In 2004, social dialogue and collective bargaining in the Czech Republic have been operating in their modern form for around a decade. This article highlights the findings of a recent project examining barriers to social dialogue that restrict the capacity for action of social partner organisations and constrain the capacity for social dialogue. It finds that, besides systemic barriers, chiefly of a legal nature, there are also certain unfavourable aspects in public attitudes towards social dialogue and the trade unions, as shown by the findings of surveys of union membership. The project makes a number of recommendations for improving the situation.
A recent social dialogue twinning project under the EU PHARE programme (CZ-IB-1999-CO-02), in which the social partners participated, threw up a number of findings regarding current barriers to social dialogue in the Czech Republic that restrict the capacity for action of social partner organisations and constrain the capacity for social dialogue. This article examines these issues, using the relevant findings of the project's conclusions, issued in November 2002.
According to the report, the main precondition of a functioning social dialogue lies in strong and visible organisation of the labour market, ie employers and employers’ organisations willing to negotiate and capable trade unions enjoying the necessary authority. Given that the interests of the actors on both sides are mutually dependent, then if the conditions for conducting social dialogue and collective bargaining are improved on the employers’ side, the trade unions usually benefit as well, and vice versa. That is also why the social partners usually concur in their identification of barriers to dialogue and also agree when assessing possible ways to eliminate or diminish these adverse factors. That has been demonstrated by their successful cooperation on a number of major projects, such as preparing harmonising amendments to the Labour Code (Act no. 155/2000) and drawing up a new Labour Code.
Legal framework for trade union activities
One of the fundamental questions regarding the work of trade unions is the relationship between them and employees who are not union members. Czech law lays down the principle that trade union organisations do not just represent their own members, but rather represent all of an employer’s staff, expressing their interests and providing them with collective and individual protection. The appropriate trade union bodies thus exercise their authority in respect of non-members as well - employees who are not members are unable to refuse this authority. This principle is certainly not accepted unequivocally and is regarded by experts as one of the reasons for the decline in trade union membership (see below) and the reduced importance and authority of collective agreements. Trade unions often criticise this arrangement, especially union officials operating at enterprise level (usually arguing that 'there are too many people hitching a free ride on the system').
Although the trade unions’ authority is also extended to non-member employees and is therefore conceived very broadly, the law does not specify any criteria of representativeness for either the formation or operation of trade union organisations (nor indeed matter for employers’ organisations) - eg for the purposes of concluding higher-level collective agreements or in connection with the extension of these agreements (CZ0410103F). Nevertheless, the need for representativeness on the part of trade unions in the Czech Republic is arguably accented by the long-term decline in trade union membership, and new legislation will have to face up to this aspect of the position of unions. The absence of any representativeness principle also means that employers’ organisations and trade union organisations and their federations are not obliged to provide information about the scale of their membership. That is why, for example, even though the information available indicates that falling membership is a phenomenon afflicting all or most trade union federations, there is little hard data on these developments.
The numerous amendments made to the Labour Code have had a fundamental impact on the position of trade unions, but not all changes to trade union powers implemented since the start of the 1990s have been justified, according to the PHARE project's conclusions. One problematic example was the weakening of legal guarantees om the participation of employees in the management of enterprises. These guarantees are contained in certain international agreements, such as the 1969 International Labour Organisation (ILO) Recommendation no. 129 on communications within the undertaking, Article 2 of the 1988 Additional Protocol to the European Social Charter or the Charter of Fundamental Rights of the European Union. The right of all employees to information and consultation was not made law in the Czech Republic until 2000, when the abovementioned harmonising amendments to the Labour Code was enacted.
Despite the numerous amendments, the existing legislation mainly lacks the necessary unequivocal clarity necessary for the purposes of collective bargaining, it is argued. Interpretation of the provision defining in general terms the room for asserting trade union powers in labour relations (Section 18b(1) of the Labour Code) causes most problems. Collective bargaining and collective agreements often strengthen the legally defined powers of the trade unions in industrial relations (eg the right to be consulted on certain matters becomes the right to 'co-decide' on them with the employer). This procedure rests on the opinion in law that allows such commitments to be settled in contractual agreements, which can be deemed not to be normatively regulated by the labour regulations. Conversely, those who think that trade union authorisation is specified normatively in the labour legislation find such provisions in collective agreements to be legally inadmissible and such commitments to be invalid on grounds of their conflict with the law. Some opinions see a need for more flexible determination of trade union powers depending on the actual needs of the partners in collective bargaining.
