The Hungarian Case Industrial Relations in the Context of Subcontractors

Agenda  Introduction  Industrial Relations in Hungary  Methodology  The Company Context  Stakeholders’ Perspectives on Subcontracting  Findings on Industrial Relations in the Context of Subcontracting  Conclusions

Industrial Relations in Hungary

 Dual system: Work Councils and Trade Unions  Decreasing trade-union membership: 16,8% in 2008  Decreasing collective bargaining coverage: 25,5% in 2008  Company level Trade Unions being important  Only few multi-enterprise or sectoral collective  The termination of the National Interest Reconciliation Council (OÉT) in 2011

New Labour Code and the impact on Industrial relations (As of 1st July 2013)  a reduction of unions’ rights;  less time off for union representatives;  saved time off cannot be recompensated financially (lost source of income);  works councils, rather than trade unions, will have the right of formulating opinions;  only one collective agreement will be signed for each employer;  collective agreements can be concluded by a works council if there is no trade union entitled to do so.  Shift of dual system towards Work Councils in the future

Methodology

 14 interviews made in June 2013:  Principal company management: 5  Subcontractor management: 2  Principle company employees: 3  Subcontractor employees: 2  Trade Unions: 2

Introduction on the Company Context

Company context  Large size company  Workers hired on permanent contracts, on full time, on two shifts  70% blue-collar workers  30 % unionized  Significant ratio of on-site subcontractors’ employees

Industrial Relations at the Principal company

Best Practice Industrial Relations in Hungary at METAL HU trade union membership density management and trade union cooperation headquarters and local trade union coordination collective agreement

Network of trade union relationships Company TU & WC leadership National Metal Workers Union (MWU) Regional rep. of MWU HQ’s TU & WC Other Company level TU in the industry Off-site subcontrac tors TU

Stakeholders’ Perspectives on Subcontracting

The areas of subcontracting: In our research we observed the following areas: Core:  Logistics  Production Support:  Cleaning  Maintenance

Reasons for outsourcing 1. Cost saving – Service and Maintenance 2. Flexibility - Logistics 3. Increasing specialized know-how and technology requirements (environment, esthetics, safety, EU) – Production The different reasons for outsourcing bears on - the type of IR related problems - the room for maneuvering of the trade union

Company - subcontractor relations Minimum requirements:  Code of conduct based on UN’ Global Compact 10 principles  Hungarian legal regulations  High quality requirements  Health and safety requirements  According to the rule: communication through only official contact persons of the two companies  In reality: stories about informal communication in the „bus stop”.

Management’s perspective  Regular management meeting of HR manager with Subcontractors to discuss „commonalities”, ex: bus timetable, shifts, overtime, safety regulations, etc.  Also bilateral meetings with subcontractors  QU: Is there negotiation and communication among subcontractors?

On-site Subcontractors’ Management perspective  Adaptability and speed as a core competency  On-site buildings of mixed ownership: on the land of the order giving company but from own financial resources  Management meetings  Challenged by the new rolling work schedule  In need of information on time

Employees’ perspective  Equal treatment of workers regardless of affiliation  No exclusion of leased employees within teams  Fair treatment of mature aged workers  Motivation to join TU:  past TU experience,  being part of a community

Subcontractor employees’ perspective  Some employees have common addresses with the Company  Considering joining TU, or forming own TU, no steps taken yet

Leased workers’ persectives  Increasing number  Selection process recommended for leasing companies  Work in the production sites  In-sourcing in larger groups to provide motivation to leased employees  Equal pay after 6 months as a legal requirement, but not necessarily in practice

Split workers’ identity  Two addresses  “I am a proud worker of X, but I know I get my wage from Y”  “If asked in town I say I work at Y” (leased worker)  “I wear Y company’s cloth” (leased worker)

Findings on Industrial Relations in the Context of Subcontracting

The Present  40 members from mostly leased companies and service companies  Willing to accept new members from subcontractors  Ready to support the formation of new trade union entities at the subcontracting company

Trade union dilemmas/options in the context of subcontracting 1. To focus on main company employees only? 2. To invite trade union membership from subcontractor employees? 3. To informally represent interests of subcontractor employees towards main company management? 4. To support own trade union formation of subcontractor employees? 5. To negotiate on integrating labour conditions into the audit process of subcontractors? 6. Other?

Trade Union’s vision for reforming the IR system at present  Smaller independent TUs with coordination within the narrower industry and not the broader metal industry.

Conclusions

 Mutual dependencies  New competencies are needed on all sides: cooperation, self-control, formal and informal networking, conflict management, partnership building, speed etc.)  Partnership Management has a strategic new role  New approach to boundary management within industrial relations  Possible new approaches to industrial relations in the context of subcontracting:  Independent trade union from national industry networks  Regionally organised trade unions  Integration of IR and other labour standards into the audit system of subcontractors.