Green Paper - Partnership for a new organisation of work
it * COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 16. 04. 1997 COM(97) 128 final GREEN PAPER PARTNERSHIP FOR A NEW ORGANISATION OF WORK (presented by the Commission) TABLE OF CONTENTS EXECUTIVE SUMMARY INTRODUCTION 1 : TOWARDS A NEW ORGANISATION OF WORK WHY AND HOW ? Mass production Step-by-step improvements The flexible firm A new organisation of work, a demanding change A great potential for Europe Flexibility and security 2 : POLICY CHALLENGES AND NEW PARTNERSHIPS The labour market context Modernising the legal, contractual and policy framework Education and training : lifelong learning Labour law and industrial relations Wage systems Working time : a new approach Taxation Social security Health and safety at work Environmental issues Mainstreaming equal opportunities policies Integration of people with disabilities Labour market policies Modernisation of public sector Telework Building a partnership for a new organisation of work The challenge to the social partners The challenge to policy makers 3 : THE CONSULTATION PROCESS ' ill 1 3 3 3 3 4 4 5 7 7 7 7 8 9 9 11 11 11 12 12 12 13 13 14 15 15 15 16 /|«t Executive S\ Why a Green Paper? This Green Paper is about the scope for improving employment and competitiveness through a bet ter organisation of work at the workplace, based on high skJl», high trust and high quality. !t is about the will and ability of management and workers to take initiatives, to improve the quality of goods and services, to make innovations and to develop the production process and consumer relations. The purpose of the Green Paper is to stimulate a European debate on new forms of organisation of work tc release this potential. The Green Paper is focused on three questions: c why £ new organisation of work - and how? G what are the policy challenges of new forms of work organisation? c is it possible to establish a new partnership for a mere productive, participative and ie&ming or ganisation cf work? TcwereSs a new organisation of work - why and how? The traditional organisation of work, based on the ideas of industrial mass production, has been questioned more and more during the last 20 to 30 years. A number of organisational changes have been tried in order to improve productivity, quality and working conditions (quality circles, just-in- time systems, team work). In parallel with these many different trends there is now a more fundamental change in the organ isation of work, a shift from fixed systems of production to a flexible, open-ended process of organ isational development. This new concept of a process of continuous change is sometimes described as "the flexible firm" and the workplaces as high trust and high skill workplaces. There is no one model, but an infinite variety of models, which are constantly being adapted to the circumstances of the individual firm and its workers. The transformation can be explained by three factors, representing change: human resources, mar kets and technology. There are already a number of case studies demonstrating the potential for productivity and pros perity of a new organisation of work. However, the great majority of firms - and public authorities - are stilf in the traditional form of work organisation. The diffusion of new practices seems to be slow. The policy challenges The policy challenges could be summarized in one question: how to reconcile security for workers with the flexibility which firms need? This raises a number of issues for the public authorities and the social partners across the spectrum of employment, education and social policy areas: • how to organise the necessary training and retraining, so that the workforce can meet the in creasing needs for skills and competence • how to adapt social législation to take account of new employment trends • how to change wage systems along with the organisational structures on which they are based • how to adapt working time arrangements in the light of the new situation • how to take advantage of the new employment trends with regard to equal opportunities • how to develop more flexible organisations in the public services • how to provide adequate support to firms, in particular small firms, who wish to change, but lack the resources or expertise to do so. Ah Building a partnership for a new organisation of work The Green Paper invites the social partners and public authorities to seek to build a partnership for the development of a new framework for the modernisation of work. Such a partnership could make a significant contribution to achieving the objective of a productive, learning and participa-' tive organisation of work. The word framework should be given a broad interpretation. It could include everything from the creation of a common understanding of the importance of new forms of work organisation, through joint declarations, to binding contractual or legal initiatives. The level and content of such a frame work has to be clarified through discussions in the social dialogue. The Commission would like all interested to develop their views on how these objectives could be reached and how all policies, whether they are public policies or policies for which the social part ners are responsible, could be mobilized to create a new framework to modernise work and the economy. At INTRODUCTION : WHAT ARE THE AIMS OF THE GREEN PAPER ? 1. This Green Paper is about the scope for im proving employment and competitiveness through a better organisation of work at the workplace. This need to improve the employ ment situation by increasing competitiveness has been at the heart of EU policy and was given add ed impetus with the publication of the White Paper on Growth, Competitiveness arid Employ ment in 1993. It has been a main theme at all the meetings of the European Council since then and is a central element in the Commission's Pact for Confidence in Employment. In the course of the discussions on the Pact, the Commission sent a questionnaire to the social partners and prepared a synthesis of the responses received1. More re cently the European Council in Dublin empha sised the importance of adequate benchmarking. 2. This Green Paper has also to be situated in the wider context of the various Community in itiatives related to employment, competitiveness and new technologies, for example, the Monti Group on taxation, the social security initiatives, initiatives in the area of new technologies, and the Davignon group on workers' involvement in Europe. 3. The European employment strategy calls for an integrated approach, whereby all the rele vant policies, including macro-economic and structural policies, contribute and support each other in the fight against unemployment. Im provements in flexibility of work have been highlighted as essential elements of this strategy. For example, the European Council meeting in Essen in 1994 stressed the need to increase the employment intensity of growth, in particular by a "more flexible organisation of work in a way which fulfils both the wishes of employees and the requirements of competition". But while much has been written about the need for flex ibility of the labour market and its regulation, much less has been said about the need for flex ibility and security in the organisation of work at the workplace. 4. One of the main aims of this document is to redress this balance by concentrating on this as pect of the wider employment debate. An im proved organisation of work will not of itself solve the unemployment problem, but it can make a valuable contribution, firstly, to the com petitiveness of European firms, and secondly, to the improvement of the quality of working life and the employability of the workforce. 5. Research has demonstrated that a renewal of the organisation of work is of fundamental im portance for improved productivity. The White Paper on Growth, Competitiveness and Employ ment2 highlighted organisational capacity as one of the key components of a firm's competi tiveness. The Commission's First Action Plan for Innovation in Europe3 also stressed the impor tance of organisational innovation for growth in employment. 