Opinion of the  European Economic and Social Committee on the Communication from the Commission — Restructuring and employment — Anticipating and accompanying restructuring in order to develop employment: the role of the European Union (COM(2005) 120 final)
Date: 2005-12-14
Institutions: European Economic and Social Committee
Subjects: ESC opinion, EU employment policy, European Employment Strategy, industrial restructuring, labour market, social dialogue (EU)

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Official Journal of the European Union

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Opinion of the ‘European Economic and Social Committee on the Communication from the
Commission — Restructuring and employment — Anticipating and accompanying restructuring in
order to develop employment: the role of the European Union’

(COM(2005) 120 final)

(2006/C 65/12)

On 28 April 2005 the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned
proposal.

The Consultative Commission on Industrial Change (CCMI), which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 23 November 2005. The rapporteur was
Mr Zöhrer and the co-rapporteur was Mr Soury-Lavergne.

At its 422nd plenary session, held on 14 and 15 December 2005 (meeting of 14 December), the European
Economic and Social Committee adopted the following opinion by 121 votes to 1, with 9 abstentions.

Executive summary

As regards the reform of the financial instruments, the EESC
agrees that they should be directed more towards the anticipa-
tion and management of restructuring.

The EESC welcomes the comprehensive, inter-sectoral approach
selected by the Commission. The Commission has taken up an
for both enterprises and
issue which is equally important
employees. Industrial change and the ability of those affected to
prepare themselves for it are key factors in helping to maintain
competitiveness. Success in this field does, however, depend
upon tackling the social consequences of industrial change.

In the Committee's view, the aim in industrial policy should
now be, above all, to step up the sectoral approach, which
makes it possible to identify tailor-made approaches for the
individual sectors. The improvement of legislation applying to
enterprises is a key point which requires more specific consid-
eration and clarification.

The EESC in essence agrees with the Commission's analysis of
the phenomenon, but would welcome a more in-depth
analysis.

The EESC regards technology initiatives, especially the tech-
nology platforms, as one of the most important means of
improving the situation. Care must also be taken to establish
an environment that is innovation-friendly.

Restructuring always involves fear of adverse consequences,
particularly for workers. But well managed restructuring can
also give rise to new challenges and opportunities.
It all
depends, essentially, on how the situation is dealt with in the
company, how the various stages are managed and how the
various players work together and develop a common spirit
which enables them to identify the opportunities.

The Committee shares the view that answers to restructuring
must be part of the strategy for growth and employment.

Closer coordination within the Commission through the estab-
lishment of a task force and regular dialogue with the European
Parliament and the Council are welcome measures.

the question arises as to
Turning to competition policy,
whether the measures currently available are adequate. In this
connection, the EESC stresses the need for greater focus on the
relationship between state aid, restructuring and production
relocation.

The EESC takes the view that the Dublin-based European Moni-
toring Centre on Change (EMCC) also has a key role to play.

Special attention should be paid to the extension of the sectoral
social dialogue. The EESC agrees with the Commission that, by
virtue of their sectoral knowledge, the social partners are able
to play a special role in alerting the authorities. This instrument
should, however, not only come into play in crisis situations.

The EESC awaits with interest the Communication on Corporate
social responsibility (CSR) announced by the Commission.

The EESC broadly endorses the priorities set out by the
Commission in respect of the review of the European Employ-
ment Strategy. The Employment Strategy cannot be addressed
without reference to the macroeconomic context and industrial
policy.

The EESC welcomes in principle the establishment of a Restruc-
turing Forum. The Forum's aim must be to explain best practices
and discuss local barriers (regulations) to introducing them.

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In addition to the regulatory modernisation and simplification
measures already provided for in the Lisbon Action Programme
— measures which the EESC has always welcomed — the
Commission announces that it is to submit a Green Paper on
the development of labour law. In restructuring, perhaps more
than elsewhere, the aim of developing labour law must be to
ensure a balance between flexibility and security.

With regard to promoting intra-Community mobility, the EESC
regards the proposal for a Directive on Improving the port-
ability of supplementary pension rights — the sole proposal
put forward — as being a somewhat meagre contribution. A
package of incentives to facilitate mobility will have to be
considered involving areas such as qualifications, the labour
market, social legislation and taxation, including the removal of
administrative barriers to the free movement of labour.

The EESC welcomes the idea of giving the social partners the
opportunity to continue, in concrete terms, their work on the
subject of restructuring.

European Works Councils (EWC) have a significant role to play
in company restructuring. Consultations on the review of the
EWC Directive should therefore embrace this issue, but they
need to cover a broader context.

the Commission's conviction that
The Committee shares
restructuring must not be synonymous with social decline and
a loss of economic substance.

