UDK: 331.105.6(437.l)
THE CZECH TRIPARTITE COUNCIL AND ITS
CONTRIBUTION TO SOCIAL PEACE *
Mitchell Orenstein
An exceptional level of social accord and political stability has accompanied
radical economic reform in the Czech Republic since 1989. Although polit-
ical cultural and economic explanations are often used to account for this,
the author makes an institutional argument and demonstrates the Czech
tripartite councils central conrriburion to the construction of social peace .
The Czech tripartite council was created as part of a governmentstrategy of
consensus. It gave the trade unions a forum for interest representation,
became the peak of a new system of collective labor relations, and defined
a role for trade unions to play in the new society.
social partnership, trade unions, social accord, government strategy, social
peace
Izjemna stopnja družbenega soglasja in politične stabilnosti je v Češki re-
publiki od leta 1989 spremljala radikalne ekonomske reforme. Ceprav se za
razlagoobehpogostn vajajolitično-kulturni In ekonomski vzroki, se
avtor opredeljuje za instituclonalne vzroke In pokaže na osrednjo vlogo
češkega tripartitnega svetapri vzpostavljanjusocialnegamiru. Češkt p rtni sve  je nastal kot del vladnet ategijek ns nzaS ndika om edal
prostorza predstavitev njihovih interesov, postal je vrh novega
sistema kole
ktivnih delovnihrazmerij In opredelil vlogosindikatov, jo Igrajv ov
družbi.
soclalno partnerstvo, sindikati, družbeno soglasje, strategija vlade, družbeni
mir
The literature on corporatism suggests that tripartite bodies are Janus-faced . From one side they
look like mechanisms of interest representation, and on the other like instruments of state con-
trol . This dual nature, some mlght say contradiction, of the tripartite institution is present in
Philippe Schmitter's distinction between "state corporatism" and "societal corporatism".1 Al-
* The author would like to thank Kristin Hohenadel for her skillful editing, and Robert Chase, Lily
Hoffman, Martin Potuček, Jonathan Stein, and Jennifer Zales for their helpful comments on earli-
er drafts. The author gratefully acknowledges the support of the Yale Center for International and
Area Studies and the International Research and Exchange Board during the research and writing
of this paper. Mitchell Orenstein is a graduate student in the Yale University Department of Polit-
ical Science and a Research Affiliate of the Institute for EastWest Studies, IEWS ESC, Rašinovo
nahreži 78, 120 00 Praha 2, Czech Republic, tel . (42 2) 29 23 83, fax . (42 2) 29 43 80.
DRUŽBOSLOVNE RAZPRAVE,1994, st.17-18
though Schmitter intended these categories to function as Weberian ideal types, in practice both
state control and societal interest representation are present in all tripartite bodies, creating a
persistent tension .
This tension pervades the Czech tripartite Council for Economic and Social Accord (RHSD),
which has been variously interpreted as a great success at engineering social harmony during the
Czech transition and as embodying a monumental failure of the trade unions to play a significant
role in the transformation process . Some researchers have portrayed the tripartite as a form of
"social pseudo-partnership" 2 and see it mainly as a clever trap the Czech state has laid for a weak
labor movement. Other authors take a less negative view, examining the benefits Czech trade
unions derive from participation in the tripartite body . 3 Has the tripartite council contributed to
social accord in the Czech Republic? And have the trade unions been disempowered by partici-
pation in the government strategy of consensus? These central issues expose the tension between
interest representation and state control manifest in the Czech tripartite .
Social Accord as a Government Strategy
The Czechoslovak government, perhaps more resolutely than any other government in the re-
gion, attempted to create a social consensus around the program of radical economic reform in
1990. The government strategy was outlined in the "Scenario for Social Reform" that was ap-
proved by parliament in September 1990 along with the fundamental "Scenario for Economic
Reform". The social reform document outlined a package of social policies, employment poli-
cies, legal reforms, and institutional innovations specifically intended to "soften the accompany-
ing shocks" of the economic transformation .4 This combination of social and economic reforms,
exceptional in the region, forms the core of the Czech "small miracle" that Prime Minister Vaclav
Klaus defines as the "relatively very quick, very successful and relatively painless and non-con-
flictual transition from a communist society to a free and open society and a market economy" .'
The specificity of the Czech experience and the consequent political success of Klaus" government
are based on the implementation of a "painless and non-conflictual transformation" 6
The Czech Republic is unique among the post-communist countries of Central and Eastern Eu-
rope in the level of social peace that has characterized its socio-economic transformation . The
Czech Republic has experienced only a handful of strikes since 1989, while Poland was riddled
by more than 300 strikes in 1993 alone (7,362 if each school strike is included individually) .?
The Czech trade unions" quiescence can be explained, in part, by an unemployment rate that
stands helow 4%.8 Thanks to the policies of social consensus, Vaclav Klaus"s neo-liberal govern-
ment has maintained 50-60% popularity since June 1992, while his personal approval rating has
fluctuated between 60-70% . 9 Government popularlty in Hungary, Slovakia, and Poland has only
occasionally reached these levels . The Klaus government remains the most successful and, after
the recent Polish and Hungarian elections, the only neo-liberal government in the region .
The Czech experience defies the conventional wisdom that radical economic transformation is
impossible in a new democracy without severe social tension and discord . One prominent theo-
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Mitchell Orenstein
retical proponent of this idea is Adam Przeworski . In Democracy and the market, Przeworski
argues that societies naturally tend to protect themselves from exposure to disruptive market
forces . Przeworski predicts a start-stop-start cycle of economic reform and social reaction in
Central and Eastern Europe . to Neo-liberal economic reformers will seek to implement deep but
painful market reforms ; societies will react against market reformers and vote in social-demo-
cratic oriented parties in the next elections, who promise to protect society from market forces .
When the reforms slow to a standstill, voters tempted by promises of radical change may opt for
a new round of reforms .
