The impact of crisis and restructuring on employment relations in banking: The cases of France,Luxembourg and Romania

Abstract

This article discusses the dynamics of collective bargaining in the management of restructuring, drawing on the example of the banking sector in France, Luxembourg and Romania. We show that the organized decentralization of the corporatist or statist models of France and Luxembourg helped sustain employment relations systems and cushion crisis effects. Bargaining outcomes included internal mobility and training. In Romania, by contrast, disorganized decentralization meant that solutions were left to the company level and to market forces.

Keywords

Banking bargaining collective bargaining decentralization France Luxembourg restructuring Romania trade unions

Introduction

The financial and economic crisis of 2008 seriously affected employment relations systems in Europe, but with different national patterns, some systems being more resilient, while others experienced considerable changes (Brandl and Traxler, 2011; Lehndorff, 2015; Marginson, 2014). We aim to contribute to the debate on changing patterns in employment relations systems, by discussing the dynamics of collective social dialogue in the management of restructuring, drawing on the examples of banking in France, Luxembourg and Romania. We argue that these cases highlight how collective bargaining specifically related to restructuring represents a critical example of the diversity of shifting patterns in collective bargaining as a result of the crisis.

We define restructuring as the modification of a company’s workforce, both quantitatively (in terms of the number of jobs) and qualitatively (in terms of skills and qualifications), following changes in its structure, organization or production processes (European Commission, 2008). In the European Union (EU), particularly in the decade after 2000, there was increasing understanding among policy-makers and academics that restructuring can be anticipated and its consequences moderated (Bergström, 2014; European Commission, 2013). From this perspective, social partners are expected to take a proactive role through collective bargaining and ‘softer’ initiatives such as instruments for anticipating change, or the monitoring of the consequences of restructuring, which is defined by some authors as ‘socially responsible’ (Forde et al., 2009).

From this perspective, the banking sector has come under particular scrutiny, all the more so because banks have been depicted as responsible for the crisis. While its impacts have been broadly discussed in the literature (Lallement, 2011), restructuring within the sector and individual banks have received less attention. However, the question is significant because the banking sector has been one of the largest employers in the EU, with almost three million employees at the end of 2014 in the EU-28 (European Banking Federation (EBF), 2015: 12). The sector has been under constant pressure to respond to new EU and international regulations (transposed into national legislation), cost-reduction efforts and digital technologies. In terms of employment, job losses were significant in some EU countries, but mitigated in others: in 2009, nine countries lost more than 5 percent of banking employment, among them Latvia, Ireland, Italy and the United Kingdom (Telljohann et al., 2012: 17). In terms of collective bargaining, we show how different responses occurred within different models of employment relations (Bechter et al., 2012: 193). We refer to France as a ‘statist’ model, Luxembourg as a continental or neo-corporatist model with some statist elements (Vollaard et al., 2015) and Romania as a post-communist transition model.

In this article, we first discuss critically the recent decentralization literature as a framework for analysing the dynamics of restructuring-related social dialogue, as well as studies of national and sectoral varieties of European employment relations models and restructuring paths in banking. Second, we describe the qualitative methodology, based on semi-structured interviews in the banking sector in the three countries. Third, we apply our theoretical framework to the three case studies. Fourth, we discuss the findings from a comparative perspective.

Theoretical framework

Since the crisis, collective bargaining in the three countries has increasingly occurred at sector or enterprise level, at the expense of broader consensus-based national tripartite agreements. Studies of trends in collective bargaining systems in Europe have identified continuous decentralization over the last decades (Marginson, 2014), a process defined as a bargaining structure ‘shifting downward … often from a national or multi-company to the firm or plant level’ (Katz, 1993: 3). Long-term trends and processes, such as pressures for labour market liberalization from employers or from international institutions (Marginson, 2014), have driven this decentralization process, which has been particularly evident in Europe (Brandl and Traxler, 2011; Glassner and Keune, 2012).

As the literature highlights, however, different dynamics in this process have emerged within the various employment models in Europe. Some involve what Traxler (1995) termed ‘organized’ decentralization, within parameters established at higher national and sectoral levels; others display ‘disorganized’ decentralization, displacing multi-employer bargaining. Marginson (2014), for example, highlights that in Western Europe is the first form predominated, with the significant exception of the United Kingdom. Where ‘organized’ decentralization prevails, some bargaining issues such as employment and competitiveness have taken priority over wages and conditions during the last decade, as for example in Germany (Bispinck and Dribbusch, 2011). In banking, more specifically, Nicolaisen (2011) identifies Ireland as a case of ‘unorganized’ decentralization, whereas the Swedish case involves ‘organized’ decentralization. In Central and Eastern Europe (CEE), ‘disorganized’ decentralization prevails, except as in Slovenia (Stanojević et al., 2016). This typology is relevant for our analysis, as it provides a distinction between Western and Eastern European developments in employment relations.

