6 Exporting the German Work Model to Central and Eastern Europe Martin Krzywdzinski

1. Introduction

The economic structure of Central and Eastern European (CEE) countries is increasingly dominated by foreign companies, with German companies being the most important industrial investors. The production and work models practised by German companies are thus extremely important for the region. Are these companies producing high-quality products in CEE, and placing an emphasis on skilled and well-paid work, or is the CEE being exploited as a low-wage periphery, characterized by 'hire and fire' and low-skilled work? For stakeholders in Germany, the issue of whether com­panies are attempting to transfer the 'German model', or whether they are relocating abroad as a means of escaping this model, is also relevant.

This chapter concentrates on German companies in the automotive industry and their work models in CEE. The four core elements of the German automotive industry work model are: co-determination and co-operative relations between works councils and management, the recruit­ment of skilled workers (Facharbeiter), high job security, and compromise-oriented negotiation between management and works councils about work organization.

In terms of employment, investment and exports, the automotive indus­try is the most important industrial sector both in Germany and in CEE. German companies are also the most important actors in the CEE automo­tive industry, accounting for between 20 and 30 per cent of the workforce, depending on country. Jürgens and Krzywdzinski (2009) argue that CEE has become an important part of the production network of the German automotive industry.

Section 2, which follows this introduction, briefly discusses the litera­ture on the transfer of standards in multinational corporations (MNCs) and stresses the importance of their governance structure and the constella­tions of stakeholders. Section 3 discusses and develops the definition of the German automotive industry's work model. Subsequently, Section 4 presents

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empirical findings on the question of the transfer of the work model to CEE. The core of the section is the analysis of the case of Volkswagen. The choice of Volkswagen is due to its role in the German and CEE automotive indus­try. It is the largest company in the sector, and it corresponds particularly to the 'ideal type' of the German automotive industry's work model. Fol­lowing the case study, empirical evidence for the transfer of work models by other German companies will be presented and compared. The analy­sis in Sections 3 and 4 is based on the results from two research projects concerning the future of the European social model and the changing divi­sion of labour between Western and Central Eastern Europe Ourgens and Krzywdzinski, 2010). In these projects, 131 interviews were conducted with managers, works council members, trade unionists and experts from the automotive industry.

Section 5 discusses the interaction between the companies' work models and the institutions of labour regulation. The transfer of the work mod­els is dependent on specific institutional conditions but can also initiate institutional change. A summary of the argument is drawn in the final section.

2. The transfer of standards in multinational companies

Multinational companies (MNCs) are the central actors of globalization. They distribute standards and 'best practices' within their organizational structures, and herewith contribute to the global standardization of prac­tices, rules and organizational forms (Edwards, 2004; Martin and Beaumont, 1998). At the same time, differences remain between institutional varieties of capitalism (Hyman, 2004), and between different cultures (Hofstede, 2001). These differences restrict the transferability of standards and 'best practices' within companies.

A major strand of research literature on the transfer of standards in compa­nies has concentrated on the conceptualization and measurement of 'home country' and 'host country effects'. In this literature, MNCs are regarded as representatives of a particular national model, that is as 'US-American', 'German', or 'Japanese' MNCs. There are now a significant number of stud­ies available and from them the concept of 'hybridization' has emerged as the strongest result. Accordingly, through the interaction of the 'home coun­try effect' and the 'host country effect', the emergence of more or less hybrid forms can be seen (Boyer et al., 1998; Ferner et al., 2001). It is not possible to predict the exact nature of these hybrids at a general level.

In the course of the debate, some researchers have developed analyt­ical models for the transfer of standards within MNCs that go beyond a comparison of 'home country' and 'host country' effects. Of particular interest are models that place an emphasis on the relationships between stakeholders and on the governance structures of companies. Ferner and

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Tempel (2006: 31) emphasize power relations within MNCs as an impor­tant determining factor for the transfer of standards: 'The nature of MNCs as agglomerations of contending interests extending across national bor­ders raises the question of the internal organizational power relations that exist in situations of transfer, both between different organizational groups and across different national-institutional terrains in which the MNC oper­ates.' Kostova (1999: 313) emphasizes the importance of 'transfer coalitions', which, in her understanding, encompass the 'key managers' of the sub­sidiary company, and the 'experts' in the functional areas affected by the transfer. In their micropolitical approach, Dórrenbacher and Geppert (2009) highlight the strategies of managers in MNCs' parent and subsidiary companies, and emphasize the importance of the managers' nationalities, professional identities, career aspirations and career options for relations between parent and subsidiary companies.

