Strike action averted in mining industry

Collective bargaining in the Czech mining company OKD has proven to be lengthy and problematic. Initially, negotiations were stalled by the failure to agree on the method used to calculate bonuses and, in the meantime, the company faced economic problems caused by increased operating costs and low coal prices. OKD had to restructure, announcing job and wage cuts and the sale of assets. Unions threatened strike action but this was avoided when an agreement was signed in November 2013.

Background

The mining company OKD, which has around 13,000 staff, faces economic difficulties (CZ1307029I). In May 2013, it announced job and wage cuts the sale of part of its property.

The situation is complicated by the high unemployment rate in the Moravian-Silesian region where the company operates, the second highest in the Czech Republic at 9.48% on 31 March 2013 according to the Czech Statistical Office data.

OKD is the only producer of hard (bituminous) coal in the Czech Republic and, in terms of production volume, one of the five largest companies in Europe. Coal is mined in the Ostrava-Karviná district in North Moravia and is then processed and refined.

The country’s caretaker government, led by Prime Minister Jiří Rusnok, became involved in seeking solutions to the company’s problems but officials refused to speculate about a potential purchase of the Paskov mine by the government. The Paskov mine is in danger of being shut down.

Challenging collective bargaining

Collective bargaining was difficult and took place over 13 months. Although most sections of the agreement had been negotiated long before bargaining started, talks stalled because of the method proposed to calculate bonuses. OKD’s management wanted bonuses tied to economic results, whereas the miners wanted to preserve the existing Christmas and holiday bonuses.

The negotiations were conducted through a nominated mediator and collapsed after the management rejected the mediator’s proposal. The management submitted its own draft contract which in turn was rejected by the unions.

Miners were balloted between 4–7 November 2013 and 90% voted in favour of strike action. A four-hour strike was scheduled for Tuesday 19 November 2013 from 12.00 to 16.00, and another for 29 November 2012. A three-day strike was scheduled for 4–6 December 2013.

Compromises made on both sides

In the event, all the scheduled strikes were cancelled and both sides signed a collective agreement on 13 November 2013, valid until 2018.

Jaromír Pytlík, Chair of the Association of Mining Unions Havířov (SHO), said:

The negotiation process was the most difficult in history. Instead of an uncertain wage increase of 4% being tied to the fulfilment of economic parameters, we have finally managed to negotiate guaranteed Christmas and holiday bonuses equal to six days’ average daily wage. This is, on average, an increase of just 4%.

This year, the miners will be given original value bonuses.

Ján Fabián, Chief Executive Officer of OKD, said he approved of the new collective agreement, commenting: ‘Both sides had to make compromises and I am pleased to have this new agreement completed, given that the situation in OKD is extremely difficult.’

Fabián added that the negotiated compromise will enable the company to carry on with a comprehensive restructuring programme. The agreement should also lead to an 8% year-on-year reduction in OKD’s personnel costs in 2014.

Cost savings forecasts include an estimated 4% cut in total labour costs and a 4% reduction in the workforce, not including staff likely to face redundancy in connection with the closure of the Paskov mine.

Soňa Veverková, Research Institute for Labour and Social Affairs

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