Facts & Figures

After over a decade of operations, the total number of transnational bodies for information and consultation (EWCs created) has reached 1,107, 908 of which are still active. We have observed steady, though moderate, growth in the number of EWCs each year. The rate of the creation of such bodies was highest in 1996 (introduction of Directive 94/45/EC and deadline for voluntary EWC agreements) and in 1999–2000 (extension of Directive 94/45/EC to UK and Ireland). Since 2002, the annual number of newly created EWCs has been, on average, 30–35.

On the other hand, EWCs have also been terminated as a result of various processes: mergers between multinational companies (MNCs), acquisitions/takeovers or the bankruptcy of MNCs. On average, between 2002 and 2008, some 13–14 EWCs ceased to exist each year.

The ETUI’s EWC database records that, out of 908 EWCs, 265 (29.1% of those currently active) exist in companies which do not operate in the NMS. The remaining 643 EWCs (70.9%) are established in companies with business activities in at least one NMS.

Among the latter, over four years after the 2004 enlargement and two years after the accession of Bulgaria and Romania, 392 EWCs (i.e. 65.4%) have not yet included a representative from the NMS, even though the mother company has operations there and despite the fact that it is a legal requirement that an EWC represents the entire workforce of Community-wide undertakings.

It is a striking fact that, more than four years after the biggest enlargement in the history of the EU, representatives of the NMS were present in existing EWCs in only 210 (i.e. 32.6%) cases. It is also evident that there is much room for improvement in terms of involving in EWCs employee representatives from Bulgaria and Romania, as their current participation is rather limited.

It is evident that the rate of establishment of EWCs varies by sector. The sector of activity of multinational companies was identified as early as 2004 by Marginson and Gilman* as one of the sources of constraint on the choices made by management and employee negotiators in concluding an EWC agreement (Marginson and Gilman 2001: 95). The ETUI database of EWCs corroborates this. Historically, the highest number of EWCs has been in multinational companies in the metal sector, followed by the chemical, building & woodwork and hotels & agriculture sectors. Similarly, various branches of the service sector, when added together, have a large share of companies with EWCs. In general, traditional branches of industry, such as the metal sector – characterised by large factories, gathering large numbers of employees in one place – make it easier to organise employees and launch the establishment of EWCs. Other sectors, with smaller companies and much more dispersed workforces (e.g. transport and textiles) often find it more difficult to coordinate the establishment of EWCs. In these sectors, there are also fewer large companies which meet the requirements of Directive 94/45/EC, thereby resulting in a smaller number of EWCs.

* Gilman, M. and Marginson, P. (2004): ‘Negotiating European Works Councils. Contours of constrained choice’, in: Fitzgerald, I. and Stirling, J. European works councils: pessimism of the intellect, optimism of the will?, Routledge, 2004, ISBN 0415309867, 9780415309868

It seems that national traditions and corporate culture (country of origin/headquarters of an MNC) do have an impact on the establishment of EWCs. The national distribution of EWCs by country of headquarters of the parent company shows significant variations between the EU member states.

As can be seen in Figure 4, the highest number of currently active EWCs (149) is found in US-based multinational enterprises operating in Europe, followed by EWCs in German (145), British (112), French (99) and Swedish (73) companies. Interestingly, at the other end of the scale, there are only two Hungarian and one Czech companies with EWCs, representing the Central and Eastern European EU member states, together with two Cypriot companies. These five multinational enterprises with EWCs represent the entire share of EWCs established amongst the 12 new member states (NMS) that have joined the EU since 2004, a mere 0.55% of currently active Councils.

Company size measured by number of employees seems consistently to play an important role in terms of defining initial conditions for the establishment of an EWC (see P. Kerckhofs, ‘European Works Councils. Facts and Figures 2006’).

Data collected in the ETUI database of EWCs consistently proves (see also P. Kerckhofs, ‘European Works Councils. Facts and Figures 2002’) the correlation between the number of EWCs and overall employment in multinational companies. The highest rate of existing EWCs was identified in the largest multinational enterprises, with over 10,000 employees, 40% of the total. For companies with between 5,000 and 10,000 employees and below 5,000 employees this indicator was markedly lower (38% and 17%, respectively). The numbers of EWCs in the two categories covering the largest multinationals are quite similar, while a sharp drop can be observed in the group of companies employing fewer than 5,000 workers. This distribution of EWCs might suggest that EWCs are best suited to or best serve the needs of the largest transnational companies; at the same time, they seem less attractive or easy to establish in smaller enterprises.

The ETUI’s EWC database classifies these bodies according to type of installation agreement. On this basis, we can estimate the distribution of specific types of EWC. Currently, the majority of active EWCs are bodies established according to art. 6 of Directive 94/45/EC. Arrangements for these bodies are required to meet the minimum requirements laid down in the Directive. Interestingly, still almost half (48%) of all active EWCs were established voluntarily before 22/09/1996 (entry into force of Directive 94/45/EC or, for the UK and Ireland, before the entry into force of Directive 97/44/EC). The voluntarily established EWCs are not subject to minimum standards (subsidiarity requirements) of the EWC directives and will retain this status also after the entry into force of the new, recast Directive 2009/38/EC.

On the other hand, the works councils established in SEs currently represent a small, but steadily growing group (more information on employee representation in SEs can be found in the section ‘European Company’). Finally, there is a marginal group of two EWCs established on the basis of an information and consultation procedure rather than as permanent bodies meeting on a regular basis.

In September 1994 when the EWC Directive was adopted, 46 companies had already established 49 EWCs. Of these 49 EWCs there are 37 that still exist in 2005. The other established EWCs no longer exist because of company mergers or takeovers. By 2007, 972 EWCs had been created of which 833 still exist

(click on picture to enlarge)

The Directive aimed to encourage the conclusion of voluntary social partner agreements as a method of creating EWCs. Article 13 of the Directive exempted all companies that had set up an EWC based on an agreement before 22 September 1996, the date on which the national transpositions of the Directive came into force. This possibility proved to be a strong incentive for setting up EWCs.

In the year 1995 alone, the number of existing EWCs doubled from 37 to 80. The 323 EWCs set up in 1996 illustrate the incentive effect of Article 13 of the EWC Directive on the number of companies with EWCs. In the following ten years the number of companies having established EWCs doubled again, but much more gradually compared to 1996. Consequently, the progress made in establishing new EWCs was for many years underestimated.

(click on picture to enlarge)

Half of the existing EWCs have built up 10 years or more of practical experience. In 2006, 41% of the EWCs will have existed for 10 years, while another 10% will have existed for more than 10 years. In 2007 already 441 existed for 10 or more years. Important experiences have also been accumulated among 31% of the EWCs that have existed from 6 to 9 years.

(click on picture to enlarge)