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EU-28

14 June 2018

EU: ILO underpins the impact of industrial relations systems on cross-country convergence in the EU

In an in-depth assessment of the impact of sound industrial relations on cross-border convergence in the EU, the ILO concludes that, rather than being weakened, systems of industrial relations should be strengthened as a possible leverage to help restore upward convergence across countries.

The International Labour Organization (ILO) published an in-depth report, What effects of industrial relations on convergence in Europe?, at an international conference in Paris on 17-18 May. The report aims to identify the industrial relations mechanisms/systems and outcomes that contribute to equality at work (in areas such as wages, working time, level and quality of employment) and to upward cross-border convergence in Europe that is defined as converging trends on a number of economic (GDP per capita, employment rate, etc.) and social indicators (reduction of poverty, social protection, etc.). It is based on a number of country reports written by high-level experts and a comparative statistical analysis that was carried out by the ILO on EU28 countries.

The study especially highlights four ways in which industrial relations seem to have contributed to national convergence stories:

  • National social dialogue is found to have contributed to convergence. Negotiated national tripartite pacts contributed to maintaining social peace while adjusting labour market conditions to the macroeconomic context.
  • Collective agreements can be an engine of convergence. They have created a favourable institutional environment for the emergence of negotiated compromises aimed at balancing flexibility and security in the labour market.
  • Industrial relations play a role in mitigating the effects of crises, especially in limiting cuts to employment.
  • Industrial relations increasingly help in tackling new issues and challenges that are relevant for convergence, in very different areas such as migration, outsourcing, new forms of contracts and jobs.

During the opening session of the conference, ILO’s senior economist Daniel Vaughan-Whitehead revealed that the convergence process in the EU was interrupted by the crisis, as the common goal of convergence disappeared from public policies and discourses. However, the crisis also acted as a catalyst in most vulnerable countries to put convergence back on the agenda. There was a general decline of collective bargaining and union membership. The systems of industrial relations eroded, with divergences emerging between countries that can be characterised by relatively stable and decent industrial relations and low inequality, and countries where social indicators have declined and income inequality has increased. The conclusion of the study is that, rather than being weakened, the system of industrial relations should be strengthened as a possible leverage to help returning a cross-country upward convergence.   

In the same period to 2018, the OECD launched, in cooperation with the ILO, the report Building trust in a changing world of work, that also underlines the critical role of social dialogue in creating decent work and inclusive growth. According to the report, new efforts are needed to ensure the recognition and realisation of the rights to freedom of association and collective bargaining. The report highlights the crucial role of social dialogue in enhancing the inclusiveness of labour protection and the important role played by social partners in shaping the future of work, through workplace cooperation, collective bargaining and tripartite social dialogue.

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