The State and the Reconstruction of Industrial Relations Institutions After Fordism: Britain and France Compared

4.2 The Strong State and Industrial Relations Reform

After 1979 the British state encouraged a sharp break with, and a reversal of, an established set of industrial relations institutions and practices. It sought, at a time of historically unrivaled labor movement strength and influence, and the deep implantation of collective forms of regulation, to weaken trade unionism and encourage unilateral managerial regulation of the workplace, and the individualization of industrial relations. For this reason, the role of the state was more significant, more direct, and more coercive than in earlier periods. Labor law took on a more central role than the administrative measures of previous periods. Despite the much more explicit use of legislation to shape industrial relations practice, it is still necessary to take an expansive view of state action in order to understand the scope of government policy and influence during the period between 1979 and 1997. The state played an important role in both the narration of crisis, which itself permitted the mobilization of state power to restructure industrial relations, and in influencing the manner in which post-Fordist economic pressures were transmitted to the British economy; higher unemployment, accelerated deindustrialization, and closer international economic integration were encouraged by state macroeconomic policy. In a similar fashion, microeconomic policy which deregulated the labor market reduced the insulation from the market enjoyed by workers, in turn encouraging different behavior on the part of employers, managers and workers themselves.

The restructuring of the public sector in Britain after 1979, and the collapse of corporatist institutions (and with it the direct influence of trade unions upon public policy) were also crucial parts of the project of industrial relations reform which were achieved either through administrative action alone, or legislation whose impact on industrial relations was indirect. Nowhere is this more true than in the privatization of the nationalized industries and the decentralization, and creation of market surrogates, in what remained of the public sector. There was little legislation which sought to directly alter the institutions of public sector industrial relations, but the wider restructuring of the public sector dramatically changed industrial relations practice.

Less tangible, but still important, were such factors as the handling of major strikes, and impact of policing during those strikes. Certainly a case can be made that the government's victory over the mineworkers' union in the 1984-85 coal strike, in which the Coal Board was prevented from reaching a compromise settlement by the government, and policing prevented aggressive picketing from spreading the strike, had an important demonstration effect for both trade unions and private sector employers.. There is a mass of literature on the coal strike. See Martin Adeney and John Lloyd, The Miners' Strike 1984-5: Loss Without Limit (London: Routledge and Kegan Paul, 1986), John Saville, “An Open Conspiracy: Conservative Politics and the Miners' Strike 1984-5,” in Ralph Miliband, John Saville, Marcel Liebman and Leo Panitch, eds., Socialist Register 1985/86 (London: Merlin Press, 1986), and Peggy Kahn, “Union Politics and the Restructuring of the British Coal Industry,” in Miriam Golden and Jonas Pontusson, eds., Bargaining for Change: Union Politics in North America and Europe (Ithaca: Cornell University Press, 1992). In the same vein, it is difficult to measure the impact of the industrial relations “climate,” to which state policy surely contributed, upon the behavior of employers, unions and workers. Conservative governments made it clear that collective bargaining was no longer considered a public policy good, and that it would support employers who sought new relationships with their employees; in some cases (the replacement of collective bargaining with personal contracts, for example) legislation legalized employer practice after courts had ruled against that practice. In short, it seems certain that the climate of industrial relations fostered by the state gave employers the confidence to experiment with new industrial relations institutions and practices of their own. As the authors of one of the most comprehensive studies of Conservative industrial relations legislation put it: “Employers were thus given the encouragement and the power to execute a similar policy in the workplace and, when appropriate and necessary, sufficient confidence to use the anti-union legislation.”. Roger Undy, Patricia Fosh, Huw Morris, Paul Smith and Roderick Martin, Managing the Unions: The Impact of Legislation on Trade Union Behaviour (Oxford: Clarendon Press, 1996), p. 29.

A distinctive feature of this period of industrial relations reform was the extent to which successive packages of legislation sought to directly restructure industrial relations. When a piece of legislation did not appear to achieve the goals set for it, the response was further legislation, to “add another layer of cement” rather than to seek non-legislative solutions, or to change the goals themselves.. Ibid., p. 74. Conservative governments after 1979 had learned a key lesson from the failure of the 1971 Industrial Relations Act, which was to make the legislation facilitative. While Conservative hostility towards trade unions was clear, the main aim of government policy was not to prescribe a particular model or form of industrial relations, but to remove restrictions (either in the form of legislative obstacles or in the capacity of trade unions to resist) upon the right of employers to choose the industrial relations arrangements that they deemed most appropriate. Whereas the 1971 Industrial Relations Act created a set of criminal liabilities for non-compliance - thus focusing attention upon the role of the state in the enforcement of the legislation - the legislation of the 1980s and 1990s created only civil liabilities. It was up to employers to choose whether to use the new legislation, thereby minimizing employer resistance to the legislation.

