Scottish Office: Involving Civil Society in the Work of Parliaments

Involving Civil Society in the Work of Parliaments

Section 2: Labour I Capital models of Social Partnership in Europe

2.1 Introduction

This section of the report summarises the degree of involvement of the trade unions and business representatives In the formulation of policy by national governments in several European democracies. The 'European social model' is generally seen as one characterised by social partnership and civic inclusiveness, where the trade unions and employers' organisations are routinely Involved In decision-making.²⁶Some models measure partnership Involvement by the degree of Inclusion extended to trade unions and business associations (see, for example, Compston below) but this can be misleading when analysing the actual institutional structures available to social partners. Effective access for social partners, particular for business and the unions, has often been found through lobbying and, In particular, through close association and involvement in the political parties. This section attempts to highlight the ways In which these traditional social partners have been included, particularly in the sphere of economic policy malting, but also tries to distinguish particular Institutional arrangements that facilitate these partnerships at a parliamentary level.

The extent of union involvement in policy decisions can be 'measured' using Hugh Compston's Union Participation Index (see Figure 7 and Figure 8).

Figure 7: Compston's Index of Union Participation

Category	Score
No participation	0
Narrow consultation	1-3
Broad consultation	4-6
Narrow agreement	7-8
Broad agreement	9-10

Figure 8: Compston's Scores for Union Participation in Government 1970-93

	Average (1970-93)	1 993
France	3.0	3
Italy	6.7	8
Germany	4.5	7
United Kingdom	3.6	0
Austria	9.7	9(1992)
Switzerland	8.0	8(1992)
Netherlands	5.9	5(1992)
Belgium	5.3	5(1992)
Ireland	6.1	6(1992)
- Sweden	8.1	4
Denmark	7.0	9
Norway	7.0	9

This is not in any way a precise measurement but a grouping of categories: a 'mark' of 6 means a greater degree of consultation than a 5, but 8 does not Indicate twice the union participation of a 4. The variables that Compston considers when explaining the degree of fluctuation In union involvement are also applicable to the Involvement of business interests:

The degree of the governing links with unions and business
Whether these social partners had something to offer in negotiations with government e.g. wage restraint, industrial peace, increased investment, joint initiatives with government etc.
The extent of union militancy (i.e. Germany is traditionally more moderate than Italy)
The history of government consultation both formally and informally with these groups.

These factors need to be taken Into consideration when making comparisons between the social partnership arrangements that exist in different countries. For example, the degree of the governing party's links with the unions may cause countries such as Norway to achieve a high participation 'score' but this may not indicate that this is achieved through formal institutional arrangements.

The range of participation in policy decision-making can be broadly characterised in the following way:

Figure 9: Potential Range of Participation

Little or no discussion

Commitments
through
consultation

Bargained
agreements on
a few policies

Agreements on
a wide range
of issues

The following country case studies bring together the available information on traditional social partnership arrangements and provide details, where possible, of the Institutional structures that exist. Significantly more material has been produced dealing with trade union involvement but information about business organisations has been Included where possible.²⁷ In many cases arrangements for economic policy decision making Include both employers and employees but it is the unions that have sought out state intervention more actively. Employer organisations tend to have a more ambivalent relationship to interventionist policies and structures. Some associations consulted for this project preferred to distance themselves from the whole concept of social partnership In favour of a free market, 'hands-off' approach from the state. Business interests tend to be organised in a much more diverse manner, often without single representative bodies such as the TUC.

We begin the case studies with Austria because it has a highly developed concept of social partnership and a range of institutional methods for integrating social partners into the decision-making process. Significantly it is also held to work effectively because Austria is a small nation that needs to promote harmony in order to compete on the International stage.

2.2 Austria

Austria is the classic example of corporatist policy-making based in part on a frequently updated, flexibly written Agreement of the Social Partners that originated in 1957 (last updated 1992). Austrian social partnership is characterised by a system of co-operation between associations representing the employers (Federal Economic Chamber and the Chamber of Agriculture), the employees (Federal Chamber of Labour and the Austrian Federation of Trade Unions) and government representatives.²⁸ The 'chambers' are the distinctive feature of Austrian politics. They are statutory bodies provided for by the Constitution to represent specific constituencies to Government and they play a central role in decision-making. Austrian chambers are not, therefore, directly comparable to the relatively weak 'chambers of commerce' found elsewhere. The mandatory Inclusion of individual economic and professional groups (via the Chambers) In the political process means these groups' interests are strongly represented at the consultation stage of legislation.