These models pick up on elements of the governance structure at the com­pany. However, in my opinion, they focus too strongly (or even exclusively) on the role of managers and employee representatives in the foreign sub­sidiaries of MNCs. Thereby, the question is for the most part the extent to which these stakeholders support or impede the transfer of standards from the headquarters. In contrast, insufficient attention is paid to the gover­nance structure and the actor constellation in the parent company. This is an important determining factor for the form, extent and success of the transfer of standards and practices within MNCs - as will be shown in the course of this chapter, using the example of Volkswagen.

In what follows, the term 'governance structure' will first of all refer to the ownership structure of the company, and to the influence and rights of the employee-interest representation. There are also further relevant for­mal and informal elements in governance structure, such as the hierarchy of management functions and their resources (Jacoby, 2000), which will not be examined here for reason of lack of space. It is important to take into account the variety of different interests within MNC parent companies. While some actors within the management strive for the transfer of standards from the parent to the subsidiary, others might prefer to break with home practices.

3. What is the 'German work model'?

The research literature refers to the 'German model' in a variety of different contexts and meanings. At the institutional level, the 'German model' indi­cates a specific constellation of institutions of collective bargaining (industry trade unions, the system of sectoral collective agreements), corporate gover­nance (co-determination, cross-ownership between firms and banks), coordi­nation through intermediary organizations (business associations) and social policy (Streeck, 2009).

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At the level of industry and companies, 'production models' are dis­cussed as meaning a coherent combination of product policy, organization of the value chain and work model (Boyer and Freyssenet, 2002). The automotive industry is often considered as the template for a 'German' pro­duction model (Sorge and Streeck, 1988), although this generalization is not quite appropriate, as industry-specific production models in Germany are considerably diverse (Jürgens, 2004; Liithje et al., 2002).

In this chapter, I will concentrate on the work model of the German automotive industry (and in particular of the automotive manufacturers) and abstract from other elements of the production models. The four main common characteristics of the German automotive industry's work model concern interest representation, recruitment, job security and work organization (Jürgens, 2003; Jürgens and Krzywdzinski, 2009).

What do these characteristics involve? In terms of interest representation, the Metalworkers' Union has particularly high degree of organization among German automotive manufacturers, encompassing over 90 per cent of the workforce, which also greatly strengthens the position of the works coun­cils. Relationships between management and works councils are generally co-operative.

For recruitment for production work, German automotive companies hire for the large part (or exclusively, in some cases) skilled workers with 3 years of vocational training (Facharbeiter). This recruitment model emerged in the 1980s in the context of the automation strategies pursued by the companies at the time, and it has remained stable, despite the rejection of excessive automation and the corresponding changes in the requirements towards the workforce in the 1990s (Jürgens et al., 1993).

As far as job security is concerned, the commitment of companies to provide secure employment, and the recognition by the unions of the objec­tive of competitiveness are the basis for co-operative industrial relations. With respect to job security, the works councils and trade unions accept measures towards flexibility and greater cost efficiency. Since the 1990s, so-called employment protection agreements have become a central ele­ment in the development of the work model in the German automotive industry. These agreements combine multi-year job guarantees with mea­sures to increase competitiveness (including remuneration or working-time concessions) (Haipeter, 2009).

Finally, more characteristic of the German automotive industry than a single model of work organization is the importance of negotiations between management and the works council on the work organization. The specifically German approaches to the humanization of work were largely abandoned in the late 1980s, to be replaced by a general orientation towards lean production (Jürgens, 2003). But work organization remains a subject of negotiation between management and the works council, whereby the works council retains influence and, depending on the situation, can

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put forward demands and concepts for innovative work structuring (job enrichment, job enlargement) (Kuhlmann et al., 2004).

This work model is not without tensions (with respect to job security and recruitment, but also with respect to the extent of co-determination). These tensions and conflicts can be understood as driving the changes of the model forward.