That said, by the end of the 1980s Conservative policy had become increasingly concerned not so much with eliminating abuses of collective bargaining and the collective representation of workers, and permitting employers to deal with their employees as they wished, as with encouraging an individualization of industrial relations in which trade unions and collective bargaining had a limited role. Conservative ministers urged unions to get out of the business of collective bargaining and instead offer individual services to their members, and government White Papers called upon employers to reconsider their industrial relations practices and stressed the merits of individual contracts, promising to support “the aspirations of individual employees to deal directly with their employer, rather than through the medium of trade union representation or collective bargaining.”. See the Conservative White Paper People Jobs Opportunity (London, UK: HMSO, 1992), p.15. Thus the permissive nature of industrial relations legislation should not detract from the fact that decollectivization was an explicit state strategy between 1979 and 1997.

The role of legislation after 1979, and the willingness of the police and the judicial branch of the state to enforce that legislation, does mark a ratcheting up of the level and nature of state intervention compared to previous efforts to act as midwife to a new set of industrial relations institutions. That should be no surprise given the strength of the labor movement and the deep implantation of collective regulation. As Gamble so aptly noted, a strong state was indeed a prerequisite for the construction of a “free economy” in this regard.. Andrew Gamble, The Free Economy and the Strong State (London: Macmillan, 1990).

There were six major pieces of Conservative industrial relations legislation, each one comprising several parts and addressing multiple themes, along with sundry other pieces of legislation which impinged on industrial relations. The main legislative packages came at regular intervals between 1980 and 1993 and were: the 1980 Employment Act; the 1982 Employment Act; the 1984 Trade Union Act; the 1988 Employment Act; the 1990 Employment Act; and the 1993 Trade Union Reform and Employment Rights Act. Making sense of this mass of legislation requires an intellectual roadmap. The logic of this mass of legislation has been nicely captured by Dunn and Metcalf:

If the first preference [of Conservative legislation] is to legislate collective bargaining out of existence, diminishing unions to harmless friendly societies and workers' advice bureaux, then, should that prove too difficult, the fallback position is to cordon off union enclaves and prevent them contaminating the existing non-union sector and new-born enterprises...if legislation stops the spread of collectivism among market rivals, individual unionised companies and their employees have to face up to the costs of trade unionism in an increasingly non-union world.. Stephen Dunn and David Metcalf, “Trade Union Law since 1979: Ideology, Intent, Impact,” Centre for Economic Performance Working Paper (October 1994), p. 8.

4.3 The Transformation of British Industrial Relations After 1979

The period since 1979 has seen the most far-reaching change in British industrial relations since the spread of industry bargaining at the beginning of the twentieth century. Purcell has powerfully described the outcome of this period of change as the “end of institutional industrial relations,”. John Purcell, “The End of Institutional Industrial Relations,” Political Quarterly 64:1 (January-March 1993). referring to the collapse of the institutions of collective regulation. It is clear that those institutions, the core elements of the first and second systems of industrial relations, are in tatters; what is less clear is what, if anything, has been put in their place. More profound, though, than institutional restructuring, has been the impact of change on the labor movement. There has been a quite fundamental, and potentially irreversible, shift in the balance of class power in Britain, with the shrinking, weakening, and hollowing out of trade unionism. Flanders famously argued that “the tradition of voluntarism cannot be legislated against,” yet the experience of the recent past suggests that indeed it can.. Flanders, “The Tradition of Voluntarism,” p. 365. The apparently autonomous strength of British trade unionism has been overcome by a combination of the scale and scope of state activism, the willingness of governments to endure industrial conflict, and a raft of industrial relations legislation, alongside a withdrawal of support for collective regulation on the part of many employers, and a period of profound economic restructuring.

It seems plausible that the deep recessions at the start of the 1980s and then the 1990s played an important role in weakening trade unions and permitting employers and the state to engage in a restructuring of industrial relations, but it is hard to explain both the continued decline of trade unionism and the continuation, and indeed the acceleration, of change in the institutions and practices of industrial relations, without reference to the state. Certainly, in their evidence the House of Commons investigation into the future of trade unions, employers “were unanimous in the belief in the efficacy of the `step-by-step' developments since the changes have significantly increased the power of managers,”. House of Commons Employment Committee, Third Report, The Future of Trade Unions, volume III, para 63, p. xvi. and the Institute of Directors argued that the “reform of trade union law since 1980 has been outstandingly successful in ushering a new age of good industrial relations and it has proved popular.”. Ibid., para 11, p. 280.

Since 1979 British trade unions have lost almost six million, or 40%, of their members, bringing union density to below 30%. The decline in membership briefly stabilized between 1998 and 2000 before continuing its decline, and even the small increases in membership at the end of the millennium were not enough to reverse the decline in union density.. Keith Brook, “Trade Union Membership: An Analysis of Data from the Autumn 2001 LFS,” Labour Market Trends (July 2002), p. 343. Turning to evidence from the Workplace Industrial Relations Surveys,. The Workplace Industrial Relations Surveys, which have already been referred to in this paper, are particularly good for capturing the extent of institutional change in industrial relations. There have been four thus far, the first in 1980, before the impact of Conservative industrial relations legislation had made itself felt, and the most recent in 1998, just before the impact of New Labour's Employment Relations Act became law. Hence the surveys provide a series of snapshots to which help to show the impact of the Conservative reform program. It is important to note, though, that only firms employing twenty five or more people are covered by the surveys, which tends to overstate the strength of trade unions and collective bargaining because the institutions of collective regulation are much weaker in small firms. a study of the period from 1980 to 1998 detected declines in every measure of union strength, and concluded that “falls in union membership were themselves widespread, rather than confined to particular industries or types of workforce or of employer.”. Neil Millward, Alex Bryson and John Forth, All Change at Work? British Employment Relations 1980-1998, as Portrayed by the Workplace Industrial Relations Survey Series (New York: Routledge, 2000), p. 89. Trade union recognition fell even faster than union membership, so that recognition in the private sector halved during this period to 25%.

This period also saw dramatic changes in the scope and form of collective bargaining. The net result of these changes was that the coverage of institutions of collective pay-setting fell to levels unseen since the 1920s. Overall, the coverage of collective bargaining fell from 70% of employees in 1984 to 40% in 1998.. Ibid., p. 221. Once again the decline in coverage was especially precipitous in the private sector, and here collective bargaining was replaced with unilateral management determination of pay. Another significant change in collective bargaining has been the dramatic decline of two-tier and industry, or multi-employer bargaining. The collapse in trade union recognition in engineering was a direct result of the ending of multi-employer bargaining in that industry, as employers picked off poorly-implanted unions which had depended upon the industry agreement for their survival.

While the coverage of collective bargaining has shrunk, and industry-level bargaining has largely disappeared outside the public sector, the form of bargaining even where it remains within the firm has also changed in important ways. The 1960s and 1970s saw an expansion of the scope of collective bargaining beyond basic conditions of work to include a range of substantive issues of work organization. This followed from the effort to enlist unions in improving productivity. By the end of 1990s it was “evident that there has been a very substantial decline in union representative involvement in the regulation of employee obligations and work organization” as the scope of bargaining once again shrunk leaving the organization of the workplace as a matter for unilateral managerial prerogative.. William Brown, Simon Deakin, David Nash, and Sarah Oxenbridge, “The Employment Contract: From Collective Procedures to Individual Rights,” British Journal of Industrial Relations 38:4 (December 2000), p. 617. Furthermore, collective bargaining itself often took on a less formal character, resembling consultation rather than negotiation. Even where institutions of collective regulation of industrial relations remain, their character has changed.

Overall, the core institutions of collective regulation were systematically dismantled in the two decades after 1979. Decollectivization manifested itself in the decline in trade unionism, in both the decentralization of collective bargaining to the firm and workplace, and its replacement by unilateral managerial determination of terms and conditions,. Undy, Fosh, Morris, Smith and Martin, Managing the Unions. in the weakening of collective decision-making structures within trade unions, and in the decline in collective action and its replacement with individual legal cases or complaints directed towards state agencies rather than trade unions.. Jackie Davies, “Labour Disputes in 1998,” Labour Market Trends 107:6 (June 1999).

What industrial relations institutions have replaced regularized collective bargaining between trade unions and employers, or employer associations? The best picture we have of the development of new industrial relations institutions comes from the Workplace Industrial Relations Surveys. The 1998 survey identified a significant rise in the spread of new industrial relations. This suggests that, while the main industrial relations development of the 1980s was the destruction of the old mechanisms of collective representation, in the 1990s, that process continued but was accompanied by the partial construction of new mechanisms. Two clear conclusions concerning “employee voice” can be drawn from the 1998 survey.. This section is drawn from the chapter, “Have Employees lost their voice” in Millward, Bryson and Forth, All Change at Work? My conclusions, even based on the evidence of the survey itself, are less sanguine than those of the authors. The first is that the last two decades have seen a sharp decrease in mechanisms of union-only voice, and an increase in non-union only voice, where the latter includes the forms of direct communication between management and employees listed above. The second, and related, conclusion is that there was a steep decline in the presence of any form of collective representation - union, consultative committee, works council - but an increase in mechanisms of direct participation, through institutions created and controlled by management. These industrial relations institutions are likely to be much more fragile, less likely to survive an economic downturn or other crisis, than those based either upon a strong trade union presence in the workplace, or legal requirements, such as continental European works councils.. See the study by Michael Terry, “Systems of Collective Employee Representation in Non-union Firms in the UK, Industrial Relations Journal 30:1 (March 1999), which confirms this conclusion based on case study evidence.

What then should one conclude about the restructuring of industrial relations institutions in Britain in the past two decades? The impact of the decline in trade union membership is particularly important for British industrial relations because of the absence of mechanisms for the extension of collective agreements beyond the workplaces where they are negotiated. Without legal extension, or extension by coordinated employer organizations, the decline in trade union coverage leads directly to a decline in collective bargaining coverage, as the exceptionally narrow gap between these two levels at the end of the 1990s demonstrates. As Brown et al. have put it: “although the decline of trade union membership may not have been exceptional in international terms, the implications of it are.”. William Brown, Simon Deakin and Paul Ryan, “The Effects of British Industrial Relations Legislation 1979-97,” National Institute Economic Review 161 (July 1997), p. 75.

The result is that a quite new system of industrial relations is emerging in Britain. What is being created is an economy in which a large majority of workers do not belong to unions and are not covered by any form of collective bargaining. There has been a massive individualization of the regulatory mechanisms governing industrial relations. The individualization of representation goes along with an employer preference for individualized terms and conditions as merit pay, flexible working time, and so on have spread.. For evidence of flexibility, see Peter Ingram, “Changes in Working Practices in British Manufacturing Industry in the 1980s,” British Journal of Industrial Relations 29:1 (March 1991), David Marsden and Marc Thompson, “Flexibility Agreements and their Significance in the Increase in Productivity in British Manufacturing Since 1980,” Work Employment and Society 4:1 (March 1990), and Mark Beatson, Labour Market Flexibility, Employment Department Research Series No. 48 (April 1995). Overwhelmingly, employers have chosen not to replace collective representation by unions with alternative forms of collective representation, such as works councils, or employee boards. In what remains of the union sector, the hands of unions are tightly tied by legislation, and unions have become more dependent upon employers.

Thus the period since the Conservative election victory in 1979 has been marked by a sharp break with the past. For all their differences, governments from 1894 until 1979 shared an emphasis upon the public policy good of trade unions and collective bargaining. This has now changed. What began in 1979 as an effort to fence in unions, reduce their capacity to damage the economy, and narrow their strategic options, while freeing the hands of employers, has become the embryo of an individualized system of industrial relations, based upon the absence of collective representation for workers in the majority of the economy, and the collapse of linkages between unions and collective bargaining inside the firm, and unions and collective bargaining outside the firm in what remain of the unionized sector. In the latter case, what is emerging is something close to a de facto enterprise unionism. The result is that even on those scattered islands of collective regulation, overwhelmingly located in older firms, in an ocean of individualized industrial relations, trade unions lack effective sanctions, existing largely at the sufferance of employers. It is an open question as to whether developments in Britain are the harbinger of an industrial relations system appropriate to the 21st century, or of “a free, unregulated labour market of the sort that predated the birth of collective bargaining 100 years ago.”. Purcell, “The End of Institutional Industrial Relations,” p. 23.

4.4 New Labour's Industrial Relations Policy

In 1997 a Labour government returned to power after 18 years of Conservative rule, and was subsequently re-elected in 2001. The Labour Party had been transformed during its years of opposition, having embraced the market and price stability as the central macroeconomic goal, distanced itself from the trade union movement (both institutionally and in terms of policy),. For discussions of this process, see Eric Shaw, The Labour Party Since 1979: Crisis and Transformation (New York: Routledge, 1994), and Chris Howell, “From New Labour to No Labour? The Industrial Relations Project of the Blair Government in Britain,” New Political Science, 22:2 (June 2000). rejected nationalization as a planning strategy, and rebranded itself as “New Labour,” pursuing what its leader, Tony Blair, called “the Third Way.” Despite this transformation, New Labour came to power with a different industrial relations agenda from that of the Conservatives, and one might have anticipated reforms that would challenge the trajectory of British industrial relations institutions described in the last section. In fact, while the industrial relations institutions currently being created differ in some respects from those of the government's Conservative predecessor, they are fundamentally convergent with the decollectivist thrust of the third system of industrial relations. The distinctiveness of New Labour's industrial relations reforms lies in their emphasis upon the creation of individual rights at work, rather than support (legislative or otherwise) for the collective regulation of class relations.

It is worth noting that New Labour is far more explicit than its Thatcherite predecessor in recognizing the importance of the state in the regulation of social relations, arguing that law can operate to deepen, widen, and embed cultural practices. As Tony Blair put it:

My ambition... is nothing less than to change the culture of relations in and at work - and to reflect a new relationship between work and family life. It is often said that a change of culture cannot be brought about by a change in the framework of law. But a change in law can reflect a new culture, can enhance its understanding and support its development.. From Blair's foreword to the government White Paper, Fairness at Work, which laid out proposals for what became the 1999 Employment Relations Act. Department of Trade and Industry (DTI), Fairness at Work Cm 3968 (London: HMSO, 1998). It can be found at: http://www.dti.gov.uk/er/fairness/index.htm

New Labour argues that the state cannot evacuate the terrain of work, leaving social regulation to employers and employees alone because it is possible for employers to organize social relations within their firms in a manner that is not even in their own interests, let alone that of the economy as a whole.

