Commission staff working document


CHAPTER 5: MEMBER STATE ACTIONS TO SUPPORT RESTRUCTURING



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CHAPTER 5: MEMBER STATE ACTIONS TO SUPPORT RESTRUCTURING

The response of individual Member States to anticipating and managing restructuring, particularly over the past two years, has been mapped by a number of recent EU-wide research projects. These projects add a great deal of value to the debate in terms of enabling key actors and policy makers to understand the main challenges involved, and how they have been overcome.


There are a range of schemes, instruments and mechanisms of support available to workers who have been affected by restructuring and which have been set up in parallel to and complementing the typical support mechanisms of public employment services (PES). Overall, the emphasis, or certainly the desired emphasis, of measures is moving away from the more traditional passive measures, towards active measures that involve an element of training and active support in the search for alternative employment. These can include schemes such as outplacement and measures designed to support occupational and geographical mobility. Studies of the measures available conclude that there is a common objective which is shared by national key actors: in times of globalisation and accelerated change in every part of the EU’s economy and society, an efficient system to organise professional and job transfer seems to be crucial.
The role of flexicurity in easing the transition of workers into alternative employment is a growing issue. Overall, the flexicurity concept moves away from a job security mentality to an employment or employability security mentality. It is a policy approach geared less towards the protection of jobs, and more towards the protection of people, and therefore can provide a useful framework for actions designed to support workers facing the need to make the transition into alternative employment.
Flexicurity has a specific role to play in the current crisis, and recent studies have highlighted the ways in which many of the EU Member States have been trying to implement flexicurity principles in order to try to weather the crisis. This has been undertaken in varying ways and to varying degrees, depending on a range of factors, including national social security and industrial relations systems, culture, traditions of social dialogue and economic governance systems. Short-time working schemes provide numerical flexibility for the employer, together with job and income security for the employee and so can as such be considered as a flexicurity measure. However, the uptake is limited and workers are not always motivated to take part. Further, firms may have limited experience of providing training to workers and the capacity for training, particularly in SMEs, is very problematic, as is the fragmented nature of training systems in some countries. Nevertheless, the consensual nature of short-time working schemes provides a promising basis for further tripartite cooperation.

1: RESTRUCTURING IN THE MEMBER STATES


To support knowledge-sharing on restructuring, in 2009, the European Commission launched an initiative for disseminating the lessons learnt on existing and innovative measures being carried out in all EU Member States for anticipating and managing restructuring at the national, regional and local levels and across specific economic sectors. This was carried out through the project Anticipating Restructuring in Enterprises: National Seminars (ARENAS), which was managed by the International Training Centre of the International Labour Office (ITC-ILO) and funded by the Directorate-General for Employment, Social Affairs and Inclusion.
The overall objective of this project was to further advance the debate and the dissemination of good practices and innovative measures and tools for anticipating and managing restructuring. This was to be achieved by holding national seminars in each of the 27 EU Member States, organised by national experts, who were also responsible for drafting a national background paper for their country in order to support debate during the seminar.
The exchanges during the national seminars aimed at focusing on the effectiveness and usefulness of specific measures and tools, taking into consideration the current economic downturn. Each national seminar aimed to add to the existing body of knowledge on how to anticipate and manage restructuring and how to mitigate its negative social and employment impacts.135 The seminars also showcased case studies of good practice in anticipating and managing restructuring. They were tripartite in nature, attended by representatives of central, regional and local government authorities, trade unions, employers’ organisations, companies, chambers of commerce, universities, research networks, and other relevant bodies. The seminars were held in each EU Member State between April 2009 and June 2010.
The main purpose of the seminars was to allow participants to share their views on the effectiveness of the different measures available in their countries to anticipate and manage restructuring. Seminar participants were given the opportunity to discuss the case studies and assimilate the lessons learnt, with a view to applying this to their own organisations and disseminating the ideas more widely.
A final synthesis report of the entire project draws out the project’s main themes. This report also provides an overview of the main measures that are available to anticipate and manage restructuring in all of the 27 Member States. The aim of the report was to contribute to better understanding the various tools available to anticipate and manage restructuring, in addition to identifying which lessons could be disseminated to other countries in Europe. The intention was also that this exercise might contribute to debates on how the European Union could facilitate the development of sustainable measures to anticipate and manage restructuring across Europe.
Measures to anticipate and manage restructuring in the 27 EU Member States share many similar features, which may be capable of being transferred between Member States. For example, in all Member States there are some measures available to anticipate economic and labour market developments, all countries have legal frameworks that regulate how restructuring should be managed and all have public authorities that initiate labour market policies to reduce unemployment in the best possible way given each country’s circumstances. These policies operate in the context of a variety of traditions, cultures, economic structures, industrial relations systems and the differing roles of actors such as the state, the social partners and the nature of the legal framework that supports restructuring.
This project did not set out to evaluate the legal frameworks and labour market policies of the 27 EU Member States, but rather to describe and discuss the measures related to anticipating and managing restructuring. Box 5.1 below sets out some examples of early warning and anticipation systems from EU Member States.
Box 5.1: Examples of measures to anticipate economic and labour market developments

