Industrial relations in the automotive sector

Romania has an important automotive sector, with major vehicle manufacturers including Automobile Dacia (owned by Renault), Daewoo Automobile, Roman, Aro and Rocar. This article examines the situation, in 2003, with regard to the structure of the sector, trade unions, employers' organisation and collective bargaining.

Automotive manufacturing has been considered an important sector of Romanian industry over the past 30-40 years. However, in the last decade, industry as a whole has undergone significant restructuring. From 1991 to 2002, the number of employees diminished from about 3.4 million to 1.9 million (down by 45 %) and the number of companies increased from about 2,800 to over 45,000. Over the same period, the number of enterprises in the automotive sector increased from 39 to 376, while the number of employees fell from 125,000 to about 83,000. The production of the automotive sector has also declined significantly in the past decade. Production in 2002 compared with 1991 fell from: 84,000 cars (town and off-road) to 66,000; 2,226 buses and vans to seven; 75 trolleybuses to nine; and 7,592 trucks to 440.

Table 1 below sets out the number of firms and employees in the automotive sector in 2002.

Table 1. Structure of automotive sector in Romania, 2002
NACE code Number of active firms Number of employees Turnover (ROL billion)
34.10 - Manufacture of motor vehicles (agricultural tractors excluded) 16 27,322 17,721.4
34.20 - Manufacture of bodies (coachwork) for motor vehicles; manufacture of trailers and semi-trailers 29 2,432 813.3
34.30 - Manufacture of parts and accessories for motor vehicles and their engines 286 38,160 16,194.5
31.61 - Manufacture of electrical equipment for engines and vehicles nec 45 15,383 6,379.0
Total 376 83,297 41,108.2

Source: Chamber of Commerce and Industry of Romania and Bucharest (Camera de Comerţ şi Industrie a României şi a Municipiului Bucureşti, CCIRB).

In the remainder of this article, we focus mainly on motor vehicle manufacturing (NACE code 34.10), rather than the manufacture of components and equipment.

The five most import motor vehicle manufacturers are: Automobile Dacia (town cars); Roman (trucks); Aro (off-road cars); Daewoo Automobile (town cars); and Rocar (buses, trolleybuses and vans). These companies - see table 2 below - account for over 95% of all employees and 96% of the total turnover of all motor vehicle manufacturing in Romania.

Table 2. Main motor vehicle manufacturers in Romania, 2002
Company Number of employees Turnover (ROL billion) Total sales on domestic market (no. of vehicles) Domestic market share (%) Total export sales (no. of vehicles)
Automobile Dacia 11,519 9,434.0 52,742 47.1 -
Aro 3,471 620.8 1,236 1.1 -
Daewoo Automobile 3,620 5,451.8 13,087 11.7 631
Roman 6,653 1,446.8 426 0.38 70
Rocar 820 59.1 16 0.01 0
Total 26,083 17,012.5 - - -
% of total NACE 34.10 95.47 96.0 - .- -

Source: Own calculations using CCIRB data.

In 2002, sales on the domestic market accounted for about 112,000 motor vehicles, of which 88,800 cars, 22,000 vans and 1,100 buses. Total imports amounted to 44,400 vehicles, of which 34,300 cars, 9,200 vans and 1,000 buses. Exports amounted to 12,100 vehicles, of which 11,000 cars and 1,100 vans. Domestic production and total assembly amounted to 79,500 vehicles, of which 65,300 cars and 14,200 vans.

Romanian motor vehicle manufacturers resorted to international outsourcing and subcontracting even before 1990. Dacia Automobile was set up jointly with the French-based Renault in the late 1960s and subcontracting practices between the two companies continued until 1978, through the assembly of various models. In 1999, Dacia Automobile was bought by Renault and nowadays its outsourcing and subcontracting practices are again internationally dispersed (especially with the parent company), though national suppliers still play their role.

Daewoo Automobile was set up in 1997, when the South Korean manufacturer Daewoo purchased a company established in the 1980s by Citröen of France. Its outsourcing and subcontracting practices are mainly internationally oriented.

Aro and Roman - both state-owned Romanian companies currently undergoing privatisation - use outsourcing and subcontracting systems mainly on the local and national levels, while Rocar is mostly an assembly line for buses and its international partnerships have been highly unstable.