6. Work organisation itself is a broad subject, including, as it does, most aspects of the way work is organised in and between firms, the re lation between the social partners, the organisa tion of the labeur market, the relationship between work and the organisation of society. There is an intensive debate about the role of work in the future and there are many ongoing research projects that will further improve our understanding of the new working life. In particular, the Commission's Green Paper 7. on "Living and Working in the Information Soci ety: People First", covered a wide range of issues related to the introduction of new technology and the organisation of work, some of which are developed further in this Green Paper. At the same time there are issues dealt with in the present Green Paper, which are not related to new technologies and the Information Society, notably those related to the evolution of the workforce and of consumer requirements. 8. The present Green Paper does not seek to cover all aspects of this vast area. Instead it seeks to concentrate on developments in work organ isation in firms and public bodies in the context of the economic and social environment. Thus in this paper, work organisation is taken to mean the way in which the production of goods and services are organised at the workplace. The fo cus is on a new organisation of work. While there is no one model, this concept implies, in particular, the replacement of hierarchical and rigid structures by more innovative and flexible structures based on high skill, high trust and in creased involvement of employees. The focus is emphatically not on short-term cost-cutting measures. 9. It should be emphasised that this Green Paper is concerned with the organisation of work in all types of workplace and in all sectors of activity. Though much of the language, much 1 This summary was distributed on the occasion of the Round Table organised by the Commission with the social partners on 30 April 1996 on the Pact of Confidence for Employment 2 Growth, Competitiveness, Employment: The Challenges & Ways forward into the 21st Century (Chapter 2. 3 (b)) 3 The First Action Plan for Innovation in Europe: Innovation for Growth and Employment (COM(96) 589 final) 1 AX of the experience and many of the examples re late to large firms in manufacturing industry, the new innovative and flexible structures are often just as appropriate in small firms as in large, and in services, including public services such as health, education and environmental services. The development of naw forms of work organ isation in SMEs, in particular, is of central impor tance, given that they are the main source of new jobs. 10. The modernisation of the organisation of work can only be achieved by the firms them selves, involving management and workers - and their representatives - and taking into account the diverse nature of the situation in each sector, company or organisation and the speed of change. 11. 3ut the new organisation of work also poses challenges to policy makers - whether they be public authorities, social partners or non- Governmental organisations - and at all levels: lo cal, national and European. In particular the chal lenge is how to develop or adapt policies which support, rather than hinder, fundamental organ isational renewal and how to strike a productive balance between the interests of business and the interests of workers, thereby facilitating the modernisation of working life. An essential ob jective is to achieve such a balance between flex ibility and security throughout Europe. 12. Ail Member States are facing similar chal lenges both with regard to labour productivity, competitiveness and employment and with re gard to achieving the right balance between flexibility and security of employment. There is much to learn from progress made in other com panies and in other Member States. The Commis sion hopes that this Green Paper will further stimulate the debate at European and national level on the organisation of work among all the actors involved and that the outcome of this de bate will be a new framework for the modernisa tion of working life based on partnership. "A co-operative approach to a different organisation of work within the firm will improve indus trial relations, allow greater worker participation in decisions and potentially lead to a better product quality. The latter in fact represents an essential component in any strengthening of the competitiveness of the European economy. " - Ciampi report. 1 : TOWARDS A NEW ORGANISATION OF WORK - WHY AND HOW? 13. For almost a century the organisation of work was usually founded on the same basic principle: a hierarchical top-down organisation with a high degree of specialisation and simple, often repetitive, jobs. Mass Production 14. This type of organisation was developed as a tool for the emerging industrial society, the transformation of the economy from handicraft via manufacturing to industrial mass production. Europe can be described as the cradle of the manufacturing society and the US as the cradle of the mass production system. The ideas were developed originally in the US car industry, which became the role model for successful in dustries. 15. During the 20th century, this type of work or ganisation spread all over the industrialised world. The rebuilding of European industry dur ing the post-war period was based on the con cept of the mass production system. This produ ction system contributed for several decades to an unprecedented growth in productivity and prosperity. Step-by-step improvements 16. However, during the last 20-30 years, the lim itations of this way of organising work have be come evident. One major problem has been that under the traditional system the work is split up into narrow functions with short, repetitive work cycles. The way work is done is prescribed in de tail. The system does not give sufficient room for a process of upgrading and innovation. For con tinuous improvement to be possible, it is impor tant to involve the workers themselves and in or der to be involved they must have the possibility of exercising judgement, developing social con tacts and learning. These are the points where the traditional mass production system becomes too much of a hindrance. The workplace has to be opened up: to flows of ideas, to suggestions, to learning, to improvement. Initially, this was done through the introduction of a parallel de velopment organisation, such as quality circles. The idea was to make step-by-step improve ments, day by day, to get visible results over time, instead of waiting for a crisis to occur. 17. The need for such improvements has been more apparent the more the service sector has grown and the more services are integrated into - the traditional production of goods. As a conse quence, both management and workers have been looking for new ways of improving produ ctivity and working conditions. We have seen a number of efforts and experiments : new forms of team-work, just-in-time production systems, lean production, "kaizen" (continuous improve ment), total quality management, eco- management, benchmarking, etc. The flexible firm 18. Both the traditional form of organisation and that based on step-by-step improvements still exist and will continue to do so for many years. But in parallel, a more fundamental change in the organisation of work is emerging, a shift from fixed systems of production to a flex ible, open-ended process of organisational de velopment, a process that offers new opportu nities for learning, innovation, improvement and thereby increased productivity. 