Enterprise-level social dialogue examined

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Drawing on recent research, this article examines the state of dialogue between owners/management and trade unions at the level of individual enterprises in Poland, as of 2004. Industrial relations, the situation of the actors and especially the opportunities for partnership are very differentiated between enterprises, with the main determining factors being the size of the company and whether it is state-owned (or has been) or in the private sector

The development of social dialogue between owners/management and trade unions at the level of individual enterprises in Poland can be analysed with reference to two criteria - the size of the enterprise (measured in terms of employment) and its ownership structure. In the specific case of Poland, these two factors are interrelated, because:

• the smaller an enterprise, the smaller the chance that it is state-owned;

• the larger the stake held by the state in an enterprise, the greater the possibility that there are trade unions operating within that enterprise. According to the available statistics, more than 60% of state enterprise employees state that there is some form of union presence at their workplace, but this figure falls to 40% for enterprises owned jointly by the state and private investors, and to 6% for the private sector (agriculture excluded);

• the smaller the enterprise and the greater the 'private' component, the greater the 'realness' and presence of the employer. In the case of many small businesses, the employer is simply the owner - an individual with whom the employees have daily contact; and

• the larger the enterprise, the more difficult the actual employer is to pinpoint - that employer becomes more abstract.

Research indicates that these four factors influence the development of social dialogue, giving the social partners different positions at the level of the individual enterprise and different social roles. On the basis of these factors, a number of basic enterprise types can be differentiated, in each of which social dialogue proceeds in a different way:

• small, privately-owned enterprises;

• medium-sized private enterprises;

• large private enterprises;

• small and medium-sized enterprises owned by the state; and

• large state-owned enterprises.

Smaller and larger private enterprises

In analysing social dialogue in private enterprises, recent research by Professor W Kozek is useful. This maintains that the private sector in Poland is far from homogeneous in economic, technical or social terms. Its fragmented nature with respect to collective labour relations is a by-product of differentiation in the ownership structure. The private sector in Poland consists first and foremost of very small companies employing a mere handful of people, of which many will be recruited from amongst family members, acquaintances or neighbours. Within such an enterprise, the 'boss' is the undisputed supreme authority. Labour relations are not subject to formalisation, and many aspects are regulated by the policy of the owner, who shapes employees' contracts in a highly individualised way; the employees, for their part, accede to such a state of affairs. Enterprises of this scale generally remain 'off the radar' of the trade unions.

Medium-sized private enterprises, with between 50 and 250 employees, often remain under the close supervision of the owner or co-owner, though in less frequent cases they may be administered on the owners’ behalf by hired managers. Unionisation is rather modest in the medium-sized enterprise sector, to a large extent due to resistance on the part of the owners, who tend to regard union presence as an intrusion on what they consider to be their own private affair. Any outside managers hired to oversee such enterprises also find themselves in a difficult situation due to the frequent physical presence of the owners, who often take a 'hands-on' approach.

The large private enterprise sector in Poland is not very sizeable. However, its situation with regard to industrial relations arguably provides a a model of sorts for other settings. Large private enterprises are almost always managed by contracted professionals; the owners do not typically take an active hand in such an enterprise’s day-to-day running, limiting themselves to following the 'bottom line' and other key indicators and to laying down general policy guidelines. In such companies, key importance in industrial relations is assumed by the attitude of the managers towards how these relations are shaped.

The owners of large enterprises are not generally well disposed towards trade unions; they are, however, generally willing to countenance employee representation at the level of their enterprise (as opposed to wider 'advocacy' structures). In a recent survey (PL0206102F), only 10% or so of business owners offered a cautious affirmative in reply to the question of whether trade unions should be permitted in private companies at all, and none of the respondents responded 'definitely yes'. Even the owners of those companies that do have a union presence tend to be opposed to trade unions in private businesses. The responses given by enterprise owners queried about employee representation, meanwhile, make for quite a different picture: 57.6% of business owners favour employee representation, and only 32.5% oppose it (the remaining 10% or so of the respondents did not have a firm opinion of the subject). For most respondents, these two attitudes - ill-disposition towards labour unions and approval of workforce representation at the in-house level - go hand-in-hand.

The widespread lack of representation of employees is not conducive to 'partner-like' relations. During the 1990s, research indicates that very definite barriers arise between business owners and employees. The typical entrepreneur seems to believe that, when left to their own devices, employees will give free rein to a poor working culture, going about their jobs in a careless manner, leaking business secrets, ignoring health and safety rules, and even engaging in the occasional 'scam' to the detriment of the business owner. The employees, meanwhile, tend to view their relationship with the enterprise owner as one of innate opposition, even if they respect the knowledge or business acumen of their employer. In substantiation of this attitude, many employees point to the efforts exerted by many employers to avoid making obligatory social insurance contributions on the employees’ behalf, and also cite the classic grievance of receiving their wages late and/or in incomplete amounts (PL0307106F). Employees also, it is reported, tend to keep an eye on the working habits and lifestyles cultivated by their employers; apparently, these observations lead many to believe that they are being exploited for their labour, that their employers are enriching themselves at their expense. Employees are aid to be unhappy at the prevailing absence of trade unions in the private sector; while they do not necessarily expect to see union branches forming within the small enterprise for which they work, they feel that, as a social or economic group, they have been disenfranchised.

