Social agreement negotiations end in failure

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In December 2003, Poland's national Tripartite Commission brought to an end a lengthy period of negotiations over a wide-ranging 'social agreement', originally proposed by the government. The government and social partners finally accepted that such an agreement cannot be concluded at present, not least because of the position of the NSZZ Solidarność trade union. However, work on the project yielded some progress, with the parties reaching consensus on a number of legislative measures and the social partners to continue talks on a number of matters.

In March 2003 (PL0307104F), the Minister of Labour proposed a draft 'pact for labour and development' (Paktu dla pracy i rozwoju) to representatives of trade unions and employers at a session of the national Tripartite Commission for Social and Economic Affairs (Komisja Trójstronna do Spraw Społeczno-Gospodarczych) (PL0210106F). The aim was to come up with a comprehensive solution to address many of the problems currently facing the country. After the Independent and Self-Governing Trade Union Solidarity (Niezależny Samorządny Związek Zawodowy, NSZZ Solidarność) rejected the idea of such a pact, negotiations instead progressed from May 2003 over a 'social agreement'. For several months, the negotiations proceeded briskly, and the signing of an agreement seemed close. In early September, employers' organisations and some trade unions agreed a joint position with respect to minimum wages, public sector wage increases and the reduction of taxes on businesses. However, NSZZ Solidarność did not sign up the joint position (PL0309106F).

On 2 December, at a plenary session of the Tripartite Commission, the Labour Minister and Deputy Prime Minister, Jerzy Hausner (the Commission’s chair) officially announced the conclusion, without success, of the social agreement negotiations. This failure provided a point of departure for a wider debate on social dialogue and 'social pacts' in Poland.

Social dialogue and social pacts

It remains an open issue whether or not Poland offers a political and social climate conducive to social dialogue, to comprehensive negotiations between employers, trade unions and the state, and to the conclusion of social pacts. Many arguments have been cited in support of the negative as well as the positive position on this issue.

In defence of the proposition that Poland does have a good climate for social negotiations, one might point to the fact that recent history witnessed a succession of social discussions on major issues; of these, at least three culminated in the signature of wide-reaching social pacts. The first of these took place in August 1980 and resulted in the signature by the Polish United Workers’ Party authorities and the opposition of what became known as the 'August agreements', providing the basis for operation of independent trade unions in what was then the Polish People’s Republic.

The second agreement, signed in 1989, was brought about through round-table negotiations. It sanctioned the transformation of the authoritarian socialist state into a limited democracy and provided for the reactivation of NSZZ Solidarność, which had been driven underground following the imposition of martial law in 1981 (PL0208105F). This agreement was a historic turning point in the country’s history, opening the way for the political turnaround and the market economy reforms which followed half a year later.

The third major negotiations ending in conclusion of a pact were held after the wave of strikes sweeping Poland from 1991 to 1993. The government embarked on negotiations with the trade unions - separately with NSZZ Solidarność, the All-Poland Alliance of Trade Unions (Ogólnopolskie Porozumienie Związków Zawodowych, OPZZ) and a group of seven smaller organisations - as well as with what was then the only employers' organisation, the Confederation of Polish Employers (Konfederacja Pracodawców Polskch, KPP) (PL0209104F). These talks, lasting half a year, resulted in the conclusion in 1994 of an 'state enterprise pact' regarding the state-owned enterprises undergoing transformation processes, now acclaimed as a major landmark. It embodied a 'social agreement' with respect to a number of legal regulations which enabled reforms of the Polish economy to continue on their course comparatively smoothly (including the statutory framework for privatisation of state-owned enterprises [PL0209103F], collective redundancies etc). One of the side-effects of this pact included the creation of the Tripartite Commission, whose original objective was to oversee the pact’s implementation.

A negative view concerning the potential for social dialogue and workable pacts in Poland, meanwhile, can be substantiated by referring to the experiences of 1994- 2001 as well as to the fate of the recently proposed social agreement. Several bursts of activity during which comprehensive negotiations have been zealously conducted and pacts signed have been interspersed with comparatively long stretches of time during which social dialogue has ceased altogether. Five years have now elapsed since the execution of the most recent pact.