4. Selective transfer: VW and other German companies in CEE

At the centre of the following analysis of the transfer of work models to CEE is the case study on Volkswagen. The case study will subsequently be com­pared with findings from other companies. There are three reasons why the Volkswagen (VW) case is particularly meaningful. First, with some 150,000 employees in Germany (including AUDI), VW is the biggest company in the German automotive industry. Second, as a consequence of Volkswagen's governance structure (more on this below), the work model of the German automotive industry is most strongly pronounced in this company. Finally, with approximately 50,000 employees in CEE, Volkswagen represents about one-quarter of the workforce of German automotive companies in this region, making it by far the largest player in the field.

In 2008, Volkswagen had 25,000 employees in the Czech Republic (Skoda), 6000 in AUDI'S Hungarian engine plant, 8500 in the Slovak automotive and component plants in Bratislava and Martin, as well as 6000 employees in the Polish commercial vehicle plant in Poznari, and 1200 in the Polish engine plant in Polkowice. In the following, the VW work model will be presented primarily on the basis of evidence from the Polish plants, supplemented by references to the other CEE plants.

4.1. Governance structure at Volkswagen Volkswagen has a unique position in the German system of corporate gov­ernance and co-determination, a result of the so-called 'VW Law' and the special ownership structure (Haipeter, 2000). The state of Lower Saxony has virtual veto power at the company. A high degree of union organization (95 per cent in the main plant in Wolfsburg) as well as the possibility of coalitions between employee representatives and government officials on the supervisory board gives the works council a particularly strong posi­tion. Volkswagen has 'a governance structure, which ensured strong state and union influence, and a very special labour relations situation, which allowed a high degree of joint decision-making and codetermination in areas not even stipulated by German law' (Jurgens, 1998: 273).

The Volkswagen governance structure reinforces the German work model outlined above. Job security, the first element of the work model at Volkswagen's German sites, is a priority of both the works council and the state of Lower Saxony. Since the early 1990s, employment guarantees have

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been laid down in repeated multi-year agreements between management and the works council. The agreements have contained various measures for securing jobs, including the reduction of working hours to 28.8 hours per week in the crisis year of 1993, a transition to flexible working hours and a reduction in overtime pay in the 1990s; 2006 saw an increase in work­ing hours to 35 hours per week without wage adjustment, meaning a cut in hourly earnings.

Recruitment for production work, the second element of the work model, relies exclusively on skilled workers who have completed a 3-year vocational training course (Facharbeiter). The hiring of trainees following completion of the apprenticeship is written into the employment protection agreements -a key demand of Volkswagen's works councils. All new hires are first placed in production, which results in some tensions because the skilled workers are overqualified for direct production work, and aspire to move to specialist departments such as maintenance.

Finally, due to the strong position of the works council, work organiza­tion is covered by agreements between management and the works council. In the 1980s, the debate about the origins of Japanese competitiveness brought teamwork and quality circles onto the agenda of the automo­tive industry, and pilot projects for quality circles and teamwork began at Volkswagen (Jürgens et al., 1993). On both issues, agreements were reached between the management and the works council that stated that improve­ments in the quality of work and competitiveness were equally important objectives, and that the works council would be closely integrated into the processes. However, the subject of teamwork remained contentious among management, which is why a significant variance emerged between VW plants in work organization. In the mid-1990s, the management's interest in quality circles and teamwork was squeezed out by other issues (above all the economic crisis). Quality circles disappeared and teamwork remained at the pilot project level. New approaches in work organization were tested out largely in the foreign plants (at Martorell, Bratislava, as well as at Mosel in East Germany), without the participation of local employee representation (Jürgens, 1998).

Only in 2006, following lengthy negotiations, was a definition agreed upon for a 'Volkswagen Way' of work organization, which was intended to become a standard in the company. Typical of Volkswagen is that the 'Volkswagen Way' was defined in agreements between management and the works council. The agreements maintained that competitiveness and job security were equally important objectives. They defined a process for the implementation of the 'Volkswagen Way', whereby the German works coun­cil was involved on equal terms with the management. They also defined teamwork for the German plants (team tasks, team size, etc.), continuous process improvement (implementation, integration of the works council in decision-making, guarantee that process improvement will not lead to

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redundancies) and management by objectives (implementation, integration of the works council) as the three pillars of the 'Volkswagen Way'.

The internationalization of the Volkswagen Group brought new chal­lenges for the Volkswagen governance structure, above all from the late 1980s. Although Volkswagen had already built production plants in Brazil and South Africa in the 1950s, and purchased a plant in Belgium in the 1970s, it was only with the acquisition of Seat in Spain in 1986 and the com­pany's expansion into CEE from the early 1990s that competition between plants for production contracts began, bringing with it new potential for conflict (Jürgens, 1998; Jürgens and Krzywdzinski, 2009; Widuckel, 2001).

