Recent news archive: selections from Mettre à Jour, the European HR Newswire

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Archive: Selected press releases

The new year introduces many changes that are of significance to employers across Europe. Germany takes over the EU presidency and the EU expands by 30 million people through the accession of both Bulgaria and Romania. Slovenia joins the eurozone and minimum wage rates increase in several leading economies such as the Irish Republic, Spain, and Turkey.

Cross-border merger activity is likely to increase from Q1 2007 onwards as companies respond to the Sevic European Court of Justice ruling and EU member states implement the EU cross-border mergers directive (2005/56/EC) ahead of the deadline for incorporation in December 2007.

January 1st 2007

• Germany takes over presidency of the EU.
• Accession of Bulgaria and Romania to the EU.
• Slovenia joins the eurozone as its thirteenth country member.
• Launch of European Year of Equal Opportunities for All.
• European globalisation adjustment fund launched with 500m euros each year to assist workers made redundant due to international competition.
• Improved benefits payable to German working parents of children born on, or after, this date.
• End of transitionary period for on-call payments in Germany. All time spent at the disposal of an employer at a workplace or at another place determined by an employer is now classified as working time - even if the employee is not required to be carrying out active work duties.
• New Czech Labour Code comes into force (with constitutional errors to be subsequently amended).
• Introduction of new rights for Czech working fathers to receive part of paid maternity leave instead of their partners.
• Reduction in Dutch corporation tax from 29.1% to 25.5% .
• Compulsory language and culture test introduced for immigrants in the Netherlands.
• Large increase in upper limit for French EPP tax allowance granted to assist workers on low incomes.
• Irish Republic places limit on the use of tax breaks for those with high incomes.
• New 'early intervention' sickness absence procedure commences in Norway.
• Effective date for new minimum wage for construction workers in Norway.
• Employers in all Swiss cantons required to use the new salary certificate (certificat de salaire) for recording payments to employees.
• Substantial incentives for IT companies introduced through new Russian tax code.
• Statutory minimum wage increases due in Bulgaria, Croatia, Estonia, Hungary, the Irish Republic, Latvia (agreed increase of 33%), Malta, Poland, Portugal, Romania, Spain and Turkey.

January 2nd 2007

• Ban on smoking in workplaces and almost all enclosed public spaces in Jersey.
• National holiday in Bulgaria to celebrate EU accession.
• French Senate scheduled to begin debating new legislative bill on the modernisation of social dialogue.
• Wage negotiations in the German chemical industry scheduled to begin.

January 15th 2007

• Russian federal law on foreign nationals comes into force.

February 1st 2007

• New French law on smoking in enclosed public places comes into force.

March 1st 2007

• Maternity benefit entitlement in the Irish Republic increased from 22 to 26 weeks.
• Liechtenstein government launches new job market service.
• Final increase under Italian national metal industry sectoral agreement. New agreement to be concluded.

March 31st 2007

• End of consultation period on European Commission green paper about modernising labour law to meet the challenges of the 21st century'.
• End of consultation period on European credit system for vocational education and training.

April 1st 2007

• New Dutch Working Time Act comes into force.
• Increase in living wage for disabled persons in Ukraine.
• Increase in paid maternity and adoption leave entitlement in the UK applies to women having babies after this date.

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A yawning pay gap exists between rich and poor countries in the European Union, with German and Dutch workers earning six times more per hour than equivalent workers in Slovakia.

According to Pay in Europe 2006, a report published today by the Federation of European Employers (FedEE), the top ten countries and territories in the European pay league are

1: Denmark, 2: Norway, 3: Switzerland, 4: Liechtenstein, 5: Luxembourg, 6: Germany, 7: Guernsey (Channel Islands), 8: Isle of Man, 9: The Netherlands and 10: Finland.

At the bottom of the league table are 44: Albania, 45: Ukraine, 46: Bulgaria, 47: Belarus and 48: Moldova.

Speaking at the launch of FedEE's Pay in Europe 2006 report today, the Secretary-General of the Federation of European Employers, Robin Chater, pointed out that although there are large differences in the gross pay received by workers across Europe, the picture changes dramatically once tax, social security, holiday bonus supplements and differences in spending power are taken into account. 'These factors all tend to narrow the gap between countries,' he said. 'For example, although median gross hourly earnings in Spain is only 30% of that in Denmark, the real net spending power experienced by the typical Spanish worker is actually 70% of that enjoyed by an equivalent Danish worker.'

