Industrial relations in the construction industry

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Industrial relations in the Polish construction industry are marked by relatively weak social partner organisations, a lack of sectoral collective bargaining and a generally ineffective social dialogue, which is further impaired by the deteriorating economic situation of the industry. This article reviews the situation in 2004, drawing on recent research.

Industrial relations in the Polish building industry have undergone a process of major deregulation, at both the enterprise and the national level, during the country's period of political and economic transition. This situation has recently been highlighted by research from a group of experts examining industrial relations in the construction sector in a number of central and eastern European countries, entitled [EU Enlargement. Construction labour relations as a pilot](http://www.efbww.org/downloads/publications/available_publications/CLR News 2003 -1- EU enlargement.pdf), organised by the European Institute for Construction Labour Research (CLR). It was hoped that Poland’s accession to the European Union in May 2004 and the introduction of EU standards would improve the social dialogue in various sectors. However, in the case of building industry, the reality so far appears to fall short of such expectations.

Two main issues have been cited as being responsible for the atrophy of social dialogue in the Polish building sector. The first is the narrow scope of influence of the organisations representing employees and employers. The largest trade union organisation in the building sector is the Budowlani Trade Union (Związek Zawodowy Budowlani, ZZ Budowlani) which has around 25,000 members employed in the building industry, housing cooperatives, the construction materials industry, wood industry, forestry and environmental protection. Apart from ZZ Budowlani building sector workers are also represented by sectoral affiliates of the Independent and Self-Governing Trade Union Solidarity (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność). There are two major employers' organisations (PL0209104F) - the Confederation of Building Employers (Konfederacją Pracodawców Budownictwa), which is affiliated to the Polish Confederation of Private Employers (Polską Konfederacją Pracodawców Prywatnych, PKPP), and the Federation of Building Industry Employers and Entrepreneurs (Federacją Pracodawców i Przedsiębiorców Sektora Budowlanego), which constitutes part of the Confederation of Polish Employers (Konfederacji Pracodawców Polskich, KPP). As in many other sectors, there is a poor inter-relationship between organisations at company and sector level, which not only leads to increasingly autonomous development of individual employment relations, but also considerably hinders joint initiatives by trade unions and employers.

The second key issue is the low effectiveness of those joint initiatives that are launched by the social partners. According to researchers, the state becomes involved in building industry social dialogue most unwillingly.

The abovementioned circumstances are blamed for the lack of an industry-wide collective agreement in the building sector, with little chance that such an agreement will be endorsed in the near future. Iin February 2003, the main trade unions and employers' organisations reached agreement on a sectoral minimum wage rate for 2003, which was 50% above the national statutory minimum wage (PL0306102N). However, this ran into problems - see below (under 'Social partners' views').

The economic situation of the building industry also fails to foster the development of effective social dialogue, as explored in the next section.

Economic and employment situation

Though the building industry was among those areas of Polish economy where the process of privatisation was most rapid, it failed to contribute to satisfactory economic results for the sector, which get worse each year. The number of buildings built has dropped dramatically, as the demand for building projects has slowed down. According to Polish Construction Research and Forecasting (Instytutu Polskiej Agencji Badawczej Budownictwa, Instytut PAB), the economic situation of the construction sector is increasingly deteriorating, leading to the loss of liquidity of a large number of entrepreneurs involved in the industry, contractors in particular. This situation has become a daily occurrence for building enterprises. However, according to experts, since the building industry is extremely sensitive to macroeconomic changes, it can be expected that the general improvement in results across the whole economy will positively influence this sector.

The poor condition of the building sector is mirrored in its employment situation. At the beginning of the 1990s, there were over 860,000 people employed in the industry, a figure that dropped by around 200,000 over the next 12 years. Employment levels continue to fall continuously. Towards the end of 2003, there were some 625,000 people employed in construction, down from 676,000 in 2002 (and over 810,000 in 1995). It is estimated that, despite its shrinking size, some 40% of the building workforce are currently surplus.

Social partners' views

The poor state of the building industry is giving rise to understandable anxiety among the social partners, which blame the whole situation on the government. Most of their objections refer to the government's policy towards the construction sector, while some reflect fears relating to Poland’s accession to the EU. Key concerns include the following:

• unfavourable taxation rules, which according to trade unions, were introduced because of the requirements of EU integration. Increased tax rates are seen as having a negative effect on the economic revival of the building sector;

• lower tax rates in the neighbouring EU Member States, which lead to the Polish market being flooded with imports of cheaper building materials;

• the fact that many EU building markets will be closed to Polish workers, Polish building companies, and firms employing Polish workers for the next few years (PL0401105F). A good illustration of the point is the fact that at the beginning of September 2004, at the request of trade unions, the German government reduced the quota of Polish building company employees to 13,000 - according to representatives of the Polish Association of Services Sector Enterprises (Stowarzyszenia Polskich Przedsiębiorstw Usługowych) in Germany, this limit should quota should be at least 16,000;

• a lack of programmes, training and opportunities for occupational requalification for former employees of the sector. According to trade unions, over the past few years, the building industry has been the major contributor to new unemployment; and

• a lack of support for the initiatives fostering the development of social dialogue in building industry. According to a trade union statement, 'the government fails to pay any attention to an anti-dumping agreement between the building sector trade unions and employers’ organisations setting the minimum hourly wage rate for construction works… in 2003, our agreement with the employers’ organisations was ignored and torpedoed by the government'.

Commentary

The difficult situation of construction may have a bad effect on the 'normalisation' of industrial relations in this sector. Undoubtedly, without greater involvement on the part of the state in the building industry's problems, it will be extremely hard to develop an institutionalised social dialogue - similar views have been expressed by the authors of the abovementioned report, EU Enlargement. Construction labour relations as a pilot. The impersonal and uncooperative attitude of consecutive governments towards the initiatives undertaken by the building sector social partners seems somewhat surprising, not least because relations in this industry are highly branch-specific and differ to a large extent from those found in other sectors. Perhaps, it is worth creating a tripartite commission similar to those functioning in other economic sectors (PL0308101F), such as the energy industry.

Currently, the coordination of the building sector remains unsettled. Work on the guidelines for state housing policy for the 2004-13 period, a fundamental document for building industry, is still in progress. Furthermore, the participation of Poland in an EU initiative, the European Technology Platform for construction, remains an unknown quantity. (Rafał Towalski, Institute of Public Affairs [Instytut Spraw Publicznych, ISP] and Warsaw School of Economics [Szkoła Główna Handlowa, SGH])