The impacts of globalisation of the labour relations in the automotive industry: the case of Hungary

Type de publication:

Conference Paper


Gerpisa colloquium, Paris (2017)


Délocalisation, Germany, global value chains, Hungary, trade unions


The automotive industry has been emerging a new techno-economic paradigm. This results not only in new products (e.g. electric vehicles, autonomous transportation system) or new process (like smart factories based on automation) but also in new business models (e.g. car sharing). These changes deeply affect the way the sector is globally and nationally organised: there are new entrants on the market (like Google or Tesla) but the already existing value chains are also transforming. This is especially important in the case of Central and Eastern European (CEE) countries as large productive capacities have been built in this region in the past 25 years. Based on their low wage costs and the relatively skilled workforce, the majority of CEE countries were able to attract significant FDI-inflow in the sector and automotive industry now plays a flagship role in these economies both in terms of employment and export activities. For example, nearly 90 thousands persons are currently employed in the direct automotive industry sector (NACE C29 and C30) only in Hungary, while the sector’s share of total export reaches 30%. The sector is dominated by German OEMs and their German 1st Tier suppliers. Hungarian-owned companies are rarely able to join to these value chains with higher value-added activities, with one exception (Rába factory) they are operating as 2nd and 3rd Tier suppliers .

However, there are more and more empirical evidences that these Hungarian subsidiaries are able to upgrade in the value chain and attract new activities with higher value-added. The so-called ‘first generation investments’ were led by cost-efficiency motives. These were replaced or complemented by the ‘second generation FDI decisions’ in the 2000s characterised by the ‘knowledge-efficiency seeking motives’, looking for talents in engineering and other profession electro-chemistry etc. This is especially true in the context of Industry 4.0 or fourth industrial revolution in which IT-related competencies become one of the most important factors of competitive advantage. There other reasons to do so: the geographical proximity of R&D and productive capacities makes the development process related knowledge transfer and sharing between designers and production staff faster and improve the quality of the production process.

Although the wage level and job quality in general is higher in these plants than the national average in Hungary, it lags significantly behind the plants located in Germany which creates tensions within the company group. Maybe that was one of the main reasons why the largest German trade union, IG Metall launched its Transnational Partnership Initiative (TPI) not only in Hungary but also in the U.S. The aim of this initiative is to help local trade unions to push for higher wages and better working conditions. The first European TPI office was opened in Győr-city (Audi) in late 2015 and an additional one has been recently (2017) established in Kecskemét-city (Daimler Benz) and targeted especially the first and second tier suppliers of these two German Multinational Companies. The presence and activity of IG Metall has had an immediate impact on the local labour relations with stronger voice of employees, increased strike activity and new forms of membership recruitment. In the proposed paper the authors seek to explore the trade union’s strategy, the reaction of the Hungarian and other nationality of employers and the short-, mid- and long-term impacts of this globalisation initiative of IG Metall in the Hungarian automotive industry. Our main question is whether it will lead to improved job quality or will decrease the competitive advantage of the subsidiaries operating in Hungary and thus save workplaces in Germany. In the first case it may further strengthen the process of upgrading in the value chain, while the latter scenario will create a glass ceiling effect to this upgrading.

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