The central elements of New Labour industrial relations reform have been as follows. First, a national statutory minimum wage has been introduced for the first time in British history. Prior to 1993, when they were abolished, Wages Councils set minimum terms and conditions in a set of traditionally low-wage industries as a form of embryonic collective bargaining. Second, Britain signed up to the Social Chapter of the European Union, something its predecessor in government had rejected. This has had an accelerating impact on domestic labor law as European directives have multiplied particularly in the areas of “family friendly” policy (maternity and paternity leaves) and the regulation of atypical work. It should be said that the British government has always chosen to interpret these directives in the narrowest possible manner to minimize regulation of the labor market, and it has sought to prevent or limit the impact of directives related to worker consultation. The third element of industrial relations reform was the 1999 Employment Relations Act (ERA). This legislation has a number of features, including a new set of individual rights at work: more protection from unfair dismissal; a legal right for individuals to be accompanied by a fellow employee or union official in grievance hearings; protection from blacklisting for union membership; and protection from unfair dismissal during the first eight weeks of a strike. The ERA did contain one major collective right: a right to union recognition if a ballot showed majority support for a union. This right was hedged in important ways, in that it did not apply to small firms and required a turnout threshold on the ballot, but it is nonetheless a significant innovation in British labor law (a somewhat different form of union recognition legislation existed for half of the 1970s). The fourth and final part of the reform agenda appeared in Labour's second term, and involved an overhaul of the employment tribunal system to reduce the number of cases being handled. One part of this reform, which was contained in the 2002 Employment Act, created minimum statutory internal procedures covering dismissal and grievances inside firms.

The central elements of the current industrial relations system then are as follows. The overwhelming bulk of Conservative industrial relations legislation remains in force, and has been endorsed by New Labour. To this basic framework of labor law has been added limited regulation of the labor market. This regulation has taken the form of a set of minimum rights at work, including a minimum wage, limits on working hours, expanded rights of unfair dismissal, expanded rights for working women and parents, and some regulation of precarious, “atypical” forms of labor contract. It is important to emphasize, however, that labor market regulation in Britain remained limited, and that the Blair government sought legislation that was compatible with a high degree of labor market flexibility.

Regulation of the labor market has taken the form of individual legal rights, enforceable through labor courts and state agencies, not, for the most part, collective rights designed to strengthen trade unions which could then take on the role of regulating social relations through collective bargaining. With a few exceptions, any benefits likely to accrue to unions will come indirectly, by virtue of a more regulated labor market, or a new role as enforcers of legal rights.. Tony Blair's Fabian pamphlet, “The Third Way: New Politics for a New Century,” Fabian Pamphlet 588 (September 1998), does not appear to mention trade unions, instead reserving for the state, the role of protecting the weak through minimum standards at work (p. 11). In several areas legislation further substitutes for collective regulation, such as in the minimum wage and statutory internal procedures. Thus, of the two parallel tracks along which social relations have been regulated in Britain, as elsewhere in the advanced capitalist world - collective regulation by unions and legal regulation by the state - it is the latter that has become the focus of New Labour attention. This continues and accelerates the trend since the 1960s in Britain of a shift from voluntarism towards individual rights at work. But it is very important to recognize that even legal regulation of the labor market remains extremely limited because of concern that employment rights encroach as little as possible on labor market flexibility.

Thus in terms of industrial relations, the current Labour government is best understood as a consolidation, rather than a radical departure, from Thatcherism. They share a broad acceptance of the current balance of social power in the workplace, a largely unitarist view of industrial relations, and, most fundamentally, an emphasis upon individual rather than collective regulation of social relations. It is hard to disagree with Crouch's assessment that, “in the industrial relations field New Labour represents a continuation of the neo-liberalism of the Conservative government, but one required to make more concessions than its predecessor with trade unions and social-democratic policy preferences.”. Colin Crouch, “A Third Way in Industrial Relations?” in Stuart White, ed., New Labour: The Progressive Future? (New York: Palgrave, 2001), p.104. The distinction between the two approaches then, lies in the degree of labor market regulation undertaken by the state, not the agent of that regulation. Both largely reject collective regulation. The institutions for the collective regulation of industrial relations, which were central to both public policy and industrial relations practice in Britain for a century after 1890, are now almost certainly in terminal decline.

