Seanad Éireann debate -
Thursday, 24 Apr 1986

Vol. 112 No. 4

Report of Joint Committee on the Secondary Legislation of the EC — Workers' Consultation and Information Rights (Vredeling Directive): Motion.

Mr. Ferris

I move:

That Seanad Éireann takes note of Report No. 19 of the Joint Committee on the Secondary Legislation of the European Communities: Workers' Consultation and Information Rights (Vredeling Directive).

In their introduction to the report the committee set down what the Vredeling Directive is about. The committee acknowledge the work of Senator Mary Robinson, who has chaired the subcommittee of the main committee which dealt with this report, and I pay tribute to her and her colleagues. In my opening remarks I want also on behalf of the House to pay tribute to Senator Robinson for her work in this area. This directive was initiated by the Community, but it is also an area that many of us — particularly those of us involved in the trade union movement — have a keen interest in, simply because any consultation that can take place between employer and employees is something that must be welcomed. If there is a dialogue between the two sides which can point out problems which could lead to factory closures and if that dialogue can relieve some of the causes of the problems of the industry, as far as we are concerned that dialogue would be welcomed.

This report sets down in a formal way how this should take place. From the publication of the original directive it was realised that there were problems, not alone political problems but also problems concerning the organisation representing industry and the Irish Congress of Trade Unions, which represents the workers. Arising out of some of these problems my colleague, the Minister for Labour and for the Public Service, Deputy Quinn, initiated a series of discussions on the revision of the Commission's proposals within a working party which was set up to look at this matter. These discussions have brought to light many problems of a political and technical nature. The Minister, with some initiative decided to set up an ad hoc working group to look at all the questions that had arisen.

The problem I have with the directive is that it probably pitches its consultative role at too high a number of employees per company. It really only deals with companies of 1,000 employees or more, irrespective of the fact that some of those employees might be working for a parent company in different parts of the Community. Because of that number of employees, I feel that the directive will have little application to the conditions in Ireland. Outside of the public sector, there are very few companies in the country which deal with that number of employees. Fords of Cork was an exception, but of course they are gone. Possibly, if the spirit of the directive had been applied, many of the problems arising out of the closure of that factory might have been eliminated. Dunlops are another such industry, but even Dunlops had 680 employees in Ireland when they closed down. It is quite likely they would have had more employees throughout the Community, which would have brought them into the league of 1,000 employees or more. However, the vast majority of companies in Ireland with no connection in the Community are smaller in number.

The need for consultation is very important. The concept of the Vredeling Directive should apply to all companies, if that is possible. Indeed the Congress of Trade Unions I am sure would think along the same lines as I do. In their submission the Congress of Trade unions have taken account of CII's viewpoint naturally but they have requested that the Government should press for the adoption of the original report and proposals and they oppose this draft directive.

The Congress support the European Trade Union Movement which argues that the national legislative provisions are inadequate if a common market is to function properly and that regulations laid down at European level on procedures for information, disclosure and consultation with workers would contribute towards the democratisation of social and economic life in the Community. The European Trade Union Movement regard the draft directive as a logical follow-up to the social action programme adopted by the Council of Social Affairs Ministers in 1974 and Congress go on to make very reasonable submissions to the Oireachtas Joint Committee.

Arising out of Congress's submission and indeed the submission from the Confederation of Irish Industry we are now in a situation where we are possibly moving towards accepting the principle of Vredeling, but adapting it to our own needs. I have no doubt that when Senator Robinson deals with the report she will be putting all the points that have been made to her at the committee. Certainly as a trade unionist I feel that anything which helps to remove the barrier between employers and employees is something to be welcomed. Anything, whether it be a European directive or otherwise, that is a vehicle for dialogue and consultation — particularly where there are problems — is also to be welcomed. If there were more of that type of consultation going on within the labour and industrial area over a long number of years we would have fewer and fewer situations which could eventually lead to the closure of a company and we would have fewer and fewer problems which lead to strikes. There would also be fewer problems leading to unofficial strikes. In spite of the strength of the trade union movement, situations arise every day in industry, where we are dealing with humans and not robots, where there is need for consultation and dialogue and any formalisation of that procedure is to be welcomed.

I will listen with interest to what Mr. Kenny, the Minister of State at the Department of Labour has to say this morning. The Minister has a new approach to some of the problems in this area, which I note from his reply to my Adjournment matter last week on the closure of a factory. When a factory like that closes and there is an on-going dialogue afterwards, the incoming industrialist does not always find it possible to live up to commitments that he has given and this can create further problems in the occupation of a factory. The principle is very important. If we can formalise the discussions which will go on bewteen management and workers we could be moving into an area where there would be a better trade union relationship with employers and this is something which all of us would welcome.

The trade union movement are a very responsible movement but they do like to be consulted. Indeed they are now organised in such a way that they have a lot of expertise available to them which in its own right could be of benefit to the ailing company. By way of consultation, advice and dialogue they can even make suggestions to management which could improve structures which would help towards securing the future of an industry. Overall that would be the trade union's attitude. Those of us who remember the problems involved in the major closure of the factory in Limerick will know that there was a lack of communication and dialogue between the unions and their members and the unions and the present company. We lost a major employer because of that. I hope that the principles of this directive are accepted by industry, in particular, and if we look at the numbers of employees my option would be that that be lowered as a starting point to the number of employees to suit Irish conditions. Then we will have done something useful in this area.

I commend the committee for their report, which is excellent. The sad news of the report is on page 34, appendix four, which lists all the industries and the job losses in the industries which had been giving useful employment. There is probably a reason for the closures. It is a tragedy and an indication of the changing times in industry, the technological changes and the changes which have taken place in the marketplace for some of the traditional industries which we had in Ireland. This is a list of tragedies in the employment sector which brings home to one the shock reality of the economic climate we have come through.

Let us hope, with the inflation rate at reasonable levels at the moment and borrowing rates at a more realistic level also that industry will find it easier to survive in this economic climate and that the prospects for employment will improve. All of us accept that the unemployment levels we have now are astronomical and unacceptable and anything we can do to stimulate employment by way of industrial development should be done. Anything we can do by way of adopting EC directives which will ensure that there will be a better climate between the two sides in industry should also be welcomed. This report deals with that area of communication and consultation between employer and employee and I welcome it and formally propose it to the House.

Mrs. Robinson

I am pleased to have the opportunity to contribute to the debate on this report. I was invited by the Deputy Leader, Senator Ferris, to second the report but I understand that is not formally necessary. Nonetheless I am grateful for an opportunity to participate at an early stage in this debate and I would like to thank Senator Ferris for his kind remarks regarding my involvement in the subcommittee which I chaired in the preparation of the report for the Joint Committee on EC Secondary Legislation.

The subject matter of this report is very important for Ireland. I say that because some doubts were expressed about that earlier in this House when reference was made to it. It was doubted whether it was really relevant or whether there was any urgency in it. Both this report on the Vredeling Directive and the report which we will debate later today on the proposed Fifth Company Law Directive are extremely important for industrial relations and company law reform in Ireland. Indeed I proposed to Senator Ferris that it would make a lot of sense to take these two reports together because they are linked in many ways, which is evident. But as always there is a procedural reason why something which is logical cannot happen and in this case it is because the reports relate to different areas of emphasis.

This report is concerned basically with employees rights and therefore we have the Minister for State at the Department of Labour with us whereas the proposal contained in the Fifth Company Law Directive is in the jurisdiction of a different Minister so they must be taken separately. Nonetheless I would emphasise that they are linked. The same subcommittee of the joint committee dealt with both proposals and on a number of occasions when we had representatives of industry or the trade union side or from the Department they referred to the linkage between these two proposals.

I will turn now to the particular proposed directive on workers' consultation and information rights. It is known and will continue to be known as the Vredeling Directive because of the commissioner who first proposed it. That was some time ago, the first proposal was submitted to the Council of Ministers in 1980, six years ago, and the matter is still under discussion at European level. As Senator Ferris has already said the initial proposal was more far-reaching than the present draft proposal which the joint committee considered. That original proposal was controversial at European level and there was a very sharp divide between the view of the representatives of industry and the view of the representatives of the trade union movement. The European Parliament in its opinion on the first draft put forward a number of amendments. It is fair to say it was one of the first occasions when the European Parliament appeared to be effectively lobbied by multinationals and to a considerable extent a sufficient number of members of the European Parliament were got at very effectively by the lobbyists on behalf of multinational companies.

The opinion of the parliament greatly diluted the thrust of the original proposals. That opinion and indeed the views of the Economic and Social Committee were taken into account by the Commission in proposing a new draft, which is the one which we report on here, which was submitted in 1983. I will come in a moment to the scope and details of the proposal. Even this revised proposal for a directive in relation to employees' rights of consultation and information is somewhat controversial. It has divided the viewpoint of industry and the trade union movement at European level and it has been difficult to make progress on this directive in the Council of Ministers.

Like Senator Ferris I wish to pay tribute to the constructive efforts made during the Irish Presidency and in particular the leadership of the Minister for Labour, Mr. Ruairí Quinn, in establishing an ad hoc body under the chairmanship of Dr. Mary Redmond. That body addressed some of the specific issues which were causing considerable problems. In page three of the report we refer to the deliberations of the group and the fact that they came forward with a new approach or emphasis in relation to this directive that it should be considered as more of an instrument of social policy giving workers the right to information and consultation than as a company law instrument imposing obligations on companies. That was an important breakthrough which has helped to advance the possible time scale in which the directive may be adopted.

What are the main provisions of this directive? What is it really intended to do? The scope of it is summarised at page four of the report. It is worth referring to this. It would confer on employees covered by the directive three important rights:

(i) annually, on a fixed date, information concerning the entire organisation and any subsequent updating of information which is required by law to be given to shareholders and creditors;

(ii) 30 days' notice of any decision "liable to have a substantial effect" on their interests; and

(iii) if this decision were likely, in the opinion of the workers' representatives (e.g. trade unions, works councils, etc.), to have a direct effect on the workers' terms of employment or working conditions, the management of the subsidiary concerned would have to hold consultations with the representatives or, in the event of their not being consulted, the workers' representatives would have the right to appeal to a tribunal or other competent national authority.

These are the main rights, to provide greater information to workers and to provide for consultation where their interests could be directly affected. Having summarised the main thrust of the proposals the report goes on to a detailed consideration of the proposals. Naturally it was necessary to define the scope of terms such as "undertaking" including "parent undertaking" and "subsidiary". One important area of definition is the workers who will be covered by the proposed directive. Here I would like to take up a a point made by Senator Ferris. He is incorrect in his assessment of the workers who will be affected by this directive. The scope is set out in Article 2 and referred to at page six of the report:

Article 2 limits the scope of the Directive to undertakings employing 1,000 or more workers as a whole within the EC.

