13th International Scientific Conference
“Economic Policy in the European Union Member Countries”
September 2-4, 2015, Karolinka, CZECH REPUBLIC
ISBN 978-80-248-3796-3
Conference Proceedings
© Faculty of Economics
VSB - Technical University Ostrava, 2015
THE ROLE OF COLLECTIVE DISPUTE RESOLUTION IN THE MAMANGEMENT OF
INDUSTRIAL RELATIONS AS A TOOL OF ECONOMIC POLICY: THE CASE OF POLAND
Leszek Cichobłaziński
Częstochowa University of Technology, Faculty of Management, 19 B. Armii Krajowej ave., 42-201 Częstochowa,
Poland.
Email:[email protected]
Abstract: Popular ideology of economic liberalism assume the market mechanisms (the invisible hand of the
market) are sufficient in the regulation of economic and social processes. However the experience suggests
that state policy is needed in stimulating and regulating certain economic processes. This is particularly
important in the area of collective labour relations. Emerging tensions and conflicts between employers and
employees (the latter are represented by labour unions) require state intervention as an active actor in the field
of Industrial Relations. The aim of this article is to present how the regulation of industrial relations can
contribute in keeping social peace at the example of resolving collective disputes in Poland. The main result of
this paper is a demonstration that the legal institution of collective dispute resolution can be an effective tool of
industrial relations management.
Keywords: Industrial Relations, Collective Dispute Resolution, Negotiation, Mediation, Economic Policy.
Jel classification: J51, J52.
1. Introduction
Economic policy has not ceased to perform its function at almost all levels of the economic system
although the neoliberal ideology, which was dominant in the last 20 years, stressed the role of the
"invisible hand of the market" as a self-regulatory mechanism. The issues of economic policy are
particularly important in the central European countries, which experienced socialism. A system that
was planning economy in a meticulous way and led to a creation of the Economics of Shortage
(Kornai, 1980). On the other hand, theses on the lack of evidence for the existence of the "invisible
hand of the market" seem to be untrue, although they are interesting (Schlefer, 2012). The recent
economic crisis shows that laws of the market are still being ignored. The crisis itself resulted from an
excessive speculation (which has nothing to do with the rules of the market) rather than the course of
economic cycle. Therefore, the role of the state and economic policy seems to be extremely important
also in the free market. It should be borne in mind, there are limits of such an intervention. Beyond
these limits the state becomes a burden to the economy due to excessive bureaucracy and complicated
legal regulations.
Labour market - in particular the relationship between employee and employer - is a separate issue.
Employers most often have a bigger bargaining power and for this reason employees defend their
interests by means of labour unions. Relations between labour unions and employers are regulated by
the state which becomes a mediator or even an arbiter in resolving conflicts between the two actors on
the labour market. These relations are referred to as Collective Work Relations or Industrial Relations
as the interests of employees are represented collectively, rather than individually. Labour unions are
the only authorized organizations to represent employees’ interests.
The present paper focuses on Industrial Relations in Poland. In particular on Collective Disputes
Resolution as an example of the economic policy of the state. Industrial Relations are in fact an
integral part of the economic system. Legislation in this area civilises the course of conflicts between
unions and employers, and in many cases the law prevents conflicts. The first part of the paper will be
devoted to theoretical aspects of Industrial Relations and Collective Dispute Resolution in Poland.
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13th International Scientific Conference
“Economic Policy in the European Union Member Countries”
September 2-4, 2015, Karolinka, CZECH REPUBLIC
ISBN 978-80-248-3796-3
Conference Proceedings
© Faculty of Economics
VSB - Technical University Ostrava, 2015
Second part will be empirical. It will be based on the analysis of case studies of collective dispute
resolutions in polish organizations, where the author of this article acted as a mediator from the list of
Polish Ministry of Work and Social Policy. Third part will cover discussion and findings.
