The effects of employee consultation and representation in harsh economic times
Inefficiencies associated with employment relationships that provide a rationale for worker participation become more salient during economic downturns. Firms may need to reduce costs, and this may result in a high number of layoffs. The EU-funded WPART2013 (Worker participation and job preservation in recessionary conditions) project addressed this pressing concern for European policymakers, industry, trade unions and citizens. The WPART2013 team examined whether European legal provisions establishing employee representation rights and requiring firms to inform and consult employees have led to increased employee representation. The team looked into whether this is connected to a greater use of flexitime and working time accounts. Researchers investigated the extent to which the observed changes are associated with differences in firms’ employment responses and employee motivation problems. They studied whether effects vary with the level at which pay bargaining takes place and with workforce composition. Project partners exploited the quasi-experimental variation introduced by the implementation of the 2002 EU Directive granting employees information and consultation rights for firms with 50 or more workers. The directive provides employees with minimum statutory rights to be informed and consulted by their employers on various key business, employment, and work organisation and restructuring issues. The team focused on Ireland, Cyprus, Poland and the United Kingdom. The directive’s implementation involved major changes to national legislation for these countries. Findings show that the directive had a positive and significant effect on both the presence of employee representation and the utilisation of working-time accounts in eligible establishments. The greater use of flexible working-time schemes was driven by establishments in which no local wage negotiations take place and those with a high proportion of female workers. Analysis of employment adjustments is still in progress. Project results have important policy implications, highlighting one channel through which employee voice may favour less dramatic firm-level employment adjustments to negative shocks. WPART2013’s work offers national and EU policymakers an empirical foundation for understanding the effects of EU directives on employee information and consultation. The project outcomes should also contribute to Europe’s competitiveness and social cohesion, as well-designed public policies that encourage firms to adopt participatory schemes involving employee representation could reduce many social costs linked to pressing issues of high unemployment and job displacement.
Keywords
Worker participation, WPART2013, job preservation, recessionary conditions