5. Reconstructing French Industrial Relations

5.1 The State and Social Actors in France

Like its British counterpart, the system of French industrial relations has been transformed in the last two decades. Changes that took place between 1968 and 1981 did create a more state-centered set of industrial relations institutions, but efforts to encourage autonomous collective bargaining institutions largely failed. That period was dominated by crisis: the regime crisis engendered by the events of May-June 1968; the economic crisis accompanying the oil shock of 1973-74; and the political crisis of heightened electoral competition between the Union de la Gauche and the Right. In this context, industrial relations reform was driven more by the desire bring social peace, demonstrate social progress, and manage inflationary pressures than to construct institutions appropriate to an emerging regime of accumulation, the contours of which were, in any case, murky. Already in the efforts of the Barre government after 1978, flexibility had appeared as a goal of industrial relations reform, but it was still a minor theme.

After 1981, the compatibility between the industrial relations system and post-Fordist restructuring of the French economy became of central importance. For reasons discussed in some detail elsewhere, the initial Socialist economic project was quickly abandoned in the face of domestic and international economic pressure,. David Cameron, “Colors of the Rose: On the Ambiguous Record of French Socialism,” Center for European Studies Working Paper Series (1988), and Peter Hall, Governing the Economy, chapter 8. and after the adoption of rigeur in 1982-83, the Socialist government underwent what Singer has appropriately termed a “conversion” to the market.. Daniel Singer, Is Socialism Doomed? The Meaning of Mitterrand (New York: Oxford University Press, 1988), p. 189. From then on there was little political disagreement about the goals of monetary stability, labor market flexibility, and privatization of state-owned industries. Rather the question became how industrial relations institutions could contribute to this form of economic restructuring, and what precise balance between social protection and flexibility was appropriate.

During this period, “the state remains at the heart of the organisation of relations between capital and labour.”. Steve Jefferys, Liberte, Egalite and Fraternite at Work: Changing French Employment Relations and Management (New York: Palgrave McMillan, 2003), p. 128. The emergence of labor market and workplace flexibility could not take place without the active role of the French state, and a state-led restructuring of industrial relations institutions. In the first place, state regulation and state industrial relations institutions were the primary obstacles to flexibility. And in the second place, private industrial actors, particularly trade unions, were simply too weak to take on the burden of negotiating flexibility. Nevertheless, the role of the French state in industrial relations reform after 1981 cannot be understood within the familiar category of dirigisme (which itself was rarely an accurate description of the relationship between the French state and society). As Vail has pointed out, state action has increasingly involved delicate and careful negotiation with business and labor organizations as the state has both tried to encourage class actors to take on more of the regulatory burden of industrial relations, and sought “to shore up societal support behind unpopular and often painful reforms.”. Mark Vail, “The Delicate Politics of Negotiated Political Change: The State and Social Partners in Contemporary French Social-Protection Reform,” paper presented at the Southwest Political Science Association's annual meeting, San Antonio, Texas, 16-19 April 2003, p. 3. The central problem facing the French state in its efforts to reconstruct industrial relations institutions in a manner appropriate to post-Fordist economic restructuring, was how to withdraw from direct regulation of the labor market in the absence of labor actors at the firm level capable of ensuring that the introduction of flexibility was genuinely negotiated rather than imposed unilaterally by employers. The core of the state's strategy, under both governments of the Left and the Right was to create legal obligations inside the firm, that would have the effect of generating autonomous and self-sustaining social dialogue that would in turn permit deregulation of the labor market.

5.2 The Auroux Laws and the Reform of Firm Level Industrial Relations

This section begins with a brief account of the Auroux laws, brief because this is a well-known part of the story of French industrial relations reform, and then moves onto reforms in the 1990s. The common theme throughout this period has been the creation of workplace industrial relations institutions, the dominance of firm-specific institutions to represent workers, and the shift in competence and mandate away from legislation and higher level collective bargaining towards these decentralized institutions for the regulation of social relations.

The Auroux Laws rewrote fully one-third of the French labor code, and represented the most thorough-going state industrial relations reform project since 1936. There were diverse inspirations for the reforms, and one of the interesting features of the package as a whole is that so many of its elements had been proposed in one form or another in the past. As mentioned above, the report of the Sudreau Commission proposed a right of worker expression in the firm, greater economic powers for the works council, and an annual bilan social, all of which found their way into the Auroux laws. Similarly, in 1978 at the point at which the Barre government was proposing to re-launch collective bargaining, Jacques Delors set out a reform agenda that involved strengthening trade unions and extending and regularizing collective bargaining inside the firm. It should also be recalled that Delors, the first economics and finance minister of the 1981 Socialist government, had also in an earlier incarnation been the architect of Chaban-Delmas' New Society project of industrial relations reform. So the Auroux Laws combined some fairly conventional (though nonetheless radical in scope) measures aimed at encouraging decentralized collective bargaining, with a series of elements that I have elsewhere characterized as micro-corporatist: strengthening firm-specific industrial relations institutions that are largely autonomous from, and unarticulated with, industry or national institutions of labor regulation.

