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

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

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

Network of trade union relationships

Stakeholders’ Perspectives on Subcontracting

The areas of subcontracting: In our research we observed the following areas:

Core: Logistics Production

Support: Cleaning Maintenance

Reasons for outsourcing1. Cost saving – Service and Maintenance2. Flexibility - Logistics3. 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 relationsMinimum 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 e-mail 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 email 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 subcontracting1. 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

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.