Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Social dialogue in central and eastern Europe

Martin Myant 2nd February 2023

Union recognition can be a tough battle in EU member states in central and eastern Europe.

central and eastern Europe,unions,recognition
The French supermarket chain Auchan was forced to resile from an anti-union stance in Romania (mimpki/shutterstock.com)

When investing in another European Union member state, multinational companies (MNCs) can be expected to respect employees’ rights to the same extent as at home. Occasionally they do but MNCs rarely transfer good practice from their home countries voluntarily or willingly. Much more frequently, they need to be persuaded and the outcome depends on MNCs’ behaviour and on the strength and activities of trade unions as active co-creators of employment relations.

Those countries in central and eastern Europe that joined the EU between 2004 and 2013 have seen an inflow of investment by MNCs, now absolutely dominant in modern manufacturing industries. Wages and living standards did increase relative to western Europe, at least for a time, and MNCs typically do offer slightly better pay than domestically owned firms. As the graph however shows for six of those countries, the gap with Germany—source of much of the investment—remained enormous even in 2021.

Nominal compensation per employee as percentage of German level, 1991 to 2021

central and eastern Europe,unions,recognition
Source: calculated from the European Commission AMECO database

An obvious question is whether wages are held down by MNCs restricting union representation and collective bargaining, despite recognition of trade unions in their home bases and commitments made in global agreements with international trade union confederations. To help answer this question, a research project was undertaken on MNCs in the automotive and retail sectors in six countries of central and eastern Europe (Czechia, Hungary, Poland, Romania, Slovakia and Slovenia).

‘Opportunist adaptation’

The research found a lot of variety but the approach typical of MNCs is ‘opportunist adaptation’. They work with existing laws, albeit often finding loopholes so that ‘bending the rules is the rule’.


Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content. We will never send you spam and you can unsubscribe anytime.

Sign up here

They have accepted union representation from the start where it already existed, as when taking over enterprises inherited from the Communist past in the early 1990s. Volkswagen’s acquisitions in Czechia, Slovakia and Poland are supreme examples. Industrial relations look more like western Europe there, with high union membership, occasional strikes—otherwise very rare in those countries—and wages somewhat above their countries’ averages.

Unions face greater difficulties with the more typical greenfield investments that came from around 2000. Even companies willing to accept union representation from the start may become more aggressive when they feel the union is weak.

An example is the French PSA group, which expanded production of small cars in Slovakia from 2003 as similar production in France was run down. It made life difficult for the unions in Slovakia but was eventually faced with a strike threat during wage bargaining in 2018.

The French management painstakingly interviewed every employee, offering a smaller pay rise than the union was demanding to individuals who formally withdrew support for the strike. The divide-and-rule tactic proved successful in reducing support and hence limiting the overall wage increase.

Hostile from the start

Asian companies have often been hostile from the start but they too can yield some ground over time. Hyundai, beginning production in Czechia in 2008, kept to the confrontational approach from its home country, arbitrarily imposing overtime at very short notice. This led to a short spontaneous work stoppage in December 2009. A subsequent visit by the Labour Inspectorate revealed the company to be in breach of 52 laws.

Hyundai was pressed into a reappraisal, including a new willingness to negotiate with a union organisation. Union membership gradually increased, thanks to the organisation’s successes in achieving a degree of adherence to employment law, modest wage rises through bargaining and additional individual benefits.

The atmosphere remained tense and in 2022 one fifth of union members were still keeping their membership secret from the management, paying dues directly rather than through automatic deductions from their salaries. Nevertheless, with increasing membership and commitment to moderation, the union was taken more seriously by the management.

Reputation for antagonism

The western-European hard-discount retail chains have a reputation for antagonism to employee representation. In one case in Hungary in 2004 the management brought in a fortune-teller to look at employee personal details and identify those to be accused of pilfering.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

The intimidation attracted national media interest and even international solidarity. This contributed to a later change in the management’s approach and a collective agreement was finally signed in 2008, giving clarity on employee protections and disciplinary procedures. Cases brought to the courts rapidly declined.

At least some retail chains in five of the countries covered have been persuaded to take part in collective bargaining but their willingness depends more on the country than the company. Foreign retailers in Poland have agreed to talk to unions but no collective agreement has been signed with any of them. In Romania, where unions were weakened after changes in employment law in 2011, the French company Auchan acquired outlets from another foreign company in 2012 and then set about dismantling the union organisation, dismissing activists and ending collective bargaining.

