task agreements, part-time employment, “self-employment” or approval for using temporary work agencies during the production process – has virtually destabilized European social relations.

In Poland, only 15% of employees younger than 30 have employment indefinite term contracts. Others, denied bank loans, condemned to temporary and unstable incomes, do not start families, pay minimal taxes, and cannot even dream about retirement ben-efits allowing bearable existence. Junk contracts have become a problem throughout Europe, yet in Poland they are particularly dangerous due to low wages. While in Bel-gium, Holland, Germany, or France one can earn one’s living working part-time, or live without paid job for a period of time, in Poland it is impossible, for an average salary (about 890 euro) is enough to fulfil only basic social needs.

Moreover, even though the nominal value of income in Poland rises, its real value goes down. The inflation is higher than the level of salary rises that have been negotiated, which is caused both by the rising price of fuel and the manipulation of the exchange value of the national currency (PLN).

In 2010, in spite of the liberalization of the labour market, unemployment rate rose above 12% for the first time since Poland’s accession to the European Union. At the same time the net value of undertakings was higher than in the previous year by 25,1%. It means that employers exploited government’s crisis panic and skilfully burdened employees with the costs of the crisis. Nowadays we can say that Poland has made up for its economic arrears – productivity is only slightly lower than the EU average! It is the quality of life that has been degraded!

That is why some of the solutions, such as shortening working week in order to keep the level of employment, are accepted by unions with certain uneasiness and only in extreme situations – even though such measures have been lately adopted in Poland more often. It must be added, however, that neither the country nor an employer are obligated to compensate for lost wages – they are proportionate to the time of work.

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The only limiting factor is the minimum wage that must be provided.

An indirect result of the liberalization of the labour market is lower tax income, which forces the government to introduce budget cuts in health service, social security, cul-ture, and education.

How to limit the negative results of changes?

The solution offered by the labour movement is neither simple nor easy. It aims mainly at convincing society that it should stop supporting liberal political parties opting for individual success, rat race, and the rule of ruthless enrichment as a the measure of all social values. That is why one of the main postulates, mentioned before, is to decrease income inequality and to reach the average earnings level of the European Union as fast as possible. This postulate is connected with the issue of raising the lowest salaries, for their level – in our opinion – directly influences the scale of national consumption, boosts demand and speeds up economic growth.

According to the next postulate, stable employment policy should be created by re-turning to indefinite term contracts as the basic form of employment. “Junk” contracts, favourable to capital from short-term perspective, in fact destabilize social life, lead-ing to degradation and exclusion. It is necessary to create administrative restrictions of the so-called self-employment, which in fact has nothing to do with business activity, but is a form of 21st-century slavery, for a self-employed person is deprived of any of the rights won during the hundred-years-long battle by the labour movement, such as the eight-hour workday, paid leave, social benefits, or fair retirement. What is more, one needs to fight against the cult of employees’ decision-making. The dependence of an employee on an employer, that is nowadays deepening in Poland, has led to the destruction of family and environmental relations, restriction of individual interest, etc.

What is more, the unions postulate the introduction of such changes in economic sys-tem that would make employers more interested in creating new jobs rather than in accumulating capital. The role of banks in economic life must be redefined as well.

In order to evaluate the role of trade unions in managing economic change, one must mention petitions issued internally by the labour movement. Nowadays, the most im-portant issue faced by the Polish trade unions is to improve the level of unionization among employees and to build internal organizational structures appropriate to face the upcoming challenges and tasks. The last remark concerns especially the trade struc-tures of the All-Poland Alliance of Trade Unions (OPZZ), which were created in a differ-ent political context of the old regime and are hardly appropriate for the new economy.

Elements of the Polish social security system regarding unemployment

The Guaranteed Employee Benefits Fund (FGŚP) was created in 1994 in order to pro-tect employees against the loss of remuneration due to employers ‘insolvency. It is a national special fund. The legal basis is The act on payment of employees’ claims in case of employer’s insolvency of 13 July 2006 (OJ No. 158, entry 1121 with subsequent changes, 2006). The FGŚP is financed by employers’ contributions. The act states that if an employer cannot pay his employees, their claim is covered by the FGŚP. The Fund settles claims concerning payment for work; payment for stoppage due to factors inde-

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pendent of employees, for time without work (job dismissal), or for short-time, excused absence from work. According to the act, an employer is defined as insolvent when the insolvency court – in accordance with insolvency law – pronounces the employer insolvent. The maximal payment made by the Fund equals three-month employees’ salary. The best witness to the scale of insolvency are the statistics carried out by the National Labour Inspectorate. According to them, during the first five months of 2011, over 13 thousand firms were pronounced insolvent.

Minimum wageIn Poland, the minimum wage is established each year on the basis of the act of 10 Oc-tober 2002 on the minimum wage – during the negotiation with social partners. The amount of the minimum wage is announced by the Prime Minister in Monitor Polski each year by 15 September. The minimum wage since 1 January 2012 has been 1500 PLN gross. During the first year of employment the wage cannot be lower than 80% of the minimum wage (80% x 1500 = 1200 PLN).

Unemployment benefitSince 1 January 2010, the unemployment benefit has been 717 PLN gross (around 170 euro) – this amount is paid only during the first three months. After that time the value of the benefit drops to 563 PLN gross (around 135 euro). Until the end of December 2009, the basic benefit was 575 PLN gross. The benefit is calculated on the basis of one’s period of employment: if it is shorter than 5 years – the benefit equals 80% of the basic benefit; if the employment is between 5 and 20 years – the benefit equals 100% of the basic benefit; when the employment is longer than 20 years – the benefit equals 120% of the basic benefit.

The unemployment benefit is valorized each year on 1 June. An unemployed person is entitled to it during 6 or 12 months. It depends on the unemployment rate in a poviat. If the unemployment rate is lower than the national average, then the benefit is paid during 6 months. If the unemployment rate equals at least 150% of the national unem-ployment rate, then the benefit is paid during 12 months. The benefit is paid during 12 months to each person older than 50 who has worked for at least 20 years and whose employer has paid all the contributions. People who raise children younger than 15 are entitled to the 12-month benefit as well.

Pre-retirement benefitIt is granted on the basis of the law of 30 April 2004 on pre-retirement benefits. The law specifies the requirements that must be met in order for the pre-retirement benefit to be granted, as well as the conditions on which it is withheld; it also states how the pre-retirement benefit is paid and financed. The pre-retirement benefit is a cash benefit financed from the resources of the Labour Fund and directed to long-serving employ-ees approaching retirement age who lose employment due to reasons independent of them and who has not yet reached the retirement age. The benefit is paid by the Social Insurance Institution (ZUS). According to the current law, the pre-retirement benefit is the same for all of the entitled, and equals 670 PLN per month (around 160 euro). The benefit expires when a new retirement law enters into force. The benefit is withheld when one takes up any paid employment.

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Prologue

At present, the consequences of liberal economic globalization are evident: the subor-dination of production capitalism (one of its features is the actual generation of wealth) to financial-speculative capitalism; shifting of the political world and the role of states – nations against the logic of the markets, and the lack of any framework and inter-national democratic institutions that would allow, among other things, to restore the balance between the power of capital and labor.

International crisis, whose effects are particularly severe in Europe, proves that there are contradictions which are present in this model of capitalist development. The alibi about the efforts that are used to overcome the crisis is employed. It is achieved by launching a policy limiting the labor and social rights and hindering regional integra-tion. The ban against the democratic values of progress and justice is utilized, and those values were the symbol of the identity of the European social model.

On the other hand, such a policy destroys millions of jobs, drastically reduces con-sumption and investments, provoking the situation in which the solution for the crisis moves away.

The current model of capitalist development is based on the powerful technological evolution, allowing for reduction or elimination of geographic distance for the flow of capital, information and goods. This scenario is used by large multinational corpora-tions to make general reorganization of their production network. It is done in the form of contracts with subcontractors and decentralization.

Nowadays, the production can be moved at any time to any part of the world. At pre-sent, “playing” a single or repeated relocation of business premises is a perverse prac-tice. Based on unequal social, labor and economic realities, there is a tendency towards the globalization of the worst conditions. This model of globalization in one way or another concerns all working people around the world.

There are countries in which the companies threaten employees with redundancy and/or with transfer of its production to another location, in order to achieve the deteriora-tion of working conditions for the people employed. In other cases, they specifically re-locate their production triggering off a serious reduction in the number of jobs. When this is the case in the industrial sector, the social and economic consequences in the country where particular production had been carried out are much more serious due to the ability to generate indirect economic activity and job creation. A large variety of industries possess such ability, however, the countries where the business activity is transferred to, as opposed to what you would assume, do not record a significant pro-gress in the area of improving the living and employment conditions. The basic human and labour rights or democratic principles are not reinforced there.

Hence, the lack of European and global governance, the lack of international regula-tory framework for employment, become the basis for the strategy of globalization in which impoverishment and inequality are the main basis for a rapid and substantial increase in the benefits of businesses and the financial sector.

Spain

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Introduction

When some general observations are expressed, it seems obvious that the situation in individual countries cannot be viewed in abstraction from European and/or interna-tional issues. Therefore, now, after this introduction, it is time to analyze the general characteristics of the Spanish model which should enable us to construct our trade union strategy, so that we could face the policy that leads neither to economic growth nor to creation of new jobs. Consequently, it also does not support the proper state of prosperity, defined by us as usually. Before the time of the economic crisis in which we are all drowning, the phenomenon of instability in employment had occurred in un-dertakings. The main reason for that was the speed and nature of technological chang-es, trends in the management of undertakings directed towards decentralization and outsourcing and competitive pressure accompanying the increasing globalization of markets. In view of globalization and rapid technological and organizational chang-es in undertakings, the modifying processes in the structures of undertakings have gained special momentum, particularly in the area of mergers and acquisitions, but also in disintegration and closing of factories and jobs restructuring. Nowadays, the processes of closing of factories and jobs restructuring have the greatest importance in industrial sectors belonging to the Federación de Industria de Comisiones Obreras.

