Trade unions, collective bargaining and the green transition in the next EU legislative period

Policy-driven green transition

With the proposed 2040 targets by the European Commission to reach a 90% greenhouse gas (GHG) reduction by 2040 (based on 1990 levels), it is clear that we need to step up the pace. The EU achieved a 30% GHG reduction in the three decades up to 2020, and for the two decades between 2020 and 2040, it should deliver a further 60% – twice as much in two-thirds of the time.

This transformation will reshape the world of work both qualitatively and quantitatively. Concerned regions and sectors are affected differently, entire value chains are being shaken up and reorganised, and job profiles and skill needs are changing dramatically. This fundamental restructuring of the economy is predominantly a policy-driven process, intertwined with ongoing technological change, digitalisation and a growing penetration of artificial intelligence, as well as being driven by business and profit interest.

Restructuring has always been part of our economic model in one way or another. However, unlike past restructuring, such as in the earlier stages of globalisation, this time it is different: it is not driven by profit maximization that undermines social and environmental standards and thereby sparks resistance, but serves the imperative for a net-zero economy that sustains its social and physical basis.

To shape this needed restructuring, trade unions developed the concept of just transition. Fundamentally, it is about supporting social justice and ensuring fair burden-sharing whilst fighting climate change. The key priorities here are to not create new inequalities during the green transition whilst addressing pre-existing ones. Looking at it from a functionalistic perspective, just transition has two key functions: the ‘outcome’ and the ‘process’. The outcome should be good and green jobs with reduced inequalities, while the ‘process’ aspect is about the way to get there, namely how the transformation can be managed in a just manner.

This process has (broadly) two dimensions: how to balance the distributional effects of climate policies, and how to manage industrial and employment transitions. Here, trade unions are key players that can ensure both broad participation and a rich experience in restructuring processes.

The role of trade unions

Often, trade unions have been seen as sceptical to environmental and climate policy, and interested in maintaining the status quo. However, this does not necessarily hold true, as trade unions recognised the limits to material and resource exploitation and, in fact, created the narrative of just transition to overcome the potential jobs vs environment dilemma. Nonetheless, there is a tension between managing the consequences of change and setting a transition agenda accelerating change.

In practice, this tension can play out in trade union action at a higher level and at plant level. At the national and supra-national levels, unions have been promoting the concept of just transition to shape a green transformation. However, unions on the ground – at local, regional, sectoral or even company level – are confronted with implications regarding wages, working conditions and collective bargaining, focusing on the immediate consequences of the transformation. While fighting climate change is a common objective, neither employers nor unions on the ground have an imminent interest in setting ambitious climate policy objectives, at least not in the short term. The ambitions and objectives driving change are set at higher policy levels in the form of the Paris Agreement, the European Climate Law and national decarbonisation targets. Yet finding balances means shaping the process of transformation that happens on the ground. To an extent, social dialogue helped to shape various national Energy and Climate Plans or formulating National Recovery and Resilience Plans, but these discussions remain somewhat detached from the factory floors and often look at outcomes. To ensure procedural justice, workers’ participation, social dialogue and collective bargaining need to be strengthened and adapted to match the new challenges of transition.

Collective bargaining and the green transition

How can the necessity to involve social partners in managing the effects of climate change and shaping the green transition fit into the old categories of collective agreements? Across Europe, collective agreements take different forms, covering different levels, sectors and aspects, which makes a unified understanding of ‘green collective bargaining’ challenging. The EESC opinion (SOC/747) sees green collective bargaining in terms of negotiable clauses between the social partners within collective agreements that have a direct and indirect effect on the environment. Accordingly, green collective agreements can cover: (a) the impact of companies’ activity on the environment; (b) the protection of workers from the effects of climate change; and (c) the impact of the green transformation on employment and work organisation. To simplify, two main forms of green collective agreements can be identified: green clauses and agreements to manage green restructuring.

