`It's Like A Too Tight Corset'

It's an idea that Europe's managers blocked for 20 years. But now the proposal is set to become reality, and companies are wondering if they are stuck with a nuisance or a nightmare.

The idea is the works council. The European Union has finally decided every large corporation must have one in place by 1999. An EU directive says large multinationals must form panels of up to 30 worker employees recruited from the member states where a company has operations. Top management must consult with these councils at least once a year on strategy and such decisions as plant closings. A vaguely worded provision stipulates extra sessions for exceptional circumstances.

TIGHT SCRIPT. The directive was passed last September. But it's only sinking in now that companies must act fast, especially if they want to use a loophole giving them some control over the final form their councils take. If companies cut their own deals with workers before September, 1996, they don't have to follow the tightly scripted regulations the EU has mandated. Thus, in June, General Motors Corp. proposed an "employee forum," and Sony Corp. will offer something similar in July. Credit Lyonnais' grandly named Committee for Information & Reflection met on May 23. Bayer is one of Germany's first companies to form a council.

Yet this flurry of activity doesn't mean that companies have reversed their opposition. Even the Germans, who have for years formally consulted with German workers, don't want to see Europewide councils develop. "It's like a too-tight corset," gripes Rolf Thusing, an executive at the German Employers Confederation. "Companies need to be flexible to compete." To managers, the rule was conceived at a time when no one thought over-regulating the workplace was possible, but now European companies feel they are among the most heavily regulated in business. Now comes one more rule that, in management's view, would cost plenty to implement for a dimly perceived benefit.

Companies also argue that they have unions to negotiate with. "We've got to be very careful not to let the role of works councils grow beyond the original intention," says Francesco Ferretti, a human resources executive at Merloni Elettrodomestici, the Italian maker of white goods. Yet some union leaders, such as Robert Steiert, a works council specialist at Germany's metalworkers union, IG Metall, envision a day when Europewide collective bargaining will develop from the works councils.

The idea of councils reinforces a division between management and labor that companies say they want to erase. Roger Wilson, the Geneva-based director of government relations in Europe for Hewlett-Packard Co., points out that his company tries to minimize distinctions between blue- and white-collar workers and that it stresses low-key, regular communication through such techniques as Friday coffee gatherings. "The directive is an irritation," says Wilson. "We need to make it work without spoiling the essence of our culture."

The rush to form councils voluntarily now may appease some of this corporate angst. In Italy, tiremaker Pirelli is designing an alternative to a single council to cover its 50 European units. Labor-relations chief Serafino Balduzzi has just clinched a preliminary agreement to create temporary delegations for specific issues, such as closing production lines.

Despite the fears, some experiences have been positive. United Biscuits, the first British company to make the move, tacked its first council session onto its annual shareholders meeting. On May 10, it flew 20 representatives from several European sites to meet executives in Edinburgh. To break the ice, a bagpipe player ushered them in to a Scottish meal of haggis--stuffed sheep's stomach. Next morning, managers laid out their strategic plans, and workers grilled them. "I was surprised by the frankness on both sides," says Michael Wilkinson, human resources director. "It's a good start." What worries companies is where it will end.

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