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DOMESTIC FIRMS ADAPTING TO WESTERN LABOUR PRACTICES

Fines target on-job drinking

LOZORNO - Alfréd Poznán had a nasty surprise waiting for him one morning three years ago when he arrived at his office with the Slovak construction firm Zipp. It was an invoice for 400,000 Slovak crowns ($8,000) from a Zipp customer, the Volkswagen Slovakia automaker, calculated as a penalty for those labourers working for Zipp and its subcontractors who had tested positive for alcohol in their blood on a VW project site.
"When I saw the bill at first I had no idea what it was," Poznán said from one of Zipp's current premises in this western Slovak town of 2,600. He soon realised, however, that the fine was the result of VW's strict policy against alcohol on its premises, a policy that was something new for Slovak construction firms. Zipp had paid the fine, Poznán remembered, but had also decided it could not afford any more such bills; the firm thus began writing a new clause into its deals with subcontractors and employees requiring them to foot the bill if caught boozing at work.
"After I saw that [first VW] invoice I realised our company could not afford to pay for the drinking of the whole [construction] crew," Poznán said.


At an industrial park for Volkswagen Slovakia suppliers in western Slovakia, construction workers face stiff penalties if caught drinking.
photo: TASR

LOZORNO - Alfréd Poznán had a nasty surprise waiting for him one morning three years ago when he arrived at his office with the Slovak construction firm Zipp. It was an invoice for 400,000 Slovak crowns ($8,000) from a Zipp customer, the Volkswagen Slovakia automaker, calculated as a penalty for those labourers working for Zipp and its subcontractors who had tested positive for alcohol in their blood on a VW project site.

"When I saw the bill at first I had no idea what it was," Poznán said from one of Zipp's current premises in this western Slovak town of 2,600. He soon realised, however, that the fine was the result of VW's strict policy against alcohol on its premises, a policy that was something new for Slovak construction firms. Zipp had paid the fine, Poznán remembered, but had also decided it could not afford any more such bills; the firm thus began writing a new clause into its deals with subcontractors and employees requiring them to foot the bill if caught boozing at work.

"After I saw that [first VW] invoice I realised our company could not afford to pay for the drinking of the whole [construction] crew," Poznán said.

The result, three years later, is a stricter and more efficient approach to work at Zipp and the firms who supply it with labour. This changed approach is itself part of a larger evolution in labour practices at Slovak companies, say sociologists and economists, an evolution that is being shaped, carrot-and-stick fashion, by foreign investors and the lucrative contracts they offer.

"It's all about increasing the quality of the services we offer, and sticking to the strict deadlines required by companies such as VW," added Poznán.

Sign of tough times

Given the woes of the Slovak construction sector, firms like Zipp are more sensitive than most to the demands of its mostly foreign customers.

Following massive highway construction investment under the 1994-1998 government of Vladimír Mečiar, the Mikuláš Dzurinda administration cut highway spending by 20% as soon as it took office in October 1998.

In 1999, the sector recorded a 25.8% year-on-year decline in real turnover, followed by a further 0.4% drop in 2000. Data for July this year show a year-on-year turnover increase of 0.7%, but analysts are expecting another drop this fall.

Such stagnation pits construction firms against each other in a fight for every contract, especially scarce but massive projects such as an industrial park for VW suppliers in Lozorno, launched in August this year, or Plastic Omnium's facility near the same town, to be finished this fall.

"The extent of greenfield investment [setting up entirely new operations] in Slovakia isn't large yet, so there is big market competition when foreign investors such as VW look for construction firms to build their plants," said Ján Tóth, an analyst with ING Barings in Bratislava.

Iveta Radičová, a sociologist with Comenius University in the capital, observed that in such circumstances, work habits inherited from communism such as alcohol on the job or petty theft, were bound to change as domestic firms adapted to the labour practices of their foreign customers

"The situation in the industry is bad, and there's nothing worse for a construction firm than to lose a contract in what is generally a stagnant sector for such a trivial reason as alcohol," the sociologist said.

The enforced change has not met noticeable resistance from labourers accustomed to greater indulgence of their work behaviour. A construction supervisor at a domestic firm, who asked that his name be withheld, said one of his company's contracts with a customer set a 30,000 crown fine if a test on one of its employees revealed a blood alcohol content of more than 0.4 parts per thousand (a level consistent with having drunk a bottle of beer). The deal also allowed the customer to back out of the contract in repeated cases of alcohol detection.

"We're not used to having such rules in our contracts, to such fines, but the guys seemed to accept it," the supervisor said. "At least, they never criticised it while I was around."

Poznán said the labourers knew full well the economic logic behind Zipp's tightened workplace rules.

"I wouldn't get any contract if my workers didn't follow strict rules, if they came to work drunk," he said. "We are constantly fighting for survival. I'm under constant pressure. Every day we have to explain why we are late on our project, and for every day of delay we have to pay hundreds of thousands of crowns in fines to our foreign customers."

Poznán added that Zipp employees caught drinking had the fines deducted from their salaries, while infractions by subcontractor labourers were deducted from the fee paid to their employers.

"We put these rules on paper because oral rebukes, the traditional means of discipline in the construction sector, no longer work here because people just ignore them," he added.

Alcohol in the workplace has been battled by several foreign companies in Slovakia, as investors confront the communist-era tradition among manufacturing and construction firms of tolerating limited drinking on the job.

Besides Volkswagen, American steelmaker US Steel, which bought into the eastern Slovak steel mill VSŽ Košice last year, this spring launched a campaign against workplace boozing, not only enforcing strict penalties but also investing into anti-alcohol education and employee treatment programmes.

Zipp, which beat foreign competition to win a tender for the VW industrial park construction contract, is leading the response among Slovak firms to the demand for sobriety, and in turn greater labour efficiency.

"We were the only Slovak firm in the tender, and managed to beat five strong foreign construction firms," said Poznán. "The [Lozorno park] construction is being financed by the AIG insurance firm, and this is the first time that a domestic firm from central Europe has received such a contract from them, so it's even more important for us to do everything we can to boost the efficiency of our employees."

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