Unions at major insurer call on top managers to be dismissed

Trade unions at Poland’s largest insurance company, PZU, called on the government to dismiss the company’s president and two members of its management board in October 2008. The unions allege that the managers are guilty of mismanagement, making ‘hidden’ collective redundancies, as well as closing branches and service points without due consultation with employees. Since then, the dispute at PZU seems to have worsened due to problematic relations between the company’s shareholders.

Company profile

The Powszechny Zakład Ubezpieczeń SA (PZU) group is Poland’s largest insurer. At present, the main shareholders of PZU SA are the State Treasury, which holds a 55% stake in the company, and the Netherlands-based bank insurance consortium Eureko BV. The process of privatising PZU got underway in 1998. In January 2005, the lower chamber of the Polish Parliament (Sejm), responding to irregularities in PZU’s privatisation process, appointed an investigative commission to review the case. Relations between the Polish government and Eureko BV have become strained.

Trade union demands

The atmosphere of conflict surrounding PZU has left its mark on relations between management and employees. In mid October 2008, the trade union organisations operating within PZU adopted a motion of no confidence in the company’s management. A document to the same effect was issued by the Federation of Insurance Company Employee Trade Unions (Federacja Związków Zawodowych Pracowników Zakładów Ubezpieczeń), and protests against the management were supported by the following organisations:

  • the PZU employees’ multi-entity coordination committee affiliated to the Independent and Self-Governing Trade Union ‘Solidarity’ (Niezależny Samorządny Związek Zawodowy ‘Solidarność’, NSZZ Solidarność);
  • the PZU Inspectorate Employees’ Trade Union (Związek Zawodowy Pracowników Inspektoratu PZU SA);
  • the PZU head office employees’ organisation affiliated to NSZZ Solidarność (NSZZ Solidarność Pracowników Centrali PZU SA);
  • the PZU multi-entity committee affiliated to NSZZ Solidarność ‘80’ (Komisja Międzyzakładowa NSZZ ‘Solidarność ‘80’, NSZZ Solidarność ‘80).

The trade unions demanded that Prime Minister Donald Tusk and the Minister of the State Treasury, Aleksander Grad, make moves to dismiss the President of PZU, Andrzej Klesyk, along with two other members of its management board – Witold Jaworski and Rafał Stankiewicz. The unions alleged that these executives have:

  • unduly inflated insurance premiums, leading to erosion of the customer base;
  • conducted employee assessments on the basis of vague criteria – employee assessments have been outsourced to an external contractor, which is charging PZU high fees for administration and the grading of multiple-choice tests which, the unions claim, are of little practical value;
  • pursued ‘improper’ human resource policies, allegedly dismissing highly qualified employees and hiring their own acquaintances to replace them;
  • conducted ‘hidden’ collective redundancies;
  • closed down 17 claim processing branches and 72 casualty reporting and assessment points without consulting employees.

Government’s reaction

In response to the unions’ motion of no confidence, the government limited itself to advising the protesting organisations that PZU employees’ grievances concerning the company’s policies or its future course should be taken up with its directors. The Deputy Minister of the State Treasury, Michał Chyczewski, also insisted that all decisions and actions taken by PZU’s management have been subject to due consultation with the company’s supervisory board and are compatible with PZU’s general strategy adopted in late September 2008. Mr Chyczewski emphasised that PZU’s management board enjoys the full support of the government in implementing this strategy.

Commentary

The dispute at PZU seems to be aggravated by problematic relations between the Polish government – the insurer’s majority shareholder – and the Eureko consortium. Conflict around PZU first arose when, after selling 30% of PZU shares to Eureko in 1999, the Polish state decided that it wanted to retain a majority stake in PZU after all and would thus sell no further shares. Eureko took this matter before the London Court of International Arbitration (LCIA) in August 2005. The latter ruled that the Polish government’s actions amounted to a violation of the Treaty on mutual protection of investments signed between the Netherlands and Poland.

The arbitration proceedings entered a new stage in the autumn of 2008; they now centre on the amount of damages (plus interest) sought by Eureko, which is demanding a total of PLN 40 billion (€11.3 billion as at 21 October 2008). In this context, PZU employees benefiting from the protection afforded by a collective agreement signed at the company in 2004 are concerned about redundancies, pay decreases and the loss of PZU share packages to which they are entitled.

Jacek Sroka, Institute of Public Affairs (ISP)

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