In these processes the undertakings have showed the tendency to eliminate a large part of their workplaces. People in those jobs who have been made redundant have difficulties in finding re-employment because of their age, level of education or type of professional qualifications. In the face of this situation, employees’ representatives must have sufficient preparation and access to information in order to face the threats to employment and overcome the crisis or mitigate its effects on employment. People must be able to appeal to all kinds of resources and legal rights in the sphere of partici-pation enjoyed by the representatives of the law or by agreement.

So that we can work effectively in such situations and properly direct and strengthen our union activities, we have to possess growing awareness of the reality in which we live and the processes that occur in it. Therefore, we must first analyze the current situ-ation and its direct impact on businesses and employment. This will allow us to act in advance in view of the decisions made by entrepreneurs or provide us with the possi-bility to implement effective trade union activity in the face of decisions taken. It is also necessary to know the legal framework for the restructuring and the knowledge of the tools that we have at our disposal (the right to information, consultation and participa-tion), in order to later be able to make an effort to establish the strategy that allows the legitimate representatives of employees to act in these situations.

Current situation in Spain

The announcement of early general elections in Spain was a response to the failure of the management of the economic crisis and the sphere of employment. The defeat, accentuated by the change of direction, which was due to regulatory action initiated by the Socialist government in May 2010, following the erroneous and ineffective so-lutions used in the first phase of the crisis. When the crisis began we all experienced alternating periods of economic depression, stagnation and recession.

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This situation, in the economic sphere of production, means that industrial production is influenced by low levels of consumption in the economy, the deterioration in the labour market or atonia in construction investments of which the supporting produc-tion is a major part.

Foreign orders were the main support for the Spanish economy in recent years, but the budget cuts anticipated by the largest trading partners are the cause of great uncer-tainty about the future evolution of exports, because, among other reasons, the euro area is the target market for 53.4% of Spanish export.

Ultimately, this evolution applies to the industries of manufacturing and electricity consumption and also to sales of large undertakings. We need to improve the partici-pation in national and international markets, increasing exports and reducing imports, in order to make better use of production capacity and increase employment. As long as the domestic demand does not increase, the possibility of sustainable economic growth are small. The solution could be increasing public investment to create new jobs, using the fact that interest rates are currently very low. However, to solve this problem, with the number of 5.5 million people who are unemployed, we must recog-nize that mistakes have been made and change the policy.

In addition to the loss of 2.5 million jobs in 2008, it should be considered that salary adjustments have also taken place, for it is still believed that labour costs are the major cause of the continuous crisis. At the same time, during this period of time, the fiscal policy had been neglected (the amount of financial transactions, tax on companies, succession and donation, tax evasion) as the main instrument to balance the deficit. More than a million young people under the age of 25 years are unemployed. The problem of unemployment poses a threat to the social project. The exclusion from the project of almost half of young people is a danger whose scope and seriousness if hard to imagine. We shall keep in mind that the Spanish unemployment rate continues to be the highest in relation to the European and, to large extent, global indicators.

We, as the Federation of Industry, in recent years, defended the need for the Pact for Industry, presenting our proposals and being aware of the benefits of adoption, and therefore the need to adopt departmental policies, particularly as a result of public con-sultation in the industry in which we participated. We have presented proposals for rev-enue, pricing, housing, financial system, fiscal policy and employment of young people. We were also aware that it the jobs will not be created without economic growth.

Spain needs to improve the quality of their products and compete in price with other EU countries. The control of prices is necessary to achieve this. It must be led in such a way so that the products may evolve in a reasonable manner. Our country cannot in-crease its competitiveness on the basis of low labour costs and extended service hours.

What really is an urgent issue is the access to credit for small and medium-sized un-dertakings, which represent 95% of the production in our country. At the moment, the restructuring of the Spanish banking system is seen as an opportunity to effectively facilitate the credit needs of businesses and families, with simultaneous competitive cost of these loans, which provides support for recovery from the crisis. It also gives impetus to the promotion of investment in strategic sectors, thereby combining the direct and indirect public subsidies with the influx of credit and economic develop-

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ment, with a particular focus on small and medium-sized undertakings, and most of all the projects related to the creation of new jobs.

Overall, the economy requires two-way actions: the short-term ones, related to the recovery of lost jobs and the long-term ones, cleansing, which will not only allow to healthily get out of the crisis and be competitive on an international scale, but will also serve the change of direction of the economy into more productive sectors.

The gravity of the situation requires arrangements relating fixed policy and not im-posing methods that beyond the destruction of the social climate and labour market conditions do not facilitate proper recovery from the crisis. On the contrary, they result in further expansion of the problems plaguing Spanish economy.

On the other hand, strong attacks on the Welfare State, explained by the high debt of the Spanish public administration, from the beginning of democracy threaten the social achievements. Political and media related right wing favoured promotion and support for the attitudes and political decisions being a direct attack on what had been the bastion of economic and social rights in Spain.

We cannot forget the strong attacks against the union movement and the union mem-bers, which are the only instrument of resistance to the damaging policies against so-ciety in general, and particularly against the working people. Despite the reluctance of institutions and the continuous questioning of our existence, we, the union mem-bers, were able to stand up to the challenge, believing in realization and mobilization against the attempts of aggression.

From the moment of the People’s Party reaching to power, the first initiatives reflected the measures which were socially unjust and the refusal to stimulate economic activity.

In the area of labour, standards that contribute to reducing the number of jobs are introduced. It is encouraged to lower the cost of employees’ dismissal. The only effort that is taken is the one to regain market confidence, introducing reforms which are unfair to employees, useless and ineffective for the economy.

Collective bargaining is a tool for the defence of employment conditions and the area in which the trade union can reflect their usefulness the most. For this reason, organiz-ing union activities we will defend the role of collective bargaining, presenting and de-fending our proposals during the negotiations. Negotiating of collective agreements must be the mechanism that allows us, through “the adoption of specific agreements, entirely concerning employment and work organization”, to combat the effects of vari-ous reforms. The priority must be to maintain the level of employment and the rights guaranteed by the intervention of the union, through strengthening the role of the union in those processes.

Labor market. Labor Law Reform 3/2012

In this context, the Spanish steel industry companies have adopted a number of methods that can be characterized in two ways: means of reactive character and strategic measures. In the following part of this document we will deal with the ways the reform of labour law, imposed by the current Spanish government, influenced those measures directly.

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Among the means of reactive character we can enumerate:

» freezing or reducing wages for workers who kept their jobs after restructuring;

» focusing collective bargaining on restructuring;

» making external adjustments in reference to workplaces;

» closing factories;

» transferring production abroad;

» lack of investments;

» reducing the scope of staff training to the essential minimum, to matters vital to conduct the business;

» restricting the access of legal representation of workers to information;

» strengthening the role of a neutral role of the public administration.

Strategic measures are:

» the policy of reducing revenues at all levels of the company (in the area of wages, salaries for management, dividends);

» connecting collective bargaining with restructuring of business and prioritizing the distribution of costs and benefits of restructuring;

» adjusting actions through the internal flexibility;

» maintaining the company’s activities and its commitment to invest;

» developing training plans for staff, related to the restructuring of the company;

» establishment and consolidation of areas of co-decision making;

» looking for ways to incorporate the public administration in taking steps allowing the achievement of positive effects of the restructuring process.

Labour Law Reform. Royal Decree 3/2012.On 10 February 2012, the People’s Party (Partido Popular) government accepted the most aggressive and ultra-liberal reform of the labour law applied in a democracy. It was based on the Royal Decree under the Act of 3/2012 on urgent measures to reform the Labour Market, disrupting the balance of labour relations for the benefit of busi-nesses, without the need to create jobs by the entrepreneur (which was to be the main factor used by the government to justify the adoption of the reform) particularly short-term ones, as it was allowed the People’s Party itself.

The labour law reform was carried out for various reasons: because of the use of the representation of employees, because it threatened the right to equal treatment, since it threatened the constitutional right to effective judicial protection, etc.

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The Decree is shamelessly looking for a way to individualize labour relations, dealing a serious blow to ministerial collective bargaining and the ability of workers to organize.

In order for us to focus more on the elements that more seriously relate to the topics in question, we will limit the calculation of the changes in the law to those that are directly related to the restructuring processes and information, consultation and par-ticipation of workers.

This reform relates to the procedures that aim to limit the number of work contracts, both individually and collectively, by increasing the number of reasons for their use and further restrict the right to consult with the Legal Representation of Employees.

Two ways to reduce the amount of severance pay when firing workers are used, from 45 to 33 days pay per year of service. The salary for the duration of the official procedures is also abolished.

The control of administrative authorities towards the act on the regulation of employ-ment is eliminated.

The model of collective bargaining and social dialogue is completely changed. It is done by ignoring the agreements concluded between the employer and the trade unions and weakening the power of the collective agreement. Thus, for example, a collective agree-ment may cease to exist one year after its expiration and it is allowed to negotiate within the company the minimum wage lower than the standard ones in the sector.

For the aforementioned and other reasons, a general strike was held on 29 March 2012 and there are various re-vindication activities carried out in different periods of time.

Change Management (Collection of Employment Regulations – ERE)

Currently, the restructuring processes in Spain, in virtually all cases produce adverse effects in relation to employment and are implemented in accordance with the leg-islative regulations, also concerning labour law: Royal Legislative Decree 1/1995, of 24 March – on its basis the modified text of the Act of the Statute of Workers’ was adopted; Royal Decree 801/2011 of 10 June, which approves the Regulations of procedures regu-lating employment and administrative activities in the field of collective transfers, etc., taking the form of a set of rules governing employment. In order for the entrepreneur to take a number of steps governing employment, reducing working hours, suspen-sion or restriction of employment, the Act requires adherence to specific procedures to ensure workers’ rights. With the outbreak of the crisis, a number of Spanish steel indus-try companies are undergoing a very difficult process of adapting. This has led to the spread of the practice of resorting to the use of a set of employment regulations (ERE).