The German works council at Volkswagen reacted to this development with a potentially conflictual dual strategy of (a) productivity pacts for job security in Germany and (b) the creation of interest representation for Volkswagen employees at a European and global level. In 1990, represen­tatives from Germany, Belgium and Spain founded the European Works Council (EWC) at Volkswagen. This was recognized by corporate manage­ment in 1992, and later joined by representatives from other European countries (Uhl and Lavon, 1997). The Volkswagen Group Global Works Council (GWC) was founded in 1999. A 'Social Charter' - valid globally within Volkswagen - was adopted in 2002. It guaranteed International Labour Organization (ILO) standards regarding freedom of organization and working conditions. Werner Widuckel, former speaker of the Volkswagen Group Works Council, and currently human resources manager at AUDI, describes the resulting structure as follows: 'With this strategic orientation, a standardized, annually recurring consultation process with the leadership of the company developed, in which, from June to November, the corporate plan is prepared on the supervisory board in an extremely dense progression of information, formal and informal discussions and votes, as well as agree­ments from the plant level through the general German works council up to the European and the global councils' (Widuckel, 2001: 337). The core principle of the EWC and GWC is 'solidarity which means the balancing of risks and development opportunities, intended to avoid plant closures and to prevent an imbalance of redundancies on the one side, and hiring and overtime on the other' (Ibid.: 338).

The development of the EWC and the GWC became an important driver of the development of international human resource management (HRM) at Volkswagen. A central personnel department for the entire Volkswagen Group was only founded in the early 1990s, before which the foreign sites had a strong degree of autonomy in terms of HRM. The negotiations with the EWC and the GWC emphasized the importance of the availability of inter­nationally comparable and standardized data and information on personnel systems. The handling of the 1993-95 crisis, however, put the German Volkswagen sites back into the spotlight at the expense of international HRM. The subject of the international standardization of HRM only regained

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importance in 2006 with the commencement of duties of a new head of HR at Volkswagen, whereupon a special 'International Personnel' depart­ment was created to deal with questions of international HRM standards at Volkswagen (Interviewee 1).

A recent landmark in efforts to transfer standards is the 'Charter on Labor Relations', which was signed by the corporate management and the GWC of Volkswagen in autumn 2009. It goes far beyond the 'Social Charter' of 2002, and represents the hoped-for transfer abroad of the German system of co-determination. The employee representatives in foreign sites are to be given a number of significant rights of co-determination, and to be trained to exercise these rights. Although the charter does not specify a timeframe for implementation, it represents a very ambitious attempt to transfer standards within a multinational company.

4.2. The Volkswagen work model in CEE The support in the creation of employee representative structures in CEE plants, and their inclusion in joint committees with the German works councils were important objectives for the German VW works council, and a response to competition for production volumes between German and CEE plants (Interviewees 2 and 3). In contrast to Germany, employee represen­tation in CEE plants is not formally safeguarded by a works council, but by a plant-level trade union organization. Nevertheless, both the Volkswagen management as well as the German works council are trying to transfer the model of 'cooperative conflict management' (Haipeter, 2000: 462; Jürgens, 1998: 274f.) from Germany to management-union relations in the CEE plants. 'Cooperative conflict management' prioritizes negotiation and the search for compromises, and the avoidance of labour disputes. In the CEE plants of VW, the transfer of this model of interest representation implies a degree of information and consultation for the union that goes well beyond legal standards (Interviewee 6). The co-determination model, however, has not yet been transferred, and there is considerable variance in the quality of management-union relations between the Polish plants.

The head of personnel at the engine plant in Polkowice, which opened in 1999, was a strong supporter of the German model of co-determination. He supported the founding of a Solidarnosc trade union organization in Polkowice, and established a highly co-operative relationship with the union (Interviewee 5). In contrast, in the commercial vehicle plant in Poznan acquired by Volkswagen in 1993, the relationship between management and union was more distant. The management argued that the union had no interest in issues regarding the development of the plant, and was not competent in such matters (Interviewee 6).