Beyond undifferentiated categorizations of ‘varieties of capitalism’ (Hall and Soskice, 2001), other studies of employment regulation note increasing within-country variation (Katz and Darbishire, 1999), identifying growing divergences within national employment systems, combined with ‘convergence’ across countries at the level of companies. Similarly, Bechter et al. (2012) challenge the concept of ‘national models’ of employment relations, suggesting that the sector is the more important level for analysis. This is relevant for our own study.

From this perspective, we consider that the national restructuring regimes which are defined in the literature (Gazier, 2008) as a combination of both ‘law-based or informal adjustment mechanisms, and as measures controlled or adopted by a particular group of actors’ (Bergström, 2014) are not alone able to explain sector and company restructuring-related bargaining processes. Sector-inherent characteristics interplay with these national regimes to produce specific tools and measures mobilized in the restructuring process in banking. This is not the case in other sectors, such as those which are more geographically tied like catering or cleaning (Holtgrewe et al., 2015).

In the concrete example of banking, collective bargaining coverage in most West European countries is still high (Adam, 2011), but considered to be under threat: this has been related to the growth of variable pay schemes (Arrowsmith and Marginson, 2011) and continuous outsourcing and offshoring processes (Prosser, 2014). In their comparative study of the German banking and automotive industries, Haipeter et al. (2012) conclude that decentralization has increased in both sectors, following the strong coordination of the German continental employment relations system. More recently, Kornelakis (2014) argues that diversity across employment models persists in banking and that a range of different responses to the pressure of liberalization have been mobilized as exemplified in Italy and Greece. Nonetheless, even if these liberalization-related pressures pose a threat to employment, Zagelmeyer (2013) emphasizes that the preservation of jobs could be still achieved in the German case, concluding that ‘company-level social partners, supported by public policies, were able to avoid redundancies and keep employees in work, while helping the company to survive’ (p. 232). Moreover, the restructuring path in banking had already been an object of research in the literature before the crisis with a series of studies that pointed towards increased deregulation and competition as sources for pressures on employment and bargaining in the sector (Mayer et al., 2001).

Nonetheless, after the beginning of the crisis and with the increased pressure on employment relations, there has been a research gap in the investigation of restructuring paths: the evidence mobilized in this contribution and based on understudied EU countries seeks to fill an important gap in the employment relations literature. In the line of these theoretical insights, the following sections highlight that employment relations were maintained and larger crisis effects cushioned within the organized decentralization of the corporatist or statist models. In disorganized decentralization, in contrast, as it is the case in the transition economies model under study, solutions to crisis effects are left to the company level and market forces.

Methodology

Our research draws on data from the European research project ‘EUROSOFIN: Social dialogue in the financial sector in Europe: contribution to anticipation and restructuring’, carried out between December 2013 and February 2015. This focused on banks and studied social dialogue mechanisms related to restructuring in Austria, France, Luxembourg, Romania and the United Kingdom. Given constraints of length, we limit our analysis to three countries. Our choice reflects the fact that Luxembourg is an important financial centre with an employment relations model which deserves more scientific attention. France is a major financial centre with similar industrial relations institutions. For comparative purposes, we examine Romania as a contrasting example.

Our approach combined semi-structured interviews, desk research, discussions and participant observation with social partners, researchers and practitioners in the framework of national seminars in Luxembourg, Paris and Bucharest as well as during an European Trade Union Institute (ETUI) international conference. We conducted 25 interviews following a common set of questions: 8 in France, 10 in Luxembourg and 7 in Romania. These involved representatives of sectoral unions and employers’ associations, enterprise-level unions, human resource (HR) managers and experts from the banking sector. Interviews were conducted anonymously between March and October 2014 and lasted between one and one and a half hours.

Finally, we analysed major restructuring cases involving at least 100 job losses (or creation) at company level, as reported by European Monitoring Centre of Change (EMCC) (https://www.eurofound.europa.eu/observatories/emcc/erm/factsheets) for the period 2008–2016. Despite some limitations (e.g. the database does not cover smaller cases in banking), it provides useful insights on the scope, factors regarding the restructuring decision and collective bargaining practices, and human resource management (HRM) policies aiming to prevent dismissals.

