Home / European Company (SE) / Case studies / Elcoteq SNB negotiations - Experiences and procedures

Elcoteq SNB negotiations - Experiences and procedures

Finnish-owned Elcoteq opened a new chapter of high company mobility and flexibility in Europe by taking advantage of the SE legislation. But its employees are dependent on cross-border information and consultation only somewhat above the standard provisions. No board-level representation has been introduced by negotiating workers’ involvement in Elcoteq SE.

Elcoteq SE was set up by a conversion of the parent company effective from 1.10.2005 and registered in Helsinki/FI. At the time of establishment ca. 7500 employees from five EU member states were represented by the special negotiating body: ca. 860 from Finland, ca. 3340 from Estonia, ca. 2700 from Hungary, ca. 550 from Germany and 7 from Sweden. Elcoteq is a electrical manufacturing services company supplying customers such as Nokia and Ericsson. Worldwide Elcoteq has ca. 20000 employees and operates in 15 countries.

According to management the foundation of an SE was motivated by the desire to adopt a European identity. Since Elcoteq publicly announced it would move its headquarters from Helsinki to Luxembourg, however, other considerations have emerged as important motives for using this new opportunity to increase company mobility throughout Europe, probably including tax savings.

The negotiations between management and employee representatives were used to set up a cross-border interest representation body - the SE works council - for the first time. Because of a peculiarity of Finnish law on worker participation no board-level presentation had been established in the previous parent company. Accordingly, no board-level representation could be introduced (on the basis of the standard rules) in the administrative board of Elcoteq SE. Given the fundamental resistance of management to the board-level representation of employees and the heterogeneous composition of the special negotiating body, however – particularly the weak interest representation of the Estonian workforce (only 100 trade union members out of 3340 employees) – the make-up of the transnational interest representation agreed upon can be regarded a remarkable success. The SE works council obtained rights somewhat above the standard provisions: in addition to its information and consultation rights it has the right to be informed about and to discuss, both in advance and afterwards, the agenda of meetings of the administrative board. This could be perceived as a kind of ‘informal participation’.

The negotiation process was characterised by the important role of the external expert working for the Finnish trade unions, serving as facilitator, legal adviser and educator at the same time. Cultural differences and lack of language competence turned out to be particular obstacles to achieving a common understanding and a mutually agreeable outcome. Not surprisingly, the agreement also contains provisions and days off for taking language courses (English). Finally, all parties involved were by and large content with the agreement.

The future will show how far the employees of Elcoteq SE can realize a strong workers’ voice which cannot be ignored by a company which has used the new legislation to make itself much more flexible. How well the SE works council is functioning will be made clear by further relocations of Elcoteq production sites outside the EU. The closure of the last production site in Finland, together with the fact that Elcoteq employs a large number of temporary workers in Hungary not covered by the SE works council, are sending clear signals that the company is developing in this direction.

Norbert Kluge, ETUI-REHS (3/5/2007)

All Case studies