Crisis, restructuring, governance and role of the stakeholders

par Salvo Leonardi - 11 Novembre 2008

The financial crisis of these months is provoking a devastating chain of effects on the so called "real" economy. In terms of GNP, domestic demand, fall of the stock-exchange, credits restrictions, industrial production,  unemployment, incomes. Some national economies and states have been terribly next to the bankrupt.

According to the IMF and many other commentators we're coping with: "The worst crisis since the big depression of the 30s" and none knows when and how it will finish. The EU Commission's provisions are of two years of recession. Also the other Asian and American economies will slow down their growth.  

All the provisions about GNPs in 2009 are next to the zero quite everywhere., which means recession. In the Euro area, Italy and Ireland have the worst situation. The situation is not very different in several other countries, out of the Euro zone, including countries like Denmark, Sweden or the UK, where the GNP is expected to decline from +1,0 to - 0,1.

The sudden and severe credit restrictions from the banks are producing a fall in the private consumption. Companies as well have problems in obtaining loans from the banks, especially the SMEs.

Unemployment is increasing quite everywhere. According to Eurostat, in the EU27, 16.572 million men and women were already unemployed in August 2008. Compared with August 2007, unemployment rose by 272 000 in the euro area. It's going up to 7,5% in euro area and 7% in EU27. Previsions are quite bad at least until 2010. Almost 800.000 men and women are unemployed in the United States; at the end of this year they will amount to 1 million. Added to the others, the level of 3mln will be reached, 10% of the workforce.

Quite all sectors are everywhere involved in ongoing processes of crisis, restructuring and redundancies. Building first of all and car industry. In the US, the "three Bigs of Detroit" are suffering big lost of sales: - 35% Ford, - 26% GM, - 24% Chrisler. There could be cuts for 25% of their workforce. In France, Renault will cut 20% of the production during last 3 months of 2008. Peugeot-Citroen factories will be closed for a couple of weeks.The situation is similar for Fiat, in Italy. In Germany VW is doing quite well because of its presence in the emerging economies, but Daimler and BMW are coping with the fall of sales of SUV. The steal industry is stopping production for a while, as Arcelor Mital in France, Belgium and south Europe, or Ilva and Lucchini in Italy. Problems also in chemical, pharmaceutic and tyre products industries. Electronic producers are facing similar situations; from Sony to Motorola to Bang and Olufsen. The crisis does not spare either the new economy and the financial services or the net-economy.

Italy, as Germany, is one of the western Europe countries with the highest portion of employment and GNP covered by manufacturing industry, most of which SMEs. Companies declaring difficulties is increasing day after day. After 7 years of reduction, unemployment has begun to rise up again and now it's above 7% : Compared to the previous year, during the first 6 months of 2008, an increase of 25% of companies'requests was recorded to the labour offices in order to obtain recognition of temporary crisis state and support to keep on paying their workers, even if they're asked to stay at home. Around 1.200 companies. In this case, workers receive 80% of their full wage which, for a country which has been suffering one of the internationally worst wage dynamic, means a further cut on their modest purchasing power. These are people not still dismissed who now receive an average of 1.000 € per month. The depressive effects of  domestic demand are easily predictable, as their economic and social consequences.            

In such a scenario, the concept of restructuring as a continuous process has never been as true as in these days. All influential actors are demanded to do their best and give their contribution.

The Roger Berger's Consulting records that 80% of the 2.000 European managers interviewed declared their intention to restructure their companies in the next 2 or 3 years. Governments and institutions have to recast their policies and public expenditures, supporting - in a different national mix - banks, companies and wage earners. Trade unions, at all levels, have to cope with emergency, trying to reduce the immediate human costs of such a crisis but, hopefully, giving their contribution to find lasting solutions which can help to get out of it.

From this point of view, some of the issues we focused in the trade unions workshops - mainly concerning information and consultation rights, especially in the big TNCs - are still completely valid and important. The problem is that they cannot intervene before the end of a process, therefore, the actors and the choices didn't see any proper involvement of the labour force. And we know, as written in our IRENE report, how this limited and terminal intervention is frustrating for workers and their trade union reps. Today the problem is basically one of macro-economy: a) the public economic policies; b) the industrial policies, if it still does exist something like this. The problem today is to know how to help the economic system to get out off this nightmare. The strategies which must be adopted by international institutions, governments, central banks, companies, social partners. In general terms, the defeat of the neo-liberal recipes, testified by the subprime tsunami and the end of the long conservative era, with the victory of Barack Obama in the US seem to open a new season of economic and social policies, more inspired by values of regulation and society.

