EurWORK European Observatory of Working Life

Bulgaria: Multinational companies and collective bargaining

About

Country: 
Bulgaria
Author: 
Ekaterina Ribarova
Institution: 
ISTUR

Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The main role of the MNC-s subsidiaries in Bulgaria is concerned to the implementation of innovations in technologies and work organisation and to the new human resource management policies and practices. In most of the MNC-s subsidiaries the social dialogue and industrial relations are better, comparing to the average in the country. In the last decade some trends of more contradictions in industrial relations appeared and the collective bargaining process was challenged with lots of difficulties. Also in the new subsidiaries employers usually resist to the organising of workers and present much strong views in the collective bargaining process

1. MNCs and collective bargaining: basic data

1) MNCs account for a significant proportion of private sector employment in many European countries. Please provide the following information according to availability:

a) proportion of private sector employment accounted for by MNCs, and recent change (e.g. since 2000)

Not available exact data

Not available exact data

c) proportion of service sector employment accounted for by MNCs, and recent change (e.g. since 2000)

Not available exact data

2) Please provide any available information on the breakdown of employment in multinationals between foreign-owned MNCs and home-based MNCs

There are no home –based MNC, although there are some investors, owned enterprises abroad. According to the surveys, made in MNK-subsidiaries in 1998-2008 (but not including all MNC-s) the level of employment in about 70% of them has been broken down with 10 to 30 % (in some cases with 50 %)(2

3) What is the level of collective bargaining coverage amongst MNCs, and how does this compare with levels of collective bargaining coverage within the private sector? In the absence of precise figures, please provide an estimate of whether it is higher or lower than the average in:

i) the private sector overall

The level of collective bargaining coverage among the surveyed in 2008 MNC(1) is higher then for the private sector in a whole. In 95 % from the enterprises there are collective agreements, covering 85-90 % from the employee, while in the private sector in a whole the coverage is about 25-30 %. In all MNC-s, however, the coverage is estimated to be much lower then in the surveyed enterprises(less then 50 %), because there are too many free of unions subsidiaries.

ii) manufacturing

The level of collective bargaining coverage in MNC –subsidiaries from manufacturing, is also higher – in 90 % for the surveyed in 2008 enterprises there are collective agreement (1) s. In manufacturing in a whole the coverage is about 40 % of companies and 35-30% from the employees. However, there are many MNC subsidiaries where no trade unions there are and these means that the expected level is less then 50%

iii) private services

In the subsidiaries, included in the survey from 2008 the coverage is 75 % for the companies and 60-65 % for the employees. (1) In most of the private services MNC-s there are no unions and the estimated coverage is less then 10 %. In private services in a whole the situation is a little better-less then 15-20%, but it depends of the size of the company and by the existence or not of unions. In some companies from telecommunications, construction, transport, energy and even in some banks where employees have been organised the coverage is estimated to be 50-90 %. In companies, with very low trade union density the coverage is too low. In companies free of trade unions also in most of banks either there are no collective agreements or the sector agreements haven’t been implemented.

4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are MNCs covered by sector agreements? What is the nature of the relationship between MNCs and sector agreements?

a) If Yes, do they mainly conform with the provisions specified in these agreements?

Yes, for most cases the subsidiaries are covered by the sector agreements, but mainly for manufacturing. The employers don’t respect too much the sector agreements. However, the provisions in the company agreements usually are higher then in the sector agreements. In some cases MNC management representatives attend the sector bargaining (in metallurgy, food industry and others)

b) If No, do MNCs conclude their own company agreements? If so, what if any relationship do these company agreements have with the sector agreement?

In most cases in the surveyed MNC there are company agreements, even if they are also covered by sector agreements. In the chemistry and pharmacy there haven’t been sector agreements since about 5 years, although trade unions have tried to negotiate. There are company agreements in most of the unionised enterprises from the chemistry and pharmacy.

5) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, to what extent are MNCs regarded by other employers as pattern setters for wage negotiations?

