Time for transnational collective agreements?

This is the result of a collective agreement which applies globally to all employees in the Suez group's companies. Such transnational agreements are becoming increasingly commonplace. But could a worker in Denmark be sure she gets what she is entitled to according to a collective agreement which has been entered into in France?

European trade unions have long argued for the development of transnational collective agreements. When the freedom of movement allows employers to move their business to wherever labour is cheapest, national deals are no longer sufficient. A pan-European collective agreement would prevent employers form playing workers against each other, forcing them to compete and lower their salary demands, the unions argue. They're mainly talking about traditional collective agreements which regulate salaries and terms of employment in different professions.

These ideas have never become reality. One reason is that not all trade unions are comfortable with the idea of relinquishing power over wage negotiations to a European negotiating team. Nordic unions in particular oppose this kind of centralisation, perhaps because of their strong position at home and because their potential influence on a transnational level would be limited.

Yet even if they changed their minds there is another obstacle: There is very little chance employers would give their organisations on a European level a mandate to negotiate on salaries and terms of employment. They've spent decades to decentralise and individualise wage formation. And when unions cannot use industrial action - like they do at home - they have no power to force employers to come to the negotiating table.

A different type of transnational collective agreement is already a reality, however, and has grown considerably in scale since the year 2000. These are agreements within multi-national businesses which apply to all employees in Europe, or even globally. But these are not wage agreements.

·       The most important part of these agreements centre on how the parties handle business restructuring, with the aim of minimising redundancies. It could be a general agreement or one which covers a particular restructuring process.

·       Another important type of agreement covers how to create a common system in order to anticipate and adapt to changes, i.e. by mapping employees' training needs and by offering everybody regular further education.

·       The third major category of agreements covers the employers’ commitment to make sure all employees in all countries where a company operates enjoy basic rights as defined in various conventions on human rights and in ILO's core conventions.

Agreements which cover ongoing restructuring will sometimes include rules on for instance the size of redundancy packages, or what economic terms should apply when it is necessary to move staff to different jobs. 

Yet it is relatively rare that cross-border agreements regulate in detail the rights (or responsibilities) of each individual employee. In this respect the agreement on part ownership for all employees in the French Suez corporation is unusual. Most of these rare examples are to be found in French companies. Companies based in the Nordic countries for some reason seem to mostly enter into agreements on the respect for employees' fundamental rights. Some examples are Danske Bank, Norwegian Aker and Swedish Elanders.

No matter the focus of an agreement, it typically contains rules on how the parties must make sure whatever has been agreed is actually implemented in all the countries where a company operates. It is common to establish a joint monitoring committee which will follow up how the agreement is applied in practice. The committee is also where the parties can try to solve disagreements.

Yet the major question remains - what to do when such arrangements are not enough? A normal collective agreement is legally binding for every person it covers, but what legal effects does a transnational agreement really have? Could the business group leadership in France force a daughter business in another country to respect the agreement? Could a Czech trade union, unhappy with how the agreement is implemented, go to court to prove its point? And is it worthwhile for a Suez employee in Finland to summon the employer if she has been given fewer shares than what the French collective agreement stipulates?

There are no common EU rules on this. Each country has its own rules on how negotiations are held, which consequences a collective agreement should have and who is bound by it. And these rules differ a great deal. A Nordic collective agreement might not even be considered as a collective agreement in a different country. But since companies and European trade unions do now enter agreements which are meant to be valid in several countries, the EU Commission wants common rules on how the parties can give the agreements legal status - if they so wish. In other words; there are no plans for making all transnational agreements legally binding.

A team of researchers presented proposals for a voluntary solution back in 2006, but it was met with little enthusiasm from the parties to the labour market. The European employers' organisation BusinessEurope is vehemently opposed to any rules, even voluntary ones. The trade unions felt the suggestions weren't good enough.

But the Commission does not give up. It has continued its work with experts from all member countries and plans to present a new proposal in 2011. Researchers across Europe are working with the same questions, partly at Stockholm University's research programme Regulating Markets and Labour (ReMarkLab). Leading researchers will meet at an international conference in early April to present their contributions to the debate.

It is not hard to see the advantages transnational agreements can have for workers. In countries with weak trade unions they could help improve conditions immediately. Stronger unions, like the Nordic ones, might feel they handle negotiations on members' behalf better on their own, at least in the short term. On the other hand major differences in terms of employment could weaken national collective agreements in the long run.

There are evidently advantages to common rules even for employers, as the recent increase in cross-border agreements within multi-national companies shows. You could argue some of these agreements are hardly obligational at all and serve mainly as window-dressing - especially agreements on fundamental rights. But this does not apply to all agreements. Some show clear ambition to enter binding agreements, and in some of them it is even explicitly stated that the agreements are binding. In such cases it makes sense to have rules which help the parties to realise the real consequences of their agreement.

The only question is how these rules should look. This is all easier said than done.