France: collective bargaining for socially responsible restructuring

Employment relations in the French banking sector are embedded in the ‘statist’ model of employment relations system. Government has a key role, including enforcing the minimum wage, extending collective agreements, promoting dialogue and enacting a range of regulatory mechanisms. Employees are generally represented by trade unions that have the power to negotiate and sign collective agreements at company level and in directly elected structures (comités d‘entreprise). Andolfatto and Labbé (2016) report that during the crisis, employment relations were the subject of important yet incomplete reforms aiming to reinforce and regenerate social dialogue. Elements of those reforms represent organized decentralization, for instance, the 2013 national agreement (Accord national interprofessionnel) on labour market reform, signed by the main employers’ organizations and three of the five main unions, includes the possibility for company bargaining to derogate from nationally agreed wage and working time provisions, in order to preserve employment.

Decentralization also affected the traditionally strong collective bargaining structure in the French banking sector, where 98 percent of employees were covered by collective agreements at branch and/or company level in 2008 (Adam, 2011). Since 2000 when no sectoral wage agreement was signed for 2009 and 2010 for commercial banking, wage agreements were negotiated in the majority of large banks. As the Labour Relations Director of a banking group commented,

The branch (sector) had a bigger role until 2000, because the collective agreement that was in effect at the time was very detailed and demanding. Since the new agreement, the branch has had less weight, especially concerning wages. All the branch has to do is not obstruct negotiation in the company and thus leave sufficient ‘food for discussion’ at that level. Moreover, we can see that cross-sectoral negotiations have been increasing recently, which has also resulted in ‘emptying’ out the importance of branch-level negotiations.

Five competing union federations represent employees in the sector. The results of the 2013 elections for employee representatives (Ministère du travail, 2013) indicate the following support for the main organizations: CFDT Banques et assurances, 27.7 % CFE-CGC Syndicat National de la Banque et du crédit, 26.9 percent: CGT Fédération des Syndicats du Personnel de la Banque et de l’Assurance, 15.4 % FO Banques, 14.3 % and CFTC-Banques, 11.15 percent. The main employers’ organization is the Association Francaise des Banques (French Banking Association, AFB).

After extensive privatization in the 1980s, most of the large banking groups are privately owned. French banking favoured the development of banques universelles undertaking both retail and investment banking activities. There has been continuous concentration of the sector in the last 30 years: the number of banks decreased from about a thousand in 1998 to 390 in 2013. However, the market is dominated by six large groups. As Howarth (2013) emphasizes, ‘The large retail banking businesses and diversified operations of the French banks – that is, their balanced business model – lessened the overall impact of the crisis’. At the same time, the French government intervened by injecting capital to recapitalize banks, deploying €40b in funds (Xiao, 2009). In terms of employment losses, the French banking sector suffered less from the crisis than in other large economies (Teissier and Bussat, 2015). In 2013, the sector had 367,000 employees, mainly concentrated in the large groups: 24 banks with more than a thousand employees accounted for 85 percent of employment. Following continuous employment growth in 2000–2007, the workforce remained relatively stable in the crisis years. This is explained by economic stability and the large-scale retirement of bank staff since 2007, not fully compensated by new recruitment (Teissier and Bussat, 2015).

Even if job losses related to restructuring have been modest, the sector is being affected by changes in skill requirements and career development. As a direct result of the crisis, new regulations have been implemented in national legislation in line with the Basel III agreements implemented through the EU Capital Requirements Directive. These regulations were identified by interviewees as a central factor driving the present and future restructuring of the sector, leading banks to modify their functioning to comply with regulatory objectives and with the result of spill-over effects, as ‘the search for equity capital and for profitability involves adjustment measures that affect the whole set of functions’ (HR manager).

Again, despite the relative stability of overall employment, restructuring is also driven by technological changes. These, together with increased compliance requirements, have brought a growth in qualified labour, as the share of managers and experts (cadres) is continuously increasing, while that of ‘technicians’ is falling: between 2012 and 2014, the share of cadres increased from 54.9 to 57.7 percent in overall banking employment (Observatoire des métiers, 2015: 9). This reconfiguration of jobs, occupations and work organization is highlighted by an employee representative:

The impact of restructuring in this sector, especially in retail banking activities, is evident from the changes in back-office as well as front office occupations (transformation or elimination of certain occupations, such as bank tellers), which have been affected by the crisis.

Between 2008 and 2016, the EMCC identified 60 cases of large-scale restructuring in the French financial services sector. Most occurred within banks and led to job losses. Already in 2008, the Caisse d’épargne announced a cut of 4500 jobs over 4 years because of European regulations which opened up competition in banks’ ability to grant Livret A current accounts which are very popular savings accounts in France. The planned staff cuts at the Caisse d’épargne involved voluntary severance and no redundancies. In BNP Paribas, job cuts were announced in 2011in its investment banking activities. Management cited a 60 percent write-off of its Greek debt, the reduction of its exposure to other European sovereign bonds, as well as the debt crisis as the key drivers of the cuts.