The legislation governing collective bargaining procedures when more than one trade union organisation operates at a single employer is another constraint on the trade unions. Although Act no. 120/1990, which regulates certain aspects of social dialogue in the event of trade union pluralism, is positive in its treatment of smaller trade union federations and regards them as necessary for asserting minority opinions, the fact that it is based on the principle of 'absolute' trade union pluralism means that its application sometimes causes problems in the negotiation of collective agreements. The rules laid down in the Act make it possible to form trade union organisations with a very small membership base (a minimum of only three people is required). This, it is argued, can easily be abused and consequently hinder collective bargaining in a firm. Some trade union organisations operating at an employer can prevent the negotiation of common action in certain, albeit merely minor, matters - this obstruction may even come from the union organisation with by far the smallest number of members at an employer. For that reason alone, in some opinions, new legislation should make allowance for the principle of representativeness in trade union representation.
Scope of the social partners’ contractual freedom
The project conclusions argue that it has proved necessary to liberalise the legislation on industrial relations, among other aims to create greater room for the contractual determination of work conditions and work entitlements. The persisting philosophy of current labour law, based on the predominance of normative rules over descriptive guidelines, or empowerment to define terms in a collective agreement, undermines the overall potential of collective agreements (and thus also, for example, the possibilities for trade union bodies and bargaining teams to react to employers’ specific conditions and capacities).
In particular, the limited room for negotiating workers' entitlements (with the exception of wage entitlements) has from the start been considered a serious obstacle to the social partners’ contractual freedom. Employees’ entitlements may be increased and extended solely within the framework set out by the labour law regulations. Higher and additional entitlements over and above the legal framework can be established in collective agreements only when the Labour Code explicitly authorises them. Opinions differ in the case of entitlements that the law does not explicitly regulate but does not prohibit either (despite this lack of clarity in interpretation, 'unnamed provisions' on workers' entitlements are commonly encountered in collective agreements).
In view of the above, the social partners are inclined to think that a new labour law code needs to be adopted to redefine the legal framework for collective bargaining, and are playing a key role in preparing this new code.
Collective bargaining at supra-enterprise level
Collective bargaining at a level higher than a single enterprise is a major challenge for the negotiating potential of the social partners (the applicable legislation makes no mention of sectoral collective agreements owing to the lack of a properly defined, stable framework for this collective bargaining, ie the economic sector, in Czech law).
The general reason for negotiating higher-level collective agreements is a need to set minimum standards for employment conditions. From the beginning, however, concluding collective agreements at this level in the Czech Republic has encountered the problems of employer’s legitimacy or the unwillingness of certain employers' organisations to practise collective bargaining. Employer federations are either not registered as associations within the meaning of Act no. 83/1990 on 'citizens’ associations', or have statutes that lack any empowerment to conduct collective bargaining on behalf of their members, or in some cases only negotiate for a very restricted proportion of their members. One consequence is that the number of employees covered by higher-level collective agreements is restricted. Over 2000-3, a period in which there was a gradual increase, higher-level collective agreements covered just 16.9% (2000), or 23.8% (2003), of all civilian employees. This proportion of employees includes the results of the relatively large-scale use of extensions during the period. By comparison, enterprise-level collective agreements concluded by member unions of the Czech-Moravian Confederation of Trade Unions (Českomoravská konfederace odborových svazů,ČMKOS), covered 28.5% of all employees as at 30 June 2004, according to the confederation, the country's largest.
Trade unions operating in the state administration cannot conclude higher-level collective agreements on account of the absence of a collective bargaining counterpart, because the law does not permit employers in this sphere, ie state bodies, to form employers' organisations.
Moreover, the effectiveness of collective bargaining and the work of trade unions at the highest level are not aided by the legal uncertainty surrounding the powers of employers' organisations that are not established under the Act on citizens’ associations but rather as 'special-interest associations of legal persons' under Section 20f of the Civil Code. There is still no definitive solution to the problem of whether associations established in this way may become partners for trade union organisations and negotiate higher-level collective agreements.
