Works Councils: EC Draft Directive (Hansard, 19 May 1993)

§ Viscount Goschen
My Lords, the Government are strongly opposed to the draft directive which would require many transnational companies to establish European works councils. We have made our position clear in negotiations, and will continue to do so.

§ Lord Boyd-Carpenter
My Lords, I thank my noble friend for that Answer. Will be take it a little further and indicate that Her Majesty's Government will use all possible means to resist the proposal? Will he also identify the British industries which are directly affected?

§ Viscount Goschen
My Lords, the Government believe that there is no proven need for the proposals. Many companies already operate across borders and successfully involve their workers within the framework of existing and differing employee involvement practices. The industries that would be affected are those with transnational interests.

§ Lord Stoddart of Swindon
My Lords, is this a matter to be decided by qualified majority voting, or do the Government have a veto?

§ Viscount Goschen
My Lords, at the moment the Government have a veto.

§ Lord Ewing of Kirkford
My Lords—

§ Lord Harmar-Nicholls
My Lords, is my noble friend aware that in his replies he has not even hinted that we have the power to stop the directive being used. If that is the case, how does he square it with the social chapter of Maastricht which was supposed to make this type of thing impossible? It seems to me to be a pyrrhic victory if we have to implement it under the Treaty of Rome although it is suggested that we might be protected under the Maastricht Treaty?

§ Viscount Goschen
My Lords, my previous answer set out the situation as it is at present. The Government opted out of the social chapter to protect British employers and employees from laws and regulations which would add to costs, reduce competitiveness, and destroy jobs.

§ Lord Rochester
My Lords, would not a more constructive response to the draft directive be for the Government to introduce legislation, as we on these Benches have long advocated, requiring all companies employing more than a certain number of people in the United Kingdom to have bodies of a kind that would enable employers to inform and consult employee representatives on matters of concern to them as employees and affecting the business?

§ Viscount Goschen
My Lords, the Government are firmly committed to the principle of employers informing and, where appropriate, consulting their employees about matters which affect them. However, we believe that in the UK companies should be free to develop employee involvement arrangements which are appropriate to their own circumstances and the needs of their employees.

§ Lord Ewing of Kirkford
My Lords—

§ Lord Hailsham of Saint Marylebone
My Lords, is this not a clear case in which the principle of subsidiarity should apply?

§ Viscount Goschen
My Lords, I have set out the situation which currently applies and also that which will apply given the ratification of the Maastricht Treaty.

§ Baroness Turner of Camden
My Lords, is the Minister aware that by opting out of the social protocol the UK will lose all opportunity to influence the European works directive and that the 11 may well go ahead without the UK's involvement? How then will it be possible for multinationals, which will have to comply with the directive, to exclude UK employees from it? Obviously they will be unable to do so. In any event, what is wrong with workers' participation? We had works councils during the war, and Germany has had them for a very long time. What are the Government afraid of?

§ Viscount Goschen
My Lords, if the matter were to be pursued by the 11, companies based in the UK would be under no obligation to implement the terms of the directive in the UK merely because such requirements existed elsewhere in Europe. The directive's proposals take no account of the UK's own successful employment practices, which are based on a voluntary approach.

§ Lord Ewing of Kirkford
My Lords, is the Minister aware that I feel like Trevor Macdonald saying, "and finally"? Has the Minister noticed the growing practice used by trans-European companies of playing off one workforce against another? For example, the Hoover company deliberately played off the workforce in Dijon against the workforce in Cambuslang; the Nestle Company played off its workforce, again in Dijon, against the Nestlé workers in Glasgow; and, finally, it closed one of its factories and left the workforce in the factory that remained open with much lower wages and fewer employment protection rights. Is that something that the Government now defend?

§ Viscount Goschen
My Lords, a measure agreed by the 11 would not require the Government to legislate for European works councils. UK-based companies would not have to introduce councils for UK employees.

§ Lord Molloy
My Lords, is the Minister aware that the probability is that few Members on either side of the House have ever served on a works council? I did for some 10 years. Many powerful trade unions and employers' organisations were not fond of works councils because they were able to reach an amicable agreement with employers. The experience of my 10 years was that works councils almost abolished the strike weapon voluntarily. Let not the Government condemn something which has done employers and employees a world of good. They must admit to themselves that they know very, very little about works councils. They should examine them and they would find that they are a good example of sensible behaviour by trade unions and employers.

§ Viscount Goschen
My Lords, the Government continue to promote and endorse best practice. For 1744 example, our joint campaign with the CBI demonstrating the importance to key aspects of business performance of employee involvement has proved most successful. Many British companies have set an excellent example by devising effective and imaginative ways of involving their employees.

§ Lord Jenkins of Hillhead
My Lords, do not the Government at last begin to recognise that nothing has led to a greater mixture of farce, squalor and embarrassment for themselves than the alleged triumph of the exclusion of Britain from the social chapter?

§ Viscount Goschen
My Lords, I totally reject that.

§ Lord Eatwell
My Lords, will the Minister confirm that in Germany, where works councils are the norm, labour productivity in industry is roughly 40 per cent. higher—

§ Lord Mottistone
My Lords, the noble Lord is not standing in the appropriate place within the rules of the House.

§ Lord Eatwell
My Lords, I thank the noble Lord for his advice. Will the Minister confirm that in Germany, where works councils are the norm, labour productivity in industry is roughly 40 per cent. higher than it is in Britain?

§ Viscount Goschen
My Lords, I cannot supply that exact figure. However, a statutory obligation to have works councils would damage company decision-making. The European works council would have the right to be informed and consulted about any management proposal likely to have serious conse-quences for the interests of employees or the group of undertakings as a whole.