Crisis in Greece's largest steel concern leads to industrial dispute

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The decision in May 1997 by Halivourgiki, the largest steel concern in Greece, to introduce flexible working hours, reduce its workforce and close a part of the production line has led to an industrial dispute. We examine the factors behind Halivourgiki's decision and the reactions of employees and their representatives.

On 29 May 1997, the Greek steel concern, Halivourgiki, informed employees of its decision to close most of its production line (cold-rolling, smelting furnaces and general services) and to maintain only its hot-rolling division. This would mean laying off 180 of the remaining 360 employees and resorting to redundancies at the rate of 2% of the workforce per month, the upper limit allowed by law (Law 1387/1983).

This decision is part of a strategy to reduce operations which started during the early 1980s. The decrease in production started in 1981 with the shutdown of the only two smelting furnaces in Greece and with the redundancy of 1,500 workers amongst the total labour force of around 3,000. This trend continued in the following years and accelerated during 1995 to reach a peak on 31 March 1996 with the shutdown of the electric furnaces division, one of the backbones of the production line, followed by an additional reduction of staff from 850 employees at the beginning of 1996 to 360 at present.

Employees criticise Government and employer

Although employees were expecting staff reductions, the decision on 29 May led to an industrial dispute resulting in widespread strikes. The dispute had already begun on 24 April after the decision by Halivourgiki to introduce flexible working hours:

  • working hours to be increased to 10 hours per day, four days per week in the cold-rolling division; and
  • working hours to be increased to 12 hours per day, three days per week in steel production, with an additional eight hours every second Friday in order to maintain a weekly average of 40 hours.

These measures which were due to come into effect by 5 May were an attempt "to avoid excessive costs (such as fuel, electricity, transport and so on) and to allow employees to have less commuting and therefore more spare time".

The decision came as a shock since it was the first time that the enterprise had attempted to introduce flexible forms of work, which were rejected as illegal by the trade union. The negative social implications of a 10- and 12-hour working day in Greece, especially in view of the heat, the risks involved in this particular type of work and the lack of transport infrastructure which potentially increases working time in an excessive manner, have also been criticised. The union also strongly feared that the measures proposed indicated further reductions in production, a fear that was borne out by subsequent events.

Strong pressure exerted by the employees initially induced the enterprise to suspend the implementation of the measures, only for it to come back later with the shutdown of most of the production line.

The union and the Greek General Confederation of Labour (GSEE) accused the management of unreliability, since less than a month before, during a tripartite discussion at the Ministry of Labour, management had committed itself to further talks on the viability and future prospects of the enterprise. The union also accused management of carrying out a strategy of gradual "downsizing" of the enterprise over recent years, using as a justification the threat of unfair competition by other countries, and aiming at the closure of its production plant and its conversion into a commercial import business. Its refusal to make new investments and modernise the plant has also been criticised, not least because, at the same time, the enterprise was choosing to invest in other countries and maintain similar business activities in Switzerland, Wales and the USA.

The union has also criticised what it sees as the passive role of the Government and its failure to intervene, pleading either the constraints imposed by the EU or the private status of the enterprise. The union has also underlined the indifference of the Government to its alternative proposals which have been repeatedly submitted to the Ministry of Development covering issues like the restriction of uncontrolled imports, quality control of imported steel products, sectoral policies and contractual agreements under the aegis of the Second Community Support Framework.

Finally, the employees and their representatives have stressed that they will not be drawn under any circumstances into negotiations which threaten to change industrial relations for the worse. The union has announced that it will fight the decision with all possible means at its disposal, such as strikes - indeed protest demonstrations have already been organised - and that it will demand the preservation of jobs and ways to prevent the closure of the plant.

Decision irrevocable, says employer

Following difficult negotiations and a long period of dispute, management has withdrawn the layoffs and redundancies and has stated its willingness to preserve production operations, though it stresses the need to reduce the level of the workforce because of free market conditions, unfair competition, price reductions and growing imports.

For these reasons, management has announced incentives for voluntary severance, and has underlined the need for more flexible forms of work to obtain greater production flexibility and reduce labour costs, in return for the preservation of jobs without reductions in pay. However, it has not yet specified the number of employees involved.

Management refuted the union's claims about lack of investment stating that over the last six years it has invested some GRD 3.58 billion on fixed assets and modernisation. It has furthermore argued that modernisation does not always favour the employees since it means more production in less time and with a smaller labour force. As for investment in other countries, management states that shareholder activities outside Greece do not affect Halivourgiki's problems.

Insofar as the union's proposals for government intervention are concerned, management has revealed that the only aid requested by the enterprise from the Government was to ensure fair competition in services and products (such as cheaper electricity). Management also adds that it is exempt from contractual agreements under the Community Support Framework since they are valid only for public enterprises. Finally, management stresses that, in the event that the employees do not accept greater labour flexibility, then the company will be forced "inevitably" into a permanent closure.


The problems faced by Halivourgiki indicate the perilous situation of the steel industry in Greece over recent years, as well as the crisis in Greek manufacturing in general (such as textiles, shipbuilding and so on).

The reduction of production, the loss of jobs and the low levels of investment, though not recent, are intensified by ever-increasing competition from low-cost plants, particularly in Eastern Europe. The Halivourgiki case is particularly noteworthy, not only for its significance for the country's heavy industry, but also for its negative impact on similar operations in other threatened industries. One of the important questions is whether and to what degree a recovery of Greek industry is possible with the Government failing to adopt a supportive policy. The lack of sectoral policy combined with seeking maximum capital profit minimises even more any chance of upgrading the competitiveness of Greek business. This also endangers the rights of employees as it leads to practices that reduce employment and destabilise labour relations, and thereby undermine collective agreements. (Eva Soumeli, INE-GSEE)

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