Communication from the Commission - Restructuring and employment -  Anticipating and accompanying restructuring in order to develop employment: the role of the European Union
Date: 2005-03-31
Institutions: European Commission
Subjects: EU employment policy, European Employment Strategy, industrial restructuring, labour market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 31.3.2005 
COM(2005) 120 final 

COMMUNICATION FROM THE COMMISSION 

Restructuring and employment 

Anticipating and accompanying restructuring in order to develop employment: the role 
of the European Union 

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COMMUNICATION FROM THE COMMISSION 

Restructuring and employment 

Anticipating and accompanying restructuring in order to develop employment: the role 
of the European Union 

The  Commission  has  proposed  relaunching  the  Lisbon  strategy,  focusing  on  stronger  and 
lasting growth and the creation of more and better jobs. In order to achieve these objectives, it 
is  necessary  to  mobilise  all  national  and  Community  resources  through  an  enhanced 
partnership between the Union and the Member States, but also with the social partners, civil 
society and all players concerned. 

The prosperity and well-being of European citizens depend on economic players and workers 
adapting  rapidly  to  the  current  far-reaching  socio-economic  changes,  which  are  translating 
into the creation and development of new economic activities, but also into the contraction, or 
even disappearance, of existing activities and the related jobs.  

At the same time, the restructuring of enterprises often entails costs that can be very high, not 
only for the workers concerned but also for the local or regional economy. The preservation 
of social cohesion, which is a distinctive characteristic of the European social model, requires 
the introduction of accompanying policies designed to reduce the social costs to a minimum 
and to promote the search for alternative sources of jobs and income. 

It is therefore essential to ensure that restructuring is well-managed so as to meet a two-fold 
economic and social requirement. It is vital for enterprises to adapt to change: if enterprises 
conduct  these  operations  rapidly,  their  competitiveness  can  be  preserved  and  enhanced. 
Moreover,  the  intention  to  preserve  the  employability  of  workers  and  to  facilitate  their 
transition to another job of equivalent quality has an economic impact by taking advantage of 
one  of  the  main  competitive  assets  of  the  European  Union,  namely  the  quality  of  its 
workforce, which is the guarantee of future growth. In addition, restructuring must form part 
of a long-term vision of the development and direction of the European economy in order to 
ensure that the changes really are a way of strengthening its competitiveness. 

The work of anticipating and accompanying these operations is therefore fully in keeping with 
the  Lisbon  strategy  and  is  the  collective  responsibility  of  the  public  authorities,  enterprises 
and social partners.  

Thus, the Social Agenda which was adopted by the Commission on 9 February 2005, at the 
same  time  as  the  Communication  on  the  review  of  the  sustainable  development  strategy, 
foresees  that  the  Commission  will  develop  a  strategy  for  managing  restructuring  operations 
focused on improved interaction between the relevant European policies, greater involvement 
of  the  social  partners,  enhanced  synergy  between  policies  and  financial  levers  and  the 
adaptation of the frameworks of legislation and agreements.  

Restructuring is nothing new. The Union has been developing policies and instruments in this 
area for a long time. Accordingly, in the past, it has played an essential role in restructuring 
the steel industry, and, more recently, shipbuilding and textiles. 

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These  measures  concern  not  only  sectors  in  difficulty.  In  recent  years,  high-level  sectoral 
groups have been set up in order to establish the strategic prospects for many sectors.  

Many  European  policies  contribute,  through  cross-cutting  action,  to  the  objective  of 
anticipating  and  accompanying  restructuring:  the  Directives  on  worker  information  and 
consultation, the European social dialogue, employment policy, financial support instruments, 
industrial and enterprise policy, rural development policy, etc. 

This  Communication  sets  out  the  measures  to  be  developed  or  strengthened  around  the 
various  means  that  the  Union  can  mobilise  to  this  end  through  cross-cutting  and  sectoral 
action. When these measures are implemented, it is necessary to limit as far as possible the 
burdens  imposed  on  enterprises,  while  ensuring  improved  anticipation  and  management  of 
restructuring operations. 

