Working Environment and Labour Relations in the Baltic States

1
Working Environment and Labour Relations in the
Baltic States

• Charles Woolfson
• Marie Curie Chair
• EuroFaculty, University of Latvia

2
Accessing Student Resources

• E mail woolfson_at_eurofaculty.lv
• Web http//www.eurofaculty.lv/MarieCurie
• Link Student Resources
• Login Student
• Password Info

3
Basic Elements of European Social Model (ESM)

• Basic elements of social model a social
  dimension guaranteeing a basic minimum of social
  protection available to every worker in the
  European Union
• Founded on Corporatist social democratic values
  a balance of market and social priorities
  so-called social market economy
• Given strength by Directives which enhance
  minimum standards of social protection in the
  European Union Framework Directive on Safety and
  Health at Work, Transfer of Undertakings, Working
  time, and Posted Workers Directive

4
Examining the ESM in the specific area of working
environment

• social dialogue, labour relations, employee
  rights to participation in CEE
• health and safety of employees in the workplace
• corporate social responsibility, that is, the
  behaviour of companies in the area of social
  questions of employee welfare and wider societal
  impacts of business

5
Other elements of the ESM

• Key assumptions
• ESM is embedded in a market economy
• The notion of quality the assumption that
  competitive advantage and performance can be
  boosted by quality in working conditions and
  social policy in general.
• A role left to public authorities to manage and
  moderate the impacts of the free market on the
  weaker and more vulnerable sections of society
• Specific concern to reduce social inequalities

6
Some Indicators of Social Development in Latvia

• Poverty indicators
• GDP per capita
• Average wages
• Unemployment
• Active Expenditures on labour market policies

7
Poverty Indicators in Latvia

• Central Statistical Bureau (2004) records a
  rising Gini co-efficient - 36 in 2003 compared
  to 30 in 1996, with a S80/S20 Quintile share
  ration of 6.1 in 2003.
• The level of deprivation on a 7-item scale by
  country ranks Latvia at 2.07, just ahead of
  Turkey, Bulgaria and Romania. This can be
  compared to a Candidate Country Average of 1.40
  and an EU 15 average of 0.64.

8
(No Transcript)
9
(No Transcript)
10
(No Transcript)
11
Unemployment rates 1990-2002
12
(No Transcript)
13
New Member States - insecure and exploited
workforces

• Low levels of unionisation
• Privatisation,Bankruptcies,Restructuring
• Emergence of small enterprises
• growth of unemployment
• increase in the category of self-employed
• grey and black economy without protection
• imbalance in power between employers and
  employees at the workplace

14
(No Transcript)
15
(No Transcript)
16
(No Transcript)
17
(No Transcript)
18
(No Transcript)
19
(No Transcript)
20
(No Transcript)
21
(No Transcript)
22
(No Transcript)
23
(No Transcript)
24
(No Transcript)
25
(No Transcript)
26
Size of undeclared work in selected CEE countries
27
Latvia Gendered Wage Differential
28
(No Transcript)
29
Social dialogue in the new member states

• Consultations between the State and the social
  partners, within tripartite structures which have
  helped to maintain a degree of social consensus,
  concerning the reforms carried out during the
  first years of transition.
• However, this tripartite dialogue has not led to
  large-scale participation of the social partners
  mainly a top-down process.
• Consequently, the autonomous social dialogue and
  collective bargaining have not been considered a
  priority a weakness reflected at undertaking
  and sector levels.

30

• At undertaking level, and particularly among
  private-sector SMEs, forms of social dialogue or
  solid industrial relations are still lacking.
• Negligible number of sectoral collective
  agreements reflects the weakness of the social
  partners, particularly the employer
  organisations.
• In general, neither civil servants nor the public
  sector (health, education, transport,
  communications, science and research, for
  example), where significant strikes have
  occurred, have any collective agreements.

31

• - collective bargaining is still weakly
  developed and general decline in trade union
  membership... But
• contamination legacy of trade unions as part
  of the previous system is potentially being
  overcome in the new context of European
  enlargement
• - In a few areas trade unions are showing the
  first signs of new members being recruited and a
  renewed combativeness (although less so in the
  Baltic States than elsewhere in CEE)

32
Health and Work in the EU

• In the EU 15 about 210 million days are lost due
  to work-related accidents - between 2.8 and 3.6
  of member states GDP.
• In 2001 there were about 4.7 million accidents
  resulting in more than 3 days of absence from
  work.
• Put another way, about 4 of European workers
  were victims of an accident at work during that
  year, and of these about 4900 injuries were
  fatal.
• One European Union worker becomes a victim of an
  accident at work every 5 seconds and one worker
  dies every two hours because of an accident at
  work
• There are some indications of a modest
  improvement in injury rates in the existing EU 15
  member states over time.
• This improvement is not mirrored in the data for
  the new member states
• Latvia is the worst perfomer in the whole EU 25.