Another major example is Société générale (SG): in 2010, the bank announced 900 job cuts in its retail banking network over 3 years, implemented by not replacing employees retiring. In 2011, SG imposed further job cuts, this time within its investment banking activities: 880 jobs or 13 percent of its French workforce were axed. Internal restructuring continued in the following years, with two waves of cuts (620 and 375 persons) announced in 2013 and further cuts in 2015 (420) and 2016 (550). Further restructuring based on voluntary departures was negotiated within the framework of the Accord sur l’évolution des métiers, des compétences et de l’emploi (agreement on changes in skills and employment), signed in April 2013. A bipartite commission was established to discuss reorganization projects, and employee representatives sought to negotiate a maximum of 450 job losses. In this case, the 154 job cuts were not in retail activities, but in back-office work, set to be transferred to Bucharest. Again in 2016, 550 jobs were under threat because of the decrease in back-office platforms from 20 in 2016 to 14 in 2020. SG illustrates the scope and the time framework of restructuring processes: all the major drivers have been in play in a continuous process since 2008, including the crisis itself, the emergence of new regulations, outsourcing processes, cost pressures and massive recourse to digitization. However, these restructuring processes are addressed internally, and solutions are negotiated with the social partners, while compulsory dismissals have been avoided.

In the context of these profound impacts of the crisis, collective bargaining and social dialogue have increasingly attempted to anticipate change and seek negotiated solutions (Teissier and Bussat, 2015). At the sector level, important instruments have been developed through collective bargaining, such as the 2005 Observatoire des métiers de la banque (Observatory of banking occupations) which led to agreements on training and on anticipating change, on qualifications and career equality between women and men. The bipartite Observatory monitors quantitative and qualitative trends in occupations and evaluates the potential risks of particular groups. The culture of anticipating change, developed with the Observatory and within banks, led also to the conclusion of the Accord sur la gestion prévisionnelle des emplois et des compétences (GPEC), agreement on the anticipatory management of jobs and skills in 2011. This agreement envisages anticipation mechanisms. Bipartite work on the definitions of skill needs is carried out at the level of sub-branches. More concretely, the social partners identify occupations considered sensitive and jobs in decline, requiring particular attention at branch level. It defines key indicators to follow up the changes in those jobs at risk. The GPEC is based on the codification of existing HRM practices within the large banks, formalized in company agreements, as in BNP Paribas (July 2012) and SG. In the context of collective bargaining, anticipation leads to the conclusion of several agreements at different levels, including the European level for BNP Paribas.

The main mechanism to address restructuring at the level of individual banks is internal occupational mobility. This is the main pillar of the HRM policy in the French case, according to interviewees. Internal mobility is understood as a change of job or occupation within the same company or bank. This leads to the establishment of platforms offering job opportunities within the bank, and the follow-up of the transition to the new jobs/occupations by HR managers and supervisors. These measures facilitate the fluidity of internal labour markets. Moreover, to favour mobility, external recruitment is limited, except for young entrants such as interns, or jobs requiring specific expertise that is not available internally. An employee representative concludes that ‘the employee mindset today is changing’: mobile skills should be considered by employees more broadly. This is in line with a significant overall investment in training, equivalent to 4 percent of the wage bill in 2012 (Laffond, 2014).

The French case illustrates intensive restructuring related to social dialogue both at sectoral and company levels, supported by state instruments and leading to job preservation.

Luxembourg: a case of organized decentralization?

As in most sectors in Luxembourg, banking has a sectoral collective bargaining structure, based on the 2004 law on collective agreements. This framework organizes the entire bargaining process at sectoral level, defines representativeness and stipulates compulsory topics for the bargaining agenda. At company level, bargaining occurs between management and the délégation du personnel (staff delegation), which comprises elected employees (trade union-affiliated or independent). Recent legislation (2015) abolished the joint committee (comité mixte) in larger companies, with the result that the responsibilities of staff delegations have increased, as they are the only negotiating body apart from European Works Councils (EWCs). Three trade union federations in the sector are recognized as representative and with the right to sign collective agreements. In terms of votes received at bank level in the last éléctions sociales in 2013, the largest union is the non-partisan Association Luxembourgeoise des Employés de Banque et d’Assurance (ALEBA), with 50.39 % followed by the social-democrat Syndicat Banques et Assurances (OGBL-SBA), with 32.33 % and the Christian-democrat Syndicat des Employés du Secteur Financier (LCGB-SESF), with 17.28 percent. A single employers’ association negotiates the sectoral agreement, the Association des Banques et Banquiers, Luxembourg (ABBL), which is affiliated to the national umbrella employers’ organization UEL.