A company where the parent company is in France may only employ 100 workers here but nonetheless they would come within the scope of the protection of the directive. Like Senator Ferris I would be happy to see the scope of it extended generally to companies, not necessarily meeting the original threshold, that between the parent and subsidiaries there would be 1,000 workers employed by the undertaking or undertakings. The effect and impact of the directive will be very significant for this country. It will precisely cover those workers who work for an enterprise where the parent company is located outside Ireland. This would include even outside Ireland subsidiaries in other European Community countries and a parent company, for example, in the United States or Japan. It will cover many workers and in particular it will cover those workers who are at risk and we have seen that happen in recent years where the Irish subsidiary shut down even though it was viable because of decisions taken elsewhere by the parent company, done very rapidly without consultation, with enormous trauma and problems for the workers concerned. The directive will have more impact here than Senator Ferris had suggested.

The type of information which workers will be entitled to is governed by Article 3 of the directive. It lays down that this must be general but explicit information giving a clear picture of the activities of the parent undertaking and its subidiaries as a whole. This would relate to the structure to the economic and financial situation of the company, to the probable development of the business and so on, to the employment situation and probable trends and investment prospects.

At paragraph 12 we show the linkage with the next matter which we will be discussing in this House — the Fifth Directive on Company Law — where there are slightly different provisions in relation to proposed information for employees. If the subsidiary in a particular country is not giving the employees this information there is what is described in paragraph 14 of our report as a by-pass provision where they are entitled as of right to go and look for the information directly from the parent company, but also there are enforcement requirements within the member state that this information would be available. Similarly the consultation provisions discussed at paragraph 15 of the report in detail show that where a decision is likely to have serious consequences for the interests of employees they must be involved in a process of consultation and if necessary have a right of recourse to a tribunal.

I come now to the views put forward to the joint committee on the directive. In the Table of Contents of the report we actually set out opposing views on the proposed directive. Is a slightly sad reflection on industrial relations generally and the maturity of these relations that the views are so opposing. It shows a certain in-built suspicion and lack of confidence in working together closely and exchanging detailed information and having a process of consultation between the two sides of industry. This problem is by no means unique to Ireland. It is a pity that this would be the case.

On page 15 of the report we refer to these opposing viewpoints and we set them out. Clearly it is one of the obligations of the subcommittee who prepares a report to fairly represent the views. Members of the House should have before them the views of the Irish Congress of Trade Unions, setting out that they basically, as Senator Ferris has emphasised, favoured the initial Vredeling proposals. They regret that these have been watered down but they regard the proposed directive as important.

We also at page 16 refer to summarised views of the Confederation of Irish Industry. It believes that the proposals, if they were made the subject of a binding directive, which is what is envisaged, could jeopardise the attractiveness of Ireland as a base for foreign industrial investment and could incline industry to go elsewhere. Basically, the Confederation of Irish Industry would prefer the evolution of a voluntary code of conduct providing for information and consultation. As a subcommittee in discussion with the representatives of the CII and, indeed, with the Federated Union of Employers — the FUE, make similar points — the basic argument was put forward that the Vredeling Directive, if it is adopted, will apply to all of the members, which now will be 12 member states, including Spain and Portugal. Therefore, it would not deter companies from locating in Ireland in possible opposition to Scotland or Portugal or Spain, because the provisions would apply in all those areas. The advantages of locating within the European Community far outweigh any constraints which a large company might feel were imposed by the Vredeling Directive. Nevertheless, it is fair to say that both CII and the FUE do strongly oppose the Vredeling Directive and the views of the FUE are set out at paragraph 33 of the report. One of the points they make is that in their estimation the requirement of providing information and, indeed, a process of consultation where the interest of employees might be affected, would threaten to infringe in an extremely damaging way on management rights to make important decisions promptly and that it is not a practical proposal.

We then come to the views of the Departments concerned. The Department of Labour's views are represented in paragraph 35. I am sure the Minister will expand on those views. At the bottom of page 18, the view was very strongly put by the representatives of the Department of Labour that, and I quote:

The positive effects in terms of increased industrial peace, as international experience illustrates, far outweigh any misconceptions which may exist regarding the desirability of such measures.

So, a strong view from the Department of Labour is favourably disposed towards this directive.

We also have had separate views from the Department of Industry and Commerce and that Department were concerned at the impact which the implementation of the directive could have on future investment and employment creation. Clearly, that is something which the joint committee itself would bear in mind and it is the first matter dealt with when we come to the views of the joint committee, the question of overseas investment, the importance of ensuring that industry is located in Ireland, but we equally show that, because of the extent of foreign investment, multi-national location of plants in Ireland and subsidiaries of multi-nationals who employ Irish workers, Ireland has a very strong interest in seeing that this directive is implemented at Community level. Although we have benefited from foreign investment, we have also suffered from the decisions taken. As Senator Ferris said, the extent of this suffering is set out in page 22 of the report.

We refer to the closure of large foreign owned firms in recent years which culminated in massive redundancies here in Ireland — Ford in Cork, 1,000 redundancies, Storage Technology, Dublin 363, Kingdom Tubes, Kerry 270, Dunlop, Cork 680, Telectron, Dublin 500, Field Crest, Kilkenny, 655, Snia, Sligo 350. There are other figures and examples referred to in appendix four to the report. We have a very real need for the protection and greater security to employees provided for by this directive. Other figures and examples are referred to in appendix four.

The report notes at page 22 in many of these cases which have just been listed, there was little, if any, forewarning to the employees involved. Many closures were the result of arbitrary decision taken by a parent company and did not relate to the viability of the Irish subsidiary. While compulsory consultations and information rights of employees might not have prevented such closures, it appears to the joint committee that the absence of such rights may have facilitated particular decisions reached. It is for the very reason that we are so dependent on multi-national firms that the Vredeling proposals have so much to offer to Irish workers. This is the thrust of the view of the joint committee.

We refer to the suggested course favoured by the CII and the FUE of Voluntary Codes of Practice in pages 23 and 24 of the report and we note, first of all, that there is no established overall code of that kind in Ireland and, second, that it is very difficult to enforce and standardise voluntary codes and practices. One of the weaknesses is that they do not provide any rights which can be enforced but rather depend upon motivation and goodwill.

So in our conclusion on page 25, paragraph 49, we say that since this revised proposal was put forward in 1983 the joint committee believes that in the light of the world economic recession, this proposal has become more rather than less important, that in a democratic society people want to be able to monitor and know of matters which will affect their rights and have a right to be consulted on them. Therefore, we emphasise the importance of this measure.

Finally, in paragraph 52 of the report, we acknowledge that progress towards the adoption of it is slow and that it will involve a considerable amount of further consultation but we urge that every step be taken to bridge the chasm that exists between the protagonists in the debate. Certainly, the joint committee, in the consideration of this report, has fairly and fully represented the opposing views on it but comes down quite clearly in favour of the proposed directive and emphasising that it is of more rather than less importance to Ireland and it would be beneficial to the development of industrial relations here.

I commend the report to the House, having participated in the early stage in preparing the draft which was considered by the joint committee. I hope that it will make substantial progress given the present stragegy of the Commission of the EC to complete the internal market measures by 1992 combined with any liberalisation of the market and removal of further barriers to that should be the development of proper protective and information rights to employees, part of a developing social policy as the ad hoc committee characterised it. I would hope that the Irish Ministers at the Council of Ministers who are dealing with social questions will press for the adoption of the Vredeling Directive.

Mr. J. Higgins

I will be very brief. I should like to start by joining with Senator Ferris in complimenting Senator Robinson on the broad thrust of the document, the very objective way in which it has been presented and for affording this House and, indeed, hopefully the other House the opportunity of debating its merits and demerits. I want to compliment also the joint committee for bringing together the various parties for listening to their views, for assessing them and for thrusting itself into the role of honest broker in this area.

As one read the submissions from the various interested parties, employers on the one hand, represented by the CII and the FUE, and the Congress people representing the unions and workers on the other hand, one became acutely aware of how polarised the views were and how far removed we are from agreement and from overall consensus in this area. One hopes, therefore, that this document will fulfil some purpose. It will bring into sharp perspective the various differences, and I hope that a certain middle ground will emerge and that there will be a defusion and a dissipation of the obvious underlying suspicions that exist in the overall structures of Irish Industry vis à vis trade union relations.

The document itself is a fairly far-reaching one and certainly it is to be expected that when measures of this sort are being superimposed upon the existing corpus of industrial relations machinery and legislation, it will give grounds for a certain amount of dissent and controversy. When one looks at the various tenets contained in the directive itself one sees that the voluntary codes of practice so desired by the employer organisations are not present. It will therefore, be difficult for the various groups or the employer organisations to accept some of the more rigid points in the directive.

The point has been rightly made by Senator Ferris and, again, reiterated by the chairperson of the joint committee, Senator Robinson, that it is not very relevant to this country in that the enterprises concerned will have to have a minimum workforce, between the parent company and the subsidiary, of 1,000.

One, therefore, sees a possible weakness or loophole there; and, while we would like to see application across the board in the Irish context, is there a danger if a company finds itself on the brink of the 1,000 threshold that in order to avoid the consequences and the demands of the directive this company could take a decision to reduce its work-force in order to escape the obligations involoved in the directive? It is far-reaching. It has as one of its primary thrusts the provision of a fixed date for information on the entire workings of the organisation. This is set down on page 7 of the document.

This information shall relate in particular to (a) structure, (b) the economic and financial situation (c) the probable development of the business and of production and sales (d) the employment situation and probable trends and (e) investment prospects.

The information sought is pretty comprehensive and extends into all areas and activities of the company itself. It is also stated that 30 days' notice of any decision which will substantially affect the rights or the welfare of employees must be submitted. Also, there is the joint obligation that management would have to hold consultation with workers and workers' representatives. If this does not happen, the workers themselves have redress to a tribunal.

It is rigid in that, if the guidelines set down in the directive are not being enforced, it is the obligation of the member country to ensure that these directive considerations are fully implemented and enforced.

One notes the "bypass" provision. This is one of the main sticking points in relation to the polarisation of views between the interested parties. The Irish Congress of Trade Unions think that it is absolutely vital that, if the information is not forthcoming, the workers and workers' representatives would have the right to go over the heads of local management to the top management in the company. on the other hand, one can appreciate the anxieties of the CII, who finds that totally unacceptable because they feel it would undermine the authority and the autonomy of the subsidiary and that this would affect the whole consultative process within the company.

The CII, again, have reservations in relation to the 30 days. They find that this is over restrictive and that this could introduce considerable decision-making delays within the company.

Article 7 allows management to withhold information which is vital, secret and confidential and which might in any way jeopardise the project or the enterprise if it were divulged to a third party. In this regard it is a considerably watered down modification of the next document which we will be discussing, and that is the Fifth Directive.

We find the polarisation abused where we have the CII feeling that commercial secrecy is vital. It is unrealistic to expect that the minutiae of the thinking of management should be divulged to workers. On the other hand, we find that Congress — and it is understandable — resent the implications that workers have less interest in protecting their company by the protection of confidential information.