Green clauses

Classical collective agreements (CA) are not just about pay and working time, but also include qualitative elements related to working conditions, skills development, health and safety or, lately, telework. Some classical CAs now have clauses on greening the workplace that include energy efficiency measures, waste management and commuting. Spain is currently proposing to include ecological issues into company collective agreements. A draft law on sustainable mobility will require companies to set up plans to include measures to support zero-carbon emission mobility options as mandatory subjects for company negotiations. France has already introduced a sustainable mobility package, where ecological issues have been part of the mandatory information-consultation process since 2021.

Advancing and promoting such agreements helps to translate abstract ambitions into specific action and ensure workers’ ownership of policies. Other legislative instruments, such as guidelines on environmental management systems, the Corporate Sustainability Reporting Directive or the EU Sustainability Reporting Standards, may provide further opportunity for workers’ involvement.

Agreements to manage green restructuring

Besides clauses promoting environmental protection, the active involvement of workers in green restructuring is crucial. Restructuring is a conflictual process, where value chains are reorganised, activities outsourced or offshored with massive job transformations, new skills needs, and respective training programmes are implemented. Several agreements show how workers’ involvement can help make this process just and efficient.

The IGBCE – Ruhr Kohle AG agreement from the early 2000s, for example, secured a social plan for the phase-out of hard-coal mining in the German Ruhr region. In Italy, the framework agreement concluded by four Italian unions with Enel, in relation to its 2030 plan with several plant closures, contributed to the decarbonisation of the Italian energy sector. The 2022 Swedish cross-sectoral agreement established a broad-based framework to facilitate and manage the green transformation. These agreements do not just focus on employment protection and retaining jobs, but put a strong emphasis on skills development to improve job security and competitiveness. While these agreements fulfil the criteria of a ‘collective agreement’, they are usually more forward looking, covering up to 10 years.

We see an increasing number of so-called ‘Collective Agreements for the future’, mainly in automobile companies, starting with the 2016 Volkswagen ‘Zukunftspakt’, and followed by other main manufacturers and their first-tier suppliers (for instance, Bosch in July 2023 and Mahle in August 2023). The key objectives of these plant-level CAs, negotiated by works councils and supported by the trade union IG Metall, include a strategic vision for each plant, safeguarding employment in the context of the transformation to e-mobility, involvement in skills management identifying future skills needs with respective training and re-skilling programmes.

In France ‘job preservation’ agreements, like the one by Renault in 2021, involve negotiating concessions from the unions in exchange for industrial investment and recruitment in the transition towards electric vehicles. In 2017, France introduced Ruptures Conventionelles Collectives (RCC) in its labour law that encourage voluntary departures. Stellantis negotiated an initial RCC, in February 2022, to implement a scheme to transfer group employees to the ACC battery Gigafactory in Douvrin for a training programme to facilitate their employability and preserve their purchasing power. Whilst still being contested at times, these agreements can help to manage the needed, yet conflictual, structural industrial transformations in Europe. However, they are often not acknowledged as collective agreements and lack enforceability.

While the agreements mentioned above would certainly qualify as being collective agreements, their status is not always acknowledged as such, and their enforceability is questionable. Still, these are the ones that deal with the most essential aspects of green restructuring and should therefore be an integral part of industrial relations.

Policy recommendations for the next EU legislative term

Principle 8 of the European Pillar of Social Rights highlights the need to promote social dialogue and the involvement of workers in social, economic and employment policies, and encourages collective bargaining. Facing the historic challenges of the just transition, the knowledge and experience of social partners is indispensable to establishing transition plans that are just in outcome and process. Therefore, collective bargaining must not just be strengthened, but also be adapted to these new challenges. Therefore, in the next legislature, the EU should:

• Develop  a Just Transition Legal Framework at the European level, recognising the important role of green collective bargaining to mobilise its transformative potential.
• Respect the right to collective bargaining with the prerogatives of trade unions as the bargaining party for workers, as recognised by the Directive on Adequate Minimum Wages in the EU.
• Support Member States that do not yet have a strong framework for social dialogue with specific recommendations and initiatives.
• Strengthen the framework for informing and consulting employees, as proposed by the 2023 Spanish EU Presidency.
• Empower social partners to shape Europe’s economic future.

The views and opinions in this article do not necessarily reflect those of the Heinrich-Böll-Stiftung European Union.