The first adjustment measures did not use ERE. At first, the number of the so-called overtime was reduced and the formula of conducting the business on their own was found. When it was time to reduce the number of job posts, it was done by not extend-ing temporary contracts, which drastically reduced the number of temporary contracts of employment of people employed in the steel industry. Early retirement or partial retirement plans were used. It was done on the basis of the work agenda, the exchange of working hours, which allowed uneven distribution of working time.

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Over the next months, the directives of companies began to apply to the employed under the contract of indefinite duration.

Some data on the spanish economy

» inflation in 2010: 3%

» Inflation in 2011: 1.5%

» Planned economic growth in 2011: 0.7%

» Unemployment rate: 22.85%

» The unemployment rate among young people: more than 50%

» The minimum monthly salary: 641

» Average salary: 1,300

Typically, the decision to restructure is undertaken within the management of the un-dertaking. However, during the process of negotiating the measures to be taken, The Legal Representation of Workers (RTL) takes the initiatives that modify – at least before the reform of labor law – the steps taken by the company, which can be understood that in many cases the RTL directly affects the effects of the restructuring process like the measures that are to be considered in this process, especially in companies where the power of the trade union organization is significant. The procedure is as follows: redundancies must be preceded by a period of consultations with the RTL, which may not be longer than 30 days, or fifteen for companies with fewer than 50 employees. The consultation with the RTL must at least relate to the opportunities to avoid or reduce the number of redundancies and mitigate their consequences, through the use of so-cial support measures, such as transferring to another post, training actions or retrain-ing workers in order to improve their employment opportunities.

Article 50 of the Statute of the Employees: „shall be understood as collective redundancies, limiting the number of employment contracts, caused by the economic, technical, organi-zational measures or those related to the sphere of production, if within ninety days, the limitation will apply to at least:

a. Ten employees a company employing fewer than one hundred employees;

b. 10% of the company’s workforce that is a group of companies employing from one hundred to three hundred employees;

c. Thirty workers in undertakings employing more than three hundred employees.

It is assumed that there are economic reasons, when the results of the company cause nega-tive effects on the economic situation, in such cases as current or planned loss, or persistent reduction of the level of revenues or sales. It will be understood that the reduction is perma-nent if it will occur in the next three quarters.

It is assumed that there are technical reasons, when there are changes, inter alia, in the field of production of means or instruments; organization causes, when changes occur, among others, in systems and working methods of staff or in the organization of production and

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production causes when there are changes in demand for products or services that the company is trying to introduce to the market.

Reduction in the number of contracts of employment will also be understood as collective redundancies, which will affect the total number of jobs in the company, whenever the num-ber of employees affected by this restriction will be higher than five, and it is a consequence of the complete closure of the business for the reasons given above (...) „.

The message about the commencement of the consultation shall be made public in the form of a letter to the entrepreneur, addressed to the RTL, whose one copy with the attached message is forwarded to the Ministry of Labour. The letter contains the following elements:

d. The description of the reasons for the collective redundancies.

e. The number and work classification of the redundant workers.

f. The number and work classification of workers employed in the last year under the usual rules.

g. The time when the collective redundancies are expected

h. The criteria that determined the selection of employees for dismissal.

An explanation of the reasons for redundancy and other aspects mentioned in the pre-vious paragraph must be attached to the aforementioned letter.

Upon notification, the authorities responsible for employment, transmit the informa-tion to the institution granting unemployment benefits and receive, in the form of in-struction, the report of the Labour Inspection and Social Security on the scope of the notification, to which the previous paragraphs refer to, as well as information about the duration of consultation.

The address as speakers towards the management of the undertaking in the process of consultation can take place on the initiative of the union sections, if they agree so, but always when they have a majority representation in staff councils or among the delegates of the staff of the company.

In cases where the RTL sections of the trade union do not exist in the company, for the duration of consultations they can assign the role of the representative of these com-mittees designated as agreed.

During the consultations, the parties should negotiate in good faith with a view to reaching an agreement.

The authorities responsible for employment will observe the effectiveness of the con-sultation period, having the right, if necessary, to provide warnings and recommenda-tions to the parties that under no circumstances shall be treated as paralysis or suspen-sion procedures.

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Examples of good practice:

In addition to using a temporary suspension of service of the employee instead of the ERE to reduce the number of jobs, there has been – in large companies – the possibility of us-ing deferred employment contract, consisting of a permanent commitment (supported by documents) of the company, in order to re-employ the redundant workers after a certain period of time and when the company resumes business operations.

Another point worth of attention is the case of a factory with a group specializing in the production of spare parts for cars, in which, apart from constructing a plan to retrain work-ers and moving to other positions persons laid off due to closing of factories, the assets and property are transferred with the purpose of establishing a business park, intended for pro-ductive activity.

In the sub-sector of capital goods, the ongoing dynamics of negotiation caused the pub-lic administration to facilitate obtaining of financing of complementary income savings scheme for the oldest group of the laid off workers.

In all the above cases, the staff was informed up-to-date and consulted during the assembly or in a referendum.

At the end of the consultation period, the entrepreneur shall inform the authorities responsible for employment about the results of the consultations. If agreement was reached, he or she sends an exact copy of the agreement. Otherwise, he or she informs the workers’ representatives and the authorities responsible for employment, the final decision about collective redundancies and informs about his or her terms.

If the limitation of the number of jobs affects more than 50% of the employees, the entrepreneur shall notify the RTL and the competent authorities about the sale of the company, besides those assets which are the element of the normal maintenance of the company.

After notifying the workers’ representatives, the entrepreneur within the prescribed period shall notify the discharged employee individually in writing. A period of at least 30 days has to pass from the date of notification of the commencement of consulta-tions with the authorities responsible for employment to the date on which the redun-dancies will start.

The RTL will have priority in terms of being in the company in situations referred to in this article. Through the collective agreement or on the basis of the agreement reached as a result of the consultations, it will be possible to set priorities of remaining in the company for other groups of workers, such as those burdened with family responsibili-ties, those who have crossed the threshold age or those with certain disability.

It will be possible to refute the decision of the company by acting as provided in case of this type of redundancies. The authorities responsible for employment will be able to cancel the agreement adopted during the consultations, if they considers that such agreements were reached as a result of fraud, extortion or abuse of law, and also when the institution responsible for the payment of unemployment benefits will inform that the possible goal of the agreement is the desire to obtain an undue benefits for em-ployees, in connection with non-existence of legal lack of employment.

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We will not discuss here the existence of a specific procedure for cases of force majeure, resulting in the expiration of contracts of employment.

A statutory obligation to provide information and documentation will be required re-gardless of whether the decision on collective redundancies has been taken by the operator or by the company holding the control over it. Any justification by the entre-preneur, based on the fact that the entrepreneur was not provided with the necessary information, will not be recognized.

In the case of proceedings relating to collective redundancies in companies not subject to insolvency proceedings, which will include employees aged 55 or more, not covered by mutual insurance on January 1, 1967, there will be an obligation to pay the amounts allocated to the special agreement relating to employees whom we mentioned earlier, to the extent provided in the Basic Law on Social Insurance.

The company which makes over fifty employees redundant will have to offer the fired workers a plan of employment in another establishment, through the authorized insti-tutions dealing with employment. The plan, drawn up for at least half a year, will have to include measures in the field of training and guidance, personalized care over the worker and active employment seeking. These tasks do not apply to companies that are subject to insolvency proceedings. The cost of implementing the plan in any case will not be borne by the employees.

Failure to fulfil the duty described in this paragraph or lack of the accompanying social measures, implementation of which is the responsibility of the entrepreneur, will be able to be the subject of complaints from employees, irrespective of the administration responsibility, which will be applied in reference with unfulfilled duties.

Number of employees affected by collective redundancies on the basis of permitted employment regulation

2007 2008 2009 2010Total

2007-2010

In the entire economy 25,742 40,572 63,476 52,534 182,324

In industrial sector 14,481 22,816 36,497 24,841 98,636

CC.OO industrial sector 6,838 10,002 17,925 13,360 48,125

In particular divisions of CC.OO

Mining 750 681 772 466 2,669

Metallurgical and metal 1,510 2,821 4,655 3,313 12,299

Means of production 1,969 3,354 4,181 2,916 12,420

Tic 165 390 2,033 721 3,309

Automobile 1,449 2,030 5,663 4,325 13,467

Other transport 443 296 248 540 1,527

Electric 552 430 373 1,079 2,434

CC.OO industrial sector 6,838 10,002 17,926 13,360 48,125

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Undertakings that make redundancies in accordance with the provisions of this Article, and the redundancies will apply to workers aged 50 or more years, will have to make an eco-nomic contribution to the State Treasury in accordance with established legal regulations.

The contract of employment can be suspended or the working hours can be limited for economic, technical, organizational or production reasons, in accordance with the procedure provided for in the previously mentioned regulations, without the payment of compensation to employees. The procedure is the same as in the case of expiration of the contract, with a specificity:

» The procedure can be applied regardless of the total number of employees and the number of companies covered by the suspension of contracts of employment or reduction of working time;

» The time allowed for the duration of the consultation will be reduced by half and shall not exceed fifteen working days or eight days for companies with fewer than fifty employees;

» Explanatory documentation will be essential to determine the start of the procedure and decide that it is related to the economic situation of the company. For this pur-pose, if the reason given by the company is economic, the required documentation will be limited to the last full reporting year and the date of the provisional accounts valid for the date of presenting the application for the initiation of the procedure.

Another difference between the ERE expiry of the contract and its suspension is that in the first case the employees covered by the expiry of the contract in case it occurs, will receive compensation in the form of the minimum amount of salary for 20 days of work per each year in employment.

In both cases, the employees are entitled to the right of protection in the event of lack of employment for people who can and want to work, and who lose their jobs or whose working hours are reduced. In the latter case, partially under the provisions of the Basic Law on Social Insurance.

The right to information, consultation and participation

These rights of Legitimate Representatives of Workers (RTL) are governed by the appli-cable laws (Spanish Constitution, Art. 7, 28 and 37, Law on the Right to Trade Union Activ-ities, chapter III; Workers Statute, Articles 4 and 64), as well as content of the agreement.