Pronounced conceptual and practical shortcomings continue to dog the extension of higher-level collective agreements, with the Constitutional Court (Ústavní soud ČR) repealing, as of 31 March 2004, the provisions in the Act on collective bargaining on which extensions were based (CZ0410103F). A draft amendment prepared by the Ministry of Labour and Social Affairs (Ministerstvo práce a sociálních věcí ČR, MPSV), in cooperation with representatives of trade unions and employers, is currently making its way through the legislative process.
In practice, there is a problem with the accessibility of higher-level collective agreements for 'ordinary users'. The use of higher-level collective agreements at enterprises is not common; broader use is prevented by the diminished authority enjoyed by collective agreements in general and higher-level agreements in particular. This is at the root of the merely relative and weakened application of the principle that determines that, if there is not enterprise-level collective agreement, a higher-level collective agreement will apply directly to employers belonging to the organisation that signed the higher-level agreement. Furthermore, there is a low awareness of the existence of higher-level collective agreements and their content among the workforce. If an enterprise-level collective agreement exists in parallel with a higher-level agreement, users wanting to find out about the benefits and commitments negotiated on their behalf and in their favour have to compare the often incompatible formulations and constructions contained in the two types of collective agreements, it is claimed.
Miscellaneous factors
Some substantive aspects of collective agreements tend to be viewed negatively by experts. These include an inordinate thematic breadth (making it impossible to regulate certain parts sufficiently concretely or making the content unclear), and shortcomings resulting from uncertain formulations, incomprehensible commitments or generalised and empty formulations. For example, the provisions on opportunities and benefits in the area of employee training traditionally tend to be relatively feeble (seen in the light of the importance of vocational training for the development of the labour market), general and empty.
The lack of a system, enshrined in law, for collecting, registering and storing enterprise-level collective agreements is seen as an obstacle to feedback on collective bargaining; this is the reason for the absence of systematic monitoring of whether commitments are honoured by an entity that is not one of the contracting partners. The fact that enterprise-level collective agreements are generally not particularly accessible, and are certainly not guaranteed to be accessible, is also an obstacle to independent scrutiny and evaluation. Research has to be based on merely partial agreements; detailed information about the scale of collective bargaining at enterprise level is available only for the largest trade union federations.
The absence of an integrated system of work inspection and the difficulty of enforcing commitments contained collective agreements are two other problems that have been raised in this area.
Decline in trade union membership
Sociological research has registered a decline in trade union membership. Membership has been monitored by research performed by the Public Opinion Research Centre (Centrum pro výzkum veřejného mínění, CVVM) since the start of the 1990s. The decline in union membership among the population as a whole and among employees between 1990 and 2003 was 50% and 62% respectively (CZ0411105F). The general reasons cited for this decline include the onset of a number of trends that do not favour the idea of trade unionism, combined with the persistent abovementioned obstacles, mainly systemic, to the work of trade unions. Industrial sectors have been restructured and privatised. The number of manufacturing enterprises is falling and production units are being reduced in size. The secondary sector (industry) is losing its stake in the economy, while the tertiary sector (services) is on the rise. Traditional groups of employees working in shifts are disappearing and people have fewer and fewer opportunities to meet inside and outside work, it is argued. There are fewer large state-owned concerns, while a number of small and medium-sized enterprises have sprung up. Foreign investors play the leading role in many sectors. The pressure for job flexibility has intensified and 'atypical' forms of employment (eg working from home, agency work, fixed-term employment, part-time employment, or work on a non-employee basis) are being used more widely. People often change their employment and occupation. Working hours are also more flexible, so employees meet in the workplace less often (creating barriers to informal communication). Work activities are becoming more individualised and the nature and organisation of work are changing.
The Czech Republic arguably lacks historical experience of the 'necessity' for the existence of trade unions. The unions, which find it difficult to recruit new members among young people (the traditional unions’ ability to appeal to young people is often questioned, with the finger pointed at the ageing ranks of officials), complain that trade union issues are not taught in schools. Some internal materials circulated by the Czech Metalworkers' Federation KOVO (Odborový svaz KOVO, OS KOVO) and CMKOS speak of the rigidity of the existing trade union structure and wonder whether the spectrum of types of trade union organisations should be broadened.
One factor impeding the effectiveness of trade unions is that it is relatively difficult to enforce employees’ claims, so employees often become sceptical about the point of trade union membership. This is linked to an anxiety about how new employers will react to an employee's trade union membership - in many people’s eyes, trade union membership is not the right road to 'social success'. Commentators also state that there is often not sufficient trade union solidarity; even trade union officials often speak of a lack of solidarity in the way trade unions pursue common objectives.