Privatised enterprises

Former state-owned enterprises now privatised account for something of a special category among the private enterprises; in their case, the nature of industrial relations is somewhat different. This difference is accounted for by the legacy of trade unions inherited from the time when the company still belonged to the state; while the union presence in privatised companies is lower than in the public sector, it is certainly higher than among private enterprises as a whole.

The available research indicates that, despite a pronounced shift of power in favour of the management boards of privatised enterprises, the unions operating within them remain a force to be reckoned with in the area of collective labour relations.

A study carried out by Professor J Gardawski and others indicates that, in reality, the influence of trade unions in privatised firms is limited to matters of a social nature (benefits such as vacations or holiday camps, extension of loans and other financial assistance to employees etc); the unions have also intervened over dismissals of union members and, more rarely, with respect to the firing of non-unionised workers. On the other hand, the unions have practically no say with respect to issues of a purely business nature, such as growth strategies, modernisation and restructuring, management or human resource policies; whatever occasional role the unions do play in such matters is of a purely consultative nature.

State-owned enterprises

A separate category, if a dwindling one, is comprised of state-owned enterprises. When considering this group of entities, the following characteristics should be borne in mind:

• the decision-making bodies of a state enterprise include a general employee assembly, a workers' council (PL0208106F), and the managing director;

• the managing director is appointed by the workers' council by way of a competition (a notable exception arises in the case of public utilities, where the managing director is appointed and dismissed by the 'founding body');

• major issues pertaining to the state-owned enterprise are regulated by its charter, which is approved by the general employee assembly on the motion of the managing director and then endorsed by the founding body; and

• the activity of state-owned enterprises is regulated by special legal instruments such as the Act regarding financial management at state-owned enterprises or the Act regarding self-government by the workforce of a state-owned enterprise.

Due to the above, the position of management at state-owned enterprises is gradually being eroded; in every step that they take, the managers must reckon with the opinion of the worker 'self-government' bodies, which are closely associated with the trade unions. This situation, at least hypothetically, engenders a certain asymmetry in relations among the social partners, to the benefit of the workforce.

When considering the position of the social partners in state-owned enterprises, this has developed in two stage. The first period coincided with the beginnings of political and economic reform in Poland. At that time, real power within state-owned enterprises was wielded by workers' councils and trade unions. There is much to indicate that these organisations did not hesitate to exercise negative power in order to preserve what they considered to be a desirable status quo - they consistently blocked moves by management and held it in check wherever the interests of the workforce (generally thought of in terms of a stable minimum employment level) were felt to be threatened.

Yet the deteriorating financial condition of the state-owned enterprises forced changes on the social partners, leading them to adjust their relations. With time, a perception arose that the interests of management, employee representatives and the enterprise are ultimately one and the same. Accordingly, the social partners progressed from a model of confrontation to one of dialogue, with the management receiving considerable leeway in its decision-making. All the parties concerned came to adopt the principle that, if they do not take good care of their enterprise, then nobody else will.

With time, the role of employee self-government in state-owned enterprise has been weakening, coupled with increasing clout for management (1996 is generally taken as a turning point). Most representatives of the social partners agree that, at present, the most important decisions are taken by the managing directors and by the board. When viewed against this background, preserving their strong position here assumes fundamental importance for the trade unions; research indicates that state-owned enterprises are one of the few remaining bastions of Polish unions.

Industrial action and collective agreements

The number of collective labour disputes in Poland has been decreasing from year to year (PL0410105F). The incidence of collective disputes is smallest at entities employing up to 50 people - they are decidedly more frequent at medium-sized entities and at large ones. By the same token, strikes are also comparatively rare. When Polish workers have a grievance they wish to air, they are increasingly likely to opt for a more 'newsworthy' method, such as demonstrations or picket lines.

There is a general rule that an entity within which trade unions operate will usually have a collective agreement, or at least a 'remuneration pact'. Upon closer examination, there emerge some details that indicate differentiation. According to research from the late 1990s involving a representative sample of 200 enterprises employing more than 300 people, the prevalence of collective agreements was largely interrelated with the ownership structure of the enterprise. Collective agreements were most common in single-shareholder enterprises owned by the State Treasury - more than 98% of such enterprises had collective agreements, compared with an average of 85% for all the entities covered by the study. It might be added that, during the period tracked by the study, not a single collective agreement was signed at a company owned by a private individual.

Commentary

On the basis of the analysis above, some general conclusions concerning social dialogue at individual enterprise level may be drawn. These follow from the application of two criteria - that of ownership structure and of size. The smaller and more 'private' an enterprise, the stronger the position of the employer and the weaker the position of the trade unions. As for small and medium-sized enterprises founded and developed from the outset by private capital, the dominant position is occupied by the employers. Professor Gardawski has formulated a thesis to the effect that relations between labour and capital depend to a considerable degree on the financial condition of the enterprise in question. As long as the financial situation remains good, employers are willing to settle for a 'paternalistic' approach to their employees but, when the situation deteriorates and the 'bottom line' is in danger, the employers assume a more authoritarian style of running their business.

Matters are quite different in the case of state-owned enterprises. The larger such an enterprise, the greater the role of the state, and the more the day-to-day power of the management will be hemmed in by laws and regulations and by the other social partners. (Rafał Towalski, Institute of Public Affairs [Instytut Spraw Publicznych], ISP) and Warsaw School of Economics [Szkoła Główna Handlowa, SGH])