According to Art. 64 WS, the information is considered as data transfer by the entrepre-neur to the committee in order to share the knowledge of a specific committee issues and give him or her an opportunity to analyze it.

A Consultation is the exchange of views and establishment of dialogue between entre-preneurs and capital committee on a specific topic, as well as on a preliminary report prepared by the committee.

In both cases, the parties work in the spirit of cooperation, with respect for each other’s reciprocal rights and obligations and taking into account the interests of the company and employees.

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As for the content relating to the RTL’s right to information, we will list the key ele-ments, focusing on specific cases of the project:

» Information on employment contracts;

» Information on contracts considering making negotiations available, signed with companies employing temporary workers;

» Information about the assumptions on contracts with subcontractors;

» Information on successions and transferring rights to companies.

In these cases, it is essential for the RTL to have the knowledge of all aspects of the is-sue, if they are associated with the change and subrogation to the employer in terms of working conditions, which the staff had previously had.

For this purpose, Art. 434.6 WS provides that the transferring and the receiving parties have to inform the RTL of their employees, those affected by the change of owner-ship, about the following terms: the expected date of the transfer; the reasons for the transfer; the legal, economic and social consequences in relation to the employees, re-sulting from transferring; the actions which will be taken in relation to the employees.

This information, in a timely manner, must be provided by the transferring company, before the transfer. The transferee must also provide information before the assign-ment will apply to employees. bankruptcy

In the event of a merger or separation of companies, the transferor and the transferee must provide the aforementioned information no later than at the time of publication of the notice about summoning the general meeting that will approve relevant agree-ments. What is more, in such cases, the right to of the RTL to information is not limited to the receipt of any such distributions. It must also receive a preliminary report on the effectiveness of succession.

» Information on the modification of the conditions of employment at the request of the company.

» Information about sanctions provided for employees for serious misconduct.

» Information on the termination of employment contracts for objective reasons.

Information on the company’s economic and financial situation

The RTL is entitled to quarterly information about:

» the general state of the evolution of the economic sector to which the company belongs;

» the economic situation of the company and the current and likely evolution of the activities, including measures to protect the environment, which will directly af-fect employment, production and sales as well as production program;

» business plans on signing new contracts, with the indication of their number, types and characteristics, including employment contracts, part-time work, the execution of additional hours for employees working part-time and plans on con-tracts with subcontractors;

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» statistics on absence rate and the reasons for it, on accidents at work and occupa-tional diseases and their consequences, accident rates, routine periodic or specific tests of the work environment and the preventive mechanisms that will be used.

Additionally, with appropriate frequency, the RTL is to acquire knowledge about the balance sheet, income statement and the undertaking’s economic report. The RTL has the right to possess information and consult on the situation and the structure of em-ployment in the business or in the workplace, and to receive quarterly information on the likely evolution of employment, as well as consultations in the event of anticipated changes in this area. The RTL also has the right to information and consultation on decisions of the company that may cause substantial changes in work organization and employment contracts within the company. Moreover, the RTL has the right to information and consultation on taking any preventive steps, especially in the case of any possible threat to employment:

» with equal rights and treatment for women and men;

» information in the field of social security,

» information on accidents at work and others.

So far, we referred to the RTL’s passive rights in the company to obtain information, which means that the law is observed with the moment of delivery of information. However, there are other circumstances in which the RTL is not limited only to receive information, but must be heard before any steps are taken by the company. Therefore, the Representation actively participates in the development of the reports that are re-quired by applicable law. We will focus now on the report which needs to be made pri-or to the adoption of certain measures by the company, since the right entitling to prior consultation in the event of ERE has already been discussed in the previous paragraph.

The RTL has the right to declare the report prior to the undertaking of decisions taken by him or her, in the following cases:

» restructuring plan of posts and their total or partial liquidation, either final or temporary,

» reduction of work time,

» total or partial transfer of the registered office,

» mergers, takeovers or modifications of the legal status of the entrepreneur, having an impact on the amount of the employment rate,

» training plans of the company;

» introduction and revision of the systems of work organization and control, analysis of the time, setting incentive schemes and job evaluations.

In each case, the entrepreneur must provide this information to the company council, without prejudice to specific arrangements for each of the cases. This must be done at the right time, in the right way, and the relevant content must be contained, so that the employees’ representatives could make appropriate analysis and, if necessary, prepare consultation and report.

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The consultation must be carried out, with the exception of the existence of any other agreements, at the right time and with the right content, at the appropriate level of management and representation of the company. It must be done in a way enabling the representatives of the employees, based on the information obtained, to hold a meeting with an entrepreneur in order to obtain a reasoned response to their even-tual report. Workers’ representatives must also be able to compare their opinions or positions on the case, with the intention of reaching an agreement on the issues men-tioned in paragraph 4, without prejudice to the powers held by the entrepreneur in the field connected with each of the issues mentioned. Consultation should allow the entrepreneur to get familiar with the company council’s criterion at the time of under-taking and executing decisions.

The reports that the company council has to announce, should be developed within a maximum of fifteen days from the date of filing the application for the development and obtaining relevant information.

The right to information, consultation and participation in collective bargaining in the environment of Comisiones Obreras Industry Federation.

Collective Bargaining (CC) in our sector contains only 31% of detailed articles on infor-mation, consultation and participation, while in Europe it amounts to 80%.

The rights in legislation are usually repeated in the sectoral agreements, determin-ing the right to information and consultation in the field of forming of contracts of employment, equal rights and treatment, freedom from discrimination, absenteeism, organization of working time and the disciplinary system. Unfortunately, the content and operation are usually modest.

When it comes to collective bargaining in the company, the common practice is to du-plicate the provisions of the agreement affecting these aspects. The right to informa-tion, consultation and participation is regulated in various ways depending on the size of the company and the correlation of forces within it.

Typically, the scope of rights of collective representation does not go beyond the necessary framework in force, such as parity committees, or the “ad hoc” creation of committees, established to consider specific issues, such as occupational classification, training, evaluation, efficiency, etc.

The right to information and consultation in the European Union

Recognition of the right of workers to information and consultation is an essential com-ponent of the systems related to labour relations in the Member States of the EU and is written as follows:

» The Charter of Fundamental Rights of the European Union (2000): the employees or their representatives, at the appropriate levels, shall be guaranteed the informa-tion and consultation rights, delivered and carried out in a timely manner, in the cases and under the conditions laid down in the European Union legislation and in the laws and practices of particular Member States. When it comes to content, the right of workers to information and consultation was created in a progressive man-ner and in stages, based on a series of the European Union directives; this process is concluded by the development of

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» Directive 2002/14/EC of the European Parliament and of the Council establishing the general framework for communication with employees in companies of the European Union. The Directive stipulates that companies employing at least 50 employees or workplaces employing at least 20 employees must inform about the current and potential development of the business and the economic situation of the company. They must also consult the decisions that may lead to substantial changes in work organization or in labour relations, including collective redundan-cies and the transfer of business to another owner.

» Directive 2009/38/EC of the European Council on the European Staff Committees: about the establishment of the European Staff Committee or the procedure for informing and consultations with employees in companies and groups of compa-nies within the EU. This Directive replacing the Directive of 1994 gives the ESC the right to information and consultation on transnational matters which in a signifi-cant way relate to the interests of workers. They are also given the right to informa-tion in extraordinary circumstances, such as closing or moving of the company, changing positions or collective redundancies.

The right to information and consultation on a global level.

The access to the information necessary to initiate and develop appropriate communi-cation between companies and employees is one of the fundamental rights and so it is understood at international level in a range of recommendations and conventions.

It should refer specifically to the Convention 154 and Recommendation 163 on col-lective bargaining (both from 1981) or the Convention 135 and Recommendation 143 (both from 1971) connected with the representatives of the employees. Particularly noteworthy, however, is the Recommendation 129 of 1967, relating to inter-company communication.

Goals and Recommendations

National

In the current context of a deep crisis, it becomes necessary to modify the production model, which we, as a union organization, have been offering for a long time. We are a fundamental pillar of the process of introduction of growth model with constant high rate of value added in our country, having a future and high-quality employment.

From the point of view of a trade union, we cannot remain on the defensive. We need to introduce innovative methods and try, in a way, to represent an effective alternative in order to become leaders of changes and their effects.

We, as the Comisiones Obreras Industry Federation want to take this innovative role, presenting the change as an example, where the position of unions is not limited to actions aimed at alleviating or inhibiting effects of the crisis, which is predominantly perceptible in our sector, but also in the whole Spanish economy.

We are convinced that the country with no industry is a country with no future and, therefore, our most ambitious aim is the location of the industrial sector in its due place as one of the most important and distinctive forces in the whole production process, and consequently – our model of production growth. We firmly believe that if the gov-

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ernment, businesses and trade unions focus on the industry, it will be a guarantee of added value creation, sustainable growth and high quality of jobs – the future-orient-ed development model. In consequence, this sector will become an essential element of strengthening social welfare.

The industry is the area of life established as the driving force in the economy. But it could not serve this role in a right way because none of the governments who led this country has ever bet on the industry. Such situation makes the effort, which aims is to cause the industry sector to be perceived as having the main tools we need to come out of the crisis in our country, to be of strategic importance. It may lead to our eco-nomic growth and to solving environmental problems that the industry creates.

For all these reasons we must continue to insist on noticing that it is necessary to change the vision from both the administration and business community perspective, and the entire society must participate in these activities.

Our companies have to give up the habit of functioning by short-term plans (the cul-ture focused on activities that facilitate quick income generation, however, ones that are completely distant from investing in high technologies) and lacking the strategy to forestall any changes. These are the characteristics of actions in the field of economy, industry and employment. This position contributes to the fact that the entire indus-try and its federal sectors are rapidly heading for the loss of any significance in the economy of the country.