2. Industrial relations in Poland
John Dobson (2000: pp.5) describes the genesis of labour union movement in Poland in the following
words: „Poland was the only country in which the transformation to political pluralism and a New
economic system was Rootem in social movement. Solidarity was formed as a trade union in 1980-81
after Gdansk strikes of 1980, but its membership grew rapidly until it had ten million members (i.e.
half the adult population of Poland).” So the Solidarity movement was at the core of political
transformation. Solidarity was not only the labour union but also a great social movement. Therefore
Poland is the only country in which the market economy based on private ownership of the means of
production was introduced with the initiative and support of a labour union. However this situation
did not prevent tensions between labour unions and the employers.
As of now there are three big labour unions – NZSS Solidarity, OPZZ - All-Poland Alliance of Trade
Unions and FZZ – Trade Unions Forum. They have a territorial structure and a large number of trade
unions of an trade nature (some of them are members of the OPZZ or FZZ). Three main legal acts
should be mentioned in the Industrial Relations: Statute on Trade Unions, , Statute on Collective
Agreements, Statute on Collective Dispute Resolution.
When discussing the issue of collective disputes in Poland, one should pay attention to the important
role the labour unions have in a free market economy. especially in the so-called transitional period the period between the centrally controlled economy and the market economy. This period is
considered to be only partly completed. There are almost no more state-owned companies anymore,
but they have been transformed into commercial companies where the State Treasury holds
significant amount of shares. It is very difficult to indicate a clear point when the post-communist
countries commence the existence of a free market economy as it is recognized in the countries of
well-developed free market economy. It is possible the transformation period still exists in some
spheres of Polish economy. The role of labour unions in this period is extremely important and
difficult at the same time. On one hand they are to care for employees interests and on the second
hand they should not restrain the emergence of the free market. (Paczyńska, 2009: p. 129 – 162). It
should be noted the position of labour unions in the countries of a former communist block is
weakened by a relatively low level of unionization. In Poland it is about 14%. For comparison, in
Germany over 23% of employees are members of labour unions. (Kloc, 2012: p. 33 – 35). Table no. 1
illustrates the trend.
Table 1. Union density in Poland.1
1990 1995 2000 2005 2010
30,4 30,8 24,2 19,0 15,0
Source: Guardiancich, I. and Pliszkiewicz, M. 2012, The Case of Poland, in Guardiancich, I. ed. Recovering from the
crisis through social dialogue in the new EU Member States: the case of Bulgaria, the Czech Republic, Poland and
Slovenia. Budapest: International Labour Organization, p. 73.
The answer to the question about the reason for this situation is beyond the scope of this text. Further
analysis will be based on the legal act which regulates the course of a collective dispute.
1
Notes: Union density rate, net union membership as a proportion of wage and salary earners in employment.
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13th International Scientific Conference
“Economic Policy in the European Union Member Countries”
September 2-4, 2015, Karolinka, CZECH REPUBLIC
ISBN 978-80-248-3796-3
Conference Proceedings
© Faculty of Economics
VSB - Technical University Ostrava, 2015
„Since 1991 there has been a special statute on resolution of collective disputes in the field of
labour law (ustawa o rozwiązywaniu sporów zbiorowych), which describes the possible methods of
dispute resolution between employees’ and employers’ unions; these includes negotiation, mediation
and arbitration. This Act emphasise the need for dialogue between the parties and grants a fairly
strong position to labour unions. This resulted from Poland’s round table negotiations’, first free
elections and led to the formation of the new non-communist government.” (Morek and Rozdeiczer,
2013: p. 778)
It determined how the conflict between labour unions and employers should be resolved. This
act was to civilize industrial relations, but it had to do so in a way that would not endanger the process
of transformation, especially the process of privatization. For this reason, for example, the collective
redundancies could not be a subject of a dispute. According to the Act, resolving collective disputes
must be carried out according to a defined procedure and mediation is one of the stages. To clarify the
issue the author provides a collective dispute resolution procedure:
1. Labour unions are to present a list of demands to the employer. The demands can only
relate to the issues enumerated by the Act and are as follows: remuneration and working
conditions, social benefits, trade union rights and freedoms. From the conflict dynamics
point of view, it is extremely important to point out there is a regulation which allows
trade unions to initiate the dispute. Employers have no power to initiate such a dispute.