As called for by the Communication on the Lisbon strategy, the European social partners at 
cross-sectoral  and  sectoral  level  have  a  specific  role  to  play  in  the  implementation  of  the 
various strands of the policies set out below. They are therefore invited to respond to the call 
made  to  them  in  point  2.4  of  this  Communication,  which  constitutes  at  the  same  time  the 
second  phase  of  the  consultation  on  corporate  restructuring  and  European  works  councils 
under Article 138(3) of the Treaty. 

1. 

THE CURRENT CHALLENGES 

1.1. 

Analysis of the phenomenon 

The restructuring of enterprises is often seen to be an essentially negative phenomenon, and 
its  immediate  effects  on  employment  or  working  conditions  are  highlighted  in  most  cases. 
And  yet,  restructuring  operations  are  often  essential  to  the  survival  and  development  of 
enterprises. It is therefore necessary to accompany these changes in such a way as to ensure 
that  their  effects  on  employment  and  working  conditions  are  as  short-lived  and  limited  as 
possible. 

Restructuring is the form taken at enterprise level by the permanent reshaping of the fabric of 
production under the effect of numerous factors. 

The  development  of  the  European  single  market  and  the  opening-up  of  economies  to 
international  competition  represent  new  opportunities  in  terms  of  economic  dynamism  and 
competitiveness  for  enterprises  and  the  creation  of  high-quality  jobs.  Thus,  in  general, 
competition on the EU’s internal market promotes prosperity and lasting employment, since it 
is  the  main  driving  force  behind  innovation,  the  creation  of  new  products  and  services  and 
economic renewal. 

Technological innovation also triggers restructuring. On the one hand, the spread of the new 
information  and  communication  technologies  is  making  international  trade  and  the 
coordination  of  production  faster  and  very  cheap,  while  generating  new  applications  that 
produce  more  creative  and  higher-quality  jobs.  On  the  other  hand,  the  development  of  new 
manufacturing  processes  and  production  methods  is  creating  a  move  towards  high-quality 
jobs  requiring  other  types  of  training.  Ecological  innovations,  as  well,  are  creating  new  job 
opportunities and improving our social well-being. 

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The  development  of  the  regulatory  framework  (the  introduction  of  new  regulations  or 
deregulation) is resulting in changes on product and labour markets. 

Major changes in consumer demand are occurring as a result of, among other things, the new 
needs  of  an  ageing  population,  greater  sensitivity  to  environmental  issues  or  changes  in  the 
geography of world demand.  

The reconstruction of the fabric of production entails permanent adjustments: 

Quantitative  aspects:  the  adjustments  lead  to  a  new  distribution  of  workers  across  production 
activities and services. Indeed, Europe is continuing to create jobs: 30 million net jobs created between 
1977 and 2002, with an increase of more than 44 million in services and a loss of at least 7 million in 
industry  and  7.5  million  in  agriculture.  Every  year,  10%  of  European  enterprises  are  set  up  and 
destroyed. It is estimated that between 5 000 and 15 000 jobs are created and destroyed every day on 
average in each of the Member States.  

Qualitative aspects: the tendency in Europe is to move towards higher-quality and more productive 
jobs  in  certain  sectors.  Employment  in  the  services  sector  has  risen  in  the  past  20  years,  employing 
two out of three people in 2003; employment in the sector of services to enterprises has risen by 25% 
in  the  past  five  years.  Between  1998  and  2003,  Europe  (EU-15)  experienced  growth  in  the 
employment  rates  of  the  three  categories  of  workers  (+2.2%  for  low-skilled  workers,  +14.2%  for 
workers with intermediate skills and +25.1% for high-skilled workers). However, the proportion of 
low-skilled workers in total employment fell.  

Workers do not automatically move from one sector to another. The disappearance of certain 
particularly dangerous, arduous or polluting jobs can be seen as something positive if they are 
offset by new ones. However, the new jobs that are created are not necessarily taken up by the 
people  who  have  been  made  redundant  because  the  location  and  the  skills  required  are  not 
necessarily the same in the two cases.  