Congress wants legislation enacted immediately to bring into force the various decrees set down in the directive. They want no watering down whatsoever; whereas, on the other hand, CII and FUE feel, as has been said by Senator Robinson, that the introduction of these measures will undoubtedly jeopardise our attractiveness as a location base for foreign industry.

Page 33 of the report sets out very clearly our dependence on foreign-based industries. We see that in the year 1984, which was by no means a boom year, the United States located 27 projects here. The number of projects approved from Great Britain was ten; West Germany ten; the Netherlands three; other European countries, seven; and the Far East, four. Therefore, it is vital that whatever measures are taken should be taken in consideration of the rights of industrial workers and employees. On the other hand, we should look over our shoulders to see what implications, long-term or short-term, this will have on the overall attractiveness of Ireland for foreign industry.

Senator Robinson made the point that we have every obligation to be grateful to these foreign firms for the degree of input they have given to Irish industry. She has also pointed the finger at our vulnerability in this regard. Much to our chagrin the spate of closures of foreign industries is set out in detail. In this regard there is an inherent weakness in the location of many foreign industries here. We are very susceptible and vulnerable in that many of these industries tend to be torso industries, where the trunk is here and the head, feet and the decisions making process is elsewhere. Too often in the past we have seen that without adequate notice or consultation, and in some cases with the minimum of justifiable reason, foreign firms seem to have upped sticks and gone.

We have a long way to go in relation to the acclimatisation and the acceptance of the various proposals. On the one hand, we have the employers opposed to the provisions herein and, on the other hand, we have the Congress people and the union people, of which I am one myself, obviously looking for greater redress and a greater decision-making voice for the workers. It underlines the vital role that this document and the joint committee have played in trying to bring together some measure of agreement, consensus or conciliation between the two groups. Again, one notes that there is even a divergence of view between various Departments. On page 18 of the report one notes the attitude of the Department of Labour. It refers to "the Minister", it says: "the Minister believes that the communication of all relevant information". One gets the impression that the Minister is speaking for himself and not totally for the Department. On page 19 of the report the Department are speaking. In this case it is the Department of Industry, Trade, Commerce and Tourism. Here there seems to be a divergence of opinions again between two Departments. Perhaps, the Minister of State might allay my suspicions with regard to that.

Professor Hillery

The recessionary conditions of recent years make it more rather than less important for information to be provided to workers. After all, workers not alone earn their livelihood in the organisations for which they work but they, in fact, spend a very substantial part of their lives in the workplace. It has been argued that by this type of involvement they have developed a type of property right in relation to their jobs. We are all aware, and this is highlighted in the joint committee's report, that the recession has not alone brought about demanning but it has resulted in closures in a number of cases. As the joint committee point out, some companies, in order to survive or expand, have been obliged to restructure or take part in mergers across international boundaries. As a consequence, multinationals account for an increasing proportion of manufacturing industry.

On the question of disclosure of information, I was a member of the Joint Committee on State-sponsored Bodies that examined Fóir Teoranta six years ago. Fóir Teoranta is the State rescue agency for manufacturing industry. In the course of their evidence Fóir representatives drew our attention to the fact that the management of companies in trouble all too often went to great lengths to conceal their financial plight and did not provide information, for example, to lending institutions or to workers. I would argue that if workers were adequately informed of the problems facing the companies in which they are employed they might well rise to the occasion and jointly co-operate with management in trying to keep these companies open and thus preserve their jobs. This may well mean freezing pay levels or reducing pay levels. All too often employees in these troubled companies assisted by Fóir Teoranta were never given the chance to assist in keeping their troubled employments open and therefore viable. The workers in these troubled companies might well have been a valuable resource in improving the viability of the companies if they actually knew the score. They heard the bad news too late in some cases.

Senator Higgins has pointed out that the Vredeling proposal as envisaged would apply only to rather substantial companies with large staffs. As I understand it, the actual number is not yet determined, and in any case it is only a draft proposal. It may well be that it will apply to companies with considerably fewer staff than what Senator Higgins said.

Previous speakers have underlined the fact that the proposal has given rise to controversy within this country as well as internationally. The Irish Congress of Trade Unions, predictably, regard the proposal as a very important step in the direction of worker participation. The Congress view the proposal as aiming at placing some responsibility on designated companies by requiring them to inform and consult their workers when decisions are being taken which directly affect their interests as workers. The CII, on the other hand, as has already been pointed out, are concerned with the binding directive and that such a binding directive could have an adverse effect on the attractiveness of Ireland as a location for industrial investment. The CII therefore opt for a voluntary code of practice on information disclosure and consultation in multinational and group companies and they argue that this would represent the best approach. The FUE, which take a rather contrary view to Congress, argue that it is not practical to superimpose EC legislation on the widely varying framework of company law and industrial relations law which applies in Community countries, and they have a point there.

That very point about the variety of practices, systems and laws in the various countries was taken up by the ad hoc working group chaired by Mary Redmond, to which I will return later. Like the CII, the FUE feels that the directive, if enacted would act as a deterrent to investment in Ireland. The FUE also feel that the directive would adversely affect management's right to make important decisions quickly. In their submission to the joint committee — and perhaps we will hear more about this from the Minister of State — the Department of Labour underlined the Minister's view that the sharing of information between management and workers would make a positive contribution to a better industrial relations environment. It may be difficult to quantify that, but I think it would be a step in the right direction.

The joint committee recognise the importance of industrial investment in the creation of jobs in this country. There is intense competition for international mobile investment. Our dependence on it is greater than any other country in the European Community, and that is a reality. Because of the demographic features which are peculiar to this country and our exceptionally high unemployment level, we must continue to offer a package of incentives to attract investment here. As the joint committee point out, American and Japanese industrialists in particular have expressed strong opposition to the proposed directive. As far as Ireland is concerned, the US remains the largest employer in the overseas sector and therefore we must be sensitive to American thinking on this matter. On the other hand, it can logically be argued from the facts available that as a country we have a lot to offer the foreign investor, including the Americans. We have a young, educated labour force, We have ready access to the teeming markets of the EC and we have a low 10 per cent corporation tax apart from a range of other incentives.

In financial terms Ireland has proved a very attractive location for American industrial investment. The joint committee's point is revealing in this regard. They say that in 1983, while Ireland accounted for a little more than 7 per cent of US direct investment in Community countries up to and including that year, US affiliates operating in Europe earned over 30 per cent of their income in Ireland. The repatriation of profits also contributes to a net outflow of funds from this country.

In the case of Ireland a balance has to be struck between ensuring that the country continues to be sufficiently attractive for new investment while at the same time advancing workers' rights in the area of disclosure of information. The joint committee welcome the support of the CII for a voluntary code of practice. As matters stand, there is no legislation on the statute books that gives employees a right to information and consultation on decisions affecting them. If the voluntary code of practice is the route that we wish to pursue, then the proposed Labour Relations Commission, one of whose functions would be to draw up codes of practice for information disclosure, could facilitate advancement in this direction. That assumes that the legislation on industrial relations reform, which is to include the proposed Labour Relations Commission, will come before the House soon and thereby act as an impetus to the drawing up of codes of practice. Could I ask the Minister of State when we might expect the legislative proposals for industrial relations reform to come before the House of the Oireachtas?

I wish to pay tribute to Senator Mary Robinson and the members of her subcommittee who prepared this report. It deserves our support and it certainly deserves to be debated here. I would like to support what Senator J. Higgins has said, that this report will be debated in the Dáil. One of the more disappointing features of joint committee reports is that they have not all been debated. In the case of the Joint Committee on State-Sponsored Bodies for example, no report of that committee has yet been debated in the Dáil. I would fully support a debate in the Dáil of the various reports of the joint committees, including this one.

At the end of the report the joint committee draw attention to the establishment of the ad hoc working group on the draft directive which deliberated during the last six months of 1984. While I welcome the comprehensive report before us, I must register my disappointment that this report did not analyse the draft directive in the light of the work of the ad hoc working group. I now propose to refer briefly to some issues raised by the ad hoc working group, which was chaired by a distinguished Irish lawyer, Mary Redmond. We are all indebted to Mary Redmond and to the members of her very hard-working committee, who addressed the key issues in the Vredeling proposal, including its defects.

They proposed a new approach in relation to the draft directive. I feel sure that the Minister, in his response, will refer to the ad hoc working group. That group found that the draft directive did not correspond to any system recognised or adopted in the member states of the EC. The draft at that time, 1984, attempted to impose an artificial transplant which contained within it some serious anomalies. The main anomaly was that employees of a parent company or parent undertaking were not covered and therefore would not be entitled to information and consultation. Only employees who were employed in a subsidiary or in an establishment distinct from the headquarters would be entitled to information and consultation. Another anomaly was that the draft applied only to enterprises with a multinational structure and, simultaneously, it excluded equally large scale enterprises operating as one single unit. This would obviously give rise to difficulties in some European countries because of the existence of such large single units there.

At the first meeting of the ad hoc working group, in September 1984, it became evident that there was a consensus among member states in favour of a newly-worded draft directive on information and consultation. The new approach focuses on the employer/employee relationship. It surmounts the acute definitional problems in that it avoids the need to define “parent” and “subsidiary” and, equally by implication, the need to define “undertaking” and “establishment”. Under the new approach the draft directive is transformed into an instrument dealing with social policy. It will be evident from what I have said that this ad hoc working group greatly advanced the draft proposal and its contents and surmounted some of the key obstacles which were preventing its advancement up to mid-1984. As envisaged now, the draft proposal will apply to all employees in enterprises of a size to be determined. It is not only targeted at multinational companies but other companies as well.

Under the proposal of the ad hoc working group, companies and trade unions would retain discretion to enable them to regulate information and consultation procedures in the best way suited to their particular circumstances. Importantly, all member states have expressed a preference that discussions on the draft directive should continue on the basis of the new approach.

I have just touched on a few of the many issues covered by the ad hoc working group, which was established following an initiative taken by the Minister for Labour, Deputy Ruairí Quinn, when he was President of the Council of Ministers for Social Affairs in 1984. The ad hoc working group identified the questions which it felt should be further examined in order to find a way forward. It has reopened, through its work, the possibility of discussions between the social partners. At the end of the day political will and co-operation between the social partners will be necessary to bring the directive to fruition. One hopes that the work of the ad hoc working group, chaired by Mary Redmond, has facilitated considerably the advancement of the directive.

Finally, I would argue that the question of whether workers should get information should not really be in dispute. Let us hope that the fresh impetus given to the issue by the new approach will soon lead to an acceptable directive which will advance the genuine need for worker consultation and information rights.

Mr. Harte

First, I would like to congratulate Sentor Mary Robinson and the other members of the committee for bringing in this report on the Vredeling directive. I find it easier to understand the contents of the report than I do to pronounce the name of the man who made the directive.