Government Foresight Network in Finland

The Government Foresight Network is an inter-ministerial forum for cooperation and exchange of information in issues relating to the anticipation of the future. Anticipation of the future refers to a systematic and inclusive process involving the collection, assessment and analysis of information. It also includes outlining projections and visions for the future in the medium and long term.

All ministries are involved in anticipation activities relevant to their appropriate administrative sector. Anticipation activities undertaken by the ministries serve the strategic planning and direction of the administrative sector as well as the Government’s decision-making. The Government Foresight Network is a forum for discussing the results of the anticipation work carried out in the administrative sectors. Appointed by the Prime Minister’s Office, the Network’s term lasts until the end of the Government’s term of office. The Network includes members from all ministries, and its presidency rotates among the ministries.

Regional economic forums in the UK

The South West Regional Economic Task Group, chaired by the government minister for the region, has a remit to:



  • assess the regional impact of current economic uncertainties;

  • provide a conduit for the Regional Minister to discuss economic challenges with private and public sector bodies, and for the views of South West regional stakeholders to be represented at national level; and

  • provide a structure through which problems affecting particular sectors or sub-regions/localities can be addressed, ideas can be harnessed, and public sector intervention can be coordinated to optimum effect.

It has considered detailed reports of the economic situation in the region. In May 2009, for example, a report to the Task Group identified four sectors which were both vulnerable and of particular importance to the region: engineering, construction, retail and business services. The report suggested particular localities that might then be particularly impacted by the recession, in order to plan appropriate responses.

In terms of managing restructuring, there is a wide range of measures in existence in EU Member States, ranging from those that aim to prevent redundancies, those that aim to mitigate the effects of redundancy and those that support redundant workers. Box 5.2 below gives an overview of these measures, their advantages and disadvantages.




Box 5.2: Overview of the main measures designed to manage restructuring

Measure

Advantages

Disadvantages

Wage and labour cost reduction

  • Difficult to come to agreement with workers’ representatives

  • Wage subsidies provide distorted incentive structure for employers

Short-time work

  • Quick adjustment

  • Termination of contracts avoided

  • Recruitment and training not necessary when demand resumes

  • Reduced income for workers

  • Long-term effects not clear

  • Redundancies cannot be avoided

  • Risk of postponing redundancies

Partial unemployment

  • Quick adjustment

  • Termination of contracts avoided

  • Recruitment and training not necessary when demand resumes

  • Reduced income for workers

  • Long-term effects not clear

  • Redundancies cannot be avoided

  • Risk of postponing redundancies

  • Risk of misuse

Temporary lay-offs

  • Quick adjustment

  • Termination of contracts avoided

  • Recruitment and training not necessary when demand resumes

  • Reduced income for workers

  • Long-term effects not clear

  • Redundancies cannot be avoided

  • Risk of postponing redundancies

Early retirement

  • Quick adaptation

  • Can be regarded as compensation for long tenure

  • Risk of losing skilled employees

  • Passive measure

  • High costs

  • Negative effect on pension system

Dismissal and severance pay

  • Can be preferred by workers

Dismissal and transition to new job

  • Activates workers

  • Unemployment can be avoided

  • Limited coverage and availability in member states

  • Temporary workers excluded

  • Costly for employers

Training for transition and re-integration

  • Increase employability

  • Prepare for future jobs

  • Funding often available

  • Not always well perceived by employers and employees

  • Lack of adaptation (time, access, methods, contents)