Adverse consequences for workers cannot be entirely avoided.
In addition to the requirements set out by the Commission,
therefore, measures taken at Community level must also aim to
give workers the necessary protection in periods of transition.

zontal and a sectoral perspective and proposes a series of
measures in a variety of EU policy areas.

Since the Commission Communication is intended for a
1.3
wide public,
includes general points, particularly
regarding the restructuring faced by businesses in the common
situation of grappling with the need to adapt.

the text

2. Gist of the Commission document

2.1
The Commission firmly believes that restructuring must
not be synonymous with social decline and a loss of economic
substance. On the
restructuring can underpin
economic and social progress — but only if such measures are
properly prepared, and provided firms can manage the neces-
sary change quickly and effectively and there is public action to
help ensure that the change is carried out in sound conditions.

contrary,

2.2
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 poli-
cies designed to minimise the social costs and to promote the
search for alternative sources of jobs and income.

It follows that the response at Community level must

2.3
focus on four essential requirements:

— A need for consistency between the various policies,

growth and the
destroying human capital.

ensuing restructuring are

if
to avoid

1. Introduction

1.1
Both the Social Agenda, which was adopted on 9
February 2005, and the Communication on the Review of the
sustainable development strategy (1), foresee that the Commis-
sion will develop a strategy for managing restructuring opera-
tions focused on improved interaction between the relevant
European policies, greater involvement of the social partners,
enhanced synergy between policies and financial
levers, and
legislation and collective
the frameworks of
adaptation of
agreements.

The Commission's Communication of 31 March 2005
1.2
on Restructuring and Employment (2) sets out the measures
which the EU has to introduce or strengthen in order to mobi-
lise its available potential. The Commission adopts both a hori-

(1) The 2005 Review of the EU Sustainable Development Strategy;
Initial Stocktaking and Future Orientations (COM(2005) 37 final),
dated likewise 9 February 2005.

(2) COM(2005) 120 final.

— 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. The
European Union's regional and cohesion policy must act as
a catalyst here.

2.4
The Communication sets out the measures to be devel-
oped or strengthened by mobilising the various means available
to the Union 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 opera-
tions.

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Specifically, Annex I to the Communication sets out a

2.5
series of 12 proposed measures, including:

3.3
The EESC agrees in principle with the Commission's
analysis of the phenomenon. Essentially, the Commission sets
out four main reasons for restructuring:

— review of the European Employment Strategy;

— The development of the European single market and the
opening-up of economies to international competition.

— reform of

the financial
growth adjustment fund;

instruments and creation of a

— Technological innovation.

— creation of a ‘Restructuring’ Forum;

— The development of the regulatory framework.

— enhanced monitoring of sectors most liable to undergo

restructuring in the short-term.

— Changes in consumer demand.

3. General comments

The EESC welcomes the comprehensive,

3.1
inter-sectoral
approach selected by the Commission. The Commission has
taken up an issue which is equally important for both enter-
prises and employees. The EESC has already set out its views
on this issue in various earlier opinions. Industrial change and
the ability of those affected to prepare themselves for it are a
key factor in helping to maintain competitiveness. Success in
this field does, however, depend upon tackling the social conse-
quences of industrial change.

3.2
The Commission's Communication addresses the issue
of ‘restructuring’. A question which clearly also arises in this
context is how this term is to be defined. In a variety of earlier
opinions, the EESC drew the following distinctions between
‘industrial change’ and ‘restructuring’: ‘industrial change’ repre-
sents an ongoing process of development in a given enterprise
or sector, whereas ‘restructuring’ refers to a specific form of
industrial change, generally characterised by an abrupt process
of (frequently forced) adjustment to take account of general
economic conditions with a view to regaining competitiveness.

that

Even if the Commission does not make this distinction
3.2.1
between the two terms, which would make the text clearer, the
EESC recommends
a more differentiated
it pursue
approach. The key to tackling industrial change is clearly to be
found in the anticipation and pro-active shaping of this change.
Industrial restructuring, for its part, presents a growing and
more complex challenge in a global context. These two issues
require the adoption of a different approach and different
measures.

The Commission restricts its analysis, then, to very
3.3.1
issue is whether
familiar unspecific factors. Another crucial
restructuring is the subject of
long-term planning to avoid
certain developments or is triggered at short notice by external
pressures or management failures. One example of this is the
development of the relationship between market potential and
production capacities: ignoring this will result in overcapacities,
which sooner or later are themselves a cause of restructuring.
As these scenarios imply different approaches, the Committee
would welcome a more in-depth analysis.

3.3.2
Restructuring always involves fear of adverse conse-
quences, particularly for workers. But well managed restruc-
turing can also give rise to new challenges and opportunities.
There are many examples of successful and less successful
restructuring. It all depends, essentially, on how the situation is
dealt with in the company, how the various
stages are
managed and how the various players work together and
develop a common spirit which enables them to identify the
opportunities.