Some trade unionists draw attention to the unions’ weak legal status, particularly in respect of their capacity to influence redundancies. Trade union members who have lost their job may turn against the unions. Some trade unionists speak of the need to increase trade union involvement in decision-making (though CMKOS, for example, expressly rejects these views).
According to the report, as attitudes and value systems undergo fundamental change, part of the population is more rigorously calculating in how they weigh up the benefits and drawbacks of union membership, with involvement in the trade unions tending not to be preferred. Membership usually does not bring any evident personal advantage, especially not material advantage - trade unions complain that membership of enterprise-level organisations is particularly low, because here the unions do not have the resources to offer palpable advantages (eg in the form of recreational activities). In some new enterprises, employees would be willing to join a union, but not to hold trade union posts (there are usually not enough resources to provide for full-time officials, however).
How to strengthen social dialogue?
Besides listing barriers, the PHARE project also came up with a number of suggestions on how to strengthen social dialogue and its structures. Some of the recommendations are universally applicable, for example:
- providing tax relief (or other relief) to employers' organisations and trade union members in order to make membership of these organisations more affordable and to create further incentives to join such organisations;
- broader application of training capacities in order to ensure that officials improve their qualifications and offer better services;
- developing ancillary institutions to support social dialogue and collective bargaining. These institutions include a national institute for social dialogue (carrying out research, documentation, training and public relations), national and regional councils for human resources development, a standing conference of the top representatives of trade union and employers' federations, at enterprise level a forum for cooperation in developing social dialogue, and at regional level regional labour market councils on a tripartite basis;
- creating a web portal for social dialogue in the Czech Republic and further developing an interactive home page providing for information exchange; and
- amending the relevant labour legislation to improve the existing legislative framework for social dialogue, make it a duty to register enterprise-level collective agreements, make more precise the conditions for collective bargaining at the highest level between the social partners (especially in cases where an employer faces several trade unions) and make it possible to conclude higher-level collective agreements in the public sector.
As far as the decline in trade union membership is concerned, most union federations are at present responding to this problem and a number of them are taking an in-depth approach to the development of membership. Some trade unions and federations acknowledge that they still have not resolved the issue of retention of membership in the event of a change of employer (ie transferable membership and the possibility to remain a union member during times of unemployment). They believe from experience that only a small proportion of the decline in union membership is due to dissatisfaction with membership - most of the decline is caused by loss or change of employment. In line with some foreign experiences, the importance of having a network of properly trained union leaders for successfully recruiting new members is stressed. There is also thought to be considerable potential for improving the position of trade unions in the professionalisation of union officials, as well as in trade union engagement in regional politics. However, the large trade union federations in particular see their role in improving membership as being in the legislative arena (including supporting the establishment and tripartite administration of such bodies as a social insurance firm, an employment fund, accident insurance firm and employee supplemental pension insurance) and improving the trade unions’ image.
Commentary
One natural factor constraining the activities of the social partners and their capacity for social dialogue lies in the actual results achieved by the two actors to date at all levels: enterprise, sectoral, regional and national. This mainly applies to the core areas of trade union interests - collective bargaining and the conclusion of collective agreements, where the course of negotiations and the importance and scope of the agreements fundamentally influence the authority of the trade unions and their representative bodies. In this context it is necessary to emphasise the time factor, ie the short amount of time that has passed since the establishment of the necessary legal guarantees for systematic application of the principles of social partnership and the general conditions for the conceptual formation of social dialogue mechanisms and procedures, including collective bargaining. The foundations of the modern history of social dialogue and collective bargaining in the Czech Republic were laid only in the first third of the 1990s, when the social partners were able to gain their first practical experience of conducting social dialogue and negotiating collective agreements. Moreover, as their membership declines, the trade unions rightly emphasise the unrealisticness of any ideas about maintaining the almost 100% trade union membership that existed at the end of the 1980s, which could not endure in the new conditions - some decline was unavoidable. On the other hand, one can ask where the bottom limit for the decline in membership lies, below which the entire system would be put at risk in the long term. (Jaroslav Hála and Aleš Kroupa, Research Institute for Labour and Social Affairs)