19. This new concept of a process of continuous change is sometimes described as "the flexible firm" and the workplaces as high trust and high skill workplaces. There is no one model, but an in finite variety of models, which are constantly be ing adapted to the circumstances of the individu al firm and its workers. The transformation can be explained by three factors, representing change: human resources, markets and technology. - Human Resources, in traditional economic thinking, labour is a factor of production similar to land and capital - a cost to be reduced. In a knowledge based economy, however, people represent a key resource. Organisations are val ued not only on the basis of their products or machines but primarily on the knowledge- creating capacity of the workforce, the people who work for them, how they work, what work means to them. The rate of innovation and change in products and technologies is so rapid that the competitive advantages of companies and countries will be the capacity of the work force to create knowledge. The European work force of the 1990s, especially the younger age group, Is much better educated and trained than any earlier generation. About 70 per cent of this young European workforce have an upper sec ondary level education and about 20 per cent have a university degree. - Markets. Consumers are more demanding than ever before and they do not accept simple standardised products. They look for innovation, for variety and novelty, for high quality, both in goods and services. Competition in the market place forces firms to organise production in such a way that changing consumer preferences can be met. That creates demand for close links between market and production, capacity for continuous innovation and improvement, and a high degree of flexibility in production. Compet itiveness and success will more and more be based on the innovative capacity and adaptabil ity of firms, less and less on the traditional con cept of producing more of the same at low prices. The most innovative and flexible firms are more like ly to survive and expand. - Technology. During the last 20-30 years a new technological revolution has begun, based on the introduction of information and communica tion technologies, (ICTs). One of the main effects of the new ICTs has been a dramatic reduction in the cost and time of storing, processing and transmitting information. Such changes have a fundamental effect on the way we organise the production and distribution of goods and servi ces, and thereby, on work itself. At the begin ning of this technological revolution, the eco nomic result of the introduction of new informa tion systems was rather poor in terms of produc tivity growth. But, more recently there is a grow ing number of examples where the introduction of ICTs has met the highest expectations. The main message from these examples is the need for an integrated approach, linking the introduc tion of ICTs with the education and training of the workforce and with organisational renewal. A new organisation of work, a demanding change 20. These three factors - human resources, mar kets and technology - can have a fundamental impact on the way workplaces are organised. 21. The new flexible firm is a demanding form of organisation of work. That goes for the introdu ction of a new organisation, as well as for the re quirements of skills and competence and the de velopment of industrial relations. In the new de centralised and network-oriented organisations, workers perform a range of tasks, rather than pass the job on from one to another. The skill structure is changing. Good skills in numeracy and literacy as well as with computers, the abil ity to interact with new technology and with en vironmental requirements, are becoming more and more important. There is a need not only for higher skills but also for broader skills. That is why continuous learning, the updating and up grading of skills and competencies, as well as in vestment in human capital, are of crucial impor tance for the improvement of the competitive- - ness and productivity of the European economy. 22. Furthermore as workers develop a wider range of skills and become more adaptable, the new organisation of work will further facilitate geographical mobility. This in turn will enable workers to exploit their potential more fully and exercise their rights in this respect. 23. The new organisation of work will challenge industrial relations. The old organisation is char acterised by specialisation of tasks and skills and the separation of design from the production phase. Industrial relations will require, in a new organisation of work, to be built on a basis of co operation and common interest. Therefore, new forms of industrial relations have to be devel oped, including, for example, greater participa tion by employees, since efficient production re quires enhanced levels of both trust and commit ment in firms. A great potential for Europe 24. European industry, manufacturing as well as services, has many underlying strengths. One such strength is the Single Market, the biggest economic entity in the world. Sixteen million firms established in this market have a great ad vantage in being close to 370 million consumers. The new way of organising work that is slowly emerging in Europe could be another strength, by improving the ability to adjust production to the new market conditions of ever changing con sumer preference. In this way the flexible firm could offer a sound basis for fundamental organ isational renewal built on high skill, high produc tivity, high quality, good environmental manage ment - and good wages. 25. It is important to recognise that European companies and public services have already in troduced a great number of organisational inno vations, which are in tune with European condi tions. There are a number of case studies - some examples are presented in the Report from the Commission's Competitiveness Group - demon strating the potential for productivity and pros perity of a new work organisation. The findings confirm that these innovations in the organisa tion of firms lead to improved business perfor mance, better job protection and job enrich ment. The same message comes from the German programme on Work and Technology and the O Scandinavian programmes, showing that the firms that have restructured their work organisation and industrial relations have been far more suc cessful than those that have attempted to meet the challenges solely through the introduction of advanced manufacturing technology. These pro grammes also show that trust and commitment cen be effectively combined with sound forma! and contractual agreements. However, many firms - znd public authorities - are still in the age-old work organisation: hierarchical, with a high de gree of specialisation and low degree of integra tion and product innovation, defensive methods of restructuring and political demands for reduced responsibility in relation to the workforce. The dif fusion of new practice seems to be slow. traditionally 26. Their informal structures, coupled with the smaller scale of operations, have enabled SMEs to avoid the organisational sclerosis which has hindered the adaptation of many large firms. However, the informal nature of relationships in SMEs gives rise to a different set of problems in relation to work organisation: in particular the lack of resources necessary for systematic organisational planning tends to hinder long-term personnel development. As a result, although SME's are potentially better able to adopt flexible forms of work organisation, further efforts need to be made if they are to exploit fully the opportunities presented. 27. It has to be acknowledged that impr in a in productivity can result ovements reduction in employment in one part of the production chain. But improved productivity is necessary if real wages and profits are to be increased. Higher wages and profits lead in turn to the craation of employment in a number of ways: in the firm itself, in its suppliers, by increasing demand and by creating the wealth to pay for the employment intensive services, which are needed in fne future: in health, education, leisure and care for the sick and elderly to name but a few*. 28. The choice is not, in fact, between be:ng more productive or staying as we are. It is between remaining competitive or reiegation to the second division. This is not an easy option. There ara a number of obstacles to the modernisation of firms and one such obstacle is the lack of awareness of the possibilities and of the potential* of a new way of organising work. There is a need for information and debate and for initiatives that can stimulate the deve lopment of new forms of work organisation, not least among the many SMEs. 29. Furthermore, alt change creates turbulence and uncertainty. There are balances which have to be struck: • between young workers and older workers • between the well-educated and the less well- educated » between the need for high production levels and the health of workers and • above aiJ, between flexibility and security. IFbxfbiGHy and Security 30. The potential economic benefits of a new- form of work organisation based on participation and trust are substantial, with potential gains for everyone. Public policies need to be built on this understanding. However, it has to be recognised that certain categories of workers in some areas at different periods in the in economic cycle wHI have more difficulty adjusting to the new situation than others: these include, in particular, older workers, younger workers with low levels of qualification and workers who live in areas of high unemployment and are not mobile. Similarly while there are considerable benefits for firms and workers engaged in core activities, care is needed to ensure that a!2 workers. Irrespective of their contractual status, share in the 'potential benefits of the new work organisation. 