The Chambers

Any individual or corporate body, by law, has to register as a member of one of the various chambers that legally represent the interests of professional organisations. The chambers then have the legal power to represent their constituents In all their dealings with public authorities. Many diverse groups are represented in an attempt to democratically symbolise a plurality of interests.²⁹ These organisations are locked into Austria's political system in a variety of ways. All the Chambers have the right to appraise bills and rulings within a certain period of time before they are submitted to the respective legal entity.

Their independence from government is guaranteed by their self-financing through a membership fee. Although they have general powers over their members this is strictly monitored by the state. The Chambers are completely autonomous so the state has no power to dictate except in tasks entrusted by the state to the Chambers. The chambers must however observe state laws.

1. The Federal Economic Chamber

The Federal Chamber is obliged to represent the social, economic and professional interests of its members.

Members: Every person and corporate body allowed to run a company independently. Membership as of 1995 was 320,000.

Decision making bodies: An executive committee (including the presidents of the nine Lander Chambers and the six heads of the Federal departments) and an assembly (executive committee and 42 provincial delegates). The six federal level departments are Trade and Crafts, Industry, Commerce, FinanceCredit-Insurance, Transport and Tourism.

Role:

Legislative

Right to appraise bills
Formulation of proposals for bills

Administration

Right to appraise rulings
Participation in numerous commissions and councils
Fulfilment of State tasks in the areas of apprentice education, diplomas, and certificates of origin.

Negotiates on Collective Agreements with the Trade Unions

Social Security

Sends representatives to the pension, health and accident insurance organisations.

Observer at the Cartel Court

Informal / Voluntary

Availability of problem-solving experts
Participation in the Social Partnership committees
Economic and socio-political policy 'think tank'
Membership of international organisations
Sends representatives to the Economic and Social Committee in Brussels

Services for members

New companies consulting service
Grants and subsidies
Legal advisory service
Job investment
Environment advisory service

2. The Federal Chamber of Labour

The nine L�nder Chambers of Labour make up the Federal Chamber of Labour, which is legally obliged to represent the political, social, economic, professional and cultural interests of its members.

Members: All employees, apprentices, those on maternity leave, and the unemployed. Those employees with the power to employ and certain public servants are excluded. Membership as of 1995 was 2.6 million.

Decision making bodies: The General Assembly, a President, vice-president, executive committee and a Control Committee.

Role:

Legislative

Right to appraise bills
Formulation of proposals for bills

Administration

Control of measures for the protection of employees
Participation in numerous commissions and advisory councils
Right to appraise rulings

Social security

Sending of representatives to the pension, accident and health insurance organisations

Informal / Involuntary

Availability of experts with high level of problem solving expertise
Participation in Social Partnership Committees
Economic and socio-political policy 'think tank'
Membership of international organisations
Sends representatives to the Economic and Social Council in Brussels

Observer at the Cartel Court Services for-members

Legal advice for the protection of employees, apprentices and young people
Social security issues
Wage and tax issues
Environmental protection
Consumer protection
Women's issues
Further education and training
Education and culture
International representation of interests (with the �GB)

3. The Chambers of Agriculture

The Federal Constitution decrees that the interests of the agricultural and forestry population is the concern of the L�nder. Therefore at the Federal level there is the Standing Committee of the Presidents of the Austrian Chambers of Agriculture. This is therefore not a self governing body but instead represents a voluntary union of the nine provincial chambers.

Members: The self-employed who receive their main source of income from agriculture or forestry. This includes the family members who work in the family business. As of 1995 there were 670,000 eligible voters.

Decision making bodies: The most important body in each chamber of agriculture is the general assembly (from 19 to 36 members depending on the province) . This assembly elects the President and the professional advisory committees.

