Industrial conflict at new Hankook tyre factory

At the recently opened Hungarian site of the Korean tyre manufacturer Hankook, employees report irregularities in payroll calculation, overtime hours and weekend work. According to the Federation of Trade Unions of the Chemical, Energy and Allied Workers, the company is ignoring international labour standards and intimidating local trade union representatives so that the union is forced to work in secret and employees are afraid to disclose their membership.

New factory set up with state aid

In the spring of 2006, the Korean multinational tyre manufacturer Hankook decided to establish its new European plant in the central Hungarian city of Dunaújváros, approximately 70 kilometres from the capital city of Budapest. Originally, Hankook had plans to build the factory in Slovakia, but the Slovakian government reversed its decision to support this project and ended up sponsoring the establishment of a Peugeot Citroen factory instead. Hankook will receive approximately €100 million in state funding, including tax relief, from the Hungarian government over the next three years. Manufacturing operations began at the end of June 2007 with a workforce of 750 staff but, according to the contract with the government, the number of employees will increase to 1,500 workers by 2008.

At the inauguration ceremony of the site in late June, the Minister of Economy and Transport, János Kóka, declared that the plant was ‘the most modern factory in the world’ and called it ‘the investment of the decade’. However, less than one month after the opening, employment authorities were investigating the Dunaújváros plant and the local trade union had appealed to the labour court claiming labour irregularities.

Workers’ grievances

Employees at the factory have a long list of complaints, including problems with the payroll calculation, delays in payments, no extra pay for overtime and weekend work, poor working conditions and attempts to deter workers from unionisation. During the labour investigation, inspectors found extreme cases such as a worker having less than five rest days in a month, and another employee who had to work more than 16 hours in one single shift. According to the employees, dismissals are also arranged in an illegal way and the management tries to obstruct the operation of the trade union.

Meanwhile, the company faces a shortage in its labour force. The factory’s walls are covered with advertisements offering HUF 20,000 (€80 as at 21 August 2007) to employees who introduce additional workers to the company.

The Korean company denies the charges but acknowledges that certain initial problems exist.

Non-recognition of trade union

According to the Federation of Trade Unions of the Chemical, Energy and Allied Workers (Vegyipari, Energiaipari és Rokon Szakmákban Dolgozók Szakszervezeti Szövetsége, VDSZ), Hankook is ignoring international labour standards and intimidating the local trade union representatives. The Dunaújváros Tyre-makers’ Union (Dunaújvárosi Gumigyártók Szakszervezete, DGSZ) was founded lawfully and has more than 400 members, but they are afraid of disclosing their membership. The company’s management refuses to recognise DGSZ as a negotiating partner, claiming that the trade union must prove that it was founded within the company and in compliance with the Hungarian Labour Code. In the absence of such proof, the management is willing to negotiate with the works council only. DGSZ has turned to the Korean Embassy requesting mediation between the management and the trade union.

Commentary

The case has spurred some political debate, as the government provided the company with substantial state support towards the creation of 1,500 jobs. However, this kind of labour dispute is not unknown in Hungary or in eastern Europe. Last year, a similar instance occurred at the plant of the Japanese car maker Suzuki in the northern city of Esztergom, where the trade union was established in a bus in the company’s parking lot (HU0603019I). In Slovakia, the establishment of plants by two Korean companies, KIA Motors and Samsung, was followed by similar conflict between management and trade unions over almost the same issues. According to experts, the reasons behind such disputes include a different work culture and varying expectations regarding loyalty to the employer, as well as the centralised management system characterising Korean and Japanese companies.

Máté Komiljovics, Trade Union of Hungarian Railwaymen

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