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Research carried out by the Federation of European Employers (FedEE) has revealed that the average employee in every EU country works well in excess of their basic contractual hours and that the main reason for this is to cover for colleagues who are taking time off. In countries such as Belgium, France and the Netherlands, more than 20% of employees are absent from work at any given time, whilst in Sweden, work absence amounts to 29.9%. This means that other staff have to work additional time to complete the tasks of their missing co-workers.

Social benefits such as paid annual leave and sickness absence, maternity and parental leave, and part-time working all reduce the staff numbers available for work in any typical week. The governments of many EU member states have further enhanced these entitlements and created additional rights such as paternity leave, sabbaticals and leave to care for dependants. Legally enforceable collective agreements have also gone beyond basic statutory rights to introduce even more opportunities to take time off, and double holiday pay received by workers in some countries makes it more financially rewarding to be on annual leave than at work.

Although additional time-off rights might be seen as an opportunity to generate extra jobs, the fragmented nature of absence due to such factors as sickness, emergency childcare or attendance at ante-natal clinics has meant that the cover required varies from day to day. No jobholder can be expected to have the skills to work in the accounts department on a Wednesday, meet a technical sales representative on a Thursday and then end the week acting as secretary to the production director.

The research has also dispelled a long-standing myth that the UK, with the most liberal working time regulations, has longer working hours than any other EU country. At 44.8 hours a week, average working hours for full-time employees in the UK are similar to those in Austria (44.7 hours) and less than the Netherlands (45.5 hours). This may be explained by the fact that employees are absent from work for only 15.5% of the time in the UK, whilst this figure rises to 23% of the time in the Netherlands.

Commenting on the findings, the Secretary-General of the Federation of European Employers, Robin Chater, said that "rather than seeking to prevent those who wish to work longer hours from improving their income levels, the focus of EU policy makers should be on removing the causes of work absence that are the main reason for obligatory additional working time.

"Our research clearly indicates that it is well meaning policy makers who have created the long working hours culture, not greedy employers seeking to avoid an increase in employee headcounts. Now it is up to the EU and individual governments to wake up to the fact that staff time-off entitlements are the real working time issue and not the questions of standby time or opt-outs from the maximum 48-hour week."

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Employers who impose punitive absence policies on their employees may be defeating their own objectives by reducing the overall health levels of their workforce. According to Robin Chater, Secretary-General of the Federation of European Employers (FedEE), sickness absence policies can only be effective if they address the wider issue of employee wellness in a positive way. "Whenever an employee with influenza feels obliged to attend work, they put all their colleagues at risk of catching the virus. It is much more cost-effective to ensure that staff receive annual flu vaccinations and are given assistance to distinguish between flu and the common cold."

A heavy-handed approach to sickness absence also compounds problems such as stress and depression. Around half of all sickness absence is due to psychological conditions and a high proportion of such cases are work-related. Managers who focus exclusively on 'lost time ratios' and disciplinary procedures will fail to produce the financial returns their policing methods seek to achieve. Their actions could even give rise to substantial damage claims from employees for psychiatric injury.

FedEE has today launched a model company wellness policy to promote a broad, positive and proactive approach to sickness absence. The policy encourages employees to take greater responsibility for their own health issues and sets out detailed methods for managing sickness absence in ways that benefit both a company and its employees. It also incorporates elements that employers frequently manage in isolation from each other, such as job enrichment and equal treatment for those with HIV/AIDS.

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At the beginning of 2005 statutory minimum wage rates throughout Europe rose by more than 50% above increases in living costs.

12 of the 26 countries that operate legal minimum rates revised them on January 1st. In all of these countries, with the exception of Turkey, the changes were at or significantly higher than the level of annual price inflation. In the Czech Republic, for example, minimum rates rose by 7.2% against an annual inflation rate of 2.6%.

The level of the pay safety net remains a highly controversial question in most European states. Minimum rates have been frozen by the Dutch government since 2003 as part of its austerity programme, whilst in France, the introduction of the 35-hour week led to widely differing rates that have only just been standardised. In Spain the socialist government of Jose Zapatero relented last week to trade union pressure by agreeing to index minimum wage rates. In Bulgaria, the government's desire to raise the minimum wage by 25% later this month has been strongly opposed by the International Monetary Fund, but in Russia, the state Duma (parliament) has approved a series of increases in minimum rates that will give rise to an 83% increase over the period from December 2004 until May 2006.

The weakening of sectoral collective bargaining in Germany has recently led politicians to suggest that a statutory minimum wage should be introduced, particularly as negotiated wage rates continue to differ between the east and west German Lander. This debate is likely to resurface during 2005 with Chancellor Schröder's reforms obliging unemployed people to take low paid jobs.

