Author: Mihály Zoltán
The current European economic environment is dominated by neoliberal policies, inspired by neo-classical economics advocating the necessity of the global free market. Liberalization, privatization and minimal state interference in economic affairs are part of the neoliberal doctrine put forth by various local elites, measures that supposedly ensure prosperity and growth in the long run. In this regard, Romania is largely an assembly line for commodities conceived elsewhere, encompassing relatively unsophisticated production processes requiring unskilled labour. Further problems arise in times of economic crisis, when austerity measures are deemed an appropriate solution against the crisis. The brunt of these measures are supported by workers, who see themselves left without their means of subsistence. They are either dismissed spontaneously due to short term work contracts and limited rights, or collectively when a company decides to relocate to a friendlier environment – with low or no taxes and low-cost labour power – that assures a competitive edge.
Two factors contribute to this state of affairs: the deregulation of work relations and the decline of trade unions. Labour-side deregulation represents a dominant trend in ‘developing’ countries, and the CEE region is not an exception. As I mentioned elsewhere (Mihály, 2015) Romania’s government proposed a so called „deregulation of work relations” necessary for foreign investments. In other words, a „flexibilization” of labor power was deemed appropriate for solving the „rigidity problem” present within the country’s post-socialist workforce. Labour Code changes achieved this by allowing unlimited short-term work contracts, equivalent to probation periods. Therefore, employers were granted the right for individual or collective dismissals without any legal burdens (Stoiciu, 2010). Also, companies were permitted to impose so called „internal performance standards” as they saw fit. Unions or any other type of worker coalitions were discouraged with a clause stating that during collective strikes the work contract is suspended. Initially, collective contracts were to be discarded entirely, but union negotiations stopped this from happening. To justify Labour Code changes, the government invoked a need to increase the competitiveness of Romania at an international level. The plan to achieve this task was by generating cheap labor power with the hope of attracting foreign investments. These measures of flexibilization decreased the legal protection workers had, raising their level of subordination in front of employers even further. In sum, these reforms were negotiated in 2010 and implemented in 2011 by modifying the Labour Code thus leading to the „defeat of worker unions”. (Guga, 2014).
In Hungary, state induced flexibilization is a fundamental feature of economic policies. Not only was Hungary the first to open its borders for Foreign Direct Investments (FDI), but the country’s economy is largely dependent on FDI. Compared to other countries in Central Europe, Hungary’s Gross Domestic Product (GDP) bears the highest percentage of these investments (71% according to Ban, 2014). The new labour law implemented in 2012 consolidated the country’s ‘race to the bottom’ strategy which consisted of lowering taxes for foreign investors and reducing wages along with working conditions. These legal prerogatives are clearly to the advantage of employers: overtime can be calculated for up to 12 months, risks associated with production are delegated to employees, vacation periods are set exclusively by employers, 3 month probation period is permitted, and employment protection is severely reduced, not including outsourced workers with short-term contracts (Schipper, 2016). Deregulation was induced in order to make Hungary competitive on a global scale, similarly to Romania and other post-socialist European countries.
In Poland, Maciejewska, Mrozowicki and Piasna (2016) document a situation which follows an identical trend. The ‘inflow of FDI’ is considered one of the economy’s main pillars, while ‘high labour costs are diagnosed as a weakness’ (2016:230). During the 2008 economic crisis, state competitiveness measures entailing ‘liberalisation and deregulation in the labour market’ were depicted as the adequate solution for economic stagnation. The labour law implemented then is presently still in place, although it represents a further development of deregulation. These measures date back to 2002, when the minimum wage was frozen and corporation taxes were severely reduced: from 40% in 1989 to 19% in 2004 (2016:234). The need for ‘employment flexibility’ led to the implementation of 4 legislative elements: support for temporary work contracts via agencies, the number of fixed-term contracts went from 3 to an unlimited number per company (identical with Romania), small and medium firms no longer needed to provide a social fund, and employers were permitted to annul collective agreements – including mass dismissals – ‘in a difficult economic situation’ (2016:237). Unemployment benefits were also reduced to 120 euro’s per month, and a ‘profiling’ system was introduced in order to reduce labour-side state expenditures and supposedly increase the employment rate.
The decline of trade union power is linked with weakening political ties of unions and workers’ loss of trust in union representation. In a country where the socialist past is transposed unto worker solidarity and collective organizing, deregulation is further legitimized and accepted, thus the bargaining power of trade unions significantly dwindled. National level organizations largely failed to represent worker interests by siding with different political actors advocating for neoliberal reforms. In these circumstances, plant-level bargaining became the only viable solution for workers (Adăscăliței and Guga, 2015). Romania’s legislation states that every firm with at least 20 employees can have a worker council (it is clearly stated that this is optional, not mandatory), which is meant to replace collective bargaining at larger levels. What makes worker organizing in individual companies a strenuous task is the ease with which management can subvert worker representation. There is no legal clause that forbids management to involve itself in worker affairs, cases where managers are the actual leaders of company worker councils are not unheard of. Although, on a wider scale workers do not believe that unions can represent their interests and collective bargaining initiatives are completely absent in the majority of Romania’s workplaces.