The literature on employment relations rarely discusses the Luxembourg model. Nonetheless, it has been described as ‘democratic corporatist’ in the literature on small states, or as ‘competitive corporatist’, given the salience of international competitiveness, which was central to the negotiations that led to the last major tripartite agreement in 2006 (Thill and Thomas, 2011). As a ‘newcomer’ in the literature, the system qualifies as a case representing another example of an organized decentralization bargaining system.

In this context, however, decentralization has not occurred ‘naturally’, but has been accompanied by multi-level government intervention paving the way for a continuation of sectoral bargaining. First, the broader finance sector was on the bargaining agenda in 2006, during negotiations towards a consensus-based agreement in the national Comité de coordination tripartite, and the subject of an assessment in 2015 by the tripartite Conseil économique et social. Second, crisis-related mass redundancies were cushioned by mobilizing legal restructuring instruments (job retention plans) already in place. Third, as consensus-seeking between the government and the social partners has become more difficult from 2010 in terms of negotiating tripartite national agreements (Kirov and Thill, 2015), bipartite agreements between the government and either trade union or employers’ associations were signed to circumvent the stalling of the national tripartite dialogue. Last, the government introduced deposit guarantee schemes and injected capital in crisis-affected banks.

Banking is one of the largest contributors to Luxembourg’s gross domestic product (GDP) and its largest employer. The internationalized financial sector had 141 banks in 2016, with a spectacular increase since the 1980s when the country had to diversify activity away from the declining steel industry. Responses to the steel crisis included the implementation of crisis management instruments such as an employment fund and early retirement schemes. The deepening of EU integration in the 1980s, the steady increase of bank assets, the strong growth of private banking in the 1990s and the growing importance of the fund industry are all factors that catapulted Luxembourg banking onto the international scene.

However, the financial crisis of 2008 exposed the volatility of the sector with corporate restructuring decisions by foreign banks and changes in business strategies required by the European Commission. However, decades of employment and GDP growth have meant that banking still has more than 26,000 employees at the time of writing, constituting 8 percent of overall domestic employment. Assets dropped after 2008, from €931b to €791b in 2009, even though the sector suffered less than in other European countries. The impact became tangible with the near-collapse in autumn 2008 of the large Dexia and FORTIS banks. Their demise was avoided by considerable injections of capital by governments in Luxembourg and the neighbouring countries, and was followed by internal restructuring. The early case of Kaupthing Bank SA in 2008 illustrates how mass redundancies were avoided by applying a mix of legal instruments and enterprise agreements: after voluntary quits, an initial plan social (redundancy plan) affected 80 employees, while 50 were offered a package in the context of an internal agreement between employees and the bank. Interviewees stressed the importance of this broadly applied strategy of finding internal and voluntary solutions before resorting to compulsory redundancy, and the fact that this approach has been significant in limiting the negative impact on the bank’s image and avoiding larger conflicts with national unions. As a legal expert emphasized, ‘these are initial plans but are often negotiated internally with the staff delegation … it is sometimes preferred in the financial sector to negotiate directly with employees’ representatives than with sectoral unions’.

In larger cases of restructuring, and with changes observed in France, employee mobility to other branches in the same group in Luxembourg or Europe has been a key instrument to preserve employment. However, mobility has also been considered a double-edged sword: while potentially vulnerable employees are relocated through social plans and internal agreements, their work routines and career perspectives are endangered. In the words of a union representative, ‘for example, one seeks a strong profile in another unit … and your profile does not match 100 percent …; the remaining 30 percent is training so you can get to do the job there’.

Furthermore, the breadth of new regulations at European level has contributed to reshaping the banking sector in terms of employment organization, as also identified in France. An example in private banking is the Directive for the Automatic exchange of information. Responsibility for its implementation has been devolved to individual banks. The legal expert argued that

step by step, all these directives, all these structures are falling apart. Today it is necessary to justify why there is staff in Luxembourg. As a result, jobs are being transformed, with everything operational is being moved towards something that is more managerial.

As a result, internal mobility schemes, together with changed career paths, have had an impact on skills and competences in the sector. Kirov and Thill (2015: 92) observe that

the panoply of regulations rapidly affecting bank management required a high level of compliance: compliance is enforced by the recruitment of a specialized and high-skilled workforce, to the detriment of less skilled employees who see their jobs and career advancement opportunities endangered.

