Role of social partners in addressingthe global economic crisis

Introduction

European cross-sectoral social dialogue

European sectoral social dialogue

National cross-sectoral social dialogue

National sectoral social dialogue in Europe

National sectoral social dialogue in the world

More of the same or time for change: Path dependency

or innovation?

Conclusions

Bibliography

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Working paper

Authors: Stavroula Demetriades, Christian Welz

Research project: The role of social partners in addressing the global economic crisis

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Introduction

Since the global economic crisis began four years ago many countries have faced difficult challenges, exacerbated by

the fact that, as the economies have become so much more interlinked, none of them is immune from economic danger.

The crisis has meant new debate and action on social issues, social justice, democracy, quality of work, rethinking the

quality of products and services, institutions, new models for labour relations, and the future of work and industrial

relations.

It is hoped that an increased focus on the variety of challenges and policy measures (related or not to the crisis) taken

by global economies such as Europe, Japan, the USA, China and Brazil may increase understanding of existing social

problems, raise awareness and assist in the development of globally coordinated initiatives.

Eurofound has been studying developments in industrial relations in Europe and in other global and emerging economies

for a number of years, focusing on issues such as wages, working time arrangements, company restructuring and

pensions, in an effort to provide useful comparisons for policy makers, and also to increase the understanding of the

world around us. As for global competition, it is increasingly relevant to look at Europe’s economic development in a

wider perspective. Unemployment has become a major concern in all of the world’s advanced countries, with economic

growth stagnating, and social issues becoming more and more acute.

This working paper examines how social dialogue has addressed the impact of the crisis. In order to make reasonable

comparisons between countries as diverse as Brazil, China, Japan and the USA it is necessary to take into account the

institutional, political, economic and social backgrounds. However, the purpose of this short paper was not to provide a

profile of the countries included but rather to identify practices employed by the social partners in dealing with some of

the great challenges caused by the crisis. The data for European countries came from Social Dialogue in times of globaleconomic crisis, an extensive research project carried out by Rachel Guyet, David Tarren and Claude-Emmanuel

Triomphe (Eurofound, 2012). Information about the non-European countries studied here was contributed by Helio

Zylberstejn, University of Sao Paolo, Brazil; Holger Bungsche, Kwansei Gakuin University, School for International

Studies, Japan; and Art Wheaton and Stuart Basefski, Cornell University ILR School, USA (forthcoming Eurofound

publications).

The authors of this paper do not claim to present a fully fledged comparative analysis of the countries concerned but

rather to highlight some developments and instances where social dialogue has played an effective role, and where the

crisis presented opportunities for institution building. Cases of social dialogue practices in certain countries were

presented at the Annual Eurofound seminar ‘Studies on the EU and other Global Economies: the role of social

partners in tackling the crisis’.

Role of social partners in mitigating the negative effects of the crisis

Social dialogue in Europe is an essential element of the European Social Model and it is a dominant feature of European

industrial relations. It is rooted in the history of the European Union and it distinguishes the EU from many other

geographical regions. The Treaty on the Functioning of the European Union (TFEU) (1.41Mb PDF) contains, in

articles 152, 154 and 155, several provisions on social dialogue and the role of social partners in matters of social policy

and industrial relations. The European Social Model is based on a balance of economic and social principles which

makes it unique at international level.

The global economic crisis has brought together the leaders of the major world economies to coordinate actions and

policies. It was evident from the start that such a major event could not be addressed by single countries or regional blocs

because national economies are now so interconnected. The G20 forum in November 2011 therefore reaffirmed

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countries’ commitment to work together to try to reinvigorate economic growth. In its final communique the group, for

the first time, also committed itself to strengthening the social dimension of globalisation and took a decisive step

towards the establishment of social dialogue at the G20 level. This is a major accomplishment considering the group

comprises countries as diverse as Indonesia, Saudi Arabia and Korea as well as the US and the EU.

European cross-sectoral social dialogue

Since the outbreak of the crisis the European cross-sectoral social partners have made proposals on how to deal with its

effects, and how to support the recovery. At the onset of the crisis they defended their common interests, such as:

n the need for the coordination of public actions across Member States;

n an economic and fiscal stimulus to support the recovery;

n the importance of taking into consideration climate change as an essential element in any recovery process.

These common positions emerged from their reaction to the European Economic Recovery Plan (110Kb PDF), which

both sides welcomed. As such, discussions among the social partners resulted in a number of common policy approaches

developed by both BusinessEurope and the European Trade Union Confederation (ETUC), as reported in the EC’s

‘Industrial relations in Europe, 2010’ (4.8Mb PDF p. 79). In May 2009, the European social partners issued joint

recommendations (328 Kb PDF) on how to optimise the role of the European Social Fund in times of crisis. This

initiative was followed a year later by a joint statement (148Kb PDF) on the Europe2020 strategy, expressing the need

for collective responsibility to achieve the objective of growth, employment, and sound fiscal sustainability. The joint

work programme (598Kb PDF) of the social partners then focused on the challenges related to the crisis and recovery.

It must also be noted that against the background of the Small Business Act (100Kb PDF), initiated by the European

Commission in June 2008, the ETUC and the employers’ organisation representing the interests of European crafts,

trades and SMEs at EU level (UEAPME) launched a joint project in June 2009 ‘to revise, adjust and update their

partnership’ (1.1Mb PDF, p.4) in order to specifically address the situation faced by SMEs, especially their ‘silent

restructuring’, and the role that pluralistic and diverse social dialogue should play at national level.

Despite some common reactions to the European Recovery Plan, the social partners failed to produce a joint declaration.

Indeed, if at first the crisis could have been seen as an opportunity for them, in the words of Rahm Emanuel, President

Obama’s chief of staff, in November 2008, to work together ‘to do things that they couldn’t do before’, the reality was

that the crisis led to a deepening of pre-existing differences. Whereas BusinessEurope continues to support the principles

of the market and expresses the need for the liberalisation of services, and for structural reforms in different areas

(European Reform Barometer, BusinessEurope, 2009) as well as for cost reduction, the ETUC makes clear its

concerns about associated risks to workers’ rights and incomes and to Europe’s welfare systems. The union federation

also called for European Days of Action from 14–15 May 2009, in Madrid, Brussels, Paris and Prague – demonstrating

the clear gap between their position and that of BusinessEurope. Tensions were also visible as the parties discussed the

Joint Report on Restructuring prepared in the framework of the Joint European Social Partners’ Work-programme (‘Joint

European Level Social Partners’ Work-programme Joint Study on Restructuring in the EU’, by Alan Aritake-Wild,

January 2010), which the ETUC had refused to endorse. On a political level, although a pan-European coordination of

recovery plans was necessary, national initiatives prevailed.

Countries are seeking new ways of dealing with increasingly acute social issues. European countries have a tradition of

using tripartite or bipartite bodies to address economic and social issues while non-European nations may seldom use

these structures, instead favouring ad-hoc measures with or without the support of the social partners.

Role of social partners in addressing the global economic crisis

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Role of social partners in addressing the global economic crisis

Successful initiatives undertaken by social partners in EU and another four countries, namely Brazil, China, Japan and

the USA, range from industry-level interventions to wider institutional revisions.