The central elements introduced by the Auroux Laws were as follows. First, a right of self-expression for workers inside the firm, in the form of regular meetings to discuss social relations within the firm. This provision was experimental in the Auroux legislation and limited to firms employing 200 or more workers. Legislation in 1986 made the right of expression permanent and extended it to firms with 50 or more workers. Second, works councils received new rights of mandatory consultation over a wide range of economic issues, greater resources including the right to hire outside experts, and, in very large firms, a special economic delegation was created. Third, an annual bilan social was made mandatory. Fourth, trade union delegates received legal protection in all firms, not simply those employing 50 or more workers as had been the situation since 1968. Unions also gained greater resources (office space, time off for union duties) in firms employing 50 or more workers. Fifth, an obligation to bargain annually (though not to conclude an agreement) at both the firm and branch level was created in firms employing 50 or more workers and having a union delegate. Firm level agreements could derogate from legislation and higher-level agreements as long as a union or unions receiving a majority of the votes in the last works council election did not veto the agreement. And the process of state extension of collective agreements was made easier. Sixth, a series of reforms of public sector industrial relations decentralized works councils, provided a right of self-expression, and extended a limited form of worker representation on the boards of public companies to such firms employing 200 or more workers.

Two main points need to be emphasized about this package of legislation. The first is that it did very little to directly strengthen trade unions. Union delegates received legal protection in small firms, and some additional resources in larger firms (resources were not provided in small firms because of the fear of burdening small firms), but for the most part the legislation created the obligation to bargain with unions where they were present without encouraging the spread and implantation of unions. The hope was that unions would be indirectly strengthened by their the increased powers given to workers councils and the right of worker expression. This was a vain hope at a time when employers were at best ambivalent, and often deeply hostile to trade unionism.. One indication of this employer ambivalence came from a SOFRES survey conducted as part of the review of the Auroux Laws. See Michel Coffineau, Les Lois Auroux, Dix Ans Apres Paris: La Documentation Francaise, 1993), annex XI.

Second, the Auroux Laws contained within them a whole series of micro-corporatist elements, whose logic pointed away from articulated collective bargaining between independent trade unions and employers, and instead encouraged an assortment of forms of social dialogue inside the firm with firm-specific institutions of worker representation, unconnected to either outside trade unions or higher levels of collective bargaining. These elements included the right of firm level agreements to derogate from legislation and branch agreements, the increased powers of consultation for works councils (which had the effect of blurring the line between consultation and negotiation), and the right of expression inside the firm. In the case of the latter, the expression groups were made mandatory at a time when managerial practices which emphasized direct communication with the workforce, unmediated by trade unions, were spreading within French firms, and an assortment of institutions such as quality circles and worker-management groups were appearing.. Alan Jenkins, Employment Relations in France: Evolution and Innovation (New York: Kluwer Academic/Plenum Publishers, 2000), chapter 3. Thus the legislation had the effect of a forced modernization of managerial practices extending their reach beyond the leading edge of French firms to the rest of the economy.

The results of the Auroux reforms on the industrial relations institutions of France were made clear by an exhaustive study ten years after their implementation.. Coffineau, Les Lois Auroux, Dix Ans Apres. While branch level collective bargaining had stagnated, there had been a substantial increase in the scale of firm-level bargaining such that “La negociation reguliere s'est affirmee comme le mode de regulation sociale privilegie.”. Ibid., p. 93. But at the same time, the weakness of trade unionism had not been reversed, and indeed appeared to have accelerated, though the study was ambivalent about the degree of responsibility of the Auroux legislation for trade union decline. The number of union delegates had fallen, especially in smaller firms, and employee representation of all types was limited in these firms. Indeed the Belier report had found that half of all workers were employed in firms with no employee representation of any kind.. The findings of the Belier report were summarized in Coffineau, Les Lois Auroux, Dix Ans Apres, p. 77.

So how to explain the paradox of a dramatic expansion of collective bargaining at a time of growing trade union weakness? In practice, employers were signing agreements with union delegates who represented very few actual members in order to gain dispensation from legislation or branch agreements. At the same time, a blurring of the lines of employee representation was taking place. The distinction between union delegates negotiating collective agreements and works councils or worker expression groups consulting over work reorganization or layoffs collapsed in the context of an acceleration in the process of economic restructuring. There was instead confusion and competition among forms of employee representation.. Coffineau, Les Lois Auroux, Dix Ans Apres, p. 78.

5.3 Workplace Industrial Relations Reform in the 1990s

Thus a decade after the Auroux Laws were put in place, they had indeed encouraged an assortment of forms of social dialogue inside the firm and a significant expansion in firm-level collective bargaining. But in the absence of strong, independent trade unions, that dialogue and bargaining were of the micro-corporatist variety. In the 1990s the role and form of employee representation inside French firms underwent significant change that had the effect of deepening and broadening the construction of a set of firm-level institutions that regularized social dialogue with largely non-union employee representatives.

