Labour authority fines Hankook for obstructing union

The Hungarian Labour Inspectorate (OMMF) has fined Hankook Tyre Magyarorszag Kft. for obstructing the activities of the Federation of Trade Unions of the Chemical, Energy and Allied Workers. Although the fine is symbolic (€3,600), the company has once again proven its unwillingness to accept Hungarian labour relation practices and to cooperate with trade unions. The company has been in Hungary since 2007 and has been fined by different authorities several times.

Background to disputes and implementation of fine

In 2006, the Korean tyre company Hankook chose Hungary to be the centre of its European supply operations and received more than €100 million from the Hungarian government to support the investment. The factory opened in 2007 and ever since there have been regular industrial disputes between management, employees and their union representative (HU0707049I).

Hankook Tyre Magyarorszag Kft. was fined a total of around €100,000 at the end of 2007 for illegally employing 32 South Korean workers at its plant in Dunaujvaros in central Hungary and for making employees work longer hours than is allowed under Hungarian regulations. Later, the company refused to negotiate either with the sectoral representative from the Federation of Trade Unions of the Chemical, Energy and Allied Workers (VDSZ) or with other unions, because they would not reveal the names of their members. The management was only willing to negotiate with the works council, although Hungarian law requires negotiation with unions on certain issues, once they have reached a certain level in the company. After these disputes, the Hungarian authorities suspended the payment of a training subsidy of €500,000 from the Labour Market Fund (Munkaerőpiaci Alap) to the company (HU0801079I). During his visit to Hungary, former South Korean prime minister Han Duck-soo promised: ‘Hankook will fully comply with the laws and regulations of Hungary,’ but problems continued. In the context of the disputes, the International Federation of Chemical, Energy, Mine and General Workers’ Unions (ICEM) even wrote a letter to the Chief Executive Officer (CEO) of Hankook Tyre Co., Mr Seung Hwa Suh, urging him to continue the industrial dialogue.

Despite this, the industrial conflicts have not been resolved and recently the Hungarian Labour Inspectorate (OMMF) fined Hankook Tyre Magyaroszag Kft. for obstructing the duties and activities of the Hungarian union federation VDSZ.

Trade union’s point of view

According to VDSZ President Tamás Székely, Hankook initially refused legal entry to the plant to Ferenc Bognár, a VDSZ official and member of the company’s supervisory council. Hankook was fined for this by OMMF.

The company then announced Mr Bognár’s dismissal without the union’s approval. Under Hungarian law, however, a company cannot dismiss a unionist without the union’s agreement. As VDSZ disagreed with Hankook’s decision, the company was unable to carry out the dismissal and Mr Bognar remained an employee, even though he had been released officially from his duties and forbidden from entering the factory grounds.

According to Mr Szekely, the company also failed to provide an office or communication equipment (phone, fax, internet) for the union, although they are obliged to do so under Hungarian labour law.

Mr Székely said the company’s monthly newspaper and notice board were a frequent cause of disputes as the management does not allow the union to communicate with employees via the notice board or through articles in the newsletter.

Company’s reaction

Hankook Tyre maintains that it did not impede the activities of the trade union at the company and that the company complies with all legally binding resolutions. It admitted that early on in its Hungarian operations there had been some administrative mistakes but that the company acknowledged and corrected them. Hankook appealed against OMMF’s decision, but as a result of continuing talks with the union and as a sign of goodwill the two parties agreed that Hankook would grant unlimited access to its premises to trade union representatives. Recalling the words of the former South Korean prime minister, the company insisted that Hankook always did its best to follow Hungarian regulations. Hankook has also offered the union a separate room to use as its premises instead of sharing a room provided to the works council. The company acknowledged there was a difference of opinion with the union in interpreting certain regulations, but agreed to cooperate with VDSZ in solving them one step at a time, and by turning to the courts when necessary to acquire legal interpretation.

Hankook Tyre Magyarorszag Kft.’s management claimed it was always open for negotiations with the trade union and was doing everything it could to ensure good working conditions for its employees. In July 2010, the company introduced the ‘cafeteria benefit system’. This system entitles each employee to a flat-rate annual tax-free allowance of a certain amount. Employees can choose to spend it on a selection of benefits, including internet vouchers, and life, accident and health insurance cover. Hankook, the world’s seventh largest tyre manufacturer, is also planning new investments, according to an article by the Hungarian Investment and Trade Development Agency. It has already purchased additional land and started building a dormitory for employees and is running training programmes for unemployed workers in cooperation with the labour office, in order to expand its staff by 700. The company declared its aim was to help lower unemployment in the region and in Hungary in general.

The Public Relations Manager of the Hungarian plant, Katalin Roy, explained that the company has been very satisfied with the performance of the Hungarian workforce in the last three years, which was one of the main factors in choosing Hungary as a location for its European factory. The company is now planning to expand its workforce by 700 – that is, 450 staff in 2010 and 250 in 2011 – which will bring the total number of employees to 1,900. As there is hardly any available training related to the tyre industry in Hungary, and a lack of skilled workers in the industry, the company started a vocational education and training programme last year jointly with the Lorántffy Zsuzsanna Secondary School. It also runs a partnership scheme with Dunaújváros College, where a Rubber Technology Engineer programme was launched in 2009. This joint venture is now running successfully and several new students applied for the course starting in September 2010.

Commentary

Over the last two decades, several Japanese and Korean companies have settled in the central and eastern European region to supply the European market. The region’s countries were competing with each other to attract multinational companies and Hankook’s original plan was to pick Slovakia as the centre of its European operations. Experiences to date suggest that these companies think about social dialogue and working with social partners in a different way to European employers, and some experts say the reason for conflict lies in a different working culture and varying expectations regarding loyalty to the employer.

So far, however, this has not affected the rate of investment in the region, as can be seen from the example of Hankook’s new investment plans, and central and eastern Europe continues to be an attractive location for East Asian investors.

Máté Komiljovics, Solution4.org

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