European sectoral social dialogue

To what extent is it possible to argue that European sectoral social dialogue has been organised differently to dialogue

at the cross-sector level? If, at cross-sector level, the European social partners failed to produce significant joint

initiatives, some sectoral actors did get together to express their concerns.

The chemical sector adopted a joint declaration (166Kb PDF) by the European Chemical Employers Group (ECEG)

and the European Mine, Chemical and Energy Workers Federation (EMCEF) in March 2009, aimed at avoiding

redundancies and stating actions to be taken in terms of temporary layoffs, short-time working and training. They also

released a joint declaration on the global economic crisis, in May 2009 (452Kb PDF).

In the construction sector the European Federation of Building and Woodworkers (EFBWW) and the European

Construction Industry Federation (FIEC) made the joint declaration ‘The global economic crisis and its consequences

for the European construction industry: positive measures and concerns of the European Social Partners’ in June

2009 (95.3Kb PDF) and a joint appeal: ‘Emerging from the crisis: fostering growth and jobs for a sustainable

construction industry (2.14Mb PDF) on 1 January, 2010.

In the road transport sector the International Road Transport Union (IRU) and the European Transport Workers

Federation (ETF) issued a statement in May 2009, calling for a recovery plan.

In the commerce sector, EuroCommerce, which represents the Retail, Wholesale and International trade sectors in

Europe, and Uni-Europa Commerce released the statement ‘Economic crisis: joint reaction of the social partners

for commerce’, December 18, 2008 (173Kb PDF).

There was a joint declaration (96kb PDF) by the European social partners of the Furniture industry, the European

Furniture Industries Confederation (EFIC), the European Furniture Manufacturers’ Federation (UEA) and EFBWW

calling on the European and national authorities to support the industry and its confrontation with the economic crisis,

on 18 November, 2009.

In the public sector the Council of European Municipalities and Regions (CEMR) and the European Federation of

Public Service Unions (EPSU) sent a joint message on 27 February, 2009 to the Spring European Council (40Kb

PDF). In the live performance sector, the European Arts and Entertainment Alliance (EATE) and the Performing Arts

League Europe (PEARLE) jointly published ‘The impact of the financial crisis in the live performance sector’

(74Kb PDF) on 6 May, 2009.

However, with the exception of the joint declaration adopted in March 2009 by the chemical sector, which produced

broad principles for the parties to follow, the other common initiatives failed to provide any concrete or specific actions

for their members. These statements, however, did attempt to develop a number of mutually acceptable solutions to

contribute to the recovery. For example, all these documents expressed concern about the probable worsening of the

situation and therefore called upon the public authorities at the European, national and sectoral level to:

n increase European and national public financial support;

n provide more investment for the infrastructure;

n provide support for training and qualifications to retain skilled workers.

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At the very least these discussions raised awareness of the problems and difficulties being experienced by workers and

their employers. Furthermore, the activities of all the European sectoral social partners, just like those at cross-sector

level, were influenced by the crisis, despite publishing few common statements.

National cross-sectoral social dialogue

The 2012 Eurofound report focuses on collective bargaining by social partners which has resulted in national collective

agreements ‘concluded between single employers or their organisations and organisations of workers such as trade

unions over the terms and conditions of employment of employees, and about the rights and responsibilities of trade

unions. It is a process of rulemaking, leading to joint regulation.’

However, social partners have also cooperated with their governments to broaden and enhance public, economic,

employment and social policies aimed at mitigating the consequences of the crisis. This type of additional social

dialogue has also been examined in this research, as it shows the important role played by the social partners in

combating the crisis. This kind of activity was more evident in countries where the social partners are traditionally

involved in the creation of public policies. However, our research found that even in those countries where this practice

is less developed, the social partners took part in discussions on anti-crisis packages. In a report by the International

Labour Organisation (ILO) (4.7MB PDF, p.10) author Y. Ghellab states:

The social partners have tried to contribute to the formulation of anti-crisis programmes and packages and to findcreative solutions to limit the impact of the crisis in terms of job losses and enterprises bankruptcies.

Here, two different trends can be observed. One is that the initial impact of the crisis prompted immediate action through

anti-crisis agreements characterised by consensus. The other trend is a hesitation to act, exacerbated by either an

unawareness of the severity of the crisis and/or tensions between the actors, resulting in agreements which were

concluded only after much longer negotiations. The process of social dialogue has varied throughout the crisis and is

demonstrated by the number of successful negotiations leading to formal agreements, or to agreed solutions with

governments and, finally, also by the number of unsuccessful negotiations as reported in the EC’s ‘Industrial relations

in Europe 2010’ (4.9Mb PDF pp 68–69). Spain is a very good illustration of such an evolution. In 2009 negotiations

between trade unions and the employers’ organisations ended in deadlock. However, in 2010 negotiations resumed and

an unprecedented three-year agreement was signed. Conversely, in Bulgaria where social dialogue is less developed than

in older Member States, the social partners were proactive, urging the government to act, and concluding an anti-crisis

package containing 59 measures on 30 March 2010. Moreover, in November 2010, the Bulgarian social partners signed

a national agreement covering home-based workers and another on telework. These agreements were developed by a

working group responsible for anti-crisis programmes. The Ministry of Labour and Social Policy extended these

agreements across other sectors, through legislation, representing a first for this approach in Bulgaria. This illustrates

that the crisis, in some countries, created opportunities for the social partners to become more involved in the creation

of economic and social policies, and shaping their terms of reference. These findings demonstrate the breadth of

responses to the crisis either through collective bargaining or discussions with governments. Responses to the crisis,

through collective bargaining, have been identified in several European Member States at various stages. But in such a

difficult economic context social dialogue and collective bargaining are far from trouble free. The crisis compounded

difficulties already faced by the social partners and created uncertainty.

In sum, social dialogue led to agreements in many Member States (such as Belgium, Bulgaria, the Czech Republic,

Estonia, Spain (bipartite), France, Lithuania, Latvia, the Netherlands and Poland) despite the tensions and difficulties

between the social partners and between the social partners and their governments. Yet, in a number of countries with

previously partially well-established social dialogue structures, talks at cross-sectoral level were disrupted and seriously

challenged in the wake of the crisis (Spain (tripartite), Finland, Hungary, Ireland, Luxembourg and Slovenia).

Role of social partners in addressing the global economic crisis

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Role of social partners in addressing the global economic crisis

National sectoral social dialogue in Europe

In Europe collective bargaining plays a key role but there are big variations across the Member States regarding the

amount and role of bargaining and coverage. Sector-level bargaining does not exist in all Member States, and where it

does it is of varied importance. During the crisis, there have been several collective agreements at sectoral level,

particularly in countries where the sector plays a role in the national system of industrial relations.

Manufacturing was hard hit by the crisis (see ERM quarterlies) across Europe, particularly in the automotive industry

where there were many redundancies and plants were closed. In this sector, according to a Eurofound report by

Roberto Pedersini (401Kb PDF), measures taken included state support in the form of credit, guarantees or loans at

special rates offered not just by national governments but also by parties such as the European Investment Bank (EIB),

or the European Commission through the European Globalisation Adjustment Fund (EGF). There was also state support

for partial unemployment measures, stimulus for the production of ‘green’ cars, industrial policy action plans, funding

for research and development, income support measures, and tax breaks.

