DIGITIZATION: BETWEEN MYTH AND REALITY

The reflection on digitization in the finance industry started from an analysis aimed at understanding its role – possibly also in a historical perspective – in the framework of the wider process of “Great Transformation” occurring in this sector. Free from any marketing-oriented approach – supported and promoted by large international strategy consulting groups – we believe that digitization, automation and technological innovation are the only possible ways to tackle three major challenges.

In the first place, digitization has been (and still is) the natural ally of the strategies based on cutting branches and staff which all European banks have adopted in response to the crisis. ISRF LAB, a partner to the Project, has – a bit provocatively – described this strategy as “Less4More”. Basically, while the finance industry was reorganizing, digitization made up for the laying off of 12% of employees and the closing down of 21% of branches in the EU. Therefore, digitization helped finance groups regain profitability. Together with NPL management, digitization actually played a decisive role in going back to acceptable profit rates for investors and management – in spite of an expansive monetary policy and of the creation of a comprehensive and centralized European model of regulation and supervision.

Like the reorganization process, digital innovation has had – and will increasingly have – an impact on another two elements. Firstly, new technologies, new apps and new access tools are three of the most significant demands of new, “hyperconnected” consumers. Even if it is obvious that consumers’ demands are in part influenced by the aggressive and pervasive marketing techniques used by digital ecosystem enterprises, it is also true that functionality, ease of use and convenience are three fundamental goals for any advanced service company striving to stay competitive.

Secondly, the market challenge posed by Big Tech companies (Google, Facebook, Amazon, the Chinese giants Tencent and Alibaba, etc.) is certainly a key test case for the finance industry. The strategy of Big Tech companies – integration in existing platforms, decentralization and disintermediation – can hardly be reconciled with a heavily regulated sector which would actually require more rules on issues like derivatives, safeguards for clients and employees, transparency. This is the challenge of the future, which should not be tackled merely with a market-based approach. On the contrary, it requires all stakeholders – businesses, trade unions, political institutions and regulatory authorities – to work together to prevent the “creative destruction” process of Big Tech companies from overwhelming the finance industry and sweeping away all employment guarantees, workers’ rights and consumers’ rights.

EUROPEAN DIRECTIVES ON EMPLOYEE INVOLVEMENT

The analysis of professor Dorssemont, an expert in EU law involved in the Project, focused on the critical aspects of EWC Directives and ensuing “pararegulatory” instruments (Global Framework Agreements and Joint Statements).

First and foremost, the instruments provided for by the European Directives are inherently weak. In the daily practices of EWCs, this has translated into an excess of information and insufficient consultation. This means that trade unions have often been involved only at a late stage, when the strategies of a business plan or reorganization process have already been decided and are about to be implemented. As a result, within EWCs – not only in the banking sector – the behaviour of management has often undermined the workers’ right to consultation, replacing it with one-way communication. Furthermore, practices change considerably from one EWC to the other and participation in EWCs has also been “artificially” restricted in several ways, in particular for representatives of companies owned for less than 50% by large European banks (EWC Directives may not be applied under this percentage).

The difficulties in the interpretation of EWC Directives have had an impact on the “pararegulatory” instruments elaborated at a supranational or EWC level in the last twenty years. The analysis of professor Dorssemont highlighted that the definitions used by the European legislator with regard to social dialogue are inherently ambiguous. The Fitness Check, i.e. the process defined at the EU level to assess whether the regulatory framework for a policy sector is fit for purpose, actually opens the way to deregulation and, speaking of legislation on workers’ rights and trade union rights, it could further weaken the role of EWCs in the future.

In this respect, through this Project we want to make our contribution to the Fitness Check by providing some elements of analysis and proposals to improve the effectiveness and applicability of Directives on employee involvement in the changing work environment within the 4.0 finance industry.

With the help and expertise of professor Dorssemont, we analyzed relevant Directives, as well as related regulatory and social dialogue instruments created within the EWCs involved in the Project and in the framework of industry-wide and general European Social Dialogue.