This start-stop-start cycle may well be occurring in Poland, where neo-liberal Solidarity reform-
ers were replaced in September 1993 by a coalition of the Union of the Democratic Left and the
Peasant Party. Both left-oriented parties promised voters refuge from the most painful aspects of
market reform. Pensioners were promised increased pensions ; farmers were promised increased
subsidies . The Czech Republic has so far avoided the cycle of reform and reaction by constructing
a durable consensus for reform.
Explaining Social Peace
The explanations generally used to account for the relative social tranquility of the Czech transi-
tion can be divided into three groups : political cultural, economic, or institutional . Perhaps the
most prominent structural explanation is a political cultural argument that the Czechs have a very
disciplined and consensual democratic political culture .1 t According to this view, social partner-
ship and consensual, non-confrontational decision-making comes naturally to the Czechs . There
are many variations on this argument, many of which contain some truth . To the extent that such
political cultural arguments are correct, it is possible to view the tripartite council as an institu-
tional expression of the Czech policy-making style and try to evaluate its functions in achieving
agreement.
The second group of arguments emphasize the relative economic prosperity of the Czech Repub-
lic in comparison with other Central and East European countries . Again, the range of economic
arguments is broad : the Czech Republic is historically more prosperous and has a long history of
successful capitalist industrialization ; the Czech Republic had a far lower per capita foreign debt
than other post-communist countries and therefore had a much better starting point for its tran-
sition ; the enormous tourist revenues from the millions of foreigners discovering Prague have
vastly improved the Czech balance of payments ; the geographic position of the Czech Republic,
surrounded by prosperous Germanic and Western countries (Germany and Austria), has alleviat-
ed unemployment and brought increased husiness opportunities . All of these structural argu-
ments end in the statement that the Czech Republic has enjoyed more favorahle economic
conditions, significantly alleviating the post-communist social crisis .
Political cultural and economic explanations contain elements of truth . Nonetheless they remain
at a very high level of abstraction and fall to explain the Czech social consensus in terms of actual
policies, institutions, and actors . They ignore the possibility that policies, institutions, and actors
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THE CZECH TRIPARTITE COUNCIL AND ITS
CONTRIBUTION TO SOCIAL PEACE
determine the social peace and the conditions for its continuation . If these structural arguments
are correct, then the existence or non-existence of a tripartite council should have no bearing on
the level of social accord . This position, however, makes little sense when one looks at the struc-
ture of government-trade union relations, since decisions that may protect or threaten social
accord are constantly being made.
The institution of the tripartite council played an important role in the strategy of social accord .
According to one deputy minister involved in the creation of the tripartite system, the tripartites
quickly proved to he extremely effective and timely measures, because they gave the parties time
to organise, pass through the necessary initial period of confrontation and learn how to negotiate
and cooperate in finding solutions to social problems in the interest of all the parties concerned. 12
The tripartite system made tbree significant contrihutions to social accord in the Czech Republic .
First, it facilitated the creation of a corporatist system of lahor relations in the Czech Republic .
Secondly, the tripartite structure created tbe necessary conditions for the low-wage, low-unem-
ployment policies that the Czech governments has pursued into 1994 . Thirdly; the tripartite coun-
cil created a forum for discussion, debate, and even compromise on social and labor policy.
What is the Council of Economic and Social Accord?
The Council was founded on October 10, 1990 on the basis of a voluntary agreement among the
tbree "social partners" : the government, trade unions, and employer associations . 13 Each year
the Council negotiates a General Agreement that sets the policy agenda and general wage agree-
ment. The Council holds monthly plenary sessions as well as meetings of its presidium and work-
ing groups . The plenary session is the tripartite"s maln negotiating body, comprised of seven
representatives from each side, as well as a restricted number of consultants and advisers . The
trade unions are represented by six members of the Czech and Moravian Chamber of Trade
Unions (ČMKOS) and one member of the Confederation of Arts and Culture . The government is
officially represented by seven ministers, although it is common for their advisers and assistants
to represent them in negotiations. The employers are represented by the chairmen of seven differ-
ent employer associations and unions, grouped together into a loose Coordinating Council of
Business Associations.
The government is required to submit all important legislation affecting trade unions, employees,
and social policy to the tripartite council before submitting it to parliament . Other social partners
may also submit material for discussion, including draft laws, but this is less common . In the
discussions of the working groups and the plenary session, an attempt is made to reach consen-
sus positions on "material for discussion", which often consists of draft laws or government
policies. "Material for information", often analyses of the course of the economy or social policy,
is also discussed and evaluated . The plenary session is not required to reach consensus on
material for discussion . If it does reach consensus by a unanimous vote, then the agreement is
considered "binding" on all parties, although it has no legal status, but rather that of a "gentle-
men"s agreement". If no consensus is reacbed, the government is required to report the positions
of the other social partners when it presents the legislation or program to parliament. 14
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Mitchell Orenstein
The tripartite council fulfills two functions in the institutional and legal framework of the Czech
state. First, it provides a forum for the discussion of government legislative and programmatic
initiatives among the social partners . Secondly, it plays an important role in the system of collec-
tive labor relations in the Czech Republic, through indicative wage bargaining and negotiations
that affect the structure of employer-employee relations . In this way, the tripartite has been central
to the low-wage, low-unemployment strategy of the Czech government . Both functions have played
an important role in the construction of social peace .
Corporatist System of Labor Relations
The Czech Council of Economic and Social Agreement is the peak organization of the country"s
corporatist system of collective bargaining that was elaborated in the Collective Bargaining Act of
1991. Written with strong trade union and International Labour Organization participation, the
act was negotiated through the tripartite itself. In conjunction with the Act on Wages of 1991 and
the much-amended Labor Code, the Collective Bargaining Act completes a system of lahor law in
the Czech Republic generally favorable to the trade unions)' Czech workers enjoy relatively
strong protection against job dismissal . Trade union bargaining power and the right to strike are
protected in accordance with the norms of the International Labour Organization (ILO) .