I should preface my contribution by saying that I agree totally with Senators Hillery and Mary Robinson on two points — first, the overlapping question. As a former trade union official I would find it very hard not to make observations on the other motion which comes before the House at a later hour; I find them interlocking. I can understand the difficulty because of the various functions of the separate Departments. It raises the question as to whether some new look should be taken by the Department of Industry and Commerce, the unions and the Department of Labour, at where this kind of overlapping takes place. Some form of consolidating measures should be considered with regard to the whole question of industrial law and directives, etc.

Senator Hillery seemed to believe that it was not complete as a report because the matter had not been analysed in toto. I see the position as being incomplete in the sense that when we go about our problems in industrial relations, because of this division of Departments etc, we seem to bring in piecemeal reports. However, I can understand the difficulties the Departments are faced with. Perhaps it will be possible to look at where this confusion exists and where the overlapping of functions can be ironed out and some form of consolidation arrived at.

Taking the report in the knowledge that industrial relations is a very wide and very complex subject, the real problem with us over the years — both the trade unions and the companies who employ people are equally at fault — is that we have never got down to a serious, in-depth consideration of the total industrial relations situation. When we have some sort of reform proposal — in effect this directive is a reform proposal — it is just something which is thrown into the thinking of the movement. It would be wrong to suggest that it does not provoke people to act and react; it does make them react on a wider scale, possibly showing some greater or keener discernment. But the purpose usually is to see if you can get a higher zeal for the application of good industrial relations, in the broadest possible context. Unfortunately, this aim falls short when you do it piecemeal because there are many-sided comprehensions to the whole question of industrial relations. These comprehensions are very essential to a total understanding of industrial relations. One or two ideas thrown out — whether it is a directive or something else — will not give a true perspective of what is required to deal with the area of the wise evolution of government in industry. That should be the ultimate, but we do not get it.

Most people who have been involved in industrial relations will understand that the magnitude and complexity of factors and forces is so vast that one or two ideas cannot take account of them. A reform or reconstruction in the fullest sense would be needed, and that is no easy task. I would be wrong to think of the ideas in both motions as being the mistaking of the means for the end. I do not wish to suggest that. It would be proper to suggest that the motions in the debate will offer no more than a short step in the direction of a partnership which we should have been working at all down the years. Because of our mentality, if you like, that everybody wants to keep to their own bailiwick, we have never gone into the whole area of industrial relations to any deep extent in the sense of not just the question of prior consultation and involvement but in the total sense, as I said, of this wise evolution of a government in industry where there would be a proper partnership.

We see that, for example, in situations here — and this is not criticising the FUE; it is just a remark on their observations — such as where in the report itself the FUE consider that there are several compelling reasons why the draft directive should be firmly opposed: it threatens to infringe in an extremely damaging way on management rights to make important decisions promptly; it is not practical to superimpose EC legislation on the widely-ranged frameworks of company law and industrial relations law which exist in the ten member states. Whether you agree or disagree with the second part about the superimposing, had the whole area of industrial relations been properly followed up down through the years, there is no question that that observation would not have come from the FUE. The job would have been done to a greater extent than it has been done up to now.

On the reports, I do not think on their own that they possess any type of instrument that is powerful enough to put a stop to arbitrary contact by either side. For example, we have to start asking ourselves will it deal with the underlying cause of industrial unrest. I am saying these things now in support of what I have just said about the FUE. You ask yourself will it change attitudes, or will it change a representation procedure and leave attitudes as they are? Will it adjust industrial relations with advantage to the immediate partners to industry? These are questions that it throws up. Will it free industry of forces and influences which are seen and have been seen to be so disastrous? We ask ourselves the question: are the principles of peace, health and work inseparable? Crafty opportunism suggests this type of rule should not be clearly defined and not too definitely stated with industry. This brings about the unprincipled strategy that we witness in industrial relations. This is continually shifting its position to avoid responsibility. We have witnessed all this.

Quite frankly, general codes of conduct in general terms without accompanying pressure of some nature to really democratise industry itself will only serve to prolong the kind of crowing on one's own bailiwick which is here. Hostility might be too strong a word to use. I suppose it could have been said at one time. In my view none of these directives will get acceptance of the significance and functions of the respective partners to industry. It has to be worked on at plant level and by example at the top level by the FUE, ICTU and other people. In other words, unless there is a strong movement in the nature of working towards this wise devolution of government in industry, the causes of the unrest will not go away. The directive will not make them go away. It will serve the purpose to some extent. But when you have the law coming in a piecemeal way and where it is not co-ordinated, people will start introducing consultation procedures etc. that will suit the particular problems they are dealing with but will not bear very much relationship to the directive in the final analysis. It is all right to make directives and it is all right to introduce codes of conduct or to appoint people to boards, because all these things can be pragmatic for short-term purposes. It does deal with means, but how effectively?

There are several causes within industry itself and within the existing legislation that can be tackled. In tackling them the aim should be to work towards the most desirable ideal. It sounds a little bit idealistic the way I am speaking, but I am speaking from a long experience. The basis was there and I suggest that we have not been doing our work on any side, either at Government level, industrial level — that is the employer side — or the trade union side. I do not mean that we have not done anything: but we have not really got down to the nittygritty. We did it some time ago, in the time of the late Deputy Lemass, Lord rest him, we had many seminars on an educational and opinion process. They were short-lived and again, because there was no follow-up and no serious type of labour laws introduced at the time, they just went by the board and people got back on to their own bailiwicks to do their own crowing. Consequently, the value of those seminars seems to have been lost, not in toto but to a great extent.

The ideal would be to bring about a type of mutual confidence. There is a great absence of that. Another ideal would be to bring about real justice and constructive goodwill where it does not exist. There is much need for that. I do not think talking about codes of conduct and directives on their own, with not even limited disclosure, will satisfy or assist this desire where you have got antagonism, coercion and resistance. Where these forces are still very much at work it will not help the desire to improve the position within industry. The way we go about our business is piecemeal and we do not really get down to the real, hard task of looking at the whole question of how our industry has been changing, the rate and pace of change etc. We have let it go on like that. If industry is to advance the material and social wellbeing of the individual, which is the two-fold purpose of industry, there has to be this continuous co-operation between the parties in application of the principles. The underlying principles always have been there. To obtain this co-operation is a very difficult task.

The directive, as I said, will be of some assistance but fundamentally it is really a question of attitudes and spirit that has to be worked on. We should not wait for the directive, but that kind of working on the attitudes and spirit is essential, and much more so now in the changing patterns and types of employment in the new technological age that we are in. Unless you bring about mutual trust born of this whole-hearted belief in the common interests of industry, you will not overcome the distrust that arises out of the misgivings concerning the opposed interests, as we witness in this report — the ICTU has a particular view that this directive is not as strong as the one that was there before it. The FUE believe that the directive is a bit too strong and they do not want it either. That supports the point I have made that we have not been doing our work properly in this whole area. If you are to get into the area of trying to get rid of fear of the unknown in the several relations we have in industry, there must be a consciousness of the common aim in a common venture. I do not see either of the two measures on their own doing that job.

When we are addressing each other nowadays it is fashionable to describe ourselves as the social partners. One wonders if in fact a real partnership exists when one looks at things in the overall sense. I am talking about a partnership in fact as well as in name. It is essential that it be a partnership not just in name alone. This is a tricky area for me as an ex-trade union official because the implication is that if you reach this real partnership the question of the gains and losses alike are then on the agenda to be shared. It is as well to bear in mind the context in which this remark is being made by me. It is in fact having regard to the two-fold purpose of advancing material and social well-being. It also implies the achievement of goodwill and efficiency and a minimum of waste of effort and materials and the sharing to a very major extent of the knowledge and understanding of the enterprise. As a whole, this is what this directive is about. It also implies an understanding of each other's duties and rights. Inevitably, to gain this knowledge is our desire.

The control and determination of policy in industry is nearer to the hearts of many people than one would imagine. If many of the conditions I have been speaking about here are satisfied, the idea of sharing might not be that difficult to realise. It could be done progressively in the gains and proportionately in the losses. At the moment — let us be quite clear — the attitude seems to be: "We will take the gains and fight the losses". We witness that every day in the week. Where the relationships have been well built, if you like, over the years — and there is the case of the odd industry that enjoys these very good relations through a dissemination of knowledge and an understanding of each other's position — they know what I am talking about when I refer to sharing the losses and the gains. I am not talking about taking money out of people's pockets; I am talking about difficulties within the industry itself where the concessions have got to be made, where people are holding on to conditions rigidly but where a surrendering of certain things is necessary for a short time and the recovery of them is anticipated when the opportunity presents itself again. Unless we have a very comprehensive and wholehearted desire on the part of both parties to industry supported by Government labour laws, we will never get to that point. But I think the desire is there; the goal is quite within our reach. We have missed out on the opportunity down through the years. It was started for us, but we did not capitalise on it.

The rights and duties of partnership in the organisation and control of an industry has to be effected through some device of representation. To overlap into the other motion, the question of whether you do this by a one-tier or a two-tier board or something more radical is one that has never been fully debated. Again it prompts a few questions: will it bring about peace, harmony, goodwill and efficiency? If a directive is simply followed without the spirit of partnership being there, will it bring about the peace and harmony that is desirable? It is one thing to describe people as social partners, but without the right attitude, spirit and wholehearted belief in the common interests of industry, the distrust will not be superseded by faith.

It is a strange observation to make but the bulk of industrialists and entrepreneurs who succeed do so because they have absolute conviction that they will succeed. They are people who remove doubt from their minds and have the capacity to live with that faith and bring it to realisation. Yet, there is a great reluctance to share that knowledge of how to realise that desire with the people they employ. They want it to be a one-sided thing. It is a pity that they lack the ability to understand the people they employ and what is in their best interests.

Wholehearted belief in the common interest of industry must be established. It is still possible and we can do it. If we could achieve it, it would be very nice indeed. If we do not succeed, distrust will continually be there at work. When we come to difficult times like the recession we have been through the question arises as to whether we would be in the situation we are in now had we dealt with our industrial relations properly down through the years. If we had gone along the lines of developing some sort of projection every year of what the economy could stand, based on the fact that we had built up good industrial relations and based on the fact that we involved the trade unions and other interest groups more in that sort of exercise over the years, it might have helped us.

I remember attending trade union conferences. Certain leaders would stand up offering, say, five shillings, which looked to be a terrible offer. The opening remark by the person who was going to speak to you would be about a "miserable offer of five shillings". But by the time that person had finished speaking you knew all about the economy, what it could stand and what was the wisest thing to do and you found your hand shooting up for the five bob. That was the way the leadership was then; but, unfortunately, it did not spill over into the industry and there were not many such people around. These people were able to deal with the situations then and it was a wonderful experience to have. Because we have not capitalised on a lot of that and because we all went back to our own bailiwicks, we have allowed this distrust to come in again. We are now dealing with the problem of public service pay. Had we done our job well we might be in a different situation today. We have lost many opportunities down through the years. These directives will assist us in getting these opportunities again.