Sectoral collective agreements, where relevant, dealt with the issues including short-time agreements, wage freezes,

cost-cutting measures, and temporary layoffs.

Apart from the automotive industry, sectoral collective agreements have also been concluded, for example, in the metal

sector (Eurofound, in press) in France, Germany and Sweden. Interestingly, a common characteristic of these agreements

is that they focused on short working-time schemes, very often accompanied by training and skills enhancement

measures, temporary layoffs, reduction of wages, measures targeting young workers or young unemployed. In the

construction sector, a specific agreement on crisis-related proactive training facilities was concluded in the Netherlands.

All in all, it is difficult to find comparable data at the sectoral level, and where this is possible the statistics are rather

fragmented (here, we draw again directly on Rachel Guyet, David Tarren and Claude-Emmanuel Triomphe (2012),

Social Dialogue in times of global economic crisis, Eurofound, Dublin). But the existing data do reveal that there were

variations in the impact of the crisis in different sectors across Europe. This can be explained by the fact that sectoral-

level social dialogue is not a feature of all Member States’ industrial relations systems and because the responses to the

crisis varied considerably from sector to sector, according to the severity of the impact of the crisis. For example, sectoral

social dialogue barely exists within the UK, and across Europe generally industrial sectors were affected to a much

greater extent than others, especially the manufacturing one. The impact of the crisis strongly influenced the pattern of

subsequent negotiations and their outcomes as well as the traditional, country-specific, practices. Traditional practices

and experiences of sectoral restructuring as a result of the crisis have influenced recent negotiations and outcomes, and

these pre-existing characteristics ensured that sectoral dialogue was limited to those countries in which this level already

played an important role in the collective bargaining process. Many sectoral agreements have focused on employment

issues, for example enabling the creation of short-time working arrangements. A greater number of agreements were

concluded in the manufacturing sector, particularly in the automotive sub-sector, and in the metalworking industry

compared to the private services sector. In a report for the European Trade Union Institute (ETUI) author Vera

Glassner says:

The limited role played by collective bargaining in dealing with the crisis seems to be characteristic of the serviceindustries in general and of the banking sector in particular.

The successful sectoral level negotiations listed here represent only a handful of the total cases at the sectoral level.

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In the food sector in Finland a collective agreement was signed in May 2010 to maintain workers’ purchasing power in

return for greater working time flexibility.

In the chemical industry in France a collective agreement was signed on working time arrangements in September

2009. The agreement includes an increase in the benefits paid to employees and the organisation of training during

short-time working periods, covering all the sector’s workers.

In the metalworking sector in France a national sectoral agreement on emergency measures to deal with the financial

crisis was signed in May 2009. The agreement was signed by four trade union federations: CFDT, FO, CFE-CGC,

CFTC, and the employer organisation UIMM. It proposes measures to safeguard employment for the benefit of

workers and companies to allow them to continue to produce and innovate. The agreement, which also provides for

creating jobs, is driven by the concept of using the crisis to develop employees’ skills and qualifications so that

companies are prepared to meet the recovery. In the metalworking and electricity sector in Germany, an innovative

agreement was signed in February 2010 in North Rhine Westphalia which has led to improved coordination within

the sector and region.

Prior to the crisis the Dutch construction sector experienced a shortage of new entrants. As elsewhere the crisis

brought about a contraction in the sector which, for the present, means there is no longer such a labour shortage.

However, the prospect of the return of this trend, coupled with the prospect of huge crisis-related redundancies

giving rise to additional shortages in the future, led to considerations about the future of the sector and, in particular,

the possibility that the social partners can establish mechanisms to anticipate future trends. The agreement signed in

the construction sector in 2009 is founded upon such a mechanism and is aimed at delivering concrete anti-crisis

measures for the sector. While the negotiations and discussions between the social partners took the usual Dutch

route, i.e. discussions between the social partners and with government, the crisis created an environment within

which this innovative response was created. The resulting Anti-Cyclical Training programme combines both the

short-term and long-term concerns of the social partners and includes measures to entice employers to train by

offering reimbursement for training fees and wages while trainees undergo their training. It is innovative in terms of

its substitution for redundancies by training, the modularisation of VET and the agreement’s reach to SMEs (often

overlooked by social partner discussions).

In the Swedish metalworking sector an agreement signed in spring 2009 for blue-collar workers includes initiatives

to deal with temporary layoffs and training by reducing working time, promoting training and reducing wages

In the finance sector in Scotland an initiative was agreed between the social partners to deal with the fall-out from the

crisis in the banking sector. This initiative, at the sectoral level, is considered as an innovation in the UK – an industrial

relations system with very few sectoral social dialogue activities – and as such has been studied by the researchers of

this project. The institutionalisation of trade unions across the UK is virtually non-existent and, although the union

movement is not met with as much resistance by governments dominated by the Labour Party (which the unions

founded and continue to support financially), the historic relationship tends to prevail, in the formal sense. What

makes this example interesting is that in Scotland there appears to be a different political attitude to the role of trade

unions and, while employers may not be any less likely to entertain their involvement, the national political and

employment relations infrastructure is such that it is relatively easy to bring together actors to discuss government

policy objectives. This enables discussions between the actors representing trainers, employers, employees, funders,

regional and economic development to be convened quicker and more directly. Furthermore, the approach taken by

the social partners to connect those workers facing redundancy with employers within the sector looking to recruit,

and the training providers and existing initiatives to support re-employment, is innovative in the sense that the

discussions are taking place at the sector level. The crisis may also have presented trade unions with an opportunity

to engage in social dialogue, yet this may be unsustainable in a country where sectoral social dialogue is rare.

Role of social partners in addressing the global economic crisis

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Role of social partners in addressing the global economic crisis

As with dialogue at the cross-sectoral level, a number of negotiations at the sectoral level also failed.

n In the Austrian metalworking sector, negotiations on working time were abandoned due to the lack of a consensus

on increasing flexibility, required by employers, and reducing working hours, demanded by the workers.

n In Estonia’s healthcare sector, cuts in public spending led to protests organised by the trade unions. However these

failed to influence the decisions of the government.

In countries where sectoral collective bargaining is present the sectoral social partners intervened in two ways:

n by concluding specific crisis-related agreements on employment issues. The most common responses included short-

term measures to protect employment and measures to safeguard workers’ income. These include traditional

measures such as the extension, or introduction, of short-time working arrangements often combined with improving

skills and qualifications and allowing employees to work elsewhere via a lease agreement. Another set of agreements

provide compensation for those employees on reduced working time.

n through the traditional collective bargaining rounds, covering issues such as wages and working conditions, the social

partners adapted the contents of these agreements to fit the context created by the crisis. This included, for example,

the implementation of early retirement schemes, the provision of severance payments in the event of redundancies

and postponing wage increases. In Germany the sectoral social partners in the metalworking industry introduced

opening clauses in their agreement which enabled cuts in wages.

Further examples of sector agreements are to be found in the report on ‘Employment and industrial relations’ published

by the European Commission in 2010.

