Magna Charter vs works council

During 1999, Austria's ÖGB trade union confederation and Magna, the Canadian-owned automotive components manufacturer, have been in conflict over the creation of works councils at the firm's operations. The trade union and politicians are caught between the company's proven ability to create jobs and a wish to maintain the Austrian industrial relations system.

Magna International, one of the world's major automotive components manufacturers, based in Canada, and founded and owned by a 1950s Austrian emigrant, in 1998 acquired the Austrian Steyr-Daimler-Puch AG (SDP) for about ATS 4 billion. At the same time, Magna continued to expand its own Austrian operations. It has, by its own reckoning, so far invested ATS 11 billion in Austria and created 1,300 jobs while cutting 100 jobs in one of the SDP plants. While engineering jobs are carried out for a wide variety of customers, much of the manufacturing output is destined for Daimler-Chrysler. Recently, major orders were also received from BMW's Rover subsidiary, from Opel and Saab ( the two General Motors subsidiaries), and from Volkswagen. The latter order is expected to create another 300 jobs. Magna, however, is threatening to divert the investment to Hungary or Germany because it feels that its welcome in Austria has soured and its treatment has become unfair.

An apparent particularity of Magna is its owner's alleged aversion to trade unions and works councils. In their place, the multinational promotes a "Magna Charter" specifying the rights and obligations of employees and management, and "fairness commissions" arbitrating complaints. Indeed, none of Magna's new plants in Austria have works councils. The Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) is taking strong exception to this state of affairs. The conflict has come to a head over the dismissal, in February 1999, of a woman who had favoured the creation of a works council at one of the company's plants in Styria. Supported by the ÖGB, she went to court. While the verdict is still pending, Magna organised a ballot at the plant and received a majority against the reinstatement of the employee. As a result of the conflict, the provincial government suspended a ATS 4.2 million subsidy to another nearby Magna plant. The subsidy was finally released at the end of July 1999 in a bid to secure the 300 new jobs created by the Volkswagen contract for the area.

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment