How employers perceive the value of works councils

Pre- and post-economic crisis comparison

Valentina Franca, University of Ljubljana

There are several factors, which influence implementation of employee participation. Among these, legal regulation and the management attitude are most frequently mentioned. The management's reluctance to inform and consult with workers' representatives often results in worse and lower exercise of employee participation, although the law provides adequate opportunities for effective cooperation. There are several reasons for the reluctance of the management to employee participation, such as the ignorance of workers’ right as determined by the law, lack of recognition of the benefits of cooperating with workers this way, the system of employee participation is seen as an obstacle to quick and effective decision-making, and the like.

The paper presents an analysis of the quantitative research conducted among the employer organization members in Slovenia. The data was collected in October and November 2018 through a web survey. The questionnaire was sent to all contacts of the employer organization (1793 e-mails), 373 opened the e-mail with the invitation to collaborate in the survey, and, finally, 125 members completed the questionnaire. Thus, the response rate was 7 %. The main purpose of the research was to find out what are employers' attitudes towards implementation of employee participation, where they see deficiencies and opportunities for improvement of the current system of employee participation. The results will be compared to the findings of a similar own research, conducted in 2007. The comparison is important as the legislation has not changed in the meantime, but due to the economic crisis and severe competition it can be assumed that the management may value employee representatives differently.

Nearly half of the companies has a works council and of those 80% also has a trade union at a company level. The results show that works councils have quite a tradition, as a half of the companies with a works council have had the works council for more than 20 years and a quarter of them between 10 and 20 years. In general, they estimate collaboration with a works council as average (3.47 out of 5) and point to communication and information as the main areas that need to be improved. However, on the other hand, the respondents claim that collaboration with a works council enables better communication in the company and greater consideration of employees' interests, as compared to other claims stated in the questionnaire. As regards the question on the work of works councils, the employers are mostly bothered by the former’s inactivity or poor activity as well as the lack of proper knowledge and understanding of their role in the society.

The second set of questions referred to the opinion on the legal regulation or, more specifically, to the scope of rights guaranteed to employee representatives by the Workers Participation in Management Act. More than a half of the respondents consider the existing legislation as appropriate, but nearly a third believe that the law is giving them too many rights. They are at least inclined to the right to co-decide. On the other hand, they see potential strengthening of cooperation with the works council towards their greater activity, standing up for employees, and in innovation, strategic functioning and development.

The third set of questions was intended for all research participants. When asked about which forms of employee participation they think are the most appropriate, they answered information (56%), consultation (46%) and, interestingly enough, employee share in profit (37%). The latter is a very interesting finding, because in Slovenia there is no mandatory employee share in profit or, in other words, it is rarely exercised in practice. In fact, employees have attempted in different ways to further expand this form of employee participation, but no developments have yet been made in this context. Increasingly, discussions revolve around in which cases it would be appropriate to inform employee representatives and when to consult them. The results show that employers are more inclined towards informing works councils about the so-called “business issues”, which is expressed as change of company status (88%), company strategy (76%) and with regard to the questions on company business operations (72%). In general, the respondents are less inclined towards consulting works councils, but more than a half consider consulting a works council regarding human-resource issues, work organization, such as job classification (57%), health and safety (55%) and personnel issues related to layoffs (54%). In the co-determination process as the form of employee participation, there is an extremely low percentage of respondents, in most cases they saw the point of co-determination in connection to health and safety (29%); while they least want to be involved in co-determination with regard the change of company status (5%). So, it comes as no surprise that two thirds of the respondents want statutory changes in the context of decision-making, and a third of those also in the context of consultation. The paper will further discuss the results based on a more sophisticated statistical analysis.

The comparison with a similar survey among 255 managers in Slovenia in 2007 reveals a major trend. One of the main conclusions of the research was that there is a significant positive link between the agreement that informing employees and consulting with them helps the company’s performance and the participation implementation level in both models that were tested. In contrast, support for the co-determination of employees was found to be negatively correlated with the level of implementation, although it was found statistically non-significant. Similarly, the findings of the current research indicate that managers prefer information and consultation rather than co-determination. Also back in 2007, before the economic crisis, managers defended the position that the legislation should be modernized, taking into account the current business trend, and “socialistic solutions should be refined”.

The main contributions of the paper will be 1) in presenting a theoretical overview of the influence of management attitudes on employee participation; 2) analysis of the web-based research among members of one of the Slovenian employer organizations; 3) comparison of research results from 2017 and 2018 on the opinion of the management in Slovenian companies regarding the implementation of employee participation; and (4) making recommendation about further policy-making activities and legislative changes.