Role:

Legislative

Right to appraise bills
Formulation of proposals for bills

Administration

Function as a 'sub-authority' of the Ministry of Agriculture regarding the implementation and
administration of agricultural policy
Participation in numerous commissions and advisory councils
Right to appraise rulings

Social security

Sending of representatives to the Social Security Institute for Farmers

Informal / Involuntary

Availability of experts with high level of problem-y solving expertise
Participation in Social Partnership Committees
Sends representatives to the Economic and Social Council in Brussels

Services for member

Legal, economic, technical and socio-political advice
Information and advice in the marketing of agricultural products and services
Training programmes
Compiling agricultural and market statistics
International relations

4. The Chambers of the Free Professionals

The Chambers of the Free Professionals represents the professional, economic and any other interests of their members. Membership is a pre-condition for any who wish to practice a 'free profession'. In 1995 the membership of all chambers totalled 551,000. The Federal Chamber is a voluntary association composed of the following chambers:

Austrian Pharmacists Chamber
Austrian Doctors Chamber
Austrian Dentists Chamber
Federal Chamber of Architects and Consulting Engineers
Austrian Rotaries Chamber
Austrian Patent Attorney's Chamber
Austrian Lawyers Chamber
Federal Chamber of Austrian Veterinarians
Accountants Chamber

Role:

Legislative

Right to appraise bills

Formulation of proposals for bills

Administration

Control of professional licensing (carrying lists of professionals, issuing diplomas etc.)

Disciplinary measures

Informal / Involuntary

Availability of experts with high level of problem- solving expertise
Participation in committees and commissions
Membership of international associations
Sends representatives to the Economic and Social Council in Brussels

Services for members

Advice and information
Education and training schemes
Social care

The 'Parity Commission'

The social partners in Austria are primarily concerned with economic policy making, in particular with wages and prices. The three major chambers and the Austrian Trade Union Federation (�GB) co-operate within the 'Joint Commission on Prices and Wages'. This informal, but highly powerful, institution is governed by the principle of parity: the representation of the Chamber of Labour and the 0GB equals that of the Chamber of Commerce and the Chamber of Agriculture.

Figure 10: Membership of the Austrian Parity Commission

Parity Commission
7 Government members	2 members from the 4 employer & employee organisations
Chancellor 3 Ministers 3 Secretaries	Federal Chamber of the Economy	Chamber of Agriculture	Chamber of Labour	Austrian Trade Union Federation(�GB)

This body is the institutional core of the voluntary co-operation of Austria's social partners. Although it is an informal body, with no basis in law and voluntary participation it is broadly consulted in the pre-drafting stage of social or economic legislation. Discussions on policies, measures and strategies are held here. The Federal Chancellor is the chairman and the committee members are the senior representatives of the different partnership associations. The federal ministries related to social and economic affairs are present, and representatives from the National Bank and economic research units can also be called upon for consultations. Recommendations must be approved by the Presidents of the 4 interest groups to demonstrate consensus and this helps to ensure that they are subsequently implemented by the government.

Parity Commission meetings take place monthly:
Every 3 months meetings are scheduled to deal with economic policy that are also attended by the President and Vice President of the National Bank and the Director of the Institute for Economic Research. Meetings are also regularly attended by expert advisors.
Decisions are taken on the basis of unanimous agreement among the four major interest organisations (�GB, the Federal Chambers of Labour, Agriculture and the Economy).
Since 1966 none of the government participants have had voting rights (to maintain parity between the two sides, the parties are seen to be adequately represented through these organisations already). Much of the negotiation required to reach compromises is done between their Presidents before meetings.

The Parity Commission has no formal decision making power over government economic policy but Austrian Governments of all alignments have sought to formulate economic policy within the parameters set by their social partners. It has been described as a form of mutual veto whereby the government cannot act without the consent of its social partners.³⁰

Other Social Partnership Mechanisms

Beyond the work of the Parity Commission and its sub-committees there are further ways for the Social Partners to participate in policy making. This is most prominent at a formal level in the councils and commissions for administration, and informally in consultations on an irregular basis.

The social partners are represented on the General Council of the Austrian National Bank and numerous advisory bodies on economic policy (e.g. taxation, trade and in-vestment).
Draft legislation must be sent to the social partners for appraisal, their comments are usually added to the final draft before being sent to Parliament for reading. This is due to the fact that major economic legislation needs a two-thirds majority in Parliament (because of constitutional ambiguity concerning Federal government competence in economic policy). As a result it is usually able to pass unanimously.

