Labour and Workplace Safety Standards in the Baltic States: A new EuroFaculty Agenda Dr' Charles Woo

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Labour and Workplace Safety Standards in the
Baltic States A  new EuroFaculty AgendaDr.
Charles WoolfsonEuroFacultyUniversity of Latvia

• Tuesday, November 9th 2004 18.15-20.30  

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Structure of Seminar

• A few words about the Marie Curie chair
• The European Social Model - a common core of
  values?
• The labour market in the new member CEE states
  the insecure workforce
• Indicators of the working environment in the new
  member states and a case study
• The working environment in the Baltic States
• The future or the European Social Model
• Regulatory reform at European level - Better
  regulation or (de)-regulation?)

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• 1. Marie Curie chair
• Charles Woolfson
• E mail woolfson_at_eurofaculty.lv
• Web http//www.eurofaculty.lv/MarieCurie
• Link Student Resources
• Password Student
• Login Info

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2. What is the European Social Model?

• The term European Social Model (ESM) has been
  used in policy circles in Europe but lacks a
  precise definition.
• Despite this, the idea of ESM informs much of
  policy making in social matters at European
  level.
• Thus, the European Summit (Lisbon 2000) member
  states adopted a formal position
• the European Social Model with its developed
  systems of social protection, must underpin the
  transformation of the knowledge economy

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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

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• What are these common European values?
• Make a list..

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• Democracy (not totalitarianism)
• Individual rights (as against purely collective
  rights)
• Free collective bargaining (free trade unions
  not dominated by the State or Party)
• Equality of opportunity (Gender and race
  discrimination avoided)
• Social welfare and solidarity (social support
  for the needy and poor, and inclusion)
• In summary, a social dimension is necessary for
  economic and social cohesion and therefore also
  for political stability and economic performance.

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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

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Strengths of ESM

• Positive attempt through a common set of
  standards and values to prevent social dumping
  or free riding - to attract foreign investment
  by offering lower levels of protection to
  citizens and workers eg on safety and health at
  work.

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Weakness of the ESM

• -ve complex and ill-understood policy model which
  lacks transparency and relevance
• -ve subsidiarity is often used by member states
  to block new Community policies and instruments
  and resist binding social regulations

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3. The labour market in the new member CEE states

• the insecure workforce

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GDP PER CAPITA AT PURCHASING POWER PARITY (EURO)
Source THE WORLD BANK, Washington, D.C. 2002
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Unemployment rates 1990-2002
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Poverty rate of Population (less than 1.08
per day, based on the purchasing power parity
(PPP) exchange rate) Source UN.
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Changes in post-communist labour market

• Low unionisation
• Privatisation,
• Bankruptcies
• Restructuring
• Emergence of small enterprises
• growth of unemployment
• radical flexiblisation of the workforce
• increase in the category of self-employed
• grey and black economy up to 30 GDP
• an imbalance in power between employers and
  employees at the workplace

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Working Life Barometer in the Baltic Countries
(2002) Antilla and Ylostalo
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Size of undeclared work in selected CEE countries
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Estonia Gendered Wage Differential
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Latvia Gendered Wage Differential
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Lithuania Gendered Wage Differential
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Social dialogue in the new member CEE states

• Employers have focused on profitability
• Workers have prioritized employment security and
  wages over health and safety.
• Even where trade unions exist - low level of
  workforce awareness of their functions and powers
  
• No real degree of workforce involvement,
  particularly in small and medium sized
  establishments
• Trade unions very weak and unable to meet
  employers on equal terms in real dialogue

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4. Indicators of working environment in the new
member states

• Question
• Is there a deteriorated work environment in
  the new member states in general, and in the
  Baltic States in particular?
• Two sets of indicators objective and
  subjective
• Statistical profile of fatal accidents in the
  workplace (EuroStat data)
• Workforce attitudes towards health and safety and
  working environment (Survey data)

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Workplace Fatal Accidents in the EU and the New
Member States
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• Fatal and Heavy Injuries Lithuania
• 1997-2003

