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Dutch Works Councils in Times of Transition: the Effects of Changes

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Dutch Works Councils in Times of Transition: the Effects of Changes Dutch Works Councils in Times of Transition: The Effects of Changes in Society, Organizations and Work on the Position of Works Councils Jan Kees Looise and Michiel Drucker University of Twente This article assesses the current position of Dutch works councils within their organizations and within the broader system of Dutch industrial relations. The authors use data from a recently conducted national survey on works councils to establish the impact that societal and organizational developments in the 1990s have had on the formal position and actual in¯uence of the works council. These data show that, contrary to popular opinion, societal developments and the introduction of new management concepts have not had a negative impact on the position of the works council. An exception to this is the internationalization of ®rms, which curtails the range of works council in¯uence. Further, the gradual increase in the actual in¯uence of the works council that characterized the postwar period does seem to have levelled off in the 1990s. Keywords: Dutch works councils, industrial relations, internationalization, organiza- tional change Introduction In 2000, the Dutch law on works councils had its 50th anniversary. Over this period the works council has become an accepted and even respected institution, while it has also slowly gained a certain degree of genuine in¯uence in organizational decision-making. State legis- lation, through several revisions of the law on works councils, has always been the main driver behind this development, although the works council has had to earn its position vis-a-vis the initial Economic and Industrial Democracy & 2003 (SAGE, London, Thousand Oaks and New Delhi), Vol. 24(3): 379±409. [0143±831X(200308)24:3;379±409;034867] 380 Economic and Industrial Democracy 24(3) reluctance of both management and unions. Gradually, the works council has come to be seen as an integral part of the `consultation culture' in the Netherlands, not as an extension of the unions, but as a representative body in its own right. This position, however, may be threatened. Several commentators (such as Soete, 2000; Weggemans, 2000) have argued that, in a `knowledge society', indirect forms of participation, such as trade unions and works councils, will become increasingly redundant or irrelevant for managers as well as for workers. They expect these forms of participation to be replaced by forms of direct, possibly even individual, participation. Others (Homan, 1995; Wissema et al., 1995) have come to similar, but less far-reaching, conclusions based on an analysis of internal changes in organizations (¯atter structures, introduction of team work and/or forms of participative management). They expect the works councils, as a consequence of these developments, to change gradually into institutions for co- management and to lose their position as a body representing workers' interests. However, at the same time, it has been predicted (van der Heijden and van der Hulst, 1995) that the works council will have a growing role in negotiations over wages and bene®ts, which in the Netherlands has traditionally been the prerogative of the unions. Again, other commentators (such as van der Heijden, 2000; de Jong et al., 2001) point to the negative effects of the ongoing globalization on the position of works councils in subsidiaries of international companies. If we categorize the developments that are seen as causes of a possible decline, or change, in the position of the works council, we arrive at the following four trends and effects: 1. General developments in society and politics, such as ongoing individualization, changing attitudes of governments, employers' organizations and trade unions, and deregulation of laws, which may lead to a decline in the general support for the works council at national, industrial and organizational levels; 2. The introduction of new management concepts, particularly those involving decentralization and/or direct participation, which may lead to a different appreciation of indirect participa- tion by both managers and workers; 3. The decentralization of collective bargaining, pushing the level of negotiations down to the level of the organization, at which Looise and Drucker: Dutch Works Councils in Times of Transition 381 unions are virtually absent in the Netherlands, thus necessitating a larger involvement of works councils; 4. The ongoing internationalization of enterprises, which leads to the isolation of local and national works councils from decisions made at the supranational level. In this article, we seek to establish to what extent these develop- ments have had an impact on the position of the works council in the Netherlands. Our main data come from a recent survey (van het Kaar and Looise, 1999), that can be seen as a repeat of the previous major survey of works councils in 1985 (Looise and de Lange, 1987). The survey consisted of separate questionnaires for the managing director and a works council member (in most cases the chair of the works council) of a representative sample of organi- zations with more than 50 employees.1 Compared to the survey of 1985, the response rates of the latest survey were rather low: 12 percent (407 responses) for the works council survey and 14 percent (N 475) for the management survey. In 1985, the response rate was 47 percent for both parties. The main explanation for the low response rate is the `research fatigue' of works councils and organizations, which can also be seen in comparable surveys. In recent years, a large number of sur- veys have been conducted in the Netherlands on the functioning of works councils. Comparison of the results of our survey with other, less all-encompassing, surveys (Visser, 1995a; van Brummelen and van den Toren, 1998; van den Tillaart, 1999) does not show large differences. Our survey sample consisted solely of organizations with a works council, so we wanted to compare our response to the actual distri- bution of works councils according to their organizations' size and sector. Since there are no direct data on this actual distribution of works councils, we calculated it on the basis of data on compliance to the law on works councils (Oeij and Stoppelenburg, 1998: 17± 19): the percentage of organizations of different sizes and in different sectors that have a works council. Our response favoured large organizations as well as organizations in the government sector. We have added a weight variable to the cases so as to make our survey more representative in that respect. Comparing the results of the 1985 and the 1998 surveys gives us the opportunity to establish shifts in the position of the works council over the last 15 years. In addition to the results of our own and other surveys, we make 382 Economic and Industrial Democracy 24(3) use of statistical data gathered on behalf of the Dutch Ministry of Labour and Employment. Our report in this article uses mostly descriptive statistics. We start the article with an overview of the position of the works council as it has developed from the ®rst law in 1950 to the time of the 1985 survey. Following this, separate sections deal with each of the four trends summarized earlier. We conclude with an overall assessment of the current and future position of works councils in the Netherlands. Dutch Works Councils in Historical and Comparative Perspective Because of the high degree of legislation, any characterizations of the Dutch works councils have tended to be based on assessments of the consecutive laws affecting works councils. The early works councils, following the ®rst law of 1950, have been described by de Nijs (1987: 89) as bodies for `pseudo-democratization' because of the absence of substantial rights. Visser (1995b: 89±91) has described these early works councils as `paternalistic', because of the dominant position of the managing director in the works council. The absence of sanctions left the establishment of works councils to the discretion of the managing director, while the task of the works council was described as looking after the interests of the company, with recog- nition of the `independence of the entrepreneur'. The latter quali®ca- tion was reinforced by the fact that the managing director of the company also acted as chair of the works council. This concept of the works council ®tted into the dominant ideology of harmonious labour relations, and the then fashionable human relations manage- ment style, and kept the discretion of management over organiza- tional matters, and that of unions over wages and bene®ts intact (de Nijs, 1987: 89±102; Looise, 1989: 256±60). As in other European countries, the labour unrest of the 1960s led to state-initiated attempts in the Netherlands to increase represen- tation of employees and their interests through of®cial channels at the workplace. Streeck (1995: 321±7) shows, through a comparison of different national systems in continental Europe, that in most countries after the 1970s forms of employee participation became a fusion of representative and consultative functions, the latter meaning increasing productivity through consultation. In the Looise and Drucker: Dutch Works Councils in Times of Transition 383 Netherlands, as in Germany, a stronger legislation had preserved works councils from marginalization, which meant that through revision of the law on works councils their traditional consultative function could be `fused' with their new representative functions (Streeck, 1995: 327). Following two major revisions of the laws on works councils, in 1971 and 1979, the formal character of the works council changed. The revision of 1971 included sanctions on the mandatory establishment of works councils, and extended the of®cial tasks of the works council to looking after the interests of the employees, alongside those of the organization. The 1979 revision made the works council a truly `representative' body (Visser, 1995b: 92±3), since its membership became restricted to employees.
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