Energy Crisis Only to Further Complicate Already Delicate Employee Relations Picture in Europe

With summer winding down, Europeans, already facing high inflation, are staring down energy prices only set to soar as the winter snows begin to fall.  Companies are also embroiled in the energy crisis which is complicating everything from basic employee relations to union negotiations and, in some cases, the ability to stay in business. 

A patchwork of strategies are being deployed across Europe by various countries to address the impending energy crisis stemming from Russia’s illegal invasion of Ukraine.  The variety of stipends, tax breaks, credits, and caps on energy expenses hope to stave off the worst for Europeans.   

Companies, however, are very much still in a tenuous position and the problems are spreading to the workplace.  First and foremost, from an employee relations perspective, companies (many of whom were quick to aid Ukrainians in the wake of the Russian invasion) may be looked upon as a place of support for employees which need assistance heating their homes.  Companies should be ready for that expectation.   

Some countries may provide more difficulties for companies than others.  An article in the Financial Times highlights how in the United Kingdom, UK government controls will insulate people from energy costs by virtue of a gas cap.  Businesses, however, will not be afforded the same protections. The lack of those protections may cause businesses, and particularly manufacturers, to trim hours and costs.  This raises issues with unions and collective bargaining at a time already strained with CBA negotiations requesting raises sometimes exceeding 8%.   

Such a situation is already present in Germany where IG Metall in negotiations is requesting an 8% raise for the 3.8 million workers it covers in the electrical and metal engineering sectors.  Comments reported in Bloomberg and made by a leader of a large employers’ association in Germany – the Gesamtmetall – stated that workers should get no raises in light of the impending energy costs which threaten the ability of the businesses to continue.  The disagreement between the Union and employers is quite stark with the union responding and noting that companies are doing well.  The negotiations, which start in September, will send a signal beyond Germany to unions and businesses across Europe.   

HR Policy Global’s Take:  Companies should already be in the mindset of managing the employee relations fallout which – at some point – will hit over the energy issue.  There will be expectations that employers help.  Additionally, EWCs and union negotiations which will already be strained by inflation will only be further complicated by the energy issues.  The one concern which should be noted about the energy issue is that it has the potential to extend for a much longer period than this winter.  If Russia continues to do what it is doing – and it certainly look to be the case – then companies can except this issue to continue for what could be two to three years.  This should be a thought in the mind of any employee relations specialist in Europe – its not just about this years negotiation when it comes to energy – its about the next few years.