Initiative in collective dispute should always come from the employees, while the role and
position of the employer in a collective dispute is fundamentally defensive.
2. Employer’s answer - further course of the dispute depends on the response of the
employer. There are only two scenarios:
a) positive - all requests are fulfilled,
b) negative - at least one request in not fulfilled.
3. If the employer’s answer is negative the collective dispute begins (as defined by the Act),
and the employer is obliged to report it to the Regional Labour Inspectorate.
4. Negotiations - bilateral talks of an employer and labour unions, held to solve the disputes.
There are four stages of the negotiations:
- accessing the negotiation process (parties to the conflict are familiarized with other party
stand, conditions, and the atmosphere of negotiations)
- consolidation - a thorough discussion on the merits of the conflict
- finalization - reaching an agreement or lack of an agreement
- formalization - signing the protocol of agreement or discrepancies.
5. Mediation - if negotiations have brought a solution to the conflict, the collective dispute
comes to an end. If negotiations have not led to an agreement, mediation is the next
mandatory step. Mediation is a separate institution and consist of several phases. The type
and number of these phases depends on the path chosen by the parties to the dispute, as the
Act gives the freedom to the parties in this respect.
Mediation is mandatory in labour disputes. It makes it different from mediation in other
disputes, which are voluntary by definition. This ensures that when the parties cannot reach an
agreement themselves, they must ask a mediator for help. Otherwise, any further stages of the dispute,
which are a result of the lack of an agreement through bilateral negotiations are illegal (i.e. strike).
Collective dispute and mediation in particular are to solve labour conflicts in a controlled way.
Mediations make the parties obliged to use all possible means to find an amicable solution before the
intensity of the conflict takes the size at which the strikes become inevitable (Cichobłaziński 2014:
pp. 45-46).
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13th International Scientific Conference
“Economic Policy in the European Union Member Countries”
September 2-4, 2015, Karolinka, CZECH REPUBLIC
ISBN 978-80-248-3796-3
Conference Proceedings
© Faculty of Economics
VSB - Technical University Ostrava, 2015
3. Collective dispute resolution – case studies
Methodology
The method used in this study is based on qualitative approach – particularly on case study
analysis. The first case study concerns a commercial company which effectiveness is based on profit.
The second case concerns public institution which effectiveness is based on meeting social needs.
These two different subjects of analysis allow to explain how the procedure of collective dispute
resolution functions in different organizations.
Case study I - factory of mechanical equipment
The mediation took place in a factory of mechanical equipment, a company wholly owned by the
State Treasury. Information on the mediation was passed on to the mediator through the medium of
the Ministry of Labor and Social Policies. The trade union which commenced the collective
bargaining had a central structure and was one of the most important in the enterprise. The main issue
to be dealt with was the increase in salaries in the company. The trade unions stated that this increase
was insufficient and was not in conformance with the growth in inflation. The previous agreement
constituted an increase in salaries that was proportional to the increase in the income of the company.
The chairman of the company requested the vice chairman of financial matters to participate in
the negotiations. The position of the board of directors was as follows: at present, halfway through the
year the financial situation of the company is quite satisfactory; however, it is not known how the
situation will look at the end of the year. With relation to this, the board stated that it is too early to
take a decision on increasing salary payments. These arguments were presented at a later date.
A further meeting was held at the headquarters of the trade union. The chairman of the trade
union, as well as two negotiators from the Regional Office of Trade Unions with formal
authorization, was in attendance. The representatives of the headquarters of the trade unions had been
involved in the aforementioned conflict for some time.
It is necessary to note that the level of emotion on both sides of the dispute was high. The members of
the trade unions presented their documentation relating to the history of the conflict. Both parties had
been corresponding with each other for a long time. One of the documents written by the chairman in
response to the trade unions suggested political aspects as a reason for the conflict.