Spain, in the field of industrial activities, apart from the economic problems and tech-nological dependency, is struggling with the lack of political will to entrust the de-velopment of the country to the ways and instruments whose results will become apparent in the longer run. We cannot deceive ourselves; the social and economic policy, specialization of production and the possibility for the Spanish products to play a significant role in the high competition that accompanies globalization, cannot avoid determined stance towards such aspects as: energy policy, physical infrastructure, technological innovation and education (it can improve the quality of employment). Additionally, there should exist a business relationship with universities (this allows for the production of goods and conducting a business activity at a higher technological level). These are the elements of the necessary changes in the production model.

First of all, we need to strengthen the social dialogue in all sectors connected with ac-tions within industrial policy. Starting from the central government, according to the criteria of strategic orientation, and ending with the Autonomous Regions where the locally characteristic elements of development must be taken into account, it is neces-sary to establish a dialogue with all sectors.

In order to properly respond to the challenges posed by changing the model, we need to find solutions to some problems that are a challenge for our union today. We need to give momentum to the process of achieving added value and further training.

Commitment to research and development.In the field which is dealt with by the Industry Federation, the majority of innovative projects is located in metal industry companies (production of metal products, 40%), followed by the field of the means of production (34%) and iron and steel industry which is ranked at a distant place (7% of innovative actions).

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In the evolution of the Spanish innovation system, the administration – both regional and central – has played an important role as a regulator of technical and legal issues relating to innovation, and has given the impetus to even wider innovation, creating complex mechanisms of direct and indirect financial assistance. In this regard, some of the goals are as follows:

» to provide public funding for research and to connect it with innovation;

» to give impetus to private investment in research and development. It is a very worrying situation that the Spanish companies have reduced their spending on research and development by 0.8%;

» to strengthen social dialogue on global issues in research and development and in the issues relating to the rules of rationing contained in the Act on Science, Tech-nology and Innovation;

» to introduce the policy of development of innovative programs in order to im-prove the capacity of scientific and technological undertakings;

» to better co-ordinate policy on research, development and investment, carried out by the central and state administration authorities of the Autonomous Regions, as the latter have received considerable competences in this field.

Commitment to training and qualifications.

As for the level of qualification of employees in Spain, workers have a lower level of qualifications compared with the European average. Therefore, if we consider that the Spanish production section must make progress towards a more competitive model as soon as possible, we need to insist on raising the level of professional qualifications to make a change in the orientation of the production model.

It is known that the competitiveness of the industrial system, in principle, does not depend on the skills of people working, but on the form of the production process. These processes are more efficient if you invest more. The efficiency depends, in turn, on scientific research and on the development as well as the transfer of these achieve-ments to the sphere of production. To conclude, in depends on innovation.

In the field of training and skill upgrading of workers in the industry, we can say that in our country there is a significant lack of any link between the professional qualifica-tions and production systems. We have a small group of workers with secondary edu-cation and a large group of highly qualified people, who, when finding employment in our sector, face serious adaptation problems.

The solution to this situation is one of the conditions, which we must meet in order to determine the way of development, of fundamental importance for manufacturing innovation. Unions must ensure that the new agreement includes appropriate instru-ments to improve the learning process and the skills of workers.

The first condition is to guarantee the right to effective training, individual and col-lective, with equal rights of access to education procedures. This condition requires broadening of the scope of intervention of the union.

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Comisiones Obreras Industry Federation, in addition to active participation in the course of the negotiation process, tries to firmly intensify specific trade union actions, in industries and businesses, in order to participate in establishing structural criteria for Training Plans, in the strategic policy of companies, on issues related to the qualifica-tion needs of the teams, in processes of hiring, promotion, etc.

Of the European Union

Commitment to the industry as the driving force of the economy.

Companies are important for the EU, because of their importance in the production on the continent, the level of employment and the contribution to the new knowledge and economy. They also create innovative products that provide three quarters of ex-ports. Such companies are mostly small and medium-sized undertakings.

The industrial policy of the EU is characterized by integrity, working with other politi-cal areas, such as education, training, research and development and environmental protection. On the other hand, is also trying to work horizontally, to ensure coherence and synergy between various strategic industries, which allows to take into account their unique specialties.

Since all sectors are important, it is vital to:

» continue to use the specific methods for strategic sectors (because of the size of employment or due to the importance of the technology used), without forget-ting the need of adapting the traditional industrial sectors which are linked with economic development, as well as finding new niches in the market;

» provide instruments for coordinated action at European level, enabling interaction between different sectors or industries in the context of the global market;

» take into account the value and supply chain, from access to energy sources and raw materials to after-sales services and re-use of materials;

» create a constant current information on industrial policy and competitive-nessin the Union and its Member States and on the impact of this policy and competitiveness.

As the Comisiones Obreras Confederation we provide the opinion and positively evalu-ate the Commission’s proposal to strengthen the European industry, in order to face the challenges of the globalization era in better shape. For this, first of all, we need a con-stant dialogue in companies and industries, which will facilitate all the future industrial strategies, not just the ones planned for the time of restructuring. This requires a Euro-pean framework, taking into account specific initiatives that are ahead of changes.

Projects such as this represent good practice in the area of the intensification of work-and the application of our proposal to consolidate business and industries. In this way, it is also possible to ensure employment stability and its higher quality among the workers we represent.

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Innovation of the trade unions

In recent years, two Europes have been built, where the North sets the rules of the game for the South. They do not threaten with expelling us from the EU anymore be-cause they have realized that the transfer of production is often much more expensive. Competitiveness is created or looked for through the limitation of the rights and the reductions within “labour costs” factor.

Social cohesion in Europe also had its weak moments, because, despite the fact it used to be the point of reference in the world, it was not uniform. Serious inequalities co-existed in access to employment, when quitting jobs, in terms of unemployment ben-efits, pensions, etc.

Today, speaking from the point of view of trade unions, the revolution is not about in-novation but about defending the model. We lead the trade union resistance, and yet a number of changes in different contexts are happening, among others in:

» political context: the political role is subject to the economic role;

» economic context: speculative capital became more important than production capital, lack of effective industrial policy, which leads to destruction of employ-ment. In the EU we have 24 million of the unemployed, of which 25% come to Spain;

» social context: the social welfare state is under attack. Public funds are allocated to the private sector, which hurts the high-quality education and health care systems;

» employment context: employers have particularly focused on lowering costs of labour.

The retirement age is being increased, severance pay is reduced in the event of redun-dancy, and because the currency cannot be devalued because of the competition, thus the remuneration is reduced (in the case of Spain, the average wage in 2007 was 1300 euro, now 900 euro).

Europe cannot be healed using the policy of belt-tightening, we need to support man-ufacturing operations. European industry provides employment to 30 million people (in Spain, to 3.5 million) and is the driving force of exports and investment. Industry was, is and should remain a value in itself.

Undertakings: products of the global market sought their chances to achieve their goals in mergers. We, the union members, should respond in the same way; respond globally to a new form of business organizing.

The proof of serious commitment to applying innovative methods and without re-maining on the defensive is the Comisiones Obreras Industry Federation. During the newly organized Congress of the European Fusion (IndustriALL Trade Union) it pro-posed – what has been adopted – the organization of the Action Day, which will allow the union to unify its actions. Industries are aware of their problems and the time has come for all of us to seek solutions together. We understand that you cannot make the modernization leap in the EU by neglecting traditional industries, characterized by a high rate of employment and quality.

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The international trade union movement must move forward and build an organized union that will not just remain the sum of corporate, local or national interests.

We cannot free ourselves from the crisis and create the new Europe where trade union rights are lost. We cannot allow the union movement to become contaminated by po-litical apathy that is consuming Europe.

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Confederazione Generale Italiana del Lavoro Lombardia

Introduction

Speaking about the anticipation of change in Italy is almost always speaking about social security and only to a minor extent about active policies. The legislation and na-tional collective labour agreements do not impose upon undertakings any obligation of earlier consultation but only several large industry groups are obliged to provide information beforehand. Our system is currently allocating a large amount of resources to passive policies to secure the income of persons who lose their jobs temporarily (standard unemployment benefits) as well as permanently (mobility and unemploy-ment). For that reason, we will devote a large part of this short text to describing our normative system in this area and try to highlight the positive aspects and their fragil-ity also in the context of the labour market reform, which, in the recent months, was the subject of discussion in the Parliament and will probably introduce streamlining and limited means of protection.

Having at one’s disposal the instruments for discussing a change with anticipation is more urgent and important than ever before; indeed, industrial crises used to begin and end at a particular time, they were almost invariably caused be poor innovation potential of the products or the saturation of relevant markets; today the economic and financial globalisation, crisis and restructuring of the undertakings often have a permanent character.

These problems are even more visible in a production system such as the Italian one, which is comprised mainly of small and very small companies which have significant capabilities and flexibility in innovating the production processes but are absolutely incapable of interfering into the innovative quality of the product.

It has to be said that, regrettably, the choices of the Italian undertakings were almost always a reflection of the national government and local authorities and instead of re-sponding to the challenges of globalisation in innovation and production quality they have chosen to lower the pay and limit the rights of the employees.

The Fiat case is a typical example here: introducing competition among the Italian, Ser-bian and Polish employees might be a cost-effective strategy for the immediate future but one that inevitably leads to a failure.

We believe that it is essential for these issues to be addressed without restricting one-self to the country but with talks and cooperation with other unions in order to pro-duce a European-type union culture which will attempt to build a synergy to overcome many problems together. Moreover, this perspective becomes a strategic choice of considerable importance when taking into consideration aspects such as the extension of the European Union and the European Economic Area, all the factors that contrib-uted to the acceleration of the restructuring processes of undertakings, which in most present-day multinational corporations take place ever more quickly and in an almost

Italy

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continuous manner. All the above facts lead to a situation in which what takes place in one country leads to obvious consequences in the other countries, thus forcing all parties to a common reflection. Additionally, during the period of a serious economic crisis, the topic of anticipation of changes and, more specifically, of social security be-comes extremely important and finds its place in the everyday political debate. In this difficult time a true labour policy cannot, in fact, not strive to ensure a certain continu-ity of income for the people who lose their jobs by protecting both the persons’ dignity and simultaneously, from the macroeconomic perspective, the demand for products and services, without which we would witness a further deepening of the crisis.

