Building Effective Unions in the new Member States:

A report on the situation in the construction industry in

Estonia, Latvia and Lithuania

Baltic-Nordic Trade Union Conference

10-11 November 2005, Tallinn

Charles Woolfson – Brief Profile• Marie Curie chair holder in the Baltic states

(2004-2007)• Resident in the Baltic states for five years• Professor of Labour Studies, School of Law,

University of Glasgow, UK• Member of British Committee of the International

Centre for Trade Union Rights (ICTUR) and editorial board member of journal Union Rights

• Projects for ILO, UK trade unions Published books and articles on union issues; organising oil workers in the UK offshore industry, strikes, on health and safety and on labour conditions in the new member states of the EU.

Study of Baltic construction unions for Nordic

Federation of Building and Woodworking Unions 1. An assessment of the situation and the unions of each

country. 2. Is there a form of “social dialogue” existing with the

employer side? 3. Could elements in the “Nordic model” with an

emphasis on collective agreements be “exported” to these countries?

4. The strategies and behaviour of the Swedish and Nordic employers in the region.

5. How are the vocational schools working? Can we use them to change the mentality of the youth towards what Trade Unions are really about?

6. As Nordic unions, how to use on-going projects in these countries to get the best possible results?

Some Indicators of Social Development in the Baltic States

• Life expectancy• Death by suicide• Death in transport accidents• Total expenditure on social protection• GDP per capita• Employees with earnings two-thirds below the

median• Levels of Deprivation and inequality• Class structuring of health inequalities

Male Life expectancy at birth (2002)

(approx 10 years less than EU averages)

EU 15 75.8 (e)

Estonia 65.3

Latvia 64.8

Lithuania 66.3

Recent demographic developments in Europe 2004. Strasbourg: Council of Europe Publishing 2005

Death by suicide (standardised death rate per 100 000 persons) (2000)

(3X to 5x higher)

EU 15 16.0

Estonia 46.0

Latvia 56.9

Lithuania 80.8 (30 per week, popl. 3.5m)(Source: EuroStat)

Death in transport accidents (standardised death rate per 100 000

persons) (2000)(2x or 3x higher)

EU 15 15.7

Estonia 28.8

Latvia 48.0

Lithuania 35.5

Average life expectancy at age 25 by educational level in Estonia 1989-2000

Source: Leinsalu M, Vågerö D, Kunst AE. Estonia 1989-2000: enormous increase in mortality differences by education. Int J Epidemiol 2003;32:1081-1087

Total expenditure on social protection per head of population (2001)

(approx ¼ of EU levels)

EU 15 6425.9 (e)

Estonia 1308.1 (p)

Latvia 1138.6 (p)

Lithuania 1318.2 (p)

GDP per capita in PPS (2004)

(about ½ of EU levels)

EU 25 100

Estonia 52.0 (f)

Latvia 45.6 (f)

Lithuania 49.8 (f)

Gini Index of Income Inequality in CEE (excl. Baltic States)

Gini Index of Income inequality including Baltic States

Lithuanian labour market

• 1997 to 1999 in Vilnius, nearly one quarter of job positions disappeared in the largest five factories.

• In Kaunas, the number of jobs in large enterprises decreased by about 40 per cent.

• Growth in income differentials. One third of families with three or more children, representing 16 per cent of population, below the official poverty line of 50 per cent of the average wage.

• ‘informal’ economy of some 300,000 workers, or more than 20 per cent of the total working population.

Working Environment Indicators in the Baltic States

Index of Fatal Accidents at Work (per 100,000 employees) Old Member States Source: New Cronos

Index of Fatal Accidents at Work (per 100,000 employees) New Member CEE States Source: New

Cronos

Index of Fatal Accidents at Work (per 100,000 employees) New Member States Source: New Cronos

Survey of Working Conditions (2002)European Foundation for the Improvement of Living and Working Conditions

• Workers in the then Accession States more exposed to vibrations, noise, heat, air pollution, and, to a lesser degree, to working in painful or tiring positions, than in the EU

• Working hours are considerably longer than in the EU • ‘Atypical’ forms of work such as night work or shift work

are more widespread. • Information/consultation less well developed in the

acceding and candidate countries than in the EU, especially regarding organisational changes

• 40% report in ACC that their work negatively affects their health or safety (compared to 27% in existing EU states)

Trade Unionism in the Baltic New Member States

The Construction Industry in the Baltic States

Key findings: Estonia

• Employment: greater percentage of workers in smaller enterprises of under 50 employees (59.8% as against 49.8%).