During the second Plenary (Rome, 13-15 November), with the help of professor Dorssemont, we would like to identify the critical aspects in the implementation of the Directives, in order to elaborate detailed proposals to rewrite or integrate specific parts of the Directives, or proposals for an implementing regulation of the Directives.

THE DEBATE AND THE INVOLVEMENT OF SOCIAL PARTNERS AND EUROPEAN PARLIAMENT

The first point emerging from the debate is diversity across countries, both in terms of labour and trade union law and in terms of participation in strategic decisions. In particular, the disparity between Eastern and Western Europe is still very serious. Eastern European countries keep on having difficulties deriving from a legislation which makes it much harder to protect workers and to set up negotiating bodies. These problems then affect EWCs, whose hardships cannot be attributed to the willingness of trade unions to represent workers with different rights, different salaries and different working conditions.

With respect to EWCs, the issue of national differences was discussed by the representatives of all the countries involved in the Project. In particular, the debate highlighted that there are some inequalities in access to information between workers’ representatives from different countries, especially as far as the German co-determination model is concerned.

With respect to digitization, the debate emphasized that, through their role and their actions, trade unions should help take the opportunities opened up by this force of transformation. In other words, modernity should not be detrimental to workers, but it should become a springboard for strengthening the role of trade unions and for improving workers’ conditions. However, trade unions must first analyze more in depth certain elements. Firstly, it is necessary to have a more structured view of the changes brought about by digitization in the world of work. For instance, the disappearance of some jobs is balanced by the emergence of new jobs, new activities and new professional skills. All in all, modernization alone does not completely eliminate the need for the human factor. Especially in the banking sector, the more simple operations at the counter disappear, the higher the need is for professional advice in the management of increasingly complex financial products. Therefore, workers need to acquire new professional skills. To this purpose, they need help with retraining, continuing professional development and training (which should be seen as an investment). This would also promote a more effective collaboration between the older generations of bank workers, who acquire new skills and reorganize their professional lives, and the digital natives, who are already familiar with new technologies and have an open mindset towards them.

In this regard, it is of paramount importance to govern the digitization process effectively with a view to rebuilding a joint governance of change in the finance industry. In order to anticipate – and not to suffer – change, Agostino Megale, President of ISRF Lab, put forward a proposal for a “Regulatory-Institutional Sequence” bringing together the needs for a Europe-wide information activity and for “macro” social plans and the national dimension through industry-wide coordination units. At the national company level, efforts for employee involvement and participatory democracy should strive to engage the trade unions and workers’ representatives of the various countries before the launch of business plans, in order to discuss and assess their effects and consequences in advance and to take pre-emptive actions together.

Another element of discussion concerned the internal yet strategic issue of generational replacement in trade unions. Even if with some differences from one country to the other, all participants emphasized that it is extremely difficult to involve young generations of bank workers in trade unions, as well as – and even more so – to select future union officers capable of bringing the added value that is necessary to manage digitization processes in the finance industry. This key problem is also related with the issue of the skills needed for collective bargaining in a profoundly changed environment. During negotiations, companies adopt a more and more technical approach. This certainly poses a threat, because technicalizing is an attempt to keep more genuinely political and social issues off the table. However, it is clear that re-skilling is truly necessary also for union officers and trade unions as a whole.

The second Plenary (Rome, 13-15 November) will include a discussion with representatives of the employers’ side. Some of them participate in some of the EWCs involved in our Project, while others are active in the European employers’ association of the banking sector. In addition, we will host a Member of the European Parliament, elected on 26 May, who sits in the Committee on Employment and Social Affairs.

First of all, with our social partners we would like to elaborate joint proposals for the Fitness Check of the EWC Directives and link them with our more general request for joint discussions aimed at anticipating and governing change.

Then, we would like to ask the Member of the European Parliament what opportunities we have to work with the current European Parliament and Commission for the adoption of our proposals and to support us in this long journey.

by ISRF-LAB • Research Institute in Fisac-Cgil