Employment dimension (desk research):

European Commission

We can find the position of the European Commission on industrial restructuring in the {COM(2008) 419 final}. Here the term “restructuring” is defined as “a modification of a company’s workforce that affects both the latter’s qualitative (skills and qualifications required) and its quantitative features (number of jobs) following adaptations to the company’s structure, organization or production. Such adaptations, which are the results of many factors, such as changes in demand, the introduction of new processes or the arrival of new competitors, are necessary for the company to remain competitive. They also bring new opportunities, as evidenced by the creation of over 12 million new jobs across the EU from 2000 to 2007. The social management of restructuring is designed to reduce the negative effects of such adaptations”.

Starting with the Managing change report in 1998, the Commission has stressed the importance for the anticipation of change and for a shared responsibility of companies and workers in order to improve training opportunities and employability.

In the following 2002 and 2005 recommendations, the Commission encouraged the consultation of the employees and their representatives throughout the whole process of restructuring, in order to create a climate of trust and a positive attitude to change and, in so doing, preventing its negative consequences.

For a successful management of restructuring operations, it is important to promote the application of guidelines and best practices based on training, mobility, the sectoral dimension and anticipation. The European Employment Strategy is consistent with this view, combining a flexible workforce with a suitable compensation system and active employment policies.

Companies have a central role in this process and they should be encouraged to include management of change and restructuring, including the relations they develop within their immediate environment (such as regions and subcontractors), in reports many firms produce on a voluntary basis in connection with corporate social responsibility.

While the national governments are still very important in terms of simplifying regulations, supporting investments in production and research and ensure the development of a qualified workforce, the regional and local authorities have a central role in carrying out permanent monitoring of changes in economic activities of significance to their regions.

European Economic and Social Committee (EESC)

The EESC in essence agrees with the Commission's view of the phenomenon, but would welcome a more in-depth analysis.

The Committee acknowledges the possibility of negative consequences in the restructuring process but it underlines that it might also give rise to new challenges and opportunities: it all depends on how it is managed. It is therefore necessary that the various players work together and develop a common spirit enabling them to identify the opportunities.

The Committee agrees that the Employment Strategy cannot be separated from the macroeconomic and financial context and that financial instruments should be directed towards the anticipation of restructuring.

In the Committee’s view; the sectoral approach should be stepped up for making it possible to identify tailor-made approaches for individual sectors.

Care should be taken for promoting an innovation-friendly environment, with measures such as technology initiatives or technology platforms. Indeed technological innovation is the key to breaking out of apparent gridlocks, particularly in the fields of energy, waste emissions and product recycling. Here tax incentives and protection of intellectual property are crucial.

Special attention should be paid to social dialog: by virtue of their sectoral knowledge, the social partners are able to play a special role in alerting the authorities. This instrument should, however, not only come into play in crisis situations: the Committee welcomes the idea of giving the social partners the opportunity to continue their work on the subject of restructuring. European Work Councils (EWC) have a significant role to play in this context.

The Committee also encourages the modernization of regulations and the development of the labour law, in order to ensure a balance between flexibility and security.

Restructuring must not be synonymous with social decline and a loss of economic substance. As adverse consequences for workers cannot be entirely avoided, measures taken at Community level must also aim to give workers the necessary protection in periods of transition.

European Restructuring Monitor (ERM) / European Monitoring Centre on Change (EMCC)

Restructuring implies a reorganization of work that may impact on the workforce through job losses in the form of collective dismissals. Nonetheless restructuring might lead also to job creation, as jobs are lost in one company or location in order to be moved to another company or location through the process of outsourcing or offshoring. But while job destruction is heavily concentrated in the trough of the recession job creation is more evenly distributed throughout the business cycle. Events that cluster at certain points in time are more noticeable than dispersed occurrences. Moreover, the decision to cut jobs will affect identifiable, possibly organized workers, while job creation will not: indeed job creation may occur at a later stage and may thus not be easily observable.

The net labour market effects of structural change between 2000 and 2005 can best be summarized by examining changes in the level, and shift in composition, of employment.

