New agreement at Hellenic Sugar Industry after EU market reform

Following a round of hard bargaining, a new collective labour agreement has been signed at Hellenic Sugar Industry (EBZ). It is considered to be of particular importance for boosting economic growth in rural areas in Greece and stimulating domestic agricultural production. The reform of the European Common Market Organisation for sugar, announced in November 2005, had a negative impact on the company’s operations, and thus exacerbated tense relations between employees and management.

Profile of the Hellenic Sugar Industry

The Hellenic Sugar Industry S.A. (Ελληνική Βιομηχανία Ζάχαρης A.E., EBZ) is the sole producer of sugar in Greece, and is also the country’s most important processor in the food industry. The company’s main activity is sugar manufacture and trading, as well as trading in sugar by-products. To this end, the company cooperates with around 20,000 sugar beet producers. It processes beet in its five manufacturing plants from mid-August until late November as part of an intensive production period that lasts around 100 days and involves the use of shift work over a 24-hour period.

For the rest of the year, the regular staff, totalling 250 employees per plant, maintain machinery, make improvements and install new equipment. During the busy sugar beet processing period, around 200 temporary employees are engaged in each manufacturing plant. In all, according to the latest published data, the company employs 2,256 people: 1,800 workers as administrative and clerical staff and 456 workers on a daily or seasonal basis.

The Agricultural Bank of Greece (ATE) owns EBZ and, since a significant portion of ATE’s share capital is owned by the state, EBZ can be considered a state-controlled enterprise.

Reform of EU sugar market threatens jobs

Following the decision by the EU Council of Agriculture Ministers on 24 November 2005 to reform the Common Market Organisation (CMO) for sugar, significant developments took place in EBZ. More stringent restrictions were placed on sugar production and, as a result, the company was left with product surpluses of four million tonnes. As a result, the average selling price of sugar fell by 11.84%.

This adverse development exacerbated the already tense relations between employees and management, as scenarios involving possible closure of some of the company’s plants were discussed at the same time as voting took place on the new market rules for the EU sugar industry. These scenarios arose as a result of a viability study carried out by Deloitte and Touche for ATE. The report aimed to investigate the impact of the EU sugar market reforms on EBZ, by outlining various possibilities involving survival and adaptation to the new CMO for sugar and the relevant regulations on sugar beet cultivation.

While speculation regarding the shutdown of some plants continued, on 16 May 2006, in a unanimous ballot on five points, the Federation of Workers in the Greek Sugar Industries stated that it was adamant that the five sugar plants should stay in operation, that the national sugar quota should not be met and that the company should develop parallel activities in the area of bioethanol production. The employees also rejected proposals to operate two units in Greece and another two in Serbia.

Action measures announced

During an extraordinary general meeting held in Thessaloniki on 24 February 2006, the representative of the company’s majority shareholder (ATE) had announced that, at least for the current accounting period, all five EBZ plants would remain in operation. This decision was related to the fact that prior approval had been granted for planned measures to reduce running costs and increase EBZ’s efficiency. These measures include the following:

• voluntary redundancy for 300 employees, at a cost of €20 million over the next two years;

• conversion of two of the company’s plants – in Serres and Xanthi in the north of the country – into biofuel production units in two years’ time, on condition that studies demonstrate their viability.

Content of new agreement

During the first week of September 2006, management and employees reached an agreement on the content of the new collective labour agreement at EBZ. The two-year agreement, which will be in effect from 1 January 2006 to 31 December 2007, provides for pay increases within the framework of the National General Collective Agreement (EGSSE) for 2006–2007, namely successive pay increases of around 2.9% from 1 September 2006 and 5.1% in 2007 (GR0605019I).

However, employees accepted a 15% lower payment bonus over the busy production period, and at the same time agreed to work without rest days during the sugar beet processing season. Finally, the agreement gives no clear or categorical assurances from management on the employees’ demand for guaranteed viability and job security, since it contains no clause to this effect.

Lefteris Kretsos, Labour Institute of Greek General Confederation of Labour (INE-GSEE)