These  changes  hit  the  most  vulnerable  population  groups,  especially  low-skilled  workers, 
particularly  hard.  The  capacity  of  the  European  Union  to  maintain  a  supply  of  satisfactory 
jobs for these workers is decisive for social cohesion.  

Moreover, apart from this permanent process, shocks linked to technological breakthroughs, 
developments  in  trade  and  state  policy  decisions  can  have  a  dramatic  impact  on  certain 
industries and/or certain regions in terms of the destruction of human capital and the reduction 
of growth potential. These negative consequences can be mitigated if the state authorities take 
appropriate action and there is effective coordination of the players concerned.  

Need to accompany the effects of the deepening of the internal market and of the opening-up of 
the economy to trade 

Overall,  the  opening-up  of  the  economy  produces  benefits  for  growth  and  employment  but,  at  the 
same time, involves costly transformations for the enterprises and employees concerned. Less-skilled 
and more vulnerable workers are hit first, with the opening-up of the economy resulting in a form of 
hidden  redistribution  that  must  be  corrected.  This  correction  is  needed  not  only  to  ensure  social 
justice, but also for political reasons, given the mismatch between the costs – that are limited overall 
but are visible, tangible and concentrated – and the benefits of the opening-up process, which, even at 
a high level, remain hard to pin down: this mismatch directly fuels rejection of the opening-up of the 
economy. Finally, it is an economic necessity, since targeted anticipation policies can reduce the costs 
of change and facilitate transition. 

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 Empirical  studies  generally  show  that  these  costs,  although  hard  to  assess,  are  very  limited  in 
comparison with the benefits that can be expected from the process of opening-up, with a ratio of one 
to twenty in many cases. However, their impact can be far higher, for several reasons: 

- the costs of opening up the economy are generally concentrated in certain sectors or regions; 
- the nature of the costs are not directly offset by the nature of the benefits resulting from the opening-
up of the economy; 
- a certain period of time elapses before the costs and benefits of opening up the economy can be seen; 
- the costs and benefits do not occur in the same place. 

The  link  between  opening  up  the  economy  and  providing  assistance  in  adjusting  to  its  effects  is 
explicit in the USA, which has always considered international trade negotiations and the introduction 
of  measures  to  accompany  the  effects  of  opening  up  the  economy  to  be  two  sides  of  the  same 
international  integration  policy.  The  2002  Trade  Adjustment  Assistance  Reform  Act  more  than 
doubled the financial resources granted to this programme ($1.4 billion for 2004), which benefit both 
the enterprises affected and their workers who suffer the concomitant effects. 

It  is  logical  for  the  EU  to  bear  the  cost  of  the  policies  that  it  implements.  This  will  be  all  the  more 
urgent  in  the  coming  years  since  the  period  that  lies  ahead  of  us  will  be  particularly  marked  by  the 
implementation of trade agreements (end of textile quotas, EU/Chile Free Trade Agreement) and the 
negotiation  of  new  agreements  (Doha  round,  EU/Mercosur  Free  Trade  Agreement,  EU/Gulf 
Cooperation  Council  Free  Trade  Agreement).  This  is  the  sense  of  the  measures  on  Community 
intervention in the event of a crisis that are referred to in point 2.1.3 of this Communication. 

Europe creates jobs every day but, in order to ensure that the new members and those affected 
by restructuring operations can benefit from them, it is necessary to improve the functioning 
of  the  labour  market,  strengthen  active  employment  policies,  anticipate  change  and  provide 
mechanisms  to  facilitate  the  transition  to  other  employment.  There  is  therefore  a  need  to 
strengthen  the  partnership  between  all  players,  focusing  on  pinpointing  the  potential 
comparative  advantages,  and  to  estimate  the  changes  that  can  be  expected  by  market  sector 
and by occupation, and hence by labour market area, so that the players concerned anticipate 
future  developments  more  effectively  as  closely  as  possible  to  the  potentially  affected 
geographical area and population. The same type of comparative advantage can be sought in 
certain areas, for example small and medium-sized cities, with lower degrees of congestion, 
and  attractive  rural  areas,  where  higher  standards  of  living  and  working  are  made  possible 
with lower costs. 