Union density is 60 per cent in the Poznan plant, and 75 per cent in Polkowice. Plant-level unions in Poland have far fewer available resources than unions in Germany. In accordance with Polish labour law, in 2005

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Solidarnosc had five representatives released from work at VW Poznañ (and three in the Polkowice plant) - the plant in Hannover, which is twice the size of the Poznañ plant, had 39 works council members released from work. Nei­ther in Polkowice nor in Poznañ do so-called annual 'site symposia' meetings between the company board, the plant management and the works council take place, despite the fact that these occur in all German plants, where they discuss the future development of the plant.

The membership of trade unions from the CEE sites in the Volkswagen EWC strengthens both their positions in the plants and the transfer of 'cooperative conflict management' to CEE (Uhl and Lavon, 1997). The EWC is supported by a range of further communication structures. A net­work of employee representatives and management representatives from the German and CEE sites meets annually at one of the Volkswagen sites to discuss current issues and developments. The meetings are financed by the company. While attending one of these meetings, the author of this chapter witnessed very open and contentious discussions. Furthermore, regular for­mal and informal meetings take place between works council and trade union representatives from sites in the same product group. The works coun­cil at the Salzgitter VW engine plant reports regular meetings and seminars taking place with trade union representatives from the Polkowice engine plant. The goal is to create solidarity, allowing the reconciliation of employ­ment interests of the sites. Annual meetings also take place between the heads of personnel and employee representatives at the VW engine plants in Germany and Poland (Interviewee 4).

Overall, only a partial transfer of the German VW model can be seen to date with regard to employee interest representation. The form of 'coop­erative conflict management' is being transferred, but not the rights of co-determination. A new step in the transfer, however, is represented by the 'Charter of Labor Relations' adopted at Volkswagen in 2009, which pro­vides for the transfer of the co-determination model to the foreign plants. It remains to be seen how well this transfer will succeed given the different national regulatory frameworks and the traditions of industrial relations.

The second defining element of the German model, the recruitment of skilled workers (Facharbeiter), is practised abroad by VW only for special­ist departments. Production workers are, for the large part, recruited at the Polish VW plants in Poznañ and Polkowice after completing high school. In contrast to Germany, the completion of vocational school in a met-alworking occupation is not a formal requirement of recruitment; rather, aptitude tests are used, focussing on manual skills and capacity for team­work. Though it is not a formal requirement, some workers had attended a vocational school that specialized in metalworking; these schools, however, are outdated and do not provide up-to-date training. Following recruitment, workers are given a 2-week introduction and subsequent on-the-job train­ing. Training is completed after about 3 months (Interviewee 7). A special

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form of training has been developed at the site in Bratislava, Slovakia, to introduce workers without vocational training and experience to the Volkswagen production system. It is called 'Profiraum' training, Profiraum being a training room in every main production area, where, with the help of a model line, workers can learn about the operation of the production line, line balancing and optimization, and can practise work operations. VW has implemented 'Profiraum' training in many of its foreign sites.

In contrast to direct work in production departments, recruiting suitable workers for specialist departments, such as maintenance, is a problem in CEE. In response, Volkswagen has set up a vocational training scheme in co-operation with local vocational schools at the Polkowice and Poznañ sites (Interviewees 5 and 6); the same approach is followed by VW in the Czech Republic and in Slovakia (Bluhm, 2007: 264f). In the Polish plants, 10-20 apprentices are accepted every year for the 3-year course. The students com­plete an apprenticeship in mechatronics based on the German curriculum, whereby 30 per cent of the training consists of operational practice, 30 per cent of practical application at school and 40 per cent of theoretical train­ing. Unlike in Germany, there is no formal guarantee of employment for the trainees, although most are hired (Interviewee 7).

The fact that the recruitment model is only partially transferred implies a challenge for the German plants. Volkswagen places an emphasis on the implementation of a unified production system in Germany and abroad. It now appears that its production system can be successfully implemented without the recruitment of skilled workers. This experience raises the ques­tion of the future of vocational training in Germany, as the skills and knowledge of skilled production workers appear to be applied only to a limited extent.