31. The key issue for workers, management, the social partners and policy makers alike is to strike the right balance between flexibility and security. This balance has many aspects. The reorganisation of work often causes uncertainty. Workers need above all to be reassured that after the changes are made they will still have a job and thai this job wil! last for a reasonable time. At the same time, once the changes are made, the new organisation of work can offer workers increased security through greater involvement in their work, more job satisfaction and the possibility of developing skills and long- term employability. This security for workers can a!so provide emp'evsrs with increased security in form of a more stable, versatile and the contented labour force. Employers need greater flexibility in order, in particular, to cope with fluctuations in demands for their goods and services. In particular, they are often looking for interchangeable fxiifs and adaptable working patterns, including working time arrangements. Such flexible arrangements can also have advantages for employees, provided thst they are negotiated : vor example working time arrangements which si:st their private or family commitments. 4 The employment potential in this area is set out in the Commission's report on "Local development and employment initiatives: an investigation in the European Union" (SEC/S64/9S) 32. It is the achievement of this balance between flexibility and security which is at the heart of the partnership for-a new organisation of work, which is the subject of this Green Paper. So far we have discussed the implications for employers and workers. But if this balance is to be achieved, there is a need to adapt a wide range of public policies accordingly. These policy challenges will be discussed in the next chapter. Questions Do you share the views expressed above on the evolution of the organisation of work and the main driving forces behind the new developments? Are there other factors that should be includ ed? What is your experience of firms that have introduced new forms of organisation of work? Are there particular experiences in respect of small firms, which you would like to mention? Are there examples of new business strategies, which appear more successful in dealing with such changes? 2 : POLICY CHALLENGES AND NEW PARTNERSHIPS The labour market context ficulties in returning to a working life with new and higher skill requirements. 33. There is a broad public debate about the de velopment of labour markets and working life. This debate is linked to new technologies, the globalisation of our economies and to new forms of work organisation. 34. The new forms of work organisation are as sociated w i th greater specialisation by firms, which leads to new employment-creating oppor tunities for sub-contractors. However, some of the changes that we are witnessing today are caused not by a new organisation of work and new technology, but by a lack of adaptation and modernisation. The downsizing of many firms is often the consequence of adverse macro- economic conditions and bad management. 35. Some of the problems are caused by a failure to integrate new technologies w i th changes in the organisation of work and the upgrading of skills and competence. 36. It is difficult to isolate these factors in statis tics on the development of the labour market. Therefore caution is needed when studying such statistics in order to avoid blaming the new or ganisation of work for the problems created by quite different factors. 37. A few facts can serve as a background to the further discussion of the challenges to existing policies and the need to modernise our policies: has increased in the Mem - employment ber States of the EU in 15 of the 23 years since 1973. The total increase in these years of employ ment growth reached 16 million jobs. However, 8 million of these jobs were lost during periods of economic downturn, giving a net employment growth of 8 million. This contrasts w i th the growth of the working age population by nearly 28 million people over the same period. Thus, the main problem is that job growth has not been strong enough to absorb the growing working age population. - there are many more jobs requiring higher and broader skills; there has been a marked shift in the structure of employment to wards higher-skillecf jobs that are, in general, more stable. Professional, technical and manage ment personnel grew by 25 per cent, while the number of production workers decreased. Those who have lost their old jobs have had great dif - the level of permanent employment remains temporary jobs account for a relatively high; small proportion, around 12 per cent of employ ees. Such jobs are often important as entry jobs; for example, in 1995 50 per cent of the unem ployed who found a job took temporary posi tions. A recent study, undertaken by the ILO, shows that job tenure has not been reduced in recent years. - working time has become more flexible; about 16 per cent of employees work part-time and such work has become more common. Only 5 per cent of men work part-time while 30 per cent of women work part-time, mainly in the service sector. - self-employment has been stable over the last 20 years; self-employed counted for about 15 per cent of the total workforce in 1975 and that figure has not increased at all. However, if agri culture is excluded, there is evidence of some growth. 38. These patterns are important to recognise as a basis for the discussions on policies supporting flexibility and security in working life. A more detailed description of the trends in the labour market in the Member States is available in the Commission's publication "Employment in Eu rope 1996". Modernising the legal, contractual and policy framework Education and training: lifelong learning 39. The new forms of work organisation require a much better educated and trained workforce, including in particular management. The flexibil ity and adaptability of skills are key. Continuous training and retraining are essential: in 10 years' time 80% of the technology we operate today will be obsolete, and replaced by new, more ad vanced technologies. By that time, 80% of the workforce will be working on the basis of formal education and training more than 10 years' old. 40. Europe needs to develop a new architecture of lifelong education and training which involves not only all parts of education and training systems but also firms and individuals them- It selves. In addition, a culture of learning and training throughout working life needs to be ful ly embedded. is hardly possible to over estimate the importance of action in this area, which has been the subject of a number of Com mission the Com initiatives. For example, mission's Green Paper "Living and Working in the Information Society: People First" identified four crucial areas: • Laying the best foundations: the foundations cf our knowiedge and skills are laid during the first years of education, and the education pro cesses involved need to evolve w i th the develop ment of new technology and w i th the new re quirements for sustainable development. Teach ers and trainers in particular must be targeted and the quality of their initial training and con tinuing professional development secured. From teaching to learning: education and • training institutions must be swiftly reoriented so that learning institutions are much more re sponsive to changes in the skili needs of business and industry. One of the key objectives identified in the Commission's White Paper "Teaching and Learning: towards the Learning Society5" was the need to bring schools and the business sector closer together to better complement each oth er as places of learning. • The learning company requires that new forms of partnership between business, other or ganisations and educators are needed to ensure that the new and changing skills required are made available. The crux of this approach is con tinually to reinforce the employabiiity of the workforce, as well as to increase the competence of managers and decision-takers through train ing. • Lifelong learning for all: there is a strong need to transform passive labour market policies into active policies for human resource invest ment, in line w i th the agreement at the Florence Summit, whereas