1.2. 

Participating and managing change for the benefit of all 

The above analysis shows that Europe is not facing an inexorable economic and social decline 
but an unsolved challenge, namely the challenge of anticipating and managing change. 

It  is  essential  not  to  lose  sight  of  the  major  impact  of  the  phenomenon  in  certain  European 
countries that are still in a process of transition, and that are faced with far-reaching economic 
and  social  restructuring  that  needs  to  be  given  substantial  support  through  cohesion  policy. 
Nevertheless,  restructuring  is  affecting  the  whole  of  the  Union.  Community  policies  and 
instruments must take account of the diversity of its effects depending on regions and respond 
in a way that is adapted to the whole of Europe. 

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2. 

RESPONSES AT COMMUNITY LEVEL — THE ROLE OF THE EUROPEAN UNION 

These  responses  fall  within  the  more  general  framework  of  the  growth  and  employment 
strategy proposed by the Commission on 2 February 2005, which constitutes the backcloth of 
a  policy  designed  to  seize  all  available  opportunities  and  prevent  restructuring  from  turning 
into a human and social drama. 

Clearly, most of the concrete responses to the present challenges occur at sub-European level. 
For its part, the European Union has useful levers at its disposal to anticipate and accompany 
change. In practice, it has an important role to play in three areas: 

–  through  the  cross-cutting  policies  it  pursues,  coordinates  or  promotes,  it  helps  create  the 
conditions  for  long-term  economic  and  technological  development  and  facilitates  the 
anticipation of change; 

–  by  endowing  itself  with  adequate  capacity  to  identify  sectoral  developments  and 
instruments for reacting to unforeseen events with a concentrated impact in certain sectors 
or regions, the European Union promotes effective coordination among all stakeholders; 

–  by  recognising  the  role  which  the  social  partners  can  play  in  anticipating  and  managing 

change, it gives them the opportunity to play a positive part. 

2.1.  Mobilisation of horizontal Community policies 

(cid:190)  Reinforced coordination of policies 
(cid:190)  Reform of the European Employment Strategy 
(cid:190)  Reform  of  financial  instruments  and  the  role  of  the  Structural  Funds,  also  in  a 

crisis 

(cid:190)  Industrial policy 
(cid:190)  Competition policy 
(cid:190)  External policy 
(cid:190)  Improving measuring instruments 

2.1.1.  Reinforced coordination of Community policies. 

What  is  needed  is  more  convergence  and  synergies  between  the  various  internal  objectives, 
policies and actions.  

This  requires  close  coordination  within  the  Commission,  to  be  achieved  by  setting  up  an 
internal  task  force  involving  the  Commission  departments  concerned,  as  well  as  regular 
dialogue with the European Parliament and the Council. 

2.1.2.  Reform of the European Employment Strategy (EES) 

Based on its Lisbon relaunch proposal, the Commission will propose a review of the EES in 
2005. The employment policy framework will be directed towards three priorities, all of them 
relevant in anticipating and managing restructuring: to attract and retain more people for the 
labour market, to improve the adaptability of workers and companies, and to invest more in 
human capital.  

In  line  with  this  revised  approach,  the  EES  will  provide  more  encouragement  for  national 
policies which contribute to anticipating and accompanying restructuring. 

