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Foreign company's approach to labor unions depends on origins

The kind of relationship that will be found between managers and workers in labor unions at foreign owned companies depends mostly on what country the foreign investor hails from. Some companies have a healthy relationship with labor unions, but others have tried to eliminate the union's power, and some have simply avoided dealing with them.
"Concerning a foreign company's approach to unions, the most important factor is the origin of the firm bringing in the new capital," said Stanislav Tarnovský, head of the economic and collective bargaining department at Kovo, the Metalworkers' Federation, Slovakia's largest Labour Union Federation.

The kind of relationship that will be found between managers and workers in labor unions at foreign owned companies depends mostly on what country the foreign investor hails from. Some companies have a healthy relationship with labor unions, but others have tried to eliminate the union's power, and some have simply avoided dealing with them.

"Concerning a foreign company's approach to unions, the most important factor is the origin of the firm bringing in the new capital," said Stanislav Tarnovský, head of the economic and collective bargaining department at Kovo, the Metalworkers' Federation, Slovakia's largest Labour Union Federation.

A good example of a company with a positive approach toward labor unions is the German-owned car maker Volkswagen. Germany has a long tradition of unions. About 74% of VW workers (out of 4,500 employees) are organized in unions, which has benefited employees.

"We are lucky that VW is one of the companies which cooperates with labor unions very well," said Ján Jankovič, head of unions in VW Bratislava. "In Germany, there is a better tradition of trade unions than in Slovakia. Maybe that's why VW did not have problems with labour, like some other foreign companies might have," he added.

A negative example of a company that didn't relate positively with labor unions was the Korean-based Samsung, a producer of electrical appliances, which bought a 49% stake in Calex in 1994. "In Korea, they have very strong, militant unions, and once they come to Slovakia to start a new business here, they were, perhaps afraid that Slovak unions were the same as theirs," said Tarnovský.

From the start, according to Tarnovský, Samsung-Calex tried to limit the power of the work-force. "When Samsung came to Calex, it tried to eliminate unions as much as possible, which resulted in the resignation of workers from their original federation Kovo and the creation of their own workers' federation," he explained.

After numerous plant shut-downs and small revenue gains, the Koreans sold their stake in April 1997 to Nový (New) Calex. Now Nový Calex, owned by the Economic Ministry (51%), General Credit Bank or VÚB (24%), and Omnia (25%), is anxious to put the past behind with a positive spin. "During the five years of having a Korean investor, all the advantages and benefits given out to workers through our own collective bargain agreement were highly above standard," said Štefan Borkovič, head of the new workers' federation at Nový Calex.

Nový Calex currently employs 1,600 people with 1,436 of them (90%) organized in unions.

Workers in the former Samsung-Calex took advantage of the Slovak law on public assembly. The law requires only five people to register a worker's federation or labor union for the company they work at the Interior Ministry.

"This is one of the great parts of our work code, when compared with the one in the United States, for instance," said Tarnovský.

In the US, workers are not as involved in unions because American legislation requires a majority to found one. No majority, no labor union.

A company in Slovakia that comes from this American tradition is the beverage producer Pepsi. "Our employees are free to found whatever unions they like, however since the existence of this company in Slovakia, no one has made such an initiative," said Pavel Uhrinčať, Human Resources manager at Pepsi-Cola Slovakia. "Once employees feel and see that the company absolutely satisfies their needs, they don't feel the necessity to create unions," he added.

History

Labor unions have a long tradition in Slovakia (see related story, this page), but their effectiveness varies depending on the company's initial set-up. The goal of labor unions is, of course, to present a united stance toward issues like salaries, vacations, work time, and social legislation that an individual worker would be powerless to seek.

The economy received an inflow of foreign capital after 1989 in two ways. The first type were firms that set up their businesses during the first wave of privatization in 1991, either privatizing an entire company or founding a joint-venture with an existing Slovak one.

"In the first wave, a foreign company that took over an existing firm with employees had to accept labor unions as reality because it was a matter of tradition," said Tarnovský. The first wave privatized companies involved mostly in production, meaning companies employing more than 25 people. Volkswagen and Samsung fall under this category.

The second type of foreign investment included companies which came to rent, or buy a building, bring their own technology and start to run their business from scratch, aka Pepsi. These companies did not inherit labor unions nor did they encourage their formation. The likelihood of workers creating a labor union has depended on management's approach to worker's benefits.

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