The Communication proposes few practical measures
3.4
and some are merely announced for the future. The EESC is
aware that the Commission cannot go much further as things
stand, but it feels nonetheless that the Communication is a
useful basis for developing Community policy on this issue,
and that that policy requires coordination among the directo-
rates-general concerned and the Member States.

4. Specific comments

4.1
The EESC agrees that responses to restructuring must
form part of the strategy for promoting growth and employ-
ment. Tackling industrial change can make a key contribution
towards achieving the Lisbon objectives.

3.2.2
The promotion of change cannot be an end in itself. A
clearly defined and forward-looking long-term industrial policy
can exert a positive influence on change and mitigate its conse-
quences by giving rise to new opportunities. The Committee
will examine the new Commission Communication on a new
industrial policy (COM 2005 — …) in this light.

4.1.1
In this regard, the EU must consider what contribution
it can make in addition to the measures adopted at local,
regional and national level. It has an essential role to play in
furthering the discussion process in the Member States and
helping to raise awareness of the issue. It can also use all the
instruments at its disposal to anticipate and foster change.

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4.2 Mobilising horizontal EU measures

Involving all

Closer coordination within the Commission through
4.2.1
the establishment of an internal task force, and regular dialogue
with the European Parliament and the Council are welcome
measures.
the directorates-general concerned
could help to develop synergies between the different areas of
policy seeking to anticipate and manage change. In the EESC's
view, however, steps must be taken to ensure that the task
force concentrates on its coordinating role and that responsibil-
ities for legislation and the implementation of EU measures
continue to be clearly defined within the Commission.

4.2.2
The EESC broadly endorses the priorities set out by
the Commission in respect of the review of the European
Employment Strategy. In this connection, there needs to be par-
ticular focus on training, lifelong learning and effective organi-
sation of work,
including sound management of human
resources. The Employment Strategy cannot be addressed
without reference to the macroeconomic context and industrial
policy. The coordination of economic policies with industrial
policy and the Employment Strategy would enable change to
be managed better.

Stable, predictable and coordinated macroeconomic conditions
in Europe are an important basis for successfully managing
restructuring measures.

The local conditions in which restructuring takes place are
crucial and must be integrated into an overall policy.

4.2.3
As regards the reform of the financial instruments, the
EESC agrees that they should be directed more towards the
anticipation and management of restructuring, but feels that
the general objectives of the existing Funds should be retained.

The financial

4.2.4
instruments proposed by the Commis-
sion under the heading ‘the Community's capacity to intervene
in a crisis’ were initially regarded with scepticism in the
Council. However, in the Committee's view, a detailed discus-
sion on the possibilities of financial
intervention to facilitate
change where unforeseen events have had severe regional,
sectoral or social repercussions is still necessary. It therefore
supports the Commission in its endeavours to create a set of
instruments of this kind.

4.2.5
The EESC has already set out its view on industrial
policy in its opinion of December 2004 (3). In its view, the aim
should now be, above all, to step up the sectoral approach,
which makes it possible to identify tailor-made approaches for
the individual sectors. These measures should not, however,
only embrace economic fields which are in a state of crisis;
analyses should be carried out in the greatest possible number
of sectors which are of importance to the EU in order to tackle
industrial change at an early stage and take a pro-active line in
shaping change. The social dialogue needs to play an essential
role in this context.

(3) JO C 157 of 28.6.2005 – Fostering structural change: an industrial

policy for an enlarged Europe (COM(2004) 274 final).

The improvement of legislation applying to enterprises is a key
point which requires more specific consideration and clarifica-
tion, with a view to easing the burden on enterprises without
lowering social and environmental standards.

4.2.6
The EESC also regards the technology initiatives, espe-
cially the technology platforms, as one of the most important
means of improving the situation. Technological innovation is
the key to breaking out of apparent gridlocks, particularly in
the fields of energy, waste emissions and product recycling.
The ensuing technological advances would help to make the
industrial sectors concerned competitive once again.

4.2.6.1
In this context, steps also need to be taken to ensure
that an innovation-friendly environment is created. The crucial
elements here are tax incentives and protection of intellectual
property. However, consideration should also be given to the
need for organisational and social
innovation when tackling
restructuring.

4.2.7
Turning to competition policy, the question arises as
to whether the measures currently available are adequate. An
increasing number of elements affecting competitiveness which
are not addressed by competition policy are playing a promi-
nent role; one example is corporate taxation.

