Europe's Unions Gaining Say Over Corporate Shutdown Decisions

The European Economic Community (EEC) is moving forward with a proposal that would give workers in the 10 community countries unprecedented leverage in their dealings with multinational corporations.

"The proposal seeks to create a community-wide framework of laws forcing multinational companies to satisfy requirements for informing and consulting their employees" about all corporate decisions that may substantially affect workers, says Andre Soulat, a French union representative on the EEC's, Social and Economic Committee, which drew up the legislation.

The EEC proposal, named Vredeling - after its author, the Dutch Socialist Hank Vredeling, a former commissioner of the EEC has sparked heated opposition from multinational companies.

"It's commerce and industry versus labor," says Kenneth Hickman of the U.S. National Foreign Trade Council, which represents over 600 U.S. firms. The Vredeling proposal would be "detrimental to the companies," not only those based in the U.S., but European as well, says Hickman, who heads up the Foreign Trade Council's special committee on the EEC. U.S. companies have 76.6 million of direct investment in Europe.

"The EEC is not on a witch hunt against multinationals," declared Ivor Richard, a commissioner of the EEC, in a March 31 speech to the U.S. Chamber of Commerce. Rather, Richard explained, the Vredeling proposal has a "quite admirable objective. Workers have at least the right to be informed about matters which are often literally a matter of economic life or death to them," he told his audience of U.S. business people. "This is particularly true in a period of recession and an increasing anxiety on the parts of workers over their future employment."

Specifically, the Vredeling proposal would require the international headquarters (or parent) of a subsidiary with 50 or more employees in the EEC to supply detailed data to the workers' unions. "At least once a year," management of the parent firm "shall forward intelligible general information" to the unions "giving a clear picture of the activities" of the parent and of its subsidiaries, and providing "intelligible specific information on prospects which might have serious consequences for the employees' interests."

The EEC would require the parent firm to disclose the company's worldwide employment, production, and investment data and plans, "the economic and financial situation" of the firm, and "all procedures and plans liable to have a substantial effect on employees' interests."

As far as the European unions - staunch supporters of the proposal - are concerned, the essential item of the Vredeling initiative is the one governing plant closing. Whenever the parent firm plans to make a decision about its operations or the operations of one of its subsidiaries in the EEC "which is liable to have a substantial effect on the interests of its employees," it must pass this information on "without delay to its employees' representatives and to ask for their opinion within a period of not less than 30 days."

If the unions feel that the planned move by management would be "likely to have a direct effect on the employees' terms of employment or working conditions, the management of the subsidiary shall be required to hold consultation with them with a view to reaching agreement on the measures planned in respect of the employees."

The Vredeling Proposal's requirements on financial disclosure and consultation with workers have particularly upset business. "There is virtually nothing that protects the confidentiality" of a company's data, says Steve Schneebaum, of the Washington law firm Patton, Boggs, and Blow, which has "had contacts with, advised, or represented" between 10 and 20 large U.S. multinationals concerned about the proposal. The financial disclosure requirements, says Schneebaum, may jeopardize the company's profits sheets, since some of the data requested may be "share-price sensitive," that is, it might effect the company's stock.

"If the competition found out about the company's plans and financial condition," says Schneebaum, "there'd be hell to pay on the stockmarket."