Although the introduction of statutory minimum rates might create an inflationary ripple throughout a country's economy, there is little evidence to suggest that it causes any lasting economic damage. A recent study carried out by the London School of Economics concerning the 1999 introduction of a minimum wage in the UK found that the reform only affected 6-7% of all workers, and that its economic impact only lasted for the two months following the introduction of statutory minimum rates.

According to Robin Chater, Secretary-General of the Federation of European Employers (FedEE), statutory minimium wage rates appear to have a stabilising affect on pay levels in countries where they are in force." He points out, however, that "the problem for some states such as Portugal and many poorer eastern European states is that minimum rates remain well below the level of subsistence and do not provide a realistic starting point for company pay scales."

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2005 is set to be a year of transition and uncertainty in the European Union. At a political level, governments will be striving to gain the backing of citizens for the new EU constitution, whilst social and employment ministers will continue their struggle to put some substance into the Lisbon agenda's goal of making the EU the most competitive and dynamic knowledge-based economy in the world by 2010. Towards the end of 2005, negotiations on EU membership will begin with Turkey, a country that could become a powerhouse for future economic growth throughout the region.

The EU's textile industries will come under severe pressure due to the WTO's removal of trade quotas, whilst the processes of privatisation and market liberalisation (especially in the energy sector) will near completion in many new EU states such as the Czech Republic. 2005 is also the year when the EU's Emission Trading Scheme will begin, a measure that is sure to place increasing demands on companies to reduce CO2 and other atmospheric pollutants.

Luxembourg takes over the EU Presidency on January 1st 2005. This affluent, landlocked state is no longer the smallest in the EU, but future arrangements for shared presidencies will mean that this is the last time it presides over Europe on its own. One of the principal tasks for Luxembourg Prime Minister Jean-Claude Juncker will be to arrange for Bulgaria and Romania to sign up to join the EU in 2007.

Politicians and European Commission officials will need to focus on demystifying the operation of the EU for ordinary citizens and reducing the administrative burden placed upon employers by public bodies. Under the UK's presidency during the second half of 2005, we may even see a modest level of deregulation as EU measures are directed towards establishing the conditions to compete with flexible and low cost production areas in the Far East.

2005 will be crunch time for several important EU proposals, outstanding Directives, and European Court of Justice decisions in the employment field. During the next few months, for example, the European Court of Justice (ECJ) is due to issue its ruling on North-Western Health Board v Margaret McKenna (C-191/03). If the court follows the advice of its Advocate-General, employers across Europe will have to make extensive modifications to their sickness absence policies.

According to Robin Chater, Secretary-General of the Federation of European Employers (FedEE), 2005 is the year in which the EU truly needs to prove itself as a competitive economy. "The pace of change is certainly not slackening at a European level," he said today. "The recent conclusion of a social partner agreement in the European chemical sector, for example, shows how rapidly new labour relations structures can emerge to challenge employers' strategies and assumptions."

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Every employer knows that being taken to court is a costly and time-consuming process, but the risks of court action are particularly high in some European countries and foreign companies are even more vulnerable than local employers.

A typical large company in Belgium can expect to defend 28 court cases brought by present or former employees every year, but a similar firm in Sweden faces an average of only one case every ten years. According to FedEE's litigation league table, Belgium ranks with Poland and the Netherlands as one of the three litigation capitals of Europe, whilst employers in Sweden and Finland rarely need to enter a courtroom.

So what makes employees so keen to go to law in some countries and not in others? In Scandinavia, despite the mass of employment legislation, there are many ways for employees to resolve disputes without the need for court action. In Belgium, however, although it is relatively easy for employers to dismiss staff, there is no formal system for dispute resolution outside the courts.

In the Netherlands, litigation figures tend to be inflated by the need for permission from a court or the regional employment authorities before an employee may be dismissed. In the Slovak Republic, the volume of cases is affected by the sheer amount of time taken to get through the courts - an average of 22 months. And if formal conciliation processes do not work, they will in themselves serve to delay litigation - a particular problem in Poland, Spain and Italy.

UK employers often complain that they face an excess of tribunal applications, but the number is modest by European standards and only one in every four applications leads to a tribunal hearing. From October 2004, the number of UK applications can be expected to fall as statutory dispute resolution procedures take effect.

FedEE's principal purpose is to educate HR professionals in how to avoid needless litigation. Our comprehensive employment law programme has become a key resource in this field since its launch two years ago, offering 24/7 access to the expertise of top legal practitioners in different European countries. Now, with the introduction of on-line certification, HR professionals have a standard by which they can measure their knowledge of international employment laws.

