High consultation and participation countries performing better

What kinds of institution and arrangement are helpful in improving economic, employment, social and environmental performance, such as those included in the EU2020 strategy?

One useful approach is to look at the different EU countries and to see what kinds of practice exist in the countries that are closer to achieving the goals and comparing them with the countries that are further away from the targets. If specific institutions are stronger in the better-performing countries than in the less-well performing countries, this would suggest that these institutions might play an important role in explaining these differences. This approach was already followed in the 2009 edition of this Benchmarking Working Europe report, where it was shown that countries that performed better on the Lisbon Strategy indicators had significantly stronger arrangements for worker participation than countries that performed less well) (ETUC and ETUI 2009). This suggested that strong worker participation could be supportive of the Lisbon Strategy of transition to a knowledge economy, more and better jobs and improved environmental performance.

This article repeats this exercise by focusing on the relationship between the strength of worker participation in the EU member states and their current performance on the EU2020 targets.

Worker participation supports economic and social performance

If countries that perform better on these targets have stronger worker participation than those that perform less well, this would suggest that strengthening worker participation across Europe could be supportive in helping the EU meet the Europe 2020 goals. This would be an additional argument in favour of policies supporting strong worker participation rights.

To summarise the results of the analysis below, countries with stronger worker participation already perform better than countries with weaker participation rights. This suggests that strong worker participa- tion is a supportive mechanism that could be strengthened in order to help achieve the 2020 targets.

In the case of Europe 2020, five headline targets have been  included  in  the strategy. These define a transparent benchmark for measuring the success of the strategy. The five headline targets are as follows:

• 75% of the population aged 20-64 should be employed
• 3% of the EU’s GDP should be invested in R&D
• The ‘20/20/20’ climate/energy targets should be met
• The share of early school-leavers should be under 10% and at least 40% of 30- 34 years old should have completed a tertiary or equivalent education
• At  least  20  million   people   should  be lifted out of the risk of poverty or exclusion

Progress on the five major Europe 2020 targets is measured in terms of eight head- line indicators monitored by Eurostat. Due to their complexity, some of targets have more than one headline indicator. These eight indicators are as follows:

• Employment  rate  by  gender  in the age group 20-64;
• Gross domestic expenditure on R&D (GERD);
• Greenhouse gas emissions, measured in terms of a baseline from 1990;
• Share of renewable energy sources in gross final energy consumption;
• Energy intensity of the economy;
• Proportion of early leavers from education and training;
• Proportion of the age group 30-34 with tertiary education, by gender;
• Proportion of the population at risk of poverty or exclusion.

The strength of worker participation is measured in terms of an updated version of the European Participation Index (EPI) which was used in the 2009 Benchmark- ing Report (ETUC and ETUI 2009). The EPI 2.0 consists of three equally weighted components:

1. Board-level participation - measures the strength of  legal  rights  in each country for employee representation in the company’s highest decision-making body. This classification was developed by the SEEurope network of ETUI and classifies countries in three groups: ‘widespread participation rights’, ‘limited participation rights’ and ‘no (or very limited) participation rights’;
2.  Establishment-level participation – measures the strength of worker participation at the plant level. This is based on an analysis of Eurofound’s 2009 European Company  Survey, which includes data on  the  presence  or absence of formal employee repre- sentation in more than 27,000 companies in the EU27 and other European countries; and
3. Collective bargaining participation – measures union influence on company industrial-relations policies, including an average of i) union density (i.e. percentage of workforce belonging to unions) and ii) collective bargaining coverage (i.e. percentage of the work- force covered by collective agreements). The EU27 countries were classified based on their overall scores on the Participation Index. The score of countries on this index ranged from 0.11 (Lithuania) to 0.83 (Denmark).

For the analysis, two groups of countries were defined  according  to  strength of participation rights. The ‘stronger participation rights’ group includes twelve countries: Austria, the Czech Republic, Denmark, Finland, France, Germany, Luxembourg, the Netherlands, Slovakia, Slovenia, Spain and Sweden. The ‘weaker participation   rights’   group   includes  fifteen countries: Belgium, Bulgaria,  Cyprus, Estonia, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Malta, Poland, Portugal, Romania and the United Kingdom. Each of the two groups accounts for roughly half  of EU27 GDP, making their importance in economic terms approximately equal.

The comparison of the EU27 countries classified by strength of workers’ rights regarding information, consultation and participation (Figure 8.14) shows that the group of countries with stronger participation rights performs better on all of the eight Europe 2020 headline indicators than the group of countries with weaker participation rights. For example, in the case of the first target (a 75 percent employment rate in the 20-64 age group), the stronger participation group is already much closer to achievement of the target (72.1 percent) than the weaker participation rights group (67.4 percent). Similarly, the stronger rights group is already much closer to the target of 3 percent expenditure on R&D than the weaker rights group (2.2 percent versus 1.4  percent).  The  other six indicators also show better performance by the stronger rights group of countries.

Although of course many other factors are also involved in explaining cross- national economic and social differences, these results nevertheless suggest that strong worker participation is part of a set of institutions and practices which sup- port better economic and social performance. Given that the Europe 2020 strategy is targeted at improving this performance, the European Union would be well advised to consider the strengthening of worker participation rights and taking them into account as one of the key instruments for achieving these targets.