at present not more than 7 per cent of the unemployed are offered training which would help to equip them to re-enter the labour market. Questions How can firms which seek to introduce new forms of work organisation optimise their in vestments in human resources? What are the obstacles, including accounting and tax constraints, to the promotion of in vestment in human resources ? Labour law and industrial relations 41. The new organisation of work calls into ques tion the basic foundations upon which labour law and industrial relations are built. factory 42. The concepts of work-place, firm, and, in particular, the notion of employer are undergoing a process of diversification, leading to an erosion of traditional employment rela tionships. Downsizing, outsourcing, subcontract ing, teleworking, net-working and joint ventures bring new dimensions to the world of work for which traditional labour law provisions do not appear to have adequate answers. the balance of 43. All this raises fundamental questions con cerning regulatory powers between public authorities (legislation) and the (collective bargaining) and social partners between the social partners and individual em ployees (individual employment contracts). In particular the possibility of derogating from leg islation by collective agreements and the scope for individual contracts versus collective agree ments are central issues on today's European in dustrial relations agenda. 44. In this context, the likely development of la bour law and industrial relations from rigid and compulsory systems of statutory regulations to more open and flexible legal frameworks may pave the way for a new balance of reguiatory powers between the State and the social part ners, in particular in the areas connected w i th the internal management of firms. Within this framework the relationship between employers and employees becomes a key factor as firms move from traditional methods of organisation to more flexible internal arrangements. The role of workers in decision making and the need to the existing arrange review and strengthen ments for workers involvement in their compa nies will aiso become essential issues. The Com mission will launch, in the coming weeks, consul tations with the social partners on the advisabil ity and direction of Community action in the field of information and consultation of employ ees at national level. 45. The participation of employees in profits and enterprise results could also assume greater im portance. In this connection the Commission re cently prepared a report6 on the ways Member States have promoted the participation by em ployees in profits and enterprise results. This shows that in all cases profit-sharing is associat levels no matter ed with higher productivity 5 6 "Teaching and Learning: Towards the Learning Society" (December 1995) PEPPER II: promotion participation) in Member States (COM (96) 697 final of 8. 1. 97) of participation by employed persons in profits and enterprise results (including equity what methods, model specification and data are used. Other positive effects of the schemes are on wage flexibility,. employment and employee involvement. The development of financial par ticipation schemes is, however, strongly influ enced by government action, in particular by the availability of tax incentives. Questions What experience do you have of changes in payment systems? What innovations are taking place, in particu lar by means of collective bargaining? lime: a new approach 48. Working time is at the centre of the public debate on the organisation of work. In particu lar, the European Parliament adopted last year an important resolution on a reduction and ad aptation of working time7, based on the Rocard report. The debate is about two separate ques tions. One is about working time flexibility: the adjustment of working time arrangements to the needs of firms or the needs of individual workers. The other question is about working time and employment: can a shortening of work ing time create more jobs? 49. Many innovative working time arrangements are being introduced in firms throughout the EU, both on the initiative of the firm concerned, or as the result of pressure or incentives from the Member State. Such arrangements can take a number of forms, including: Changes in the length of the working week 50. An important development in recent years has been the decoupling of plant operating times and shop opening hours from individual working time. This has allowed firms to increase the utilisation of expensive equipment, or to meet shoppers' wishes more effectively, while re ducing individual working time, often at no cost. In this context, some research has shown that firms may employ more workers as a result of re ducing working time, provided that certain con ditions outlined below (box) are met. Questions How should the current legal framework be modernised to take account of new employ ment trends ? Which types of workers' involvement mecha nisms could contribute to successful strategies on technical and organisational change? How would the development of direct worker participation affect the role of bodies or or ganisations representing workers? Wage systems 46. Pay is, of course, at the heart of the contract between employers and workers. But some of the pay systems in use today were developed for ty or fifty years ago. Frequently they provided only for payment for a specific job in a hierarchi cal organisation with a rigid division of labour. Such wage systems are now proving an obstacle to the introduction of more flexible company structures. It is precisely in the most up-to-date companies that traditional pay differentials between manual and white collar workers, between women and men, or between members of the same team are no longer workable. Wage systems are the financial expression of organisa tional and status structures within a company. 47. New wage systems, compatible with the flex ible firm, have been introduced into many firms, in both manufacturing and services and in large, medium-sized and small firms. The characteristics typical of these new payment systems are broad er job descriptions and a corresponding decrease in the number of pay grades, incentives to ac quire extra qualifications, higher valuation of new job requirements (such as co-operation, re sponsibility, decision-making, problem solving, etc. ), supplements to the basic wage paid accord ing to results or for continuous improvements, establishment of internal job equity for blue and white-collar employees, for time and piece-rate workers, for part-timers and full-timers and equal pay for women and men. 7 O. J. N' C 320 of 28. 10. 96 p. 97 J. Conditions which may need to be satisfied for working t i me reductions to have an im pact on employment Reductions in working hours should take place in the broader context of a better balance between flexibility and security: reducing working hours while maintaining the same pattern of work or ganisation will be counter-productive. The way work is distributed has to be planned and working time patterns have to be adapted to the new situation. The redistribution of working time should be accompanied by an active training policy. Otherwise skill shortages are likely to arise. The speed w i th which they arise depends on the nature of the work and the quality of the available labour force. Barriers to recruitment should be low. In this context there is a need to look in particular at the effects of taxation systems on working time and to make the necessary adaptations to social se curity systems. Co-operation between the public authorities, trade unions and the various training bodies w i th interests at plant level is important. Working time reductions should be incorporated into long-term bargaining packages. Many working time reductions in recent decades, for example in Germany, Belgium and the Nether lands, have been traded against long-term wage moderation. Such long-term packages have the advantage of making it possible to use productivity increases to reduce working time over a peri od of several years, while at the same time reducing the wage increases needed to offset the re duction in working time. Annualisation of working time 51. There has also been a trend in recent years towards coping w i th fluctuations in demand by calculating working time on an annual basis rather than on a weekly basis. Agreements to this effect usually provide, within certain limits, for the workers to receive a regular