The 1990s have seen a mergers and restructurings wave with unprecedented peaks in both the EU and the US. The compelling evidence showed that between 65-85% of mergers and restructurings failed to create economic value or profitable market power and that total returns are negative. Apart from a whole set of negative trends, productivity trails behind R&D inputs and outputs decrease. Astonishingly, since 1996 all mergers in Europe have created negative aggregate value and in 1999 mergers and restructurings suffered their greatest loss. These negative effects lead to economic stagnation, which turn into economic slowdown.

The so-called "EU Lisbon strategy"  is based above all on a positive approach to changes. Change has always been part of the business life cycle. The strategic view taken within the European Union is that change should be embraced. It is at the core of economic dynamism as it renews the economy. It contributes to innovation, increases productivity - including as a result of the modernisation of the organisation of work - and raises profitability.

Mergers and restructurings as part of changes are of course able to create employment, provided that they succeed. In political terms, the workers and the public can very well accept sacrifices in terms of employment if there is an economic success behind this "industrial change phenomenon" leading to growth and in the end more and qualified jobs.

Unfortunately, not all services of the European Commission concerned so far, in particular the competition services do not perform the same evaluation on the impact of mergers and restructurings on employment and on the social framework of those concerned as on competition policy. No restructuring or/and merger was ever stopped in the framework of preventing harmful effects on competition and consumer protection due to an excessive negative impact on employment.

However, corporate restructuring and mergers, with a growing transnational dimension, is an important element of change. The PES Group has been focusing for many years on these issues. It requires, in the view of the PES Group the right balance between flexibility for businesses - which is more important than ever in times of permanent restructuring - and security for workers - which is necessary to maintain human capital and employability. The development of an appropriate combination of flexibility and security is highly recommended by the PES Group towards the follow-up and implementation of the Lisbon Strategy - "Europe of Excellence" .

This can be done by defining a renewed positive and proactive approach to change, and in particular to corporate restructuring, by promoting information for businesses and workers, notably through the "European monitoring centre for change", and finally by taking account of the social and employment consequences of economic integration (mergers, take-overs, etc.).

In particular, as underlined by the "Social Agenda" , the social dialogue and co-operation need to create the conditions for employees to participate in change, through an anticipation of developments in businesses, industrial sectors and territories.

Consequently for the PES Group is it essential that the implementation and a desirable review of merger regulations and of the take-over bids directive ensure that worker representatives play a proper role in the assessment of the companies concerned and that the opinion of workers' representatives on a merger will be of more relevance to the responsible European institutions before and during notification procedures.

Moreover, the PES Group asks a directive to protect the rights of workers in the event of restructuring and to follow-up the proposal by the Gillenhammer Working Party regarding its report on "Managing change" (1998) and the establishment of an annual social report to be drawn up in large companies.

The PES Group fully supports in this respect as well the work of the "European Monitoring Centre for Change".

At the European level, it is necessary to impose rules guaranteeing not only that information foregoes all major mergers and restructurings but that the candidates to a merger and restructuring should present an industrial report including projections on the social consequences of these projects. The time is ripe for compulsory consultation and social plans that will deal with the impact of mergers. These social plans must include supplementing measures such as opportunities on professional training and the acquisition of new skills as well as equal opportunities for men and women.

In this context and on the basis of an initiative by the PES Group the European Parliament called once again in its last resolution on restructuring on the European Commission to adopt a more decisive strategy to tackle industrial restructuring. Furthermore, the Commission and the member states should promote a European dialogue on industrial restructuring as well as on structural reforms of the labour market to secure the advantages of globalisation, while minimising the negative social impact. A well-functioning European Works Council Directive is of high importance, which ensures that informing and consulting workers is properly carried out. The PES Group insists that the Commission draws up, without delay, an evaluation of the application of this Directive and make proposals for measures to ensure compliance.

Ultimately, on the face of restructuring, politics must reinvent itself. It must return to being a conciliator not only between the interests of the capital owners, but above all preserving the interests of the workers. Sustainable economic growth as well as strengthening competitiveness requires a new focus on the social aspects of restructuring.

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