With our new certification scheme, managers can assess the knowledge of their HR staff and deal with any gaps in their expertise. Training is offered in the form of audio-visual webcasts covering 16 different countries, which may be viewed on-line in the members' area of the website. On-line assessment is on a country-by-country basis and certificates are available as soon as a pass level has been achieved. These have been designed so that they may be printed for display purposes, attached electronically to a CV, or incorporated into the new 'Europass' due to be introduced by the European Commission next year.

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Today, more companies than ever are establishing operations across the European Union. But how well-informed are managers about the employment laws in the countries where they set up shop? Compliance has become a critical element in the success of EU expansion, yet many companies are getting it seriously wrong.

Hiring and firing staff in Europe is surrounded by legal pitfalls. For example, an employment contract in France will not be valid unless it is written in French. In the Netherlands, no-one may be made redundant until the employer has gained prior permission from the regional employment office or a court. Other areas of employment law may be complex in their detail; if an employee wishes to change to part-time hours in Germany, their employer's right to refuse depends on whether it is a general request, or within the context of parental leave.

The penalties for getting it wrong can be severe. Earlier this month, the plant manager of an Italian snack food manufacturer faced accusations in a French court that he had ordered the removal of production lines without first consulting the plant's workforce representatives. If the case is lost, he could face a substantial fine and one year's imprisonment. In Germany, over 600,000 cases are brought before labour courts each year. This means that a typical company with around 1,000 employees must find the resources to defend a new tribunal case once every three weeks.

FedEE's on-line employment law programme has become a key resource in this field since its launch two years ago, offering 24/7 access to the expertise of top legal practitioners in different European countries. Now, with the introduction of on-line certification, HR professionals have a standard by which they can measure their knowledge of international employment laws.

With FedEE's new certification scheme, managers can assess the knowledge of their HR staff and deal with any gaps in their expertise. Training is offered in the form of audio-visual webcasts covering 16 different countries, and these may be viewed directly on-line or downloaded for internal presentations. On-line assessment is on a country-by-country basis and certificates are available as soon as a pass level has been achieved. These have been designed so that they may be printed for display purposes, attached electronically to a CV, or incorporated into the new 'Europass' due to be introduced by the European Commission next year.

Speaking at the formal launch of the new certification scheme, FedEE's Secretary-General, Robin Chater, said, "No company operating in more than one European country can afford to ignore this important resource. I am sure that FedEE certification will rapidly become an essential stepping stone in the development of human resource professionals at a European level".

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What are the prospects for human resource management in the ten countries joining the European Union on May 1st 2004? In the second of a series of briefings on EU accession, the Federation of European Employers (FedEE) examines the development of the HRM approach and contrasts the different reporting relationships and functions to be found in typical human resource departments throughout Europe.

Across the ten EU accession states there are few signs of the strategic, business-orientated approach that sets HRM apart from the routine activities of traditional personnel management roles. Many eastern European countries joining the EU are adopting the top-heavy German two-tier board structure and find it hard to shake off their past bureaucratic approaches to HRM.

Companies operating in the accession states face management tasks that are vastly different from elsewhere in the EU. The working week is longer than in the established EU states, with more than twice as many people employed on shifts, working on Sundays and having second jobs. The typical worker in an accession country has less autonomy and more years of service with their current employer than their counterpart in an established EU country.

According to Robin Chater, Secretary-General of FedEE, "the prospects for human resource management in countries such as Poland and the Baltic states may well be influenced by the sharp drop in unionisation that is taking place throughout eastern Europe and the need to manage individual work commitment as the economies grow rapidly to reach western European levels."

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With all to play for, what can the former communist countries joining the European Union on May 1st learn from the experiences of existing EU states?

FedEE's review of the prospects for eight of the new European Union (EU) member states has concluded that they need to avoid the mistakes of most current EU members. Only five countries stand out as examples to follow - the Netherlands, Ireland, Finland, Austria and Germany.

Above all, Germany was singled out for its high level of labour productivity, wage stability and "capacity to modify its employment policies in a relatively painless way".

Despite some criticism of its continued east-west wage divide and inability to fully utilise the skills and potential of its female workforce, Germany was ultimately considered the best model for the new member states to follow.

The review is part of a series of briefing papers on EU accession by FedEE's Secretary-General, Robin Chater. Speaking at its launch today Mr Chater said that:

"The accession states are likely to experience a threefold increase in their labour productivity during the next five to ten years. The choice is open to them to use this improvement in competitivess wisely and become the powerhouses of the new Europe, or to fritter it all away in trying to buy all the trappings of western society before establishing high-performance market economies".

He went on to point out that "The experiences of countries such as Greece, Portugal, Spain and Sweden that have joined the European Union during the last 25 years suggest that it is all too easy to waste the opportunities that EU entry can bring".

© FedEE Services Ltd

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