In banking there is mainly single –employer bargaining. There are company agreements in the unionised banks.

2. MNCs and change in national systems of collective bargaining

1) To what extent have MNCs been a source of recent change in the agenda and outcomes of collective bargaining in respect of any of the following issues. Please distinguish between manufacturing and private services:

a) payments systems? If so, please elaborate and give examples.

Yes. MNC-management often have been initiators for implementation of variable pay systems, bonuses, productive bargaining(in most of cases, but mainly in American Standard, Kraft Foods, Zeratizit, Mirolio, Solvey)

b) working time arrangements? If so, please elaborate and give examples.

Yes. In some MNC- subsidiaries some types of flexible working time like compressed work week (in brewery-InBef, Heineken, Karlsberg) and shift work (food manufacturing- Danone, mining, cement production-Holsim, cement production- Italcementy) have been implemented.

c) flexibility arrangements (other than working time)? If so, please elaborate and give examples.

Yes, in some companies, mainly from the food manufacturing temporary workers via Agency for temporary workers have been employed (DANONE, Kraft Foods Bulgaria)

d) handling restructuring? If so, please elaborate and give examples.

Yes, in some companies new organizational structures have been implemented and new forms of work organisations are already in use (Solvey, Strabag, Kumerio,

2) Are any of these changes associated with MNCs headquartered in particular countries? If yes, which countries?

Not exact data

3) Are MNCs introducing new issues onto the bargaining agenda? If so, what are these new issues? (Examples might include equality and diversity practices; environmental issues; new employee participation practices; teleworking.)

Yes, in some cases new employee participation practices and environmental issues, but they are also introducing outside the bargaining

4) Are any of these new issues associated with MNCs headquartered in particular countries? If yes, which countries?

Yes, Belgium, France, Switzerland, Czech Republic, Italy

5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what has been the role of MNCs in opening up greater scope for company negotiations? Please distinguish between developments in manufacturing and private services.

a) are company negotiations mainly confined to issues on which sector agreements

Yes, but sometimes new issues have been added.

provide openings and/or a framework?

Not always, although the employers usually could agree with much better provisions for the company agreements, they don’t respect t too much the sector agreements.

establish minimum standards or conditions?

Sometimes and mainly for the private services (distribution, hotels), where usually not too high level of company standards could be negotiated.

b) are there company negotiations on issues which are not addressed by sector agreements? If yes, please give examples.

Yes in some cases, where there are better conditions or employers requirements. For example this concerns (issues of restructuring and discipline, mechanisms of coverage of non-union members).

c) are there any instances of company negotiations resulting in breaches of provisions in sector agreements? If yes, please give examples.

In chemistry and pharmacy there are mainly company negotiations, but they have been existed also before breaking down the sector negotiations.

6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are there any recent examples of MNCs:

  • leaving a sector agreement? If yes, please give details.

Employers usually don’t leave officially the sector agreements, but practically they often are not interested in them or don’t respect them.

  • placing new operations or sites outside agreement(s) which apply at existing sites? If yes, please give examples.

Yes, but the activities are too sophisticated. Usually the MNC –s establish new enterprises, which are not covered by the existing company agreements and could not be always covered by the sector agreements.

The main problem is the organising of workers and employees in the new enterprises. If new sites or operations in the already existing enterprises have been placed, it is easier to involve workers and employees in the unions and in the collective bargaining process.

7) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any evidence of the practice of ‘double-breasting’ by MNCs? (Double-breasting is when companies recognise trade unions for collective bargaining purposes at longer established sites, but not at more recently opened ones.) If yes, please indicate the extent of the practice and provide examples.

Not officially, in the new sites usually is more difficult to organise the workforce. The same cases were in Metro (new establishments), Viohalko and American Standard (new plants). Although in some Metro subsidiaries and in the new plant of American Standard some workers have been organised, it is still too difficult for company unions to obtain real recognition.

