Weathering intermediated temporary labour mobility: social partners in Central and Eastern Europe after EU enlargement

Abstract

This article highlights the growing significance of intermediated temporary labour mobility, and how it has put further pressure on industrial relations institutions in Central and Eastern Europe since EU enlargement. The social partners’ modest regulatory role has been further challenged and reconfigured by the spread of labour market intermediaries. In their struggle to maintain a degree of regulatory influence in the face of unilateral government regulation and the dominance of intermediaries, social partners have shifted their positions between entrenched consent and antagonism and/or protagonism. Our two case studies of Hungarian temporary agency work in metal manufacturing and posted workers in Slovenian construction show similar labour market pressures on sectoral industrial relations in the two countries, but different responses by social partners, indicating different prospects for national industrial relations. The state has retained the decisive regulatory role in both cases, but the Slovenian social partners, in contrast to their Hungarian counterparts, still have some regulatory influence.

Introduction

Accession to the European Union (EU) accelerated the ongoing process of labour market liberalisation and helped the proliferation of new forms of temporary cross-border labour mobility in Central and Eastern European (CEE) countries (Lillie et al., 2020; Meszmann et al., 2022; Novitz and Andrijasevic, 2020; Voss et al., 2013). One striking feature of regional liberalisation processes, in which the EU Directives played a part, was the introduction and development of new labour market mechanisms for temporary mobility. Despite the expectation that EU accession would stabilise industrial relations in Central and Eastern Europe (Cazes and Nesporova, 2004; Martin and Cristescu-Martin, 2003), CEE social partners were faced with new challenges, including pressures arising from the expansion of intermediated labour mobility.

Intermediated temporary labour mobility can take multiple forms, but the most widespread types to emerge so far are temporary agency work (TAW) and posting. In this article, we investigate their impact on industrial relations and observe how the transnationalisation of CEE labour markets is putting pressure on industrial relations and affecting the constraints industrial relations actors face in their attempts to regulate both labour markets and new labour market mechanisms. Concentrating on social partner responses to the transposition of EU directives into national regulations and their implementation, we apply and extend Korpi’s (2006) typology of protagonists, antagonists and consenters in relation to employers’ strategies. In our view, the effects on industrial relations stem from increasingly transnationalised national labour markets, which we observe as engaged in a regulatory battle, and the changing role of social partners and intermediaries in regulating intermediated labour mobility. We argue that the modest regulatory role of social partners has been further challenged and reconfigured by the spread of labour market intermediaries. In their struggle to maintain a degree of regulatory influence in the face of unilateral government regulation and intermediary dominance, social partners have shifted their positions between entrenched consent and antagonism and/or protagonism.

We provide two illustrative cases of temporary agency work in Hungarian manufacturing and posting in Slovenian construction, in which these new labour market mechanisms have become crucial in accommodating flexibility-oriented business models and labour in a transnational migration-driven context. Relying on statistical data, secondary resources and social partner documents, we show that sectoral industrial relations in both countries have come under similar pressures from labour market intermediaries. Based on their power resources and alliances, however, social partners in the two countries have responded differently. While in both instances the state has maintained the decisive regulatory role, the Slovenian social partners, in contrast to their Hungarian counterparts, still have some regulatory influence indicating different prospects for national industrial relations.

Methodology

Scholars have pointed out that the transnationalisation of EU labour markets puts immense pressure on national labour markets (Lillie and Greer, 2007; Streeck, 1998). An actor-centred approach (Lillie and Greer, 2007; MacKenzie and Martínez Lucio, 2019) is suitable for examining how these pressures are channelled into the regulation of labour migration and the role of social partners in this. Sectoral regulation battles related to protecting labour market access (immigration control) and labour standards, expanding the scope of collective bargaining and minimum wages, and the organisation of migrant workers have been the focus of several studies (Afonso, 2012; Afonso et al., 2020; Lillie et al., 2020; Marino et al., 2017). This is particularly important in the CEE context, where autonomous regulation is limited, and social partners typically have a consultative role to a dominant state actor (Kahancová and Martišková, 2023).

To understand the varied responses of CEE social partners to transnational temporary labour mobility – specifically temporary agency work in Hungarian metal manufacturing and posting in Slovenian construction – we utilise Korpi’s (2006) employer-strategy typology of protagonists, antagonists and consenters in relation to the regulation of new labour market mechanisms, as suggested by Afonso (2012). Retaining employers as central, but not unified actors – the logics of coordinated joint position and competition may clash – we extend this typology to trade unions in order to examine their strategic responses to transnational precarious labour (Afonso et al., 2020; Heinrich et al., 2020). According to these authors, alliances and the role of the state inform employer organisations’ strategies with regard to market-shaping regulatory interventions. Thus, protagonists are organisations that promote (new) market regulations because it benefits them; consenters accept them in exchange for other benefits; and antagonists oppose them (Afonso, 2012: 711). In the case of consenters, their lack of power or alliances pushes them towards second-choice compromises or trade-offs, implying weaker autonomous regulation. While we do not engage in counter-factual analysis of policy choice-making, we observe the time order in which different actors enter into the policy-making process, as suggested by Korpi (2006: 13) and contend that social partner positions are not fixed but might shift, based on their available resources and other factors. Framing the situation thus, we highlight the ways in which selected forms of intermediated labour mobility have been regulated and analyse social partner actions and strategies in relation to temporary labour mobility. Ultimately, the point of the analysis is to show action capacities, logics and effects on industrial relations, including the capacities of sectoral social partners to influence regulation.

In a landscape that includes a wide range of formal and informal actors, from private individuals to public and private institutions (Jones and Sha, 2020), we focus on two key labour market mechanisms: temporary agency work (TAW) and posting. In both forms, workers are sent by their employer to provide a service to a user company for a definite period of time: the first case involves temporary agency work in the same country, the second the posting of workers from one EU country to another. We chose these labour market mechanisms for five reasons. First, posting and temporary agency work are formalised and traceable labour market mechanisms, regulated at the EU level, which offers social partners an opportunity to exert some influence. Second, these forms are both temporary and transnational, and directly linked to developments in Central and Eastern Europe after EU accession. Third, and to some degree in contrast with old EU Member States, these forms offered CEE employers and entrepreneurs new opportunities for new sectors or business models to grow in national contexts, where they were struggling with shrinking markets and labour market constraints. Hence, CEE social partners reacted to challenges related to intermediated temporary labour mobility only after the resulting issues could no longer be ignored. Fourth, in most CEE countries posting and temporary agency work have proliferated in particular sectors, decisively penetrating both national and transnational labour markets. Finally, these two different forms of intermediated labour give us an opportunity to observe the different challenges they give rise to for both labour standards and industrial relations in selected sectoral and country contexts.

A sectoral focus allows us to be sufficiently concrete in presenting all labour market and regulatory developments, but also in terms of social partners’ actions and the presence of intermediaries. Hungarian metal manufacturing and Slovenian construction are large sectors, prominent nationally and relevant transnationally. Intermediated labour mobility has been growing rapidly in both. Posting as outward transnational mobility is more relevant for the construction sector, whereas temporary agency work, with a component of inward mobility, is commonly used in metal manufacturing. Therefore, we expect different constellations of actors and responses.

Among Central and Eastern European EU Member States, we selected Hungary and Slovenia, taking into account earlier classifications and industrial relations prospects (Bohle and Greskovits, 2012) and later developments. Hungary was classified as an embedded neoliberal economy. Similar to other Visegrád countries, collective bargaining in manufacturing was decentralised to the company level and has had a very modest regulatory impact. Decentralisation was remedied by maintaining centralised labour market regulation and social dialogue in which social partners relied on the ‘friendliness’ of the political elite. Such reliance backfired after 2010 when the right-wing government significantly weakened the role of social dialogue institutions (Meszmann and Szabó, 2023). Manufacturing is a key economic sector, accounting for about two-thirds of all temporary jobs. Metal manufacturing is a typical sector in terms of both social partner density rates, and decentralisation of collective bargaining (NFSZ – National Employment Service). Until the global financial crisis, non-Hungarian temporary agency work was concentrated in large electronic firms, and after 2015 in automotives (Fedyuk and Meszmann, 2018).