Summary

Since 1987 the social partners influence in certain areas has been weakened by inter party friction and decline, though its role in economic policy making is continues to be extensive. The success of Austria in maintaining consensual corporatist arrangements in economic policy making, even during times of recession and economic crisis, has depended upon far more than mere institutional mechanisms. A deep-rooted history and culture of collectivity means that Austrians tend to apply the principles and attitudes of social partnership even when these may appear to contradict their short-term self-interest.

The position of power of the social partners - industry, farmers, and labour representatives - in the Austrian political system is so great that they are considered the 'secret government' by many. In economic, labour market and social policy, the social partners have a political monopoly, which the government must respect. However these highly formalised partnerships can have significant repercussions for equal opportunities. Erna Appelt, for example, has described the relationship between women and the social partners as a The 'Parity Commission'. does not, it should be noted'. apply its principles of equality of representation to any societal divisions other than those between employers and employees.

2.3 Netherlands

1. The Social and Economic Council (SER)

The most prominent mechanism for social partnership in the Netherlands is the Social and Economic Council'. Sociaal-Economische Raad (SER). It is independent from the government and financed by industry. The SER's role in the legislative process is that it must be consulted on all important measures (national and international) in the economic and social field by the Dutch government. It may be asked questions at any stage in the legislative process or it may forward opinions on its own initiative'. though the government is not obliged to adopt them. These opinions do, however, carry significant weight since they have the support of the employers'. and employees'. associations and therefore they tend to be accepted.

The SER is not only an advisory body'. but also an administrative one. Its administrative tasks consist of monitoring commodity and industrial boards'. which perform a key role in various parts of the Dutch economy. Ah 'industrial board'. represents the interests of a particular branch of industry and is formed by both the employers and union organisations. Additionally the SER is involved in the enforcement of the Works Council Act, the Enterprise Establishment Act and the Insurance Agencies Act.

There are three groups of members represented in the SER (see Figure 11). This is referred to as a tripartite composition and it reflects social and economic relations in the Netherlands. The first two groups are formed by representatives of union and employer organisations. The third group is formed by independent members, so-called 'Crown members'., appointed by the government The Crown members are often university professors'. holding chairs in economics, finance, law or sociology. They are appointed through invitation by the Crown'. but are not accountable to the government. With each appointment special care is taken to maintain a fair balance between the various fields of interest and the political views in the country. Two crown members are appointed in their capacity as president of The Netherlands Bank and director of the Central Planning Bureau. The Chairman is appointed by the government from one of the independent experts on the council's advice. This chairmanship is a full-time position. For the other council members, membership is an additional function. All members of the SER have a corresponding deputy.

All public council meetings and closed meetings of the commissions and working parties are attended by government departmental representatives in the capacity of observers and advisors. These officials are appointed because of their expert knowledge in certain policy making areas, their presence enhances the exchange of information with the various government departments.

Figure 11: Membership of the Dutch Social and Economic Council

Social and Economic Council (SER) 33 members
Employers Representatives 11 members	Union Representatives 11 members	Crown members 11 members
7 from VNO/NCW Federation of Netherlands Industry and the Netherlands Christian Federation of Employers	8 from FNV Netherlands Trade Union Confederation	1 full-time Chairman of SER
3 from MKB Netherlands Association of Small and Medium-sized Enterprises	2 from CNV Confederation of Christian Trade Unions in the Netherlands.	1 Director Central Planning Bureau I President of the Nether lands Bank
1 from LTO Agricultural and Horticultural Organisations	1 from MHP Trade Union Federation for Intermediate and higher Employees	8 independent experts (currently 6 University professors, an advisor from 'Interlace-Executive Search' and the vice-chair of CDA)

Figure 12: Working method of the Dutch Social and Economic Council

In order to fulfil its purpose and give advice on a wide variety of subjects, the council delegates much of its work to a number of commissions ions and a permanent secretariat.

