Industrial relations in the automotive sector

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The automotive sector in Bulgaria consists almost exclusively of the production of parts, components and accessories. This article examines the situation, in 2003, with regard to the structure of the sector, trade unions, employers' organisations and collective bargaining.

Since 1989, during the process of restructuring and privatisation in Bulgaria, major enterprises in the automotive sector have been liquidated or have transformed their activity. In the socialist era, lorries and cars were assembled for eastern bloc markets and buses were produced, but these activities have since been wound up. Due to these changes, a number of enterprises supplying the major producers have terminated their activity or reoriented themselves to new areas of production.

Structure of sector

Currently, there is no production of motor vehicles in Bulgaria. Enterprises have reoriented themselves to produce parts, components and accessories for motor vehicles and their engines, and employment and production is now concentrated in these areas. Flexibility is a basic characteristic of many of these enterprises - they are mainly small and medium-sized enterprises (SMEs) which work to clients' demands. After completing an order, they often switch to the production of other parts that are not necessarily related to the automotive sector. They tend to have the equipment and qualified staff that allow them rapidly to reorient themselves to new market niches. The characteristics of enterprises which manufacture electrical equipment for engines and vehicles are similar. Over 90% of automotive enterprises are privately owned and produce mainly for the domestic market. Table 1 below shows the number of firms and employees (including the number of female employees) in the automotive sector. Only about 0.3% of the national workforce are now employed in the automotive sector. The average wage in the sector is about 18% lower than the average wage in industry.

Table 1. Structure of automotive sector, firms and employment levels
NACE code Description Number of firms Employment Of which, female employment
34.10 Manufacture of motor vehicles (agricultural tractors excluded) 4 148 28
34.20. Manufacture of bodies (coachwork) for motor vehicles; manufacture of trailers and semi-trailers 18 586 141
34.30 Manufacture of parts and accessories for motor vehicles and their engines 98 2,346 528
31.61 Manufacture of electrical equipment for engines and vehicles nec 21 2,480 1,616
Total . 141 5,540 2,313

Source: National Statistics Institute.

Nearly half of all workers in the sector are employed in seven major companies - see table 2 below - and of these almost half works in one enterprise, EPIQ Electronic Assembly Bulgaria JSC, a subsidiary of the Belgian-based multinational, EPIQ. One other automotive components multinational has a subsidiary in Bulgaria, the German-based Grammer.

Table 2. Major automotive sector companies in Bulgaria, ownership and employment levels
NACE code (see table 1) Company Ownership . Employment
Total Of which, female employment
34.10 Kenta JSC 100% private 113 15
34.20 Semi-Trailers and Containers JSC 100% private 42 8
34.20 Remel JSC Mixed 113 15
34.30 Druzhba JSC 100% private 400 102
34.30 Madara JSC 85% private 500 91
34.30 Grammer JSC 100% private 285 197
31.61 EPIQ Electronic Assembly Bulgaria JSC 100 % private 1,280 na

Source: Ministry of Economy, National Statistics Institute and author’s survey 'Industrial relations in major automotive companies' (October 2003).

The automotive enterprises (except those mainly manufacturing electrical equipment for engines and vehicles) form part of the wider machine-building sector. Due to the limited domestic market, export-oriented automotive enterprises have better prospects for increasing production.

Table 3. Major automotive sector companies in Bulgaria, production and markets
NACE code Company Manufactured production 2002 (BGN 000s) Markets
Internal External
34.10 Kenta JSC 1,238 0 100%
34.20 Semi-Trailers and Containers JSC 1,227 0 100%
34.20 Remel JSC 1,600 0 100%
34.30 Druzhba JSC 5,681 41% 49%
34.30 Madara JSC 3,892 53% 47%
34.30 Grammer JSC 10,000 90% -
31.61 EPIQ electronic assembly - Bulgaria 48,750 90% -

Source: author’s survey 'Industrial relations in major automotive companies' (October 2003).

Trade unions

There is no established sectoral trade union (BG0307204F) structures representing employees in the automotive sector. The workers in the sector are represented by: the National Trade Union Federation Metal-Electro and Trade Union Federation of Organisations in Electronics, Machinery Construction and Information Systems and Technologies affiliated to the Confederation of Independent Trade Unions in Bulgaria (CITUB); and the Trade Union Federation of Metalworkers, and National Federation of Technical Industry, Science, Informatics affiliated to the Confederation of Labour Podkrepa (Support) (CL Podkrepa).

At enterprise level in the automotive sector, there are trade union organisations affiliated to the CITUB National Trade Union Federation Metal-Electro and trade union sections affiliated to the CL Podkrepa Trade Union Federation of Metalworkers. Trade union committees that lead union activity in companies, conduct bargaining and conclude collective agreements with the employer are elected at meetings of these unions' members.

In the automotive sector as a whole, the trade unions have 1,396 members. CITUB affiliates have 1,191 members (85.3% of union membership in the sector) and CL Podkrepa affiliates have 147 (10.5%). Other trade unions not considered nationally representative have 58 members (4.2% of all union members in the sector). Total trade union density in the sector is 25.2% (based on a CITUB internal survey - definitive data are not available pending the findings of a current national census of trade union members). Union density in the major companies is 28.3%, which is higher than the average for the automotive sector as a whole. Trade union organisations are mainly established in these larger companies and many SMEs remain outside trade union representation and are thus not covered by collective bargaining and collective agreements.