Until enlargement, Slovenia was an outlier in terms of social partner density and stability of industrial relations institutions. Traces of a neo-corporatist model were detected, with significant autonomous regulatory power on the part of both employers and trade unions (Bembič, 2023). Nevertheless, Slovenian exceptionalism ended under the impact of the 2008 financial crisis and transnationalisation (Guardiancich, 2012; Stanojević et al., 2023). Unlike in most CEE countries, Slovenian construction was an exceptionally well-regulated sector until EU accession. The 2008 crisis transformed the sector into a much more fragmented one, with smaller companies, increased unemployment and transient employment, and stagnating wages. Transnational posting became a solution to national market problems that eventually transformed Slovenia into a main supplier (Danaj et al., 2023a). To sustain this model, migrant workers from neighbouring Bosnia and Herzegovina have become a significant part of the posted workforce (Vah Jevšnik et al., 2022b).

Our analysis relies on EU and national statistical data, secondary literature, social partner documents, observations and empirical data obtained from several research projects on temporary agency work and posting that the authors have conducted in the past 10 years (Danaj and Zólyomi, 2018; Danaj et al., 2020, 2021, 2023a, 2023b; Meszmann, 2016, 2018; Meszmann and Fedyuk, 2019, 2020; Meszmann et al., 2022).

Intermediaries and industrial relations in changing CEE labour markets

Eastern enlargement not only opened up the EU market to CEE workers, but also diversified the mobility patterns of work in the region. The working population declined in all CEE countries, except for Slovakia, between 2002 and 2019, the proportions varying from 0.2 per cent in Czechia and Slovenia to 1.1 per cent in Bulgaria and Romania. According to Eurostat projections this is likely to persist. This is a result of several factors, including continuous labour emigration to other EU countries (Astrov et al., 2021; Galgóczi et al., 2013). Along with longer-term and permanent labour emigration, more ‘liquid’ forms of emigration have also developed (Engbersen, 2018), including seasonal migration, circular migration and other forms of short-term labour mobility, such as posting of workers and cross-border commuting (Andrijasevic and Sacchetto, 2016; Castles et al., 2014; Triandafyllidou, 2022). But while CEE countries remain labour suppliers to ‘old’ and ‘new’ Member States, relatively soon after enlargement they also, to different degrees and paces, became receiving countries of immigration, especially from the European neighbourhood and Asia (Okólski, 2012). CEE countries’ migration regimes in recent years have introduced measures to facilitate or favour temporary labour migration in the form of quota schemes, seasonal work programmes, labour market test systems, or bilateral agreements with third countries providing facilitated labour market access to certain nationalities (Danaj et al., 2023b; Meszmann et al., 2022). Although net migration remains negative in many CEE countries (Astrov et al., 2021), data show a significant and growing presence of migrant workers in eastern Europe as a whole (Eurostat, 2020; ILO, 2021: 32). Available data show that the employment of non-EU citizens in the region has increased unevenly, and in 2019 it varied from 0.1 per cent of the labour force in Croatia to 13.4 per cent in Estonia (Eurostat, 2020).

Within this complex landscape of outgoing and incoming labour mobility, EU directives have played a decisive role in shaping temporary labour mobility through intermediaries in the CEE countries, especially the Posting of Workers Directive (96/71/EC) and the Temporary Agency Work Directive (2008/104/EC). Both directives regulate the temporary provision of services across and within the EU and have a twofold objective: protecting workers while constructing a more flexible market to create jobs. The Posting of Workers Directive focuses on cross-border service provision by posting companies. This type of employment is by definition temporary, and upon project completion workers are supposed to return to their sending EU country. The definition of posting as service provision also means that, during their posting assignment, workers remain under the sending country’s social security system. The Temporary Agency Work Directive focuses on the provision of services through staffing agencies, nationally and transnationally. Temporary work agencies also mediate employment for many migrant and mobile workers, and in some circumstances, they also post workers across borders. These national and EU policies combined have further transformed labour migration in Central and Eastern Europe multi-directionally, but they have also made temporary mobility a distinctive feature of their labour markets.

