If European manufacturing industries are to survive they need to adopt a new paradigm in industrial relations management. An interesting example of how radically industrial relations are changing in Europe is that in which Fiat conditioned its future investment in two of its major moribund plants in Italy – Pomigilano in Naples and Mirafiori in Milan.

The Fiat-Chrysler partnership gives the Italian automobile giant a more international perspective which in practice means that it now takes its investment decisions purely on consideration of where in the world the best long-term prospects of growth exist. Free from the usual political pressure that is common in some EU countries, the managing director of Fiat, Sergio Marchionne made it clear that his company would either be given a free hand to improve competitiveness, productivity, and governance in the Naples and Milan plants, or it would invest elsewhere in South America or Eastern Europe.

Restructuring plans were defined in a short time and the main trade unions representing Fiat workers – Fiom CGIL, CISL and Uil – were involved in negotiations. The changes that the management of Fiat were seeking were radical: no more national industry-wide collective agreements, new timetables, shorter shift breaks, tighter control on sick leave abuse, and the prohibition of strikes when agreements not to strike are in force.

Mr Marchionne was literally insisting that the trade unions abandon a fundamental belief of Italian trade unions that past achievements in working conditions were untouchable. From now on, it would be back to the drawing board as far as defining the parameters of industrial relations with the company committing itself to safeguard the workers rights as defined by law, but insisting that everything else was negotiable. Fiat sweetened this take-it-or-leave-it strategy with an offer to improve wages and guarantee investment.

Once again, the major Italian trade unions failed to present a common front in these difficult negotiations. The extreme left Fiom CGIL broke ranks with the more moderate Cisl and Uil and refused to sign the agreement. This agreement will now be submitted to a referendum in which workers will be asked to approve the deal signed by their representatives as a condition of the rescue of these plants and future investment. If approved, this agreement will also mean that CGIL will no longer have a seat on the negotiating table in future.

The changing industrial relations dynamics in European private sector industries contrast with the lethargic approach adopted by some governments in the reform of their public sector. Timescales for reforms in the public sector are much longer, critical success factors are less clearly defined, sensitivity to adverse electoral consequences more acute, and the political will to do what it takes to revitalise this sluggish sector is often lacking.

This partly explains why public finances in the euro area are still critically weak. The European economic model built on the strong presence of government in certain sectors of the economy means that Europe will continue to lag behind the US and the emerging economies of the East. Yet, what is at stake is the prosperity of millions of European workers who are often not being told the whole truth by their political leaders about the risks threatening their future.

The Fiat strategy shows that economic restructuring can only succeed when all the stakeholders face the tough realities that affect their competitiveness. Past labour ‘achievements’ that become entrenched in inflexible work practices have to be challenged in order to give a better chance for reforms to bear fruit in the future.

Our political leaders need to unashamedly look at the glass that is half empty and define ways on how they intend to fill it, rather than aim for the feel-good factor by failing to define the difficult challenges ahead. Complacency and an obstinate disregard of the factors that need to be reformed to upgrade our economic performance are our worst enemies.

The different treatment given to public and private sector workers is beginning to be challenged as governments are now wielding the axe on public sector employment. But reducing public sector employment should only be a solution of last resort.

The Fiat solution for Pomigliano and Miarafiori shows that a new approach to industrial relations management can often be painful, but can also save jobs and promote investment. Political and trade union leaders need to put their jobs on the line and tell people the hard truth about the difficult options ahead.

jcassarwhite@yahoo.com

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.