
VW Strike in Slovakia Exposes a European Divide - CrocodileStreet
https://www.bloomberg.com/view/articles/2017-06-21/a-strike-in-slovakia-exposes-a-european-divide
======
manmal
It's very natural for lower income regions to strive towards higher incomes
when they are used extensively for production. It's a process many eastern
countries have gone through, and, as a result have become "unsustainable" to
host manufacturing sites. I write unsustainable in quotes because those higher
wages are certainly not unreasonable; but as long as there is a cheaper
option, enterprises will keep moving on.

So, Slovakian workers are now realizing their current leverage, they might
actually receive raises, but soon auto companies will move on. Auto co
shareholders want their company's suppliers to squeeze every last penny out of
every part, haggling over 0.5 cent savings is really normal.

Source: My father has been working in automotive for last 2 decades (auto
parts supplier). They had an unofficial saying "EBIT macht frei", a pun on
Nazis' "Arbeit macht frei", meaning that EBIT has to be optimized for at ALL
cost.

EDIT: Corrected the EBIT pun

~~~
charlesdm
> So, Slovakian workers are now realizing their current leverage, they might
> actually receive raises, but soon auto companies will move on.

Then they actually have no (sustainable) leverage at all.

In the end, the shareholders just matter more to these companies than the
employees. They're often the ones signing off on the renumeration of the CEO
and the executive team.

~~~
vetinari
>> So, Slovakian workers are now realizing their current leverage, they might
actually receive raises, but soon auto companies will move on.

> Then they actually have no (sustainable) leverage at all.

They kind of have. To go any lower with the wages, the car companies would
have go outside of EU - to Serbia or Ukraine, for example. Then, they would be
hit by the import duties they themselves lobbied for.

So the workers can ask for such increase, that is still a bit below the costs
of having it behind EU borders plus duties.

The trend of the plant operators is currently exactly the other way: they try
to import workers from these cheaper countries. Undocumented, of course.

------
niftich
Slovakia's situation is particularly acute, because there is a significant
divide in economic fortunes between the capital's region Bratislava, and the
rest of the country; while this divide is not altogether unusual, the
magnitude of this divide is dramatic [1]. Slovakia's poor are also, relatively
to average Slovakians, more poor than those in rest of the countries in
central Europe [2].

Bratislava's residents are well-off, but are within an hour of Vienna and
literally across the river from Austria -- a decidedly different experience.
Though the two metropoles have pursued closer integration since the opening of
borders, there is still progress to be made.

Foreign ownership of firms in Slovakia, Hungary, Poland, etc. is very common,
and there is an increasing undercurrent of people who are beginning to notice
that since joining the EU, though their economic outlook has improved, the
fortunes of the German, Dutch, and French firms that took over both struggling
and thriving local businesses has improved more. These residents may look like
they're envious of the German, Dutch, or French citizen, but in truth they're
channelling their anger at multinational corporations.

For the common person, the most visible benefits of EU integration have been
infrastructure spending from EU convergence funds (roads, railways, telecom),
and the ability to take work in other EU countries to remit money. Those who
stayed in their home countries -- most people -- saw their fortunes lifted
slower, and in a less thriving economy, more questions like this get asked.

[1] [https://www.oecd.org/cfe/regional-policy/regional-
outlook-20...](https://www.oecd.org/cfe/regional-policy/regional-
outlook-2016-slovak-republic.pdf) [2]
[http://ec.europa.eu/eurostat/statistics-
explained/index.php/...](http://ec.europa.eu/eurostat/statistics-
explained/index.php/File:Relative_median_at-risk-of-
poverty_gap,_2015_\(%25\)_YB17.png)

~~~
triggercut
Yes 100% agree.

Also, first thing I noticed about this article. "Any Slovaks reading this are
going to be very upset that they have been referred to as "east" European.

That aside, it is a rather unique situation, the country (the geographic area
specifically, forgetting past borders) has a long history with the automotive
sector and associated tooling and skills. During communism the region produced
tanks and other vehicles for the military. After the collapse of the USSR and
the dissolution from Czechia all those jobs were suddenly redundant. A lot of
the older Slovaks resent the split for this reason (ignoring the general
turmoil in the labor market associated with ending state owned enterprises
etc.).

When car manufacturers realized they had a cheap labor market with the
historical skills base they pounced, and now margins are being pushed. I have
family in Slovakia, and, not to paint with a board brush, but the growing
middle class is becoming more aspirational, is tends to be the case with
growing middle classes.

~~~
smcl
Nitpick: Czechia is the name for Czech Republic the govt here are pushing.
Czechoslovakia was the unified Czech/Slovak nation

~~~
triggercut
Ano, Prepáč, bad wording on my part. I meant the split form [i]what is now
refereed to as[/i] Czechia, however the use of that verb means it's probably
more appropriate to refer to what has been split from (in it's joint form).
It's Friday, I'm finding it difficult to communicate in any language today. :)

~~~
smcl
I feel a bit ashamed for "well actually..."-ing a Slovak speaker on this -
sorry!!!

------
miskin
This was mostly fight between two groups of union in one company. New union
wanted to show off their power, so they pushed hard for strike. Outcome was
laughable for anyone who remotely understands how percentages works. They
announced that they got their 14% raise and presented it as great victory. But
it was achieved just by adding one extra year to agreement - so instead of cca
4,7% increase in first year and 4,7% increase in second, they also got promise
for 4,1% increase in third year. Before strike, they got very similar offer
without that third year, but 14% sure looks much better than 8.9%.

~~~
grenoire
Where did you get 8.9% from?

~~~
miskin
VW was rather strict before strike - they had some existing offer and were
presenting this as non-negotiable. Even during first days of strike they
offered really small increase, so I was initially very surprised when news
annonuced 14% increase. Here [1] is original article in Slovak and here [2] is
google translation to english.

1: [https://www.aktuality.sk/clanok/500481/strajk-vo-
volkswagene...](https://www.aktuality.sk/clanok/500481/strajk-vo-volkswagene-
sa-konci/)

2:
[https://translate.google.com/translate?sl=auto&tl=en&js=y&pr...](https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=https%3A%2F%2Fwww.aktuality.sk%2Fclanok%2F500481%2Fstrajk-
vo-volkswagene-sa-konci%2F&edit-text=&act=url)

------
toyg
I honestly struggle to understand. Can't these guys see that the people they
"envy" are actually on a _worse_ trend? Eastern Europe benefited immensely by
European manufacturers relocating there, _to the direct detriment of their
Western workers_. The EU pumped zillions of Euros in their infrastructure and
their economies; and for the trouble, more often than not we get back an
insistence on regressive and retrograde policies, blocking ever-closer
integration, and constantly sabotaging "solidarity" policies like refugee
resettlement out of pure racism and egoism.

To me these people seem extremely ungrateful. I have said it before, and I
know it's an unpopular opinion, but I _really_ wouldn't cry if EU8 and their
galaxy would just be left to their own devices. They don't want to feel like
colonies? Fine with me, that's the door. Like us idiots in UK, they'll soon
find out that life outside is not that great.

~~~
bobthechef
s/ungrateful/unappreciative/. You could say that some don't appreciate the
changes that the region has gone through. Gratitude is a term you would use
for things like gifts. You can, however, appreciate a good business
relationship.

The colonies bit you wrote was out of place. It sounds like you're saying
"either be a colony, or get out".

Calling the refusal to take in so-called refugees racist is inappropriate. I
think you should do yourself the favor and delve into that subject a bit more
instead of passively accepting certain ignorant narratives. The migrant crisis
is a huge stain on Merkel's record, a demonstration of massive incompetence
and blindness. Most migrants weren't even from Syria or affected areas. Also,
note that no one seemed to notice how countries like Poland took in more than
1 million refugees from Ukraine following Russia's invasion of the country.
Germany took in practically no one.

W.r.t. solidarity, Germany has a spotty record where solidarity is concerned.
Consider how Germany has refused the building of Nordstream gas pipelines
through central/eastern Europe from Russia, instead opting to have them run
through the Baltic at greater expense. This allows Russia to cut gas supplies
to central/eastern Europe without affecting Germany. Russia, as we have seen
time and again, does not hesitate to use energy supplies as a tool of
political pressure.

I think that while central/eastern Europe should recognize the massive changes
their markets have undergone, it does not negate the other realities that are
at play.

~~~
bgarbiak
Poland took in not million but _183_ refugees from Ukraine. (data from april
2017)

The million people you're talking about are no refugees, they are cheap
labour. They're allowed to stay only as long as they keep their jobs. And
they're free to go to any other country in EU.

To say that Poland's (and other central European countries) refusal to take in
refugees from the Middle East is not driven by racism is to delude yourself.
Some politics bluntly only agree to take in Christians. Not to mention that
those countries are even willing to pay fines, just to keep these people away.