All these observations become even more significant when taking a quantitative per-spective. According to the data supplied by CIG (Centre for Economic Information), of the Italian trade union CGIL (The Italian General Confederation of Labour), the CIG re-port of April 2012 states that since the beginning of the year 322 million hours of an equalisation fund (this and other social security measures will be discussed in detail in the following chapters) were agreed on, with an upward trend to one milliard hours (1,000,000,000) also for 2012; altogether 470 thousand employees interested with zero hours worked who noted a decrease in payments of 1.2 milliard EUR, i.e. the equiva-lence of 2.600 EUR per each employee. However, taking into account all the employees protected by various social security schemes with working time reduced from 50% and more, with regard to the total number of hours, it appears that their number reaches circa 930.000 thousand persons interested since the beginning of the year.From a terri-torial point of view we may observe how the Lombardy region notices the highest level of using the equalisation fund. The CGIL analysis suggests that there are 76.165.681 hours registered since the beginning of the year with 110.706 employees (taking into consideration the zero hours worked).

Picture 1 – The total number of working hours CIG for the industry sector

Source: INPS data processed by CIG report of April 2010, eds. CIG Observatory of the CGIL union.

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As far as the industrial sectors are concerned (see Picture 1), the one most affected is again the mechanical sector, where the total number of registered in April equals 102.129.472, including 148.444 employees (with the instance of zero hours worked as a point of reference). Next there are also the sector of commerce with 47.606.172 CIG hours approved for 69.195 employees interested and the construction sector with 32.187.506 hours and 46.784 persons. It should also be kept in mind that more and more employees stopped or are going to stop being covered by the available wel-fare benefits as their protection period provided by the law in force will end. The data showing an increase in unemployment are also an effect of this situation.

Truth be told, the already mentioned alarming data could be supplemented with those published by the National Institute of Statistics (ISTAT) with reference to the make-up of the workforce. In the first quarter of 2012 the Italian rate of employment was 57%, a very low level indicating how important is the question of employment and income support for our country at this historical stage. This data should also be supplemented with a considerable increase in the unemployment rate, reaching 10.2%, with 2.615.000 of unemployed in the country. The total data in themselves is unfavourable but it proves to be even more dramatic after being distributed according to age groups. For the group of 15 to 24 year olds the unemployment rate has reached the level of 35.2% and that means an annual increase of 7.9%.

The above facts emphasize the importance of social security and other welfare meas-ures that, in the time of fighting the crisis, would extend the protection of employees onto those now excluded from the benefits; meanwhile, the labour market reform, now being looked at in the Parliament, which is to negatively decrease the predicted time coverage, still does not predict sufficient means for the employees presently ex-cluded from the benefits.

The next chapters will analyse the now applicable provisions regarding Italian social security and try to define the basic strong and weak points of our system. Later on we will try to shed some light on the new labour reform and its implications for the social security system. Finally we will present our proposals for the system reform, which may be an interesting opportunity for a reflection reaching beyond the borders of a coun-try, and try to define common strategies and goals.

We decided not to focus solely on the metal-mechanical industry in this short text as, from a legal point of view, there is a universal standard in Italy which does not intro-duce much difference between industry sectors. The main differences, on the other hand, lie between different sectors of the economy where e.g. the agriculture sector has a protection system different form other sectors.

The present normative system

The Italian legal system referring to social security, i.e. the total of means supporting the income of employees who lost their jobs both permanently and temporarily, e.g. due to restructuring of the processes of the company, is very complicated. There are at present 7 different institutions (see picture 1.2) which differ in the scope of application and types of offered benefits.

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Social security in our legal regulations

Existing institutions

During the course of an employment relationship

Ordinary Wages Guarantee Fund (CIGO)

Financed from contributions paid by undertakings and employeesExtraordinary Wages Guaran-

tee Fund (CIGS)

Solidarity contracts

Wages Guarantee Fund in derogation

Financed by FAS (fund for underdeveloped areas) i ESF (The European Social Fund)

After a termination of contract

Ordinary unemployment benefit Financed from contributions paid

by undertakings and employeesMobility allowance

Mobility in derogation Financed by FAS (fund for underdeveloped areas) and ESF (The European Social Fund)

In the above proposed scheme the security schemes are divided into two groups: the security schemes which apply in cases of continued employment relationship and those which apply after a termination of employment. The division was necessary be-cause our legal system contains both security forms protecting the employee during the undertaking crisis period, when the working relationships is not definitely termi-nated or where there is no chance of continuing it, and forms of benefits for persons who lost their jobs and are looking for a new one. There is also the institution of soli-darity contract, relying partly on a different logic because in that case there is no real termination of employment but an agreement between the employers and the labour unions concerning reduction of general working hours to maintain a constant level of employment or, in some cases, to increase the workforce of a company.

As it can be observed there are significant differences in financing of those institutions. Initially the system was focused solely on a solidarity model based on the principle ac-cording to which the undertakings and the employees make a monthly contribution (administered by the National Institute for Social Security) to a special fund for financ-ing social security schemes. This mechanism enables accumulating resources in peri-ods of economic growth and are later used at times of greater difficulties. The system does not, however, include all employees and all undertakings due to a number of re-strictions, which will be discussed later. As a consequence, when the crisis began, it was necessary to deal with it by introducing the institution of a Wages Guarantee Fund in derogation and mobility in derogation. The institutions differ from other types of social security schemes in two main aspects. First of all, they were established on a regional

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not a central level to meet the needs of various production areas more effectively. Sec-ondly, since they were designed to provide help also for persons not included in the system of contributions other forms of financing had to be invented. The resources are partly financed from taxes and in part from the European Social Fund.

The above description concerns the general structure of the social security system. Now we will try to describe the particular institutions to understand their scope and gain a better view of the strong and weak points of the whole system. We will start the analysis with the Ordinary Wages Guarantee Fund (CIGO). It is a benefit paid by the INPS which is to complement and replace the payments of employees in uncertain economic situation due to suspension or reduction of employment. The target group of this benefit is very limited as the persons eligible are physical workers, office work-ers and management teams employed in undertakings of specifically defined sectors, including the production sector. The benefit can be obtained in case of suspension or decrease in production, in situations caused by temporary situations independent from the employer, temporary market inactivity, seasonal difficult weather conditions. The benefit amounts to 80% of the payment which the employee would receive for the hours he could not work, between the zero number of hours worked and the contrac-tual working hours and not more than 40 hours per week. However, the amount cannot exceed the maximum monthly limit, which is set annually. Moreover, a sum equal to the amount of the contribution (5.84%) is subtracted from the total amount of money to be paid. In order to launch a CIGO fund undertakings have to launch some preven-tive information procedures for the employees’ representatives, which makes it pos-sible to call for a common consideration of measures to be implemented. Only in case of a sudden and objectively unavoidable event can the undertaking continue without notice. In such cases, however, there is an obligation to contact the Unitary Workplace Union Structure (RSU) or, when there is no RSU, with trade unions of the given sector and give the number of employees affected by the event and the predicted time of suspension. Finally, these measures are limited in their maximum duration. In reality the benefit is paid up to a maximum of 13 consecutive weeks, which may be prolonged under special circumstances to a maximum period of 12 months (52 weeks). The maxi-mum period of using CIGO is 52 weeks during a two-year span of time. At the end of CIGO period the undertaking is obligated to take back all the workers covered by CIGO.

Extraordinary Wages Guarantee Fund (CIGS) differs from the ordinary one in the grav-ity of the situation in which it may be launched. In this case the means are used to in-tervene in cases of over-employment caused by a crisis in a given undertaking or sector which may result in collective redundancies. For that reason the procedure as well as the restrictions imposed on the access to the benefits are, for CIGO, defined in a more strict manner. First of all, a given employee must be a party of a legitimate employer/employee contract (a fixed-term contract) and be employed in the undertaking for at least 90 days before the latter applies for the benefit. At the same time the applying undertaking has to employ, on average, more than 15 employees in the six months preceding the application. Moreover, as in the case of CIGO fund, there is a restriction placed on which sectors may resort to these means. The managers, trainees, home workers, managers employed by the owner of the company and those with appren-tice contracts also are not subject to the regulations unless explicitly mentioned in the decision allowing for the use of CIGS fund. On account of the weight of the situation in which such means are applied, the benefit periods are significantly longer than those

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of CIGO; the benefit can be received for a maximum period of 24 months with the pos-sibility of being extended twice for additional 12 months in case of restructuring and re-organisation of the undertaking. In case of the undertaking being in a state of crisis the period equals 12 months with the possibility of being extended with another 12 months if the company terminates its activity. In the end even this resource is regulated by con-sultation procedures to be carried out with the trade unions before entering into force.

Both CIGO and CIGS have the obligation of prior consultation with the trade unions and/or the representatives of trade unions but, unfortunately, there is no obligation for the undertakings to conclude with any agreement, even though a union agreement facilitates and allows for a swifter process of bureaucratic procedures necessary for ob-taining consent of the ministry.

As far as the already mentioned solidarity contracts are concerned, one more thing needs to be added: their use is limited to a period of 24 months with the possibility of extension with another 24 months, which can then be extended to a maximum period of 36 months for the employees of the Southern Italy area. The Wages Guarantee Fund in derogation will, however be discussed along with mobility in derogation towards the end of the chapter. Let us now move on to those social security schemes which are applied after termination of contract. First of the institutions is an ordinary unemploy-ment benefit. It is a cash benefit paid on application to the persons working on the basis of a contract of employment who had their employment relationship terminated. It is aimed at the employees of the sector of non-agricultural production, made redun-dant against their will and it consists of a benefit paid during a period of maximum 8 months in the case where the employee did not reach the age of 50, or 12 months when the employee is 50 or more years old. The allowance is calculated in the follow-ing manner: 60% of the average pay from the three months before the termination of contract for the first 6 months; 50% for the next 2 months; 40% for the remaining period for employees who on the day of termination of contract reached the age of 50. There is a benefit cap regulated annually by the law. The benefit is paid on applica-tion submitted by the interested person, which has to be presented within 68 days following the termination of employment. Even in that case there are some conditions that the applicant has to fulfil to claim the benefit. First of all, he has to have at least 52 weeks of paid contribution during the two-years period preceding the termination of employment. Secondly, in the two-years period after the termination at least one weekly contribution has to be made. Finally, the applicant is obliged to present to an employment office a statement of immediate willingness to work.