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2.1.3.  Reform of Community financial instruments for better anticipation and management 

of restructuring 

In  its  proposal  on  the  financial  perspectives  for  2007-2013,  the  Commission  has  suggested 
that the Structural Funds should focus more on the objectives of the Lisbon Agenda, through 
the Community strategic guidelines which will constitute the basis of national strategies. The 
European Social Fund is already financing measures to anticipate and manage restructuring. 
The new draft ESF Regulation confirms this role, in particular in the following contexts: 

•  improving  the  adaptability  of  workers  and  companies  in  connection  with  sectoral  and 

company restructuring;  

•  by  supporting  investment  in  human  capital  and  lifelong  learning;  the  ESF  can  assist  the 
development  of  quality  training  systems  geared  to  local  needs  and  based  on  a  broad 
partnership; 

•  establishing  employment  and  innovation  pacts  and  partnerships  at  national,  regional  and 
local  levels;  for  example,  the  new  regulation  will  foster  the  development  of  systems  and 
tools to anticipate economic and social change; 

•  strengthening the institutional capacity and the efficiency of stakeholders, for example by 

training "change managers"; 

•  strengthening  synergies  and  partnerships  among  vocational  training  and  regional 

development players.  

The  European  Regional  Development  Fund  will  also  play  a  major  role  in  developing  new 
activities, thanks to investment in research and development, dissemination of innovation and 
creation of infrastructures with a view to the sustainable management of resources. 

With regard to rural development, the contribution of rural areas to these objectives will be of 
a different kind to the one expected from urban areas: in low density areas competitiveness is 
more  often  achieved  through  economies  of  diversification,  the  modernisation  of  traditional 
crafts  and 
the  exploitation  of 
environmental amenities, etc.  

innovative  services, 

the  provision  of 

technologies, 

The key financial instruments that Member States will have available in this field will come 
from  the  Agriculture  and  Rural  Development  Fund.  In  this  context,  sectoral  (agriculture, 
industry,  services)  and  territorial  policies  (regional,  rural,  urban,  local)  need  to  act  in 
complementary  and  integrated  ways  in  order  to  maximise  their  growth  and  employment 
impact. 

Other programmes will also contribute to improved anticipation and integration of economic 
change.  The  Framework  Research  Programme  aims  to  strengthen  the  scientific  and 
technological bases of EU industry in order to promote excellence and creativity in European 
research and boost the international competitiveness of the EU economy.  

Education and training programmes play a key role in fostering the creation of a competitive 
and dynamic knowledge-based economy which encourages mobility. This aspect will also be 
reinforced  by  the  adoption  of  the  new  integrated  programme  for  lifelong  learning  for  the 
period 2007-2013.  

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The Community’s capacity to intervene in a crisis 

Despite  efforts  to  improve  the  anticipation  of  change,  unforeseen  events  with  a  severe 
regional  or  sectoral  impact  may  occur  (cf.  1.1  above),  necessitating  public  intervention  in 
order to facilitate the necessary transitions. 

Regional  policy  has  proved  effective  in  this  context,  and  this  is  why,  in  the  financial 
perspectives  for  2007-2013,  the  Commission  has  proposed  the  constitution  of  contingency 
reserves within the Structural Funds (to the tune of 1% of "convergence" funding and 3% of 
"competitiveness" funding, per year and per Member State), which will also be used for this 
purpose,  in  close  association  with  the  regional  authorities  and  social  partners.  It  has  also 
proposed the creation of a growth adjustment fund with an annual budget of €1 billion. 

2.1.4. 

Industrial and enterprise policy 

a) 

Follow-up to the Communication of April 2004 

The Commission will continue to implement the revamped industrial policy which it proposed 
in April 2004. In particular, this will involve improving the regulatory framework applicable 
to companies, supporting their innovation and competitiveness activities, and ensuring better-
coordinated action especially at sectoral level.  

b) 

Reinforced sectoral and regional follow-up 

Better anticipation of change is dependent on a better knowledge of sectors, their outlook, and 
the  levers  which  can  be  used  to  promote  growth  and  employment.  In  recent  years  the 
Commission  has  set  up  high-level  groups,  which  are  informal  temporary  bodies  bringing 
together all stakeholders in order to compare their points of view on each sector's difficulties 
and opportunities and achieve a common vision. 