• Construction as proportion of workforce: approx 7%

• Unionisation: low 3% (no construction union)• Collective agreements: low (one local

agreement)• Social dialogue: low (tripartite and bipartite) • Workplace unions: low (non-existent except for

building materials manufacture)• Management hostile attitudes: high• Union capacity: low

Key findings: Latvia

• Employment: 90% employed in companies with less than 250 workers

• Construction as proportion of workforce: approx 6%

• Unionisation: low 5% (LCA current claim 2,000 of total employed in the construction industry)

• Collective agreements: low (mainly larger coys)• Social dialogue: limited but some at tripartite and

bipartite levels• Workplace unions: low • Management hostile attitudes: high (NNC

Swedish, Dalte Holding, UIT) • Union capacity: low to medium

Key findings: Lithuania

• Employment: 60% of Lithuania enterprises in construction have less than 10 employees, and these are responsible for 8% of registered employment

• Construction as proportion of workforce: approx 6%

• Unionisation : low 4%• Collective agreements: low (mainly in materials)• Social dialogue: low (tripartite and bipartite)• Workplace unions: low • Management hostile attitudes: high• Union capacity: low

Key findings: Poland

• Employment: micro enterprises with fewer than 10 workers account for the great majority (96%) of enterprises

• Construction as proportion of workforce: approx 6.5% of the total employed population

• Unionisation: low (7.9% overall/ 3.6% in construction)

• Collective agreements: low• Social dialogue: low• Workplace unions: low• Management hostile attitudes: high• Union capacity: low to medium

Absence of effective ‘social dialogue’ and collective bargaining

• Consultation between the State and the social partners, within tripartite structures has helped to maintain a degree of social consensus concerning the ‘reforms’ carried out during the years of transition.

• However, this tripartite dialogue has not led to large-scale workplace participation of the social partners – mainly a top-down process.

• Consequently, absence of ‘autonomous social dialogue’ (and collective bargaining) - a weakness reflected at enterprise and sector levels (especially in the SMEs).

• Insecure and exploited workforces• violation of trade union rights and hostile anti-

labour legislation• Low levels of unionisation and fragmentation• Privatisation, bankruptcies, restructuring• Emergence of small enterprises• growth of unemployment – new labour

discipline of fear• increase in the category of ‘self-employed’• ‘grey’ and black economy without protection• poorer levels of safety and health at work• imbalance in power between employers and

employees at the workplace

Summary of findings

Recommendations 1-41.Need for greater trade union unity and solidarity at

national level in nearly all confederations in the Baltic region.

2.Need to concentrate trade union renewal efforts at branch level and in organizing in new companies,

3. Increase capacities of national organisations. Clear targets and sustainable outputs should be established in any international future assistance programmes.

4.Unions in new member states should be equipped to promote the advantages they can offer to members -- legal services, training, participation opportunities at work, health and safety.

5.Full-time Nordic sectoral liaison officers to be based in the region.

Recommendations 5-85. Pooling of resources for the creation of an all-region

Scandinavian-Baltic Trade Union Training School, perhaps along similar lines to the UK TUC Organising Academy.

6. Unions to address the issue of the rising informal sector and the growing numbers of ‘self-employed’ with a view to stopping labour abuses and devising effective recruitment.

7. Attention should be given to enhancing the ‘compensatory social wage’ provisions for workers in the higher wage Nordic countries faced with competition from low wage labour from new member states. Campaigning around this issue would at least recognise some of the realities now facing the construction industry in the more advanced Member States in terms of the longer term difficulties in defending existing wage levels.

Recommendation 8Given the context of ‘Europeanisation’ of the construction labour market an adequate response to the challenges to labour standards and wages in the construction industry is no longer possible at a purely national, or even at a bilateral level.

True ‘All-European Unions’ are required which go beyond national, or even regional union formations.

New structures both in Nordic countries and the Baltics that address the increasingly mobile workforce.

Rebuilding unions from ‘ground zero’ -campaigning for workers rights

• All trade unions Nordic and Baltic should undertake a hard process of ‘continuous renewal’.

• Trade unions in Baltic post-communist society should develop new perspectives and styles of work.

• Trade unions need to become more than simple ‘partners’ with the employers.

• Trade unions need to become credible ‘class bargainers’ which can campaign for and defend their members interests – organising empowers!

• Trade unions need to develop a clear political and economic perspective about the anti-worker nature of contemporary ‘new’ capitalism and the neo-liberal policies which seek to remove worker protections.

The Neo-liberal Attack on Organised Labour

The Politics of Labour Standards

A global neo-liberal offensive

- New forces of ‘globalisation’ require less regulation of labour markets – European Social Model - an outdated concept of the 1960s and the 1970s.

- Major international financial institutions (IMF, World Bank, European Bank for Reconstruction and Development) argue that competitiveness depends on being able to compete in the global market place.