The Czech Republic has a three-tiered corporatist system of collective bargaining . At the highest
level sits the national tripartite council . The tripartite concludes a yearly General Agreement that
sets basic wage guidelines and the agenda for council negotiations during the following calendar
year. Collective bargaining at the national level involves four basic components : setting indicative
real wage growth levels, defining minimum wages, negotiating real wage growth limits, and mak-
ing explicit wage agreements for workers in the "budgetary sector" . The Czech Republic has
750,000 state employees 1 ) whose wages are set by laws that must be negotiated in the tripartite
council . Minimum wages and excessive wage taxes are set hy government decree, in accordance
with the amended Act on Wages. Indicative wage growth levels have heen negotiated and lncluded
each year in the General Agreement.
Below the national level are branch-level or regional-level collective agreements between associ-
ations of employers and branch trade unions, called "collective agreements of a higher level" .
The government is not involved in the negotiation of these branch collective agreements . Instead
they are concluded between associations of employers and employees and merely registered with
the Ministry of Labor and Social Affairs . In reality, brancblevel collective agreements are not
reached in every sector of the economy . In 1993, 30 such branch agreements were registered,
out of approximately 40 branches of the economy .'? Branch bargaining structures are extremely
varied and still in a developmental stage in many areas . Vladislav Flek, in the most detailed ac-
count to date of branch collective bargaining in the Czech Republic, writes, "On the one hand
there is a relatively strong organizational structure of the branch trade unions . on the other
hand, due to the governmental wage regulation and the lack of large private employers in indus-
try, this structure so far has not started to function" . 18 it must be noted that private employers and
associations of private employers are both new, post-1989 phenomena in the Czech Republic and
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THE CZECH TRIPARTITE COUNCIL AND ITS
CONTRIBUTION TO SOCIAL PEACE
as a result employers" associations are much less well organized and probably also less repre-
sentative than the trade unions . In many cases, branch trade unions "practically assisted in the
establishment of the employer organizations because they wanted to find partners for collective
bargaining" . 19
The real condition of enterprise-level collective bargaining is unclear, even to the trade union
central itself. In mid-1994 ČMKOS was conducting a study to determine how many businesses
exist in the Czech Republic and how many had concluded collective agreements with their em-
ployees. Opinion polls show that 53% of "economically-active" Czechs are members of a trade
union, although only 22% of employees of private companies reported being union members . 20
Such statistics indicate that the trade unions face enormous challenges in organizing employees
from a rapidly growing number of private enterprises. Nonetheless, enterprise-level collective
agreements appear to be the norm in many Czech companies . The question for the future is how
well trade unlons will make the strong collective bargaining system that exists on paper work in
practice.
The system of lahor relations that was negotiated in the tripartite council, and that includes the
tripartite as its peak organization, represents a significant compromise . By creating a legal frame-
work for effective collective bargaining, the Czech government avoided trade unlon protests,
gained labor's cooperation in tripartite consultations, and thus protected social peace at a key
moment of the transformation. The trade unions were heavily involved in drafting collective bar-
gaining legislation, and threatened to strike when dissatisfied with government legislative drafts .21
The government backed down and agreed to produce labor legislation that conformed with ILO
conventions and international norms, and even allowed employee representation in private com-
panies. Under the Czech system of "co-determination", Czech employees elect one-third of the
representatives to the supervisory board of any Czech company with more than 50 employees.
The supervisory board acts on behalf of shareholders and employees to oversee the work of the
executive board that, according to Czech company law, is a company"s main decision-making
body. The Czech trade unions, for their part, supported enterprise privatization, as long as they
were able to gain a collective bargaining role and some board representation in the privatized
enterprises.
Low Wage, Low-Unemployment Policies
The corporatist system of labor relations, which itself constituted an important compromise be-
tween the government and trade unions, made possible a further compromise: trade union acquies-
cence in the low-wage, low-unemployment, and low -inflation policies of the Czech government.
These government policies have been crucial to the construction of social accord . In November
1993, Vaclav Klaus stated his belief that wage control and the undervalued Czech crown were the
"two cushions" of economic reform . "Real wages and the real exchange rate in this phase must
be relatively low to create the two cushions allowing a spanning of the not insignificant period of
privatization and restructuring ." 22 Klaus argues that wage restraint allows marginal workers to
remain employed, while an under-valued crown allows marginal exporters to continue their trade,
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Mitchell Orenstein
and incidentally to maintain employment . In the keynote speech at the recent trade union con-
gress, he said, "In its own economic and social policy the government works for the maximum
possible welfare of all our citizens and for the highest level of employment, because we are
conscious of the unhealthy and dignity-degrading nature of high, and long-term, unemployment .
I believe that each of our fellow citizens and each of our trade unionists sees the achievements of
our country in the post-November (1989) development" . 23
Wage restraint has been pursued effectively in the Czech Republic because it was negotiated in the
context of the tripartite council. According to PlanEcon, a highly-respected economic analysis
firm, dollar wages in the Czech Republic "dramatically lag behind Hungary and Poland (by nearly
40% and over 20%, respectively) as of late 1992 despite much higher level of development of the
Czech economy relative to that of Hungary or Poland" . 24 While wage restraint is common in East-
Central Europe, popular and trade . union acceptance of this policy is exceptional . In Poland, the
popiwek excess wage tax has been a major cause of strife between the trade unions and succes-
sive governments . In the Czech Republic, trade unions have never mobilized to oppose the excess
wage tax, although the labor representatives in the tripartite have publicly opposed wage controls
since 1992 .
Wage controls are a relic of central planning. While wages have been liberalized to a significant
degree, the labor market remains highly state-controlled in the Czech Republic . Under the old
system, each job was categorized and the wages for each category were administratively deter-
mined each year. This system still continues for state workers, whose wages are set through a
special yearly law on state employment. In 1991, along with price liberalization, the government
took the first guarded steps towards the creation of a labor market . However, the government"s
obsession with preventing inflation dictated that it would retain a strong role in limiting wage
growth. Price liberalization in 1991 was expected to create a substantial expansion in the con-
sumer price index. In order to prevent these one-time price increases from causing a wage-price
spiral of inflationary expectations, the government sought to limit wage growth to below the infla-
tion rate. In the short run, this would cause a drop in real wages. In the long run, real wages were
expected to grow gradually to catch up .
The Czech government used the decree powers of central planning to implement a tough wages
policy. Decree 15/1991 forced every state and private enterprise with 25 or more employees to
remain within a wage growth limit set by the government or be subject to a tax penalty . This wage
restraint was negotiated and agreed in the context of the tripartite, leading one observer to re-
mark that "anti-inflationary wage regulation accompanied by a significant fall of real wages for
1991 was the only tangible outcome of the Czechoslovak tripartite system" . 25
The 1991 wage restraint worked extremely well ; too well, in fact, from the trade union perspec-
tive . Inflation in 1991 reached 60% and real wages dropped precipitously, by approximately
26% . 26 Trade unions, under pressure from their membership, demanded an end to wage regula-
tion in 1992 . However, in January 1992 the government managed to pass through parliament the
Wages Act l/1992, which while extending the range of unions" collective bargaining powers, also
gave the government the power to set excess wages tax by decree . These decrees must, in princi-
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THE CZECH TRIPARTITE COUNCIL AND ITS
CONTRIBUTION TO SOCIAL PEACE
ple, be negotiated and agreed in the tripartite council . The final decision, however, rests with the
government.
Tripartite negotiation of government wage tax decrees has given the council some influence over
government police The experiences of 1992 demonstrate exactly how much . Disputes over the
system of wage regulation through an excess wage tax continued through the first quarter of 1992
and delayed the signing of the General Agreement for that year. At the end of March, the trade
unions threatened not to sign the General Agreement until the wage regulation issue was re
solved.27lt was not resolved until April 22, when the tripartite agreed to a wage tax based not only
on inflation, but rather linked to enterprise profits as well . In addition, the new wage regulation
exempted most private firms and joint ventures with more than 30% foreign ownership . 28 The
General Agreements in 1993 and 1994 provided for real wage growth, but wage limits were kept
in place, and even strengthened in the wake of a dramatic growth in real wages in the latter half of
1992 that frightened government policy-makers
. Wage control was re-extended to cover all private enterprises with more than 24 employees .29In the fall of 1994, the tripartite was debating a
timeline for ending wage regulation, in conjunction with the conclusion of the second wave of
privatization . The government has always promised an end to wage regulation once privatization
is complete. Sow; it appears to want to dilute this promise . Even if the Czech government decides
to remove regulation at some point in the future, it retains its power under the Act on Wages to re-
impose wage policies by decree whenever it judges necessary .
Active Labor Market Policies
In addition to low-wage policies used to reduce the level of unemployment in the Czech Republic,
the government has implemented effective active labor market policies that help the unemployed
find new jobs quickly. An important priority for the trade unions, these policies were negotiated
through the tripartite, which also supervised their administration. Active labor market policies
include retraining programs, jobs programs, and other forms of government intervention in the
labor market designed to increase its efficiency and to reduce unemployment .
In February 1991, the Czech Republic enacted tripartite-approved legislation that created a number
of programs to he administrated by a new network of district labor offices established in 1990 .
District offices were mandated to provide "socially purposeful jobs" (long-term), "publicly use-
ful jobs" (short-term), jobs for new graduates, and retraining from a budget provided by the
Ministry of Labor and Social Affairs . Socially purposeful jobs include assistance to new entrepre-
neurs and new job creation with existing employers . Employers who create and maintain socially
purposeful jobs for one to two years receive a suhsidy from the district labor office . Publicly
useful jobs, lasting up to six months, normally involve some type of community service work,
from street cleaning to small building projects. The labor offices had almost complete discretion
in allocating funds .
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Mitchell Orenstein
In 1992-93, at any given time the number of people employed through the various jobs programs
ranged from 100,000 to 140,000, making up about 2% of total employment . The Czech govern-
ment spent l .7 billion crowns ($58 million) on active labor market policies in 1992 . 30 The
district labor office system in the Czech Republic, efficiently computerized and sufficiently staffed,
is the most successful in the region . 3 ' Active labor policies were an important element of the
1991 General Agreement in the Czechoslovak tripartite council and in subsequent agreements at
the republic level . These policies represented a response to trade union concerns about unem-
ployment, and were explicitly designed to retain labor"s support for the program of economic
reform .
Forum for Social Discourse
In the overall interest of "preserving social peace", the tripartite council was intended to allow
the social partners to "participate in the formulation and implementation of economic and social
policy" . 32 In practice, participation has been limited . While willing to discuss its plans in the
tripartite forum, the government has not compromised on core elements of its policy
. Nonetheless, the tripartite has provided a forum for limited compromise and policy-making on issues of
lesser importance to the government . Tripartite discussions can even lead to small modifications
of government policy on important issues like the excess wages tax, as discussed above . Impor-
tant examples of policy-making in the tripartite include the negotiation of energy policy, in which
employers took the lead, and in the creation of a new system of workplace health and safety
regulations, where the trade unions appear to have had a major impact . Trade unions have also
participated in the programs to assist regions threatened by long-term unemployment.
The struggle over pension reform, however, demonstrates the social partners limited influence
on certain key issues of reform . It proved impossible to reach a compromise over the new pen-
sion system in the tripartite. The trade unions consistently recommended a system of industry-
based collective pension insurance, which was rejected by the government during tripartite sessions
in September 1993 . The government proposed the creation of individual, private pension plans,
funded in part by a state contribution. The trade unions disagreed with this program in the
tripartite, insisting that collective pension insurance was necessary to insure a sufficient basic
pension to all .i3 The trade unions want mandatory employer contributions to any additional
pension insurance plan, and objected strongly to the government proposal for basic pension
insurance that would provide less than 50% of the average wage. 34 These disagreements within
the tripartite are noted when the program is presented to parliament, but the trade unions have
failed to make a significant impact on this and other vital areas of social policy reform .
The Self-Limiting State
The concept of social peace, the founding of the tripartite, the new system of collective bargain-
ing, and consultative policy-making were not supported by then Finance Minister Vaclav Klaus 35
but rather reflected the priorities and strategies of the more social-democratic memhers of Civic
Forum, the umbrella anti-communist movement that splintered in 1991 . The institutions of social
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THE CZECH TRIPARTITE COUNCIL AND ITS
CONTRIBUTION TO SOCIAL PEACE
consensus were founded in 1990 and 1991 under the first democratically-elected government of
Prime Minister Marian Čalfa . Minister of Lahor and Social Affairs Petr Miller, who later entered
the Czechoslovak Social Democratic Party and Prime Minister Čalfa, a communist party member
until 1990, were the major supporters of the conciliatory stance toward the trade unions . Klaus,
at the time, strongly opposed the social policies of consensus, and Minister Miller reports scores
of loud arguments between himself and Klaus at cahinet meetings which Miller and his allies
apparently won 36
Despite his original opposition, Klaus as Prime Minister has been willing to uphold provisions of
the social consensus negotiated by the first government in order to prevent a union-sponsored
social explosion . The Klaus government has taken a carrot and stick approach toward the trade
unions and the tripartite . As long as the trade unions restrain their protest activity to the forum of
the tripartite, they receive the "carrot" of corporatist labor relations. On the other hand, the
government lashes out at the unions whenever they attempt to mobilize .
Klaus has very strong ideas about economic reform, so at any one time there are a number of
priority issues of socio-economic policy that the government has developed and does not wish to
compromise. The government is happy to discuss its plans with the social partners, and to incor-
porate certain changes in the details, hut it is not really prepared to allow the social partners to
influence policy priorities. The trade unions have no choice but to accept government decislons.
In exchange, the government is willing to regard the trade unions as "social partners", and to
respect the tripartite structure as a model of social accord .
The Klaus government has not to date launched a major attack on the trade unions, their prerog-
atives, or their strong formal role in society. This tolerant policy seems strange in light of Klaus"
neo-liberal views and it has prompted labor leaders to wonder why Klaus has never attempted to
crush the trade unions as Ronald Reagan or Margaret Thatcher did. Richard Falbr, then vice-
president and now president of the ČMKOS, said in a September 1993 interview, "I dislike the
hehavior of some representatives of the government, but I must say . . . that the government - with
the exception of the proposed law on state employees - has not taken, till now, any concrete steps
against the trade unions. The methods to knock the unions on the head are many. The English are
excellent at this and I have the impression that our government knows it. . . I will not be surprised
when the government begins to take some anti-union steps, because I do not know why we should
expect something else" . 37
Trade Union Mobilization : The Line in the Sand
While Klaus remains within certain boundaries in attacking the system of collective bargaining, he
engages in vitriolic public tirades to intimidate the trade unions whenever they attempt to leave
the calm forum of the tripartite council and take their grievances to the street . Since Summer
1993, the trade unions have twice attempted public protests of government policy and have en-
countered the same tough response from Prime Minister Klaus.
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Mitchell Orenstein
The first clash occurred in August 1993 when the unions used the opportunity of a half-yearly
tripartite evaluation of the 1993 General Agreement to launch what looked like a public campaign
to declare opposition to government policies . Vladimir Petrus, then president of ČMKOS, gave a
newspaper interview in which he accused the government of breaking the 1993 General Agree-
ment and threatening social peace .38 The trade unions detailed their position in a document
entitled, "Viewpoint of the trade unions towards the fulfillment of the General Agreement of the
Czecb Repuhlic", that was submitted to the tripartite . 39 In this document and in the proceedings
of the tripartite plenary meeting on August 19, the trade unions drew their line in the sand . The
document stated that the unions did not consider the work of the tripartite to represent real
consultation ; that consultation often begins after the government has already reached important
cabinet decisions; that materials submitted by the unions are treated as informational statements
and not as dehating points . Besides these procedural points, the document includes along list of
substantive points in which the 1993 General Agreement was not upheld .
The document caused an angry reaction from Vaclav Klaus, who went himself to the plenary
meeting of the tripartite to debate the trade union position40 The government and trade unions
clashed on the five key issues of tripartite discord in 1993 : wage regulation, the minimum wage,
pension insurance, injury insurance, and the broadening of branch collective agreements . Rec-
ognizing the serious nature of the controversy, the government and the trade unions agreed to
intensive negotiations to resolve these issues as soon as possible . The government was prepared
to upbraid the trade unions, not to cancel but to intensify tripartite negotiations. The trade unions
appear to have agreed to continue to work within the structure of the tripartite negotiations .
Several plausible explanations could account for the decision of the unions not to mobilize dur-
ing the summer of 1993. It was mid-August and trade union members were probably on vacation .
Perhaps the trade unions honestly believed that the government would improve the level of nego-
tiations. Trade union leaders may also have been afraid of the consequences of the outburst by
the Prime Minister and decided to back down .
The August conflict seems to have re-affirmed Klaus" modus operandi of answering union calls to
arms with strong rhetoric designed to force the unions to back down . For this is exactly the
strategy that he used in March 1994 when the trade unions announced thelr first mass mobiliza-
tion in protest against government policy since November 1989 . However, in March 1994 Klaus"
plan appears to have backfired . Calling the trade unions an "irresponsibly extremist movement"
and declaring that "demogogy of this type is not acceptable" 41 , seemed excessive to most Czechs,
including to President Vaclav Havel, who publicly defended the right of trade unions to protest in
a democratic society Klaus further compared the peaceful demonstration on Staromestske na-
mesti on March 23, 1994 to the demonstration in 1948 in which Klement Gottwald proclaimed
the communist coup, an absurd claim especially since the Czech trade unions are independent of
any political party.42 Debate raged in the press for several days . In the end an opinion poll showed
that 57% of Czechs approved of the trade unions" demonstration.43 However, the trade unions
failed in their immediate objective when the parliament approved an unpopular amendment to
the labor code that increased the pensionable age.
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THE CZECH TRIPARTITE COUNCIL AND ITS
CONTRIBUTION TO SOCIAL PEACE
The weeks following the demonstration brought a shift both within the trade union movement
and in government policy. The April trade union congress elected a new president, Richard Falbr,
head of the confederation of state employees, who was expected to take a more confrontational
approach towards the government than the compliant former president Vladimir Petrus . Switch-
ing from his confrontational approach at the end of March, Prime Minister Klaus agreed to give
tbe keynote speech at the trade union congress and used the opportunity to deliver a relatively
comprehensive policy statement on labor relations. Klaus emphasized that trade unions should
seek to represent only their own members and mainly at the enterprise level, therefore question-
ing the validity of branch and tripartite-level bargaining . At the same time, Klaus spoke the lan-
guage of social peace, saying:
"The government seeks a basic consensus of the citizens in the fundamental issues of the
present and the future and it is conscious of the fact that the trade unions play in this an
exceptionally important role . Therefore we respect the existence of the Council of Eco-
nomic and Social Agreement and we will try also in the future to negotiate in this context,
even though the role of the government (and the state) as an employer, thanks to privati-
zation, is changing in a fundamental way. We will continue to make suggestions for further
changes and shifts in the tripartite negotiations, but I would like here, before you, to
emphasize that we are not calling for a revolution, nor for radical changes . Further differ-
ences of opinion in these matters are therefore not, in my opinion, necessary to drama-
tize" 44
Falbr, for his part, predicted the advent of a more conflictural period in government-labor rela
tions as the government continues its Thatcherite policies and the trade unions begin to more
aggressively represent the interests of its members .45
The tripartite structure and negotiations are now in a state of flux . The 1994 General Agreement
is a very different, and much less specific, document than its predecessors . The government does
not want to be held to specific policy compromises made in the General Agreement and has stated
that it wants to reduce its role in the tripartite altogether now that the state has reduced its role as
an employer through privatization . The government wishes to send "experts" rather than govern-
ment ministers to tripartite negotiatlons; and eventually to change the council into a bi-partite
collective bargaining organization, where the government plays the role of arbiter and consult-
ant. Added together, these changes indicate that the uneasy compromise that has protected social
peace up to now may in fact unravel, or be re-constituted on a newly-renegotiated basis .
Have the Trade Unions Been Disempowered?
Peter Rutland concludes his analysis of workers" reponses to the market transition by arguing
that "Vaclav Klaus" combination of radical economic policies and cautious social policy seems to
have emasculated the trade unions both politically and economically" . 46 He points to the trade
unions" inability to find effective political allies in parliament, a consequence of the weakness of
the left and the unwillingness of trade unions to be identified in the public mind as post-commu-
203
1
Mitchell Orenstein
nist . The government strategy has resulted in profound political isolation for the trade unions,
low wages accompanied by low levels of union mobilization, concerns about the loyalty of trade
union membership, and the failure of the trade unions to exercise any influence through the
institutions of "sham corporatism" .
The trade unions" success or failure should, however, be evaluated in light of their objectives
during the transition . Wages in the Czech Republic are lower than in any country in East-Central
Europe, except for Slovakia . 47 But the trade unions made full employment a central part of the
trade unions" platform in 1991 48, at that time supported the government limits on wage growth,
and have achieved the lowest unemployment rates in Europe . '9 Low wages should not necessarily
he considered a failure for an egalitarian labor movement . Fritz Scharpf, a prominent German
social democrat, argues in his ground-breaking work on the crisis of social democracy in \Vest-
em Europe that, "full employment cannot be recovered through strategies that are painless for
the clientele of the labor movement . . . If it can be solved at all, it is through a redistribution of
existing work opportunities and working incomes at the expense of the great majority of those
who are presently employed" .'o
In their program for the years 1994-98, the trade unions reaffirmed their commitment to "a rapid
transformation of the Czech economy to a modern market economy primarily relying on private
ownership. . ." Simultaneously they are placing great emphasis on the social dimension of eco-
nomic development and on the social acceptability of its consequences ." Thelr pursuit of the
strategy of social consultation and negotiation through the tripartite has undoubtedly contributed
to the speed of the transformation and has arguably had a positive effect on its social consequenc-
es as well . The Czech trade unions cannot, therefore, be accused of failing to attain their own
goals. But did the trade union strategy of cooperation in the tripartite lead to their disempo-
werment?
The Czech trade unions did not emerge from the communist period in a particularly powerful
position to begin with . Unlike Poland or Hungary, no independent trade unions developed in
Czechoslovakia before 1989 . The trade union movement remained a centralized transmission
belt for the wishes of the party though in 1990 the old leadership was replaced by the leaders of
the revolutionary strike committees that sprang up in November 1989 to support the popular
demonstrations on Wenceslas Square. In the popular mind, however, the trade union movement
remained a stars struktura.'2 The renamed Czech and Slovak Chamber of Trade Unions (ČSKOS)
transformed itself into a more loose, federal structure, partly in reaction to the un-democratic
centralism of the previous union structure, and partly the result of the autonomy concerns of the
Slovak members. As a result of this de-centralization, inherited by the Czech and Moravian Cham-
ber, decision processes of the chamber are cumbersome . 53
The loose structure of the trade union chamber, combined with the controversial nature of the
transformation itself, led to significant differences of opinion within the trade union leadership .
From 1992 to 1994, the Czech trade unions were led by the moderate Vladimir Petrus, who
viewed the government reform strategy as "the key to the prosperity that could make the unions
long-term objectives realizable" .'4 Under Petrus, strong support for the government reform strategy,
204
THE CZECH TRIPARTITE COUNCIL AND ITS
CONTRIBUTION TO SOCIAL PEACE
shared by the majority of the trade unions" members, was accompanied by a strategy of pursuing
social guarantees solely through the forum of the tripartite. A strong, but minority, group of trade
unionists was very dissatisfied with this policy. Some believed, for instance, that the trade unions
should reject the government program and ally with the social democratic party to support an
alternative economic program. Others wanted the trade unions to promote worker buy-outs as
the primary method of privatization .
Falbr"s election as president seems to have marked a shift toward a more professional, organized,
and assertive chamber, though Falbr remains firmly against allying with any political party . The
trade unions have improved their internal organization, replacing the 38-member "council" where
each union had one vote with a new leadership body, the snem, in which member organizations
are represented according to size . This has simplified decision-making while aligning ČM KOS
policies more closely with those of the largest and most powerful trade unions . The profes-
sionalism of labor representatives in the tripartite has also seemingly increased . Union represent-
atives report sigificant success in influencing the drafting of the new Law on Employment ."
The Czech trade unions have not been unwise to accept the implicit social contract offered to
them through tbe tripartite council. Although the trade unions had very little influence over priva-
tization, wage control, and liberalization policies of the government during the crucial period of
transformation, it enabled them to carve out a place for themselves in the new society . At the April
1994 congress, the trade unions explicitly acknowledged that "the Law on Collective Bargaining
bas created space for improvement of labour, social and wage conditions of employees" .'6 The
degree to which the trade unions are able to take advantage of these opportunities will depend on
their ability to organize workers in the private sector and to represent them effectively in collec-
tive bargaining at the enterprise, branch, and national levels .
Interest Representation in a Liberal State
Since 1989, the Czech government has exercised extraordinarily strong control over its econom-
ic and social policy agenda . Despite the existence of the tripartite council, the government has
rarely compromised on core policies with the trade unions or the nascent employers" organiza-
tions_ Nonetheless, trade unions and employer interests have been represented through the tripartite
to a limited extent . The tripartite forced minor changes on important government initiatives and
had a considerably stronger voice on issues of lesser prominence . The discourse in the tripartite,
while not always resulting in agreement, allowed all sides to remain in constant contact, creating
a fuller mutual understanding of priorities and objectives . Moreover the tripartite itself, as the
central organization in the Czech system of collective bargaining, symbolizes the trade unions"
new role in society
In the process of democratization, the government has created a space for trade unions to repre-
sent their members" interest .-, at work and in national politics . Under communism, the party-state
directly controlled organizations and associations that, under the First Republic, had aspired to
free representation . The post-communist Czech state has renounced direct control of civil socie-
205
Mitchell Orenstein
ty, but its withdrawal has been carefully structured . Rather than leave behind a vacuum, post-
1989 governments have defined new roles both for the state and for the associations of civil life,
including the Czech and Moravian trade unions . Rapid economic reform demanded a certain
degree of social coordination. The Czech state therefore created a system of consultation and
collective bargaining acceptable to both sides. The Czech state remains exceedingly strong . The
future of the tripartite and the system of labor relations in general will depend on the evolution of
government priorities, the maturation of private capital, and the development of trade unions"
organizational capacities .
f
REFERENCES
1 . Philippe Schmitter, "Still the Century of Corporatism?", in G . Lehmbruch and P. Schmiuer, eds ., Trends
Toward Corporatist Intermediation, (London, 1979) .
2 . Peter Rutland, Workers" Responses to the Market Transition . (Unpublished manuscript, Wesleyan
University, 1994 .) Vladislav Flek, "Tarifni Vyjednavani v Obdobi Prechodu k Tržni Ekonomice", Politicka
ekonomie 9-10(1991), pp .783-809. Peter Rutland, "Thatcherism, Czech Style : Transition to Capital-
ism in the Czech Republic", Telos, no .94 (Winter 1992-93) .
3 Martin Myant "Czech and Slovak Trade Unions", in Michael Waller and Martin Myant, eds ., Parties,
Trade Unions and Society in East-Central Europe, (Ilford, England, 1994), pp.59-84 .
4 . Igor Tomes, "Social Policy and Protection in Czechoslovakia since 1989", in Stein Ringen and Claire
Wallace, eds ., Societies in Transition: East-Central Europe Today, volt, (Prague, 1993), pp .137-
147 .
5 . Vaclav Klaus, "Nedostatek pokory", Lidove noviny, 18 June 1994 .
6. Mitchell Orenstein, "The Political Success of Neo-Liberalism in the Czech Republic", CERGE-El
Working Paper no.68 (June 1994) .
7 . Jerzy Hausner and Witold Morawski, Tripartism in Poland . (Unpublished manuscript, University
of Warsaw,1994 .)
8 . Czech Statistical Office, 1994 .
9 . Institute for Public Opinion Research (IVVM), June 1994 .
10. Adam Przeworski, Democracy and the market, (Cambridge, 199 1) . In later writings, Przeworski
has argued that economic reform in new democracies requires accompanying social democratic pro-
grams. See Luiz Carlos Bresser Pereira, Jose Maria Maravall and Adam Przeworski, Economic Re-
forms in New Democracies: A Social Democratic Approach, (Cambridge, 1993) .
11 . Peter Rutland, "Thatcherism, Czech Style" . Rutland argues that, "The Czech government's accept-
ance of corporatism can be attributed to the underlying consensual nature of Czech political culture, a
206
THE CZECH TRIPARTITE COUNCIL AND ITS
CONTRIBUTION TO SOCIAL PEACE
willingness to replicate the labor institutions of neighboring Austria and Germany, and Klaus" own style
of avoiding direct confrontations" (p .122) .
12 . Tome, "Social Policy", p .143.
13 . Council of Economic and Social Agreement of the Czech Republic, "Council of Economic and Social
Agreement of the Czech Republic", (Prague, 1993) .
14. Zdenka Mansfeldova, Tripartism in the Czech Republic. (Unpublished manuscript, Institute of
Sociology, Czech Academy of Sciences, May 1994 .) A revised version of this paper should be published
in a collected volume of the Institute for Labor Research, Budapest, and the International Labour Or-
ganization .
15 . Mark McLaughlin Hager, "Constructuring a New Liberal Capitalism", The American University
Journal of International Law and Policy 7 :3 (Spring 1992) .
16 . Ivan Halek and Pavel Švejda, "Perspectivy tripartity", Narodni hospodarstvi 10 (1993) .
17. Prehled KSVS uloženych u MPSV ČR a učinnych v r. 1993, Ministry of Labor and Social
Affairs (1994) .
18 . Vladislav Flek et . al ., The Unions of Employers in the Czech Republic. (Unpublished manu-
script, March 1993, p . 9 .) This paper should be available through the Friedrich Ebert Foundation in
Prague, which sponsored this research.
19 . Igor Pleskot, Czech and Slovak Trade Union Movement in the Period of Transformation
to a Civil Democratic Society, 1989-1993 . (Paper presented at the Third Prague International
Workshop on Social Responses to Transformations in East-Central Europe, Central European University
Prague, 6-8 May 1994 .) Pleskot was the first Chairman of the Czech and Slovak Chamber of Trade
Unions (ČSKOS) .
20. Odborari a jejich hodnoceni odboru, Institute for Public Opinion Research (IVVM) (April
1994) .
21 . Pleskot, Czech and Slovak Trade Union Movement, p.18 .
22. Ekonom 50 (1993), p .23 .
23. "Projev premiera Vadava Klause na sjezdu ČMKOS", Prace, 9 April 1994 .
24 . PlanEcon Report, 9:7-8 (March 1993), p .2 .
25 . Vladislav Flek et . al ., The Unions of Employers in the Czech Republic, p .11 .
26 . Vladislav Flek and Alena Buchtikova, Income Policy and Wage Development in the Czech
Republic, Czech National Bank Institute of Economics, (Prague, 1994) .
207
THE CZECH TRIPARTITE COUNCIL AND ITS
CONTRIBUTION TO SOCIAL PEACE
45 . "Kroky odboru budou čitelne", Prace, I I April 1994 .
46. Rutland, Workers' Responses, p .35 .
47 . " Českym zamestnancum rakouskych firem by pry stačily nižši platy", Lidove noviny, 18 September
1994 .
48. Want, "Czech and Slovak Trade Unions", p .75 .
49. Marcia E. Greenberg with Stephen B. Heintz, Removing the Barriers : Strategies to Assist the
Long-term Unemployed, Institute for EastWest Studies (1994) .
50. Fritz W. Scharpf, Crisis and Choice in European Social Democracy, (Ithaca and London,
1991), p .274 .
51 . Programme of the Czech-Moravian Chamber of Trade Unions for the Years 1994-1998,
ČMKOS (1994).
52. The term "old structure" in Czech refers to any institution or individual associated with the former
regime.
53 . Pleskot, Czech and Slovak Trade Union Movement .
54 . Myant, "Czech and Slovak Trade Unions", p .76.
55 . Interview with Ludek Rychly, Č MKOS, 23 September 1994 .
56. Resolution No.1 of the 1st Congress of Trade Unions Affiliated to the Czech-Moravian
Chamber of Trade Unions, (ČMKOS (1994) .
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Mitchell Orenstein
27 . Svobodne Slovo, 30 March 1992 .
28. For a very clear and more detailed discussion of the evolution of wage policy and the other major
areas of Czech economic policy from 1989-1993, see Jan Adam, "Transformation to a Market Economy
ln the Former Czechoslovakia", Europe-Asia Studies, 45 :4 (1993), pp .627-645 .
29. Government Decree No .334 of December 22, 1993 on Regulatory and Sanction Measure in the
Wage Area.
30. John Ham, Jan Švejnar, Katherine Terrell, "Explaining Unemployment Dynamics in the Czech and
Slovak Republics", Center for Economic Research and Graduate Education Discussion Paper
23, Prague, November 1993.
31 . Michael Burda, Unemployment, Labor Market Institutions and Structural Change in Eastern
Europe . (Paper presented at the Economic Policy Panel, London, October 15-16, 1992 .)
32. General Agreement of the Czech Republic for 1993, Article 1 .
33 . Notes on the Negotiations of the Plenary Session of the Council of Economic and Social Agreement of
the Czech Republic, September 23, 1993 .
34 . Standpoint of the Trade Unions Towards the Suggested Law on Basic Pension Insurance, materials of
the Council of Economic and Social Agreement of the Czech Republic, October 20, 1993 .
35 . Myant, "Czech and Slovak Trade Unions", pp . 65-66 .
36. Interview with Petr Mlller, May 5, 1994 .
37. "Moderni odborova centrala musi byt na politickych stranach nezavisla", Rude Pravo, September
22, 1993 .
38 . 'Jsme k vlade lojalnejši než ona k občanovi a potažmo k odborum", Rude Pravo, August 2, 1993 .
39 . Materials of the Council of Economic and Social Agreement of the Czech Republic, August 17, 1993 .
40. Notes on the Negotiations of the Plenary Session of the Council of Economic and Social Agreement of
the Czech Republic, August 19, 1993 .
41 . "Vlada odmita ždemagogii odboru"', Lidove noviny, 17 March 1994 .
42 . "Petrus: demonstrace byla predel - odbory nabyly sebevedomi", Rude pravo, 24 March 1994 .
43. Verejnost k demonstraci odboraru, Institut pro Vyzkum Verejneho Mineni, April 18, 1994 .
44. "Projev premiera".
208