«The appearance of multinational companies in Hungary has, in general, been greeted positively by public opinion. However, some professionals dealing ...»
They believed that before the privatization of Malev took place, it would be necessary to decide on the methods which would ensure that the whole process served the strengthening and maintenance of national property. In particular, they wanted the ownership partner to guarantee that they would be able to protect long-term job opportunities for the workforce, and upgrade the conditions of work and living standards. It was only in this spirit that the trade unions would accept the establishment of the joint venture for aircraft maintenance.
Malev’s then director-general initially conceived of the foun dation of the joint venture as constituting a partial privatization of Industrial Transformation in Europe Malev, but the trade unions found out that the proposed LockheedMalev Ltd could not be regarded at all as constituting a (partial) privatization of Malev in accordance with Hungarian legislation in force, but simply as the establishment of a new economic associ ation.
Advisers to the unions also pointed out that in the planned joint venture the whole of the technical and aircraft repair capacity would fall outside the process of privatization. In as much as the employees of Malev could transfer to the new joint venture before its foundation, they could also lose several rights guaranteed by law;
among other things, they would have to stay completely out of the process of privatization and would lose the opportunity to buy worker’s shares. Furthermore, the experts showed that Lockheed’s planned activities - with much lower than necessary investments seemed to be aimed at achieving a significant market position at a cheap price, in order to have economic-political advantages in the region, and would devalue the ‘remaining’ Malev, because the joint company would be managed by Lockheed staff. Nobody else would be able to repair their aircraft, so that the national airline and, in time, the only international airport in Hungary, could become dependent on Lockheed at a ridiculously low price.
The Lockheed case posed a serious decision-making dilemma for Malev’s trade unions, for workers did not in general question the need for such a joint venture. Accordingly the trade unions negotiated with the Malev management, but also tried to assert their rights politically. In several cases they lodged written protests with the State Property Agency (SPA) and the Ministry of Trans port, Communications and W ater Management (MTCWM).
Several issues concerned the employees and trade unions: what sort of chances would there be for the joint venture, considering that its establishment was not going to bring any significant technical development? How would employment chances develop in the future: would there be mass unemployment? Before the establish ment of the joint venture, in the technical area there were almost 1150 principal workers, yet Lockheed had suggested that about 900 principal workers would be adequate. Was there no danger that the given technology and cheap labour force would encourage the US partner to prefer less well qualified personnel to do lower paid tasks (for instance, the work of a fitter)? Those workers who could speak English were retrained so that they could handle the Boeing aircraft, and those who were still able to sell their abilities were all right; however, the others were placed in a disadvantageous situation. W hat would happen to wages if the earlier practice of overtime and other part-time opportunities were abolished?
Employment Relations in Multinational Companies 269 The effect of this was that, on 21 January 1992, representatives from the above-mentioned authorities and Malev discussed the m atter of the joint company in a committee established specially for the purpose. In the negotiations, those representing the employees repeatedly indicated that notice should be taken of their demands in the planned contract (that is before its signing). If their legal rights were not suitably recognized they did not want the final contract.
The ministry and the management of Malev gave a promise at this sitting. Thus it was with astonishment and outrage that the workers learned that after this the Malev managing director had signed - in Budapest on 24 January 1992 - the relevant contract for the establishment of the joint venture with the representatives of Lockheed, without any agreement with the workers.
After all this, it is understandable that the contract that brought Aeroplex into existence became the centre of conflicts between the management and those representing the workers’ interests; more over, somewhat later it caused quarrels between the two ownership partners. On 5 February at a trade union roundtable meeting there was unanimous agreement that a protest should be made against the methods that had been used, and it was announced that in connection with the establishment of the joint venture the employees’ side would accept no responsibility whatsoever. In spite of the protest, on 6 February Malev’s legal representative handed in a request to the court for company registration, asking for immedi ate registration of the joint venture, which the court proceeded to give. Therefore, Aeroplex of Central Europe Ltd (ACE) was formally established.
Incidentally, the trade union roundtable of 5 February can be regarded as the Malev trade unions’ and the aircraft technicians trade unions’ last action together. In 1989-90, as with the rest of the country, a fragmentation of trade unions took place at Malev.
Practically all the trade union federations that had been affiliated to M SZOSZ remained with that organization; additionally two other trade unions which were close to the liberal Independent Trade Unions Democratic League (FSZDL) were established. One of these unions allied itself with the new US-Hungarian joint venture.
Two other trade unions were also set up, the pilots’ union and the air stewards and hostesses’ union (neither of these affiliated to any national federation).
The formation of the joint venture occurred at a time (1991-92) when powerful debates were taking place between the seven largest national trade union groupings over the division of trade union property, and there were also questions being asked about legitima tion and representation. These debates prevented the chances of Industrial Transformation in Europe common action being taken to achieve interest representation through a single organization.
The Strike The room for manoeuvre of those trade unions which came across to the new joint venture company was narrowed down right from the start; this was because their main task of maintenance had been broken away from the mother company. Because the trade union roundtable was not successful, the contract signed between Malev and Lockheed had the effect of unambiguously removing the field of maintenance work from the privatization process at Malev. Those trade unions involved in maintenance (the Aircraft Technicians Independent Trade Union) went on (without the other interest representation organizations) to make a new attempt to have its interests recognized. On 20 March it handed in a petition asking for a re-examination of the foundation of the joint company, and termination of the company due to breach of regulations.