33
Health and Safety in European law

• Article 118A of the Treaty of Rome (incorporated
  as Article 137 of the Amsterdam -Treaty- the
  Commission with the Member States will develop
  clearly defined policy on prevention of
  occupational accidents and diseases.
• An issue of quality of life, of efficiency and
  productivity and also the prevention of
  distortion of competition.

34
Key Directives and measures

• Key instrument Framework Directive 89/391/EEC
  which contains basic provisions regarding the
  organisation of health and safety at work and the
  responsibilities of employers and workers.
  Subsequent legislation protects workers form
  risks related to exposure to chemical, physical
  and biological agents at work with specific
  directives on harmful substances such as
  asbestos.
• Directive on the organisation of working time
  (93/104/EC), plus further Working conditions
  measures regarding protection of pregnant women,
  young people at work and the posting of workers.

35
(No Transcript)
36
(No Transcript)
37
(No Transcript)
38
(No Transcript)
39
(No Transcript)
40
(No Transcript)
41
Workplace Fatal Accidents
42
Fatal Accidents, Latvia 1997-2001
43
(No Transcript)
44
In Latvia in 2003, the highest number of
accidents at work by sector occurred in
wood-pulp, timber and cork production (16 of all
accidents), construction (10.9) and food and
beverage production (10).
45
European Foundation for the Improvement of Living
and Working Conditions Survey of Working
Conditions (2002)

• Workers more in Accession States more exposed to
  vibrations, noise, heat, air pollution, and, to a
  lesser degree, to working in painful or tiring
  positions, than in the EU
• Working hours are considerably longer than in the
  EU
• Atypical forms of work such as night work or
  shift work are more widespread.

46
Working Conditions Survey

• Information/consultation less well developed in
  the acceding and candidate countries than in the
  EU, especially regarding organisational changes
• 40 report in ACC that their work negatively
  affects their health or safety (compared to 27
  in existing EU states)
• Estonia at 77.9, Lithuania at 76.0 and Latvia
  at 78.4 score highest when it comes to
  disagreeing with the statement that work does
  not affect my health, compared to a candidate
  country average of 69.0.

47
Work Environment in the Baltic States

• Levels of reported fatigue are significant in all
  three Baltic countries. Lithuanian (45) and
  Estonian employees (46) report harmful fatigue
  levels roughly twice as high as the EU average
  (23).
• Work-related skin, vision, sleep and allergy
  problems, Estonia comes highest for the CEE
  countries, again followed by Lithuania.

48

• Reported work-related anxiety, Estonia (19.4) is
  to of the score followed by Latvia (12.3) and
  Lithuania (12.2), (again roughly comparable to
  Bulgaria at 13.3) compared to the average
  reported level of 4.5 for the Candidate
  Countries as a whole.
• Reported trauma (emotional distress) resulting
  from workplace abuse, Baltic States register
  three to nearly five times average levels (2.2)
  for the Candidate Countries, with Estonia at
  6.6, Lithuania at 10.5 and Latvia at 9.3 of
  respondents (European Foundation, 2002).

49
(No Transcript)
50
(No Transcript)
51
(No Transcript)
52
(No Transcript)
53
(No Transcript)
54
Findings

• Work intensity is felt to be too high by a
  significant percentage of employees (33-43)
• Mental stress at work is increasing among
  employees (40-48)
• Physical stress at work is increasing among
  employees (37-40)
• Three quarters of employees felt safety had not
  improved
• Significant inter-country and inter-sectoral
  differences in of employees who felt they could
  complain about working conditions

55
Barriers to improving working environment in the
new member states

• Regulatory authorities in new member states may
  be subject to post-accession regulatory fatigue
  and depletion of capacities
• Support among new member state business and
  political elites for European labour protection
  regulation, especially in the area of OHS, is
  limited (absence of reform fit)

56

• External agencies (IMF) appear to favour
  deregulation and differentiated standards of OHS
• Washington-based Cato Institute
• over-regulation of conditions of employment
  will diminish the comparative advantage that CEE
  workers enjoy over their more highly paid western
  counterparts

