What can be done? 83

The concern for survival and competitiveness of companies and the concern for em- ployment and income continuity for workers has always been one of the major sources of conflict between the employers and employees within the European social model. These two aims appear incompatible and more of one appears to imply less of the oth- er. However, as mentioned above, restructuring can be made in such a way as to pro-

vide both security and competitiveness, by means of support to those workers who are made redundant with a view to find a new job. Thus, the final section of this report explores how, in principle, the regulation of restructuring could develop to obtain this dual aim.

As shown in chapter 3, we find great variation of regulation of collective redundan- cies between countries. There are thresholds that limit the application of the regula- tion. The most common threshold is that employers with less than 20 workers are exempted from the legislation, or that larger employers who reduce a particular share of the workforce during a certain time period are exempted. The redundancy must be of a particular size to offer workers some form of protection. It is unclear what the purpose of this threshold is? However, the effects of such regulations are rather clear. It means that larger employers are circumventing the regulation by dismissing small- er groups of workers several times, instead of doing it all at once, or that workers in the smaller companies are not protected in the same way as employees of the larger companies. This is paradoxical because SME:s account for more than 99% of Europe- an enterprises and about two-thirds of private sector employment. This means that the legislation, for unclear reasons, discriminates between workers dependent on the size of their employer. There are therefore good reasons to argue that employers should be treated equally and that thresholds for application of the law should be abolished. However, such expansion of the scope of employment protection legislation would probably initiate extensive dissatisfaction among employers, in particular SMEs, because such regulations would restrict employers’ freedom to decide upon the size of its workforce. However, such resistance is based on the assumption that there would only be an extension of the current legislation.

The restriction of employers’ freedom to decide upon the size of the workforce, in- cluding dismissing workers, is the main means of regulating restructuring in labour law. The idea is that workers are protected from being dismissed by making it diffi- cult and or costly for the employer to take such decisions. However, it is far from obvi- ous that such restrictions of the “freedom to decide upon the size of the workforce” – always is in the interests of (all workers) those workers who are indeed dismissed. As regards the continuity of employment, income or the capacity to anticipate future em- ployment termination for the worker, the restrictions on the employers freedom to dismiss workers per se is not the critical issue, but rather the continuity of the income level, which, in all European Member States, is secured through some form of unem-

ployment benefits. The regulation of the employers’ freedom to decide upon the size of the workforce appears primarily to serve the purpose to ensure that dismissals do not

become widespread and thereby contribute to create insecure working conditions for

workers in general who would continuously be threatened by the risk of being dis- missed. It is clear that the cost of dismissal and the procedures are meant to deter employers from choosing redundancies as the solution to their problems.

When regulation of collective redundancies is extensive, dismissals as a means of restructuring the workplace is blocked. To “block” the use of collective redundancies may be regarded as a way to stimulate employers to search for alternative ways of restructuring the organization25_{. However, such regulations also deter employers from}

developing measures and practices to support workers after dismissals have been exe- cuted. This may be devastating in case the preventive and postponing measures are unsuccessful and redundancies have to be implemented anyway.

The regulation of employers’ freedom to dismiss workers is thus primarily related to the interests of those workers who remain after dismissals have taken place – the survivors – and not those workers who are dismissed. This, while perhaps obvious, should be made explicit. If one is to regulate collective redundancies to the benefit of the workers who are dismissed, the regulation of the employers’ freedom to decide upon the size of the workforce is not the relevant issue.26 _{Instead the focus of regula-}

tion should be on the conditions that may have an impact on the dismissed workers’ chances to find a new job – the transition conditions.27

As shown in chapter 3 there are several examples of regulations that serve such purposes and there are alterations in collective agreements in several countries that provide inspiration for further development of legislative proposals, for example:

- Longer notification periods that allow dismissed workers longer time to search for a new job,

- Time off for job search

25 _{For example to consider other alternative measures to manage the firms’ adaptation needs, such as working time reduction,}

etc. In many countries extensive regulation is combined with generous state funded programs to enable employers to use other alternatives than dismissals, see for example Germany, which offers the possibility for employers to reduce labour costs through short time working schemes. However, such programs are not always available in countries with a restrictive regula- tion.

26 _{The exception is the prohibition of employers to dismiss particular groups of workers, e.g. trade union representatives or}

individuals with ill health.

27 _{For example, the conditions for dismissed workers (after the decision has been made) varies considerably. Dismissal peri-}

- Mechanisms to incentivise or require employers to provide transition services, such as job search activities for dismissed workers or transition units.

The common denominator of such practices and regulations is that they regulate the process and conditions for the dismissed workers, something that the remaining workers and their representatives do not always take into consideration. The inter- ests of the remaining workers at the workplace are of course important, however, it is also important to take the interest of the dismissed workers into account.

There is clearly a risk that regulations of the transition conditions to ensure better treatment for the dismissed workers may be seen as costs that could potentially un- dermine the survival of the company, as the costs of such activities are enforced upon the employer when the company probably has the least resources available.28 _Indeed,

it may be assumed that employers initiate collective redundancies when they are in economic difficulties and therefore would not have the resources to support workers who are dismissed to any greater extent. This is also linked to the experiences of sev- eral EU projects: the need to disconnect restructuring from economic crises. Collective redundancies are more difficult to manage when it is regarded as a crisis measure. There are several examples of anticipated restructuring where collective redundancy is a response to a long-term adjustment and plan for the future operations of the com- pany. Of course this can not be done in all cases, but in general it may be argued that is better to allow employers to rationalise the organization little by little, to stay pro- ductive and competitive, instead of waiting until the crisis makes it necessary to cut the workforce. And in such situations, often a major economic crisis, it is probably more difficult for the displaced workers to find new jobs. Therefore it is better, for the sake of long term competitiveness, to shift the focus of regulation from blocking collec- tive redundancies to facilitating worker transition to new jobs.

Thus, a reformed legislative framework must include a shift from regulating the employers’ freedom to initiate redundancies to regulating the conditions that facilitate the dismissed workers’ transition to new jobs.

28 This explains why Swedish trade unions and employer associations set up job security councils, as they believed that they