National sectoral social dialogue in the world

There are few examples of social dialogue in the USA. However, a prime example is in the automotive industry

involving government, trade unions, sectoral and company-level representatives. The sector has traditionally been a trade

union stronghold in the USA. Concerted action here resulted in legislative measures to save more than one million

automotive-related jobs. The first series of measures were taken as early as 2008, with a second wave introduced under

the Obama administration, which included negotiations and agreements with GM, Chrysler, Fiat, Ally Bank/GMAC,

Congress, shareholders, bankruptcy attorneys and the United Auto Workers (UAW). A total of 86 billion dollars in grants

and loans were used to save automotive companies. Chrysler went through an expedited bankruptcy process and merged

with Fiat. General Motors reluctantly agreed to expedite bankruptcy; it discontinued its Pontiac, Hummer and Saturn

brands and sold Saab.

The UAW entered into negotiations and agreed to a no-strike clause until 2015 and accepted a two-tier wage system

paying all new employees about half the current wage and benefits paid to senior employees. The UAW became a major

shareholder in both GM and Chrysler in exchange for their concessions. Previous GM and Chrysler shareholders lost all

of their holdings in the bankruptcy process.

Auto manufacturing lost more than 35% of its jobs during the 18-month recession and the bankruptcy filings of GM and

Chrysler. The expedited bankruptcy process helped to minimise the job loss but has raised concerns over ‘moral hazard’

of the government saving large firms at the expense of the free market. This government intervention saved well over

800,000 jobs and may have saved the pensions of nearly one million retired workers in the sector. General Motors has

since recovered, selling the most vehicles in the world in 2011 (Automotive News, 19 January, 2012).

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In Brazil, national agreements proved difficult to conclude, but sector-related accords provided the right platform for

discussing issues such as working conditions. The agreements in the construction, metal and sugar/ethanol sectors

contain provisions of labour rights within the sector and were reached through a state initiative. As there are few or no

collective agreements at industry level in Brazil these three accords were considered a success by all parties (see section

‘building capacity for social dialogue’).

While social dialogue at company level is the most important in Japan, the automotive industry again provides a good

example of social partners and government working in a comparable way to the European model. Several factors

contributed to the cooperation of the social partners at industry level:

n The impact of the crisis on both manufacturers and suppliers was tremendous.

n The auto industry is extremely important for the entire economy and vital for the prosperity of certain regions, such

as the prefecture of Aichi, whose capital, Nagoya, is completely dependent on Toyota; Hiroshima, which depends to

a considerable extent on Mazda, and the Mie prefecture where Honda is the biggest employer.

n Talks had already taken place between the industry’s social partners prior to the crisis, in relation to the taxation

system.

Two main measures were:

n Tax exemptions were agreed with the government in April 2009, for the following three years, on new generation

vehicles (hybrid, plug-in hybrid, electro and fuel-cell cars, clean diesel and natural gas). Buyers of such cars were

totally exempted from purchase tax and tonnage tax, which is paid at the first technical inspection after three years.

Cars with largely improved fuel efficiency were granted a 50%–75% tax deduction;

n A scrappage incentive scheme was introduced after being jointly proposed by the social partners.

n The combination of these measures was considered vital for the survival and fast recovery of the domestic industry.

They also contributed to a considerable reduction of CO2 emissions by new cars.

Holger Bungsche, author of ‘Industrial Relations in EU and other global economies: the role of social partners in tackling

the crisis, the case of Japan’ (in press) attributes this joint industry-level initiative, unusual in Japan, to mounting

economic pressures that dictated decisive and concerted action. This sense of partnership may have been resulted from

the crisis but it is not certain whether it can be sustained as the economic situation improves. As there is no tradition of

cooperation at that level and no institutions supporting joint sectoral work it is very difficult to set them up and retain

them after a crisis is over. They can be used as ad-hoc fora created following exogenous pressures, not deriving from

endogenous needs or demands.

However, it should be borne in mind that Japan has not been affected by the global financial crisis in the same way as

the USA or EU. In fact Japan’s recovery was faster than that of Germany. However, the country faced another crisis in

the wake of the Tohoku earthquake and tsunami in April 2011 which destroyed large coastal areas in North-eastern Japan.

Again, the manufacturing industries were most affected as many manufacturers of supply parts for the electronics and

automotive industry are based in this region. As a result the automotive industry faced a downturn even more severe than

the financial shock after the fall of Lehman Brothers. Today the biggest challenges the Japanese economy faces are the

high value of the yen against the US dollar and euro as well as sluggish demand from the developed economies in North

America and Europe. This clearly shows the interdependencies of global economies.

Role of social partners in addressing the global economic crisis

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Role of social partners in addressing the global economic crisis

More of the same or time for change: Path dependency or innovation?

According to the findings of the research ‘Social dialogue in Times of Global Economic Crisis’ (Eurofound, 2012), it is

clear that in most cases the crisis did not generate the necessary environment required for the social partners to develop

new methods of dialogue or responses. Despite some institutional innovations in response to the crisis, the traditional

institutional patterns of European social dialogue generally prevailed and remain unchanged. (Path dependency practices

with some innovative elements and successful practices are described later on in this section).

However, that is not to say that the behaviour of the social partners and the outcomes from social dialogue adhered to

their customary practice in all cases. For example in Spain and in Ireland, countries in which traditionally the social

partners have reached agreement, our findings demonstrate a rupture with path dependency. In fact on the scope of

austerity measures, the employers and trade unions in both countries were unable to conclude an agreement, either with

each other or with the government, resulting in deadlock.

The social partners in a number of countries did manage to reach agreement and our research has highlighted successful

practices. Social dialogue in the Netherlands led in March 2009 to the creation of 33 regional mobility centres managed

on a bipartite basis, and in France the government and social partners established a tripartite committee to monitor the

crisis with the launch in April 2009 of a social investment fund to coordinate action on training and reskilling, also

managed on a tripartite basis. In Finland the social partners, together with the government, introduced an innovative

mechanism through which wage increases could be delayed or abandoned in specific qualifying circumstances. In

Poland the social partners have led intensive bilateral talks and reached agreement on an anti-crisis package representing

a break from past practice. Unfortunately the agreed package was not fully incorporated into legislation. In Slovakia an

Economic Crisis Council, comprising the social partners and government, reached agreement on anti-crisis measures and

a similar approach saw equally positive outcomes in Bulgaria. However, the measures adopted in these two countries are

limited to the crisis period, and, despite their formal existence, their success is difficult to evaluate.

Some attempts were not so successful. For example in Spain and in Ireland, countries in which traditionally the social

partners have reached agreement, employers and trade unions were unable to conclude an agreement about austerity

measures, either with each other or with the government.

Path dependency can lead to innovative outcomes. Innovation through social dialogue can be demonstrated either

through its practical outcomes or through strategic or political outcomes/choices made by social partners. The Austrian

short-time working case study illustrates the enduring power of path dependent social dialogue, providing that adequate

support and resources are made available, and how it is possible, despite the impact of the crisis, to create an environment

in which the social partners are able to explore and adopt practical solutions. This demonstrates that the concept of path

dependency and that of innovation need not be mutually exclusive. The contents of the agreement are innovative and

there is consensus between the social partners that it is highly effective and one which they intend to use in any future

economic downturns. The innovative element of this measure is the combination of short-time working and education

or further training, with an allowance for employees that partly compensates for the loss in working hours. Furthermore,

the entire agreement is underpinned by the concept of flexicurity which, although not specifically referred to in the

negotiations, was covered in these discussions.

Another example of the mutuality of these two concepts (path dependency and innovation) is demonstrated by social

dialogue in Andalusia. A social-pact was established in this region of Spain in 1993 and has remained practically

uninterrupted since its conception. This policy has taken the form of seven main social concertation agreements signed

between the Junta de Andalucía (the regional administration) and the most significant trade union and employers’

organisations in the region (UGT-Andalucía, CCOO-Andalucía, CEA). However, despite the rather conventional nature

of the agreement, the pact itself does nevertheless represent a strategic approach to social dialogue, innovative in itself.

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A rupture with the traditional path dependency approach that can be considered as innovative can be found both in

countries with strong (robust, centralised and enforced) and weak (voluntary and decentralised) industrial relations

systems. In the former, the results of social dialogue have tended to demonstrate the capacity of the social partners to

adapt to challenges and to create innovative outcomes. In these countries, such as France and the Netherlands, our

research has also revealed the capacity of the social partners to reach compromise. In countries where social dialogue is

considered to be weaker (such as Poland or Bulgaria) the consequences of the crisis on employment have challenged the

status quo and produced an environment in which the historical lack of social partner involvement was reversed.

In the latter group, which was previously characterised by lack of involvement of social partners, the trend was reversed

during the crisis as regards the involvement of social partners (break from the path dependency) whereas the

governments’ reaction followed the previous path of unilateral intervention. So, where the social partners were, at the

start of the crisis, able to begin negotiations, for example in Poland, or able to cooperate with the government in the

creation of anti-crisis measures, for example in Romania, the respective governments tended to determine unilaterally

whether to adhere to the agreements concluded. Although in Romania the overall process of social dialogue throughout

the crisis was not characterised by innovation and took place within the country’s traditional legislative and institutional

framework, this example can be considered as innovative as it represents a rupture of path dependency; anti-crisis

measures were agreed in a climate of joint understanding of the need for joint solutions at the tripartite level. In Poland

the government failed to implement the 13 recommendations made by the social partners and instead came up with a

different legislative programme. However, the decision to launch bipartite negotiations by the social partners in early

2009 is considered innovative and, symbolically, as the launch of genuine autonomous social dialogue in Poland. In

Romania, after a commonly agreed anti-crisis programme in January 2009, the government introduced, a month later, a

different set of measures containing an increase in social security contributions and a forecast deficit of 2%. For more

than a year other key measures were the subject of negotiations between the government and the social partners, but

without a consensus being reached. However, the government eventually implemented changes without trade union

support.

Social partners in many European countries prefer to negotiate at sector level and the volume of activity at this level

throughout the crisis offers a useful insight into the resilience of sectoral dialogue. Our initial assessment suggests that

the social partners maintained their discussions in those sectors where dialogue was established prior to the crisis. For

example pre-existing sectoral social dialogue continued in Member States such as France, Germany and Sweden (metal),

Netherlands (construction) and Finland (food) throughout the crisis. Conversely, in those sectors where pre-crisis

dialogue had been weak, was beginning to fracture or was starting to exhibit signs of decentralisation, such as in the UK

print sector, the crisis appears to have exacerbated these trends.

It is clear that where sectoral level dialogue did occur, it tended to produce path-dependent traits with some occasional

innovative elements and sectors traditionally deeply engaged in social dialogue had similar experiences.

First, they have all been hit profoundly by the crisis and most are similar in their make-up, such as heavy industry, the

automotive industry, construction and transport. Another sector heavily affected, given the roots of the crisis, was the

finance sector itself. A second characteristic is the correlation between the extent of dialogue throughout the crisis and

how much restructuring had been done before the crisis. Restructuring within these sectors has become a continuous

phenomenon due to their exposure to international competition and subsequent mergers and acquisitions. This has meant

that the social partners have gained considerable experience and have developed resources to deal with the impact of

change and responded now in this crisis in a similar way.

A third common characteristic concerning the sectors that are most dynamic and play a strong role in the economy is

that they all have well established, well organised and well structured social dialogue and therefore ought to be in a better

position compared to other, less organised, sectors to act and mobilise internal resources when confronted with a crisis.

Role of social partners in addressing the global economic crisis

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Role of social partners in addressing the global economic crisis

Examples include the innovative collective agreements signed in the metal and electricity sectors in February 2010

between the social partners and the State of North Rhine Westphalia in Germany. For the first time in the union’s history

the IG Metall union did not demand a wage increase and instead the social partners sought to incorporate job security

and flexibility into the sector agreement, which also strengthens the role of local Works Councils and offers local social

partners a degree of discretion in applying certain elements of the agreement at company level. The final agreement can

be voluntarily adopted by other states. A similar example of positive outcomes can be seen in the crisis-related agreement

signed by the social partners in the French metal industry.

Reforming the labour market

The well regulated Japanese labour market has been liberalised since the 1980s and, as a result, has been divided into

one market for regular long-term employment and one for part-time, occasional and other forms of non-regular, often

precarious work. In recent years, the unprecedented increase in the numbers of agency workers caused a heated political

debate regarding re-regulation of this form of employment. Moreover, the global economic crisis led to thousands of

agency workers losing their jobs, which was the critical point for political intervention in Japan. The 1986 Worker

Dispatching Act (280Kb PDF) regulating agency work originally allowed only a limited number of professional groups

to work in this way. However, a growing number of occupations has been added since 1999, with a 2005 reform opening

the manufacturing sector fully to agency workers. Until 1999 the number of agency workers remained well below one

million or roughly 1% of the total workforce. However, from then until the crisis began in 2008 the number jumped to

almost four million, including an additional 500,000 workers in the manufacturing sector.

Figure 1: The increase in numbers of agency workers in Japan 1986–2007

Source: Japanese Ministry of Health, Labour and Welfare

However, the crisis meant that the rate of unemployment of agency workers jumped in 2009 from 7.9% to more than

22%, while part-time unemployment only increased from 2.9% to 3.6% and the unemployment rate of regular employees

rose from 1.7% to 2.3%. The data are displayed in the following graph.

© European Foundation for the Improvement of Living and Working Conditions, 2012

400

1986

Ten

th

ou

san

d p

eo

ple

Tri

llio

n Y

en

350

300

250

200

150

100

50

0

7

5

4

3

2

1

0

6

Agency workers

200120001999199819971996199519941993199219911990198919881987 20062005200420032002 2007

Valued added by agency workers in trillion YenAgency workers in producing industries

12

Figure 2: Unemployment according to types of employment

Source: Japanese Ministry of Health, Labour and Welfare

If we compare different groups of non-regular workers, it appears that part-time workers were not affected much, which

is due to the fact that in the Japanese labour market this category of workers enjoy almost unlimited work contracts (on

much lower income) and they are indispensable for many companies (for instance, customer service desks at banks are

operated largely by part-timers).