The mobility allowance is a benefit supporting some categories of employees made redundant by companies in difficult situation; it guarantees employees a cash benefit compensating for the pay and facilitates their return to the job market. Since this re-source is very fragile, due to the difficulties the employee encounters when returning to the job market, there are certain very strict restrictions for granting that benefit. In reality, to announce redundancies a procedure needs to be followed which requires that the undertaking immediately contacts a Regional Employment Board and the trade unions for common evaluation and alternative solutions. The legislation is also very specific about the requirements defining the rights to the benefit. The allowance can be granted to a group of physical workers, office workers and managers made redundant, in mobility and placed on linked lists, with at least 12 months length of

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service, out of which at least six concerns real work, who were employed by a defined category of undertakings of average size on the basis of an employment contract for an indefinite term. The period covered by the allowance depends on the age of the em-ployee and the geographical region in which the undertaking is based. This element agrees with the aim of the benefit, which is to provide support first and foremost to the employees whose reintegration on the job market is more complicated. Generally, however, the mobility allowance cannot exceed the length of service in a particular company which terminated the contract of employment and cannot, in any case, ex-ceed the period of 36 months of paid benefit.

In case of mobility, there is also a requirement to consult but not necessarily to reach an agreement; a trade union agreement allows the undertakings to lower the costs predicted by the law required to access the benefit.

For the employees made redundant by small companies with a workforce of less than 15 there is a possibility to be placed on special lists, which will ensure certain tax allowance for the employing companies but will not provide any cash benefit for the employees.

In this preview of Italian security security we discuss mobility in derogation and the Wages Guarantee Fund in derogation (CID) as the last. That is because both of those institutions refer to a logic different from the other forms and their application is ex-tended by a regional level tripartite agreements in order to introduce new means for increasing the number of the person covered by the social security schemes in this period of crisis. In practice, those two means are comparable to the ordinary ones but their beneficiaries include undertakings and employees excluded by the applicable law. In the case of Wages Guarantee Fund in derogation it is also applicable in cases where it is necessary to extend the period beyond the acceptable thresholds by the legal regulation for the Extraordinary Wages Guarantee Fund.As it was mentioned be-fore, the special feature of the two institutions is their partly being financed from the general taxes and partly from the European Fund and not, as it has place in other ben-efits, by employees and undertakings.

Strong and weak points of the present system and the attempts of reforms

In total, as it can be understood from what was already said, our system offers various means for dealing with the time of crisis or the restructuring of undertakings. The regu-lation system allows those who lose their jobs to receive cash benefits for several years, which makes it a key means of income support, especially for those categories for which returning to the job market is difficult. Additionally, in particularly difficult cases some extensions can be granted in accordance with the above mentioned norms. The case of Alitalia, for example, with the company being in crisis, the employees could benefit from for a 4-year period of the Extraordinary Wages Guarantee Fund and an additional 3-year period of mobility allowance thanks to the government intervention and an agreement concluded with the company and the trade unions. In this case the extension of social security allowed 4500 employees to benefit from income support for 7 years; the period made it possible for some to reach a contribution period re-quired to be eligible for retirement.

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One of the more difficult problems encountered on meetings of trade union and the undertaking, necessary in the process of distribution of means, was the selection of employees who were to be covered by the benefit.

The provisions and standards stipulate certain criteria (the length of service, family du-ties as well as technical and production requirements); the agreement between the parties also allows for employing other criteria and almost always refers to the volun-tariness and the length of service to allow the employee to reach the retirement age.

Another positive aspect of the system is its solidary character. As it has already been explained, we have a mechanism which does not require using general taxes to oper-ate but is financed by the contributions made by employees and undertakings, who in the periods of activity pay a small part of their income. The system has also shown some strength. From the data provided by INPS (National Institute of Social Insurance), who administers the funds directed to various security schemes and manages the pay-ment of benefits, show that in 2010, the period of maximum use of the wages guaran-tee fund, the total expense for CIG (ordinary, extraordinary, in derogation) was in the black for the ordinary fund and in red for the extraordinary fund, with the difference of 1.7 million euros. Essentially, the system, operating even during the most serious crisis since the end of the war, is financed in 75% by direct contributions from the employees and undertakings. The same data show how unemployment increased dramatically in 2010 (the data presented along with mobility) which produced a large deficit oscillat-ing around 7.6 milliard. Without the Fund the deficit would have been much more seri-ous as hundreds of thousands of people would have remained unemployed. Analysing the data from before the crisis shows how stable the system is.

As far as criticism is concerned, it is to be noted that even the reliable analyses, especial-ly the one of Bank of Italy, show that the present system is almost closed: it is enough to think of the requirements for gaining the unemployment benefit and the strict rules granting means only to persons with a contract of employment alone. Additionally, the recent research shows how the eligibility conditions discriminate both large numbers of untypical employees but also a constantly growing number of workers employed on the basis of a contract of employment for an indefinite period. Looking closer at who is excluded, one notices mainly young people, women, contract workers and em-ployees with low qualification, mostly in the south, and immigrants. In other words, people with a weaker position on the job market and those requiring a higher level of protection. The Bank of Italy has estimated that, from a quantitative point of view, the year 2010 saw 1.6 million workers employed on the basis of a contract of employment or similar who do not have rights to any benefit in case of suspension or termination of employment relationship; another research estimates that only one third of the total number of the unemployed is currently covered by a form of income support.1

It should be noted that solving the problems was attempted by the institution of social security in derogation, already in operation for several years, thanks to which an exten-

1 Anastasia., Mancini. e Trivellato., Il sostegno al reddito dei disoccupati: note sullo stato dell’arte. (income support for the unemployed: notes on the state of knowledge.) Tra riformismo strisci-ante, inerzie dell’impianto categoriale e incerti orizzonti di flexicurity, Working Paper ISAE, n. 112, 20

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sion of the security was attempted, but the exclusions were, unfortunately, only partly eliminated by introducing an intermediary element into the system. It is caused by the fact that some benefits for which no contribution is required were introduced into the insurance system, thus only reducing the public budget. In a time of crisis it is surely a justified reaction but it must not become a general rule. The final problem is the data on the fragmentariness of the institutions and their complexity, which results in prob-lems with administering the resources.

The current attempt at reforms is also inscribed into this context; the government tries to legislate it as part of the reform of the job market and it is being considered by the Parliament after a long process characterised by a poor disposition for dialogue with the social partners. Since the law has not yet been passed, the consideration we will present in reference to such attempt of the government will remain of a general level: while passing the law the Parliament can change the text presented by the government.

It can be said that the reform concerns three main aspects: an attempt at extending the social security on some categories so far excluded, an attempt at simplifying the system, shortening the periods of receiving benefits. In practice, from the point of view of the institutions of the new standard, only the CIGO fund should remain in force while the CIGS fund is to be made inoperative in cases when undertakings end their activity. Instead, the benefits applicable after termination of employment will merge into one means called ASpI (Social Insurance for Employment). It predicts the same allowance for everyone and would be extended also to the employees of the art sector and train-ees. The benefit will be paid for 12 months (15 for employees over 58). To be able to access them, as in the case of unemployment benefit, one needs to present a prove of 52 weeks of time worked during the last two years and a 2-year period of paid contribu-tion. Additionally, to further extend the number of persons eligible for the benefit a mi-ni-ASpI will be introduced, offering a benefit reduced in comparison with a standard ASpI for all employees who worked for 13 weeks during a period of 12 months before being made redundant. Off course, all that will happen in the context of increasing of the contribution assessment basis, which will be raised.

If this form of the benefit is approved then it will cause problems on account of short-ening the period of benefit payment in the time of crisis. Moreover, with the growing retirement age this element may affect negatively those older employees who, in case of losing their jobs, will have no appropriate form of income support until they reach retirement age. What is more, the introduced changes do not solve the problem of the adequacy of benefits (it is enough to mention the shortened periods of ASpI and Mini-ASpI in reference to mobility and unemployment benefits, with consequences not only for the persons’ income but for the contribution period; it is a serious question when keeping in mind the raising of the retirement age introduced by the recent reform) and they do not represent, as it had been expected, a significant increase of the number of employees eligible; the only extension predicted was that for trainees and artists with a contract of employment, whose number is estimated at no more than 300 thousand persons in total while contract workers are still to be excluded. Finally, the question of financing the reforms should also be kept in mind; it is an element characterising the recent political period in our country, which has great significance here. Thinking about a limited reform in a particular area is not possible without thinking about its financing. It is certainly reasonable for all undertakings to contribute to financing the benefits but

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for a complex social security system to be reformed public resources are also needed, especially in the initial stage. All these questions are non-existent in the public debate, which constitutes a strong negative point against the government project.

CGIL union proposals for the social security

As we saw before, the Italian security system is a very complex system with two co-existing regulating institutions which are to ensure a certain continuity of income for those who lost their jobs. As it was already mentioned, the main flaw of this system is the non-universality of the benefits. In practice, not all types of contracts are pro-tected in the same way and different professional categories are completely excluded from the regulation. This fact becomes more and more apparent in connection with the mass application of the system by large undertakings in their civil law agreements, especially in reference to the employees who are new to the job market. All this has a negative influence on young persons and creates a true youth problem.