salary, rath er than one which fluctuates week by week or month by month. It can also enable workers to better organise their time between work and lei sure. For employers it allows for greater flexibil ity in the organisation of production and avoids expensive overtime premia. Part-time work 52. There are now 24 million people working part time in the Member States. This form of work represents both opportunities and risks. From the employer's point of view it provides the flexibility which is necessary to meet changing consumer demands, especially in services. From the worker's point of view it also provides a flex ibility that makes it easier to combine work w i th other responsibilities, for example studies or housework. The problem is that conditions of employment, for example social protection, for part-time workers are often limited when com pared w i th those for full time work. This crystal lises the need for a new balance between the interests of employers and workers, which would have positive benefits for both sides and could lead to the integration of part-time workers into the labour market, in particular by making their work less precarious. The social partners are now negotiating at European level on the basis of the Commission's consultation document on flexibil ity in working time and security for workers. A European agreement on this would make an im portant contribution to the development ot flex ibility and security in working life. Flexible leave arrangements through out working life 53. A number of interesting experiments are be ing undertaken in Member States and in individ ual firms to allow workers to take career breaks for family, training or other reasons. The recent framework agreement on parental leave con cluded by UNICE, CEEP and the ETUC8 is a good example of the progress at Community level. 54. Such working lifetime policies may reduce unemployment and improve the quality of life by humanising the world of work and, above all, its compatibility w i th private life. 8 Annex to Council Directive 96I34IEC of 3. 6. 97; O. J. N" L 145/4 of 19. 6. 96 10 Questions • e What contributionjdo you consider that a re duction and adaptation of working time can make to the improvement of growth, produc tivity and employment? What is the scope for agreement at sectoral level on working time arrangements? Are oth er levels more appropriate? Taxation 55. The existing taxation systems are not normal ly designed to cope with the new flexible work organisation. On the contrary, taxation systems may give employers a financial incentive to em ploy people in traditional work arrangements and therefore act as a barrier to a more flexible work organisation. 56. Taxes, including social security contributions, falling on labour are often reiated to employees' income levels. Some taxes may distort employers' choices on organisation of working time as the imposition of the taxes can give incentives to work either more than a certain level or less than a certain level. For example, some taxes may hBMe a ceiling which can be an incentive for em ployer? tc hire only one employee whose salary exceeds the ceiling, and beyond which no addi tional contributions ara payable, compared tc hiring two part-time employees whose individu al salaries would be below the ceiling and whose combined contributions would be greater than for one employee. Such ceilings may also give in centives to employers tc use overtime instead of hiring extra people. 57. Other taxes may have a tax-free floor which gives an incentive to employers to employ part- time workers below a cartain number of hours per week. Some taxes are a fixed amount per em ployee, irrespective of the level of earnings, and consequently give an incentive for employers to use as small a number of employees as possible. Q<LB®$t§oft What reforms are necessary to taxation systems, in order to avoid the disincentive ef fects ? Social security which assumes that the "normal" pattern of em ployment is lifelong and permanent, with retire ment from the labour market taking place at the end of the employee's working life. Benefits are therefore predicated upon a contributory insu- - ranee model and eligibility often depends upon continuous service. 59. If, as predicted, "traditional" work structures are to continue to change over the next few decades, the implications for social protection policies in the longer term are enormous. The most frequently-advanced change scenario en visages the replacement of the 20th century lin ear career concept by a norm of a varied work ing life. 60. Such changes should not be perceived as a threat to social security : flexible working can ba both beneficial to European economies and at tractive to individual employees. Therefore, the latter should not be penalised for adopting such working patterns. 7Ns means that the multitude of different forms of employment, which em ployees may increasingly experience, must be supported by appropriate social protection systems. 61. However, it is vital that mechanisms be found for adapting European social protection systems to take account of these new patterns of work. Obviously there are no easy solutions to this complex problem. Therefore, in October "[995 the Commission launched a debate on the future of social protection which addresses among oth er things the implications of changing work pat terns for social protection. A Communication' taking stock of the debate during 19S6 and pro posing appropriate follow-up has recently been published. Question What adaptations are necessary to social se curity rules to stimulate more innovative forms of work organisation? Health and safety at work 62. There is an important body of Community legislation in this area, which already makes a significant contribution to the hearth and safety of workers'0. These measures may need to be strengthened and adapted in order to take ac count cf changes in work organisation. 58. At present, most European social security 63. In this context it should be noted that it is the systems are based upon a model of employment employer that has the duty of managing the pre- 9 Modernising and Improving Social Protection in the European Union (COM(97) 102 of 12. 3. 97) 1G See in particular Council Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and heaith of workers (O. J. N' L 183/1 cf 29 June 1989) - and subsequent individual directives 11 venticn of occupational ill-health. The growing importance of SME's as employers, including sub contractors, raises important health and safety issues. Furthermore, new employers often lack knowledge of health and safety risks, and fre quently have neither the time or money to recti fy this. Some initiatives have already been under taken to address this information gap11, but fur ther measures may be necessary. In addition the incorporation of health and safety within early education and within the lifelong learning ap proach will be increasingly necessary to ensure that workers are adequately trained. Environmental issues 64. The development towards a more flexible or ganisation of work is likely to have effects on the natural environment, for example by changes in transport demand. These effects can be positive or negative, depending, in particular, on individ ual working time arrangements, the transport in frastructure and the location of the work. It will be necessary to identify the environmental im pacts of new forms of work organisation more accurately in order to develop approaches which are compatible w i th sustainable development and which are beneficial for the whole of society. Question What impacts, both favourable and detrimen tal, are the new forms of work organisation, flexibility in working time and employment contracts, having on the health, safety and job environment of workers and for the manage ment of these issues? Mainsireaming equal opportunities policies Women and men 65. The new developments in relation to work organisation present a challenge and an oppor tunity w i th regard to equal opportunities for men and women. Employment is declining in typical traditional male jobs w i th traditional work organisation, such as heavy manufacturing industries, and growing in the service sector, where women have a stronger position and where new ways of working are more devel oped. The question is whether the new organisa tion of work, emphasising social skills, broader skills and multi-tasks, can contribute to the pro motion of equal opportunities. 