Bonn casts doubt on Euro-company deal

Date: 03/07/1997

By Simon Coss

A LUKEWARM German response to new plans designed to pave the way for the creation of pan-European companies has dented hopes of breaking almost 30 years of deadlock over the issue.

Officials have expressed surprise at the apparent lack of enthusiasm for the proposal in Bonn, given that it was specifically drafted with German concerns in mind.

When it was unveiled in May, hopes were high that the formula proposed for a European Company Statute would solve the intractable problem of whether to allow representatives of the workforce to have a formal say in management decisions.

The German system already allows for this, but other EU member states have always insisted that management must have the final say in how companies are run.

The report drawn up by a group of experts headed by former European Commissioner Etienne Davignon in effect proposes a compromise between these two positions.

It suggests European firms should reserve 20&percent; of seats on the management board for workforce representatives, but points out that no business would be obliged to set up as a pan-European operation. In other words, any organisation unhappy with this option could continue with the present system of setting up subsidiaries in each EU member state.

It was thought that the deal would present an almost ideal solution for Germany, but Bonn's reaction has been surprisingly muted. “The Davignon report suggests an interesting approach, but it is too early to make any detailed comments,” said one German expert.

Officials argue that they need to consult the powerful Deutsche Gewerkschaftsbund (DGB), which represents most of Germany's trade unions, before they can say any more.

But experts question whether this is the real reason for German reticence. They say it is difficult to see exactly what Bonn still needs to know from the unions given that former DGB president Ernst Breit was a member of the Davignon group and was involved in drawing up the new formula.

They also point out that the European Trade Union Confederation (ETUC), of which the DGB is one of the most powerful members, has already reacted favourably to Davignon's proposals. “We feel the Davignon report presents a good basis for the future participation of workers in European companies,” said an ETUC spokesman.

All this has fuelled concern that Germany may have serious reservations about the plan. “When I speak to German colleagues about this they tend to talk for a very long time and not say very much,” said one Council of Ministers insider. Some suggest that the Davignon plan may not go far enough for Bonn. Certain sectors of German industry guarantee workers 50&percent; of seats on the board.

But in a European Union where decisions are supposedly arrived at through compromise, it is hard to see how much more ground can be ceded to the Germans.

However, Bonn's apparent reluctance over the plan may not in the end be decisive, given that the UK has already made it clear it will find it hard to accept the principle of compulsory worker involvement in any form. A decision to introduce a European Company Statute will have to be arrived at unanimously.

Social affairs ministers will discuss the Davignon report when they meet informally in the Luxembourg town of Echternach this weekend (4-5 July).