We are going nowhere if we keep at this piecemeal procedure. I do not want to get brought before the Committee on Procedures and Privileges for using the wrong terminology. If we do not have regard to many of the observations I have made and other people have made on this whole question of industrial relations and dealing with directives, we will be walking against the wind. It would be better for us to sit up and take notice. The measures before us are not going to do much to narrow the distance between the parties but at the same time they are an opportunity to be built on. The whole question of general partnerships will not result directly from them and it will not arise from some small disclosure of information or mickey mouse consultation procedures. It will not come from somebody on the shop floor becoming an elected director. You cannot write off these particular things because they are all essential ingredients but if we go about them piecemeal, there is an overlapping between two Departments and the effect in the end, if we do not come together on this, is that things that are very good can become useless.

This particular directive is beneficial. How far it is beneficial in a far-reaching sense is what I would argue about. When I talk about the far-reaching sense I mean satisfying the principles of peace, work and health. Would it not be much more effective to witness a situation in which round table conferences had found acceptance in regard to industry rather than us working on directives? I think it is possible. I make this latter observation not only as a conviction of what is the right thing to do for workers, capital and management but because I believe it would, by a natural process, pay attention to the other partners, that is to say, the community. The community in all of these situations, where there is industrial unrest and where we are dealing with the question of applying directives very often gets short shrift. They are very seldom taken into consideration. The community is never looked on as a partner. The community is very much a partner.

If these directives were developed on, if we got back to the idea of removing the suspicion and doubt and tried to create a little more faith and a better spirit, I think the question of investigation, prior to disputes would take on a much more important role and it would be a long time before we would see people on the street. Rights and duties do not only apply to capital, labour and management. To ignore the community is a very serious matter. If you have information and consult the procedures, no matter how well structured they are, you have got to ask yourself will they go a long way to alleviate the fear of the unknown which lies at the root of many industrial disputes and day-to-day grievances.

I have already dealt with the question of the political situation and how the community are affected by that. I would like to link the two together. In an industrial relations situation where you have, teachers, the public service and the Government, the community are partners. They have not had due consideration, not by deliberate design but neglect to follow up the industrial relations codes properly over the years and bring about a situation where every interest group is actually sitting in and having a look at what the prognosis for any particular year would be in an area. It might sound like going to the ideal but even places like Holland just after the war were able to realise this sort of thing. They have had their problems in recent times but consider that they are a country the size of Munster, supporting a population of eight million people who were under water during the war and had to begin from scratch. Maybe that was the secret. We did not have to begin from scratch. That could be one of the problems with our industrial relations here. There, all particular groups had to come together and they were able to provide as near as possible to full employment, largely through very good industrial relations practices and by putting their minds to it and creating this faith rather than engendering fear.

We could go a little further. Given a partnership in the organisation and control of industry, workers would ensure — that is in the law and order context — the acceptance of the principle of thorough investigation prior to taking industrial action. That could become a reality if we progressed in the correct way. I say that to those of us who would promote the organisation of industry on lines of voluntary association, co-partnership and other forms of co-operation.

In Guinness's going back over 20 years prior consultation procedures were there. Naturally you could not put prior consultation in an agreement. That was very early times to have an agreement of that nature. Some firms do not have it at the present day. It was a little bit more far-reaching than the actual way it was worded. That came about by the spirit of co-operation that developed through this procedure of prior consultation. The company annually found it very beneficial to assemble all the employees over a period of, say, two weeks and they would be informed of the total situation of how the company was broken down, which company was making a profit, where the productivity problems lay and even to the extent of where the political situation affected trading. It went a very substantial way towards removing the fear of people whose jobs were threatened.

It made it much easier to deal with the difficulties of the coming of technology and so on because this kind of relationship had been built up and worked on very hard and over long hours. Maybe the basis was in Guinness's already and I am not claiming the credit for the union. That type of information was there. People from the parent company would be there; there would be an exchange of views and observations and the seeking of more information. By and large, they never found it an impediment or a danger to their trading arrangements to disclose a lot of this information. Obviously, there was information they could not disclose, and any practical or sensible person did not push for it, but there was a lot that they could disclose and that is where the FUE are making a mistake. If they were to bite the bullet in this respect it could bring about a little more harmony. They could work outside the directive to bring this about.

We use the word "participation" very freely. Some years ago, when you could not even get prior consultation, I remember members of the Labour Party arguing about the whole question of joint ownership. So we talked about the question of participation and the word "participation" was too weak for them. There were rows about the word "participation". We have come a long way since then, and I would like to deal with the word "participiation" now in the sense that it is freely used when we speak about industrial democracy for the Fifth Directive. But we have got to ask ourselves what it means. Will it bring about a more adequate understanding of the significance of their respective functions in the various processes? Does it assist in assuring a direct interest in the success of the undertaking as a whole, which, of course, is very very essential to the highest efficiency? Will it foster the real co-operation and the social spirit aimed at? If you take on the directive, will weak consultation procedures or even elected worker representations substitute for an effective method of acquainting all the parties to production with the advantage to be derived from vocational training, technical education in the introduction of labour saving machinery and scientific management? Will the concept of profit sharing and other forms of industrial remuneration progress arising out of any of these measures? Will this participation increase the efficiency of the company as a whole?

Those conditions to bring about the right attitude will not come from either measure, nor will it come from any piecemeal reforms in trying to bring about the desired objective. As I said earlier, the bullet will have to be bitten. I said the FUE people will have to bite the bullet in this respect, but the Government and the Irish Congress of Trade Unions and a lot of other people will have to bite the bullet in respect of making use of these directives where there are weak procedures in industry and, generally speaking, an atmosphere of mistrust and a "Them and Us" situation.

The job situation at present makes it imperative on all of us to do something. It is debatable now what sort of jobs can be created, or whether the unemployment level can be reduced substantially at all and will that not be affected by subsequent census results of what population growths are going to be. We are in an awkward situation. But if the existing industrial law is examined for its flaws and weaknesses and if the commitment is made to pursue a course of action that can lead to a situation where a partnership means more than just a name, the situation could be improved. Guinness's have been a great example down through the years.

I do not want to sound cynical, and I hope I have not been, but I thought I should tackle this report from a different angle rather than just the contents of the report itself without being totally irrelevant. Prior consultation and worker representation are very desirable and constitute part of the means to the end. The end to be the real partnership and it is based on what I have outlined here. This has got to be done even if these directives are not effective. They all know how to do it. It is just a question of having the goodwill to do it, and company law and labour law will play a major role in this. We are waiting for company law to come on the stocks at the moment. However, since I am more taken with the principles of working towards this evolution of government in industry, we must do substantially more to work out a wise system of joint control, because in working out our systems we usually leave the community out. To all who participate in production the question of joint control must be a starting point only. There are a substantial number of companies employing many people who do not have any system of prior consultation and information and this is a very sad thing.

Finally, the whole question of industrial relations in the fullest sense has been neglected from the point of view that we had opportunities some years ago when the College of Industrial Relations was established along with other developments. They got some support, but sufficient commitment was not made to them at the time and this has brought about a lot of our problems. That is not to say that our industrial relations are bad, relatively speaking, compared to a lot of other countries. They are quite good, but that is not a reason for not doing what we ought to have been doing. I would say to the Irish Congress of Trade Unions and to the FUE that these two motions which are before us can in fact be very helpful and some of the opportunities which we lost can be taken up again if the will is there between both parties in industry.

Mr. Fitzsimons

We can all agree that there is a conflict in this report with regard to the employee and the employer; the Irish Congress of Trade Unions, the CII and even in the Department of Labour and the Department of Industry and Commerce there is a conflict or divergence. It would be true to say that never the twain shall meet because we are never going to have a perfect world.

I would not be as enthusiastic as some other Members about this report. I believe that in relation to Ireland it is largely irrelevant. It deals with companies of 1,000 workers or more. These are very large companies. In the appendix which lists the closures of multinational companies in 1982, 1983 and 1984, of the 46 companies listed only one, Ford of Cork, had 1,000 workers. Some may be subsidiaries but this is not listed in the appendix. This is a pity. It is a pity that 1985 is not included. I realise that the report was completed in September 1985. At this stage it might be possible to get a listing for 1985. In my own town, Kells, a major company folded. It was Westinghouse. Another company in Kells closed but opened again on a smaller scale. In relation to Westinghouse, Zenith have come in and taken over and are making great progress.

The point raised by Senator Higgins with regard to the number of workers is very important. It is clear that if a particular company does not want to be bound by decisions which relate to large companies, they can employ fewer people. Once something is started there is bound to be some kind of evolution. It is much the same as in relation to the divorce problem. Many people would say that once that step is taken, further progress is going to be made along that road. In every instance we can take it that this happens. There is always a softening of the situation. I cannot recall any situation where the opposite happens. If this report is incorporated and the recommendations are put into effect, perhaps the numbers will be reduced. Perhaps it will relate eventually to 500, 200 or 100 workers and right down to the smallest company.

Senator Hillery referred to the secrecy of companies and said that openness would have saved many of them. This may very well be so. With his experience of dealings with Fóir Teoranta in their attempt to rescue companies he would be in a position to know. It seems that in many instances workers heard the bad news too late. This is regrettable. On the other hand, everybody would agree that where a company have financial difficulties, if word of that gets around there is a reluctance on the part of people to accept cheques. There is the problem of credit. It is understandable that companies might try to hide these problems. I am sure that many companies in doing that have succeeded in overcoming their problems. I am sure that many companies, if they had divulged their problems, might not have solved them. I agree that public relations is most important. Senator Harte in his interesting contribution referred to social partners and to participation. As a former union member I realise the importance of these. On the other hand when we come to an employment situation and realise the difficulties that are there, regard must be had to the problems in that area. Over the last while there has been a deep depression and many great difficulties in that area.

Other Members referred to interesting aspects of their own lives. From my background as a farm labourer I would have to say in passing that this is the section that has been most neglected. In times past the farm labourer has been very important to the farmer. I have always had great consideration for farmers and their problems and more so now than ever. By and large the farm worker has become redundant. Machinery and different methods have changed things. In past times the farm labourer was simply an adjunct of the farm, badly paid with long working hours. He was only useful for as long as he was strong and healthy and able to work. In the cultural sense he was never highly regarded. He was given some regard as long as he did not get above himself, as long as he kept his place. That day is gone. The importance of the labourer has always been overlooked. The labourer has been regarded by many people as little more than an ogre or a gorilla, without a brain. My experience would lead me to believe that the labourer has been a very intelligent person. He understood husbandry and was an expert in that area. He was also an expert on building construction. In the final analysis the building depended on the expertise of the labourer. He mixed the concrete. The strength of that concrete depended on the propr mix and the right amount of water. That is an area that has been neglected.

Sitting suspended at 12.30 p.m. and resumed at 2 p.m.

Mr. Daly

In order to facilitate the Minister who has to go away at 2.30 p.m., it has been agreed with Senator Fitzsimons that he will adjourn and with your permission that you will recall him when the Minister is finished.

An Cathaoirleach

Just for the record the Minister has to go to the other House to answer questions. Is that the reason?

Mr. Daly

Yes.

An Cathaoirleach

I thank Senator Fitzsimons.

Minister of State at the Department of Labour (Mr. Kenny)

I want to thank you for your indulgence in this matter and Senator Fitzsimons for allowing me in at this stage. I also want to thank the Senators who contributed during the morning debate on this very important matter. On behalf of the Minister for Labour, I am pleased to have this opportunity to reply to the debate. The examination of the Vredeling Directive by the Joint Committee on Secondary Legislation of the European Communities has been thorough and very thought-provoking.

The speakers in the morning session referred to the Minister for Labour's position. It should be made clear that in a submission to the joint committee the Minister for Labour's position on the draft directive was very clearly stated. The submission stated that the sharing of information between management and workers and the development of participative structures within the work place can only have a positive impact especially in regard to the development of a healthy industrial relations environment. The exchange of information, subject to considerations of confidentiality and commercial security, is a prerequisite for the development of trust between workers and their employers. The positive effects in terms of increased industrial peace far outweigh any misconception which may exist about the desirability of such measures. This view already submitted to the joint committee clearly reflects the position of the Minister and the Department in a very precise manner.

The Vredeling Proposal has given rise to controversy whenever and wherever it has been discussed. At European level the European Industry Organisation and the European Trade Union Confederation — ETUC — and business organisations have keenly debated the issues. A similar debate is evident in the submission of the joint committee. Again, this morning something of the diversity of opinion which the proposal generates has been reflected in the contributions made by the various Members of the House.

No satisfactory resolution of the issues has been found to date at the Social Affairs Group of the European Council of Ministers. The original draft directive was adopted by the Commission in 1980 and following lengthy discussions the Commission put an amended proposal to the Council in June 1983. Discussions on the revised Commission proposal continued during 1983 and in the first half of 1984 and revealed a range of problems of a political and technical nature.

When the Minister for Labour assumed the Presidency of the EC, he identified the problematic status of the Vredeling Directive as an issue to be addressed in the course of our Presidency. The agreement of Council Ministers was secured to the setting of an ad hoc working group on the draft directive. The short term objective of the initiative in setting up the ad hoc working group on the draft directive was to isolate technical from political issues in so far as that might be possible.

This timely intervention established a forum in which experts from the member States could concentrate their attention fully on the draft directive by sifting through various documentation, identifying the real technical difficulties besetting the proposal, arranging these in order of priority and, if possible, proposing solutions. The terms of reference for the group were framed so as to allow its members maximum flexibility in discussion. The ad hoc working group, under the chairmanship of Dr. Mary Redmond identified three important developments for the future. The first of these was that the Council of Ministers were presented by the outgoing Irish Presidency with a suggestion for the adoption of a new approach to the formulation of the proposal for a draft directive.

The new approach took as its starting point not the duty of undertaking to give but the right of an employee to receive information. The whole focus had redirected towards social policy and away from company law. Second, the suggested new approach was more universal in application than the original Commission redraft which had given rise to serious anomalies through its underlying preoccupation with multinational enterprises. Its effects would spread more evenly and more fairly because it would embrace workers in all kinds of companies, whatever their structure. The new approach showed the way to a realignment between the draft directive and other company instruments. The merit of the new approach prepared by the Irish Presidency was to propose a greatly simplified text. In particular those provisions relating to information disclosure, consultation and confidentiality had been clarified.

With regard to more recent events in progress concerning the Vredeling Directive, immediately following the Irish Presidency of the Council, the Italian Presidency carried forward the examination of the draft directive. They focused on the new approach as well and they also considered a further option which would limit the scope of the draft directive to enterprises involving new technologies. No developments have taken place since mid-1985. It remains to be seen whether the proposal will receive any prominence at the Council of Ministers meeting which is scheduled for June of this year.

I see from its report that the joint committee recognised that. The report stated:

Progress towards adoption of the Vredeling Proposal is slow and will involve a considerable amount of further consultation.

It appears that the proposal may have reached an impasse once again. I believe that progress can best be achieved if a new direction and fresh emphasis are given to the proposals. The Irish Presidency has placed one such new approach before the European Commission. I hope the Commission will take advantage of this option or some other one to revitalise this important initiative in the area of worker participation.

In her address this morning, Senator Robinson referred to the linkages between the draft Fifth Directive and the Vredeling directives. I want to clarify that my Department are very much aware of these linkages and work on the basis of officials of my Department being involved with the Department of Industry and Commerce in dealing with the worker participation proposals in the draft Fifth Directive in the economic working group of the Council.

The Minister for Labour has also indicated his disappointment from time to time at our failure to develop participative arrangements in Irish industry through collective agreements. This has been referred to by some speakers also. Although such an approach would appear to be in accord with our traditions and practice in industrial relations, progress so far has been negligible. In order to inject a new impetus and to help signpost the way towards future developments in participation, in March 1985 the Minister set up an advisory committee on worker participation with the following terms of reference:

(1) To advise on the scope for development of employee participation at sub-board levels in different types of work organisations.

(2) To promote interest in practical experimentation in workplace participation.

(3) To identify research needs and to make recommendations.

Membership of the advisory committee comprises an independent chairman, representatives of the Irish Congress of Trade Unions, the Federated Union of Employers and a number of independent and specialist members. The committee's report is still awaited.

In the semi-State sector the Minister for Labour will introduce legislation soon which will provide for the appointment of worker directors in a further number of State enterprises including Aer Rianta, Bord Gáis, An Foras Forbartha, the National Rehabilitation Board and Irish Steel. Senators will be aware that worker directors are already on the boards of Bord na Móna, B & I, CIE, NET, the Sugar Company, Aer Lingus and the ESB. These appointments came about as a result of the Worker Participation (State Enterprises) Act 1977.

The legislation will also provide for the establishment of sub-boards participative arrangements in a broard range of State enterprises with the consent of the majority of employees. This will be an enabling measure giving support to employee influence but not regulating for any particular sub-board arrangement and procedures. Such details are best developed through collective agreements which may reflect specific requirements depending on the size of company, the type of production, local interests, etc.

Senator Hillery asked about the proposals for industrial relations reform. No doubt Senators will be aware that the Department's discussion document was published in January of this year and that consultation with the social partners will continue for some time. It is the Minister's intention and wish that legislation should be introduced in this area before the end of the year.

Finally, I would like to comment on a view which continues to arise in discussion on the Vredeling proposals. This is the view that any EC instrument on employees consultation and information would impose too rigid a model and that only through voluntary initiative can a sufficiently flexible system be developed. I find that this view begs the question. If the voluntary approach is so effective, why have we so few corporate volunteers? Too often a voluntary approach is advanced as a necessary condition for any progress but, once the pressure for change recedes, advocates of the voluntarist approach often sit back and do nothing.

Senator Higgins raised the question of the threshold of 1,000 employees and he queried whether companies in that category might deliberately keep their workforce under the threshold in order to relieve themselves of the obligations of the directive. It is a draft proposal at present and no firm decision has been given with regard to the actual threshold, though the 1,000 figure has been mentioned for consideration.

The social affairs group of the Council has before it a broad range of social policy issues for consideration. Progress on Vredeling in the immediate future will depend on the priority given to competing policy options there. In the meantime the Minister for Labour intends to press on with the identification and development of opportunities for participation between workers and their employers in Irish enterprises. Once again I want to thank the Cathaoirleach for his indulgence in this regard and Senator Fitzsimons for allowing me in to make this contribution.

Mr. Fitzsimons

The Minister of State has clearly stated that no satisfactory resolution of the proposals has been found to date. Not alone is that true, but it seems that if a satisfactory solution is found it will be in the distant future. In this situation we have two groups diametrically opposed, the workers and the employers. Where you have some people concerned about their salaries and others concerned about their profits it is very difficult to reach agreement. The most we can expect is to get some kind of convergence where all those involved realise that mutually they depend on each other. The salutary fact that in the end must bring them closely together is this dependence on each other. Nothing will change that.

The Joint Committee decided in November 1984 that their sub-committee on social environmental and miscellaneous matters, together with their sub-committee on statutory instruments and legal affairs, would jointly examine the amended proposal for a Council directive on procedures for informing and consulting employees. The previous committee attempted to do the same, but there was a dissolution of the Dáil in 1982 and this delayed the workings of the committee.

Senator Mary Robinson was the chairperson of the joint sub-committees. With the other Members of the House I want to pay tribute to Senator Robinson and to all the members of the sub-committees for their work. All of us who have been involved on committees know the hard work that is involved and the long periods of time involved. People in the media who are critical of the time Members of the House give to their duties are unaware of this time consuming work.

Written submissions were received from a number of bodies, the Irish Congress of Trade Unions, the Federated Union of Employers, the Confederation of Irish Industry, the Consultative Committee of Accountancy Bodies (Ireland) and the Departments of Labour, Industry, Trade, Commerce and Tourism. I understand that the submissions are available for those who may be interested in reading them. It would be useful to append these submissions to the report, particularly for Members of this House when dealing with the reports and when a motion of this kind comes before the House. If it is not possible to do so, perhaps a precis of the submissions might be included. That would be most helpful.

The history and scope of the Commission proposal are quite interesting. Mr. Vredeling, who was the main force behind the original version of the proposal in 1980, made a submission to the Council on 24 October 1980. It is interesting to see, even in that situation, that there was no great weight of evidence one way or another. The EC Economic and Cultural Committee approved the proposal by 79 votes to 61 with 11 abstentions. If we take the abstentions together with those who voted against, that would make a total of 47.7 per cent, a very considerable body. The European Parliament approved the Commission's initiative by 161 votes to 61 with 84 abstentions, subject to some amendments. Eighty-four abstentions amounted to 27.5 per cent. Those who voted against and abstained amounted to 47.4 per cent.

Perhaps what Senator Mary Robinson said was very true, that there was a considerable lobby by the employers and that this was the reason that so many abstained and voted against. It would be interesting to know why so many abstained. Was it for ideological reasons or was it that they were not interested enough to be there? I would like to know why there were so many abstentions. In any event, it shows that there is no trust in either direction.

The amended proposal was adopted by the Commission on 3 July 1983 and submitted to the Council on 13 July 1983 after a period of five days. This report has given rise to much controversy at European level. We are told in the report that the debate has been reflected at national level as well as in submissions received by the joint committee. On the one hand it is argued that the directive is necessary in order to safeguard the interests of employees while on the other hand the need for a directive in preference to a voluntary code of practice in this area is questioned. This is gone into in some considerable detail later. While I agree that a code of practice would possibly have no legal basis, I believe we would welcome it if a code of practice could be drawn up between the groups who would represent employees and employers and perhaps some consideration could be given to a legal framework which would give such a code the effect of a statute. I believe something could be done in this regard.