As mentioned above, employment in the automotive sector has fallen by around a third over the past decade. Increases in productivity have required significant redundancies, and overly high employment levels are perceived as the sector's main employment-related problem, rather than employees' level of training and skills. Indeed, there is a surplus of skilled labour in the industry.

Trade unions

The main trade unions which organise in motor vehicle manufacturing are affiliated to the National Trade Unions Bloc (Blocul Naţional Sindical, BNS), Cartel Alfa and the Democratic Trade Union Confederation of Romania (Confederaţia Sindicatelor Democratice din România, CSDR) (RO0307101F).

The largest federation in the sector (with 18,000 members) is the Romanian Car Federation (Federaţia Automobilul Românesc, FAR), affiliated to BNS. It groups trade union organisations in eight companies:

  • Automobile Dacia (13,000 members);
  • Aro (2,000 members);
  • Daewoo Automobile (400 members); and
  • five companies producing parts and components for the motor vehicles industry (2,500 employees).

The second largest union federation is Fraternity Braşov (Înfrăţirea Braşov), to which the main trade union organisation at Daewoo Automobile (3,000 members) and the Astra trade union at Roman are affiliated. The third-largest organisation is the Cartel Metal Federation (Federaţia Cartel Metal) to which two trade union organisations at Roman and the only union at Rocar are affiliated.

There is thus generally more than one trade union organisation active in each of the five main vehicle manufacturing companies, and their affiliation varies. There are:

  • five unions at Aro, representing 87% of all employees in total, and having 150 to 1,500 members each;
  • four unions at Roman;
  • three unions at Automobile Dacia. The BNS affiliate mentioned above is the largest, with 13,000 members, while two unaffiliated unions have 900 and 100 members respectively. Total union membership currently exceeds the size of the workforce, since 9,800 workers have been made redundant and in some cases retained their union membership (an advantageous social assistance programme was specially designed for the redundant employees);
  • two unions at Daewoo Automobile; and
  • one union at Rocar.

In these companies, trade unions are invited to attend meetings of the board of directors as observers.

Employers' organisations

There is no specific employers' organisation for the automotive sector. Roman and Automobile Dacia are affiliated to the General Union of Romanian Industrialists - 1903 (Uniunea Generală a Industriaşilor din România, UGIR 1903) (RO0310103F). Rocar and Aro, as state-owned companies, are currently administered by the Authority for Privatisation and Management of State Ownership (Autoritatea pentru Privatizare şi Administrarea Participaţiilor Statului, APAPS). Daewoo Automobile was a member of the Romanian National Employers (Patronatul Naţional Român, PNR), but left it in 2001 and is now unaffiliated.

Collective bargaining

At the branch level, a collective agreement for vehicle manufacturing is in place between the representative employers` organizations and trade unions. Within companies, the trade unions consider the provisions of the sectoral agreement as the floor for subsequent enterprise-level bargaining.

Besides wages, which are negotiated every year, the thorniest issue in industrial relations within the sector is company restructuring leading to redundancies. There have been frequent labour disputes over this issue at Roman (RO0311101N), Automobile Dacia and Aro. At theses companies, total redundancies have so far totalled 20,000 and many more are to follow.

The only company in the Romanian automotive sector covered by a European Works Council is Automobile Dacia, whose trade unions have one representative on the Renault EWC. In the other company in which foreign capital is dominant, Daewoo Automobile, employer-trade union relations are considered to be quite good.

Commentary

Since 1991, the Romanian automotive sector has seen a significant reduction in the number of employees, along with an increase in the number of active firms. Industrial relations have been shaped in the context of privatisation, which has already been completed in two of the main companies in the sector, but the most important disturbances have arisen from company restructuring leading to redundancies. Falling production in the sector acts as a major constraint not only for industrial relations but, in some cases, even for the survival of the companies concerned.

The surplus of skilled labour in the sector constantly undermines trade unions’ bargaining power. The present wage level is much below what might be expected, considering the importance of the sector and its highly skilled personnel. (Luminita Chivu, Institute of National Economy)

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

Eurofound welcomes feedback and updates on this regulation

Add new comment