Words, concepts and policies, considered as blasphemes during these years of de-regulation, are running again and transformed in acts by governments. I'll just mention the nationalization of some important banks in the UK, the huge public financial support given by many governments to their bank system, as in some European countries or in the US, where the Federal Government is going to aid the three big car groups of Detroit with 25 bln of dollars. With the consequence that European producers are now asking similar measures of support from their governments. Some of which invoke new forms of import limitations in order to protect the domestic (or European) industry and jobs, undermined by the unfair concurrence, the social dumping, the weaker or not existing costs relating to the Kyoto agenda or the new emerging economies. Obama intends to invest in the health and school sectors, discourage off shore delocalisation, give more power to the unions at the workplace level. In Japan, France or Germany governemnts are planning to finance and support investments in strategic sectors and infrastructures in order to re-launch their economy.  

If we need, as we need in fact, more and better regulation - also for what concerns industrial restructuring -  social partners have a crucial role to play. But at all levels, as prominent policy makers, and not only at the company level (basically the big corporations). If we want to prevent the social costs of restructuring and anticipate change, we have to intervene before, during and after the crisis. Trade unions are on the front line.

First of all, the crisis has to be prevented and contrasted through a new support to the demand and to the families' puchasing power, incomes. This requires new investments; a partial reduction of taxes on lower wages; a better income distribution.

In these weeks, the metal workers unions in several countries are next to launch a campaign of actions for better wages, after years of depression. I guess that we now need a new economic policy, a (new) new deal (even if we're aware of the big differences with the situation in which Roosvelt first and the British Labour after put it in practice).

What an ideological mystification, during these years, to give people the illusion that banks loans, families debts, could surrogate low real incomes! After years of financial speculations, work has to be the core of the economic system and of the public policies. 

Secondly, new laws have to stop and turnaround the trend leading to precariousness of employment relationships. At the origin of the today collapse there is the unaibility of a huge number of American families to return the loans received from banks in order to buy their house. The beginning of all must be found in the low wages and precarious jobs of too many American citizens, after more twenty years of neo-cons and reaganomics.     

During the crisis. At the company level this is the domain of  industrial relations and of its typical machinery; including reliable information, consultation and collective bargaining rights; at all the levels (transnational; national; workplace and plant level). Industrial relation systems are notoriously multi-level forms of governance and they are crucial to better manage the restructuring processes. At national level, I'd like to remind that: the most important reforms achieved by the majority of the EU member states - in regard to pensions, labour market and social protection systems - were normally realised through tripartite social pacts (with the exception of very few countries); social partners are often involved in the management of the welfare schemes. As in the case of the unemployment insurance funds, the vocational training, supplementary pension schemes, local welfare; collective bargaining remains a key tool - together with the participation rights - to introduce and manage flexibility at the workplace level.

It's worthwhile to remember that the collective agreement coverage, in Europe, is much higher than in other competitor countries. But if we look in detail, we see: huge differences between the top and the bottom of the European list (only 15-20% in the Baltic states); a dangerous erosion of this important pillar of the European social model, under the joined attack of  undertakings initiative and now the ECJs jurisprudence; the effect of moderation in national wage dynamics, because of the pressure of the stability pact; of the ECB and Ecofin policies. Even stronger collective bargaining systems are subjected to considerable stress: in Germany, in Italy or in Sweden.

After the crisis

Here it's the domain of the welfare schemes and active labour market policies. Reliable lifelong learning systems are needed in order to improve the individuals employability. The recent debate about "flexicurity", in Europe, is part of such a concern. In many EU member states, especially in the southern and central-eastern Europe, social security systems have to be deeply revisited. In particular the unemployment insurance systems:  eligibility criteria, rate of income replacement, duration, duties of the unemployed from the point of view of the means tests or activating. 

The basic social rights (including universal and decent unemployment insurance; good job services) have to be universal, for all citizens, regardless of their legal status. The so called "bismarkian" welfare state systems, which in Europe are the majority, have to learn from the "beveridgian" systems, better in their Scandinavian version. Beveridgian systems (especially in their British and Danish version) have to learn from the Bismarkian systems, the value and the primacy of  job stability as condition of real citizenship and individuals dignity.

In a Europe where nearly 50% of  jobs are atypical and precarious, we've to be aware that job security comes first. Business and companies already enjoy a lot of adaptability and flexibility. Income security and lifelong learning come second. It's not easy in a Europe dominated by centre-right governments, but we can't give up such goals.

Otherwise we have not the right to complain whether more and more European citizens have the image of a Europe which systematically attacks workers' rights and manifest their disaffection to the European project every time they're given the opportunity.

Salvo Leonardi  IRES Italy

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Auteur(s) : Salvo Leonardi

Mots clés : crise financière, crise économique, crise sociale, protection sociale, syndicats, gouvernance, stakeholders, salvo leonardi