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Fatal Accidents, Latvia 1997-2001
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Fatal and All reported Injuries Estonia,1997-2002
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Summary of key findings

• The new member states as a whole appear to be
  increasingly diverging from EU averages over
  time.
• There appears to be significantly higher rates of
  workplace death and injury in Lithuania and
  Latvia, and accelerating rates of injury in
  Estonia.
• 6 to 7 employees killed per month in Lithuania
• 4 per employees killed month in Latvia
• 3 killed employees killed per month in Estonia

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Subjective indicators

• First Survey of Working Environment in the
  Accession and Candidate Countries, European
  Foundation for the Improvement of Living and
  Working Conditions (2002)
• Working Life Barometer in the Baltic States,
  (Antilla and Ylostalo, 2003)
• The Lithuania Enterprise Survey(Woolfson, Beck
  and Sceponavicius 2002)

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European Foundation key findings

• Workers in Accession and Candidate Countries
  (ACCs) 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 in ACCs
  than in the EU (probably underestimated)
• Atypical forms of work such as night work or
  shift work are more widespread in ACCs.

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• Information/consultation less well developed in
  the ACCs than in the EU, especially regarding
  organisational changes
• 40 report in ACCs that their work negatively
  affects their health or safety (compared to 27
  in existing EU states)

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5.The working environment in the Baltic States

• Question-
• Is there a specifically deteriorated working
  environment in the Baltic States and if so, why
  is this?

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• Estonia at 77.9, Lithuania at 76.0 and Latvia
  at 78.4 highest score in disagreeing with the
  statement that work does not affect my health,
  compared to a average of 69.0.
• Levels of reported fatigue are significant in all
  three Baltic countries. Lithuanian (45) and
  Estonian employees (46) report harmful fatigue
  levels twice as high as the EU average (23).
• Estonia comes highest for the CEE countries,
  followed by Lithuania for work-related skin,
  vision, sleep and allergy problems.

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• Reported work-related anxiety, Estonia (19.4) is
  top of the score followed by Latvia (12.3) and
  Lithuania (12.2), (Bulgaria at 13.3) - compared
  to the average reported level of 4.5 for the
  Candidate Countries as a whole.
• Reported trauma (emotional distress) 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).

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Key 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

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The Lithuania Enterprise Survey(Woolfson, Beck
and Sceponavicius 2002)

• Conducted in co-operation with the State Labour
  Inspectorate
• National survey of over 3,500 employees
• 30 enterprises of which 20 were SMEs
• Key focus on employee attitudes towards
• - OHS issues in the enterprise
• - Safety committees and/or trade unions

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Most feared aspect of work
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A Case Study of Safety Failure

• Ferro-concrete plant in Ukmereges, a small town
  of 30,000 in eastern Lithuania
• New production line producing expandable
  polystyrene (EPS) insulation panels for buildings
• granular raw material for EPS emits pentane - a
  gas so flammable that, when mixed with air, even
  heat from a single light bulb can ignite

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Ukmereges July 2003 3 killed, 10 burn victims

• no gas-monitoring equipment
• ventilation was inadequate
• a fire which resulted when a welder used a
  blowtorch the previous day unreported to the
  authorities warning ignored
• substantial amounts of pentane which is heavier
  than air, had accumulated in the foundations of
  the building.

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Profits before Safety?

• Company was the cheapest supplier of foam
  polystyrene panels in the country.
• The production line had been recently renovated
  and modernised
• production output was 9 times higher than before
  renovation.
• Consequently, pentane levels in the occupational
  environment also increased

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Key findings

• Company failed to execute any additional
  occupational risk hazard assessments
• Management failed to indicate any explosion risk
  in the workers instructions
• Warning instructions were disregarded
• Regulations relative to workers protection
  against hazardous chemical substances at work
  were not adhered to
• Requirements for protecting employees working in
  a potentially explosive environment were not
  adhered to.