The 1990 Belier report on employee representation in small and medium-sized firms, that had identified the paucity of such representation, even in firms where employee delegates or works councils were legally required, recommended a simplification of employee representation to permit a merging of function. The Five-Year Employment Law (which also had important provisions relating to work time reduction and flexibility, see below) permitted the merging of the employee delegate and works council function in firms employing fewer than 200 workers, and simplified the information employers were required to provide to works councils.

In October 1995 employers and several of the trade union confederations (but not the CGT or FO) issued a general statement about collective bargaining and signed two interprofessional agreements (the other one concerned work time reduction and flexibility, indicating the linkage between workplace industrial relations institutions and the introduction of flexibility). The general statement called for the autonomy of bargaining and decried “social interventionism” on the part of the state.. “Joint employer/union declaration,” European Industrial Relations Review, 255 (April 1995), p. 6. The agreement relating to collective bargaining launched a three year experiment during which time firm-level agreements on single issues could be signed by either mandated or authorized delegates in firms employing less than 50 workers in which there was no union delegate. This permitted either an elected employee representative, or an employee mandated by a national trade union, to sign collective agreements. Arguing that levels of collective bargaining should be complementary rather than hierarchical, it also permitted firm-level agreements to be signed that contained clauses less favorable than branch or interprofessional agreements, thus breaching the cornerstone of French collective bargaining law since 1950. This agreement was sanctioned by legislation in 1996, and then extended for another five years in 1999 when the initial experiment expired. As will be discussed below, the Aubry legislation formally incorporated the principle of agreements signed by non-union employee representatives into the process by which work time reduction could take place.

Faced with the weakness of French trade unionism but the need to use collective agreements in order to introduce flexibility, governments of both the Left and the Right, employers and some of the trade union confederations chose to permit a delegation of trade union responsibilities onto employees who had no necessary connection to a trade union, in firms that had no union representative nor any necessary union membership. For the unions that did support this practice (and all the union confederations participated in the mandating process even if they did not sign the original interprofessional agreement), the hope was that the mandating process would help unions get access to smaller firms and eventually create union delegates out of mandated employees. For employers and the state, these representatives provided an employee interlocutor with whom to negotiate flexibility, and it is no coincidence that legislation and interprofessional agreements on employee representation always went hand-in-hand with measures encouraging flexibility.

Elsewhere, I have argued that French trade unionism can be usefully characterized as virtual unionism,. Chris Howell, “Virtual Unionism in France,” in Harrick Chapman, Mark Kesselman and Martin A. Schain, eds., A Century of Organized Labor in France (New York: St Martin's Press, 1998). in which the influence of organized labor rests not upon class power (in the sense of control over labor's collective capacities), or any of the conventional measures of labor strength, but rather upon dual functions: as a vehicle representing labor interests to the state (deployed by workers, who are rarely union members, to bargain with the state during moments of social crisis); and as institutions that the state uses to legitimize economic policies that cause social dislocation. In this latter function, French governments have tended to seek out trade unions during moments of industrial conflict and social crisis to negotiate the terms of change. That French unions do not represent actual members matters less than that the state be seen to be bargaining with the “labor interest.” It is worth noting that in both cases, the importance of trade unions is a function of their relationship with the state rather than with employers, something that emphasizes the centrality of the French state in labor regulation. With the development of the mandating process, virtual trade unionism is taken to its logical conclusion and endpoint: national trade union confederations without any necessary presence or power in the workplace are called upon to bestow legitimacy upon firm level flexibility agreements.

A second industrial relations development worth mentioning here is related to the management of layoffs which accompany economic restructuring. In 1986 the requirement that mass layoffs for economic reasons receive administrative authorization, introduced in the 1970s and a symbol for employers of rigid bureaucratic obstruction to economic restructuring, was abolished. But what emerged in its place was a greater emphasis upon the obligation of employers to provide alternatives to layoffs in a social plan presented to the works council. Again, there was little difference between governments of the Left and the Right, with a Socialist government giving the Labor Inspectorate a greater role in regulating social plans in 1993, and the new conservative government which replaced it also emphasizing that firms had an “obligation of means” to avoid layoffs wherever possible. In 1995 a court of appeal decision required that social plans contain “real and serious” redeployment measures,. European Industrial Relations Review, 258 (July 1995), p. 6. a decision that led employers to argue that administrative authorization for layoffs had been replaced with judicial authorization. This concern was given credence after the passage of the Robien Law in 1995, when it appeared that social plans that did not include work time reduction as one option for avoiding layoffs would not be approved. Thus the social plan became a tool for state influence over economic restructuring at the firm level, and for obligating employers to engage in some dialogue with their employees over the process of restructuring. In Jenkins words, state action fostered “a more proactive HR” [human resources] approach.. Jenkins, Employment Relations in France, p. 140. In practice, this obligation was likely to encourage the negotiation of flexibility in order to minimize job loss.