Unions at Škoda Auto threaten strike action for higher wages

Trade unions at the country’s largest automobile manufacturer, Škoda Auto, are demanding a substantial salary increase. According to news reports, the trade unions are prepared to organise a general meeting with one-hour token strikes in all shifts if no agreement is reached on the pay rise. The chair of the Škoda union refused to rule out the possibility of a subsequent strike for an indefinite period of time should there continue to be no progress in reaching an agreement. A similar dispute in the company two years ago eventually concluded in a 7% pay increase.

Employer’s proposal

The largest automobile manufacturer in the Czech Republic, Škoda Auto, plans to increase the base wages of all employees by 6.1% from 1 April 2007 to 31 March 2009 and to provide a one-off bonus for 2007, amounting to CZK 8,000 (about €285 as at 23 April 2007). However, in subsequent meetings with the representative trade unions, the company agreed to a higher bonus for heavy working conditions and night work. The company also proposed increasing incentive payments and severance pay in cases where jobs are cut for organisational reasons.

In the social arena, Škoda Auto promised larger loans enabling employees to purchase homes, along with higher contributions towards the use of pre-school childcare facilities. The employer has also backed down from its plan to introduce a new wage model, the acceptance of which had previously been a pre-condition for any increase in its wage proposals.

Trade union demands

The trade unions are demanding an average increase in base wage scales of 17%. Combined with their other requests, this increase would lead to an average pay rise of 24%. The unions rejected the new salary structure, which was intended to strengthen the significance of variable components in wages. They insist that their demands are based on a strong argument, namely the company’s excellent economic results. In 2006, the company increased its sales by 11.7%, producing a record number of almost 550,000 vehicles. Revenue grew by 8.7% to CZK 203.7 billion (around €7.3 billion), the highest to date, with net profit increasing by an unprecedented 40% to a record-breaking CZK 11 billion (about €391.8 million). Some analysts predict that these record numbers will not be matched for several years to come.

Škoda Auto workforce and wages

In 2006, the company’s workforce grew by some 700 employees to a total of almost 27,000 employees, with workers’ average monthly wage rising to CZK 22,057 (about €788). The average monthly wage at the company – not including management level salaries – ranges from CZK 22,000 (about €785) to CZK 27,000 (around €964), compared with the average wage in the Czech Republic as a whole of approximately CZK 20,200 (around €720).

For the purposes of comparison, the employer and trade unions at the competing Toyota Peugeot Citroën Automobile (TPCA) plant in Kolín, to the east of Prague, agreed on a pay increase of 7.5% for 2007, which will result in the average monthly wage at the plant increasing to approximately CZK 23,000 (about €820). The fact that TPCA has promised this higher wage increase has generated dissatisfaction among Škoda Auto employees with the current proposals of their employer.

Protest action

Trade unions at the company launched the planned four-day series of over 50 half-hour information meetings in support of their wage demands. So far, however, the meetings have not halted or delayed production although union representatives previously referred to such a possibility. Chair of the Škoda union, Jaroslav Povšík, refused to rule out the possibility of a subsequent strike for an indefinite period of time should there continue to be no progress in reaching an agreement. A similar dispute between management of the joint-stock company and the trade unions arose two years ago, with the unions organising demonstrations and a one-hour token strike; both sides subsequently agreed on a 7% wage increase.

In a declaration issued in mid March 2007, leaders of the largest trade union confederation in the Czech Republic, the Czech Metalworkers’ Federation KOVO (Odborový svaz KOVO, OS KOVO), backed the union representatives at Škoda’s Mladá Boleslav plant, in the northeast of Prague, expressing support for their member organisation in all protest actions supporting the wage demands, including possible strike action. At the same time, the executive board of OS KOVO announced that it was appealing to trade union headquarters in other countries, in addition to all of its member union organisations, to guarantee their solidarity regarding possible protest action.

Employer’s view

The company management argues that there is no reason for unions to engage in coercive action. In relation to the current wage agreement which was due to expire on 31 March 2007, the Human Resources Director at Škoda Auto, Martin Jahn, announced: ‘Our goal is to reach an agreement by the end of March.’

Jaroslav Hála, Research Institute for Labour and Social Affairs

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