- Social protection measures introduce harmful ‘rigidities’ into the labour market and undermine necessary ‘flexibility’ and ‘adaptability’ (eg minimum wages, too high unemployment benefit levels)

Neo-liberal offensive against the European Social Model

• Attack from within the EU: - powerful individual member states such as

UK, Italy and Germany hostile to ESM, especially during the 1980s and 1990s, and still today (the Third Way of Tony Blair, Germany Hartz IV reforms).

- UNICE – the European Employers Federation afraid of ‘too much regulation’ as a ‘burden on business’

European Commission

• EU’s ‘post-Lisbon’ (2000) retreat from securing employee rights, in favour of promoting growth and competitiveness

• downplaying of the ‘social dimension’ of Europe

• Adoption by EU of many neo-liberal assumptions about regulation and the ‘burden’ it imposes on business

• European Commission programme of ‘updating’ and ‘simplifying’ the acquis

Neo-liberal attack on work standards

• External financial agencies appear to favour deregulation and differentiated standards of OHS protection in Central and Eastern Europe

• ‘overregulation of conditions of employment will diminish the comparative advantage that CEE workers enjoy over their more highly paid western counterparts’ (Washington-based Cato Institute)

• EU criticized because it rejects: ‘the possibility of different levels of safety and health protection of labour within the Union’ and advocates ‘the need to harmonize health and safety standards irrespective of the different needs of the member states’ (Cato Institute, 2003)

• Health and safety regulations contribute ‘to worsening of the workers’ lot,’ by ‘creating an artificial increase in labour costs’ (Cato Institute, 2003)

The Cato Institute

Estonian Employers’ Confederation• “EU labour law is in some parts overregulated

and that the minimum standards have been set too high….

• Without underestimating the necessity for the regulation of occupational health and safety, the Employers' Confederation regards that the compulsory expenses of the employer related to occupational health and safety are disproportionately large in small businesses compared to large businesses …

• The Employers' Confederation will make a proposition to the Government for reviewing the composition of obligations set for micro and small businesses in relation to the work environment with a view of maintaining only the most essential ones and ensuring their competitive ability”.

Regulatory ‘reform’ at European level - ‘Better regulation’ and ‘Soft Law)

• Traditional’ EU Directives replaced ‘by more efficient, flexible and proportionate instruments (for example, framework directives, new approach directives or “softer” regulatory alternatives)’

- Benchmarking

- Self-regulation

- Corporate social responsibility

- ‘Better Regulation’

• The European Commission is committed to improving the regulatory environment within which our businesses operate and in so doing help them compete successfully in global markets.

• Major efforts have already been launched to improve the regulatory environment as part of the so-called Lisbon Strategy for growth and jobs. Consultation procedures have been strengthened, major new proposals for legislation are now subject to impact assessment, and existing legislation is being evaluated on its effectiveness.

• In mid-March, the Commission announced further steps in its Communication on “Better Regulation for Growth and Jobs”. This includes the launch of a major new simplification programme by October, 2005. In order to ensure that the programme responds to real concerns, the European Commission is keen to hear from businesses …which rules need to be simplified because they stand in the way of sustainable growth, deter business investment or hinder job creation.

• Your views are important to us. They will be compiled and examined in the Commission’s “Red Tape Observatory” and will also be examined by the responsible Commission services.

Thank you in advance for your time.José Manuel Barroso, President of the European Commissionhttp://europa.eu.int/yourvoice/forms/dispatch?form=418&lang=EN

Bringing it all back home

Laval, the Services Directive, Sweden and Latvia

The proposed ‘Bolkestein’ Services Directive – (First Version)

• Context of declining European competitiveness and failing Lisbon strategy

• pro-liberalising European Commission seeks to deprioritize social protections

The objective of the proposal is to provide a legal framework that will eliminate the obstacles to:-

1) the freedom of establishment for service providers

2) the free movement of services between the Member States

• The Bolkestein Directive is wide-ranging, including all types of service sector. It effectively treats all sectors of the services industry the same - regardless of whether they are protected, public services monopolies in some member states.

• Bolkestein Directive will reduce member states' control over working practices, open the door for companies to bypass labour and environmental standards,

‘Country of Origin’ Principle

• The so-called 'country of origin' principle will undermine regulation of the labour market in the service sector.

• It wil create a downward spiral as companies re-establish themselves in other countries to take advantage of lower labour standards.

• The Directive will undermine the protective provisions of eg Posted Workers Directive.

‘The SwedishApology’

Diena7 June 2005

Questions to be addressed

• Is the Nordic union strategy to rely on the strength of voluntary collective bargaining arrangements sustainable?

• How can different national trade union movements develop a common strategy that will protect their interests?

• Are we seeing a new ‘race to the bottom’ in which the new member states undermine labour standards in the old member states?