57

• EU criticized because it rejects the
  possibility of different levels of safety and
  health protection of labour within the Union
• EU criticized because it advocates the need to
  harmonize health and safety standards
  irrespective of the different needs of the member
  states (Cato Institute, 2003)

58
Estonian Employers Confederation (2004)

• EU labour law is in some parts overregulated and
  that the minimum standards have been set too
  high.
• Without underestimating the necessity for the
  regulation of occupational health and safety, the
  Employers' Confederation regards that the
  compulsory expenses of the employer related to
  occupational health and safety are
  disproportionately large in small businesses
  compared to large businesses
• The Employers' Confederation will make a
  proposition to the Government for reviewing the
  composition of obligations set for micro and
  small businesses in relation to the work
  environment with a view of maintaining only the
  most essential ones and ensuring their
  competitive ability.

59

• EUs post-Lisbon retreat from securing employee
  rights, in favour of promoting growth and
  competitiveness, and a consequent downplaying of
  the social dimension
• Adoption by EU of many neo-liberal assumptions
  about regulation and the burden it imposes on
  business
• European Commission programme of updating and
  simplifying the acquis
• Health and safety legislation subjected to a
  detailed scrutiny

60

• Traditional EU Directives replaced by more
  efficient, flexible and proportionate instruments
  (for example, framework directives, new approach
  directives or softer (self-)regulatory
  alternatives)
• This confers rule making-powers to
  stakeholders employers and trade unions - who
  voluntarily agree to frameworks of rules in a
  process of self-regulation eg sectoral agreements
  on safety and health

61
Soft law in action The Open Method of
Co-ordination (OMC)

• Open Method of Co-ordination endorsed (Lisbon
  Council, 2000) as-
• an important tool of EU governance in achieving
  social and employment policy goals includes
  health and safety at work
• Notions of benchmarking and best practice -
  securing a flexible and decentralised approach to
  policy creation and implementation

62
(No Transcript)
63
Soft Law on the move
64
New policy instruments
65
Policy implications for health and safety in an
enlarged Europe

• In the CEE new member accession states many
  employers do not see good health and safety
  necessarily as good business
• Limited interest in good practice voluntary
  initiatives and corporate social responsibility
  outside of larger firms

66

• Scope for regulatory experimentation
  (self-regulation - soft law and the OMC) very
  limited at a domestic level in the new member CEE
  states.
• CEE new member accession states in danger of
  providing a reservoir of cheap labour and an
  inferior high hazard work environment.

67

• Introduction of soft law and self-regulation
  (corporate social responsibility, best practice
  models, partnership strategies) inappropriate
  in the short to medium term (5-10 years, and
  possibly longer)
• Emergence of regulatory regime competition and
  a race to the bottom between new and older
  member states a two track Europe?

68
The business case for safety and health Good
health and safety good business?

• An unproven theorem ..
• Need for compliance incentives..
• Marginal costs of substitution (recruitment,
  training and discipline costs of new workforce)
  do not outweigh the benefits for the individual
  enterprise (low costs of replacement of injured
  or ill workers)
• Enterprises able to externalise costs of worker
  ill-health and injury to national social
  insurance systems (no realistic charges for
  rehabilitation services by national health
  systems)

69

• Enterprises able to externalise costs of worker
  ill-health and injury to individual workers and
  their families (no developed system of personal
  injury litigation)
• Insurance premiums not related to company record
  on safety and health, and implementation of
  advanced occupational health and safety
  management programmes
• Financial sanctions for safety and health
  regulation violations are insufficiently large to
  impact of enterprise profitability
• Low reputational costs for business - no naming
  and shaming of offenders, transparency through
  social and environmental auditing (CSR), ongoing
  scrutiny by civil society actors (eg trade
  unions, health and safety campaign organisations,
  environmental NGOs)
• No concept of criminalisation of corporate body
  and/or possible custodial sentencing of
  individual company officers under corporate
  killing legislation

70
Conclusions

• Need to recognise tensions between profits and
  safety
• Business will not always do the right thing
• Need for credible compliance incentives
• Empowerment of stakeholders must be real
• Accidents - rarely individual isolated
  unforeseeable events.
• They are more often the result of long term
  underlying patterns of (mis)behaviour.
• Management must carry primary ethical, legal and
  practical responsibility for safety and health of
  employees.