In spite of the ongoing assault on labour rights, in rare cases, union militantism can still change the balance of power and secure important benefits for workers. One such case is the Dacia union present at the Dacia-Renault plant in Mioveni, Romania. The union successfully engaged in various militant activities and prevailed in long-standing conflict with the company. This paper seeks to describe the manner in which the workers at this plan made use of various types of power standing at their disposal, and secured significant benefits while maintaining a coflictual relation with management.
Workers’ Power and Resistance
Workers can assert their demands by making use of their ‘associational’ and ‘structural power’ (Wright, 2000). Associational power is gained by convergence into worker organizations, mainly trade unions, but also worker councils and political parties insuring ‘forms of institutional representation of workers’ (Wright, 2000:962). Structural power represents the ‘location of workers within the economic system’ at two levels: on the labour market in general and within a specific industry. Silver (2003) neatly terms these two levels as ‘marketplace bargaining power’ and ‘workplace bargaining power’. The former is determined by the skill level of a workforce, low levels of unemployment and the possibility of non-wage income. The latter refers to direct worker militancy and resistance: production stoppages, slowdowns and general strikes. Workplace structural power is closely tied to the nature of the production process: while a continuous assembly line is susceptible to slowdowns and stoppages (where one break in the chain of production disrupts the entire production process), a flexible production process (with fragmented assembly lines or ‘production islands’) largely counteracts such initiatives.
The case of the Dacia-Renault plant from Mioveni, Romania is compelling example of how workers’ power can be manifested. The plant’s trade union (representing 11.000 Dacia employees out of approximately 16.000 workers from the Romanian automobile industry), Sindicatul Automobile Dacia, is a visible example of associational power that further wields workplace bargaining power, leading to significant results. By all intents and purposes, the Dacia-Renault plant is an outlier in an otherwise hostile environment for workers. Not only did wages increase dramatically in the recent past (by 308% between 2004 and 2011, reaching on average 2.500 RON – roughly €560 – in a time when the minimum wage was 800 RON), but workers benefit from generous bonuses (holiday, vacation, as well as a ‘results bonus’) and paid overtime (Adăscăliței and Guga, 2015:8). The turnover rate is also low, thus job security is high, with only 10% of the workforce having fixed term contracts, despite the 2011 Labour Code changes permitting the use of agency workers. Employment contracts are terminated voluntarily, often accompanied by hefty benefits (between €7.000 and €17.000 for workers aged over 55 years).
Workers achieved this state of affairs by maintaining a conflictual relation with the plant’s management. Sustained militancy is the driving force which created this worker-friendly environment, and is arguably the only reason why it still persists, despite numerous relocation warnings and intimidation attempts by management. Since 2007, the union staged 13 protests at the plant, including a general strike in 2008. The succession of possible militant activities start with a demand put forth by the workers (tied to wage increases or improvement of working conditions), if management refuses to abide then the union starts announcing strike threats followed by slowdown strikes and ultimately a general strike can ensue. In 2008, the union demands included a €145 pay raise and the limitation of ‘temporary contracts’ (Adăscăliței and Guga, 2015:14). When management denied the requests, the union enacted a warning strike and announced the date for a general strike. Management responded with a 12% wage increase, far below expectations. In addition, the company tried to prevent the general strike by sending letters to employee residences, warning them of wage reductions and the plant’s possible relocation to Morocco or Russia in case of a longer conflict. Workers refused to give in and management sued the union – claiming that the strike was illegal – but subsequently lost the trial in court. In the end, a 36% wage increase was accepted, and the ‘outcomes of the strike were almost unanimously regarded as an outstanding victory obtained in an overall hostile environment for trade union organization and strike activity’ (2015:16).
Worker unrest in the long-run can be categorized in cycles of change, either from a polanyian or a marxian perspective (Silver, 2003). Driven by the overuse of fictitious commodities (labour power in this case), Polanyi and Marx propose two different transformation trends driven by worker resistance. According to Polanyi the dominance of the free market (manifested through the use of fictitious commodities) is inevitably accompanied by a countermovement, which can take the form of worker unrest that leads to legislation changes, worker protection and the formation of trade unions – thus to a certain degree of labour power decommodification. Silver calls this the ‘pendulum-like motion’ of worker induced social transformation (2003:17). In Marx’s analysis, the seeds of change are already present at the moment of production, determining a ‘stage-like nature of transformations’ (2003:16). Capitalist production creates only ‘misery, degradation and exploitation of the working class’ (2003:18) thus labour movements aiming to forge a different social order are inevitable.
No matter what perspective we adopt, worker militancy at the Dacia-Renault plant had noteworthy results. The union in question succeeded in a time and place where unions exist only on paper, and in practice rarely represent any labour rights whatsoever. By using a varied set of disruptive activities, the Dacia union workers secured pay raises, benefits and favorable contractual obligations, proving that an organized labour force can still retain power and exert it in the benefit of all parties involved in productive activities. The victories achieved by the Dacia union constitutes a sliver of hope for a better working life in the future.
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