Collective bargaining underway at Škoda Auto

Škoda Auto has not yet reached agreement with the trade unions on the wording of its collective agreement for 2010. The car manufacturer, employing 29,141 people in 2009, is one of the biggest employers in the Czech Republic. As a result, collective bargaining at the company is always a major source of attention for employers, trade unions as well as the professional public. Tensions are mounting over the wage element, with trade unions threatening strike action.

The validity of the existing collective agreement for the car manufacturer Škoda Auto expired on 31 March 2010. As a result, the employer and the company trade union of the Czech Metalworkers’ Federation KOVO (Odborový svaz KOVO, OS KOVO) agreed on its extension until 12 April 2010 so that bargaining could continue. Nevertheless, all of the essential elements of the future collective agreement have already been agreed on – such as the formal aspect of the agreement, working hours and social benefits. The only remaining item for consideration is the wage contract.

Trade unions reject bargaining proposals

The initial (minimum) offer of the employer Škoda Auto proposed a gradual increase of the wage scale from 1% to 2%, with two deadlines in the course of 2010, a lump-sum payment of CZK 1,000 (about €40) and extended validity of the wage contract until 30 June 2011. This proposal was rejected by the trade unions, which argued that such a wage increase cannot cover expected inflation. The company anticipates inflation of 1.4%, whereas the trade unions estimate that it will rise to 1.9%. Therefore, the trade unions request an ‘inflation clause’, given that inflation estimates according to various analyses range between 0% and 5% and the trade unions must protect employees against a potential growth in prices.

In the subsequent rounds of talks, the company increased its offer, proposing a wage rise of 2.5% immediately from April 2010, an increase in the contribution to the additional pension insurance by CZK 50 (around €2), as well as a lump-sum payment of CZK 8,000 (about €320). However, the trade unions rejected the proposal once again. According to the Chair of the works council, Jaroslav Povšík: ‘We did not accept the proposal in defiance of rather tough threatening by the company.’

Company resists trade union requirements

The employer is willing to adjust wages but has so far resisted the trade unions’ demands. According to a member of the board of directors, Holger Kintscher:

‘The total volume of sales will drop and a decline will occur in markets which contribute most to our profit. This news is not good. There is a hard year ahead of us at the end of which we will have less money in our wallet than we had at its beginning.’

Last year, the net profit of Škoda Auto fell interannually by 68% and sales of Škoda cars, except for their licence production in China, decreased by 12% to 546,000 cars. The Human Resources (HR) Director, Klaus Dierkes, explained to the trade unions that such a profit is not sufficient for the company in the long term and that the owner is there not to grant financial gifts but to make money.

However, the trade unions are standing firm on their requirements and are prepared for industrial action and strikes if their demands are not met. According to Mr Povšík, potential protests would not take place before April. He added:

‘Yes, industrial action would intensify. On the other hand, I must say that this time employees must not expect unrealistic figures and I am sure that we have such a figure on our mind that we set as a balance and optimum against the given economic and market situation.’

The trade unions representing workshop workers are ready to go on strike. In their opinion, employees take issue with the fact that although production keeps growing and accelerating, the company is offering less money. According to the leader of one of the workshop trade unions, Josef Zmrhal:

‘People would be willing to go on strike, they consider this proposal insufficient. There is a danger that if at a lower production we agree on a lower wage increase, production may get off the ground in the course of the year and reach the peak numbers of last year.’

One of the most heated discussions took place in the Czech car factory three years ago (CZ0703029I). To enforce their requirements at that time, the trade unions staged a strike of several hours.

Soňa Veverková, Research Institute for Labour and Social Affairs (RILSA)