Better work and life

EU Presidency conference on:

Better work and life: Towards an inclusive and competitive enlarged Union - 12-13 May 2003, Alexandroupolis, Greece

Co-organised by the Greek Ministry of Labour and Social Affairs and the European Foundation for the Improvement of Living and Working Conditions

Speech abstract - László Neumann

Research Unit, National Employment Office, Hungary
Co-founder of the Centre for European Employment Studies at the Institute for Political Science, Hungary

Modernisation of work organisation: chances for negotiated flexibilisation in an accession country?

The paper presents the involvement of employee representation in the process of modernising work organisation in Hungary, especially in the development of flexible working time patterns. Available research findings are also reviewed regarding the changes in shop-floor work organisation in the narrow sense (such as team-work, redefinition of job demarcation lines, continuous improvement, KANBAN, Total Quality Management).

According to the HRM literature, foreign owned companies had a "change agent" role in the nineties, but follow-ups have found that domestically owned companies made substantial efforts too. Case studies at multinational companies, in particular at "brown-field" sites, discovered a very pragmatic, sometimes incremental, "hybridisation" approach in the technology transfer, which always went hand in hand with process and knowledge transfer.

A radical breakthrough seems to be questionable also in the light of relocation of mass production from Western Europe; in these plants Taylorism still seems to be alive. However, traditional assembly lines are frequently combined with teamwork; production workers' job content increasingly includes quality control; and upgrading in skill requirement takes place. Contrary to the apparent demise of the Fordist production, academic discussions are focused on the emerging "neo-Fordist paradigm".

Far less attention is devoted to the industrial relations side of changes in work organisation. Basically, collective bargaining is quite decentralised in the country. The company is the most important unit, while sectoral agreements are of marginal importance. Theoretically, decentralised bargaining would be a favourable structure to negotiate company-specific issues, like changes in work organisation. Surprisingly, collective agreements almost never address such issues. As a rule, they are confined to certain procedural rules and to substantive issues that are explicitly specified by the Labour Code as possible fields of deviation from the mandatory minimum standards.

Established procedural rules sometimes explicitly name certain situations in which negotiation should be assumed between management and employee representatives. In the light of the experiences of the transition period, this list understandably consists of events having a direct impact on wages and job security, such as privatisation, organisational change (for instance, separation of a former company unit), collective redundancy, perhaps bankruptcy and insolvency. (No doubt the narrow-minded focus of collective agreements is partly the consequence of the weak bargaining power of company trade unions. At the same time, the bargaining is mainly focused on wages and job security – at all levels of union policy – and less attention is paid to training, job content and work conditions.)

Concerning information and consultation rights, the legal authorisation of company unions and Works Councils uses a similar enumeration, including "new methods of organisation of work". (In Hungary, Works Councils have no co-determination rights save the distribution of the company welfare fund.) Nevertheless, the quality of the information and consultation process on organisational changes varies company by company. It largely depends on the parties whether they have by-laws, codes of conduct or simple precedents of earlier changes which are binding or which encourage the parties to negotiate such instances in a meaningful way.

Generally, those changes in the work organisation that have no immediate impact on job security and wages are mostly negotiated at the plant level, where the local manager is responsible for "reconciliation" of interests between the employer and local representatives. As the latter are frequently foremen or shop-floor supervisors, the "reconciliation" may overlap with the operative meetings of lower level managers on the implementation of changes. In return, employees feel that they are left without true representation in the matters of shop-floor changes. Moreover, the new wages resulting from the changes are also negotiated individually. Informality and direct communication with employees has become the prevailing technique in convincing employees, especially at workplaces where neither union nor Works Council exists. (Although setting up a Works Council is mandatory at companies with more than 50 employees, according to a survey, about two-thirds of the employees concerned do not know about the Works Council at their workplace.)

Policy makers consider work organisation to be an internal company issue, thus public policy is mainly constrained to create an appropriate regulatory framework. Nevertheless, during the transition period, Hungary created a permissive environment for foreign investors both in terms of financial conditions of investments and in the flexible use of the labour force. The 2001 legislation entailed a further step towards deregulation and also aimed at enhancing the protection of workers. Through the transposition of nine EU directives (including 93/104/EC on "organisation of working time"), the major amendment of the Labour Code came into effect in the middle of 2001.

As for flexibilisation, it not only further extended the role of collective agreements in allowing deviations from the law to the disadvantage of employees (the earlier legislation also used the same logic in order to encourage employers to negotiate with unions), but also "the parties" to individual employment contracts may agree on deviations in favour of the employer. In order to enhance flexibility in working time and in the venue of work, the new law reformulated the rules for non-standard work settings. Another new aspect of the law is that collective agreements may stipulate annualised working hours in certain work settings. The amendment also re-regulated the use of temporary agency work.

Collective agreements signed in 2002 show that parties to company agreements were keen to adapt the most important new provisions, for instance the newly introduced 48-hour limit of weekly working hours. Concerning flexibility, the general use of the 2 to 6 months accounting period of the working time budget ("time frame") is a new aspect. However, contrary to expectations, the recent modifications of collective agreements do not represent a breakthrough in working time patterns. Almost all agreements still make use of the maximum upper limit of annual overtime hours. Working time schedules often include shift-work, night work, flexitime in certain positions, but that had been the case before the amendment of the law. Several agreements limit the yearly number of days of non-standard work settings (for example, posting, standby service), and determine procedural rules for ordering them.

Wage supplements for overtime, shift-work and night work, etc. are the traditional items of collective agreements. The "price" paid by the employer to achieve flexibility may be slightly higher than specified by the law, because some contracts determine extra bonuses for such work settings. However, unions have rarely been able to achieve a substantial raise in exchange for acceptance of managerial ideas of greater flexibility (such as the introduction of a longer "time frame", or annualised work hours). Attempts by unions to try to combat a company management that uses temporary agency workers are often fruitless as collective agreements' stipulations cannot be enforced in such cases. However, there are examples of negotiated change with mutual advantages: a road construction company, for instance, offered certain former seasonal workers the possibility to convert to a permanent employment contract through the newly introduced annualised working time.

Contrary to the above mentioned achievements of negotiated modernisation of work organisation, at workplace level the flexible organisation of working time is often extremely individualised and, to a great extent, relies on informal agreements, sometimes breaching the overcomplicated legal provisions and written contracts.

László Neumann PhD

Sociologist and senior research fellow at the National Employment Office, Research Unit (formerly Research Institute of Labour) and co-founder of the Centre for European Employment Studies at the Institute for Political Science, the Hungarian National Centre in the European Industrial Relations Observatory (EIRO) network.

Former adviser to an independent union federation (LIGA), he gives lectures on industrial relations at the Institute of Sociology and Social Policy, Eötvös Loránd University, Budapest. He is also a mediator within the framework of the Labour Mediation and Arbitration Service.

His earlier studies focused on shop floor wage/effort bargaining, decentralisation and privatisation of former state owned enterprises, Management-Employee Buy-Outs (MEBOs). His current research interest embraces several fields of employment policy and industrial relations: decentralised collective bargaining and sectoral social dialogue, impacts of German foreign direct investments on work organisation and labour relations in Hungary, flexible working hours and atypical forms of employment, impacts of Hungary's accession to the EU, labour market impacts of Knowledge Based Society (KBS).