  • Costly for employers

  • Redundant workers are not always motivated to take part in training


This project culminated in the production of a final synthesis report, which highlighted the main themes to emerge from the project, and the lessons learned. It covers the following areas:


  • an overview of the context and regulation of restructuring and on the actors involved in restructuring. It sets out the EU regulatory context governing restructuring, largely in the area of the information and consultation of workers regarding any changes that are likely to affect the workforce. It also gives an overview of the main actors involved in restructuring, which include the employer, company-level workforce representatives, national governments, regional authorities, joint tripartite bodies, public employment services, social partners, training providers, external consultants and individual employees;

  • the main measures and tools that are in place to anticipate restructuring in the EU, drawing out the communalities and highlighting innovative practices. These measures focus on economic and labour market forecasting tools, and tools that anticipate and support transition;

  • the main measures and tools that are in place to manage restructuring in the EU, identifying the main common elements and showcasing differences and innovative elements. Management measures focus on: ways to avoid redundancies, such as wage reduction, short-time working and temporary lay-offs; ways to manage redundancies, such as early retirement, severance pay, and transition to alternative employment; and training measures for transition and re-integration;

  • the dynamics, trends, issues and dilemmas related to the measures outlined in the previous chapters of the report. This covers issues such as the role of the social dialogue process, issues surrounding state intervention and the changing role of the public employment services, issues surrounding training and education, the impact of restructuring on health, and the effects of the crisis; and

  • conclusions, including thoughts on future policy emphasis. This final section of the report contains a number of key findings, such as the need for the collection of data in order to allow measures to be evaluated, the fact that, although there is a diversity of measures in place around the EU to anticipate and manage restructuring, they share some common elements that may be capable of transfer across national borders, and the need for measures to stimulate demand for transition services in some countries.


The report also contains an annex which gives a brief description of the main existing measures for anticipating change and for managing restructuring processes in all EU Member States.
Box 5.3: Highlights of the European Synthesis Report

The range of information gathered by this project confirms and underlines the work that has been developed in previous years by the European Commission and the social partners. Although there are differences in the systems and tools of anticipation and management of restructuring that are in place in the Member States, it is nevertheless possible to identify similar features amongst the existing systems and tools that could form the basis of convergence of practice in this area.



Anticipation of restructuring:

  • almost all countries have been developing anticipatory measures. Examples: (1) forecasting and early warning systems; (2) measures aimed at enhancing skills and competences levels in order to (i) strengthen employability and thus mobility, (ii) as well as avoiding skills shortages or skills mismatches. Those measures are particularly important to workers as they allow them to be in the strongest position to react to any future restructuring event and not to be absent from the labour market as a consequence of a restructuring event; and

  • the importance of social dialogue in the context of an anticipatory approach. Regular exchanges of information in the context of collective bargaining and a permanent and effective information sharing and consultation at company level are a key element and work as the main anticipatory measures.

Management of restructuring:

  • all countries have been developing measures for managing restructuring, and while there are some national differences, the majority of countries give priority to measures aimed at avoiding redundancies, such as short-time work, partial unemployment or temporary lay-offs; and

  • there is state involvement in restructuring in all Member States, although the extent of state involvement varies.

The European Synthesis Report is available via the following link: http://arenas.itcilo.org/

European Conference
The synthesis report was presented at a European-level conference co-organised by the Belgian Presidency of the EU Council and the European Commission and held in Brussels on 18-19 October 2010.
The event gathered all the actors that had played a part in this project, in order to review best practices in anticipating change and managing restructuring in a socially responsible way and to consider the future, and most specifically the role of the European Union in adding value in this domain. This final gathering of all the participants was considered to be essential to develop a common view of the evolution of national systems in anticipating and managing restructuring, as well as to allow conclusions to be drawn up at European level.
The conference consisted of a series of workshops at which the project’s national country expert for each of the 27 EU Member States gave a presentation of the main issues that were relevant for their country, in order to stimulate debate. An overview was also given of the debates that were held in each of the national seminars, which drew out useful issues and themes that were relevant for each of the countries. The national seminars brought together representatives of government, trade unions and employers for each country, and served to stimulate debate on the issue of restructuring in each country.
The next part of this chapter looks more closely at the tools that are available to support the transition of redundant workers to new employment.



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