WORKS Conference 8-9 October 2008

Restructuring of work in transitional economies: the impact on employment Vassil Kirov, Institute of Sociology, Bulgaria Session 3b Changes at the regional and national level. New paths for Europe? WORKS Conference 8-9 October 2008

The presentation aims to outline the major conclusions about the impact of GVC restructuring on employment in the transitional economies Objective

The report and the cases The impact on employment – flexibility, skills, careers The conclusions and perspectives Structure:

Prepared together by ISB and IS WORKS teams Analysis on the basis of company case studies, carried out in both in the new economy and matured industrial sectors The report

Software development (SoftServ in Bulgaria and DomainSoft in Hungary), Food industry (Beer AD, Bulgaria) Clothing industry (Copy Fashion, Hungary) Public service sector (National Employment Agency in Bulgaria and Intermed in Hungary). The cases

From state-socialism to capitalism or from the variety of state-socialisms to the variety of capitalisms? The transformation context

From the socialist co-operation to the global value chains – transformation of enterprises and FDI in CEE Moving within the global value chains - the cases in IT, food and clothing also supplied evidence that countries in Southern Europe and Central and Eastern Europe are to some extent moving up the value chain, becoming intermediaries, or outsourcing, either partially or fully, some of their activities to countries outside the EU (Huws, 2008) Value chains – longer and more elaborated?

Forms of impacts: Flexibility in NMS Skills Careers Imposed on negotiated impacts? Impacts on employment?

The increased flexibility in the assignment of task or deployment of personnel (Flecker) is closely connected to globalisation and development of knowledge economy, and it is based on increasing standardisation and fragmentation of processes, mainly as result of the spread of ICT and the convergence in standards. The Flexibility in NMS

Full time work is still the predominant model in CEEC Part-time work - part-time jobs are not usual even for private business. In all reported cases, these are only temporal, short-term exceptions – most often in order to fulfil family-related cares or due to training/education needs of the employee. Part time work

Private companies - introduce various models, combining different flexibility instruments (flexible working time arrangements, overtime, unusual working hours, temporary work of permanent staff, home working, etc.) in the frameworks of the full-time jobs of their employees. Different logic for working time flexibility are observed – cases of new economy and old industry Working time flexibility

SoftServ - The intensification of communication with customers in USA and Canada and with the company’s branch in South East Asia imposes specific time scheduling for company’s core activities CopyFashion - the result of the GVC restructuring is also constantly increasing work intensity (143 persons in production instead of 250…). The main reasons that speed up the work intensification were reorganisation of the business functions through consolidation of activities and spatial centralisation, lay-off of personnel, and introduction of products’ varieties (e.g. small-scale runs, customer-tailored products, use of different fabric types and raw materials). Working time flexibility - 2

‘Flexibility in time sequencing is a delicate competitive advantage for us when compared with a company with German working culture. For example, when our intelligent network system stops working in Indonesia, then somebody gives us a ring speaking in bad English and tells that 3 million people cannot use the wireless telephone service. In such a case there is a need for somebody who goes there immediately and does not ask first what will happen to his overtime money.’(Makó, Illéssy & Csizmadia, 2007a) Is working time flexibility a comparative advantage?

Macro data suggests that in the last decade the percentage of temporary workers among employees steadily increased both in EU-15 countries (from 11.5 per cent of 1995 to 14.0 per cent of 2005), and in the NMS (from 5,6 per cent of 2000 to 12,5 per cent of 2005) But as a whole, WORKS case studies show that numerical external flexibility is not typical for both public and private sector and the restructuring of the respective GVCs do not have any impact on it. Numerical flexibility

Standardisation and optimisation - usually refer to a set of functional flexibility instruments, which is unique for each company. According to case studies most important among them are: multiskilling, multitasking, teamwork, project organisation, and outsourcing. Some specific characteristics of the development of functional flexibility patterns in CEE countries, influenced mainly by deep economic, political and social transformations after the collapse of socialism. Functional internal flexibility

As case study reports demonstrate, changes usually result in need for/or intensification of already existing, multitasking, multiskilling, team working, job enrichment, outsourcing, project organisation of work, etc. The changes in Bulgaria and Hungary - often introduced or direct imposed when business functions of the private companies under consideration become part of GVCs Especially in cases, when local companies have been owned by MNE, the standardisation and optimisation of their functions follow strictly defined plans for restructuring in order to be more competitive on a global market. Standardisation and optimisation

Subcontracting and outsourcing are among the main sources of external functional flexibility in all case studies from the private sector Functional external flexibility

The supply of skills in NMS is problematic - a weakening of the complementary institutions in the NMS is visible in the fields of knowledge supply and labour relations. As concerning education and training we have to mention the erosion of professional training system especially in the declining sectors (e.g. clothing industry) accompanied by the privatisation and restructuring of the NMS economies, the fact the Universities could not respond to the needs of companies… Skills

New skill requirements in CEE The rising importance of in-company training after restructuring The importance of IT skills in all sectors examines (old industries, new industries, public administration) The rising importance of soft skills? Skills development after restructuring

New career opportunities/barriers, imposed by MNE that enter into NMS Limited opportunities for ‘global career paths’ among employees in NMS Rise in the demand for knowledge-intensive work shaped the possibilities for broadly defined and autonomous forms of work within high-trust, high-performance firm vs. new forms of work with low levels of autonomy, co-operation and participation due to the increasing formalisation, codification and standardisation of knowledge, skills and business processes. Career development

According to the women-respondents, even when the MNE has well developed family friendly policy, it does not always answer local needs due to the big geographic distance and respective social, cultural and economic differences. On the other hand, local companies could not have formal policy toward work-life balance but managers are more close to the needs of the employees Work-life balance and gender perspective

The impact on employment in NMS is not mediated by meaningful social dialogue However different practices of adjustment at micro-level could be observed Are changes negotiated?

What impacts on employment? Constantly increasing (functional) flexibility - in ‘old’ as well as in ‘new’ industries Models of flexibility and skill formation often imported through the GVC Flexibility is not always seen negatively by employees - numerical-internal flexibility assessed as giving competitive advantages or possibilities for better work-life balance Career development – dualisation Impacts of GVC seemed imposed by lead companies Some preliminary conclusions

WORKS Conference 8-9 October 2008