68. Women have made great progress in the la bour market during the last 10-20 years, but there is still a big gender gap in employment and persisting segregation in the labour market. The difference in employment between men and women is 25 million, 85 million men and 60 mil-, lion women in work. Women's working patterns are also sometimes different from those of men and that may also affect the development of work organisation. In order to realise this poten tial it is necessary to organise not only firms but the whole social infrastructure to support men and women on a more equal footing. That in cludes for example training, child care, transpor tation, gender balance in decision making, indi vidualisation of rights and so on. 67. Mainstreaming, which is the guiding princi ple of the Fourth Community Action Programme on Equal Opportunities for Women and Men (1996-2000)12 , aims to promote the integration of equal opportunities for women and men in the process of preparing, implementing and monitoring all policies and activities of the Euro pean Union and the Member States. Questions What more can be done to ensure that a bet ter gender balance is achieved through the development of a new organisation of work? How far will the growing participation of women in the labour market have an impact on work organisation? Immigrants and ethnic minorities 68. New developments in relation to work or ganisation also present risks and opportunities for workers from immigrant or ethnic minority backgrounds. Businesses and other organisations are operating in an increasingly multi-cultural environment, w i th customers, suppliers and em ployees from diverse national, ethnic and cultu ral backgrounds. Success in the market-place in creasingly depends on the ability to integrate this potential to best effect. Integration of people with disabilities 69. A better organisation of work can improve job opportunities of people with disabilities, in particular it can help to ensure that workplaces and work arrangements are adapted to their needs. Measures involving working time organ isation have aîso proved to be essential to in- company reintegration. The same consideration applies to the effect of the introduction of new ? 1 See "Self-Audit Handbook for SMEs on Safety and Health at Work", European Commission, 1995 12 Council Decision of 22. 12. 95, O. J. N° L. 335 of 30. 12. 95 12 technologies. Telewerking can expand dramati cally the employment opportunities of a wide range of people w i th disabilities, in that it can overcome or remove barriers and problems relat ing to health conditions, safety, fatigue and stress, the need for personal assistance, inaccess ible transportation or architectural barriers. Con siderable human resources, which are today non productive and have to rely mainly on social as sistance, can be released in this way for employ ers and in general for the benefit of all society. QuesticFè What practical steps can be taken to ensure a better use of the potential of all our people in the new organisation of work? Labour merket policies important 70. Labour market policies play an role in the development of the new organisation of work, reconciling flexibility for firms and se curity for workers. First of all, there are huge f i nancial resources spent on passive policies, that should be activated. Secondly, the new concept of ' j ob r o t a t i o n" offers opportunities for firms as well as for jobseekers. Job rotation means on the one hand upgrading the existing workforce in order to achieve bettei quality, higher produ ctivity and new forms of work organisation, on the other hand a need to recruit substitutes, while the workers are being trained. This recruit ment could provide good entry jobs for young and unemployed people. Such a shift from pas sive to active measures, based on the job rota tion idea, is in line w i th the European Council agreement on a selective restructuring of public expenditure to stimulate growth and e m p k -- ment. 71. Most of the initiatives for the modernisation of work organisation must be taken at a local or national level. However, these initiatives can get support from the European Union, through the European Social Fund. Objective 4 of the Structu ral Funds has as its aim to "facilitate workers' ad aptation to industrial changes and to changes in production systems". Created for the current programming period 1994-99, it is a new and challenging Objective in so far as it deals primar ily with people in employment as compared w i th the traditional target groups of the Social Fund, namely the unemployed. Objective 4 (together with the ADAPT Community Initiative) carries a budget of about 4 billion ECU, which when mar ried with Member State and private funding makes it a European fund for supporting indus trial change of about 7. 5 billion ECU <&\?er t h s. , five years of its operation. The actions•supported'' are to a major extent concerned w i th training and re-training, but w i t h in an overall context of organisational change within and among com- panies. 72. During the remaining period of current pro gramming (1997-99), the interventions under Objective 4 and ADAPT will be pursued w i th spe cific aims which support the process cf improving work organisation. An improved use by the rele vant bodies of the opportunities offered by Ob jective 4 and ADAPT will be a key demonstration of their willingness to improve work omzrSit- tien. 73. In addition t he Leonardo da Vinci pro gramme supports experiments and the launch of particularly innovating projects in this ares-. The Fifth Framework Programme for Research and Development ccuid also make a contribution in support of research on new methods of organ isation of work1 3. Question I How do you consider that the contribution of ! the Structural Funds, and in particular Ob;'e- ! i ! ctive 4, could bsst be optimised to promote a j j , better organisation of work? Modernisation of the public sector 74. The public s e c te employs a significant oro- portion of the E J abour force. For example over 9 million people are employed full-time in local government alone. Within these public organisa tions there are increasing pressures tc get value for money both in order to keep public expendi ture in check and tc improve the quality and flexibility of service which the public expects. There are a number cf example; where public sector bodies nave devefoped innovative forms of work organisation, with the active participa tion of trade unions, but both employers and trade unions are conscious of the fact that more needs to be done. Indeed in November 1996, the social partners at European level adopted a Joint Declaration14 on the modernisation of public ser vices which recognised inter alia that the reor ganisation of work processes and administrative structures for adapting to the changing environment. They emphasised that this requires a long-term com mitment to employment and the development of professional skills, and that management of change demands co-operation between man instrument the main is often 75' "Towards the 5th Framework Programme: Scientific and Technological Objectives" (COM(97)47) 14 Joint Declaration of the CEMR Employers' Platform and the European Federation of Public Service Unions, Brussels November 1996 13 agement and. labour in all organisations. The parties stressed their striving for reconciling effi ciency w i th a high quality of working life: "In an open and secure climate the move towards a learning organisation may be a natural outcome of the adaptation to the continuous change". Telework 75. Telework comes in a variety of forms - home- based telework, alternating telework, multi-site telework, freelance telework, mobile teiework ing and telework from relocated back offices. Its centra! features involve the use of telecommuni cations and advanced information technologies and the performance of work at a location other than the traditional workplace. telecommunications, changes 76. Although the spread and penetration of tele work remains unclear, the current numbers of teleworkers do not seem to meet the expansive forecasts made in the 1970s. However, the lower ing cost of in managers' and trade unions' attitudes towards telework, as well as new practices in respect of alternating telework, are strong indications that the number of teleworkers will increase substan tially in the coming years. Telework is particular ly evident in industries and occupations which are information intensive. 