Swiss Chair Corporation, Hungary: Comprehensive approach
As a consequence of their qualifications and experience in production, older workers at Swiss Chair Corporation in Hungary enjoy good wages, rewards and esteem, ensuring the possibility of a career for life.
Privatisation of the county branch (Eger) of the large state-owned furniture industry (BUBIV Tröszt), set up in 1960, began in 1990, at the same time as the appointment of a new manager. This process reduced the labour force by two-thirds. In 1992, the company passed into Swiss ownership (DIEDIKER Egri Bútorgyár Kft). Again, in 2003, the company changed owners, but remained in Swiss hands under the name Swiss Chair Corporation (SCC). Today, it is one of Hungary's largest export-oriented companies, with a secure and growing market.
The factory has 130 employees. This includes 100 blue-collars workers, 70% of whom are skilled workers and 30% semi-skilled. The administrative staff is small. Women make up 34% of the workers in production.
The company’s age structure is as follows: 31% are under 30 years of age; 33% are in the age range 30-39; 14% in the age range 40-49; 10% in the age range 50-54; and 12% are 55+ years. The company also has 4 employees of pensionable age.
There is no trade union in the company. A works council operated with short interruptions and was re-established in 2006. All employees are hired with individual work contracts.
Good practice today
In 1990, at the time of Hungary’s transition to a market economy but before the company's large-scale dismissals, workers in Swiss Chair Corporation sought and found work elsewhere, partly because of the economic restructuring and partly because of the professional incompetence of the manager appointed in 1990. Young and middle-aged skilled female workers in the specialised jobs requiring considerable experience and manual skill (e.g. surface treatment, smoothing, painting and polishing) remained with the company, considering that their future was secure, thanks to their experience. In the course of privatisation, the factory was modernised: new high-capacity machines with health protection devices were installed, reducing the possibility of damage to health. Production is organised in two shifts and even today the majority of workers in the surface treatment jobs are women.
Work in the production area requires precision skills that cannot be obtained through formal training. The result is that it is difficult to find workers with the necessary skills. The surplus of labour in the region is unable to make up for the shortage of skilled workers. The products made by the older, more experienced workers are of excellent quality and they are better able to meet the quality requirements. Since wages depend on the job and the hourly wage category, which is determined by quality criteria, the income of older workers is higher than that of younger workers. Annual wage increases are also based on considerations of quality, thus older workers are at an advantage here, too. The possibility of attaining higher wages with age and experience acts as an incentive for the younger workers.
The high wages and general appreciation of older workers (22% of the workforce is aged 50+) delay exit from the labour market. 11% of those over 55 years, including women, have remained active workers beyond retirement age. The presence of older 50+ blue-collar female employees can be regarded as especially positive because in the Hungarian employment structure, a high proportion of women take advantage of the early retirement opportunities allowed by the regulations.
The Swiss owner (who spends much of his time in Hungary) has entrusted the running of the company to Hungarian managers. At present, management is working on developing a system of fringe benefits that will favour older workers. The system, to be introduced in the near future, is intended as a way of rewarding workers for loyalty and good performance. Management believes that this previously missing HR element will contribute to the retention of older workers. It is considered important that older workers should feel that they are valued, both financially and morally. Thus, with good wages, training and financial and moral recognition, the possibility of a career for life for older workers is offered.
In order to ensure the recruitment of new workers and counterbalance the weaknesses of formal training, the company has created its own training system and training workshop. Under a contract signed with a secondary vocational school, the young people trained in this workshop will be employed by the company and then, in practice, will learn from the older workers.
The management attaches importance to a good workplace atmosphere and organises social events to foster such an atmosphere. For example, a celebration is held every year before Christmas in a restaurant, and this proves very popular with the workers.
The works council, re-established in 2006, has good relations with management (it does not, however, have the right of consultation and authorisation; only the trade union had such rights). Feedback from the works council helps to fine-tune HR policy.
A possible transferable element could be: in order to retain older workers, in addition to higher wages (which are naturally related to their greater experience), a system of fringe benefits should be elaborated that will favour exclusively the older workers, both financially and morally.
Contact: Zoltán Tóth, Managing Director