A  number  of  sectors  have  also  seen  rapid  and  far-reaching  changes,  in  some  cases  with  a 
severe  impact  in  certain  regions  with  insufficient  diversity  in  available  jobs  and  workforce 
skills.  In  view  of  this  experience  and  the  risks  involved,  the  Commission  intends  to  ensure 
more  attentive  follow-up  in  the  sectors  likely  to  experience  significant  changes  in  the  short 
term.  It  will  concentrate  on  analysing  the  development  of  competitiveness,  environmental 
threats and opportunities, consequences at regional level, and measures likely to be taken at 
Community level to anticipate and accompany change. As regards employment and training 
issues, it will involve the European sectoral social dialogue committees where appropriate. 

These  arrangements  will  be  set  out  in  a  communication  being  prepared  on  the  sectoral 
dimension  of  industrial  policy.  In  2005  the  Commission  will  concentrate  its  efforts  on 
developments in the textile and shipbuilding sectors, as well as the car industry. 

c) 

Other measures 

The Commission has also proposed that joint technological initiatives be launched to finance 
programmes  for  the  development  of  socially  useful  products  or  services,  with  the  aim  of 
creating a competitive advantage and creating new markets and jobs. 

Technological  platforms  will  provide  a  forum  where  all  the  parties  concerned  can  identify 
needs on the basis of the current state of research and technological development. 

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It is also essential to make full use of new employment opportunities brought about by present 
trends. The Action Plan on Environment Technologies is a strategic component here. 

2.1.5.  Competition policy 

On  the  whole,  vigorous  application  of  the  competition  rules,  including  control  of  State  aid, 
significantly  contributes  to  long-term  growth  and  employment,  and  helps  bring  about  better 
products and services which, at the same time, reflect distinct European values, in particular 
respect for the environment, as well as acceptable working conditions. 

In the field of State aid, the Commission is working on a reform of its policy on the control of 
State aid, particularly with a view to contributing to the implementation of the Lisbon Agenda 
by redirecting State aid to areas making the greatest contributions to growth and employment. 

With  regard  to  the  control  of  concentrations  between  undertakings,  the  new  Merger 
Regulation facilitates industrial restructuring and responses to the challenges of a globalising 
economy,  whilst  at  the  same  time  ensuring  that  those  mergers  are  stopped  or  modified  that 
would harm competition.  

Employee representatives are in a position to make their views on particular competition cases 
known to the Commission in the course of investigations: 

•  under  the  Merger  Regulation  and  similarly  under  antitrust  procedures,  employee 
representatives already have the right to be heard as third parties; they can submit written 
observations, participate in the oral hearing and request a meeting; 

•  under State aid rules and procedures, employee representatives have the capacity as third 
parties  to  submit  information  to  the  Commission,  which  it  may  take  into  account  after 
having  submitted  such  information  to  the  Member  State  concerned  for  comment;  the 
Commission may also meet with employee representatives to hear their views on particular 
cases.  

2.1.6.  External policy 

The  Social  Agenda,  through  external  measures,  makes  provision  for  the  promotion  of 
employment,  social  policy  and  decent  working  conditions  for  everyone.  This  will  involve 
promoting  fundamental  social  rights,  development  of  the  social  dialogue,  corporate  social 
responsibility  and  social  protection  cover,  as  well  as  proactive  management  of  change  at 
global level. These objectives will be followed up in the context of exchanges between the EU 
and  its  partners,  and  also  with  international  organisations  (ILO,  OECD,  UN,  and  the 
organisations involved in economic governance — IMF, World Bank and WTO). 

Concerning  trade,  the  Commission  will  continue  its  efforts  to  ensure  that  the  Doha 
Development  Round  acts  as  a  development  factor.  It  will  also  endeavour  to  consolidate  the 
protection  of  intellectual  property  and  measures  to  combat  counterfeiting.  Finally,  it  will 
continue  to  take  the  necessary  action  provided  for  in  WTO  agreements  to  counteract  the 
adverse effects of practices which infringe the basic principles of a market economy (illegal 
dumping and subsidies). 

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2.1.7. 

Improved ways and means of measuring restructuring 

The  Dublin-based  European  Monitoring  Centre  on  Change  will  be  asked  to  develop 
quantitative  and  qualitative  analysis  resources  and  the  wherewithal  for  monitoring 
restructuring,  with  a  view  to  building  a  firmer  foundation  for  the  public  debate  on 
restructuring and relocation. 