Besides interest representation and the recruitment of skilled workers, job security is a central element of the Volkswagen work model in Germany. This element is being transferred to the foreign plants only to a limited extent. Although, job security is indeed a management objective at the for­eign plants, collective redundancies are nevertheless resorted to in difficult situations - something that does not happen in Germany. Particularly note­worthy at the foreign VW sites is the use of agency workers. While the use of agency workers in German VW plants does not exceed 5 per cent of the total workforce, it can at times reach 20-30 per cent in the CEE plants (Jürgens and Krzywdzinski, 2009). One of the justifications for the extensive use of agency workers in CEE is the limited flexibility of working hours in comparison to Germany. Working-time accounts, while common in Germany, are possible only to a limited extent in CEE. As a consequence, fluctuations in produc­tion capacity result in additional costs (overtime, absence of cost-neutral reduction of working hours) (Interviewee 6).

The final component of the work model in the German Volkswagen plants is the emphasis on negotiation and compromise with regard to

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work organization. This has not been transferred to date to CEE. As there was no standard model for work organization at Volkswagen in the 1990s, plant managers were responsible for defining the work organization, result­ing in considerable variance in developments. From the outset, the Polish engine plant at Polkowice established a teamwork concept with small teams of about eight employees, elected team spokespersons, and relatively high self-organization and integration of indirect tasks within the teams (Interviewee 5). In the Poznañ plant, however, teamwork concepts were only recently put into place. German managers working in Poznañ reported neg­ative experiences with teamwork in their own factories in Germany, and complained that responsibility for process optimization had been left to the teams, and that insufficient attention had been paid to support and control through industrial engineering, as well as to standardization of the activities (Interviewees 6 and 8). 'You can forget about the subject of teamwork here. There's a healthy sense of authority in Poland, and it should stay like that,' commented one manager in the plant. Remarkably, the trade union at the Poznañ plant expressed little interest in teamwork, and argued that there was still an insufficient sense of quality awareness and responsibility among the Polish workers: 'Teamwork is something for Japan, where they have a culture of discipline and responsibility. Our society is not mature enough for this' (Interviewee 9). The first steps towards greater involvement for workers in process improvement were only initiated in 2005 (creation of a sugges­tion scheme, introduction of continuous improvement workshops). From 2007, the introduction of teamwork in the Poznañ plant finally began in the context of the international standardization of the VW production system.

Agreements between the management and the works council - typical in the German VW plants - on the aims and forms of teamwork, as well as on process optimization (such as employment guarantees for employees whose jobs are rationalized) are not to be found at the CEE sites. Work organi­zation remains the prerogative of management. Even when management implements innovative forms of work organization to increase the quality of work, the inclusion of in-plant employee interest representation is low.

4.3. Work models in German companies in CEE Volkswagen is a unique company; its governance structure makes it perhaps the strongest expression of the 'German model'. Nevertheless, the transfer of standards at Volkswagen to CEE countries remains selective. But how are other German companies in the automotive industry behaving in this regard?

Most studies on this issue work with cross-industry samples of compa­nies, and with different (if overlapping) definitions of the 'German model'. I will begin with employee interest representation - in all the studies the most prominent specificity of the 'German model'. The research consis­tently shows a high variance in the behaviour of German companies towards

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unions in CEE. The strength of the works councils and trade unions in the German parent company is emphasized by some studies as a key factor in this behaviour (Bluhm, 2003; Fichter et al., 2005; Tholen et al., 2006). This finding is consistent with the argument of this article, that is that the governance structure in the company centres has an influence on the transnational transfer of standards. The Volkswagen case represents a selec­tive but nevertheless far-reaching transfer of German practices, which goes beyond the practice of most of the other companies. The majority of German companies operate somewhere between a 'formal cooperative' approach (Vofi and Wilke, 2003), which tolerates the creation of unions in CEE plants, but where co-operation with trade unions is limited to the statutory mini­mum, and a rather negative attitude towards trade unions (Fichter, 2003). This pattern is evident both in cross-industry studies, as well as in studies of companies in the automotive industry (Fichter et al., 2005; Jiirgens and Krzywdzinski, 2007; Tholen et al., 2006).

The other elements of the work model in the German automotive industry highlighted in this chapter (recruitment, job security, compromise-oriented negotiation of work organization) have received little attention in the research literature to date. Most studies rather focus on the issue of train­ing and identify here the strongest tendency for the transfer of practices from Germany to CEE. Fichter et al. (2005: 23) write about German automo­tive suppliers in CEE: 'German companies invest highly in the development of transferable skills, promote employees' further education, and establish cooperation links with local schools and universities including appren­ticeships and tailor-made courses' (cf. VoB and Wilke, 2003). Jiirgens and Krzywdzinski (2007) present the case of a German supplier which, follow­ing the takeover of a Polish plant, had maintained the dual vocational training carried out in the plant in co-operation with a vocational school. Bluhm (2007) describes the vocational training conducted in co-operation with a technical college at the Volkswagen subsidiary Skoda and at the sup­plier Bosch in the Czech Republic. However, she stresses that vocational training projects remain exceptional: 'A fundamental reason for the lack of interest in vocational training is the classic problem of the collective good, which can be more easily resolved in the German institutional structure than in an institutional environment with weak collective actors and a lack of cross-company standardization of the remuneration policy by collective agreements' (Bluhm, 2007: 271).

