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EMPLOYEE VOICE IN THE NETHERLANDS

EMPLOYEE VOICE IN THE NETHERLANDS. OMNES Air France KLM seminar on Corporate Governance May, 31, 2011 Basis & Beleid Organisatieadviseurs BV Evert Smit. Contents. Introduction Industrial relations in the Netherlands Co-determination Financial participation Trade unions and shares

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EMPLOYEE VOICE IN THE NETHERLANDS

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  1. EMPLOYEE VOICE IN THE NETHERLANDS OMNES Air France KLM seminar on Corporate Governance May, 31, 2011 Basis & Beleid Organisatieadviseurs BV Evert Smit

  2. Contents • Introduction • Industrial relations in the Netherlands • Co-determination • Financial participation • Trade unions and shares • Conclusion Employee voice, OMNES, May, 31, 2011

  3. Introduction • Basis & Beleid : ‘Grass roots & policy’ (‘base & politique’) • Founded in 1991 by Industriebond FNV (now FNV Bondgenoten) • Independent consultancy firm • Mission: employee voice • Activities: • Consultancy to works councils (restructuring, mergers, acquisitions) • Research and consultancy on employment relations • Evert Smit: since 1995 at Basis & Beleid; lecturer industrial sociology and employment relations (Erasmus University Rotterdam, Tilburg University) Employee voice, OMNES, May, 31, 2011

  4. Industrial relations in the Netherlands • The “big deal” of 1945: union federations have, on behalf of the workers, voice in national socioeconomic policies, leave governance of companies to employers; accept management prerogative • Consultation at national level (union federations, employers’ organizations, government) (“poldermodel”) • Collective bargaining at sector level • No union presence at company level, works council = consultative body • Collective bargaining coverage 85% • All over union density 23% (2000) (France: 8%). • FNV (General [Socialist/Catholic]) – 1.376.000 members (2009) • CNV (Christian) – 335.000 members (2009) • MHP (middle management, white-collar staff) – 160.000 members (2006) Employee voice, OMNES, May, 31, 2011

  5. Codetermination • Debate around new works council act 1979: • Keep power (employers’ organisation) • Share power (CNV) • Control power (FNV) • Function of works council: to represent employee interests ánd the sound functioning of the organisation in all its objectives • On labour conditions the Collective Bargaining Agreement has primacy • Division of labour: bargaining on labour conditions by unions; consultation about componay policies bij works council Employee voice, OMNES, May, 31, 2011

  6. Codetermination (cont.) • Powers: • Render advice (restructuring, merger, large investments, etc.) • Approval (social and personnel policies) • Information (an unrestricted right to all information needed) • Nomination of member of supervisory board (not atively used) • Works council in practice: • Accepted by employers as consultative body • 75% of companies have works council • Key position in corporate restructuring • In some (crucial) cases coalition with supervisory board member Employee voice, OMNES, May, 31, 2011

  7. Financial participation • Trade union position on employee shares: • Not part of their policies, focus on control of power • Not really against employee shares • CNV proposal in aftermath of financial crisis: “dividendless” participation shares for employees of listed companies • NPI (NL Participation Institute) supports employee shares, but very small. • Employee shares occasionally used during restructuring and takeovers. Generally not strategically used to influence company policies. • Employee shares and options in remuneration policies of (financial) corporations to foster motivation of professionals. Heavily criticized as part of unhealthy culture of bonuses. Employee voice, OMNES, May, 31, 2011

  8. Unions’ shares • Equity of unions partly in shares. Investment policy based on UN Principles for Responsible Investment (UNPRI). Not primarily aimed at strategic influence on corporate policies. • On the boards of Pension funds (governed by employers organizations and unions). UNPRI type of principles. Primary focus on keeping up the value of the equity. • Former union leaders in the Boards of major corporations (Kok, de Waal), role in remuneration policies criticized. • Occasionally FNV unions buy shares to have a voice on the share holders meeting (Stork NV). Employee voice, OMNES, May, 31, 2011

  9. Conclusion • Role of unions: consultations at national level, collective bargaining, individual interests. • Union policy on corporate governance primarily focused on control of power. • Works council is the main body of employee voice in corporate governance. Employee voice, OMNES, May, 31, 2011

  10. Employee voice, OMNES, May, 31, 2011

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