Between Apprehension and Support: Social Dialogue, Democracy, and Industrial Restructuring in Central and Eastern Europe

This article explores the attitudes of trade union organizations to restructuring and privatization of their enterprises to strategic foreign investors in Central and Eastern Europe's biggest steel producers: Poland, Czech Republic, Romania, and Slovakia. Contrary to advocates of insulating technocratic decision-makers from social partners, this article argues that higher quality of democracy and concomitant social dialogue carried out at the level of the sector with union organizations that are autonomous of the government in power (as was the case in the Czech Republic and Poland), are associated with greater restructuring and with support for privatization to strategic foreign investors. In these circumstances, the unions actually pressure reluctant governments to accelerate the privatization process. By contrast, politically motivated capture of individual enterprise-level unions and splitting them from sectoral-level organizations, as occurred in countries with lower quality of democracy (Romania and Slovakia), weakens the autonomous sectoral-level organizations, which are generally supportive of restructuring. Conversely, captured unions remain far more resistant to reform than their counterparts belonging to autonomous sectoral organizations. Thus, higher quality of democracy and concomitant vibrant social dialogue safeguard industrial restructuring.