Effective weapon

Media publicity can be a very effective union weapon, especially against retail companies that rely heavily on their reputations. It works best where unions and civil society are already strongest—bringing results especially in Slovenia, where the battle for recognition in a hard-discount chain was aided by public campaigning and new allies, including an environmental movement. That at least persuaded management to talk to the union, although full recognition has yet to be achieved.

By way of contrast, seeking media publicity is regarded as a ‘nuclear option’ in retail in Romania. Keeping the media ignorant of any protest actions can be necessary to show the goodwill necessary for gaining recognition. A number of union representatives from several countries interviewed for the study insisted that the company name not be revealed, fearing in some cases dismissal or legal action associated with accusations of giving a company bad publicity.

International solidarity can be extremely effective when the union in western Europe provides access to top managers who can be made to feel obliged to live up to claims of a progressive company culture. Indeed, the Auchan management in France, which signed a framework agreement with the UNI global union confederation, agreed in 2017 to accept a union in Romania again, although rebuilding an organisation from scratch was not easy.

Discrimination and harassment

The typical story of trade union representation in MNCs in central and eastern Europe remains one of slow beginnings, as pioneers face discrimination and harassment. By pursuing careful strategies and using all the resources at their disposal it has been possible to make progress, even against some initially very hostile employers. Even then, winning recognition does not mean an end to conflict—not least because MNCs try to concede very little more when bargaining does take place.

So it is not surprising that wages in central and eastern Europe still remain well below western-European levels.

Martin Myant 1
Martin Myant

Martin Myant is an associate researcher at the European Trade Union Institute.

You are here: Home / Economy / Social dialogue in central and eastern Europe

Most Popular Posts

meritocracy The myth of meritocracy and the populist threatLisa Pelling
consultants,consultancies,McKinsey Consultants and the crisis of capitalismMariana Mazzucato and Rosie Collington
France,pension reform What’s driving the social crisis in FranceGuillaume Duval
earthquake,Turkey,Erdogan Turkey-Syria earthquake: scandal of being unpreparedDavid Rothery
European civil war,iron curtain,NATO,Ukraine,Gorbachev The new European civil warGuido Montani

Most Recent Posts

global south,Ukraine Winning in Ukraine, losing the global south?Werner Raza
Sunak,strikes,Britons,Britain,UK,cost of living Suave Sunak cold comfort for impoverished BritonsPaul Mason
persons with disabilities,people with disabilities,European Disability Card Equal citizenship for persons with disabilitiesAntoine Fobe
gas,IPCC Will this be the last European Gas Conference?Pascoe Sabido
water Confronting the global water crisisMariana Mazzucato, Ngozi Okonjo-Iweala, Johan Rockström and 1 more

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Foundation for European Progressive Studies Advertisement

Let’s end involuntary unemployment!

What is the best way to fight unemployment? We want to know your opinion, to understand better the potential of an EU-wide permanent programme for direct and guaranteed public-service employment.

In collaboration with Our Global Moment, Fondazione Pietro Nenni and other progressive organisations across Europe, we launched an EU-wide survey on the perception of unemployment and publicly funded jobs, exploring ways to bring innovation in public sector-led job creation.


TAKE THE SURVEY HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

The four transitions and the missing one

Europe is at a crossroads, painfully navigating four transitions (green, digital, economic and geopolitical) at once but missing the transformative and ambitious social transition it needs. In other words, if the EU is to withstand the storm, we do not have the luxury of abstaining from reflecting on its social foundations, of which intermittent democratic discontent is only one expression. It is against this background that the ETUI/ETUC publishes its annual flagship publication Benchmarking Working Europe 2023, with the support of more than 70 graphs and a special contribution from two guest editors, Professors Kalypso Nikolaidïs and Albena Azmanova.


DOWNLOAD HERE

Eurofound advertisement

#AskTheExpert webinar—Key ingredients for the future of work: job quality and gender equality

Eurofound’s head of information and communication, Mary McCaughey, its senior research manager, Agnès Parent-Thirion, and research manager, Jorge Cabrita, explore the findings from the recently published European Working Conditions Telephone Survey (EWCTS) in an #AskTheExpert webinar. This survey of more than 70,000 workers in 36 European countries provides a wide-ranging picture of job quality across countries, occupations, sectors and age groups and by gender in the context of the Covid-19 pandemic. It confirms persistent gender segregation in sectors, occupations and workplaces, indicating that we are a long way from the goals of equal opportunities for women and men at work and equal access to key decision-making positions in the workplace.


WATCH HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube