Deutscher Gewerkschaftsbund


Codetermination: indispensable for a Just Transition in the EU

von Dr Norbert Kluge, member of the EESC, founding member of the IMU

Will the Europe of the future be no more than an ‘à la carte Europe’? A Europe of the future in which money and the Green movement may be able to pursue their deal for the benefit of the environment, but in which there has clearly not been a Just Transition, if workers, lacking decent jobs, are barely able to make ends meet? Who would such a future Europe be for? Codetermination is a key element in shaping a better future, and not only in the world of work. It expands our understanding of what is possible and the feeling that we can really make a difference.

Fahnen der EU und EU-Länder vor einer Glasfassade (Europäisches Parlament)

No wonder the European Economic and Social Committee (EESC) has taken up the European Commission’s proposal to organise a conference on the Future of Europe so eagerly. ‘A new narrative for Europe’ must emerge from Europe’s organised civil society, ‘grounded in the realities of everyday life’ and it has to be something ‘more than a list of achievements’.

The EESC’s recent statement on European standards on the quality of work was a milestone for government policy on a decent future for Europe. Without decent work, there will be neither social progress and high quality working lives, nor economic prosperity in a healthy environment. Achieving a Just Transition will be the crux of a new European self-confidence. Europe can but try. European Commission programmes such as the ‘Green Deal’ and the Next Generation EU recovery package will provide the basis for this.

But the digital and climate-friendly transformation has to succeed beyond the economy and the environment. Europe’s citizens have to have a real say in it. This demands much more than the endlessly repeated mantra ‘no one left behind’. A robust legal framework is needed, incorporating codetermination rights at cross-border level. Companies have long taken advantage of the untrammelled single European market across national borders, but this has consequences at local level. And national governments are still responsible for them, even in a united Europe. Codetermination must therefore be on the agenda at the Conference on the Future of Europe.

This is because the future will also be about the preservation and further development of our social foundations. Among other things, older people must not be excluded from employment just because their jobs have fallen victim to industrial structural change. Younger people and women must have equal opportunities to participate in working life and constantly improve their qualifications. Where working life actually takes place, in the regions, changes have to be anticipated in such a way that existing skills are built on and new ones can emerge locally.

Creative and binding social dialogue

Social dialogue takes place between trade unions and companies and represents a tour de force of the social partners, also at European level. It also benefits climate and environment. The various interlocking elements that enable social dialogue comprise the ability to strike good collective agreements and wage agreements. The basis for effective codetermination by means of works councils and supervisory boards is a well-organised and united membership, backed by tripartite economic and social councils and chambers. You don’t have to be a fan of trade unions or codetermination to recognise our societies’ policy achievements, which need to be updated to adapt to new conditions.

Shaping structural change through codetermination

The world of work is already immersed in major upheavals as a result of digitalisation and the globalisation of production and value creation chains. These need to be shaped to ensure that they are sustainable, socially-oriented and benefit workers individually. On one hand, this is the task of the legislator. On the other, it is the particular mission of codetermination. The transformation now under way will have a profound influence on labour relations and working life. More and stronger codetermination is required if this process is to be a positive one. Above all, we can’t allow a situation in which employees get their chance to have a say only when everything has already been decided. If changes affecting labour aren’t anticipated in the course of transformation the outcome will be bad all around. Without works councils or trade union involvement competitiveness will suffer, and democracy, social cohesion and our ecological future will be damaged.

Not only company management, but capital owners and investors have to share the responsibility. Profits from digitalisation also have to be made available for social and sustainable development. This also includes sharing in the material benefits of structural transformation.

Codetermination – part of Europe’s political and structural organisation…

European works councils are now part of the governance structure of many companies. They enhance understanding and coordinate solidarity across borders and workplaces. But that is not matched by any legal competence – there is no mandatory information and consultation.

European company law also needs to be brought up to date, for example, in the form of a stakeholder directive that statutorily requires employee involvement in management and sustainable corporate governance. In periods of transformation, with more and more transnational companies and globalised value chains we also need strong European codetermination!

Codetermination and decision-making rights should be bundled in a European legal framework in anticipation of change, setting standards for information, consultation and codetermination in the supervisory and administrative boards of cross-border companies. Codetermination will also be essential in maintaining workforces’ cultural cohesion in the face of change. Increasingly, we are looking at it differently: from institutionalised codetermination to active participation. We need to move from ‘we are doing you a favour’ to ‘you have every right to have your say’. In Thyssenkrupp steelworks, for example, employees from 43 nations work in solidarity, alongside and with one another. That is the result of integrated company management based on codetermination, influenced by labour directors on company boards. In such circumstances no one asks about people’s backgrounds, papers or skin colour when it comes to democratic elections in the workplace. Anyone with an employment contract can take part in these elections, whether they are for the (European) works council, the supervisory board, representatives of young people or the disabled. That is real integration and workplace democracy. That is what codetermination can do!

…and a key instrument of participation

Democracy is not for governments alone. It requires active citizens, across the globe. They don’t confine themselves to seeking parliamentary representation of their interests. They organise themselves as employees, for example, in trade unions, and use statutory bodies for interest representation in order to have an impact at the wellspring of their employment, their workplaces. In that way they show that employees can strengthen and breath life into democracy as citizens in the workplace.

The Just Transition will not succeed merely on paper and as a project of central government. What is really needed is a low-resource and inventive way of achieving higher quality and more socially useful output, not something that merely ‘conquers’ markets in the shortest possible time and fills the shareholders’ pockets. Needless to say, appropriate and supporting social policy and macroeconomic measures are also required, a task above all for European parliaments and governments. We welcome any legislative proposals aimed at improving economic and social actors’ ability to find solutions for themselves. We realise that with codetermination we’re exercising a European fundamental right to information and consultation, as enshrined in Article 27 of the European Charter of Fundamental Rights. Codetermination makes workers citizens in the workplace.

Info box

Once again, a decisive role for companies with codetermination in the German economy

For the foreseeable future sustainable companies for the Green Deal in Germany will have codetermination. In 2017 more than one-third of all employees were working for such a company (10.8 out of 30.2 million). Some 40 per cent of sales volume and 45 per cent of value creation in the German economy were generated by companies with codetermination. Codetermination helps companies to cope better with crises. Such firms were more robust during the financial and economic crisis and recovered from its effects more rapidly. Companies with codetermination maintained their investments in research and development and their fixed assets at a higher level than companies without it. The market valuation of firms with codetermination was also positive.

Further insights are provided by macroeconomic research: in comparison with companies in Europe without codetermination, companies with codetermination were also more active with regard to investments and productivity initiatives. Workers’ representation at the highest level of management has positive and significant effects, improving well-being for the various stakeholders.

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