The Council
The council has an executive committee to prepare procedures and complete its tasks. The full council meets on the third Friday of every month. The primary items on the agenda are the discussion and completion of the advisory reports to the government. The advisory reports have previously been comprehensively prepared and discussed in a commission or working party. When the advice in not unanimous on all points, the differences of opinion are set out in the report. The council meetings are usually open to the public, except those that concern matters of individual persons or affairs where public disclosure would be damaging to the national interest.
The Commissions
Commissions and working parties carry out the tasks of the Council and prepare its advisory reports. Like the council itself, commissions are formed tripartitely and consist of employers and union representatives, and independent experts. A commission is in principle chaired by a crown member. Some commissions can give their advice directly to the government, these are the so called 'article 43 commissions' (article 43 of the Industrial Organisation Act).
The Secretariat
In order to prepare and execute its numerous activities the Council has a secretariat at its disposal. It has a workforce of about 160 employees and is led by a General Secretary. The secretariat consists of:
Three Directorates: Economic Affairs Social Affairs Administrative Affairs	Three Staff departments: Financial Affairs Personnel Information
Financial resources
The SER is financed independently of government. The necessary financial means are paid annually by industry through a mandatory tax on the Chamber of Commerce, (in Holland it is compulsory for all businesses to be a member of the Chamber of Commerce). To finance the administrative tasks of enforcing several laws, there are separate taxation and contribution arrangements.

The SER's tasks

Advising the government and parliament: The most high profile role of the SER is to advise the government on social and economic issues. The objectives of the council are:

balanced economic growth and sustainable development
the largest possible labour participation
a fair division of incomes

The SER gives advise'. either solicited or unsolicited, to the government on the main areas of policy. The arguments put forward by the SER are also utilised by Parliament in debates with the government. In this respect the council advises and reports on:

medium-term social and economic developments
European policy
relations between the labour market and education
transport matters
labour and industrial law
consumer affairs
worker participation
industrial policy
social security

These advisory reports are usually published in book form and are available to the public. It is not obligatory for the government to follow the SER's advice but it must provide in-depth feedback to the SER explaining whether or not the advice will be followed. In order to carry out a proposed policy the government needs widespread social support. By asking advice from the SER, the government can learn if sufficient support exists among the representative members of the SER.

Supervision of commodity and industrial boards: The Industrial Organisation Act sets the SER the task of supervising almost 40 industrial boards. These boards represent the interests of a particular branch of industry and are formed by both the employers and unions. Within each board, regular meetings lead to agreements on matters of importance to that particular industrial sector. Industrial boards can also be called upon to implement government measures and guidelines set by the European Union. The SER is the highest authority of the statutory trade organisations and in this capacity it can establish and abolish boards. The SER also decides on the composition of their executive committees, on which both employers and union representatives hold seats.

Only 4 percent of the members of the boards in the economic sector are women. This low percentage can be found at all levels: national, regional and local. The Ministry of Economic Affalrs commissioned a study to find out why so few women were present in these organisations and it discovered that only the employers organisations in the agrarian sector and trade unions had some form of equal opportunities policy.

Enforcement of laws: Although the government is responsible for the enactment and enforcement of laws'. the SER is, in a number of cases'. asked to help with enforcement.

For example,. the SER ensures the enforcement of the Insurance Agencies Act (which requires that insurance brokers must be officially registered) and the Works Council Act (which dictates that every firm in the Netherlands with more than 35 employees is legally bound to set up a workers council).

2. The Foundation of Labour (SvdA)

Dutch trade unions occasionally reach agreements with the government on economic policy via the bipartite Foundation of Labour, Stichting van de Arbeid (SvdA). The SvdA only contains representatives of employers and unions. Its primary concern is with wages and working conditions'. however'. the relevance of wages does lead to the involvement of the SvdA in broader negotiations on economic policy in order to reach wage settlements. Wide ranging negotiations leading to an agreement are rare but they have in the past reached a common policy framework covering employment'. taxation, education and training and social benefits.

Other social partnership mechanisms

The above two institutions - the SER and the SvdA- are embedded in an extensive network of bipartite and tripartite councils and committees that have various degrees of input into the economic policy making. These include:

Sectoral and Regional Councils
Labour Councils
Social agencies
Committees attached to Ministries

Less formally the unions have an input into the policy process via their associated political parties and thus have access to the ministers if they are in Government.

Summary

Consultations with the social partners has been strong in the Netherlands over a broad range of economic policies between 1970 and 1981. The scope of consultation has tended to fluctuate somewhat since.