The mediator, thus, asked the chairman of the trade union to go to the chairman of the company with
the aim of commencing trilateral talks. From the very beginning of the meeting emotional ripostes
were exchanged between the chairman and the representative of the trade union. In such a situation
the mediator had no doubts that indirect mediation would be the most effective solution which he
immediately proposed to both parties. At the beginning, the mediator moved between rooms and
passed on information that was written down during the bilateral talks to the interested parties. He
occasionally availed of notes prepared directly by the parties in question.
Following a long exchange of information the negotiators for the trade unions decided to run direct
talks and one of them (the unknown employer) went to the chairman of the company together with the
mediator. During the course of the talks the mediator only intervened when it was necessary for the
process of communication. He merely asked questions such as: Do you understand? Do you agree?
Are you certain that you can provide such information? The talks mainly referred to the issue of the
economic conditions of the company as the representative of the trade union had different
information than that which was presented by the chairman of the company. The employer was very
careful in passing on information to the trade union on the issue of the economic state of the company
by declaring that it was difficult to gain all of this in such a short time. In principle, he was reluctant to
pass on any significant information relating to the company.
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13th International Scientific Conference
“Economic Policy in the European Union Member Countries”
September 2-4, 2015, Karolinka, CZECH REPUBLIC
ISBN 978-80-248-3796-3
Conference Proceedings
© Faculty of Economics
VSB - Technical University Ostrava, 2015
Following this stage of mediation, both the mediator, as well as the negotiator went to the office
of the trade union. The chairman of the trade union and the experts of the Regional Office analyzed
the information received from the chairman of the company, which took over an hour. During this
time the mediator talked to both sides. Subsequently, the chairman of the company went to the second
negotiator representing the trade unions, whom he knew personally and who seemed to be the more
experienced. The reaction of the chairman was once again very emotional; similar to the case when he
talked to the chairman of the trade union. The talks were heated, but in the end it was possible to reach
an agreement with relation to providing the information required by the trade union.
The mediator subsequently went to the office of the trade union where there were talks held
between the chairman and two negotiators. An analysis of the information indicated that at present the
company does not possess a sufficient quantity of money to share out, as the chairman actually stated,
however, this conclusion was only based on preliminary and fragmentative data. It was clear that the
resolution of the conflict must be postponed for the future. The next issue was to establish a date for
the following sessions of mediation. The mediator presented his opinion on this matter. One of the
negotiators representing the trade unions was a better partner for the mediator, whereas the second
one had a better understanding with the chairman of the company.
The date of the next meeting was established for the following week. The mediator held talks with
the negotiators for the trade unions. They asked him if it had ever occurred for one of the parties to
withdraw their negotiating position. The mediator responded by saying that such situations happen
quite regularly. This was the last discussion at this stage of the negotiations.
Two days later the mediator received information from the chairman of the trade unions that the
chairman of the company passed on a report to them with the information required earlier than
promised. He also presented an agreement in which he stated that the decision relating to the increase
in salaries would be taken when the financial situation of the company became more stable. After
receiving this information the mediator called the chairman and asked for a copy of the said report.
The aforementioned case of mediation is a good example of when indirect mediation is necessary in
some stages of negotiations. This tactic should not be applied longer than is necessary. In mediations
these trade unions were supported in the lobbying process and were represented in the talks with the
employer by experts from the headquarters of the trade unions. Such talks require particular care on
the part of the mediator as introducing people from outside the enterprise creates additional
difficulties and in this case it increased the resistance of the employer. On the other hand, the external
parties, particularly those supporting the trade unions could balance out the negotiating power of the
parties to the dispute. The course of the mediation described indicated the necessity of tight control of
the actions of the parties by the mediator as sometimes they try to take control of the course of the
negotiations.
Case study II – hospital
Marshal’s Office in one of south-polish provinces is the owner of the hospital. It employees around
500 people. The employer was represented by the CEO of the hospital. He was accompanies by the
HR manager, chief accountant and a solicitor. The unions party consisted of the labour unions
representatives. Apart from the NSZZ Solidarity, there were also other unions in the hospital: Labour
Union of the Nurses and Midwifes., the Union of Medical Analysts and the labour union of the
hospital employees. The chairman of the biggest union, namely NSZZ Solidarity, represented all the
unions. There were three mediation sessions. There were few-day intervals between the sessions.