Refusal to take in refugees is not an act of non-solidarity with Germany. It's
mainly a not-solidarity with Greece, Italy, Spain - countries who deal with
this issue for years, and for years pledged for help.

~~~
bbv-if
Don't confuse migrant workers and refugees. Poland has profited greatly from
the ukrainian workers.

------
rini17
I live in Bratislava. Just like to point out some omissions/flaws in the
article:

1\. The strike was not about money, the negotiated increase was practically
same as planned by VW. It was about work conditions, for example there is no
air conditioning in the work halls and in the summer there is steady trickle
of ambulance cars for people who collapsed from the heat(no exaggeration). I
don't know whether these demands were met, so far looks like it was
whitewashed by VW corporate PR "they want money!!!".

2\. I doubt cost of living in Bratislava is so much lower than Wolfsburg. Rent
and restaurant food might be somewhat cheaper, but everything else are the
same prices in euro.

E: And the flow of money in the EU is complicated discussion, but it's true
that dividends extracted from eastern EU by western companies are several
times the amount of cohesion funds flowing in the other direction.

------
sengork
It's worthy to note that the buildings of the Volkswagen factory near
Bratislava were build during the old eastern bloc days (BAZ)
[https://en.wikipedia.org/wiki/Volkswagen_Bratislava_Plant](https://en.wikipedia.org/wiki/Volkswagen_Bratislava_Plant)

VW would have moved their equipment right inside those buildings during the
1990s period without having to build most of the facilities in use today.

In fact the whole place took years to be rebranded (logos changed to VW).

~~~
jacquesm
Same thing happened to the old Polonez factory outside of Poznan in Poland.

------
dejv
There was discussion I read on HN today, where people compared European cities
where average developer can earn 100-300k per year.

In region like Slovakia you can get highly senior people (with decade of
experience writing world class software for blue chip companies with hq in US
tech hubs) for 30 or maybe 40k a year, which is considered sky high salary.
Juniors might make 10, maybe 15k.

Just few hundred of kms, within same EU can make huge difference.

~~~
mrisoli
Eastern Europe became some interesting version of a developer boot camp or
farm system.

Locals can get a cheap education and a nice job at either a startup or BigCo
engineering office, where a salary is very high compared to local averages.

But I see most of them leaving eventually after attaining some experience to a
bigger tech hub in Europe(London, Amsterdam, etc).

~~~
dejv
And some people just don't work for local companies. Thank you remote work.

------
zukzuk
The pseudo-colonial takeover of Poland that this article alludes to was
already unmistakable when I visited some three years ago. The cities —
especially the malls and shopping districts — looked much like they do in
western Europe, completely dominated by western European retailers and brands.
The people wandering through these stores though looked dazed, alienated, and
entirely out of place. This is what they wanted and what they fought for —
western plentitude, with all those shiny, colourful goods they dreamed about.
So why isn't it making them happy?

A big part of it may be that eastern Europeans are now effectively strangers
in their own land. They have no sense of ownership or agency. During the day
they work for foreign corporations, usually in low-level positions, and then
in the evening they go out to spend their wages at those same foreign-owned
establishments. This is definitely neoliberal colonialism, and it will not end
well for everyone involved.

~~~
gerikson
Walk around in any shopping center in Sweden - a country that has had agency
over its history for centuries - and you will also see people who look dazed
and alienated. This isn't a symptom of a national malaise, it's simply being
tired.

~~~
toxik
I think it's just the increasing levels of stress in the general population.
People looked forward to tomorrow, and thought it would be good -- people
would work less. Tomorrow came and it meant more work, for less relative
wealth.

------
pmontra
Are there similar dynamics at work in the USA, with smaller or poorer states
believing they are colonies of larger and more affluent ones? If positive, how
does the federal government address that issue?

~~~
jdmichal
Apologies if any of this is familiar to you already...

The Senate was originally formed for exactly that purpose. It provides equal
representation to every state. The House, on the other hand, has
representation based on population. Bills must pass both the House and the
Senate before being signed as law by the President.

Additionally, Senators were originally elected by state legislators, not the
general populous. This, in addition to being equal representation, gave each
state government direct influence at the federal level. This practice was
ended in 1913 with the seventeenth amendment.

[https://en.wikipedia.org/wiki/Seventeenth_Amendment_to_the_U...](https://en.wikipedia.org/wiki/Seventeenth_Amendment_to_the_United_States_Constitution)

Now, economically, there's plenty of single-workplace towns which have been
devastated by companies leaving. However, any blame is typically placed
directly on the company, rather than any governmental-level entities.

------
nickbauman
The nations with the most poverty are middle-income nations.

