Work, employment relations and FDI in CEE countries: patterns, trends and some reflections

1. Work, employment relations and FDI in CEE countries: patterns, trends and some reflections Alex de Ruyter

2. Outline • Introduction • Globalisation, FDI and precariousness • CEE developments • Reflections and conclusions

3. Introduction • Globalisation • Shifts in economic activity – manufacturing from mature economies to NICs • Realignment of production regimes • Plant Closure • Labour Market Adjustment • Growth of low-wage low skill (service sector) jobs prominent in mature economies

4. Globalisation, FDI & precariousness • Globalisation debate • Take a “transformationalist” approach • Typified by significant increases in FDI across most countries • Dunning’s O-L-I model of FDI • Globalisation outcomes • Patterns of “uneven development” (Hymer, 1975) => rising inequality between countries and regions within countries

5. Globalisation, FDI & precariousness • Must consider globalisation in context of broader changes in LM structure • Two key periods: post-WWII “golden age”: • Typified in mature capitalist economies by welfare state, commitment to “full employment” and predominance of “standard employment relationship” (SER: Bosch, 2004) • And then neo-liberal period (ca. 1976 - ): • Deregulation, privatisation, marketisation, “inflation first”, “austerity” => decline of SER and growth of “non-standard” employment => re-commodification of labour (Stanojevic, 2014)

6. Globalisation, FDI & precariousness • BUT to equate the growth of non-standard employment with rising insecurity is to overlook: • a) that not all forms of non-standard employment need be “insecure” or of “poor quality”; • b) erosion in the terms and conditions attached to the SER itself over the past 30 years; and • c) ambiguous nature of new work arrangements driven by changes in organisational forms (Rubery et al., 2002) • Hence, how does the concept of LM precariousness fit in?

7. 7 dimensions of “labour insecurity” Source: De Ruyter and Burgess (2003; adapted from Standing, 1997)

8. CEE developments • EU influence: Dominance of FDI-led growth model post-socialist period • Lisbon ‘Growth and Jobs’ agenda emphasized the role of FDI, flexible labour and product markets and low corporate taxes (Mabbettand Schelke, 2007). • Pre-2008 crisis; prima facie success of FDI model, with gradual convergence of CEE states to EU averages in GDP/capita; unemployment rates • Czech Republic and Slovenia had higher GDP per capita in PPS terms than Portugal in 2007

9. Inward FDI stocks as a % of GDP Source: Eurostat

10. Country inward FDI stock as % of EU-27 FDI stock total Source: Eurostat

11. Unemployment rates (%) Seasonally adjusted. Source: Eurostat

12. CEE developments • Increasing use of non-standard/flexible employment • Decline in trade unions • Impact of transition to capitalism and consequent privatisation; • De-legitimizing of unions – unions “acquiescing” to free-market reforms; • Pressures from MNCs to drive down employment terms and conditions • see Snajder-Lee and Trappman (2014) for a discussion.

13. Trade union density, selected countries Source: http://stats.oecd.org/Index.aspx?QueryId=20167

14. Part-time employment shares (%) Source: Eurostat

15. Employees with contract of limited duration (%) Source: Eurostat

16. Reflections • 3 stages of post socialist development • 1992 – 2004: transition period • Shift to market economy and catch up prior to EU membership; initially rising unemployment with privatisation and exposure to international competition • 2004 – 2008: EU membership • Embrace of Single Market and EU rulings; end to protectionist measures; rising FDI and falling unemployment • 2008 – present: post economic crisis • Impact of Austerity measures limits ability to utilise fiscal policy to counter recessions; higher unemployment and stagnation

17. Reflections • Unfulfilled expectations of EU membership: • failure to transfer “EU social model” has led to disengagement and rise of populist right-wing political parties (Meardi, 2012, cited in Stanojevic, 2014; Innes, 2012) • Austerity • Impact of EU Stability and Growth Pact with budget deficits capped at 3% of GDP has had negative impact on active labour market policies and social protection programmes (Heyes 2014)

18. Comments on policy • Reform of Stability and Growth Pact • End to Austerity; promotion of harmonised fiscal policies within EU • Shift away from market regulation • A promotion of international labour standards and voice and representation in the workplace • Questioning an FDI-led growth model

19. References: • Bailey, D., Lenihan, H. and De Ruyter, A. (2014) ‘A Cautionary Tale of Two Tigers: Industrial Policy ‘Lessons’ from Ireland and Hungary?’ Local Economy (submitted to). • Bosch, G. (2004) ‘Towards a New Standard Employment Relationship in Western Europe’ British Journal of Industrial Relations, 42 (4): 617-636. • De Ruyter, A. and Burgess, J. (2003) 'Growing Labour Insecurity in Australia and the UK in the Midst of Jobs Growth: Beware the Anglo-Saxon Model!' European Journal of Industrial Relations, 9 (2): 223-43. • Eurostat (2014). Various. • Heyes, J. (2013) ‘Flexicurity in crisis: European labour market policies in a time of austerity’ European Journal of Industrial Relations, 19 (1): 71-86. • Hymer, S. (1975) ‘The Multinational Corporation and the Law of Uneven Development’, in H. Radice (ed.) International Firms and Modern Imperialism. Penguin: Handsworth. • Innes, A. (2012) ‘In Hungary Viktor Orban adds the EU to his lengthening list of ‘enemies of the state’’ LSE Blogs, accessed on July 12th 2013 at http://blogs.lse.ac.uk/europpblog/2012/04/05/hungary-viktor-orban/ • Mabbett, D. and Schelke, W. (2007) Bringing Macroeconomics Back into the Political Economy of Reform: the Lisbon Agenda and the Fiscal Philosophy’ of EMU, Journal of Common Market Studies, 45(1), 81-103. • Plank, L. and Staritz, C., (2013) ‘Precarious upgrading’ in electronics global production networks in Central and Eastern Europe: the cases of Hungary and Romania, Capturing the Gains 2013: Working Paper 31. Accessed on January 27th 2014 at http://ssrn.com/abstract=2259671

20. References contd. • Rubery, J., Earnshaw, J., Marchington, M., Cooke, F. and Vincent, S. (2002) ‘Changing Organizational Forms and the Employment Relationship’ Journal of Management Studies, 39 (5): 645-672. • Sznajder Lee, A. and Trappmann, V. (2014) ‘Overcoming post-communist labour weakness: Attritional and enabling effects of multinationals in Central and Eastern Europe’ European Journal of Industrial Relations, 20 (2): 113–129. • Standing, G. (1997) ‘Globalisation, Flexibility and Insecurity’ European Journal of Industrial Relations, 3 (1): 7-37. • Stanojevic, M. (2014) ‘Conditions for a neoliberal turn: The cases of Hungary and Slovenia’ European Journal of Industrial Relations, 20 (2): 97-112.