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European Commissioner responsible for Employment, Social Affairs and Inclusion
Social dialogue - vital component of European social model, not a luxury
Conference on Industrial Relations and Social Dialogue in Europe 2012/Budapest
15 April 2013
Ladies and gentlemen,
It is my pleasure to welcome you to this conference on industrial relations and social dialogue, which we are holding to mark the publication of the Commission's seventh Industrial Relations in Europe report.
The fact that it is taking place in Budapest gives me special pleasure.
This great city in the heart of central Europe is the right place to discuss the diversity of Europe's social dialogue and industrial relations systems.
Approaches to social dialogue differ widely from one Member State to another.
But despite the differences, social dialogue is crucial to the competitiveness of all our economies and our European way of life.
As President Barroso has underlined, social dialogue is a key element of the European social model.
Social dialogue, collective bargaining and consultation are — so to speak — in our genes.
In countries where social dialogue is well established and industrial relations institutions are strong, the economic and social situation tends to be more favourable and subject to less strain. And it must be stressed that the countries with strong social dialogue are also the most competitive ones in Europe.
The Commission attaches great importance to fostering and supporting high-quality industrial relations.
The fact that we are holding one of our major conferences this year on social dialogue is proof of that.
Sound policy needs to be based on solid data and analytical evidence.
This is what our Industrial Relations in Europe 2012 report does — it charts relations between employers, workers, their representatives, and governments across Europe.
Social dialogue under strain
And what does it tell us?
Let me be frank: it shows that social dialogue in Europe is currently under great strain.
There are various reasons for this, all of which are linked to the current crisis and the difficult macro-economic situation.
Back in 2008 and 2009 when the crisis was in its early stages, many countries used social dialogue to seek creative solutions to preserve jobs and help companies adapt and cope with the recession.
But the crisis has lasted, it has got wider, and it has got deeper.
It has increased tension and generated conflict.
Reforms undertaken have not always gone hand in hand with fully effective social dialogue, and this has led to a lack of consensus on how the cost could be shared fairly.
Over these two days, we will have a chance to look more closely at the situation in certain groups of countries and sectors.
1. This morning’s first panel will look at the challenges facing the Member States in Central and Eastern Europe.
The report shows that, while there is great diversity between the Central and Eastern European countries, industrial relations institutions there are generally weak and fragmented.
While some 70% of workers in the 15 older Member States are covered by negotiated agreements at the workplace, the figure for Central and Eastern Europe is only 44%.
Trade union membership is lower in the Central and Eastern European countries.
And according to the report, employers in Central and Eastern Europe who are members of employers' organisations are very much less numerous.
The implications are clear: where companies or workers are less organised, they cannot support their interests jointly or make themselves heard effectively.
Other recent developments are clearly worrying too.
Some reforms under way are undermining the consensus needed for effective social-partner involvement in adaptation to change.
The report is clear about the need to reinvigorate national industrial relations systems in several Central and Eastern European countries.
The social partners’ capacity and structural position needs strengthening.
Only thereafter can social dialogue produce sustainable results.
2. Social dialogue is also under strain in the programme countries benefiting from assistance from the EU and the IMF.
This morning’s second panel will look in greater detail at the lessons of experience in the programme countries.
The Greek, Portuguese, Irish and now Cypriot Governments are implementing fiscal consolidation measures to re-establish their fiscal solvency and restore confidence.
These measures involve tough, painful reforms, including of their collective bargaining systems in those cases where they have been seen to be part of the problem.
There have been arguments regarding respect for the principles of social dialogue, national wage-setting mechanisms and collective bargaining.
But if structural reform is to succeed in the longer term, the social partners’ involvement and some degree of consensus are vital.
3. Lastly, social dialogue is under strain in the public sector across Europe.
For quite some time now, the public sector — including administration, education and healthcare — has been restructured and modernised in many countries.
But with the fiscal consolidation measures being applied in many Member States, the Industrial Relations in Europe report shows that the pace of public sector reform has increased dramatically.
Governments have made efficiency gains a priority in public sector restructuring.
In some countries the process has involved a more balanced approach that has curbed conflict.
Much-needed reform has preserved the scope for collectively agreed solutions between trade unions and public-sector employers.
Elsewhere, the methods chosen to implement decisions have often excluded recourse to social dialogue.
As a result, fiscal consolidation measures have triggered a wave of industrial conflicts and demonstrations in the public sector.
The report chronicles these events through extensive analysis of evidence from throughout the EU.
Tomorrow morning’s panel will discuss the government’s role in industrial relations in the public sector and the effect it has on collective bargaining.
Strengthening the social dimension of EMU
Ladies and gentlemen,
The picture I have painted of the state of industrial relations in Europe in 2012 is a disturbing one.
Lack of confidence and trust in our institutions can undermine the whole European integration project and unravel our achievements.
We cannot build a united Europe without people’s support. And that includes the social partners.
The Commission is firmly convinced that social dialogue is not a luxury, but a vital component of the European social model.