If the lack of recruitment for high-skilled profiles is not successfully addressed, banks often resort to ‘skills-shopping’ or engage in outsourcing and offshoring when, as has been the case since the onset of the crisis, cost pressures have increased. Interviewees highlight three interrelated types of outsourcing involved in restructuring. The first is relocation of activities to countries with lower labour costs, mainly in Asia (India) or CEE (Poland). The second involves the transfer of activities to mainly private companies located within Luxembourg: this type of outsourcing means that an increasing number of employees are not covered by the sectoral collective agreement and its beneficial conditions. A third involves relocation of jobs within the same international banking groups, but to other countries. Again, this often requires employees to be mobile and to accept the redirection of their career paths. Some interviewees argued that outsourced activities entail a loss of quality of service and communication between the client and the bank, and between the bank and the company managing the outsourced activities abroad. In-sourcing back to the parent bank is then considered a more financially tenable option, and jobs are again relocated back to the home labour market.

In terms of skills and training, the sector responded with the ‘Fit 4 Financial Markets’ initiative organized by the Institut de Formation Bancaire (IFBL) and supported by the Agence pour le développement de l’emploi (ADEM, national employment agency) and the European Social Fund. It promotes sectoral training for the reintegration of unemployed persons into the sector. The project involves several procedures (diagnosis of occupational skills followed by an individual interview and a personal development plan) applied to those jobseekers who wish to re-enter the financial sector. Job-seeker participants who are directed to the programme by ADEM (144 in 2015) or who receive a training budget from a plan social follow training modules and take examinations

The Luxembourg case demonstrates how social partners mobilize collective bargaining at sectoral and company level to preserve jobs and incorporate available statutory instruments in their bargaining strategies.

Romania: disorganized decentralization and market-driven restructuring

Collective bargaining in Romanian banking, in contrast to France and Luxembourg, occurs only at company level as no employers’ organization existed until 2014. The Asociaţia Română a Băncilor (ARB, Romanian Banking Association) operates primarily as a business association rather than an employers’ organization; the only bargaining topic discussed at sectoral level deals with skills development. Discussions take place in a sectoral committee (established in 2009) and are hosted by the Institutul Bancar Român (IBR, Romanian Banking Institute) (Andronic, 2015): the committee contributed to a set of 20 new occupational standards. From 2007 to 2010, the provisions of the cross-sectoral collective agreement were applicable in the sector. According to Romanian law, the only representative trade union federation in banking is the Federatia Sindicatelor din Asigurari si Banci (FSAB, Trade Union Federation for Insurance and Banking), affiliated to the confederation Cartel Alfa. Established in 2002, FSAB represents the interests of about 15,000 members in 12 affiliated sections and covers 15 percent of the employees in banking and insurance. Collective agreements have been signed in six of the large banks: according to FSAB data, 40 percent of employees were covered in 2014 (Andronic, 2015).

This decentralized bargaining structure is embedded in a larger dynamic that has become the symbol of the ‘frontal assault’ on collective bargaining in Europe (Marginson, 2014). While the Romanian transitional model of employment relations before the crisis involved ‘relatively protectionist labour legislation with high centralization and coverage of collective bargaining’ (Trif, 2016), there has subsequently been a drastic trend to decentralization (Delteil and Kirov, 2016). While before 2011 all employees were covered by a cross-sectoral collective agreement and sectoral agreements were in place in many sectors, under pressure from the EU and the international financial institutions, the government adopted new labour legislation in 2011 which weakened the collective bargaining model (Clauwaert and Schömann, 2013). The cross-sectoral agreement was abolished, and government data show that the number of sectoral agreements has decreased drastically since the expiry of those concluded before the changes to labour legislation (Adascalitei and Guga, 2016). This new legislation introduced new criteria for representativeness and requires the social partners to re-apply for recognition as the new sectoral structure does not correspond to the old branches (Chivu et al., 2013).