The crisis presented a good opportunity to change legislation. Many companies are reportedly replacing agency workers

with part-time or regular workers. In Holger Bungsche’s national report for Japan (in press), the personnel manager of

Toyota Shatai (Toyota Body Works), a contract manufacturer of Toyota Motor, said:

There will be a new legislation, but anyway, there were various problems, especially quality and with respect to thecontinuous improvement process. Therefore we decided to return back to our former employment habits.

The section chief for Group Development at Honda added:

We were surprised to learn how many agency workers Toyota employed. We at Honda never had agency workers.Of course our suppliers had, but not we at Honda.

And to the question, why there weren’t agency workers used at Honda, he replied: ‘It was against our employment

principles’.

Role of social partners in addressing the global economic crisis

© European Foundation for the Improvement of Living and Working Conditions, 2012

25.0%

2002

0.0%

Agency workers

Part-time employees

Regular employees

20.0%

15.0%

10.0%

5.0%

200820072006200520042003 2009

13

Role of social partners in addressing the global economic crisis

Conclusions

Resilience of social dialogue

The European national case studies considered throughout this research highlight the degree to which Europe’s

employment relations systems have overcome challenges thrown up by the crisis, with the data for this stemming from

the Eurofound report ‘Social Dialogue in times of global economic crisis’ (Eurofound, 2012). Two important conclusions

should be made at this point. While there can be no doubt that the global economic crisis has tested the durability of all

national industrial relations systems, all the cases examined demonstrate clearly that these systems have weathered the

economic and social impact of the crisis. However, even in those countries with a deep history of social partner

involvement in discussions with government and employers, the negotiations often failed to secure consensus to mitigate

the negative impact of the crisis. Nevertheless, in comparison to others, those countries overall fared better in terms of

cooperation between the state and social partners.

However it was at sector level where the social partners’ discussions generated outcomes, derived from their historic

relationships, and which appear to have been better able to weather the storm. The same holds true for non-European

countries whose institutional settings are less conducive to sector-level social dialogue. The automotive sector is an

example in both Japan and the USA, where social dialogue played a role. The severity of the crisis in the Japanese

automotive industry gave the impetus for the emergence of a European-like social dialogue. Although the two sides of

the industry had engaged before in talks, the crisis made tripartite talks possible with solutions acceptable to all parties.

However, the future will show to what extent such dialogue is sustainable.

In the US, trade unions have traditionally had a strong presence in the automotive industry and despite their position

weakening in recent years, they played a significant role in the negotiations to secure the future of their industry.

Although legislation was required to save more than one million automotive-related jobs, negotiations between United

Auto Workers union (UAW), Chrysler and General Motors included agreements on no-strike clauses, different pay levels

for new recruits, allowing workers to share in the profits, and lump sum payments in lieu of a permanent pay rise. The

UAW and the management representatives of GM and Chrysler also agreed to binding arbitration until 2015 if an

agreement is not reached. At the time of writing, similar, tentative agreements had also been reached between Ford and

UAW, with slightly higher lump sum agreements than those with GM or Chrysler. Overall, in the light of this economic

urgency and uncertainty about the future, the industry came to agree large wage concessions.

Brazil has a weak institutional framework for social dialogue and has been less affected by the crisis. Nevertheless it

seems to be to be gradually developing a system of regulating employment relations at industry level following an outcry

over some abuses of labour rights. Emergency situations like those in the sugar/ethanol and construction industry gave

rise to new patterns of labour relations and the conclusion of voluntary agreements providing for labour rights. These

examples are better understood in context, as Brazil is characterised by provisions of generous individual workers’ rights

(regulating in detail issues such as working hours, holidays and Christmas bonus) and poor regulation of collective rights

at the workplace level. There is, for instance, no collective representation at the workplace, and as a result there is no

consultation with workers about layoffs. Calls from unions for collective representation are countered by employers who

insist that existing regulations have significantly increased labour costs. Clearly, the existing regulatory framework is not

satisfactory to either side and it was due to the widespread demonstrations and violent protests in the construction, metal

and sugar/ethanol sectors that all three parties, the government and the social partners, agreed a new model of regulation.

In Europe there is evidence of a trend in which the social partners have either been invited by their government to

participate in discussions, or themselves urged the government to launch initiatives. However, there is also evidence of

an emerging trend of tension and conflict in previously cooperative relationships between the social partners themselves

© European Foundation for the Improvement of Living and Working Conditions, 2012

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and between them and their governments. This has stemmed from the severity and longevity of the crisis, leading to the

social partners occupying more traditional, entrenched positions.

It is also clear from the research that social dialogue with trade unions was undermined in a number of countries by the

action of employers. In some countries with robust social dialogue, for example in Belgium, or in countries with

relatively weak institutionalised social dialogue, such as Hungary, employers sought to direct dialogue with workers

themselves. However, this is likely not just to weaken the pre-existing framework and thus the capacity of the social

partners to conclude and enforce agreements, but also to undermine the role of works councils as statutory bodies. It is

important to note that thus far this move has been found in only two company case studies, but this approach should be

given greater attention to see whether it becomes a trend.

If, as is clear from the research, social dialogue has proved to be key in overcoming the crisis and maintaining stability

in Europe’s industrial relations systems, it has also been weakened by the impact of the crisis. Indeed, the crisis has

exacerbated:

n pre-existing weak spots at the various levels of social dialogue;

n the decrease in trade union membership and density;

n the power of unions to negotiate.

The crisis has also led to:

n an increase in unilateral decision making by governments within the public sector;

n the increasing decentralisation of collective bargaining at company level.

The austerity measures on the whole created strong opposition throughout Europe, which illustrates the pressure that the

crisis exerted on the public finances and also the degree to which people depend upon public services, especially in a

crisis.

European states have experienced a decentralisation in collective bargaining in the last decade, and our research has shown

that the crisis accelerated this process, despite many initiatives at sectoral, national or transnational levels. In Hungary, for

example, following the conclusion of a collective agreement the company management initiated direct

discussions/negotiations with employees individually (informal dialogue) covering such issues as wages and bonuses, etc.

There are also examples of the crisis accentuating pre-existing weaknesses in social dialogue, by being path-dependent.

For instance, the UK printing industry, unlike other sectors, has a long tradition of multi-employer bargaining. The

sector’s national agreements had been under pressure for some time, but the crisis exacerbated these tensions and the

agreements between Unite the Union and the Scottish Print Employers’ Federation and the union and the British Printing

Industries Federation (covering England and Wales) have collapsed. Furthermore, due to the demand for urgent

responses during this process, the tendency towards decentralisation became overwhelming, compounding this pre-

existing problem.

It should be borne in mind, however, that this is not the first economic crisis Europe and the world has faced. In the

1930s, during the Great Depression, one might have expected a weakening of collective bargaining and supporting

legislation. However, small and large countries (from Mexico to Australia) specifically introduced relevant legislation

on collective bargaining, coverage, and extension of agreements (Hamburger, 1939).