2.2. 

Strengthening the partnership for change 

(cid:190)  Strengthening the sectoral social dialogue 
(cid:190)  Corporate social responsibility 
(cid:190)  Creating a “Restructuring” Forum 

Apart from the call made to them under point 2.4 below, the social partners have a decisive 
role to play, in two main areas: 

•  within the European sectoral social dialogue committees, it is up to them to develop ways 
of  anticipating  structural  change,  having  regard  particularly  to  the  conclusions  of  the 
negotiations  set  out  in  point  2.4  below,  and  to  their  sectoral  and  regional  monitoring 
initiatives; 

•  given  their  special  knowledge  of  the  sectors,  they  have  a  role  to  play  in  informing  and 
alerting  the  authorities  at  all  levels.  If  the  social  partners  then  decide  to  alert  the 
Commission to a particularly worrying development, the Commission can decide to set in 
motion an enhanced process of sectoral and regional monitoring along the lines spelled out 
in points 2.1.3 and 2.1.4 above. 

The Commission will shortly be tabling a Communication on corporate social responsibility, 
focusing on positive initiatives being taken by firms and the various stakeholders to address 
restructuring.  Evidence  shows  that  companies  which  are  able  to  handle  restructuring  in  a 
socially  responsible  manner  are  often  those  with  better  track  records  in  terms  of  market 
competitiveness and resilience. 

The Commission will set in place a “Restructuring” Forum in 2005. Based on work already 
done  by  existing  organisations,  the  Forum’s  mission  will  be  to  keep  in  regular  touch  with 
ongoing  changes  and  to  ensure  that  the  various  initiatives  are  properly  dovetailed;  this  will 
require  the  participation  of  the  Commission,  the  other  European  institutions,  the  social 
partners and outside specialists. 

2.3. 

Adapting the framework of regulation and agreement 

(cid:190)  Regulatory modernisation and simplification 
(cid:190)  The Green Paper on the Development of Labour Law 
(cid:190)  Promoting worker mobility 

The  first  point  to  be  made  here  is  a  reference  to  the  regulatory  modernisation  and 
simplification measures provided for in the Lisbon Action Programme. 

In the context of its Green Paper on the Development of Labour Law, the Commission will 
look  into  developments  concerning  the  new  models  of  work  organisation  and  the  role  of 
labour  law  in  coping  with  these  changes  and  creating  an  environment  which  will  ease 
effective transition on the labour market. 

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With a view to promoting intra-Community mobility, the Commission will present a proposal 
for a directive concerned with improving the portability of supplementary pension rights. 

2.4. 

The second phase of consultation of the European social partners on company 
restructuring and European works councils 

This second phase of consultation consists of calling on the social partners to become more 
involved in the ways and means of anticipating and managing restructuring. The fact is that 
they are the key players in terms of effective action on the restructuring front. 

This  second-stage  consultation  should  primarily  consist  of  inviting  the  social  partners  to 
continue their ongoing work by encouraging the adoption of their best-practice guidelines on 
restructuring and European works councils. 

As early as January 2002, the Commission made the social partners aware of the restructuring 
issue, asking them to pinpoint and develop throughout Europe instances of good practice in 
terms  of  restructuring.  They  subsequently  spelled  out  reference  guidelines  for  managing 
change. The point of this new phase is to ensure that these guidelines are put into practice and 
developed further, and in particular to encourage the adoption of these guidelines. 

In  April  2004,  the  Commission  launched  a  first  phase  of  consultation  on  revising  the 
European works councils directive. European works councils have an essential role to play in 
anticipating  and  managing  restructuring  operations.  Here  again,  the  social  partners  have 
undertaken  a  Europe-wide  review  to  establish  principles  or  guidelines  based  on  an 
examination of existing councils. 