The decentralization of collective bargaining coincided with the crisis. In banking, as in all CEE countries, the former state-owned banks were privatized during the 1990s. Since the 2000s, the sector has been almost entirely dominated by foreign capital, mainly originating from Austria, France and Greece. Privatization also coincided with a process of concentration. After a period of business and employment growth, the banking sector was severely affected. The number of bank agencies decreased from a peak of 6552 in 2008 to 5484 in June 2013, a 16.3 percent decline. As a result, the number of employees in the sector decreased from 72,000 to 60,000 (−16 percent) from 2008 to 2013. The main reason for downsizing activities and closing a number of bank branches is related to ‘low economic potential’ (Andronic, 2015). The large banks have resorted to restructuring, involving laying off thousands of employees between 2009 and 2013. This was exemplified by the Romanian branch of the Royal Bank of Scotland, which in 2012 issued dismissal notices to 350 employees from its retail division. Another example was the subsidiary of the Austrian-based Volksbank, with the collective dismissal of 170 employees as a part of the restructuring plan approved in 2012. One of the more drastic cases was the decision by the Banca Comerciala Romana (BCR, a subsidiary of the Austrian group Erste), which in 2013 announced its intention to dismiss 1600 employees over the next 18 months. The restructuring plan included the closure of more than 60 unprofitable branches and a decrease in the number of employees in Romania from 9100 to 7500.

In line with Romanian legislation, employers planning collective dismissals are obliged to initiate timely consultations with unions or employee representatives over ways of avoiding compulsory redundancies, or reducing job cuts, as well setting our social measures to reduce the impact of dismissals. These include support for retraining of redundant employees. This means that the trade union or the employee representatives can propose measures to the employer to avoid collective dismissals or reduce the number of redundancies within 10 days of the date of receipt of the collective dismissal notice.

Although this legal possibility exists, the involvement of trade unions in the anticipation and management of restructuring is rather limited in practice, except for some measures for internal reorientation and the search for solutions, as well as support for so-called ‘social cases’, for example, vulnerable employees. Trade union respondents claim that in practice, trade unions are involved only briefly in the implementation phase, when the lay-offs are discussed. Also, Andronic (2015: 90–91) stresses that the role played by trade unions is undermined by banks’ policies of avoiding collective lay-offs whenever possible. The reason is that the newly modified labour legislation facilitates the termination of individual labour contracts by resignation, or by the parties’ mutual agreement. As a result, banks offer generous severance payments to those willing to leave voluntarily. In addition, these employees can retain the preferential loans made to bank employees. In the case of BCR, as in Luxembourg, informal solutions were negotiated during the restructuring process, as a trade union representative emphasized:

Trade unions focus on obtaining solutions for the employees during the restructuring process. We have negotiated with the management generous departure packages with early retirement for older employees close to retirement. For those who chose voluntary departure, the package was more generous than for those in the collective restructuring programme.

Voluntary departures are not always feasible, and our respondents indicate that several major restructuring schemes have been conducted recently. One example is the case of BCR Bank, described by Andronic (2015), when the employer launched the so-called NEXT programme, reorganizing its retail network and organization. This case of restructuring followed on from a previous reorganization in 2007–2008, which led to the reduction of staff from 10,700 to 8700, involving dismissals and protests. In this process, trade unions joined the management in seeking and implementing appropriate solutions for vulnerable employees, a process during which employers and employee representatives also analyse ‘social hardship cases’. As an example,

A single parent with two children was supported by not being fired. In the case of a couple, one member was kept, and employees supporting a parent or child suffering from an incurable illness were retained. These cases were treated by the union and the management on a case-by-case basis. (Trade union representative)

BCR has supported those employees affected by collective lay-offs by involving them in a career transition programme (Voinea, 2014). Under this programme, dismissed employees received advice and training by the Agentia Nationala pentru Ocuparea Fortei de Munca (ANOFM, Public Employment Agency). However, those steps were limited as they concerned solely a small number of individual cases. There are no data about the number of dismissed employees involved in such measures, nor about their efficacy. In practice, restructuring processes and their accompaniment measures are disconnected from collective bargaining and centred in the context of the disorganized decentralization at the level of the company.

The Romanian case illustrates a purely market-driven approach, where restructuring is cushioned neither by state instruments nor by collective agreements as in the two other cases.

Discussion and conclusion

Employment relations systems in Europe have responded in diverse ways to crisis pressures. This article has analysed three responses in the banking sectors in France, Luxembourg and Romania. While pre-crisis research on banking restructuring focused on increased deregulation and competition as sources of pressures on employment and bargaining in the sector (Mayer et al., 2001), post-crisis developments confirm that diversity across employment models in the EU persists, including in relation to restructuring paths (Kornelakis, 2014). By mobilizing the concepts of ‘organized’ and ‘disorganized’ decentralization and examining three concrete restructuring paths (two involving countries, Luxembourg and Romania, which remain understudied), we have identified that there remain significant and in some cases increasing differences between ‘old’ and ‘new’ Europe concerning collective bargaining.