The primary sectors, agriculture, forestry, fishing, mining and quarrying, continue to demonstrate a long-term relative decline, especially in Eastern Europe due to the rationalization of the agricultural sector encouraged by the Common Agricultural Policy.

Manufacturing also continues its long-term decline while employment in both the hotels and restaurants sector and business services sector exhibit high job growth and contribute significantly to the aggregate increase in employment. In particular, the three sectors – education, health and social work, and social and personal services, have proved to be the major contributors to employment growth.

Data shows that the rate of change in broad shifts between the primary sectors, industry and services have declined, while there is some indication of an increased change within the various sub-sectors of the ever-growing services sector. This implies that structural changes in employment patterns, to an increasing extent, are taking place within the services sector.

The individual consequences of job loss are hard to investigate about. Some studies show significant lower average earnings with long-term effects due to an increased sensitivity of initially displaced workers to subsequent macroeconomic shocks. Kuhn (2002) finds that women are more likely than man to experience a period of joblessness after displacement, although they are less likely to experience displacement in the first place.

The European Employment Strategy calls for action based on three priorities:

In December 2005 the European Council agreed on the establishment of the European Globalization Adjustment Fund (EGF) as a response to the negative effects of restructuring on employees. While in the past the Structural Funds that most specifically addressed restructuring were the industrial areas included in the Objective 2 criteria, the main criterion for support of the EGF is evidence of a significant amount of job loss attributed to competition from outside the EU. The EGF criteria largely do not require evidence of low income or employment, and may be awarded to regions in most Member States.

European Trade Unions Confederation (ETUC)

The European Trade Union Confederation (ETUC) welcomes the European Commission’s initiative to restore the issue of restructuring to the EU agenda and to reopen the debate on how to handle restructuring.

We should underline that restructuring always directly affects labour issues and the interests of employees and their families as well as local communities: whether or not restructuring results in dismissals, unemployment, distress, regional crises or leads to improved living and working conditions, better jobs and enhanced individual career prospects for employees is not predetermined. It very much depends on the way restructuring operations are carried out and the specific frameworks within which it is implemented at the level of companies, regions, national and sectoral environments and beyond.

From the point of view of the ETUC a coherent EU wide strategy is vital, given that badly managed restructuring undermines many of the Lisbon objectives including full employment, better jobs and social and territorial cohesion. The ETUC and trade unions in Europe are not opposed to change, but we are concerned about the way in which it is managed. While restructuring is a major stimulus for development and progress, it is important that it is planned, well managed and followed up in such a way as to allay the fears and insecurity felt by many workers in Europe. We cannot accept that workers should pay the price of restructuring, or that globalisation and technological progress should become alibis for forcing employees into jobs where working conditions are worse and pay inadequate. The ETUC therefore insists that the prime objective of well managed restructuring must be to ensure that no one is left unemployed or excluded at the end of the restructuring process. It is the responsibility of companies and the relevant public authorities to find a solution that meets the needs of every individual employee.

Business Europe

Restructuring is a dynamic process of adjustment in a broad context of socio-economic changes at the European and global level. It allows companies to make strategic decisions in order to move out of unprofitable activities and to develop more productive ones. While we recognize that restructuring can have negative consequences, we believe that it is a precondition for economic success. Moreover restructuring does not have negative consequences on employment: indeed it enabled the creation of ten million jobs, while relocation represented no more than 10% of job losses in Europe.

Employment protection threatens Europe’s competitiveness and companies’ capacity to create jobs and growth. Rather than imposing restrictions on the companies’ possibility to terminate individual work contracts, flexicurity rightly focuses on supporting companies and workers capacity to adapt to change. It follows that an evolution towards individualized re-integration processes for workers who are made redundant is necessary.  On the other hand implementing Lifelong Learning strategies is an essential element for dealing with flexibility: increasing individuals’ employability, adaptability and overall skills is crucial to enhance the labour market well functioning and, at the same time, Europe’s competitiveness.

Social dialogue should be used to facilitate change and to promote economic success: consultation procedures among the social partners are especially important in order to consider the social consequences of restructuring and agree to a social plan.

Employment dimension (best practices):