Last-ditch bid for EU firm deal set to fail

Date: 26/11/1998

By Myles Neligan

EU DIPLOMATS have virtually written off the Austrian government's chances of brokering an agreement on 20-year-old proposals for pan-European companies during its EU presidency, despite Vienna's last-ditch push for a deal.

Austrian Social Affairs Minister Eleonora Hostasch will chair ministerial talks on the vexed question of workers' participation in Europe-wide firms at a meeting next Wednesday (2 December), and the Austrian government has called an extra meeting of EU single market ministers on 7 December to try to settle other issues raised by the proposal.

But officials say that while social affairs ministers may make some progress on worker participation next week, it is very doubtful that this will be enough to bring about a breakthrough on the other issues.

“Some governments may be willing to compromise if they see that there is movement on the major questions. But there is a lot of hostage-taking and hiding behind each other's positions. The mood at the moment is pessimistic,” said one.

A clear majority of ministers welcomed Hostasch's most recent compromise proposal aimed at settling the long-running dispute over worker consultation, which would guarantee stronger employee representation in pan-European companies created by a merger between two or more existing firms.

But the UK, Germany, Spain and the Netherlands are still deeply divided over the basic issue of how workers should be represented on the management board of pan-European companies.

Ireland and Spain have also objected to a proposed fall-back solution, under which one-third of the seats on a firm's management board would automatically go to staff if trade unions and employers failed to reach a voluntary agreement on worker participation.

The issues to be discussed by single market ministers on 7 December are, if anything, even more contentious.

Chief amongst these is a proposal which would oblige pan-EU companies to open corporate headquarters in the country where they are registered.

Only the Netherlands and Luxembourg, both of which play host to a large number of 'shell' companies, oppose this. However, EU legal experts recently advised that the principle would require unanimous approval from all 15 member states, so the chances of a deal are slim.

In addition, Spain is strongly resisting a second proposal under which governments would have to set up bodies to ensure that pan-European businesses observe the rules. Madrid fears that the UK would set up a separate statutory authority in Gibraltar which would have a direct influence on the running of Spanish-registered firms.

At next week's meeting, Employment Commissioner Pádraig Flynn will also formally present his recent proposals to extend existing EU rules on working time to more sectors of industry.