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6. The future of the European Social Model and
soft law in the new member states
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The European Social Model under attack the
neo-liberal offensive

• The ESM founded on social democratic values (a
  social welfarist Europe a balance of market and
  social priorities)
• Attack from within the EU
• - powerful individual member states such as UK,
  Italy and Germany hostile to ESM, especially
  during the 1980s and 1990s, but still today (the
  Third Way of Tony Blair, Germany Hartz IV
  reforms).
• - UNICE the European Employers Federation
  afraid of too much regulation as a burden on
  business

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ESM under attack

• Major international financial institutions (IMF,
  World Bank, European Bank for Reconstruction and
  Development) argue that European competitiveness
  depends on being able to compete in the global
  market place ie with cheaper sourced products
  from SE Asia, China etc

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The rationale of neo-liberal offensive on the ESM

• - New forces of globalisation claim the ESM an
  outdated concept of the 1960s and the 1970s
• - Social welfarist approaches stifle individual
  initiative and free market enterprise (the nanny
  state)
• - Social protection measure introduce harmful
  rigidities into the labour market which
  undermine necessary flexibility and
  competitiveness (eg minimum wages, too high
  unemployment benefit levels, unwillingness to
  accept lower pay and benefits eg reduced state
  pension rights and increased working age).

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The EU response to neo-liberalism

• EUs post-Lisbon retreat from securing employee
  rights, in favour of promoting growth and
  competitiveness, and a consequent downplaying of
  the social dimension of Europe
• 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 at work legislation being
  subjected to a detailed scrutiny for their
  simplification potential

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Policy constraints on the ESM in the new member
states

• Implementation Theory-
• - veto points in policy implementation
• - Severe regulatory accession syndrome (SARFS)
• - lack of domestic reform fit internal elites
  do not subscribe to the ESM and accept
  neo-liberalism.

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Internal policy constraints

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

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External policy constraints on the ESM

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

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External policy constraints on the ESM

• EU criticized because it rejects the
  possibility of different levels of safety and
  health protection of labour within the Union and
  advocates the need to harmonize health and
  safety standards irrespective of the different
  needs of the member states (Cato Institute,
  2003)
• Health and safety regulations contribute to
  worsening of the workers lot, by creating an
  artificial increase in labour costs (Cato
  Institute, 2003)

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7. Regulatory reform at European level -
Better regulation or (de)-regulation?)

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

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

• Open Method of Co-ordination endorsed (Lisbon
  Council) 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

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OMC, subsidiarity and social partnership

• The principle of subsidiarity embodied in the OMC
  implies devolving policy inputs to regional and
  local levels, thus spreading horizontally
  outwards to the social partners and civil society
  representatives.
• These actors will be actively involved, in the
  policy process using variable forms of
  partnership (European Council 2000, para.38).

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OMC and Corporate Social Responsibility

• OMC appeals to companies' sense of corporate
  social responsibility regarding best practices,
  on such matters as
• work organisation
• equal opportunities
• social inclusion
• safety and health

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From rhetoric to reality - safety and health at
work in the CEE new member states

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

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Regime competition

• Scope for regulatory experimentation (soft law
  and the OMC) very limited at a domestic level in
  the new member CEE states.
• Emergence of regulatory regime competition and
  a race to the bottom between new and older
  member states
• CEE new member accession states in danger of
  providing a reservoir of cheap labour and an
  inferior high hazard work environment.

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Alternative regulatory strategies to the OMC and
soft law

• End the pro-business anti-regulation bias in
  policy circles and reaffirm Community-level
  regulation in the enlarged EU
• New resources to domestic monitoring agencies to
  ensure implementation, enforcement powers
  sufficient to stimulate compliance-seeking by
  member states and domestic actors.
• Higher commensurate fines for safety violators
  and criminalisation of health and safety offences
  where necessary (corporate killing laws)
• Resourcing and empowerment of social partners,
  trade unions and employers organisations, within
  the health and safety and social dialogue process

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Policy implications OMC for health and safety in
an enlarged Europe

• The problems and issues in the new member states
  require that strategies are tailored to realities
  that exist on the ground
• Current weakness of trade unions and employers
  organizations will not be overcome in short term
• This makes the 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)