In reality, the risk of loosing one’s job without access to certain forms of social security concerns 54.3% of young people aged 14 to 24 (40.3% for persons between 25 and 34) who signed fixed-term contracts. However, young people aged 14-24, working on the basis of a contract of employment for an indefinite term, in 30% of cases would also have no rights to the unemployment benefit. It is the result of difficulties in fulfilling the requirement of having a two-year period of paid contributions predicted in the cur-rently operating system. Moreover, between 2007 and 2008 over 213.000 employees, mostly young people, lost their jobs but only 6.000 applications for the relevant ben-efit were granted for the only 6.000 submitted, again because of the strict conditions predicted by the standard in operation. If the already presented data is supplemented by the fact that unemployment among youth (15-24 year olds) in the first quarter of the year 2012 reached 35.9% it is easy to realise how serious the situation is. What is more, the debates of recent months concerning the reforms in the job market and the government’s first draft of the law do not seem to improve but rather pose a grave problem also for those categories which were previously protected by the legislature. In reality, as it was already shown, the shortening of the duration time of the security predicted by the reform (ASpI and mini ASpI concerning mobility) in connection with changes in retirements, which predicts raising the retirement age, can lead to serious social difficulties, especially in the stage of the crisis caused by the recession.

In order to attempt to solve the problem of lack of universality of the social security sys-tem the CGIL union, with the help of IRES, presented a detailed proposal of the reform in October 2010. Although formulated two years ago, it remains valid today and gains in significance at this stage of the debate precisely because it deals with the problem of social exclusion and extending the benefits in the professional area by simplifying access procedures and the number of security schemes. These rules are important in the present stage of the crisis when the issue of maintaining the continuity of income after job loss becomes the essential problem. For that reason we believe that the pro-posal, despite lacking a national specificity, may gain a more general significance, with the use of its principles as a basis for common strategy of demands concerning social security and the policy of anticipation of changes.

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The CGIL union proposal is certainly directed at a considerable extension of the per-sons eligible to access the security system. It is the first and basic point of the pre-sented proposal: inclusion through a public and universal system, without differences between employees referring to the the activity sector, the size of the undertaking, the place and type of performed work. The goal is to take into consideration even the most powerless categories of employees who still remain excluded from the system and are most at risk of social exclusion at this difficult economic period. The hypothesis of new security schemes relies on a reduction to only two means of intervention: first, a wages guarantee fund for persons remaining in an employment relationship, awaiting the restructuring or more favourable economic and production situation, and second, the unemployment benefit in cases of job loss. It is a response to the need of simplifying legal framework.

To extend the number of persons covered by those security schemes, on the other hand, we propose a change in the access requirements for the benefits. Practically speaking, the condition of a two-year period of paid contributions, predicted in the applicable law, proved to be the main factor that excludes workers from claiming the unemployment benefit. The CGIL proposal predicts establishing new requirements for accessing the benefits: 90 days length of service to gain access to CIG and 78 days of real paid contribution for the unemployment benefit. The only proposed restriction would be limiting the months covered by the benefit to the number of months worked in a given undertaking. Moreover, to extend the group of persons covered by those who are self-employed, the proposal predicts including the persons operating inde-pendently from the undertaking in cases of “predominant reporting line”.

To facilitate the reintegration of the employee the system will predict the obligation for the employment office to bring forward a balance of the employees qualifications during the first 6 months of the benefit. Additionally, after the 6th month of claimed benefit the beneficiary is obligated to accept training offers corresponding with their balance of qualifications and work in accordance to the local applicable law. In case of a second unjustified refusal to participate or absence in more than half of the course the benefit will be decreased, in case of third unjustified refusal to participate the pay-ment of the benefit will be withheld and the employee will not be able to use the privi-leges of the unemployed. The amount of money paid in the new form of social security will provide 80% of the original pay, up to € 1.800 net, and it will gradually decrease until it reaches 50% after 24 months. The maximum period for claiming the benefit is 24 months for persons under 50 and 30 months for people over 50; 6 months more is predicted for the unemployed living in the southern part of the country. As far as the Wages Guarantee Fund is concerned, on the other hand, the period for claiming the benefit is 36 months with the pay of 80% of the original pay and maximum € 1.800. The proposal also predicts a deeper synergy of benefits and active policies, encouraging the employee to retrain by attending training courses.

The criteria on which the proposal is modelled give information about the choice of the form of the defrayal of expenses: on the one hand expanding the contribution assess-ment basis for unemployment and CIG to all sectors and all groups of the interested and, on the other hand, operating within the current contribution-based security sys-tem to lower the fragmentation and, in some cases, the costs, at the same time simpli-fying the means employed. The initial assumption should be, however, that apart from

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agriculture our system is close to ‘balanced’, if analysed as a whole. The choice of the transitory stage from security schemes in derogation, which are currently based com-pletely on the public budget without any investment to the system, to a stage in which public investment coexist complementarily with the gradual increase of contributions suggests willingness for a universality based on equality and respect towards different kinds of undertakings and predicting equally differentiated rates.

Conclusion

As it was said before, one of the main consequences of globalisation is the crisis and the restructuring of undertakings, which now have a more permanent character than in the past. That change forces us to redefine our strategies and goals. Precisely when trade unions are unable to become more global in character, at least on a European lev-el, defending the rights and pay of employees from social dumping will be more and more difficult. In this context trade unions have to be able to preventively intervene into the processes of innovation and restructuring, but it will be possible only with a standard which obligates the undertakings, and particularly corporations, to follow the rules. From that point of view, the Directive 2002/14/EC providing a general frame-work for informing and consulting employees as well as the recast directive 2009/38 on European Works Councils can prove to be good opportunities to use.

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Conclusions from the discussion between the project’s partnersGuidelines for the European trade unions: How to deal with the negative conse-quences of economic changes?

I.The words “crisis” and “ restructuring” have become a permanent element of the trade unions’ vocabulary.

We hear about the crisis every day and in the minds of the society it is no longer a cyclic event but a state of the economy permanently inscribed into everyday reality. Such social perspective on the economic events makes labour movement redefine the goals and strategies of conduct, especially in the context of the processes of globalisation. Globalisation does not, however, have to destroy the European model of social soli-darity and management for a sustainable development and employment. The labour movement ought to be an advocate of management conceptions in a long-term, pro-innovative economic cycle and oppose evaluations in which the only positive crite-rion is income generated and calculated in annual cycles. In the present-day national strategies of economic development of the European Union there is still not enough place for a conscious and purposeful risk avoidance and a balanced perspective in the decision-making process.

II.The extended European Union entered the second decade of the 21st century with a lug-gage of unresolved issues, with which we did not cope using the methods provided by the “Lisbon Strategy”, and a number of new ones connected with the crisis of the capital market. The present job market models of the EU do not prevent the growing economic inequality but deepen it even further. The countries of the so-called “old Union” are now quickly, and ever more quicker, resigning from the Social Europe model while the countries accepted into the EU after 2004 have not achieved a comparable social status. The idea of welfare countries, where the tax progression enables the equalisation of the social status, should be, as soon as possible, made valid again. The deepening of the integration of the Union states has to go in pair with a sustainable development of par-ticular member states; that said, it has to be kept in mind how important for the process of equalisation are the funds of integrity and regional development.

III.The governments of the states of the European Union need to abandon the policy of “tightening the belt” in their own societies for the sake of rescuing the falling bank sys-tem, for the sake of politics that improves the living and working conditions, the quality of the education systems, and the creation of possibilities for continuing education to improve the employment quality. It has to be said clearly and emphatically that the costs of employment in Europe are not the vehicle of crisis nor its cause. The crisis was caused by a too liberal policy towards the activities of banks and financial markets as well as tolerating the virtual system of capital turnover by the governments.

IV.A contract of employment cannot be treated as a standard civil law agreement as it concerns an interest of special value for the society and its further development. Thus, we will most strongly object to further, uncontrolled by the government, spreading of

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other than the contract of employment systems of workers’ employment. The activity of temporary job agency of the “self-employment” systems should be legally forbid-den as degenerating social life and the job market. The work on introducing a Euro-pean Employment Charter – modelled on the Charter of Fundamental Rights – should begin at the European union level. Fundamental social rights (including the right to employment) should have priority over economic liberty.

V.The job market is closely related to the demographic situation of societies, their needs and expectations. The specificity of European market is a result of a clear separation into two groups. The first privileged group consists of persons employed on the basis of a permanent contract of employment, with all rights the guaranteed in the respec-tive national legal regulations, majority of which are in force for decades. The group closely reflects the specificity of the European job market in which ageing of popula-tion is one of the main dominants. The elderly workers with a long-term service now regularly made redundant under the pretext of lowering the employment costs.

The second group consists of young employees, most often potential employees, be-cause the level of unemployment among persons under thirty is one of the main mala-dies of all the states of the Union.

In such situation the professional movement demands the introduction of extraordi-nary and effective legal solutions which enable an easier start for young employees and make the processes of laying off workers with long periods of service more dif-ficult. In case of young people who only start their career it can be a complex system of tax reductions for the employers; in case of older employees additional financial burdens may be employed which would benefit the country’s budget and encumber the employer in case of dismissing workers aged 50 and more.

VI.Restructuring programs and systems for administration of changes ought to be sub-jected to the policy of development of innovation programmes in such a way as to guarantee that the technological level of undertakings is raised. Moreover, all political initiatives aiming to increase the public funding for the support of scientific research and its practical application in economy should be supported.

The same effort should be devoted to provide financial aid to education and continu-ing education programs. Only modern, open and innovative undertakings employing a highly skilled team of specialists can endure competition ion the global market.

VII.Trade unions should be granted the right to evaluate and consult the programs of professional training on a macro level and the training programs of the undertakings. Special professional training systems not only have a significant influence on the com-pany’s development directions but they are also an important element of building at-mosphere in a company and a criterion defining personal career.

VIII.The European job market model is – or should be – dominated by a negotiable sys-tem of introducing new solutions. The representatives of all partner organisations have agreed that the programs of the labour movement have to account for a dynamics

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of change in the industrial area and adjust the model of negotiation to it. The reac-tion time for changes and the ability to accommodate to new situations, including the organisational ones, is today the main task of the European trade union structures. The dynamics of changes cannot, however, debilitate or obliterate the main goal – the preservation of the European model of job market, which, through a system of social guarantees, ensures social security for its citizens.

With support from the European Union


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elaborated within the framework of the project

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Strategy of effective management of change · 2017-12-17 · POLAND Związek Zawodowy Przemysłu...

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