In summary, it can be stated that German companies in the automotive industry are pursuing a selective transfer of their German work models to CEE. Willingness to transfer is most strongly pronounced with regard to the training of skilled workers, and goes as far as transferring some German voca­tional training schemes. However, this transfer remains selective inasmuch as it concerns only the specialist departments and not the regular produc­tion workforce. While there is selective transfer with regard to training, there

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does not appear to be any overarching tendency towards the transfer of the German model of interest representation. The variance between German and CEE industrial relations is very high indeed.

Volkswagen thus transfers selectively, while also being the company that is most strongly transferring elements of the German work model to CEE. This is significant because, first, it concerns the most important German automotive company. Second, Volkswagen is a role model for other com­panies. The company union fighting for recognition at a Toyota plant in Poland designated Volkswagen as the 'best practice' model in Poland (Interviewee 10). In co-operation with a vocational school, the Polish bus manufacturer Solaris has begun a mechatronics training scheme that explicitly imitates Volkswagen's approach (Interviewee 11).

5. Institutions for labour regulation in CEE - status and perspectives

The work models of German companies in CEE are developing in a spe­cific institutional context. To conclude the analysis, I will discuss how this context influences the companies, and the institutional changes brought about by the investments of German companies in CEE in relation to interest representation, recruitment and training, job security and work organization.

Despite different developmental paths, some similarities have evolved in the systems of interest representation in automotive sector of the CEE coun­tries, the first institutional area examined in this section. With the exception of Slovakia, the collective bargaining takes place at the plant level. Although unions can be formally founded relatively easily in companies, they have no rights of co-determination, and often only relatively weakly formulated information and consultation rights. The influence of the trade unions in the automotive sector is thus determined to a greater extent by their ability to mobilize than by the legal framework (Jiirgens and Krzywdzinski, 2007; Kohl and Platzer, 2004). The EU Information and Consultation Directive could bring about some changes. In response to this directive, the governments of the Czech Republic (2001), Slovakia (2002) and Poland (2005) introduced works councils (in Hungary, works councils have existed since 1992). The objective of the reforms was to stimulate the formation of employee rep­resentation in non-unionized workplaces. This hope, however, is far from being fulfilled (Krzywdzinski, 2009). In addition, works councils have the same weak information and consultation rights as the unions.

Against this background, a wide variety of forms of employee interest representation has emerged in the companies: social partnership-oriented models such as in Volkswagen, formal toleration of unions without genuine co-operation, attempts to prevent union organization, and paternalistic, anti-union models in small- and medium-sized companies (Jurgens and

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Krzywdzinski, 2009). There is no pressure from the institutional framework to change the situation, not least because supervisory bodies such as the State Labour Inspectorate and the labour courts lack resources. A change could be brought about, however, by new trade union strategies. While the CEE trade unions have for a long time neglected recruitment and organi­zation, since the late 1990s the Polish Solidarnosc union above all has been involved in successful organizing activities based on the model of the Service Employees International Union in the US (Krzywdzinski, 2009).

The second important institutional area for work models is the educa­tional system. Under the communist regime in CEE, vocational schools that were linked to large companies existed. Given the economic crisis of the early 1990s, however, most companies attempted to cut costs by separat­ing from the schools. By the mid-1990s, only a limited number of public vocational schools with outdated equipment and ageing teachers remained (Jiirgens and Krzywdzinski, 2007). The CEE countries now focus on higher education; vocational schools are underfunded and do not enjoy a good reputation.