77. Any consideration of telework at regional, national or European level should be strongly in fluenced by the need for job creation, increasing employment opportunities, environmental im provement and regional development. The cen tral question here is how can we use telework and related techniques to bring about a net in crease in work opportunities for Europeans in. such a way that the overall quality of working life is enhanced. 78. The transnational dimension of ICTs, and in particular the fact that electronic commerce on the internet goes beyond geographical borders, brings to the fore the issue of transnational tele- working, international private law and transna tional industrial relations. labour 79. In 1996 the Commission undertook compara tive research and an analysis of law, health and safety and social security legislation and collective bargaining practices in Member States in respect of telework. As a result of this a number of issues were identified for considera tion by the public authorities and the social part ners (see box). 80. It is necessary to assess what measures are necessary to facilitate the development of tele work, whether the existing rules are appropriate and what are the respective roles of the different actors. These issues will be further assessed in the context of the follow-up to the Green Paper on "Living and Working in the Information Society: People First" and in relation to the development of telecommunications net works. trans-European [5SUES CONCERNING TELEWORK PRACTICES Contractual status (empioyed-seif-ernployed teieworking) Voluntarism and teleworkers' right to return to the company's premises Written information on working conditions Equality of treatment between on-site workers and teleworkers Teleworkers' involvement in information, consultation, participation and negotiation Teleworkers" training rights and skill development Social security issues Data protection issues Environmental impact Inviolability of home and the employers' access to it Working time, availability and work load Pay systems Infrastructure, equipment and expenses Teleworkers' involvement in the company's affairs Separation of working and living environments Health and safety issues, including isolation, stress, checking and control Social mpiications of trans-border teieworking Legal framework applicable to freelance teieworking, including trade union rights 14 Building a partnership for a new organisation dï work The challenge to the social partners 81. The role of the social partners, in firms, at sectoral, national and at European level, is cru cial in the development of a new organisation of work. But both sides face challenges. 82. For management, the challenge is to achieve a fundamental renewal of their organisation in such a way that they create a climate of trust and partnership, based on the concepts of flexibility and security. For trade unions, the challenge is to ensure that they exercise a constructive and ac tive roie in the innovation and modernisation process within the firm and so achieve a sustain able balance between their social and economic objectives. 83. In a number of Member States, the social part ners have shown their readiness to adapt to pro found changes taking place in organisational struc tures, management style and industrial relations practices in both the private and public sectors. 84. This experience leads the Commission to in vite the social partners and public authorities to take part in a discussion about partnership. The concept of partnership includes, first of all, work ers and managers in the firm. The renewal of the organisation of work can only be achieved by the firms themselves, involving management and workers and their representatives. In addition, the social partners and the public authorities can facilitate this work by improving awareness of the potential of a new organisation of work. 85. This could lead towards a partnership for the development of a new framework for the moder nisation of the organisation of work, taking ac count of the interests of both business and work ers. The word "framework" should be given a broad interpretation. It could include everything from the creation of a common understanding of the importance of new forms of work organisa tion, through joint declarations, to binding con tractual or legal initiatives. The level and content of such a framework has to be clarified through discussions, in particular in the social dialogue. 86. Such a partnership could make a significant contribution to achieving the objective of a pro ductive, learning and participative organisation of work. St would be based on European values, which combine competition between firms and solidarity between citizens. The challenge to polky makers 87. The European institutions - the Commission, the Parliament, the Council of Ministers, the Eco nomic and Social Committee and the Committee of Regions - can stimulate the debate, give politi cal support and organise an exchange of informa tion and knowledge about the introduction of new forms of work organisation, both on the ba sis of the results achieved and the problems that have arisen. However, policy makers in European institutions, as well as in national and regional Par liaments and governments, need to understand what is happening in firms so that they can sup port the public debate in a well informed way and take these developments into account when for mulating policy and modernising legislation. Therefore, this Green Paper is also addressed to policy makers, to increase awareness of the poten tial and of the need for renewal of public policies. Questions on Section II What actions are appropriate at the different levels: the firm, local, regional, sectoral, national and European? Under which conditions, which will vary from country to country, could decentralised negotiations at firm level be developed to cover several aspects of work organisation? How could agreement be reached at sectoral or occupational level on framework guidelines for the organisation of work, which could be applied, at the same workplace, to workers with differ ent types of contractual arrangements? Which are the most appropriate ways in which this process can be supported at EU level, for ex ample support from the Structural Funds; support for training policies and innovations in them; dissemination of information, in particular in relation to good practice; medium-term social policy analysis and research, adaptation of the legal framework; other action ? How can we best mobilise our resources to realise the potential gains for both firms and workers, which could arise from a new organisation of work? How can we give particular support to SMEs? What should be the respective roles of the main actors who might be involved in such a partner ship, i. e. the social partners, the public authorities, NGOs in supporting the development of a pro ductive, learning and participative organisation of work? 15 3: THE CONSULTATION PROCESS 88. As stated in the introduction, the main aim of this Green Paper is to raise awareness and stimu late debate on new ways of organising work. The Commission does not wish to pre-judge the out come of that debate by making concrete proposals for action, at this stage. 89. The Green Paper is being given a wide circula tion and it is hoped that it will be discussed at local and national level, as well as at European level, in particular w i t h in the Social Dialogue. 90. The Green Paper includes questions directed to the social partners, to the Member States' author ities and to the European Union institutions. The Commission welcomes comments also from individ uals and f r om institutions, f r om practitioners and from researchers, from NGOs active in the social and health fields, f r om people w ho have experi ence of new forms of work organisation as well as from people w ho are preparing to step from old forms of work organisation to new ones. 91. Written comments should be sent by 30 Novem ber 1997, to European Commission Directorate-General V Rue de la Loi/Wetstraat 200 B - 1049 Bruxelles/Brussel 92. Comments can also be sent by e-mail t o: DG5-PartnershipQBXL. DG5. CEC. BE This document is accessible at the following address: internet http://europa. eu. int/ The DGV homepage is accessible through the following path: Welcome, Policies, Employment and Social Policies, on which page there is a link to DGV 16 ISSN «254-1475 COM(97) 128 final EN m os Catalogue number : CB-CO-97-154-EN-C ISBN 92-78-18671-6 Office for Official Publications of the European Communities L-2985 Luxembourg