Role of social partners in addressing the global economic crisis

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Role of social partners in addressing the global economic crisis

The need for greater multi-level coordination

Social dialogue is considered one of the main pillars of the European social model and if the social partners intend to

contribute to the attainment of priorities established by Europe 2020, reform of governance ought to be seriously

considered. While our research clearly demonstrates interaction and a degree of coordination between the social partners,

both horizontally and, with rather more difficulty, vertically at the European level, there is little evidence of coordination

between the national level and EU level. The authors suggest the reason for this void is the complexity of European

social dialogue and the requirement at the national level for the social partners to interact with a large number of national

member organisations, each with their own national characteristics. This is compounded by the issue of sovereignty and

the transfer of power from national to European level. The behaviour of the social partners is firmly rooted within

historic and institutionalised practices all of which make European coordination from a national level particularly

challenging. Coordination also usually takes place in a within a framework of committees, whose decisions are often not

binding, so implementation is largely dependent on:

n the interest of national actors;

n resources available;

n the national legal and institutional framework;

n the capacity of the European social partners to strengthen their own legitimacy;

n the ability of the European social partners to influence national actors to implement these decisions.

In summary, at the EU level, national actors can opt for a strategy of competition or one of complementarity, depending

on the circumstances. In addition, while issues of a transnational nature are the subject of debate within European Works

Councils, these bodies themselves offer both an opportunity to develop a common platform for exchange and a challenge

to the coherence of European social dialogue.

The challenges to improve, among other things, the coordination between the various levels of social dialogue, the

challenges provided by Europe’s increasingly fragmented labour markets and climate change were not overcome during

the crisis. This is perhaps unsurprising due to the severity of the crisis and perhaps also due to a reluctance of the actors

to venture onto new ground in the wake of such a profound economic mess. It will however be interesting to follow the

evolution of social dialogue in Europe and to analyse and evaluate the success of the strategies that will be required to

face these difficult, but necessary, challenges.

Building capacity for social dialogue

Outside Europe, in the four countries under consideration: Brazil, China, Japan and the USA, national level social

dialogue is non-existent. However, there have been some recent developments pointing to increasing involvement of

social partners.

In the four years prior to the crisis Brazil (as we can see from our national report) benefited immensely from favourable

economic conditions and (admittedly unequal) prosperity. Growth in GDP was more than 6% in 2006. As the country

was indirectly affected by the downturn, in the form of credit reduction because of the tightening of the international

financial markets, the last 10 years have seen remarkable social progress. One outstanding achievement has been to

reduce inequality. This can be seen from the Brazilian Gini Coefficient (where 0 corresponds with perfect equality, with

everyone having the same income, and 1 corresponds with perfect inequality, with one person having all the income and

everyone else having nothing. Brazil’s Gini Coefficient has been historically close to 0.6, but is approaching 0.5 which,

although high, shows a constant and continuing reduction.

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The country is often described as suffering from institutional backwardness; although individual workers’ rights are well

documented and protected, collective rights and the regulatory model are underdeveloped. There is also no mediation or

arbitration mechanism to deal with conflicts at workplace level, with the result that many grievances end up as long legal

battles. While no major overhaul of labour relations is envisaged, three recent initiatives have shown how social dialogue

and collective bargaining can play an important, although limited, role.

The ‘National Commitment’ in the sugarcane/ethanol industry. The government concluded a National Tripartite Agreement with the social partners in 2009. Environmental concerns

about the Amazon rainforest and the exploitation of the workforce in near-slavery conditions presented a major challenge

for the industry and the government. However the management side does not think it suitable to extend the traditional

collective bargaining approach to the entire industry. The government therefore invited the sector’s trade unions and

employers to negotiate a ‘self-regulated’ system of environmental protection and working conditions. A set of voluntary

rules has been agreed, but firms signing up to the agreement must consent to allow external private auditors to examine

their compliance with the provisions which are updated bi-annually as part of a continuous process of improvement. The

main provisions of the agreement include employers promising to:

n stop outsourcing labour;

n stop forced labour practices;

n improve occupational health and safety;

n supply free and safe transportation to workers;

n provide transparency about productivity measurement;

The agreement also included training to improve skills of workers who operate heavy machinery. All the three parties to

the Agreement consider it a success and the main producers have adhered to it.

Social dialogue in the construction sector The National Tripartite Agreement, discussed above, was used as a model in the construction sector on the government’s

initiative following a series of serious and violent conflicts at the sites of hydro-electric dams. These were triggered by

abuses of labour regulations. The projects, located in the remote and hostile region of Amazon (Santo Antonio and

Girau), meant the workers staying far from home in exchange for increased pay and benefits. However the geographical

and social isolation, lack of collective representation at workplace level and unfulfilled promises on pay, sparked violent

strikes. The tripartite agreement for the construction sector was signed in 2010, providing for work committees and

health and safety committees to be set up at the workplace. The agreement is again voluntary and firms deciding to

participate will stop labour outsourcing and will consult and negotiate with workplace committees.

‘Special collective agreement’There is no labour legislation regulating collective representation in the workplace. However, the Metalworkers’ union,

ABC, a strong union once led by Luiz Inácio Lula da Silva, later Brazil’s president, has had some success in this area.

Lula, as he is known, organised several successful strikes in the 1970s and 1980s, and succeeded in setting up union

plant committees, unique in Brazil. ABC is well known for the quality of its leadership, and because of the good relations

it has established with the large firms in its sector. Trade union and management agreed to a draft bill (expected to go to

Congress in 2012) on voluntary collective representation, through a ‘special collective agreement’. The two parties have

agreed that the agreement will apply to companies which have a recognised trade union committee, and where union

representativeness is more than 50%. This gives a framework for workplace social dialogue to be applied nationally.

Role of social partners in addressing the global economic crisis

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Role of social partners in addressing the global economic crisis

All three initiatives share two characteristics:

n they recharge the relationship between unions and company management;

n adherence to the agreement is voluntary.

The voluntary nature of the agreements means that social partners acknowledge mutual legitimacy and signal that they

are both willing to improve their relationship through social dialogue and collective bargaining. The three models may

also show that, rather than a general and comprehensive labour reform, Brazil might improve its labour regulation with

step-by-step sectoral and voluntary reforms. Interestingly, the move may include segments where social dialogue is well

established (as is the case of the auto industry in the ABC region), and sectors where labour relations are less developed

(as in the cases of the ethanol/sugar cane and the construction industries). In both instances, it becomes clear that the

existing labour institutions needed reform to reflect the needs of the social partners in this new era.

China: is the road to shaping an industrial relations system too long?

Since China began to ‘open up’ in the late 1970s and particularly early 1990s, the country has introduced several laws

covering all economic entities and private enterprises. Although not strictly related to the crisis, the laws are aimed at

facilitating the country’s transition period. The provisions of the 2007 Employment Contract Law were meant to reduce

abuse of labour rights, particularly in SMEs. In 2010, to combat widespread dissatisfaction caused by the over-use of

short-term contracts and the practice of layingoff workers in the name of flexibility (Ma, 2011) the Ministry of Human

Resources and Social Security (MHRSS), the All-China Federation of Trade Unions (ACFTU) and the China Enterprise

Confederation-China Enterprise Directors’ Association (CEC-CEDA), which is the official industry association, agreed

to adopt a so – called ‘Social Action Plan’ to implement the 2007 law in small firms by 2012.