Among subsidiaries of automotive multinationals, CITUB has an organisation only at Grammer JSC, where union density is 94.7%. At EPIQ Electronic Assembly Bulgaria JSC, attempts to recruit employees are being made by the CITUB Trade Union Federation of Organisations in Electronics, Machinery Construction and Information Systems and Technologies. At initial meetings, employer’s representatives have indicated that they would not impede the process of trade union organisation at the company.

Employers' organisations

There is no specific branch-level employers’ structure in the automotive sector. Some automotive companies belong to wider sectoral employers' organisations - the Bulgarian Branch Association - Machine-building and Bulgarian Branch Association - Electronics and Informatics affiliated to the Bulgarian Industrial Association (BIA). These organisations represent about 13% of the employers in the sector.

Social dialogue and bargaining

At national level there is a tripartite Sectoral Council for Social Partnership for the wider sector, made up of nationally representative trade union and employers’ organisations and representatives of the Ministry of Economy and chaired by the deputy minister of economy. The social dialogue in this Council covers a number of issues related to restructuring and privatisation, including for the automotive sector.

In terms of sector-level bargaining, the main automotive enterprises, as mentioned above, belong to the machine-building industry. Although negotiations have been under way for two years, no sectoral collective agreement has yet been concluded for machine-building. The process has been delayed by employers’ organisations, which argue that: the establishment through bargaining of employment conditions higher than those laid down in the Labour Code would decrease the competitiveness of the industry's enterprises, which already face problems in an insecure market environment; and the enterprises without trade union representation would have better opportunities for flexibility - notably in terms of pay and social security contributions - because they would not be committed to the higher standards laid down in a sectoral agreement.

A sectoral agreement has been concluded for the electro-technology and electronics industry, but it does not cover the automotive enterprises in this field.

Since 2002, the social partners have been setting minimum social insurance thresholds for various economic activities and occupations through negotiations and the conclusion of collective agreements. These thresholds set the minimum amount of pay on which employers are obliged to pay social insurance contributions in respect of their employees (with the aim of stopping the practice of employers paying contributions on the basis not of the employees' actual wage but of the much lower national minimum wage) (BG0307101F). This process has included workers in the automotive sector.

The lack of a sectoral collective agreement for the machine-building industry make the negotiation and conclusion of enterprise-level collective agreements difficult, because there are no agreed principles, frameworks and standards at industry level. However, in all major companies with trade union presence, collective agreements are currently in place, with the exception of Madara JSC. At this company, in early 2003 workers initiated protest actions over wage arrears, not having been paid for several months. The actions started spontaneously, without being organised by the unions, and included a blockade of the entrance to the company's premises. After negotiations with the National Trade Union Federation Metal-Electro and the CITUB leadership, the employer came to an agreement to start paying the wages owed, but this has been delayed.

Negotiations in the major automotive companies with a trade union presence are conducted by specially established bodies for social cooperation composed of equal number of representatives of the trade unions and employers. The bargaining relates mainly to wages and employment. In the major companies, there are also working conditions committees made up of equal numbers of employee and management representatives. In enterprises with a trade union presence, the employee representatives are usually trade union representatives or members.


Since the beginning of the political and economic transition in Bulgaria in 1989, the automotive sector has not been a priority for the national economy. The loss of the former socialist markets has led to the reorientation of the whole branch's production - from assembly of trucks and cars, and production of buses and engines, it now manufactures only parts, components and accessories for vehicles. The out-of-date equipment and technologies of major companies do not provide them with access to the international market or the possibility to become sub-suppliers of multinational automotive companies.

For the development of the sector, there is a need to attract important foreign investors to renovate the equipment and to introduce modern technology for the production of final products. The renovation of major enterprises will lead to a revival in the whole sector because the SMEs linked to them will also be developed.

Trade union presence is concentrated in the major enterprises and is insignificant in the sector's SMEs. A large number of employees are not covered by collective bargaining and their interests are not otherwise represented because Bulgaria has no statutory system of workers’ participation.

The main reasons for the low level of trade union organisation in SMEs in the automotive sector and the lack of social dialogue in such enterprises include:

  • the unclear branch structure of CITUB federations organising the workers in this sector;
  • the fact that some employers do not perceive the importance of the social dialogue as a mechanism that would provide them with industrial peace and an appropriate social environment for the enterprise’s development;
  • anti-trade union attitudes on the part of some employers which, in breach of Bulgarian legislation, prevent the establishment of trade union organisations in their enterprises; and
  • the weakness of employers’ organisations. Only a small proportion of the employers are affiliated to employers’ structures that are involved in social dialogue at the branch level.

The decentralisation of bargaining to the enterprise level is caused by the lack of sectoral bargaining. The lack of a sectoral framework is an obstacle to the effectiveness of the bargaining at the lower level. Low wages and jobs insecurity characterise the contents of collective agreements. However, there are some individual collective agreements containing clauses providing for information and consultations with trade unions on: issues concerning work organisation; the situation of the enterprise and its perspectives for development; continuing training; and other 'contemporary' issue that are dealt with in industrial relations elsewhere in Europe. (Tatiana Mihaylova, Institute for Social and Trade Union Research)

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