Failed talks

When Mr Hausner, the Labour Minister and Deputy Prime Minister, proposed the 'pact for labour and development' in March 2003, there were many hopes that this would result in a major social agreement which would overcome the impasse in addressing the basic economic and social problems of Poland, particularly in the area of public finance reform. As the Minister saw it, this agreement would be a new version, under new circumstances and in the face of Poland’s pending accession to the European Union, of the 1994 'state enterprise pact' (see above). The idea was to address labour issues so as to inject new life into the country’s economy and to resolve a number of problems in other areas.

From the very outset, however, negotiations over the new pact were fraught with numerous difficulties, chief among them the high level of scepticism on the part of NSZZ Solidarność. The union’s national commission appeared loath to sit down at a negotiating table with representatives of a government comprised of the 'post-communist' Democratic Left Alliance (Sojusz Lewicy Demokratycznej, SLD) and of the left-leaning Labour Union (Unia Pracy, UP) (NSZZ Solidarność traces its lineage to the opposition movement to one-party rule in Poland prior to 1989, and its positions on many issues - for instance religion - would, in most countries, be termed right-leaning - the usual rule of thumb whereby trade unions incorporate left-wing currents rather than opposing them does not always hold true in Poland). According to some NSZZ Solidarność figures, the very fact of involvement in such negotiations would amount to an unwarranted act of legitimisation for the government. As a result, Janusz Śniadek, the NSZZ Solidarność chair, was crticised strongly by his union constituency for expressing preliminary agreement to join the negotiations. This particular stumbling block was removed by one of the employers' organisations, the Business Centre Club (BCC) which suggested that the word 'pact', clearly offensive to NSZZ Solidarność, be replaced with the less weighted 'agreement'. Following the resolution of this problem, negotiations duly commenced and continued without a break from April to late November 2003.

Major obstacles arose in the course of the talks, most notably the following.

• Difficulties arose from the government’s attempts to tackle problems associated with reform of certain economic sectors (notably mining - PL0310103F) and public services (such as healthcare and railways - PL0308105F), and with the increasingly difficult circumstances of some employee groups (especially those working in the traditional, declining branches of the economy). These problems were among the root causes of various protest actions launched by NSZZ Solidarność, during the Tripartite Commission negotiations, to the point of disrupting them (PL0311102N). However, NSZZ Solidarność’s capacity for mobilising public protest proved limited, and certainly not as extensive as hoped for by the union’s leadership.

• In the course of the agreement negotiations, Mr Hausner unveiled a series of proposals designed to stave off the risk of a breakdown of the country’s public finances. The premises of his reforms include reductions in specific areas of state expenditure, but also scaling back some employee privileges. The fact that, while serving as the Minister of the Economy, Labour and Social Policy and Deputy Prime Minister, Hausner also chairs the Tripartite Commission was not lost on the trade unions, many of whose members interpreted his proposals (increasing the retirement age for women, and changes to the system of retirement and disability benefits) as contradicting the spirit and the validity of social dialogue. Mr Hausner’s proposals have been submitted to public consultation scheduled to end in the middle of January 2004. The unions, however, were unwilling to wait this long to voice their criticisms. For example, Maciej Manicki, the chair of OPZZ, Poland’s second largest union organisation, stated in December that he agreed in principle with the idea of scaling back state expenditure but rejected the Minister’s proposals for adjusting retirement and the disability benefits indexing system.