Since the EU accessions of the CEE countries, however, companies have faced an increasing shortage of trained workers. While German companies have attempted to deal with the problem, companies from other countries have not participated in training schemes in co-operation with vocational schools. The possibility therefore arises that 'free-riders' will poach the skilled workers trained by the German companies and thus gain a competi­tive advantage by opting out of training costs, thereby undermining training efforts. In turn, the disappearance of a well-trained workforce could promote 'low-road' work models that depend on low labour costs and the hiring and firing of low-skilled workers. The economic price of this strategy for the CEE could be a specialization in low-cost products and a decoupling of economic growth and social progress (Jiirgens and Krzywdzinski, 2009).

The third institutional area to be examined is the regulation of employ­ment protection. The legal regulatory framework in CEE is characterized firstly by limited rights for the trade unions as regards dismissal procedures, secondly by particularly low employment protection for fixed-term contracts and agency workers, thirdly by legal limits on working-time flexibility. Thus, the institutional framework supports external labour flexibility with a 'hire and fire' approach (Jiirgens and Krzywdzinski, 2007; Krzywdzinski, 2008).

Under pressure from foreign companies, and German companies in par­ticular, the CEE countries have made their working-time regulation more flexible to allow working-time accounts. With working-time accounts, over­time can be later offset with leisure time, thereby avoiding overtime pay for employers. The flexibility of working hours is most advanced in the Czech Republic, Slovakia and Hungary. Here, the regular working week of 40 hours may be reached over an average of 12 months, if management and unions agree on this in a collective agreement. This makes working-time accounts

Martin Krzywdzinski 113

possible, as practised in many Western European countries. It is noteworthy here that the state has made efforts to use higher flexibility as an incentive for collective agreements. The greater flexibility of working time regulations is accompanied by cautious steps by the CEE countries to more strictly reg­ulate the use of agency workers and fixed-term contracts. To date, however, neither these steps nor the greater flexibility of working-time regulations has resulted in a move away from the extensive use of temporary work.

Finally, it should be stressed that the discourse of the 'humanization of work' and 'quality of work' that developed in Western Europe since the 1970s has a relatively weak tradition in CEE. In the context of the forced industrialization of CEE countries, a discussion about the 'humanization of work' emerged in the 1970s which, alongside technical solutions, also took on board issues of job enrichment and employee self-organization (Tatur, 1983). This discussion remained marginal, however, and was forced entirely into the background by the economic and political upheavals of the 1980s and 1990s. Trade unions in Poland and other CEE countries have as good as no experience with the issues around influencing work organization, which is reflected in the absence of union influence on this issue, even in com­panies with strong unions. Work organization remains the prerogative of management.

6. Conclusions and outlook

In summary, a pattern of selective transfer can be seen, both in the Volkswagen case study and in other German companies. The Volkswagen case study also shows the influence of the strength of the German works councils and transnational forms of advocacy such as the EWC on the transfer of standards, particularly with regard to employee interest repre­sentation.

There are a number of reasons why the transfer of work models by German companies remains selective. Labour regulation in CEE limits the transfer of the work model from Germany. At the same time, companies consciously take advantage of the possibilities of only transferring a partial work model, inasmuch as they limit investment in vocational training to a small group of essential skilled workers, rely heavily on temporary work, and in several cases seek to limit the influence of employee interest representation. The selective transfer reflects in part the different balance of power between management and labour in CEE compared to Germany. Nevertheless, an explicit break with the German model can be seen in only a few cases.

Jürgens and Krzywdzinski (2009) have raised the question of the future consequences of the strong dependence on foreign companies in CEE. Are 'high-road' work models, which place an emphasis on job security, invest­ment in training and good work conditions, as well as internal flexibility, gaining the upper hand? Or are 'low-road' models, which seek to increase

114 Employment Relations in Central and Eastern Europe

List of interviews

1 - Head of 'Human Resources International' department at Volkswagen (September 2008).

2 - Executive secretary of the European Works Council of Volkswagen (February 2005).

3 - Head of works council, VW Hannover plant Gune 2005). 4 - Head of works council, VW Salzgitter plant (June 2007). 5 - Head of personnel department, VW Polkowice plant (May 2005). 6 - Head of personnel department, VW Poznah plant (May and July 2005,

January 2007). 7 - Specialist for vocational training, VW Poznah plant (July 2005). 8 - Head of industrial engineering department, VW Poznah plant (July

2005). 9 - Head of Solidarnosc union, VW Poznari plant (July 2005).

10 - Head of personnel department, Solaris (November 2006). 1 1 - Head of Solidarnosc union, Toyota Jelcz-Laskowice plant (May 2007).

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