Introduction

For many years, trade unions have been the sole recognized representation of employees. However, this trend has been changing rapidly in different countries where employees have sought other means of representation. One of the most notable changes in the employee representation is the adoption of workers council which has been embraced in different parts of the world. It is important to note that the work councils have varied levels of development depending with the nature of the country from which it emanates. The variations of these work councils are defined by the different historical and cultural factors that lead to great differences in the formulation of workers representation(Ashiagbor, 2005).

As result of these major changes in employee representation, it has become necessary to research on the effect that these representation will have too the development of business across the globe. This is because the labor market has had several limitations as a result of globalization of economies, increasing competition, unemployment and need for flexibility among others.  In this report, we will be interested in unearthing the impacts that the work councils have had in development of multinational companies in Europe. These work councils serves as the major decision making organ on behalf of labor matters and have significant impact on the multinational companies. In essence it is evident that the development or limitation of multinational companies in Europe is as a result of the impact of the worker council which has been very instrumental especially after 2^nd world war. The paper will shed more light on how EWCs have become institutions promoting management of MNCs and the challenges faced by European companies.

Discussion

The European work councils (EWCs) have had major impact in the development and growth of the multinational companies.  The major area of concern is the human resource sector which requires an improved strategy to ensure that there is compliance with the labor laws. The European Union directive on the EWCs is regarded as one of the most notable legislation in the field of industrial relations in the globalized European economy(Whittall, 2007). The 1994 legislation covers most European states with exception of UK. The aim of the workers council was to improve workers information and consultation rights in multinational groups and other companies operating in Eurozone.  The establishment of the workers council had great impact on the more than 1100 multinational companies in which employ more than 15 million workers.

The European work council is operational in at least eleven member states of EAA which include; France, Britain, Netherlands, Finland, Ireland, Spain, Sweden, Germany, Austria and Italy. The work councils spelt out the agreements between these countries and stipulate how member states should deal with working population. It is believed that there are more than 70 agreements with over 40 multinational companies within these boundaries. The nature of these agreements varies from one country to another as some refers to them as ‘’charters’’ while others refers to them as mere ‘’agreements’’ or joint declarations.

The European work councils are governed by major directives contained in the famous article 27 of the charter of Fundamental Rights of the European Union. The legislation demands consultation on employees in case of major layoffs or corporate reorganizations. The employee involvement in the European Company is also well documented in the 1994 directive. All these directives play significant roles in the way through which multinational companies are run in the Eurozone. It is for this reason that it is important to identify how EWCs can be used as a tool to strategize on internationalization of company operations and human resource management across cultural and national borders(Klaveren & Tijdens, 2013).

The presence of EWCs has great implication in the human resource management in the major multinational corporations. One of the implications of these work council is the internal restructuring of many European companies in order to suit the directives. This has been realized through creation of many European based headquarters and upgrading of the responsibilities they are entitled to. The upgrading of these headquarters has been at the expense of other national subsidiaries where the EWCs are not applicable. Another major implication of the EWCs is the cross-border merger waves experienced in the recent past.  These waves have been phenomenon as MNCs try to strengthen their presence in European market. It is also important to note that the EWCs have been instrumental in enhancing diversification in major companies to enhance competence and strategic positioning with an aim of achieving financial goals of the company.

All the above mentioned implications have great impact on the human resource management in Europe’s largest MNCs. For instance, organizational change has always been a tall order for many managers in large corporate bodies. This is because it has major impact on employees who are always represented in work councils. It is required that major organizational change must be communicated to the employees and convince them of the reasons behind the recommended changes. This has posed a great challenge to HRM since some of these organizational changes are critical and requires to be carried out urgently(Hill, 2010).

It was expected that the European economic integration and globalization would be beneficial to the growing number of multinational companies in the region. The development of the European work councils was expected to guide the corporations to greater heights especially as far as human resource is concerned. This is because these councils provided the basis for industry relations among the different stakeholders in the European market. However, the presence of these EWCs has not made the work of human resource department as easy as one would prefer. For instance, the proposed sale of LongBridge by BMW was made difficult by presence of the directives contained in the European work council.   The employees, managers, local community and labor activists were very outspoken in expressing their dissatisfaction with the intended sale(Overbeek, 2003).

The directives as stipulated in the EWCs have significant impact on major companies in different parts of Europe.  They are known to cover companies with at least 1,000 employees in European Union and at least 150 employees in two member states. This plays a major role in the expansion of the multinational companies. The consultations of these employees may be time consuming and thus hinder the eventual development of the company in question. This may be even more difficult in cases where language barrier is experienced. Language barrier may hinder the solidarity of the employees and their representatives thus limiting the intended purpose if making EWCs a core component of European system of industrial relations(Cooke, 2003).

However, it is important to note that the presence of European work councils have had positive impact on the growth and development of multinational companies. The increased communication among the employees of different companies has made several managers remain optimistic on growth of their corporate bodies. The company’s objectives can also be realized as there is increased sense of belonging thus increasing the employees’ commitment. Increased commitment by the company’s employees is critical to the overall growth of the company. The human resource department in such companies has smooth running especially if dialogue is given space in running of the organization’s affairs. European work councils are recognized due to the critical managerial role they play of ensuring that dialogue between management, labor and company is smooth and efficient.

EWCs are also obliged to review the international framework agreements. These agreement frameworks are transformed into new tasks of work councils and become global players that govern the running of companies. The EWCs are very recognized by global bodies such as IMF and World Bank thus they help in ensuring growth of multinational companies even in non-Eurozone. They are restructured in a way that they are impressive for human resource functions of recruitment and maintenance of workers. If an organization is capable of proper recruitment and maintaining of the recruited workers, then there are high chances of the company to record tremendous growth (Tenbücken, 2002).

EWCs play a vital role in enhancing mergers and acquisitions of major corporate bodies and MNCs. This is because the different directives provide the guidelines and road map to be followed through intended mergers. It is however important to note that some mergers and acquisitions has at times affected the functioning of the work councils. One of the most notable examples involves GlaxoWeLlcome and   SmithKiln of 2000. It is noteworthy to understand that the two companies worked in accordance with the directive of article 6 of European Work council. Joint EWCs was set by the two companies which would act as the utmost guiding principle of the human resource in the merger.  However, it is of paramount importance to note that SmithKline created its employee side of EWCs which was focused on the central management of the internal affairs. After efforts to harmonize the human resource strategy for the merger, an agreement was reached to form European Employee Consultation Forum.

Conclusion

In conclusion, employees’ representation has gone to greater heights over the past few years. This can be further explained by the integration that the EWCs have had with other trade unions with the sole aim of enhancing representation of the employees. Many states in European Union have strived to have well integrated trade unions with the EWCs which have enabled organizations to overcome limitations presented by the EWCs directives(Rogowski, 2012). This has also made the EWC a cornerstone of the European industrial companies and other multinationals in the EU.  European work council has acted as key pillars of European industrial relations and developments of companies. It is therefore important to understand that there should be proper integration between the trade unions and the human resource strategy in order to have a development of the MNCs in that region.

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