Despite all this, on 30 June 1992 ACE officially began its operations with 840 workers and 6 US managers. The management did not employ the leaders of the trade union who had opposed the foundation of the mixed company, which further weakened the position of the trade union. In the last days of June 1992 the workers of Malev’s M aintenance Division called personally on the head of Malev’s human resource management centre to cancel the labour contract with A C E, because they thought they would no longer enjoy various benefits due to them as ‘Malev men’. Thereupon, when Aeroplex was formed, all workers transferred from Malev received a wage increase of 21 per cent under a one-year agreement.
That was not, however, an effective increase, but a compensation for lost benefits formerly granted on a non-regular basis, and as an across-the-board measure it failed to reduce existing disparities in wages to any degree.
In return for the ‘wage increase’ the employees promised that they would not make any further wage demands for a year. In fact there were no demands for wage increases (except for 20 per cent for the higher management of the firm before the General Assembly of April 1993). It also seemed that the situation of the workers was ‘normalized’, and the earlier tensions died down.
Meanwhile the privatization of the Malev airline company began:
the first steps in this process involved the formation of a so-called ‘individual (state) share company’; later 35 per cent of the shares were sold to a foreign partner. This partner was Alitalia, which was the winner in international negotiations involving such applicants as Lufthansa and KLM. The privatization of the company finished in Employment Relations in Multinational Companies 271 1993, when the foreign investor paid the purchase price of the shares.
The new management of the Malev share company, in contrast to the earlier management, did not view the Malev-Lockheed agree ment as being unambiguously positive, and on more and more occasions expressed their dissatisfaction to ACE that the repairmaintenance deadlines were not being kept, and were leading to flight delays. In July 1993 Malev publicly announced that ACE was not operating well, and this was causing flight delays and damage to
the standards of the airline company’s services:
According to Malev’s timetable their flights and other charter flights faced significant delays yesterday. For example, the flight to Istanbul arrived eight hours late... the Aeroplex company (the Malev and Lockheed joint company) does not always observe deadlines for main tenance of Malev aircraft. Yesterday Malev held a meeting about the situation that has emerged, when the delays demonstrated that the theme was timely. (‘Malev is delayed’, in N ipszabadsag, 23 July 1993) According to Malev’s account the delays were increasing at a worrying rate; in 1992 18 per cent of flights were delayed, in 1993 the figure stood at 22 per cent. The average duration of the delays went up from 34 to 40 minutes in the same period. Of these delays, in 1992 31 per cent could be put down to mistakes made by Malev, in 1993 this figure was 37 per cent. However, during that time Malev’s total number of aircraft increased, the older planes were becoming even older, and there was a greater number of flights. It was argued that this implied a bigger task for the now separate technical base where, compared to the earlier position, almost 150 less people were employed.
In connection with the delays, Malev claimed that the M alevLockheed contract was not advantageous from Malev’s point of view. This was because the repair company’s work was to a large extent not accountable in terms of time, and thus it was not of paramount importance for Aeroplex to meet deadlines. The main source of the problem was that the so-called ‘line maintenance’ was not in Malev’s hands, and therefore the necessary technical back ground to ensure the flow of daily air traffic was also out of the control of the airline company. This is why it was suggested that, in the future, it should be Malev’s own specialists who would rectify the problems; for this a suitable apparatus needed to be created.
Malev’s supervisory committee, in cooperation with Alitalia, began to re-examine the contents of the contract between Aeroplex and Malev. Meanwhile, on 30 June 1993, the ‘wage m oratorium’ that ACE had agreed with the workers at the time of its foundation expired. According to the trade union it was owing to the mistakes Industrial Transformation in Europe of the management of Aeroplex (due to their poor preparation) that an agreement on a collective contract had not been made. Thus the Aircraft Technician’s Independent Trade Union (RMFSZ) could see little sense in wage negotiations. On 15 July the trade union announced that, independent of the collective contract, it would begin wage talks, and it put in a request for a near 200 per cent wage increase (as opposed to the company’s suggestion of a 14 per cent rise). On 2 and 3 August the management’s offer was raised to 18 per cent. The employees’ representatives worked out their own scheme - which the company management accepted - in which they insisted on a H U F 30,000 monthly minimum wage.
The RMFSZ held that a differential wage rise would only be acceptable if it noticeably decreased the earlier discrepancies. On this basis the workers delegated representatives who worked out a set of criteria which paid attention to the norms recognized for aircraft mechanics in international practice. They were not able to establish much else because there were no job description agree ments with the company, nor were there any regulations for organizational operation. In 1993, in order that every worker fully received the pay according to the criteria accepted by the manage ment, it would have been necessary to implement a 150 per cent increase in the overall wage bill. According to the spokesman of the
Aircraft Technicians Independent Trade Union (RMFSZ):
They inherited this tension-filled wage system from Malev, on the basis of which there exists within one sphere of work activity wages ranging between H U F 20,000 and H U F 60,000. (Heti Vildggazdasag, 21 August 1993: 80) On 5 August the management of ACE worked out a wage development package, according to which wage levels for the workers would be ‘fixed’ until the end of 1994 on the basis of the following: 18 per cent immediate wage rise (from 1 July 1993); 10 per cent from 1 January 1994; 10 per cent from 1 July 1994.
The following day the trade union handed in a proposal which demanded a 90 per cent increase from 1 July 1993, a 30 per cent increase from 1 January 1994, and a 20 per cent increase from 1 July
1994. On 7 August ACE raised the 1993 wage increase by 20 per cent. In a workers’ assembly on 11 August the trade union agreed to a seven-day ‘cooling-off period, and in the case of unsuccessful negotiations raised the prospect of a strike. On 18 August a workers’ assembly was once again organized by the trade unions.