Results of the negotiations

These difficulties notwithstanding, the parties to the social dialogue did find common ground on a number of issues. Thus, the negotiations over the accord resulted in: agreement on indices for wage increases in 2004 and a number of labour law provisions; and joint understandings with respect to laws on social aid, freedom of economic activity, retirement programmes and individual retirement accounts, retirement and disability benefits from the social insurance fund, and the Act on the Tripartite Commission and the regional (Voivodship) social dialogue commissions (PL0307105F). On all these points, the government is now in a position to bring before parliament positions fully agreed with the social partners. As Mr Hausner said during the Tripartite Commission session on 2 December: 'this is no mean achievement, and it should be appreciated; on the other hand, however, the field of agreement is much wider than that defined at the beginning of negotiations.'

Another important effect brought by negotiations over the social agreement, their ultimate failure notwithstanding, lay in the intensification of dialogue between the trade unions and the employers' organisations. These parties were able to reach agreement on a number of issues, with dissenting statements by NSZZ Solidarność. Even after the conclusion of the agreement negotiations, the unions and the employers' organisations are pursuing talks of their own on a number of issues of mutual concern.

NSZZ Solidarność position

During the Tripartite Commission meeting on 2 December, Mr Hausner named NSZZ Solidarność as the single participant most responsible for the collapse of the agreement project: 'The social dialogue carried on within the Tripartite Commission continues and is bringing certain results, but it is also plain to see that some organisations represented on the Commission devote more energy to protest actions than they do to negotiations. When the idea of a social pact was overthrown as a result of the position adopted by NSZZ Solidarność, I said on behalf of the government that one must finally opt for something, one must make the choice between protest and discussion, between the streets and dialogue. As the reality of the past few months shows, however, we were always 'in between'- we were pursuing negotiations on the one hand while successive demonstrations and strikes were being prepared on the other.'

The NSZZ Solidarność leadership, for its part, has on several occasions elaborated at length on its unwillingness to sign the social agreement. The key problem appears to be lack of trust, with three major issues coming into play:

• the NSZZ Solidarność leaders believe that the government does not always abide by standards of fair dealing, particularly in its relations with the trade unions. They take issue with a government proposal whereby profits accruing to trade unions from their business activity would be taxed. This proposal was raised and subsequently suspended, and the NSZZ Solidarność, Mr Śniadek, interpreted this sequence of events as applying pressure on the unions, 'as if letting us know that, if you don’t behave, then the axe will fall'. This particular complaint, however, seems to be less of a concern for the remaining unions - Mr Manicki of OPZZ, for one, maintains that the member unions of his organisation do not have any profits to begin with;

• perhaps more seriously, some members of the NSZZ Solidarność leadership state that they do not trust the government because the latter, in their belief, does not control the situation in the country. They claim that it is open to manipulation by informal groups and 'murky' relationships and that legislative proposals championed by the government are unduly influenced by vested interests opposed to Polish workers. Accordingly, it is argued, deal-making with the government must, by its very nature, be dubious; and

• it is claimed that the government has set a firm liberal course and that it favours the interests of employers over those of employees. In this context, protestations of left-wing ideology by members of the government are dismissed as exercises in hypocrisy.

Such attitudes are bound to engender an erosion of trust between NSZZ Solidarność on one side and the government and some of the other social partners on the other. It might nonetheless be added that, in the course of interviews carried out by the author of this article during the work of the Tripartite Commission, many NSZZ Solidarność activists spoke with respect about Minister Hausner himself.

Commentary

Social dialogue at the national level, negotiations and agreements between the social partners and the government have a long tradition in Poland. Unfortunately, social dialogue has not been sufficiently institutionalised. In practice, social agreements are impeded not only by major differences of interest, but also by fundamental mistrust between the social partners and the government. This mistrust also contributed to the failure of the recent social agreement project, conceded after long months of negotiations in December 2003. This ultimate collapse of talks notwithstanding, the work on the agreement did have its successes, at the level of agreement on specific points as well as at the more universal one of strengthening bipartite dialogue and instilling the relevant values. What is more, all the social partners have declared their willingness to continue work within the Tripartite Commission in the future. (Juliusz Gardawski, Warsaw School Economics [Szkoła Główna Handlowa, SGH] and Institute of Public Affairs [Instytut Spraw Publicznych, ISP])