3. MNCs and the cross-border dimension to collective bargaining

1) Is there evidence of MNCs using comparisons of labour costs, flexibility and performance drawn from company operations in other countries in the course of local company negotiations? If yes, please give examples when answering the following:

i) in which sectors does this typically occur?

Rarely, because the labour standards and cost of living in Bulgaria are lower then in the country of origin of the most of MNC-s (from the other EU member state, USA, Canada).

However, there is a case with Russian MNC (Lukoil), where trade unions had been forced to leave the Bulgarian sector and national affiliation and to join the so-called company trade union of Lukoil (which I international )

what is the geographical focus of the comparisons (e.g. western Europe, eastern Europe, Asia, worldwide)?

“Russian model”

iii) what is the impact of these comparisons on the outcome of local negotiations?

Not available data – trade unions already don’t belong to the national structures

2) Is there any evidence of threats to relocate operations influencing the agenda and outcomes of local company negotiations? If yes, please give examples when answering the following:

i) in which sectors has this occurred?

Closing the whole subsidiaries of relocate them in another countries ( food, industry, paper)

ii) what are the destination countries / regions of the global economy for any threatened relocations?

Romania( relocate operations from food industry ), some operations were relocated in another subsidiaries in Bulgaria (brewery),or the enterprise was closed without relocation (paper)

iii) what has been the impact on the outcome of local negotiations?

As the subsidiaries have been closed, only final agreements for compensations and some other activities in regards to the redundancies have been negotiated

3) Is there evidence of MNCs seeking to introduce so-called ‘best’ practices and/or corporate policies from their operations in other countries in the course of local company negotiations? (This may arise through the use of benchmarking.) If yes, please give examples when answering the following:

i) in which sectors does this typically occur?

Yes - in metallurgy, chemistry, and ceramics.

ii) is the process linked to the use of comparisons of labour costs, flexibility and performance or other Human Resources policies (if so, please specify)?

The process was linked to the organizational communications, improvement of the health and safety at work, flexibility of working time.

4) Do MNCs employ significant numbers of posted workers (e.g. amounting to more than 5% of the workforce)? If yes,

i) in which sectors does this typically occur?

In some companies there are workers, employed by Agencies for temporary work, but working a the MNC- sites (food industry)

ii) are these posted workers covered by local sector and/or company agreements?

Rarely or not, because they usually are not organised

5) Are there any instances where MNCs headquartered in your country have engaged in transnational negotiations at either European or global levels? If yes, please provide details of the MNC(s) concerned and the issues addressed.

There are no MNC headquarters in Bulgaria

4. MNCs and the social partners

4a. Employers

1) Are MNCs affiliated to the main employers’ organizations at cross-sector and sector levels?

Most of them are affiliated to the associations at cross-sector level, but only a few to the sector associations. There was an employers association, involving mainly MNC-subsidiaries and another foreign owned companies-Bulgarian International Business Association, but it already has merged with another association –Union of Employers in Bulgaria and they have established the Confederation of Bulgarian Employers

2) To what extent are MNCs regarded as key players within the main employers’ organizations at cross-sector and sector levels?

In cross-sector levels associations they are key players.

3) Are MNCs also organized in country-of-origin specific associations (e.g. American or German Chambers of Commerce). If yes:

Do these associations intervene on industrial relations issues? If yes, please provide details.

Yes, they are organised in American, German, Italian chambers of Commerce. They don’t intervene much on industrial relations issues.

4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what influence do MNCs exercise over sector negotiations? For example, how far are MNC personnel involved as lead negotiators for employers’ organizations?

They have been involved in the bargaining process in some sectors (metal, food industry). Also some of Human Resources managers from MNC-s participate in the sector bargaining.

5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what, if any, kind of reforms to sector agreements are MNCs proposing? For example, are they pressing for:

  • i) limited reform, with modest extension of scope for company bargaining within sector agreements? If yes, please give examples.