The mediation covered the following issues:
1. Introducing the new remuneration regulations.
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13th International Scientific Conference
“Economic Policy in the European Union Member Countries”
September 2-4, 2015, Karolinka, CZECH REPUBLIC
ISBN 978-80-248-3796-3
Conference Proceedings
© Faculty of Economics
VSB - Technical University Ostrava, 2015
2. Calculating the statutory bonus to the hospital employees for the previous year, according to
the Bonus Regulations. Namely 5% of the personal salary and payment of the arrears.
It should be emphasized that some of the staff took legal actions in order to obtain the rise but
not everyone did that. Some employees did not want to go to court and expose themselves to the
employer and that is why the unions wanted to resolve this issue systemically. Labour unions
suggested a mediator and the employer agreed for the choice. The unions requested the Ministry of
Labour and Social Policy to assign a mediator. During the first day the mediator talked to each party
separately. The employer blamed labour unions for the conflict. The CEO refused to realize the
demands arguing the new regulation comes into life. According to this regulation the 13 th salary
would be guaranteed to the employees. Apart from that the employer claimed the unions would be
soon presented a new remuneration regulations. The employer initially agreed to start the talks on the
same day. However, due to the lack of all the people, the talks postponed for the following week. The
labour unions agreed for that scenario.
Three parties were present at the second meeting. The unions were represented by the chairman of the
biggest union in the hospital along with two members of the works council. The employer was
represented by the CEO of the hospital, the solicitor and a chief accountant.
Mediator started the talks, explaining the rules of mediation to the parties. The chairman of the union
was the next to talk. The hostility grew as the talks proceeded. In nearly half an hour the parties
stopped listening what the others had to say and they concentrated on accusations of unsolved
problems. The current substantive issues were put aside and the parties ceased to the analysis. The
mediator’s attempts to overcome the deadlock focused on reducing the emotions and aggression did
not work. It was reflected in the protocol of discrepancy: ‘ the employer agrees to negotiate the salary
increase when he will get the proper interpretation of certain regulations, and when he obtains the
necessary funds from the National Health Fund (NFZ)’.
The unions responded: ‘we can’t proceed and set the amount of salary increase yet’ and ‘the salary
increase should be prepared by the employer and presented to the unions for the acceptance’.
Employer responded it is not possible, because at that time he did not have enough data to assess the
future financial condition of the hospital. Apart from that he would be obliged to respect the
agreement in the future irrespectively of the hospital’s financial powers.
The mediation ended with a protocol of discrepancy. However the parties to the conflict agreed on
one issue. The employer agreed to pay the so called ‘thirteen salary’.
4. Discussion
The discussed case studies indicate the importance of economic policy in the field of
Industrial Relations Management. At first glance, the Industrial Relations are a part of the Social
Policy rather than the Economic Policy, however the issue is on the boarder of these two fields.
It is hard to imagine efficient functioning of the enterprise and the whole economy without an
appropriate mechanisms of social dialogue at all levels of the economic system. In Poland, at the
national level there is the Tripartite Commission for Socio-Economic Affairs. It consists of
representatives of the government, labour unions and employers. However this text focuses on the
functioning of the Industrial Relations at the enterprise level, because such a solution in the field of
Collective Dispute Resolutions was adopted in Poland. For example in Germany, all the Collective
Disputes are resolved at branch level. Both solutions have their advantages and disadvantages but
these are beyond the scope of this article.
The analysis of the previously mentioned case studies indicates how legal regulations within
the sphere of Industrial Relations function in practice at the enterprise level. The role of state in this
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13th International Scientific Conference
“Economic Policy in the European Union Member Countries”
September 2-4, 2015, Karolinka, CZECH REPUBLIC
ISBN 978-80-248-3796-3
Conference Proceedings
© Faculty of Economics
VSB - Technical University Ostrava, 2015
case is limited to creating proper legal regulations. It should be noted that even though the Ministry of
Labour and Social Policy has the list of mediators, they are not state officials and they work on their
own. The state does not cover the cost of mediation neither. The system, however, makes the conflicts
between labour unions and employers take place in a civilized manner. This is evidenced by
obligatory mediation the parties must have when they do not reach an agreement themselves. The
drawback of this solution is the fact the mediation is obligatory. It happens that labour unions treat
mediation only as an element of a whole collective dispute and when mediation is finished they may
take a legal strike. However, in practice, labour unions often changed their attitude and mediation
became a way to reach an agreement without using any force based solutions.