The discussions brought to light several problems of a political and technical nature, the report states. The problems were fundamental. I am not too clear about the political and technical nature. The technical nature would not be anything to worry about. I am sure the political nature on the other hand is meant in the overall sense of the science of Government. In the area of public relations I suppose it would be absorbed within the political framework. Nevertheless I am not too sure that while this clearly focuses on the fundamental differences I am sure they came within a greater ambit than just political and technical.

I welcome the initiative of the Minister for Labour, Deputy Ruairí Quinn, President of the Council of Ministers for Social Affairs, when he decided to set up the ad hoc committee. This has been praised in the report and also by Members who contributed to the debate. The ad hoc working group were successful. That is the main conclusion. It was successful in a way that puzzles me. We are told that the deliberations of this group under the chairmanship of Dr. Mary Redmond — I pay tribute to Dr. Mary Redmond for her successful work — resulted in a new approach being put forward which entailed considering the proposed directive as more of an instrument of social policy where the workers have a right to information rather than a company law instrument imposing obligations on companies.

The conclusion is that the directive would relate more to labour than company law. I am sure that a rose by any other name would be just as sweet but I fail to grasp the subtleties of how this kind of interpretation could change any of the basic differences, because the differences are basic, they are fundamental. While I agree that this new approach might have made the deliberations more easy to deal with, nevertheless the basic problem remains the same, the difference in the rights of the employees and the employers. The scope of the directive has been dealt with by a number of speakers and by the Minister. The Minister has pointed out that it is a draft proposal and that the figure of 1,000 is a tentative one which may be changed — I am sure he meant downwards.

The point Senator Jim Higgins made still holds, that companies, in order to avoid complying with whatever proposals are agreed, very easily reduce the workforce just under that figure. While profitability is their main concern, and that in some instances it may not be easy to increase their profitability without increasing the workforce, nevertheless I am sure there would be ways of overcoming that.

The decision making centre of the undertaking or subsidiary may be located in the same EC country or in another EC country or even outside the EC. This is where the major differences will arise. The employees are covered by the directive. They would obtain three major rights. The would receive certain information annually on a fixed date about the company or organisation. This would be comprehensive information. There would be 30 days notice of any decision liable to have a substantial effect on their interests and if there was a decision about to be made, which in the opinion of workers' representatives or a union would have a direct effect on the workers, the management of the subsidiary would have to hold consultations with their representatives or in the event of their not being consulted the workers representatives would have the right to appeal to a tribunal or other competent national authority.

The report deals with the detailed consideration of Commission proposals. When I suggested that perhaps it would be possible in these reports to include the actual details of the submissions made by the various organisations I also think that perhaps it would be possible to include, in this case for example, the actual proposals. We have the definitions and the various articles of the proposal. These are gone into in some considerable detail but it would be helpful to have the actual proposal before us so that we could refer to that.

It would be no harm to go through some of these articles. Article 1 defines the concepts of parent undertaking and subsidiary by reference to criteria which are already there in regard to the EC rules. It is the member state concerned which must ensure that all obligations under the Vredeling Proposal are fulfilled. In other words, if both the parent company and the subsidiary company are established within the EC territory the matter is simplified and the parent company will be responsible for ensuring that all the obligations are fulfilled. If the parent company is established outside the EC the EC member, where the subsidiary is established, will be responsible for ensuring that the employees of the latter are properly informed and consulted and there may be some problem in this regard.

Article 2 limits the scope of the directive to undertakings employing 1,000 or more workers. As the Minister said, this is not a cut and dried situation. It may be changed. The report states: "It gives no threshold for the size of subsidiary or establishment to which the provision would apply." That sentence puzzles me. My understanding is that in a situation where a parent company and its subsidiaries would have 1,000 or more workers then as the present report is constituted this would apply to that company. But here it states: "It gives no threshold for the size of subsidiary or establishment to which the provision would apply". Perhaps the Minister would clarify this aspect.

Each subsidiary concerned in the Community will be held responsible in the event of a parent undertaking established outside the Community failing to fulfil its information and consultation obligations. So the subsidiary within the EC will be responsible — of course that is a responsibility that in all cases it may not be possible to have fulfilled. The report states:

The Joint Committee is aware of the criticisms which have been levelled at the extra-territoriality of this aspect of the draft Directive. It is also aware that Article 2 raises numerous complex problems in relation to the law which would be applicable where more than one country was involved.

Although the report tells us this, it does not tell us how to get over this particular problem. That would be a very difficult problem in many instances where you have a country outside the EC with an obligation which it might not be possible to enforce. These are some of the areas in which we can see that it will be very difficult to structure a final proposal which would be acceptable not only on an employer-employee situation but on an international level.

Article 3 stipulates that at least once a year, and on a fixed date every year, the management of a parent undertaking will supply general but nevertheless explicit information giving a clear picture of the activities of the parent undertaking, all its subsidiaries as a whole, to the management of each of its subsidiaries in the Community, with the express purpose of communicating this information to the employees or the employees' representatives. This information which will be required will be very comprehensive. It will relate to the structure of the company, its economic and financial situation, the probable development of the business and the production of sales, the employment situation and probable trends and investment prospects. It is very comprehensive and there are some areas where it would be very difficult to determine what the prospects are. Certainly, at present many companies would find it very difficult to comply with all these requirements. I would say that forecasts in many cases would turn out to be wrong. In situations where information of a more up-to-date kind is published more frequently, or is required by national legislation to be made available more frequently, the management of the parent undertaking would have to forward the updated information.

The information to be given to employees' representatives under the Fifth Directive, which we will next consider in this House, on the structure of public companies differs in some respects from the Vredeling proposal. Senator Robinson went into that in some detail this morning. She pointed out that whereas this report deals more specifically with the employees, the Fifth Directive will be oriented towards the employer aspect. Under the works council option of the Draft Directive on Company Law, for example, employees' representatives would receive regular information similar to that to be provided under provisions of the Vredeling proposal. But they would also receive a written report on the company's affairs every three months and all documentation and information on the agenda of the company's boards, to comply with the terms of the Fifth Directive. In effect, if the Fifth Directive is adopted, it will result in more information being available to the employees, in some respects, than is required under this report.

As a result of the adoption by the Council of the Fourth and Seventh Directives on Company Law, there is already a Community law in force binding enterprises to issue a consolidated report giving precise information on the group as a whole and to make available to the public information on the activities of individual companies. The report tells us that neither of these two directives have yet been implemented in Ireland. The obvious question to ask here is, why? How can we be expected to make progress in the more difficult area of this directive when neither of these two directives have been implemented? Have we any indication as to when they will be implemented? This report was considered so important that it had to be dealt with within a relatively short period. It has come before this House within a relatively short period. I am sure there is some drive to have the report finalised and agreed. How can we hope to do that when these two directives have not yet been implemented? The report states:

`Employees' representatives will be able to apply in writing to the management of the parent undertaking if the management of the subsidiary has not communicated the relevant information within thirty days. This is known as the "by-pass" provision. Member States would have to provide for penalties for failure to comply with the obligations of Article 3.

I suppose the penalty would be an arbitrary amount. There is no indication whether it would be severe or otherwise. There is no indication as to whether it would be financial or otherwise. This is a very important area. It emphasises and demonstrates the conflict in this situation. The report illustrates this conflict in dealing with that by-pass provision. The report tells us that the Irish Congress of Trade Unions consider that this provision is one of the most important in the directive and is of vital importance to the large number of Irish workers employed in transnational and multinational companies. The amended proposal requires a written procedure, which implies a possibility of seeking a court ruling and could, in the opinion of Congress, prove prohibitive and would, in effect, leave workers' representatives without any appeal or redress in a situation where the subsidiary fails to communicate information to the workers representatives.

To the Confederation of Irish Industry the by-pass provision, even in its modified form, is completely unacceptable. The confederation feel that if employees' representatives were able to demand information directly from the parent company the autonomy and authority of subsidiary management would be seriously undermined. It is easy enough to understand that apprehension. Furthermore we are told in the report that the Confederation of Irish Industry are firmly of the opinion that the provisions of this Article would not be helpful in efforts to attract international companies to locate in Ireland. This is most important for all of us. Consultation provisions are covered in considerable detail. The report states:

Where the management of a parent undertaking proposes to take a decision concerning the whole or a major part of the parent undertaking or of a subsidiary in the Community which is liable to have serious consequences for the interests of the employees of its subsidiaries in the Community, it shall be required to forward precise information to the management of each subsidiary concerned in good time before the final decision is taken with a view to the communication of this information to the employees' representatives in the manner provided in paragraph 3.

This information is very comprehensive and I do not have to go into it in any detail. It is listed out for us in the report. Local management would then be required to communicate this information without delay to employees' representatives and consult with them in an attempt to reach agreement on the measures planned for the employees and, of course, where the future of the employees is at stake, this is understandable. Whether it is always possible in practice is another matter. It goes on:

The preamble to the Directive states that the management of each subsidiary "must have the necessary powers to conduct the consultations referred to above in good faith". The proposed decision could not then be implemented until the employees' representatives had given their opinion or until 30 days had elapsed from when the information had been communicated.

This would give the workers notification in good time and it would give them considerable leverage. To the extent that it could be implemented, this is very important. The report continues:

The CII considers that the requirement that consultations should be held with the employees' representatives for a period of at least thirty days would introduce considerable delays in the decision-making process which would have a serious effect on a company's competitive position and, ultimately, on the employment prospects of its employees.

We must be interested in the eventual position of the company and, in so far as any obligation of this kind would undermine the company, we would have to be concerned. It goes on:

Article 4 also provides that, where information is defined as secret under Article 7, local management must still consult employees' representatives on the measures planned in respect of employees 30 days before the decision is implemented.

I find difficulty in understanding what subtle difference there may be between secret and confidential. It is not spelled out in the report. It is necessary to have this in fairly concise terms. As far as I understand it, the report is left hanging very much in the air.

The report tells us that the provisions of the draft Fifth Company Law Directive relating to consultations of employees' representatives are also extensive. I have already dealt with that and feel that, if the Fifth Company Law Directive is also incorporated, it will be to the further advantage of the workers. There are some areas in the Fifth Directive where apparently the employers have agreed terms which will give considerable power and leverage to the employees. In many ways I feel it is an area where the employers would have been reluctant to grant this power. Nevertheless they seem to have done so and I suppose it is an attempt to achieve good relations. This is something we all welcome.

The report says:

Article 5 states where, in a Member State, a body representing employees exists at a level higher than that of the subsidiary, the information referred to in Article 3 relating to the employees of all the subsidiaries thus represented shall be given to that body.

Article 6 ensures that the provisions of the Directive would apply equally to undertakings and their establishments as to parent undertakings and their subsidiaries.