But the social component of economic governance is often underdeveloped.
A lively debate is currently going on in the EU about the social dimension of Economic and Monetary Union — or EMU for short — including social dialogue.
The fact is that EMU today is undergoing an economic, employment and social crisis, characterised by growing divergence between the Member States and increasing polarisation within societies.
These factors are generating economic and social spill-overs for EMU as a whole and affect economic stability.
Employment and social problems in individual Member States are increasingly a matter of common concern, especially within the euro area.
EMU’s original design failed to take sufficient account of real economic developments and structural issues that are vital to the sound functioning of the currency union.
Furthermore, until recently, it ignored macro-economic imbalances such as huge capital inflows and speculative bubbles.
Today, it still ignores employment and social issues that affect the currency union as a whole.
In a genuine EMU, we must first detect and collectively recognise the issues that could lead to imbalances.
This means we should be looking for a trigger for collective action before such socio-economic imbalances develop disproportionately at national and EU level — for instance, through a scoreboard of employment and social indicators.
This could be achieved within the current Treaties by strengthening social coordination at EU level and by supplementing macro-economic surveillance under the European Semester framework with social surveillance mechanisms.
It goes without saying that strengthening the social dimension of EMU also means a stronger role for the social partners.
Involving them suitably in discussion of policy and decision-making is critical, not only to increase their “ownership” of policy adopted in response to EU recommendations, but also to increase the effectiveness of policy coordination at euro area level.
The existing processes for consulting the social partners at EU level — Macro-economic Dialogue, Tripartite Social Summit, Social Dialogue Committee, Tripartite exchange of views on wage developments — could be made more effective and, if necessary, new forms of consultation could be introduced.
Involving and consulting the social partners at national level is also vital and should be developed. I would like to also underline that social dialogue and the tripartite approach have been promoted within the framework of the G20 as well in the recent years and it gains more and more importance.
Social partner involvement in reform and social fairness
Ladies and gentlemen,
The economic crisis has been a stress-test for EMU.
The euro may lose support among EU citizens if it is perceived as a purely economic and budgetary project that does not take account of the challenges facing the European social model and the welfare state.
That is why I am convinced the social partners must be involved in the design of reform to improve the EU’s economic competiveness.
Social dialogue is vital — not because the two sides of industry can necessarily agree on everything, but because we are living in a time of growing social conflict.
Strong industrial relations institutions allow the views of all parties to be taken into account and help identify the sticking points and those where people can agree.
That can lead to a balanced policy mix that furthers social justice and competitiveness too.
ESF support for social partner capacity-building
Ladies and gentlemen,
The EU’s main instrument for investing in people is the European Social Fund, management of which is shared with the Member States.
Promoting partnerships, pacts and initiatives through the networking of such stakeholders as the social partners and non-governmental organisations has been a Social Fund priority in the current programming period, and the Member States have allocated €931 million to it.
Under the convergence objective, the Fund has also supported capacity-building of the social partners and activities jointly undertaken by them, with a view to increasing the adaptability of workers and enterprises.
This has helped enable the social partners to contribute to the modernisation of the labour market.
Here in Hungary, for instance, the Fund has provided support for setting up social dialogue committees at sector level.
Institutional reform and the introduction of properly functioning systems takes time, and such social investments, co-financed by the EU Funds, need to be kept up.
Greater efforts are also needed, especially in the less-developed Member States and regions.
The Commission has therefore proposed that suitable Social Fund resources be earmarked for social-partner capacity-building in those countries and regions.
Ladies and gentlemen,
The Commission has organised this high-level conference to step up the debate with the social partners, as part of our efforts to strengthen social dialogue at EU level.
We are using all the instruments available to strengthen this dialogue with the European social partners.
The Tripartite Social Summit allows for an exchange of views between the European social partners and the EU leaders.
As President Barroso said, we have taken the unprecedented step of inviting the European social partners to a meeting of the members of the Commission on the 2nd of May.
I would also stress our excellent, longstanding cooperation with the ILO, and especially with its office here in Budapest, in efforts to promote social dialogue.
We support the ILO in its efforts to develop industrial relations in the transition countries of Central and Eastern Europe. The Commission and the ILO also share the objective to revive social dialogue in Greece. I am glad that I will have the opportunity to stress this message in Athens this June, at the ILO event on promoting social dialogue in the programme countries.
And we also agree with the ILO that in the enlargement process to the European Union, respect for social rights, such as collective bargaining and the right to strike are essential criteria of progress.
The ILO has done constructive work analysing fiscal consolidation programmes and their effect on the world of work.
The ILO is also an active participant in the debate on how to overcome the crisis, and we value their input.
I was pleased to attend the ILO's regional meeting in Oslo last week, where we discussed the way the crisis is putting the European social model to the test, and how we can collectively meet the challenge.
This conference in Budapest is an opportunity to continue the discussion, and point the way forward for industrial relations in Europe.
I look forward to two days of fruitful and productive discussion.
Thank you very much for your attention.