As regards state aid, reform redirecting aid towards the areas
which contribute most to growth and employment is still a
long way away. In this connection, the EESC stresses the need
for greater focus on the relationship between state aid, restruc-
turing and production relocation. The rules on state aid must
remain non-discriminatory and promotion of social cohesion
must continue. In this context, the Committee recommends
that particular attention be paid to practices outside the Euro-
pean Union.

4.2.8
has already set out its views in a number of opinions.

On the subject of the EU's external policy, the EESC

The EESC takes the view that the Dublin-based Euro-
4.2.9
pean Monitoring Centre on Change (EMCC) also has a key role
to play with a view to developing the requisite analytical instru-
ments for monitoring restructuring. The CCMI should continue
to strengthen its cooperation with the Monitoring Centre.

4.3 Strengthening the partnership for change

4.3.1
Special attention should be paid to the extension of
the sectoral social dialogue. The EESC agrees with the Commis-
sion that, by virtue of their sectoral knowledge, the social part-
ners are able to play a special role in alerting the authorities.
This instrument should, however, not only come into play in
crisis situations but should apply in the case of all situations in
which, in the view of the social partners, there is a need to take
action, not only when they wish to alert the Commission to ‘a
particularly worrying development’. This approach would be
more in line with the requirements in respect of anticipating
and accompanying restructuring.

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4.3.2
The EESC awaits with interest the Communication on
Corporate social responsibility (CSR) announced by the Commis-
sion; this will focus on positive initiatives being taken by enter-
prises and the various stakeholders to address restructuring.
There is clearly a need to publicise and promote not only the
development of the legal bases but also examples of good prac-
tice in tackling change. The EESC draws attention, above all, to
the need to take account in these processes also of those
parties which are indirectly affected by the restructuring of
individual enterprises (e.g. suppliers, service-providers, etc.).

The EESC has already set out its views on CSR in an earlier
opinion.

4.3.3
The EESC welcomes in principle the establishment of
a Restructuring Forum. The Forum's aim must be to explain best
practices and discuss local barriers (regulations) to introducing
them. It is still too early to assess the results. The Committee is
very willing, however, to contribute its expertise to the Forum
and help to ensure it adds value to EU policy-making. For this
to happen, its modus operandi must not entail the creation of a
new bureaucracy and it must focus on those questions which
have so far not been adequately addressed. The civil society
organisations concerned must have the opportunity to take
part in its work.

4.4 Adapting the framework of regulation and collective agreement

In addition to the regulatory modernisation and
4.4.1
simplification measures already provided for in the Lisbon
Action Programme — measures which the EESC has always
welcomed — the Commission announces that it is to submit a
Green Paper on the Development of labour law. In restruc-
turing, perhaps more than elsewhere, the aim of developing
labour law must be to ensure a balance between flexibility and
security.

4.4.2 With regard to promoting intra-Community mobility,
the EESC regards the proposal for a Directive on Improving the
portability of
supplementary pension rights — the sole
proposal put forward — as being a somewhat meagre contribu-
tion. Worker mobility in relation to restructuring is a very
complex issue and cross-border mobility is just one aspect of it.
Workers must be able to adapt to new circumstances brought
about by restructuring. At the outside, this could mean a career

Brussels, 14 December 2005.

change or looking for a new job. Thought therefore needs to
be given to what measures must be taken at Community,
national or regional
level to make this transition easier for
workers. A package of incentives to facilitate mobility will have
to be considered involving areas such as qualifications, the
labour market, social
including the
removal of administrative barriers to the free movement of
labour.

legislation and taxation,

4.5 Second phase of

the consultation of

the social partners on

company restructuring and European works councils

for the first

The Commission has here,

4.5.1
time in a
Communication aimed at a wide readership, initiated a consul-
tation of
issues. This
method is not universally endorsed and it has yet to be estab-
lished whether the right process for consulting the social part-
ners has been selected in this case.

the social partners on two different

4.5.2
Irrespective of these procedural questions, the EESC
welcomes the idea of giving the social partners the opportunity
to continue, in concrete terms, their work on the subject of
restructuring.

4.5.3
European Works Councils (EWC) have a significant
role to play in company restructuring. Consultations on the
review of the EWC Directive should therefore embrace this
issue, but they need to cover a broader context. The right of
employees, laid down in the EWC Directive, to be informed
and consulted is not confined to the issue of restructuring.

4.6 The Commission's conclusions

4.6.1
The Committee shares the Commission's conviction
that restructuring must not be synonymous with social decline
and a loss of economic substance. Restructuring can make an
appreciable contribution to economic and social progress. But
the Commission has rightly noted, the conditions in which
restructuring takes place are of crucial importance.

4.6.2
However, adverse consequences for workers cannot be
entirely avoided. In addition to the requirements set out by the
Commission, therefore, measures taken at Community level
must also aim to give workers the necessary protection in
periods of transition.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND