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MULTI-LEVEL BARGAINING DURING BULGARIA'S RETURN TO CAPITALISM.

This paper emphasizes the close interrelatedness among various levels of bargaining in transition economies. Focusing on the Bulgarian case, the author argues that in Bulgaria and other transition economies, neither purely national nor purely company-based bargaining is occurring; instead, the "social partners" (interest groups representing labor and business) have developed a multi-level bargaining structure that encompasses and links together national, company, industry, and regional levels. Multi-tier bargaining is prompted, on the one hand, by simultaneous pressures for centralization and decentralization during economic restructuring, and, on the other, by the need to legitimate the social partners at all levels. The author shows that in Bulgaria, increasing interdependencies and interactions among levels of bargaining have helped secure greater flexibility, adaptability, and survivability during extremely uncertain times.

More than a decade after the dramatic breakthrough of 1989, the transition economies of central and eastern Europe are enjoying a successful return to a market economy and democratic capitalism. National tripartite negotiations among the state, unions, and emerging employers, as well as collective negotiations at industry, company, and regional levels, have been consolidated in an interlinked bargaining structure. These developments were not predicted by previous research on industrial relations in transitional economies, including research on Bulgaria (for example, Jones 1991, 1992). The transition literature has offered predominantly broad multi-country comparative analyses or single-country analyses that have focused on the restructuring of industrial relations at the national level, the company level, or both (see, for example, Schienstock and Traxler 1994; Thirkell et al. 1995; Mason 1995; Slomp et al. 1996; Frege 1999). The literature has thus largely neglected the intermediate levels of bargaining, and has remained almost silent about the existence of any linkages among bargaining levels.

Through an in-depth exploration of the Bulgarian case, in this paper I attempt to fill that analytical gap by emphasizing the close interrelatedness among the various levels of bargaining. I argue that in Bulgaria and perhaps other transition economies in central and eastern Europe, neither purely national nor purely company-based bargaining is occurring; instead, the social partners (major interest groups representing labor and business) have developed a multi-level bargaining structure that encompasses and links together national, company, industry, and regional levels. This is a consequence, first, of the transforming economic and political context and, more specifically, the simultaneous pressures to both centralize and decentralize economic management, and to preserve but restrict the state's active role in economic development. Second, it is a specific response to the uncertainty of the transition: with new norms and regulations as yet underdeveloped, collective bargaining is used to legitimate the acto rs.

Multi-Level Bargaining: An Overview of the Argument and Methodology

I argue in this paper that during the transition to a market economy, with all its attendant uncertainties, collective negotiations were essential if the old industrial relations system was to be successfully transformed. As a mechanism for rule-making and decision-making with respect to the employment relationship, collective negotiations reduced uncertainty for both workers and management by channeling and institutionalizing conflict (Bean 1994). To fulfill that role, collective negotiations were required at all levels--national, industry, regional, and company levels, for example--where actors needed public legitimacy in a context of rapidly changing rules and regulations. In addition, multi-level bargaining became the strategic choice of all actors, as they attempted to diffuse and democratize central planning even while acknowledging that some centralization remained necessary for coordinated responsiveness to the uncertain exigencies of transition.

Developing first at the national level, collective negotiations quickly spread to lower levels, with the consensus of all the partners involved in national-level talks. At the regional level, regional employment councils comprising local governments, employers, and trade unions were established to complement the national employment councils that were trying to tackle the most acute problem of the economic transition, namely, unemployment. In addition, regional negotiations emerged in regions where there were acute restructuring problems caused by collapsing old industries such as textiles and coal mining (see, for example, Buchner-Jeziorska and Kulpinska 1994).

Institutionalized collective negotiations at sectoral and industry-wide levels were also prompted by the social partners. Such negotiations took place, as a rule, at the appropriate ministry. [1] They involved participation of ministry officials overseeing the state strategy for developing the respective industry or sector, together with representatives of the most influential union and employer associations operating in that industry or sector. Collective bargaining also emerged at the company level, to regulate the terms and conditions of employment. Such developments were, however, closely interwoven with collective negotiations at upper levels, and in the more complex cases representatives of upper bargaining structures became directly involved in company bargaining.

I analyze the four levels of negotiation that are formally present in Bulgaria. First, there are the national tripartite negotiations among the government, the national trade union organizations, and the national organizations of emerging employers. With the shift toward the market ideology of capitalism, and with recognition of the existence of conflicting interests in the industrial relations arena, tripartism and collective bargaining became favored by all actors in the Bulgarian industrial relations system, who viewed it as a civilized way to resolve conflicts (Atanassova-Tzeneva 1992; Thirkell and Tseneva 1992; Iankova 1994). In November 1989--March 1990 the social actors focused on the interpretation and adaptation of collective bargaining, and its active promotion in the newly emerging market economies.

Second, I explore the industry/sector level, where intense tripartite negotiations also developed in the early years of transition, followed later by a shift toward bipartite union-employer bargaining. For this analysis, I study collective negotiations at the Ministry of Industry, with a focus on the electronics industry as the industry most hard-hit by the economic crisis of transition.

Third, I analyze collective bargaining at the company level. In privatized companies this ordinarily consists of bargaining between unions and management; in still non-privatized companies, it often includes, in addition, representatives of the state and of union and employer organizations from upper levels. I have selected a company from the electrotechnical industry, where collective bargaining has been broadened to include also representatives from the Tripartite Council on the Electronics and Electrotechnical Industry at the Ministry of Industry.

Finally, I explore regional or local negotiations that bring together local authorities, local unions, and local employer organizations. I have selected Vratza as a typical Bulgarian region with difficult restructuring problems.

My overall analysis is based first on my pre-1992 work experience in Bulgaria, which included my professional involvement in the elaboration of general normative guidelines for the conclusion of collective agreements in the country, as well as in the preparation of a law on the resolution of collective labor disputes. Second, between 1992 and the spring of 1999 I made many return trips to Bulgaria, during which I conducted more than 100 interviews with national and local government officials, representatives of the major trade unions, and representatives of the emerging employer associations from various levels. I also attended, as an observer, numerous sessions of the National Council for Tripartite Cooperation, as well as sessions of sectoral and regional tripartite councils (in postal services and telecommunications, electronics, metallurgy, light industry, and the chemical industry; and in Sofia, Plovdiv, Blagoevgrad, Vratza, and Dupnitza). I analyzed a variety of government documents, constitutions and mission statements of the major employers' and union organizations, specific decisions and minutes of tripartite negotiation forums at the national, sectoral, regional, and enterprise levels, and a variety of national, sectoral, regional, and enterprise collective agreements and contracts.

The State Socialist Experience with "Collective Contracts"

Collective bargaining can be a viable mechanism for the regulation of the terms and conditions of employment where (1) there is a market economy and, especially, labor markets, and (2) there are clearly differentiated social groups having contrasting interests with regard to labor issues. Under state socialism, these conditions were missing. In Bulgaria and other Soviet bloc countries, state socialism abolished private property and markets. Labor markets were paralyzed by administrative control, and wage bargaining was replaced by central planning. With respect to the second basic precondition, the ruling Marxist-Leninist ideology regarded conflicts in the sphere of labor as contradicting the "true" nature of socialism as a classless society based on public (state) ownership. The alleged supremacy of the "common" interest over individual and group interests was said to "design" fully harmonious relations between the state and the trade unions.

The alleged harmony and unity of all interests were additionally strengthened by the absence of real employers and the lack of autonomous social partners. Although not involved in bargaining over employment conditions, the Bulgarian trade unions had been given some state distributive functions in the areas of health care, recreational facilities, and pension benefits. At the national level unions were formally involved, together with state organs, in preparing documents broadly concerned with labor and social issues and living standards, which were jointly signed by the government and the central organs of trade unions. However, all these activities required preliminary Communist Party approval (Petkov and Thirkell 1991).

Despite the lack of the two necessary preconditions for collective bargaining, the institution was not abolished under state socialism, either in Bulgaria or elsewhere in the Soviet bloc. The reasons for its preservation were both ideological and practical. Collective bargaining was regarded as a major achievement of the working-class struggle for improvements in living conditions. It was also viewed as a fundamental civil right in the labor sphere, like the right of association and the right to strike--and at a time when, according to the state socialist ideology, the working class had allegedly become the "ruling class," the liquidation of one of its most important rights would have contradicted the logic of the "socialist achievements." In more practical terms, as it happened in Bulgaria, a new Labor Code in 1951 designed a new, "socialist" model of collective bargaining that corresponded to the new economic and political conditions.

Under this model, the word "bargaining" was itself scrupulously avoided in the state's normative language, as it contradicted the energetically maintained assertion that a harmony of interests prevailed. Instead, the concept of a "collective contract" was introduced. Collective contracts were concluded only at the enterprise level and in manufacturing. They were concluded between the enterprise union organization and the "enterprise." Again for ideological reasons, the term "employer" was not used in the language of state socialism, as it implied the possibility of exploitation in its Marxist meaning. The major goal of the new "collective contracts" became the "mobilization of workers" to produce more in the name of rapid industrialization.

Collective bargaining was transformed into a mechanism through which both the unions and the "enterprise" fulfilled obligations to a third party--the state, the dominant "employer" under state socialism--to achieve increases in production and improvements in work organization and labor discipline. Actual bargaining between unions and management was neither legally required nor practically necessary due to the centralized control of wage funds. Enterprise collective contracts instead became a mechanism to ensure "over-fulfillment" of the enterprise plan, "over-increases" in labor productivity, and "over-planned" reductions in production costs; they were actually an "over-plan or super-plan" for the enterprise. The "super" results that were achieved, however, became the basis of the state planning process for the next year and hence produced little more than increased plan parameters (Hristova 1961).

Collective bargaining was further reshaped in Bulgaria in the late 1980s when a new labor code abolished these "horizontal" collective contracts and mandated so-called "vertical" contracts. In vertical contract talks, the trade union did not face enterprise management; rather, the two together faced higher-level union and management. These contracts fit in with what the Bulgarian ruling elite styled as the "self management" of "labor collectives" or enterprises, a new scheme designed to preempt the formation of the sort of independent trade unions that had emerged in Poland in the early 1980s. A premise was that the administrative subordination of the enterprise to its higher economic organization had become obsolete, and as a result the relations between the two now had to be bargained. In fact, vertical collective contracts were never implemented, and were officially abolished in March 1987 by a joint act of the Council of Ministers and the Central Council of the Bulgarian Trade Unions (BTU).

As shown by the cases described below, with the political transformation in November 1989, the actors in the Bulgarian industrial relations system, while heavily involved in politics, needed and sought to establish a form of collective bargaining in which bargaining truly played a part.

National-Level Development of Social Dialogue

The collapse of the Zhivkov regime in November 1989 and the winter 1989-90 strike wave manifested the existence of opposed interests in the sphere of industrial relations, and the necessity of independent trade unions and employers. Guided by the major goals of political recognition and democratization of politics and society, the independent trade union Podkrepa was formed in Bulgaria in February 1989. The old, official trade unions underwent a series of organizational changes to adapt to the realities of an emerging market economy.

With the start of transformation, shared ideology ceased to be an integrating mechanism of the industrial relations system, and the old rules became obsolete and impossible to apply in practice. In the turbulent new conditions, the industrial relations system's survival and restructuring became crucially tied, in particular, to increased interaction among the actors. Interaction led to the successful elaboration of new industrial relations rules corresponding to the emerging new political and economic context.

The importance of the political context was evident in the changes under way in Podkrepa, the independent trade union. After November 1989 Podkrepa came into the open. It became part of the Bulgarian political opposition and was one of the thirteen founders of the umbrella organization of the democratic opposition, the Union of Democratic Forces (UDF), in December 1989. Podkrepa was formally constituted as the Podkrepa Confederation of Labor at its First Congress in March 1990. Although it was established by a small group of the Bulgarian intelligentsia and had only a few thousand members at the moment of its formation, Podkrepa interacted with national political and economic elites and was extremely active and politically powerful. Its goals were political: to dismantle the old political structures, create new forms of economic ownership and new attitudes toward ownership, and support its political partners and allies. Podkrepa was successful in organizing widespread social protests (there were some 500 stri ke actions in the first few months immediately following the November events), which quickly undermined the government's legitimacy and forced the communists to grant political concessions to Podkrepa and other opposition groups.

A mass pro-democracy demonstration on December 10, 1989, directly challenged the Communist Party's leadership. The Bulgarian government and the UDF legitimated the emerging political opposition by opening roundtable negotiations on the political future of the country, which lasted from January to April 1990. The political roundtable clearly demonstrated the intense interplay among industrial relations, politics, and economics. A broad range of interest groups, including unions and employers, were able to participate in the negotiation of political arrangements between the Communist Party and the democratic opposition, which included elimination of the Communist Party's power monopoly and arrangements for free parliamentary elections in June 1990. The Communist Party, constituted as the Bulgarian Socialist Party, also agreed to abolish its workplace organizational structures.

Later, major political pacts on economic restructuring were signed by the state and a wide variety of political parties and social organizations, including trade unions. Such pacts generally preceded the signing of tripartite agreements, which occurred within the national social dialogue forum established in April 1990. For example, the Bulgarian Political Agreement for Peaceful Transition towards Democracy, signed in January 1991 by 15 political parties and organizations, including trade unions, preceded the signing of the National Tripartite Agreement for Preservation of Social Peace; and another Political Agreement was signed in June 1991, just prior to the signing of the Tripartite Agreement on the Further Course of Economic Reform and Preservation of Social Peace.

As for the old unions, their restructuring started with the proclamation of their independence on November 25, 1989. A resolution was passed declaring the BTU independent from political organizations, state organs and structures, business and administrative organs and organizations, and other public organizations and movements. Although initially denied access to the political roundtable between the BSP and the UDF, the old unions were soon granted participation on the side of the BSP. In February 1990 the Bulgarian Trade Unions constituted themselves as the Confederation of Independent Trade Unions in Bulgaria (CITUB).

For unions, this restructuring had two major implications. First, it meant independence from the Communist Party. Second, it meant elimination of the old practice of subordinating union activities to the economic goals of the state, and thus a revival of true collective bargaining. Collective bargaining became a way to transform the unions' function from a purely economic-administrative one to the defense of the immediate social and economic interests of union members. It also became a means to strengthen the image of unions among their members and a way to secure union member loyalty in the wake of mass dissatisfaction with old union activities and mass withdrawal from union membership.

CITUB's organizational reforms, however, were accompanied by a steady decrease in membership. To gain political legitimacy and to prove to its members that it was capable of defending their interests in the transition to a market economy, CITUB initiated negotiations and regular consultations with the Atanassov government, which was a government of the Communist Party. The government also sought public negotiations with the trade unions for the purpose of maintaining some political legitimacy in the face of a democratic opposition that was rapidly consolidating. In January 1990, however, the Atanassov government, faced with broad public pressure and a Podkrepa-organized national strike demanding the socialist government s dissolution, was forced to resign. Then when the democratic opposition and the Agrarian Union refused to form a coalition government with the Communist Party, Lukanov's "pure" communist government was formed.

In order to secure political legitimacy and favorable conditions for the implementation of the reform package, this government, like the previous one, began regular negotiations with CITUB. In February 1990 CITUB and the Lukanov government agreed to consult regularly concerning problems of vital importance to working people, such as rising unemployment and rapidly falling living standards. Both parties later agreed to include in these negotiations the National Union of Economic Managers as well as other actors (such as Podkrep a).

Although Podkrepa had as its priority the political goal of dismantling the communist system, and initially it opposed negotiations with socialist governments, it soon realized that in order to gain members and legitimacy as a trade union it had to join the government-union negotiations, thereby showing its members that it equally cared for their specific group interests. Accordingly, Podkrepa agreed to join the national tripartite forum at the end of April 1990. Participation in social dialogue resulted in Podkrepa's restructuring from a pure political union into a more traditional union for the defense of the economic interests of its members. With the advance of political democratization and economic restructuring, the strategy of Podkrepa evolved toward depoliticization. Thus after the first free political elections in the country (June 1990) and the formation of the Grand National Assembly, Podkrepa edged away from active membership in the UDF, first adopting an observer status, then becoming an outside supporter. The ideological differences between CITUB and Podkrepa, however, shaped social dialogue for a long time.

As employers came under pressure from other actors, especially trade unions, social dialogue facilitated the emergence of more distinct employers' organizations. The Bulgarian Industrial Association (BIA), founded in 1984, was the first employers' group to reshape itself, followed by the Bulgarian Chamber of Commerce and Industry. In December 1989, both the Union of Private Economic Enterprises and the Vazrazhdane Union of Private Entrepreneurs were founded.

The relationship between state enterprise directors and the state was fundamentally altered by the formation of one such organization, the National Union of Economic Managers (NUEM), in January 1990. In its effort to establish social partnership, CITUB assisted in the formation of NUEM (Petkov and Gradev 1995). Although NUEM was designed mainly to defend the interests of economic directors as state employees, it played an important role in laying the foundation for an organization of employers. Since unionization in the private sector remains low (it was about 4% in 1996), the efforts of these organizations have been directed mainly at defending small business from state influence (Martin, Vidinova, and Hill 1996). The defense of members' economic interests is promoted through representation in the tripartite social partnership system at national, regional, and sectoral levels.

The most important activities of the emerging national tripartism have included the elaboration of the Law on the Settlement of Collective Labor Disputes, which was adopted by the Grand National Assembly on March 6, 1990; the signing by the government, CITUB, and NUEM of a General Agreement on urgent social and economic problems (March 15, 1990); and the adoption by the social partners of General Guidelines for the Conclusion of Collective Contracts and Agreements During 1990 (April 5, 1990). The creation on April 5, 1990, of a National Commission for Coordination of Interests marked the institutionalization of this sort of social dialogue in Bulgaria.

The Law on the Settlement of Collective Labor Disputes and the General Agreement were an effort to combat the economic crisis and to control social protest with economic reforms. While the new law legalized and regulated the right to strike and prescribed several negotiation and mediation steps for the preventive resolution of conflicts, the main provisions of the General Agreement dealt with social protection in the areas of employment, wages, living standards, social development (holidays and social funds), health and safety, rest and recreation, and democracy in companies and enterprises.

The signatories to the General Agreement founded the National Commission for Coordination of Interests to better coordinate their activities. The Commission was open to other parties, and the participation of interested political and other organizations as observers to the Commission was also regulated. The Commission aimed at fashioning mutually acceptable decisions concerning economic reforms and the social consequences of the reforms. Within its purview were, among other things, labor relations issues, social security and living standards, and the resolution of important labor conflicts, including those in which strike actions were legally forbidden.

One of the most important achievements of the Commission was the signing of the "General Guidelines on the Conclusion of Collective Contracts and Agreements in 1990." To reduce the strong direct involvement of the state and the national social partners in the resolution of local problems, the Guidelines aimed to develop social dialogue at lower levels--industry, sector, region, and enterprise (see Figure 1). These provisions later became the core of a new Labor Code adopted in 1993, which made collective bargaining mandatory at all these levels.

The Guidelines also laid the basis for a new collective bargaining approach to replace the system of centrally fixed wages. Based on these guidelines, and contravening the existing still unchanged labor law, a new national wage policy was introduced in July 1991. This policy eliminated centralized tripartite determination of compensation and the indexation of wages (implemented in 1990) and introduced sectoral, regional, and enterprise wage bargaining in addition to the existing national bargaining. National wage bargaining continued to fix the minimum wage and the "excess" wage tax, and produced advisory adjustments based on individual education and skill levels.

In order to launch economic reforms, the Popov coalition government, formed in December 1990, needed broad mass support, including the cooperation of trade unions. The coalition government signed two social peace agreements and reached a six-month temporary consensus with the social partners. The Agreement on Preservation of Social Peace, completed in early 1991, focused on economic reforms, and in June 1991 a second agreement concerning social peace was concluded.

Social partnership was temporarily suspended at the end of 1991 by the newly formed neo-liberal government of the Union of Democratic Forces. Only in May 1992, after unions and international organizations applied extreme pressure, did this government establish a new social dialogue body--the National Council for Social Partnership. Finally, in early 1993 the National Council for Tripartite Cooperation was formed following the adoption of a new Labor Code, which made social dialogue and social partnership mandatory.

The National Council for Tripartite Cooperation endures to this day. It comprises representatives of the government and of the organizations of employees and employers recognized by the Council of Ministers as being nationally representative. On the union side, these are CITUB and Podkrepa CL; on the employers' side are the Bulgarian Industrial Association, the Bulgarian Chamber of Commerce and Industry, the Union of Economic Enterprising, and the Vazrazhdane Union of Private Producers. Standing expert commissions were created to facilitate the work of the National Tripartite Council on the most urgent problems of transition. In addition to regulating national tripartite bargaining, the new Labor Code (January 1993) legalized and regulated tripartism and collective bargaining at lower levels.

The Tripartite Council focuses much of its attention on wages. The social partners have to agree on the national minimum wage, as well as on other protected payments--monthly additional children's payments and unemployment benefits--that are calculated as a percentage of the minimum wage. The social partners also negotiate wage increases and protections against inflation for both the public sector and state enterprises in manufacturing.

Strategies and policies in the area of employment and unemployment are also regularly discussed by the Tripartite Council, and important laws and normative documents eventually issued by the government often have been prepared by the Council. The Council has also concerned itself with the creation and effective functioning of labor markets, the development of national and regional employment programs and measures against unemployment, including mechanisms for setting unemployment benefits, the training system and the retraining of the unemployed, and the formation, governance, and budget of a specialized national unemployment fund--the Vocational Training and Unemployment Fund. The Council also has discussed amendments to legislation concerning collective labor disputes, social insurance, pensions, social aid, and ways to privatize the state sector.

The goals, principles, criteria, and mechanisms of incomes policy have also been a major area of discussions within the tripartite forum. Consensus about how to protect real incomes from galloping inflation has been reached only with difficulty. The mechanisms under discussion have included the formation, regulation, and indexation of wages in material production and in the budget sphere and the indexation of pensions, unemployment payments, the minimum wage, the minimum qualifying income for social aid, and children-based payments. Unemployment benefits, minimum income and pension levels, and other labor market issues related to living standards are also regularly discussed. Disputes over calculations of inflation rates and average money wage increases have been frequent. Most aspects of the economic reforms are also discussed in the Council. These include price controls on selected basic goods and other goods produced by state monopolies; legislation concerning the financing of small and medium enterprise development; privatization and industrial restructuring; and health insurance.

The legalization of social partnership led to a second phase in its development. Before 1993, social dialogue often disintegrated during each election campaign and governmental reshuffling. The adoption of the new Labor Code, however, reduced the frequency of these politically initiated breaks in social dialogue. The number of local labor conflicts in the country then decreased as social dialogue boomed. Thus, according to CITUB data and estimates, in 1993 conflicts numbered 750; in 1994, 620; and in 1995, 538.

When mismanagement by the Videnov government caused rapid economic deterioration in 1996, social dialogue within the National Council was discontinued. Massive protest actions and strikes across the country in December 1996 and January 1997 led to the resignation of the socialist government and to early parliamentary elections in April 1997. The Kostov cabinet was formed in May 1997, and social dialogue was restored in June 1997. The July 1997 introduction of a currency board at the insistence of the IMF stabilized the Bulgarian currency, but challenged the government and the social partners to work closely with the international financial institutions, which became an important part of the revised social dialogue system. Under the conditions of a Charter for Social Cooperation and Memorandum for Priority Common Action (signed in October 1997 between the Prime Minister and the social partners), and in recognition of the need to preserve the social peace, the unions agreed to allow the Currency Board to start working, provided social dialogue was deepened. The Charter for Social Cooperation aimed to mobilize broad social support for continuing efforts to implement economic and social reforms in the country and promote democratization. The goal was to bring social dialogue to a higher level, as is done in many other European countries.

From June 1997 to the end of July 1999, the National Council held 24 meetings. The social partners discussed several issues of national importance, including wages and income policies. The Council reached consensus on guidelines for setting wages in enterprises with more than 50% state ownership. The NCTC also discussed the national minimum wage and how public sector wages were to be determined in 1998 and 1999. Second, a series of draft labor and social laws were discussed. Among them were the basic principles of a social insurance code; draft amendments to the Labor Code; and draft laws on family aid and child payments, social assistance and the tripartite management of the Social Assistance Fund, a voluntary pension insurance scheme, and health insurance.

CITUB, Podkrepa CL, and the Bulgarian Industrial Association also have concluded bipartite national agreements. One of these, the National Agreement on Collective Bargaining, signed on April 7, 1998, regulates the negotiation of collective agreements at lower levels between the two unions (CITUB and Podkrepa CL) and the Bulgarian Industrial Association. In particular, it recommends to the lower-level members of these organizations that they reach agreements in all spheres of activities where they have members, and to comply with agreements reached at upper levels. These agreements also created a voluntary labor arbitration committee comprising representatives of the two unions and the BIA.

In 1998-99 a series of laws created other tripartite organs that cover all major areas of the social sphere corresponding to the priorities of the Kostov government's program "Bulgaria 2001" (for the period 1997-2001). In addition to the NCTC, seven other tripartite institutions were created to deal with social insurance, employment, vocational training, social assistance, work conditions, and the rehabilitation and social integration of the disabled. These forums are the National Council on Unemployment Protection and Employment Promotion; the National Council on Vocational Training; the Supervisory Board of the National Employment Office; the National Council on Working Conditions; the Council on Social Assistance; the Supervisory Board of the National Social Security Institute; and the National Council on Rehabilitation and Social Integration. The social partners also created five specialized social funds, each of which is governed with the broad participation of the social partners: the Social Security F und; the Vocational Training and Unemployment Fund; the Work Conditions Fund; the Social Assistance Fund; and the Rehabilitation and Social Integration Fund. Typical of the new tripartite forums for social dialogue, these forums do not have a classic tripartite character but rather are multipartite, since they include non-governmental organizations and various professional organizations. They serve not only as arenas for consultation, but also as mechanisms through which social groups become involved in the decision-making process in the social sphere.

Thus, collective negotiations in Bulgaria first emerged at the national level immediately following the breakthrough of 1989, and were initiated by actors from the state socialist regime in an attempt to secure organizational and political legitimacy in an environment of rapidly changing economic and political rules and regulations. The highly centralized system of economic management that continued to operate in the country pushed many local conflicts to upper levels for resolution.

Pressures were building, however, for the creation of negotiation forums at lower levels as well. The practical need for such forums became apparent when, in the winter 1989-90 strike wave, numerous locally based social and industrial protests were referred for resolution to upper managerial structures and the national government and its ministries (Thirkell and Tseneva 1992). To reduce the pressures to settle all these local conflicts at the national level, and in response to the fact that the state and the national social partners were poorly equipped to resolve them, the social partners agreed in 1990 to develop a system of collective negotiations at lower sectoral and regional levels, where local and sectoral authorities, unions, and employers could directly address the specific local and regional problems brought about by economic restructuring and transformation.

The new Labor Code of 1993 mandated not only the creation of tripartite bodies for social dialogue in all industries and branches of the national economy and in most regions, but also the development of collective bargaining at the enterprise level and at sectoral and industry levels. However, since centralization was still needed to allow quick, concerted responses to unexpected problems as they arose during the transition, these lower-level bodies were tightly linked to the national tripartite council and the national government, thus creating an interlinked system of multi-level bargaining, with boundaries among the different levels often becoming blurred.

Social Dialogue at the Industry Level: The Case of Electronics

The new Labor Code of 1993 provided for the establishment of tripartite social partnership councils in all Bulgarian industries and sectors. Tripartite sectoral agreements were signed in each sectoral ministry, including the Ministry of Industry, replicating the major provisions of the national General Agreement, and by the end of 1994 sectoral tripartite forums were functioning at each ministry.

At some larger ministries, such as the Ministry of Industry, more than one tripartite body for collective negotiations emerged in order to adequately serve more than one sub-sector. Social negotiations on issues concerning the electronics industry thus became an integral part of the social dialogue occurring at the Ministry of Industry.

I chose the electronics industry as the subject for a case study in this research because it was hit particularly hard by economic restructuring. It had been a priority industry under state socialism, with guaranteed markets in the Council for Mutual Economic Assistance (CMEA) countries accounting for over 90% of its production, and after 1989 it suffered the deepest drop in production of any industrial sector. Whereas in 1988 the electronics industry accounted for 17% of GDP, by 1994 that share had fallen to not more than 4%. Employment in electronics was also drastically reduced: from 197,000 in 1990, to 89,400 in 1993, to only 40,000 in 1995. As the crisis deepened, wages and other forms of remuneration in the electronics industry were paid extremely late and were at least 10-15% lower than in other sectors (Bojadzhiev 1995:5). Due to the general delay in privatization in Bulgaria, privatization remains low in electronics.

Negotiations among the social partners operating in the electronics industry were intense and encompassing. Collective negotiations at the Ministry of Industry started in 1991, when the Minister signed an agreement with the central leadership of Podkrepa CL and CITUB to regulate social partnership. This social partner grew to include 40 union federations. In exchange for some job security, retraining, and social benefits, these unions agreed not to organize strike actions before negotiations were held in tripartite forums at the Ministry.

Social dialogue was suspended at the Ministry of Industry in spring 1994. Following its restoration in June 1995 by the Videnov socialist government, an Agreement for Tripartite Cooperation was signed between the Minister of Industry and the numerous social partners involved in negotiations with the Ministry: 14 sectoral chambers of the Bulgarian Industrial Association; 16 CITUB federations and sectoral unions; 7 Podkrepa unions; and 6 unions of the newly recognized trade union confederation OSSOB. This Agreement reduced the state's role in the sectoral social dialogue occurring at the Ministry of Industry to that of mediator and guarantor of the collective agreements signed by unions and employers. The agreement also established a trend away from discussion of purely local issues and the resolution of enterprise labor conflicts. The agreement focused tripartite cooperation on the conclusion of sectoral collective agreements and on issues such as employment levels, training, wages, incomes, social insurance, and collective disputes. Tripartite negotiations also covered work conditions--work time, holidays, leisure time, rest hours, and recreation--as well as the social aspects of privatization and economic restructuring.

At present, social partnership at the Ministry of Industry occurs at two levels: the all industry level, which spans industries; and the sub-industrial or sectoral level, involving one sector or several sectors that have similar activities or problems. At the all industry level, social partnership occurs through a Departmental Council. The Departmental Council is chaired by the Minister of Industry and includes representatives of the Ministry of Industry, the chairs of the eight sectoral councils for tripartite cooperation, the chief of the "Leasing of Management and Social Policy" department, the chairs of the federations of the nationally recognized trade unions, and the chairs of the sectoral associations that include the nationally recognized employers' organizations. The Council holds monthly sessions and makes decisions by consensus. Its jurisdiction covers general matters in the Ministry such as the coordination of draft labor legislation, wages, social insurance, employment, training and retraining, c orruption, privatization, work ecology and work safety, and enterprise-level collective bargaining. The Departmental Council also deals with the resolution of concrete problems that have not been resolved in the sectoral tripartite councils, and it is responsible for establishing communication with the social partnership organs in the other ministries and with the social partnership structures at the national level.

At the sub-industry/sectoral level, social partnership occurs through sectoral councils in eight industry areas: machine-building; electronics and electrotechnics; chemistry and mineral oil processing; metallurgy; timber, forestry, and furniture; light industry; mineral resources; and special production. According to the 1995 Agreement, the major task of these sectoral councils is to conclude collective contracts regulating the employment relationship in all companies of the respective sectors. The councils are charged with discussing and resolving all problems arising in regard to issues of employment, wages, incomes, sectoral collective contracts, labor conflicts, and inter-branch relations and communication with national tripartite organs. The main focus of the sectoral tripartite councils has gradually shifted from the resolution of local labor conflicts and prevention of strike actions to the preparation of annual sectoral collective agreements. The agreements reached by these councils concern wages, la bor effectiveness, inflation, employment, working time, holidays, training, and health and safety.

The sectoral council for the electronics industry (and the informatics industry), "Electronics and Informatics," was formed in 1992, with representatives of the Ministry of Industry, the Branch Chamber in Electronics of the Bulgarian Industrial Association, Podkrepa's Federation "Electronics, Electrotechnics and Informatics" (3,000 members),and three CITUB trade unions-- the Federation of Trade Union Organizations from Electronics and Machine-Building (18,000 members), the Trade Union Federation of the Organizations from Electronics, Machine-Building, and Informatics (5,600 members), and the small Electrotechnical Trade Union. The hottest debates have mainly been between the unions and the state, since the Branch Chamber of employers in electronics has been relatively weak and the unions prefer to negotiate directly with the Ministry of Industry.

The work of the sectoral Tripartite Council falls into three major categories: resolution of concrete problems and conflicts in the companies within the sector, especially those concerning union demands for the replacement of company directors and board members; negotiation of collective agreements regulating wages and work conditions in the sector; and discussions of the parameters of the economic reform in electronics. Between August 1992 and March 1994, the Council held 62 meetings, in which the issues most often discussed were problems within individual companies. Of 186 cases concerning local social tension discussed in the Council, nearly half (90) involved the replacement of company directors and members of management boards. Problems with corporate restructuring and analyses of the financial and economic conditions in local enterprises accounted for 67 of the 186 cases; layoffs and the implementation of local collective contracts, for 10 cases each; and strikes and other protest action, for a total o f 9 cases. This almost exclusive focus on personnel issues was the reason for the high politicization of the Tripartite Council.

Compared with tripartite councils in sectors experiencing less severe economic restructuring problems, the electronics council was much more politicized and was granted greater and more direct decision-making responsibilities. Thus the Minister of Industry, Rumen Bikov, reached an agreement with the trade unions that company managers would not be replaced without the consensus of the Sectoral Tripartite Council. In return, the unions agreed to a six-month moratorium on strikes in all the companies where new directors had been appointed with the Council's consent. This bargain was directed against illegal privatization and the frequent replacement of company directors for purely political reasons (such as changes in government after political elections). In fact, about 500 of the approximately 1,500 company directors in the country had been replaced, and 430 of those 500 were subordinate to (and hence had been replaced by) the Ministry of Industry. A great number of these dismissals occurred in the electronic s industry.

Another major area of negotiations has been the signing of collective agreements regulating wages and the employment relationship in the electronics sector. An agreement signed in November 1992 by the social partners in the sector set the minimum wage in the sector, established a procedure for adjusting wages for inflation, and provided for additional payments for education, night work, and overtime. The agreement also regulated work conditions and bonuses, employment and professional development, health and safety, work time and holidays, social insurance, and relations between the social partners.

The macro-parameters of the restructuring of the electronics industry were also discussed at the Sectoral Council, The continuing economic decline of the Bulgarian electronics industry and the government's unclear policy and strategy for economic restructuring led to increased tension and frequent strikes and other protest actions. Once happy to be part of Bulgaria's "elite" industry, employees in electronics, after 1989, organized many protest actions, especially during the Berov regime (December 1992-September 1994). In 1993 Podkrepa protested officially to the Bulgarian parliament, the Council of Ministers, and the Ministry of Industry, demanding the quick adoption of a comprehensive strategy for the development of the sector and the enactment of legislative protections for domestic production. Other demands focused on clearing bad debts, fulfilling the sectoral agreement concerning electronics, paying all overdue wages, and creating an employment program in the sector.

In Bulgaria's electronics sector, social dialogue, in common with other sectoral tripartite structures, was tightly linked with lower, company bargaining mechanisms, as well as with upper national forums of social dialogue. The aims of social dialogue in this context of continuing centralized decision-making were to give sectoral and local actors greater decision-making power, and also to provide national actors with a modicum of direct involvement in the resolution of sectoral and local conflicts. Centralized decision-making was still necessary because of the uncertainty of transformation.

As part of a multi-tier bargaining structure, the sectoral structures exhibited many of the characteristics found in national social dialogue. The sectoral agreements and the institutionalized sectoral forums for social dialogue bore a close resemblance to the agreements signed by the national social partners and the national tripartite forums.

First, the main social partners acting in sectoral social dialogue were the same as the players active at the national level. The regulations governing each national tripartite body called for the formation of tripartite branch councils at the request of any of the social partners at the national level. A sectoral tripartite commission typically was comprised of representatives from the respective ministry (a deputy-minister), the branch federations of the nationally recognized union confederations participating in national social dialogue, and the sectoral structures of the nationally recognized employers' organizations. In the beginning, sectoral social dialogue was more episodic than regular, mainly due to the absence of organizations of employers and of Podkrepa in many sectors. Because there were at first no distinct employers' structures, directors of enterprises represented state employers in some of the sectoral tripartite forums. The employers' organization most commonly represented in sectoral soci al dialogue has been the Bulgarian Industrial Association, with its 38 branch associations.

Second, important parallels to the national level could be found in the content of sectoral social dialogue. As at the national level, the main purpose of sectoral social dialogue was the resolution of major industrial conflicts. The first sectoral commissions with the task for coordinating interests met only to discuss written requests from local firms for the resolution of concrete problems. As the economic transformation progressed, however, issues and problems put forward by the ministries and other state organs began to dominate, and the sectoral tripartite forums then focused their attention on privatization, economic restructuring, and other macroeconomic policy matters, including the minimum wage in the sector.

Finally, the peaks and break-ups in sectoral social dialogue corresponded to those in national social dialogue. While most of the break-ups were politically rooted in election campaigns and changes in government, a major rupture, as a result of an internal dispute among the social partners, occurred in April 1994. The conflict began with a dispute over the signing of the sectoral collective agreements in the Sectoral Commission on Machine-Building. The employers insisted that they and the unions be the only signatories to the industry-wide collective contract for 1994. The unions, however, requested continued direct state involvement in the bargaining process because of the dominance of state property. The conflict also involved specifics of the sectoral contract, such as the minimum wage and the procedure for mass layoffs. When the unions and employers could not reach an agreement, the employers withdrew their signature from the 1993 collective contract.

In April 1994, as a result of this conflict and some national disputes related to the process of economic reforms, the unions discontinued their participation in the National Tripartite Council, and national social dialogue ceased until the election of a new provisional government in early October 1994. Some sectoral tripartite councils did continue to function after April 1994, to resolve major sectoral industrial conflicts and conflicts in major enterprises. The legal requirement (set forth in the Law on the Resolution of Collective Labor Conflicts) that unions could not strike unless they had first taken their complaint to the appropriate upper state organ (ministry) for negotiations contributed to the preservation of sectoral social dialogue.

The sectoral tripartite forums thus became important as intermediate problem-solving forums. On the one hand, they dealt extensively with the resolution of local problems, and required consensus for their decisions; if no consensus could be reached, a (local) issue was typically transferred for discussion to the national forum. Conversely, agreements reached at the national tripartite body extended downward to lower levels. Joint discussions involving a number of sectoral tripartite organs were also held, when a problem concerned more than one sector.

Company-Level Collective

Negotiations: The Case of ELPEM

The electronics company ELPEM exemplifies how local enterprise problems have been, discussed by local and upper-level actors. In the process, company-level bargaining over the terms of economic transition has become an important part of the multi-tier collective bargaining structure that has emerged in Bulgaria.

Union representation at ELPEM and the adoption of a company collective contract were discussed in the "Electronics and Electrotechnical Industry" Sectoral Tripartite Council in January 1996. Within ELPEM, CITUB had approximately 250 members and Podkrepa CL had 70. According to the Bulgarian Labor Code, an employer can conclude a collective contract with at most one representative body, and in situations where more than one union has members in a firm, either they have to agree on a joint representative body that will participate in collective bargaining or, if they cannot agree to elect a body, a general meeting of the employees has to vote for one of the competing unions. The branches of Podkrepa and CITUB within ELPEM did not reach an agreement on a joint representative body. The Podkrepa branch then asked the Sectoral Council for Tripartite Cooperation to mediate the conflict, and to extend the negotiations regarding the company's collective contract for 1996.

After discussions, the Tripartite Council recommended (1) that the two unions--Podkrepa and CITUB--collaborate and prepare a joint representative body; (2) that the company's management disclose necessary information to the trade unions; (3) that the Podkrepa branch in the company deliver its own draft collective contract to the Commission on Collective Bargaining; and (4) that the company director postpone an upcoming scheduled general board meeting of the company.

With guidance from the Sectoral Council for Tripartite Cooperation, a Commission for Social Partnership was created at ELPEM in January 1996, after the signing of the company's 1996 collective contract. Although the CITUB branch was a party to this agreement, both unions were allowed to participate in the work of this commission. The Commission is comprised of equal numbers of representatives of management and the two unions. It meets monthly and discusses predominantly social issues, such as summer holidays, rest and recreation facilities, and the distribution of social aid to needy employees from the company's Social Fund. It is not supposed to discuss wages. After reaching consensus on an issue, its members sign a protocol of agreement and prepare a draft-ordinance on behalf of the director.

The second discussion concerning ELPEM that occurred within the Sectoral Tripartite Council was in May 1996, and it again concerned the nature of social partnership in the company. At the sectoral level the social partners agreed to visit ELPEM and meet with representatives of its management and unions.

A third discussion concerning ELPEM took place in the Sectoral Council in early September1996. This discussion concerned social tensions in the company caused by the large and variable wage increases that had violated ELPEM's collective contract. According to the contract, wages were to be increased by 20% across the board by 1996, but the June 1996 wage increase was much higher and varied--33% for production workers and 47% for administrative personnel. After a visit to the company (in which I participated as an observer) and intense talks involving the company management, unions, and workers, the representatives of the sectoral tripartite council (from the Ministry of Industry, CITUB and Podkrepa, and the Bulgarian Industrial Association) recommended that the next wage increase raise the wages of production workers by 45% and those of administrative personnel by 20%, in order to preserve the initial (pre--July 1996) wage relationship.

The failure to resolve local issues at the company level in this case is not surprising, in view of the uncertainties surrounding the transition and the fact that the company was not yet privatized. The social partners' joint initiative to push the dispute upward to the sectoral level appears to have effected a resolution acceptable to all parties.

Regional Social Dialogue: The Case of the Vratza Region

As with the sectoral councils, the development of social dialogue at the regional level was intended to reduce the heavy involvement of the Bulgarian state and the national social partners in the resolution of locally based social problems and conflicts. Tripartite regional agreements were to be signed with the expectation that they would cover topics similar to those addressed in the national General Agreement.

The new Labor Code of 1993 promoted the establishment of social dialogue in all regions of the country, but, in fact, regional tripartite bargaining developed mainly in regions that faced major restructuring problems and rapidly rising unemployment. Two distinct types of tripartite forums emerged. Social dialogue forums sought to guarantee "social peace" through local initiatives that would resolve regional social problems, restructure the local economy, and combat regional unemployment. At the same time, so-called tripartite consultative committees emerged in some regions to address employment issues, primarily by strengthening the Vocational Training and Unemployment Fund and adopting a National Program on Temporary Employment. In most regions these tripartite forums merged into a single tripartite forum that coordinated various issues. A regional tripartite commission typically includes representatives of the local government (mayor or deputy-mayor), local unions (Podkrepa CL and CITUB), and employers.

One place in which a regional social dialogue forum emerged in response to acute regional restructuring problems was Vratza, a city of about 100,000 in northwest Bulgaria. Under state socialism, Vratza had developed as one of the major industrial centers of the country, with several huge industrial complexes. After the collapse of the regime in 1989, social tensions in the region escalated, mainly due to persistent high unemployment as the industrial complexes were slow to restructure or privatize. Employment in the region (including the private sector) dropped from 56,000 in 1987 to 41,500 in 1995. In more recent years the number of unemployed has begun to decrease, however, with the development of the private sector and increased trade.

The social partners that are active in the Vratza region are the municipal council (the local self-government), the local branches of Podkrepa and CITUB (union coverage in the region is about 61.5%), and the local branches of several employers' organizations. Employers were initially represented in the region by the National Union of Economic Managers, which had 65 members. Later, the Union of Private Economic Enterprising, the Bulgarian Industrial Association, and the Bulgarian Chamber of Commerce and Industry also created regional branches and became partners in the regional social dialogue.

After the 1990 adoption of national guidelines for the development of social dialogue at lower levels, the unions in Vratza began to pressure economic managers in the region to meet to discuss a regional tripartite agreement and create a regional tripartite commission. The Regional Council of CITUB called on its enterprise-level union organizations to refuse to engage in enterprise bargaining or to sign collective agreements on layoffs in enterprises until their managers organized themselves into a regional employers' structure. These union tactics, especially the refusal to sign legally required agreements on layoffs, forced the enterprise directors to create a regional structure of the then-existing National Union of Economic Managers and to sign a regional tripartite agreement with the local unions and the local government in April 1991.

The Vratza Regional Tripartite Agreement closely resembled the General Agreement, which had been signed in 1990. The regional agreement, aimed at securing social peace and a more equal distribution of the burden of economic transition, put special emphasis on two sets of issues--social problems in the region, and employment and unemployment. With respect to the latter, the social partners agreed to facilitate research on the local labor market, including studies of prospects for new job openings, and to guarantee their own control over the implementation of the company-level layoff procedures required by the National Tripartite Commission in March 1991. They agreed that mass layoffs (defined as more than 10% of the work force) should be discussed in the regional tripartite commission, and in such cases the commission had to decide whether to seek from the ministry the resignation of the enterprise management. An agreement was also reached to facilitate the conclusion of enterprise agreements on employment is sues.

The second part of the Vratza agreement, on the resolution of some social problems in the region, provided for the increased production of consumer goods and communal services, development of private initiatives in agriculture, and control over private sector prices and the prices observed by the Council of Ministers. Also agreed upon was a requirement that the managers of state and municipal enterprises in the region report to the tripartite com- mission any reductions or closures of health services in their enterprises. The local government further agreed to facilitate housing allocation and house construction in Vratza. For their part, the unions agreed to control emerging strike tensions in local companies.

The Vratza regional tripartite agreement proposed the creation of a Regional Commission for the Coordination of Interests. Its goals focused on coordination of the activities of the social partners so as to fulfill the regional tripartite agreement, and on consultations about the social and economic policies of the local government.

As in the electronics sector and elsewhere, with each new national tripartite body, a corresponding regional tripartite body was founded in Vratza. More generally, break-downs in the Vratza regional social dialogue coincided with break-downs in the national social dialogue. Thus in 1992, following the creation of the National Council for Social Partnership with the UDF government, a Regional Council for Social Partnership replaced the Regional Commission for the Coordination of Interests. The resolution of local problems concerning work conditions, social insurance, and living standards remained the major focus of the renewed social dialogue in Vratza. Following the Berov government's creation of the National Council for Tripartite Cooperation in 1993, the Vratza Regional Council for Tripartite Cooperation was set up with goals similar to those of the national body--consultation and cooperation in the resolution of labor conflicts, and improvements in social insurance and living standards in the region.

Since its emergence in 1991, social dialogue in Vratza has addressed four large issues in its attempt to reduce industrial and social tensions in the region arising from the uncertain and fluid processes of regional and national restructuring: problems in specific local companies, regional unemployment, the employment relationship in municipal companies, and wages in the public sector.

Most negotiations among the social partners in Vratza have concerned problems specific to local companies, both state and municipal. Of the 41 companies whose problems were discussed in the council, 14 were municipal and 27 were state. Tensions in municipal companies most commonly arose in connection with reorganization issues, financial and economic issues, and requests for the replacement of management. While the state companies are subordinate to their respective ministries, they have initiated meetings and discussions with the local government to resolve specific problems. Tripartite discussions concerning state companies have focused most frequently on financial and economic issues, reorganization and labor problems, union requests for the replacement of directors and changes in the management boards of companies, and health and safety issues.

Inevitably, given the on-going political and economic transformation in Bulgaria, which has been especially dramatic in Vratza, personnel issues entered into the agenda of the tripartite council-in particular, proposals to replace directors and members of management boards. Since the political parties and the local government in Vratza, fearing accusations of political purges, refused to engage directly in the replacement of directors, the Vratza tripartite council was used for that purpose. The council worked out criteria for the replacement of directors, and when the social partners could reach consensus they submitted proposals to the government for dismissals.

The second major area of interest and collaboration among the social partners was regional unemployment and employment. Discussions in this area focused on the Program on Temporary Employment of January 1993 and on trends in regional unemployment. In 1994,2,900 people were offered new jobs through the regional labor office. While in some other regions the Program on Temporary Employment led to the creation of regional tripartite forums, in Vratza the existing tripartite forum acquired this additional function.

A third major area of activity and negotiation among the social partners in Vratza has been the employment relationship in municipal companies, and in this respect the regional social dialogue represents a typical collective bargaining process, with the local government acting as an employer. The process ends with the conclusion of a collective agreement. One such agreement, signed on October 19, 1993, by the local administration and two trade unions, regarded labor relations and social insurance in municipal enterprises. Its aim was to create a framework for the conclusion of collective contracts between unions and employers in municipal companies. The parties agreed that conflicts arising over collective agreements in the municipal companies should be resolved in the tripartite council. The regional agreement regulated wage and inflation adjustments; work conditions, especially health and safety; social and cultural services; social insurance; and privatization policy.

A fourth focus of negotiations in the Vratza forum is wages in the public sector (education, health, culture), 50% of which are provided by municipal budgets. Two subcommissions were created at the Vratza council to address problems in health care and education. The major task of these subcommissions is to conclude collective agreements for local health care and education units. Collective agreements for teachers and health care workers are concluded annually between the local government and the unions.

The Vratza regional tripartite council was closely linked with the national tripartite council. Discussions concerning problems in local companies also involved representatives of the national social partners. The Vratza tripartite council had frequently requested the direct assistance of higher state organs and the national tripartite council. The problems that were pushed upward for resolution most often involved the replacement of directors in state enterprises, at the request of enterprise unions, but also included regional unemployment, the poor financial situation of local enterprises, and health and safety issues.

The Vratza tripartite council regularly submitted official comments and opinions to the National Council for Tripartite Cooperation regarding draft laws and government decrees on problems of labor, social insurance, and living standards, as well as proposals for the stabilization of social and economic conditions in the country and the preservation of social peace. Another indication of the close ties between levels is the fact that in both 1992 and 1994, when national social dialogue broke down, the regional social partnership in Vratza was almost frozen. It continued to function only in emergency situations, such as when there was a need to negotiate salaries and conclude collective contracts in municipal enterprises or the public sector (the health care, education, and culture departments, for which half of the wage fund is provided by the local government budget).

Regional tripartite cooperation in Vratza during the course of Bulgaria's extrication from state socialism confirms the existence of close links between, and the practical interweaving of, different bargaining levels. The evidence also reveals that regional tripartite bargaining focused primarily on the resolution of local conflicts. These conflicts were predominantly centered around acute industrial disputes in different state and municipal enterprises within the region, rising regional unemployment caused by the collapse of local enterprises, and various social problems. The local conflict resolution that was involved in addressing all these issues required the direct involvement of upper forums and social partners. And if a problem could not be resolved at the local level--for example, if the local social partners lacked the needed competencies--problems were typically transferred from the regional forum to the national level.

Multi-Level Bargaining:

Some General Traits

Multi-tier bargaining developed in several dimensions. The sectoral and regional agreements were tightly interwoven with the agreements signed by the national social partners, and the sectoral and regional tripartite forums became tightly linked with upper bargaining structures. Involving actors from lower levels in consultations aimed at resolving problems of national importance was a plausible way to democratize the system. Simultaneously, this process facilitated the resolution of the specific problems facing enterprises. This hybridization of bargaining levels increased the decision-making potential of sectoral and local actors while recognizing the inevitability of centralized decision-making during such a major economic transformation.

The interweaving of bargaining levels also appeared in the content of bargaining. At all levels, the tripartite forums focused much of their attention on the resolution of labor conflicts and preservation of social peace to assist the successful transition toward a market economy and a liberal democratic state. The preservation of social peace became the legitimating glue that helped the system avoid disintegration. The sectoral and regional tripartite forums became important intermediate problem-lving organs. When a problem could not be resolved at the sectoral or local level--cause the social partners could not reach consensus or lacked the needed competencies, for example--it was transferred to the national level.

The peaks and break-ups in sectoral and regional social dialogues corresponded to those in national social dialogue. Most of the break-ups were politically rooted in election campaigns and changes in government. At the end of 1990, national social dialogue ceased to exist as Podkrepa CL launched a massive national strike against the Lukanov socialist government, which led to its resignation and the formation of the Popov coalition government (a compromise arrangement in which the democratic opposition held the key ministries of economy and finance). At the end of September 1991, active preparation for the October 1991 elections also led to a discontinuation of social dialogue. The formation of the Dimitrov government of the Union of Democratic Forces, with its firm neo-liberal and anti-union policy, gravely damaged social partnership in the country; several times, the government even attempted to discontinue it. The vote of no confidence that parliament passed on the government at the end of 1992 led to yet another temporary suspension of national social partnership. And at the end of 1996, with the sharp deterioration of the Bulgarian economy and the fall of the socialist Videnov cabinet, Bulgarian social partnership was once again discontinued for purely political reasons at the national level and, consequently, at the lower sectoral and regional levels.

Fissures moved in the other direction as well: break-ups in sectoral social dialogue led to discontinuation of the national tripartite negotiations and of the whole social dialogue system. Such a situation occurred in April 1994 at the Ministry of Industry, as discussed above.

Explaining Multi-Level Bargaining during Bulgaria's Transition

Two major factors have contributed to the emergence of an interlinked multi-level bargaining structure during Bulgaria's transition away from state socialism. One is the changing economic context and, more particularly, the changing role of the state in the economy. With the transition to a market economy, industrial relations also had to reflect market principles. On the one hand, a move away from state socialism's highly centralized regulation of the employment relationship, and a move toward democratization, were necessary. These moves inevitably entailed the emergence of collective bargaining as a mechanism for the democratization of labor relations, where rules are not imposed by the state but are jointly made by the actors. Democratization required that some authority be ceded to the traditional actors in industrial relations--unions and emerging employers--and this resulted in the development of collective bargaining at lower levels.

Thus, in contrast to recent developments in developed market economies (Katz 1993), the strategic choices not only of management but also of unions favored the development of collective bargaining at the enterprise level. According to a nationally representative survey conducted by the Institute for Trade Union and Social Studies in November 1991 in 120 enterprises across all sectors, the enterprise level was most favored by both management (67%) and union leaders (57%) as the level at which bargaining should take place. Ranking second (with about 17% and 21%, respectively, of managers and union leaders favoring it) was the national confederal level (Tseneva 1991).

Yet, legislative deregulation became fraught with problems during Bulgaria's economic transition. In the absence of a normal market environment, the radical decentralization of labor relations caused serious social problems and high social tensions that hampered the country's extrication from state socialism. Thus the legacy of a highly centralized state socialist economy and the unavoidable centralization of decision-making during the economic transformation necessitated that collective bargaining also be promoted at upper levels, especially at the all-national, confederal level.

A second reason for the emergence of a multi-tier bargaining structure in Bulgaria was the utility of negotiations as a means by which the social partners could gain much-needed legitimation. Because of the inapplicability of the existing labor legislation and the difficulties encountered in creating new governing rules in the sphere of labor relations, tripartism and collective bargaining became the legitimating mechanism for all actors. The government, unions, and emerging employers all faced the need to adapt their organizational structures and platforms to the changing political and economic realities. Negotiations provided day-to-day rules of the game and became a viable mechanism for organizational legitimation and restructuring. Tripartism and collective bargaining thereby became a glue preventing the industrial relations system from complete disintegration. All significant changes--in the actors, in the actors' guiding ideologies and strategic choices, in institutions and rules--became interwoven in the bargaining arena, so that there were no dangerous vacuums.

With the consent of all actors involved in national tripartite negotiations, sectoral and regional tripartism and collective bargaining at the enterprise level developed into an integral part of the already existing national tripartism. Despite the clear formal differentiation among bargaining levels, in practice they became blurred. Especially in the initial years of the transformation, national actors found themselves actively involved in the resolution of numerous local and sectoral social and industrial conflicts. This "hybridization" of bargaining levels, or blurring of lines among national, sectoral, regional, and enterprise social dialogues, led to the emergence of an interlinked multi-tier bargaining structure. This structure differed from both centralized and decentralized bargaining patterns. In a centralized setting, conflict resolution and collective bargaining involve only participants from the top level. In a decentralized setting, symmetrically, the resolution of problems and collective bargai ning involve predominantly local actors. In the sort of multi-tier interlinked bargaining structure that emerged in Bulgaria, in contrast, local, sectoral, and regional actors attempt to involve central decision-makers when they have difficulties resolving local issues, thus pushing these issues upward for resolution. Simultaneously, however, central decision-makers and the representatives of peak labor and business associations attempt to push the resolution of issues downward, in an active effort to decentralize and democratize labor relations.

Conclusions

I have examined the emerging bargaining patterns and the specific links among bargaining levels that appeared during the post-communist transformation of the Bulgarian industrial relations system. My conclusion is that negotiations were the mechanism preventing the system from complete disintegration; they served as the legitimizing "glue" that held the system together and allowed the relatively smooth and peaceful transformation of the actors, their guiding ideologies, and industrial relations institutions and rules. Within a transformational context, collective bargaining acquired multi-tier dimensions and features. Bulgarian social dialogue during the uncertain post-communist transformation brought together national social partners, lower--sectoral and regional-decision-making bodies, and tripartite social dialogue forums.

Overall, Bulgarian tripartism and collective bargaining alleviated the economic and social problems facing particular companies, regions, and industries, as well as those confronting the country as a whole. These practices helped smooth the transformation of the industrial relations system, away from the state socialist experience and toward a new model based on the principles of democracy, markets, and private property. I have argued elsewhere that post-communist tripartism in the former Soviet bloc countries became a critical feature of the extrication from state socialism. It emerged everywhere in the region, with certain variations in form, strength, and the actors' involvement. And everywhere in the region the transformation of the industrial relations system has been tightly linked with the transformation of economics and politics, to form a specific post-communist variant of capitalism that I have called "transformative corporatism" (see Iankova 1997, 1998).

As Locke (1992) and Katz (1993) suggested, new concepts and theory are necessary to understand recent changes in bargaining structures. While the aim of this paper has not been to assess whether the industrial relations changes found in post-communist Bulgaria were similar to those under way in advanced industrial economies, it is worth noting some resemblances. Signs of multi-tier bargaining cartels can be found in other countries. For example, Denmark is moving toward a new system in which the main actors are neither the national unions and industry-level employers' associations nor the peak associations, but rather five bargaining cartels and their counterparts on the employers' side (Wallerstein et al. 1997:395). Some form of renegotiation of the relationship between centralized collective bargaining and local bargaining has emerged as a general trend in all western European market economies, as part of an attempt to secure greater workplace flexibility.

This paper shows that in Bulgaria, increasing interdependencies and interactions among levels of bargaining helped secure greater flexibility, adaptability, and survivability during extremely uncertain times. Studying not simply levels but the links and increasing interaction among levels of bargaining is becoming an important new avenue of industrial relations research.

The author is Research Associate at the Institute for European Studies, Cornell University. She acknowledges financial support for field trips and research facilities from the Center for Human Resource Studies and the Institute of Collective Bargaining at the School of Industrial and Labor Relations, Cornell University, and from the Institute for the Study of World Politics, Washington, D.C. The paper benefited from discussions at the Collective Bargaining Workshop at Cornell, November 1996 and November 1997. An earlier version of the paper was presented at the Eleventh International Conference of Europeanists, to the panel focusing on the topic "Economic Restructuring in Eastern Europe" (Baltimore, February 26-28, 1998). For helpful comments, the author thanks Martin Behrens, Valerie Bunce, Jean Clifton, Alex Colvin, Derek Jones, Peter Katzenstein, Sarosh Kuruvilla, Krustyo Petkov, John Thirkell, Lowell Turner, and David Stark. She especially thanks Ivan Neikov, Bulgarian Minister of Labor and Social Policy, for helpful comments and great facilitation of her field work interviews, and Zdravcho Zdravchev, President of the Podkrepa Electronics, Electrotechnics, and Informatics Federation, for helpful comments and his invitation to join the sectoral social partners in a visit to ELPEM as part of an ongoing multi-tier negotiation process.

(1.) Structurally, Bulgaria's ministries are similar to the state administration departments in the United States, such as the Department of State, of Labor, and of Agriculture.

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The Organizational Structure of Bulgarian Social Dialogue.

I. National Economy

1. National Council for Tripartite Cooperation

A) Plenary sessions of the National Council for Tripartite Cooperation

B) Standing expert commissions of the National Tripartite Council:

-- Labor Force--Employment, Unemployment, Training and Retraining

-- Incomes, Prices, and Living Standards

-- Collective Labor Disputes

-- Social Insurance and Social Aid

-- International Labor Legislation and Work with the ILO

-- Work Conditions

-- Privatization and Restructuring of the Economy

-- Financial, Credit, and Tax Relations

-- Specific Problems of Employees in the Public Sphere

2. National Council on Unemployment Protection and Employment Promotion

3. Supervisory Board of the National Employment Office

4. National Council on Vocational Training

5. Managing Board of the Vocational Training and Unemployment Fund

6. National Council on Working Conditions

7. Managing Board of the Working Conditions Fund

8. Supervisory Board of the National Social Security Institute

9. Managing Board of the Social Security Fund

10. Council on Social Assistance

11. Managing Board of the Social Assistance Fund

12. National Council on Rehabilitation and Social Integration

13. Managing Board of the Rehabilitation and Social Integration Fund

II. Industries and Sectors

1. Industry-Wide and Sectoral Councils for Tripartite Cooperation at each ministry

2. Collective bargaining for each industry and sector

Ministry of Industry

A. Departmental Council at the all-industry level

B. Sectoral councils

-- Machine-Building

-- Electronics and Electrotechnics

-- Chemistry and Mineral Oil Processing

-- Metallurgy

-- Timber, Forestry, and Furniture

-- Light Industry

-- Mineral Resources

-- Special Production

III. Regions

1. Regional Councils for Tripartite Cooperation, in most regions

2. Collective bargaining in municipal companies

IV. Enterprises

1. Collective bargaining

2. Union-Management Commissions for Social Partnership
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Date:Oct 1, 2000
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