One of the described examples reveals negative aspects of the Economic Policy. That is the
case of Collective Disputes in the hospital. A regulation requiring higher salaries in the public health
care was one of the triggers of the conflict. The parliament did not indicate the source of the
additional funds for salaries, so the government did not implement it. Because of that there were a
number of conflicts in various health care institutions. The employers were not guilty for non-paying
the legally indicated amounts. This is an example
of how the state (legislative power) may generate Industrial Relations conflicts.
In general, the law on collective dispute resolution in Poland is a good tool for the
management of Industrial Relations. It allows to keep control on Industrial Conflict and - in many
cases – to find a resolution of a conflict which is rewarding for both the parties.
The role of mediator in Collective Conflict Resolution is a different issue. A mediator acts in
his own name and for his own account. He becomes a part of the complex system of social dialogue at
the enterprise level. One becomes an active actor of the Economic Policy in the sphere of peaceful
Industrial Relations, which is an integral part of the economic system. Industrial peaceful relations on
the other hand have an important impact on the productivity of the whole economy.
References
[1] Act of 23 May 1991 on Trade Unions. Journal of Laws, 1991, No. 55 item 234 with the
amendments.
[2] Act of 23 May on solving collective labour disputes, 1991, Journal of Laws, No. 55, item 236
with the amendments.
[3] Cichobłaziński, L. 2014. Labour Relation in the Flattening World at the Example of Collective
Dispute Resolution – Polish Cases. Argumenta Oeconomica Cracoviensia, No.10, pp. 43-58.
[4] Dobson, J. 2000. Industrial Relations in Poland: Survey evidence of workers and managers
attitudes and behaviour. Riga: Riga International College of Economics and Business
Administration.
[5] Guardiancich, I. and Pliszkiewicz, M. 2012, The Case of Poland, in Guardiancich, I. ed.,
Recovering from the crisis through social dialogue in the new EU Member States: the case of
Bulgaria, the Czech Republic, Poland and Slovenia. Budapest: International Labour
Organization, pp. 71-93.
[6] Kloc K., 2012. Rozwiązywanie sporów zbiorowych w Unii Europejskiej ze szczególnym
uwzględnieniem roli alternatywnych metod rozwiązywania konfliktów (koncyliacji, mediacji i
arbitrażu,
Warszawa:
Pracodawcy
RP,.
http://mediacje.pracodawcyrp.pl/attachments/article/72/Rozwiazywanie_sporow_zbiorowych_
UE_28-09-2012.pdf, (19.05. 2014).
[7] Kornai, J. 1980. Economics of Shortage. New York: North-Holland Pub. Co.
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13th International Scientific Conference
“Economic Policy in the European Union Member Countries”
September 2-4, 2015, Karolinka, CZECH REPUBLIC
ISBN 978-80-248-3796-3
Conference Proceedings
© Faculty of Economics
VSB - Technical University Ostrava, 2015
[8] Morek, R. and Rozdeiczer, Ł. 2013. Mediation in Poland: Time for a Quiet Revolution? in Hopt,
K.J. and Steffek, F. eds., Mediation: Principles and Regulation in Comparative Perspective.
Oxford: Oxford University Press, pp. 775 – 808.
[9] Paczyńska. A. 2009. State, Labour, and the Transition to a Market Economy, Egypt, Poland,
Mexico, and the Czech Republic. University Park, PA: Pensylvania State University Press,.
[10] Schlefer, J. 2012. There is no Invisible Hand. Harvard Business Review no. 10,
https://hbr.org/2012/04/there-is-no-invisible-hand (1.07.2015).
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