Industrial relations controversy in Austrian automobile cluster

One of the best-known Austrian economic development schemes, Autocluster Styria, has run into serious trouble over its industrial relations in late 1998. A number of companies within the cluster are actively opposed to the formation of works councils.

Autocluster Styria is an invention of the provincial government of Styria (Steiermark) in Austria. It comprises 150 plants and research sites, all engaged in one aspect or other of automobile manufacturing, that began to cooperate actively in 1996. They range from very small to fairly large sites and together employ more than 11,000 people, several thousand more than in 1996. Some 20% of the province's exports now originate from this industry. The provincial government has invested ATS 20 million in making the cluster idea work. However, from 1999 the subsidies will be terminated, as was made clear from the beginning, and cooperation will have to be financed by the companies themselves on the one hand and the trade unions on the other. The unions are now baulking at the prospect of self-financing.

Trade unionists have accused some companies of obstructing the formation of works councils and of actually dismissing workers willing to stand for election, even though the firms would be legally required to have a works council. Furthermore the unions claim that pay has not been rising because piece rates and bonus systems have replaced hourly wages. Stress at work has also, it is claimed, been rising. An innovation has been that wage earners have had to sign contracts prohibiting them from working in another plant in the same industry for a year after quitting their current job. As a result, the trade unions have raised three demands that they say must be met before they will honour their commitment to self-financing the cluster:

  • works councils must be established in all eligible plants. Three new plants set up by a Canadian multinational are a particular target. Two of them are formally outside the cluster but the one in the cluster has 250 employees. According to trade union estimates, only half the cluster companies have works councils;
  • employees are to share in the benefits accruing from the cluster. For the purposes of quantifying these benefits, an audit of the economic benefits of the cluster should be undertaken with the results fully accessible to works councils; and
  • a central works council should be established that covers the entire cluster.

The provincial government and employers have rejected the demands, and the last one in particular on the grounds of a lack of a legal basis. On 28 November 1998, the unions called a meeting of all the works council members in the cluster to promote cooperation and the exchange of information and to sanction the demands officially. The central works council demand was not formally upheld. It was replaced by a demand for works councils in all eligible cluster members.

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