Industrial relations in the brewing industry

Download article in original language : PL0509102FPL.DOC

In Poland, almost all brewery companies are owned by foreign capital. Perhaps on account of this, they tend to have well organised systems of industrial relations, with active social dialogue and relatively high standards of working conditions. This article outlines the system of industrial relations in brewery companies.

The Polish beer market

The brewing industry ranks among the most vibrant in Poland; while its growth has slightly abated in recent years, sales of beer continue to increase by several percentage points every year. Over the 1990s, beer sales in Poland grew by 135%.

Brewing is a processing industry characterised by a relatively high, and relatively steady, rate of return. It is not surprising that the privatisation of Polish breweries attracted a number of major international brewers.

Matters have now come to a point where an estimated 90% of the Polish beer market is controlled by foreign investors. There are three principal players:

• Kompania Piwowarska (KP), a subsidiary of SAB Miller;

• Żywiec Group (Grupa Żywiec SA), a subsidiary of Heineken;

• Carlsberg Okocim Group (Grupa Carlsberg Okocim).

The first two companies listed have been vying for primacy in the Polish beer market for some time; between them, they account for over 30% of combined beer sales in the country.

Poland’s accession to the European Union precipitated momentous change in the Polish beer market. The most obvious one comprised the elimination of customs duties, with the result that the domestic market was thrown wide open to competition by foreign brewers. Many experts feared that brewers from Germany, Slovakia, and from the Czech Republic (a country whose beer producers were consolidating into strong, well-managed companies) would make extensive inroads into the Polish market. These fears proved unfounded. Moreover, foreign companies already operating breweries in Poland soon concluded that, in the new reality brought by EU accession, Poland had become a very attractive location for producing beer for export to other countries. Other changes in the brewing industry concerned developments in the sphere of industrial relations.

Social partner representation at sectoral and enterprise level

When compared with other Polish industries, brewing has a fairly well-developed representation structure at sectoral level.

Employers are represented by two organisations:

• The Union of Brewing Industry Employers-Polish Breweries (Związek Pracodawców Przemysłu Piwowarskiego-Browary Polskie, ZPPP-BP). This organisation consists of the largest beer producers in the country (the three companies named above and Browar Belgia). The organisation formulates various proposals, suggesting new legal, economic, and organisational solutions to government at both national and local level; it also represents the brewing industry in contacts with the authorities, with social organisations, and with trade unions. The Union of Brewing Industry Employers also conducts public relations activity, fostering a positive image of the industry and of its products. Since January 2004, the Union of Brewing Industry Employers is a member of The Brewers of Europe;

• An association of small and medium-sized brewers, representing approximately 30 enterprises as of late 2004.

Employees of the brewing industry are also represented at sectoral level by two organisations:

• The Brewing Industry Domestic Section of the Independent and Self-Governing Solidarity Trade Union (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność), with over 2,400 members;

• The Federation of Brewing Industry Employee Trade Unions, affiliated with the All-Poland Alliance of Trade Unions (Ogólnopolskim Porozumieniem Związków Zawodowych, OPZZ).

Studies show that, in Poland, unionisation in the private sector is considerably less than in the public sector. The brewing industry is a welcome exception to this general trend; while exact data are not available, it is estimated that almost half of the estimated 10,000 persons employed by the Polish brewing industry belong to a union.

These figures point to a well-developed, civil culture of industrial relations; the brewing industry - at least when compared with other sectors - boasts such a culture.

Social dialogue

The picture is far from perfect, however. Despite well-developed representation at sectoral level, no multi-employer collective labour agreement exists. It appears that the intense competition among brewers in the Polish market is an obstacle to such an agreement, and there is little to suggest an imminent breakthrough.

This is not to say that brewing industry employees do not benefit from collective agreement safeguards. In this respect, the situation in the industry is similar to other areas in the Polish economy: where an enterprise has unions, a collective agreement most likely applies. In the major brewing enterprises in Poland (accounting, between them, for more than 90% of the market), employees benefit from a collective agreement.

The fact that the largest brewing companies have been promoting the development of works councils is a significant contribution to the improvement of industrial relations in Poland. In 1997, a European Works Council was established within the Heineken Group, and it includes representatives of Heineken’s Polish workforce. In 2004, the unions at Kompania Piwowarska (SAB Miller) proposed the establishment of a similar body. In April 2004, there was a meeting of union representatives from SAB Miller operations in Poland, the Czech Republic, Hungary and Slovakia, organised by the Foodstuffs Industry Secretariat of NSZZ S. This initiative of the Polish unions was endorsed by the European Federation of Food, Agriculture and Tourism Trade Unions (EFFAT), representing food industry workers. The directors of SAB Miller, for their part, took a favourable view of the idea and more detailed negotiations duly commenced, with Italian and Spanish employees of SAB Miller also being represented. The end result is that the two largest players in the Polish brewing industry have an institutional base for industrial relations complying with the best European practices.

This positive picture, however, is marred by the occasional collective dispute, an example being the latest protests staged by NSZZ S at Kompania Piwowarska. Pointing to the steadily improving financial results of the company, employees have sought a pay increase.

Another problem is posed by declining employment in the brewing industry. Rapid technological progress has left the major Polish brewers engaging in regular rounds of shedding excess production capacity; in practical terms, this usually means shutting down some minor facility owned by the company and shifting production elsewhere. As a result, employment in the industry has dropped by almost 20% in recent years. Perhaps surprisingly, this downscaling of employment occurred without major protests. Strife may have been avoided as a result of measures adopted by employers that ensured a soft landing for redundant employees. For example, when Grupa Żywiec recently closed one of its breweries, the 170 employees who had worked there received severance packages considerably in excess of the Polish average, as well as vocational counselling and retraining. Carlsberg, which shut down a brewery in Wrocław and shed 70 jobs, offered a similar package.

Commentary

Industrial relations in Poland tend to be diametrically opposed. On the one hand, there is the public sector, with considerable union representation and collective agreements; on the other, there is the private sector where employees do not enjoy a similar degree of representation and are essentially left to deal with their employers on their own. The example of the brewing industry seems to contradict this general rule, thereby begging the question: what makes the brewing industry so special? Such a question may, however, be irrelevant. It should be noted that the stereotype of no unions, no collective agreements, and hand-to-mouth realities for employees essentially applies to small and medium-sized enterprises. Some large companies (Heineken, SAB Miller), meanwhile, are not afraid to deal with unions or with works councils. (Rafał Towalski, Institute of Public Affairs (Instytut Spraw Publicznych, ISP) and Warsaw School of Economics (Szkoła Główna Handlowa, SGH))