The report deals with the secrecy provisions. I have dealt with those. Perhaps some other Members when speaking on this motion would enlighten me as to the difference between confidential and secret. The draft Fifth Directive has no provision for the withholding of secret information. I welcome this very sincerely but I find it rather strange. When I say "strange" I mean where it would be in the interest of the employers that certain information would remain secret or confidential. Most firms and organisations would be inclined to insist on some areas where secrecy would be necessary. the Fifth Company Law Directive, specifically related to the employers, has no provision for the withholding of secret information. I am trying to reach some consensus, areas like this will have to be kept in mind. I am sure the employees will appreciate this and, for that reason, will be more likely to come to terms with these resolutions because of the efforts on the part of the representatives of the employers to meet the reasonable demands of the employees. Where a company comes under the scope of both directives there would be an exceptional situation. You might have a situation where the same representatives of the workers would also be dealing with the Fifth Directive and this Vredeling Directive. There might be a problem with that. The Report continues:

The CII believes that the draft Directive does not provide adequate safeguards for maintaining commercial secrecy and confidentiality. The distinction which the Directive seeks to draw between "secret" and "confidential" information it feels has no place in existing Irish law and is unrealistic.

I am sure, in the practical sense, that is unrealistic. I am not too sure what relevance Irish law has to that situation, but obviously the Confederation of Irish Industry feel that it is relevant. In my view the secrecy or confidentiality aspect would be specifically related to a particular company and to its interests and to the fact that other companies might not be able to get information which would undermine their profits. The Report tells us:

On the general question of secrecy and confidentiality Congress rejects the presumption that workers have a lesser interest in the welfare of the company where they are employed and are therefore likely to use information indiscriminately and to the detriment of the business interests of the company

I am not sure that I completely understand that sentence. It mentions workers having a "lesser interest", but a lesser interest than what? Obviously the workers in a particular company are involved in that company, are related to that company and their interests are in that company while those outside that company do not have an interest. I find that sentence a little bit ambiguous. Perhaps I just do not grasp the subtlety of it. It goes on:

Congress also considers that this article guards against management being the sole judge of the confidentiality of information by providing that tribunals or other national bodies should be empowered to settle any disputes relating to the confidentiality of certain information.

At the stage where that information goes outside the company and goes before a tribunal, I am sure there is always the danger that the confidential element will be lost. There are exemptions recommended. These are fairly substantial. The report states:

Article 8 (2) would enable Member States to lay down "special provisions for undertakings and establishments whose direct and main objectives are (a) political, religious, humanitarian, charitable, educational, scientific or artistic, or (b) related to public information or expression of opinion".

Apparently there is agreement with this regulation in the Fifth Directive. That covers a fairly wide area although it specifically excludes of course the industrial area which is the important area and which is covered specifically in this report which states:

Article 8 (3) provides that the draft Directive would be "without prejudice to the application of national laws concerning bankruptcy, winding up proceedings, arrangements, compositions, or other similar proceedings in so far as these proceedings result from judicial decisions".

That is easily understood. By and large the exemptions are reasonable and they do not take in a very wide area.

It would be interesting to go into all the opposing viewpoints and the conclusions of the committee, but those have been dealt with already. I would just like to refer to the Confederation of Irish Industry. The report states:

The Confederation believes that the proposals contained in the amended Vredeling proposal, if made the subject of a binding Directive, could jeopardise the attractiveness of Ireland as a base for foreign industrial investment which would be inclined to go elsewhere, to countries outside the EEC where such constraints would not apply.

We are dependent on multinational companies coming in here specifically from Japan and America. There is going to be a big problem in this regard if this directive becomes legally binding. The report goes into that in some detail.

The Confederation also feel that a voluntary code of practice and information disclosure on all the other areas represents the best approach to this issue. As I have already said, I, too, feel that perhaps this avenue should be explored. With some compromise between the workers and the employees this code could be drawn up and brought within a legal framework. The report has already been well debated. I do not want to hold up the house regarding this discussion.

Finally, I should like to refer to indigenous industry. It is pointed out in the report that in 1984, 134,857 people were employed in indigenous industry. It is important to remember this because the joint committee are specifically concerned that the draft directive could have implications for competitiveness in trade and for confidence in the business and commercial sector. In Ireland, we are specifically attempting to help small companies with regard to the effect of the proposals. While the number of 1,000 will be the determining factor, the Minister has clearly stated that this is an arbitrary figure which in time will be reduced or may be reduced. As I have said before, it is like the old saying on the radio long ago: "It is easy to keep on saving once you have made a start". The same applies in every other area. There is generally a softening in all situations, never a hardening. The time will probably come when this will apply to all firms, even the smallest firms. The implication with regard to indigenous industry should be kept in mind.

Mr. Hourigan

Much ground has been covered with regard to this Vredeling Directive. First, the committee who prepared this long report of 36 pages are to be complimented for a very good job. They have put before us quite lucidly and clearly the various pros and cons of what is being suggested and what is being included in the Vredeling Directive. As I would perceive it, this directive has a lot of merit but perhaps in many respects lacks a good deal of practicality, particularly in an Irish context. I would totally support and favour the whole concept of consultation between workers, management, directors and boards, but we must marry the desirability of all this with the effective operations of any particular company or organisation. That has to be taken full account of.

As far back as June 1983 the Commission approved an amended proposal for a directive on workers' information and consultation rights. This was an amendment of an old directive which was initially put forward in October 1980. Basically, what we are talking about now is a revised version of the original directive of 1980. There are a number of points which Senator Fitzsimons and other Senators have gone into in great detail. The first thing that strikes one is the relevance of this Vredeling Directive to the Irish scene, as I have mentioned already. The first point that is mentioned fairly clearly in the directive is that the directive would relate to procedures for informing and consulting employees of an undertaking or subsidiary within the Community which employs at least 1,000 persons. That is the sort of figure which would have limited application in this country and perhaps might have greater relevance elsewhere. As proposed in the amended directive the workers would be covered by this proposed directive and would be entitled to obtain information and be consulted fully under three major areas in order to give them a clear picture of what was happening within the company and also to help the company to have the best performance possible. Information would be disclosed at least once a year on a particular fixed date. It would relate to the whole question of structure, the economic and financial situation, the probable development of the business, production and sales of that company, the employment situation, the probable trends and investment prospects. Another precise proposal in the directive is that, if there was any major decision taken by management, the workforce would be notified of such a decision 30 days in advance. That would have a substantial effect on the interests of the workers. Frankly, I would see that point as having certain restricting and inhibiting effects on a company. It depends on what one would define as a "substantial effect on the interest of the workers" because there could be many occasions when the divulgence of information pending decisions could be to the detriment of a company and, therefore, could also be to the detriment of the workers. So, it could actually work very much against the interest of workers rather than in their favour.

It is suggested that management consultations with workers' representatives would be likely to have a direct effect on employers' terms of employment or working conditions. It is suggested that if there was failure on the part of management to consult workers' representatives the workers' representatives would have the right to appeal to a tribunal or other competent national authority.

The question of secrecy and confidentiality has been referred to at length already. Might I attempt, as invited by the last speaker, to draw a distinction between secrecy and confidentiality? One would not be at liberty to divulge any information regarded as secret. It would be in the strict sense of the word "secret", whereas confidentiality is something that could be discussed on a limited, confined basis. That is my precise definition, but I am not sure if this is what a dictionary would uphold.

It is important that we look at the effects on existing legislation which this proposed directive would have. There are two specific areas of legislation which at present provide for consulting and informing employees under certain circumstances, one is the Acquired Rights Regulations of 1980 and the other is the Protection of Employment Act, 1977. Both of these give effect to the EC directives.

If the Vredeling Directive was adopted, legislation would be necessary to implement it in this country. The Vredeling Directive has given rise to much controversy at European level. In fact, there has been a good deal of debate — sometimes acrimonious debate — on it at national level. Submissions received by the joint committee, as indicated in their report, would suggest that there is quite a variation of opinion on the whole matter. The views of the employers' organisations would not totally coincide with the proposals of the Vredeling Directive. In fact, very positive criticisms of the Commission's proposals from employers, who are not perhaps fully tuned in to the amended version of this directive, have emphasised strongly the whole unworkability of this directive. For example one of the reasons the FUE opposes the adoption of the directive is that it would act as a deterrent to United States and other non-EC investment in Ireland. The CII are in favour of a voluntary code of practice in this respect. In this regard one has to take positive cognisance of the importance of investments from countries like the US and Japan, and we should be very mindful of this.

The trade union organisations have generally welcomed the proposed Vredeling Directive. They have been critical of some parts of it, but by and large they have welcomed it. In fact, it is seen by the Congress of Trade Unions as a very positive step forward in the whole area of industrial relations and in the area of the development of industrial democracy and so on — although, again, there are reservations expressed about certain aspects.

We must acknowledge that it was on the initiative of the Minister for Labour, Deputy Ruairí Quinn, as President of the Council of Ministers for Social Affairs, that an ad hoc working group on the draft directive was established. The deliberations of that group, under the chairmanship of Dr. Mary Redmond, resulted in a new approach being put forward which entailed considering the proposed directive as more of an instrument of social policy, giving workers the right to information and consultation, rather than a company law instrument imposing obligations on companies. Thus a directive would relate more to labour law than company law.

Many submissions were received by the joint committee and much credit is due to the very worthwhile submissions received from the Department of Labour, the Department of Industry, Trade, Commerce and Tourism, the Federated Union of Employers, the Confederation of Irish Industry, the Irish Congress of Trade Unions and the consultative committees of accountancy bodies of Ireland. However, it is a fact that at this time there is no movement on this Vredeling Directive. In fact, the indications are that it is not very likely that there will be movement on the directive in the very near future.

There are one or two points I want to make relating to some observations made by the committee in their lengthy document. These points cannot be overstressed. I have already talked about investment from America and other countries here and I stress that we must not under any circumstances seriously put at risk American, Japanese or other investments by directives of this sort. I believe that to be extremely important. On page 21 of the report it is stated that in 1973 foreign-owned firms employed about 22,000 persons in manufacturing in Ireland. This was about 27 per cent of total employment in manufacturing in that year. By 1981 these figures had increased to over 81,840 and to 35.32 per cent respectively. In 1983 there were over 850 overseas sponsored firms in Ireland employing almost 81,000 people. This represents a decline of over 1.5 per cent with the losses arising principally from lay-offs rather than closures.

I appreciate that time is a problem. There are many other things I should like to have said but, before concluding, I believe that in the interest of harmonious relations and in the interest of effective industrial development consultation of the right order is very important. I am not — in case my remarks might be misconstrued — in any way suggesting that there should be anything less than the best and most effective type of consultation at all times, but I would add to that the importance of ensuring that the level of consultation or contact did not in any way put at risk or in jeopardy the effective operations of a particular business, or indeed, most importantly, that it did not deter intending businesses from being established here and providing much-needed employment. I am certain that there is need not alone for greater consultation of workers at the moment but also a great need for greater worker participation in firms and in all businesses throughout the country.

Finally, I should like to compliment the committee for producing such an excellent document. While the various points in the Vredeling Directive are very commendable and go into great detail, they do not at this juncture have a practical relevance or application for Irish industry or Irish business.

Question put and agreed to.