In the light of this work and these contributions, the Commission takes the view that there is a 
need for more European social dialogue input on these two closely linked questions, as part of 
the  partnership  for  growth  and  jobs  which  lies  at  the  heart  of  the  reinvigorated  Lisbon 
strategy. The Commission is therefore encouraging the European social partners to intensify 
ongoing  work  and  to  start  negotiations  with  a  view  to  reaching  an  agreement  among 
themselves on the requisite ways and means for: 

•  implementing  mechanisms  for  applying  and  monitoring  existing  guidelines  on 

restructuring, and a discussion on the way forward; 

•  encouraging  adoption  of  the  best  practices  set  out  in  the  existing  guidelines  on 

restructuring; 

•  promoting best practice in the way that European works councils operate, with a view to 
making them more effective, more especially as regards their role as agents for change; 

•  devising  a  common  approach  to  the  other  points  in  this  Communication  which  are  of 
concern  to  them,  more  especially  training,  mobility,  the  sectoral  dimension  and  the 
anticipatory aspect.  

The  Commission  will  follow  the  work  of  the  social  partners  and  will  look  at  the  progress 
made between now and the 2006 Tripartite Social Summit. 

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3. 

CONCLUSION 

The  Commission  firmly  believes  that  restructuring  must  not  be  synonymous  with  social 
decline  and  a  loss  of  economic  substance.  On  the  contrary,  restructuring  can  underpin 
economic  and  social  progress  —  but  only  if  such  measures  are  correctly  anticipated,  and 
provided firms can manage the necessary change quickly and effectively, and provided public 
action helps ensure that the change is carried out in sound conditions. 

Policies  aimed  at  blocking  change  and  freezing  economic  structures  can  only  defer  the 
problem and exacerbate the negative effects. They would tend to slow down innovation and 
lead  to  a  loss  of  competitiveness  on  the  part  of  European  companies.  Additionally,  policies 
which  would  in  effect  make  workers  less  employable  would  have  grave  effects  on  growth 
potential and social cohesion. 

It follows that the response at Community level must focus on four essential requirements: 

–  A  need  for  consistency  between  the  various  policies,  if  growth  and  the  ensuing 

restructuring are to avoid destroying human capital. 

–  A need for a long-term perspective encompassing the various Community policies. If the 
economic  and  social  players  are  to  act  effectively,  they  need  to  be  able  to  see  the  way 
ahead. 

–  A  need  for  participation  on  the  part  of  all  the  stakeholders,  first  and  foremost  the  social 

partners. 

–  A need to pay heed to the local dimension — it is, after all, at local level that anticipating 
change  is  most  effective.  Looked  at  from  this  angle,  the  European  Union’s  regional  and 
cohesion policy must act as a catalyst. 

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Annex 

Proposed measures 

•  Review  of  the  European  Employment  Strategy,  focusing  on  three  priorities:  boosting  the 
employment rate, increasing the adaptability of workers and companies, investing more in 
human capital. 

•  Reform of the financial instruments, more particularly to strengthen the contribution of the 
cohesion policy, the ESF and the European education and lifelong learning programmes to 
the Lisbon strategy. 

•  Creation of a growth adjustment fund (to the tune of €1 000 million) and of contingency 
reserves as part of cohesion policy (to the tune of 1% of “Convergence” funding and 3% of 
“Competitiveness” funding) to deal with unforeseen events. 

•  Promotion  of  fundamental  social  standards,  decent  working  conditions  and  the  social 

dialogue in external policies. 

•  Closer monitoring of restructuring by the European Restructuring Monitor. 

•  Enhanced sectoral and regional monitoring of sectors liable to undergo significant changes 

in their short-term competitive situation. 

•  Greater involvement of sectoral social dialogue committees on restructuring issues.  

•  Creation of an internal Commission task force on restructuring. 

•  Creation of a “Restructuring” Forum. 

•  A Green Paper on the development of labour law. 

•  Facilitation of intra-Community worker mobility. 

•  Launch  of  the  second  phase  of  consultation  of  the  social  partners  on  restructuring  and 
European  works  councils,  in  particular  with  a  view  to  encouraging  the  adoption  of  their 
best-practice guidelines on restructuring and European works councils. 

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