They don’t propose officially limited reform, but negotiate for not as much high level of labour standards at sector level –in case when they participate

  • ii) extensive reform, under which sector agreements are confined to establishing either minimum standards or a basic framework governing a few key issues? If yes, please give examples.

Not available data

6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any indication of the advantages or disadvantages that MNCs perceive in continuing to be party to sector agreements?

In most cases there are indication for advantages, because even in cases that the employers are not very much interested in sector agreements, they have much respect to them when their representatives had been participated in the negotiation process. At the same time when MNC-s are party to the sector agreements, this could encourage the other employers to join them.

4b. Trade unions

1) How have trade unions responded to the impact of MNCs on the agenda and outcomes of collective bargaining? Please give examples.

Sometimes there are acceptable suggestions and trade unions are likely to negotiate on them, but sometimes they don’t agree easy to negotiate for the new provisions.

2) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to attempts by MNCs to broaden the scope of company negotiations? Please give examples.

They try to use this for the purposes of employees” interests in cases when the employers suggestions are related to the better working conditions.

3) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to any attempts by MNCs to:

  • i) leave sector agreements? Please give examples.

MNC usually don’t leave officially sector agreements. They don’t respect them too much

  • ii) place new operations or sites outside of the coverage of the sector agreement which applies to existing operations? Please give examples.

In some cases new trade union structures have been established and also collective bargaining process has been started, but in a whole the process in difficult (2)

4) In what ways have trade unions responded to the use by MNCs in local, company negotiations of:

  • i) comparisons of labour costs, flexibility and performance?

Comparison of labour costs has been used by trade unions, because in most cases it is of use for Bulgarian workforce.

  • ii) threats to relocate? Please give examples.

Practically trade unions could nothing to do to stop the process. There are already some cases, where only levels of compensations and other activities have been negotiated (food, paper) (2)

5) Are there instances where trade unions have targeted specific MNCs because of public, media or political interest in their practices? If yes,

  • i) have they involved political exchange, involving mobilization of popular sentiment against foreign companies as political leverage to gain concessions from government (e.g. the cases of Alstom in France and Alitalia in Italy)? Please provide examples.

Rarely

  • ii) have new industrial relations actors, such as NGOs, been involved in such campaigns? Please give examples.

Yes, some NGO or group of citizens sometimes play against MNC-s in mining (concessions for gold mines), because of environmental issues. This concerns some companies, exploring possibilities of opening of new mines (for instance –gold mines).

6) Are trade unions in MNCs engaged in compiling their own cross-border comparisons of working conditions etc. at sites in different countries? If yes, please give examples.

Yes, sometimes they try to do this, but there are not substantive results, because the employers positions are also based on the living standard and average wages in Bulgaria. Sometimes the cross-boarder comparison help for negotiating higher level of wages, but in most cases much lower then average for the MNC-s. (Examples- Bulgarian subsidiaries of Kumerio, Solvey-group, some banks)(2)

7) Are national and local trade unions involved in European-level negotiations with MNCs on any issues? If yes, please give details.

Yes, some of the sector federations are involved in European –level negotiations, but they still are not the main players in such negotiations. (2)

8) More generally, do trade unions have policies aimed at developing the cross-border and European-level dimensions to collective bargaining in MNCs?

They still begin to elaborate such policies

5. Commentary by the NC

MNC-s have some implications on the collective bargaining process in Bulgaria, mainly in relation to the deregulation and decentralisation of negotiations. Although the employers from MNC-s usually agree for higher level of wages and better working conditions, this could still not have much influence on the sector bargaining and on the company bargaining in the other enterprises from the same sectors.

Resources

  • 1.Multinational companies-2008. European dimensions of the industrial relations. N. Daskalova, E. Ribarova, L. Tomev, T. Mihailova and others. ISTUR with the CITUB, Fridich Ebert Foundation. 2009(in Bulgarian)
  • 2.CITUB and ISTUR data base, 2008

Ekaterina Ribarova, ISTUR