Wave of pay demands

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Late 2004 has seen an upsurge in demands for pay increases by Polish employees in sectors such as the metal-processing, coal-mining, petroleum, automotive, and food industries. Trade unions generally advance the same argument in support of their demands, namely that workers too should benefit from a recent improvement in the economic climate. Employers are very circumspect in addressing these demands, warning that over-hasty spending of the fruits of economic growth may lead to a reduction of investments and thus endanger the very growth that is now fuelling employee demands.

Economic growth in Poland continues at a healthy rate, and there is nothing to suggest any imminent stalling. In 2003, Polish GDP grew by 3.8%, while 5.7% is predicted for 2004. The financial results posted by Polish enterprises are also improving. Many forecasts indicate that a large influx of direct investments from abroad is in the offing, and even at the moment investment outlays seem set to top USD 8 billion by the end of 2004. Under these circumstances, questions as to how the 'surplus funds' will be used have emerged, with divergent views taken on this issue by employers and employees. On the one hand, following Poland’s accession to the European Union in May 2004, the economic gap separating Poland not only from the 'old' 15 EU Member States, but also from some of the new Member States is becoming increasingly apparent. If they are to close this gap, enterprises must invest heavily - an objective that excludes day-to-day use of funds. On the other hand, employees have experienced a growing cost of living, with EU accession bringing a rise in inflationary pressure and prices for some consumer staples (the notable example being meat products) growing more than expected, by over 3% on average. Furthermore, the workforces of successful enterprises want to share in the profits in some way.

Demands for pay raises are not limited to the private sector, and are also beginning to manifest themselves among public sector employees. This has set off fears in some circles that a chain reaction of sorts will be triggered, with employees all over the country - emboldened by the pay increases won by some of their colleagues at other employers - will claim pay raises of their own. The prevailing social climate certainly seems conducive to such initiatives. The unrestrained criticism piled upon the government’s budgetary proposals for 2005 (PL0410103N) by all the trade unions represented on the Tripartite Commission for Social and Economic Affairs (Komisja Trójstronna do Spraw Społeczno-Gospodarczych) (PL0210106F) suggests that employees are not willing to contemplate economising measures; for instance, a 3% increase in pay in state-financed entities and a 3% increase in the national minimum wage have been opposed as too low (PL0410101F).

Pay demands

Negotiations concerning pay increases are underway in late 2004 in the metal-processing, coal-mining, petroleum, automotive, and food industries. The subject has also been broached by employees of the public sector.

In the metal-processing industry, riding high on favourable prices in the international markets and on large demand, demands for wage increases have been put forward by the trade unions at ISPAT Polska Stal SA and KGHM Polska Miedź. The former (known until May 2004 as PolishPolskie Huty Stali SA) is now part of the multinational LNM Group and is the largest employer in the Polish metal-processing industry with a workforce of approximately 15,000. ISPAT operates the four largest smelting and processing plants in the country, in Cracow (formerly the T Sendzimir plant), Dąbrowa Górnicza (originally called Huta Katowice), Sosnowiec (formerly Cedler) and Świętochłowice (formerly Florian). The unions are demanding a PLN 250 monthly pay increase. At present, ISPAT’s directors are resisting.

The employees of KGHM Polska Miedź, meanwhile, are asking for an additional end-of-year bonus to be paid out of the firm’s profits. For the second quarter of 2004, KGHM posted a net profit of PLN 500 million, a 10-fold increase over one year. The company’s directors have taken the position that pay increases already accorded are sufficient to offset the rise in prices; the unions counter by arguing that, seeing as the employer is making substantial profits, a further pay increase would be perfectly reasonable. The parties are expected to resume talks concerning increases in basic 2005.

The employees of Poland's largest company, the Polish Petrol Concern Orlen (Polski Koncern Naftowy Orlen, PKN Orlen), secured a monthly pay increase of PLN 99 (in gross terms) earlier on in 2004, having launched a collective dispute. Following several months of disruptions associated with changes in the company’s governing bodies (PL0406102N), the situation at PKN Orlen is stabilising; the unions took this as a sign to make demands for pay increases at a level 3%-4% above the inflation rate.

Discussions concerning a possible pay increase are also underway at Kompania Węglowa, the largest mining group in Europe (PL0408101N). 2004 is the first year for quite some time that the Polish mining industry is beginning to post profits. The unions have drafted a number of proposed new collective agreements and submitted them for the management’s consideration. One, advocated by the August ’80 Free Trade Union (Wolny Związek Zawodowy „Sierpień ’80”, WZZ „Sierpień ’80”), provides for a pay increase of 25%; another, supported by 12 assorted unions - including the Independent and Self-Governing Trade Union Solidarity (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność) - calls for increases to the tune of 35%. The management and employees of two other mining companies, Katowicki Holding Węglowy and Jastrzębska Spółka Węglowa, have already reached agreement concerning pay rises.

Discussions about possible wage increases are also being pursued at Fiat Auto Poland, the country’s largest maker of passenger vehicles. The unions are seeking increases in remuneration packages of an average of 10%.

The unions active at Morliny, one of the better known meat producers, have demanded that pay be adjusted, at the very least, in line with the inflation index. In this sector, such demands receive added strength due to an unprecedented boom now enjoyed by the Polish meat industry, largely thanks to ever-rising demand for its output in other EU countries.

The atmosphere has been growing increasingly tense among public transport workers in the nation’s capital. Pay increases are being sought by Warsaw streetcar staff as well as by bus drivers. In late September 2004, a demonstration was held outside the Warsaw city hall. The staff of Tramwaje Warszawskie, the capital’s light rail operator, affiliated to the Sierpień ’80 union are demanding a wage increase of 10%, arguing that their pay has remained at an unchanged level for three years. The city’s bus drivers, meanwhile, are seeking an hourly wage increase of PLN 2. Several weeks of talks resulted in no progress, with union activists from Sierpień ’80 rejecting an offer of a 5% increase and threatening to work to rule.

Commentary

Recent developments clearly demonstrate the 'spend now, or invest for later?' dilemma. The demands of the employees are understandable enough, especially if one considers that many of them work in industries that appear to be in good shape, and that workers have been affected by growing prices of utilities, food and other goods. On the other hand, it most be borne in mind that, for years, Polish heavy industry achieved nothing but losses, the impact of which was softened by extensive public aid. Overall, it seems that, for the time being, the warnings against spiralling employee pay demands voiced by employers are a preventive measure stemming from a 'better-safe-than-sorry' attitude or, perhaps, intended to improve their negotiating position. There is no way to tell, however, whether 2005 will bring new worker demands. (Jan Czarzasty, Institute of Public Affairs [Instytut Spraw Publicznych, ISP] and Warsaw School of Economics [Szkoła Główna Handlowa, SGH])

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