In France and Luxembourg, the ‘statist’ and ‘neo-corporatist’ model of employment relations still operates, with strong collective bargaining at sectoral level, reinforced by government intervention which occurs within a legal framework that regulates sectoral bargaining. In these two cases, major national agreements in tripartite arenas did not create a consensus between social partners although collective bargaining remained largely operational, moving either to the bipartite level (agreement with one of the social partners) to implement nationally relevant policies or to the sector, and thus cushioning larger crisis effects (Kirov and Thill, 2015). Our findings for these two countries are consistent with recent empirical research on banking restructuring in Germany, where Zagelmeyer (2013) identifies different responses to liberalization pressures in crisis-affected banks: these responses that have led to company-level adjustment strategies for job preservation. By contrast, in Romania, changes in labour legislation have weakened the role of national trade unions in social dialogue by dismantling a system that was previously centralized.

In practice, the dynamics of bargaining in the three countries also reveal various bargaining strategies and the mobilization of instruments to manage restructuring. In Luxembourg, mass redundancies were largely avoided through the legally embedded multi-level collective bargaining system. The collective bargaining process was reinforced by the mobilization of costly restructuring measures implemented by the government. Although the management of the crisis rendered negotiations between the social partners more laborious and conflictual as a ‘common reading’ of the socio-economic environment was lacking (Thill and Thomas, 2011), arrangements have continued to be implemented by consecutive collective agreements in the sector. At the workplace level in banks, the employee representation institutions, combined with the use of informal negotiation practices, have led to the adoption of mobility schemes and training initiatives for employees facing dismissal or social plans.

In France, collective bargaining in banking involves similar practices to those in Luxembourg, namely, extensive sectoral agreements and negotiation practices and company agreements based on consensus at the individual bank level. Instruments and bargaining outcomes focus on anticipation changes at sector level and, in some large banks, on internal mobility and training schemes. However, bargaining outcomes often codify existing HRM practices, as in the large French banking groups studied. Nevertheless, some differences exist between the French and Luxembourg employment relations models. The French case focuses on anticipating both at sectoral and company level. In the small and open Luxembourg economy, and a sector dominated by foreign banks, anticipation has been made difficult in local subsidiaries, as these are dependent on decisions by the parent companies. Therefore, the focus of social partners resides instead in the negotiation of redundancy and retention plans (preservation of employment or reskilling) and informal internal agreements (severance pay and training).

In contrast to Luxembourg and France, the employment relations model in Romania has been seriously affected by the process of decentralization. In banking, the only bargaining level is the company. Restructuring occurs almost entirely outside of bargaining, except for a limited number of individual cases, while the legal instruments for socially acceptable restructuring are rarely mobilized. Although the sector is dominated by West European banks, the export of socially responsible practices is limited. This is in line with the findings of a study of the HRM practices of a German bank in its subsidiary in Poland (Hunek and Geary, 2016). Employees and their representatives are informed about impending restructuring plans, but their role in consultation is limited. From this perspective, our findings about Romania support the thesis of the persisting diversity of the European social models and ‘low-road’ Europeanization in CEE (Delteil and Kirov, 2016). In addition, in the Romanian case, the available state support schemes are scarce. In comparison with Luxembourg and France, public opinion is not so sensitive and hence there is less pressure to stimulate banks to invest in job preservation.

Finally, the restructuring paths examined suggest that transnational elements are present in the case of large multinational banks. From this perspective, the potential role of EWCs in addressing this transnational restructuring should be considered. However, our research findings suggest that the role of EWCs is limited (with the exception of the transnational agreements of large French banks and their role in job preservation in Luxembourg) and absent in the Romanian case.

While economic integration of the European banking sector continues to be reinforced through new regulations, harmonization and market concentration, with economic indicators pointing towards growth, the integration of social models is still lagging behind. The sector continues to face challenges that affect jobs and skills: the digitization of business processes, diversification and product innovation, competitive strategies between European financial centres, as well as the competition from non-banking financial actors. In this complex and often transnational environment, nationally embedded social partners in banking also face the challenge of adapting their strategies, areas of negotiation and expertise.

Footnotes

Acknowledgements

We thank Adrien Thomas, Virginie Bussat, Christophe Teissier, Laurentiu Andronic and Gabriella Dragut, as well as two anonymous reviewers, for their comments.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research received funding from the European Commission under grant agreement VS/2013/0355 and from a Visiting Scholar research scheme at the Luxembourg Institute of Socio-Economic Research (LISER) in 2016.

Author biographies

Vassil N Kirov is an Associate Professor at the Institute for the Study of Societies and Knowledge, Bulgarian Academy of Sciences, Bulgaria and Associate Researcher at European Trade Union Institute (ETUI), Belgium.

Patrick Thill is a Researcher at Luxembourg Institute of Socio-Economic Research (LISER), Luxembourg.

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