Several authors indicate that the existing system is characterised by segmentation by enterprise type (Ma, 2011). Ma and

other authors identify five type of enterprises:

n state-owned enterprises, where industrial relations are relatively formalised with ACFTU union branches;

n privately owned enterprises, with low management standards and violations of labour rights;

n subsidiaries of multinational companies with formalised management and HR practices but mostly without trade

unions;

n joint ventures, with formalised industrial relations and ACFTU branches;

n general foreign investment enterprises, catering for outsourced production of international markets, with formalised

HR, with a few semi-independent unions.

The segmentation of industrial relations is reflected on the segmentation of the workforce (workers in state-owned

enterprises, and those in privately owned enterprises, rural-urban, blue collar-white collar) as well. Recent studies such

as that by Chang Hee Lee and Mingwei Liu (ILO, 2011) show that trade unions have become more effective in protecting

workers’ rights and interests (see for instance the Wal-Mart case and some Fortune 500 enterprises where the trade

unions have been successful in organising workers). A crucial question for the building of institutions in China is to what

extent the trade unions can assume an independent role from the ruling communist party and operate as the voice of

workers.

As attempts to set up some sort of industrial relations system in China are still in their infancy, regulations tend to address

the issue at the micro level (corporate) while the macro level and its articulation with the lower levels are still

undeveloped. The system needs to take into account the variation of forms of ownership and workers’ characteristics.

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Regulation over the main actors of the system – trade unions and employers’ organisations – is developing slowly, with

ACFTU in search of an identity and with employers’ organisations proliferating. The role of ACFTU, an entity between

the Party and workers, and its relationship with the workplace trade unions still needs to be further developed. Also, the

state has to ascertain its role in the industrial relations system providing a regulatory framework for the actors within it.

Lessons learned

To conclude, our examination has shown that the use of social dialogue to address the crisis occurs mainly in Europe,

but also, to a certain extent, in some non-European countries, particularly once it became clear that the crisis would

endure. Indeed, Brazil began to build a new labour relations framework, which though not all-encompassing, is at least

based on agreement between two sides of industry. Some agreements, with substantial support by the state, became so

powerful that they were able to influence national legislation. The global financial crisis also gave Japan the opportunity

to review the existing framework regulating different groups of workers while a European-type of social dialogue in the

automotive sector gave rise to joint proposals on measures to address the adverse effects on the sector. With social

dialogue weak at all levels but the company one, this common ground remains to be tested. Among the lessons learned

in Japan from this recent crisis is that there is a consensus among the social partners and government about sharing the

burden between the companies, employees and society. Having overcome the negative effects of that crisis now Japan

is faced with other challenges such as demographic problems, the need for greening the economy, diversity at the

workplace level, work-life balance as well as the fact that the country is in the middle of the rapidly growing economies

of East and South-East Asia. The impact of joining the Trans-Pacific Partnership agreement (TPP) would be a major

political (and economic) issue for Japan.

Even though social dialogue in Europe has played an important role throughout the crisis, its nature and form varied

considerably through time and across EU Member States. Moreover, what is clear is that the responses from the social

partners in many cases were proactive and positively directed towards securing employment and avoiding redundancies,

while in others they were reactive in nature and sought to merely limit the extent and the consequences of redundancies.

Indeed, social dialogue has been an important instrument which, in some circumstances, has been encouraged by

governments to combat the negative economic and social consequences of the global economic crisis. In the report for

the European Trade Union Institute (ETUI) cited earlier, author Vera Glassner says:

Collective bargaining and interest representations have been used as tools to avoid the worst, which meansredundancies, extensive job losses and company closures.

Clearly the challenges confronting social dialogue are profound and it is not at all clear if this process can withstand

further problems as the financial crisis develops into a crisis over government debt. Its ability not just to withstand this

seismic shift but to play an active and positive role in seizing and tackling issues faced by vulnerable groups in order to

reduce the inequities between, for example, the so-called permanent workforce and those employed in precarious

employment, will be tested. The question of whether social dialogue is able to deal comprehensively with the particular

needs of SMEs and their workforce and subcontractors is also one that requires an answer. Furthermore, can social

dialogue make a coherent and comprehensive contribution towards the implementation of the EU2020 strategy?

The crisis was a missed opportunity for the development of new forms of social dialogue in order to better address the

key issues. Nevertheless it did also represent a test for the legitimacy of European industrial relations systems. It is clear

that the social partners will be presented with future opportunities to counter economic crises across Europe and perhaps

they will be able to consolidate and strengthen the current body of social dialogue and, at the same time, enhance the

legitimacy of their role as social partners. In fact they are facing this opportunity now – the sovereign debt crisis.

Europe’s position in the world is changing and its economic situation depends very much on other imbalances in the

Role of social partners in addressing the global economic crisis

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Role of social partners in addressing the global economic crisis

global economy. World production is moving towards the East. By 2025, China, Korea and India will weigh as much as

the European Union, according to the EC study ‘The World in 2025, Rising Asia and socio-ecological transition’

(817Kb PDF). If we add Japan, Thailand, Taiwan and Indonesia to these three, their total share of world GDP would be

more than 30%, greater than that of the EU. The EU is no longer the world’s largest exporter. A new global financial

governance system is being formulated. As President of the European Commission, Jose Manuel Barroso, said:

In today’s strongly interconnected world most challenges are global by nature and call for global responses. Strongeconomic global coordination is therefore key for world stability.

Many European countries are faced with financial, economic and social crises. Weak growth and unemployment seems

to be an acute problem for Europe as a whole. Better coordination of national and European policies, and actions of

social partners at national and European levels as well as at different levels within countries are necessary to ensure

cohesion of societies and sustainable economic growth. Social dialogue, a feature of the European social model, has no

exact parallel in non-EU countries. This research has also showed that particular outcomes of social dialogue have to be

seen in their specific social, economic and political context. This is true not just for European countries but also for non-

European ones.

As a new geopolitical situation arises and Europe aspires to play a leading role, it may be expected that Europe will draw

up a new model of political, economic and social governance. What role will the social partners and social dialogue play

in this new model? Will Europe continue to inspire other countries with its unique economic and social model, or has

European integration passed its ‘sell by’ date?

Bibliography

Automotive News, January 19, 2012, available online at http://www.autonews.com.

Bungsche, H. (in press) @IR in EU and other global economies: the role of social partners in tackling the crisis, the case

of Japan’, Eurofound, Dublin.

Eurofound (2012) ‘Social dialogue in times of global economic crisis’.

European Commission (2011) Industrial Relations in Europe 2010, European Commission Directorate-General for

Employment, Social Affairs and Inclusion, Brussels. Available online at:

http://ec.europa.eu/social/keyDocuments.jsp?type=0&policyArea=0&subCategory=0&country=0&year=0&adv

SearchKey=IRIE&mode=advancedSubmit&langId=en

Hamburger, L. (1939) ‘The extension of collective agreements to cover entire trades and industries’, International

Labour Review, August.

Lee, C.H.,and Liu, M., (ILO, 2011) Collective bargaining in transition: measuring the effects of collective voice in

China, in Susan Heyter (Ed), ILO, The role of collective bargaining in the global economy, 2011.

Ma, Z. (2011) ‘Industrial relations in China: A review based on a six party model’, International Labour Review,

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