Sources indicate the rising magnitude of the temporary agency work sector and the share of migrant workers in it. Europe has the highest agency work revenues globally, generating 43 per cent of the global sector’s turnover in 2019 and about €55.8bn in temporary work agency revenues (WEC, 2021). In Central and Eastern Europe, temporary agency work has had a modest but rising share in total employment. It is growing faster in countries with foreign direct investment (FDI)-driven manufacturing, such as Hungary, Slovakia and Czechia (Meszmann et al., 2022) than in countries with dominant service industries, such as the Baltic states or Croatia. Qualitative research also suggests that migrants have become a significant group among temporary agency workers in CEE countries. The pressures stemming from the increase in the level of temporary agency work and its composition include tensions among workers, more difficulties in organising labour, incentives to further increase working time flexibility, and the diminishing scope of collective bargaining (Meszmann and Fedyuk, 2019; Novitz and Andrijasevic, 2020).

Posted workers are not included in migration statistics. Estimates drawn from the administrative data contained in portable documents A1 (PDs A1), which are issued to workers before they are posted abroad to certify they are covered by the sending country’s social security system, indicate that posting has grown significantly, rising from 1,481,263 PDs A1 issued in all EU countries in 2012 to 4,512,401 in 2019. Despite the impact of the COVID-19 pandemic, nearly 3.7 million PDs A1 were issued in 2020. Since enlargement, CEE countries have been among the main suppliers of posted workers (De Wispelaere et al., 2022b). Posting has thus become the main form of cross-border service provision, accounting for 1.5 per cent of EU employment, CEE countries being the main sending countries, especially Poland (4.1 per cent), Lithuania (8 per cent) and Slovenia (15.9 per cent) (De Wispelaere et al., 2022a). The increase in posting has created two main types of pressure. First, posting companies use transnational mobility to go regime shopping and avoid national collective bargaining agreements. Second, transnational mobility has made monitoring and enforcement of national labour standards difficult, especially because the original Posting of Workers Directive allowed for unequal pay between posted workers and others in the same workplace (Arnholtz and Lillie, 2020).

EU accession and the adaptation of EU policies governing international migration and transnational labour mobility strengthened central state actors in the new Member States. In most Central and Eastern European countries, sectoral regulation has been weak and the national level was supposed to provide trade unions with the main arena in which to influence labour market regulation, which in turn informed collective bargaining at company level (Czarzasty, 2024). The fragility of such influence stemmed from fragile state capacities in terms of implementation, instability of the social dialogue bodies because of political change, and economic and political crises that undermined the authority of regulation via social dialogue. Nevertheless, for national-level trade unions in most CEE countries, this arena remained of key importance, with no alternatives (Bernaciak, 2015b; Delteil and Kirov, 2016).

Compared with their western European colleagues, in Central and Eastern Europe labour migration has not been central to social dialogue or the social partners’ agenda (Grünell and van het Kaar, 2003; Meszmann et al., 2022). Early on, CEE social partners showed limited interest in EU directives related to temporary labour mobility. The Temporary Agency Work Directive was negotiated in 2001–2002, but, after enlargement, CEE social partners did not react to the compromise already reached between the more regulated and liberalised western EU Member States (Sartori, 2016). The Posting of Workers Directive was passed in 1996, but only after eastern enlargement did posting really take off as a form of cross-border service provision. When the number of temporary agency workers and postings from CEE countries grew, so did criticisms of implementation of the directives as enabling social dumping (Bernaciak, 2015a). Despite appeals from western Member States to revise the Temporary Agency Work Directive, so far, no changes have been made. In the case of posting, steps have been taken to address western Member States’ concerns with the Enforcement Directive (ED) in 2014, followed by the amendment of the Posting of Workers Directive in 2018. While national CEE social partners did not show much interest in the Directives at the EU level, their interest in their transposition and/or implementation in national contexts grew as these forms became more prominent in national labour markets and the threats they posed to labour standards grew, especially in terms of measures aimed at limiting their scope in the case of temporary agency workers (Meszmann, 2016), or the enforcement of labour standards for posted workers (Vah Jevšnik et al., 2022a).

There was a deep and persistent drift in CEE labour markets even before enlargement, between (in the main) large companies and the public sector on the one hand, and a semi-informal, secondary labour market populated by low-wage sectors and/or workers at many small enterprises, on the other (Pailhé, 2003). Labour market intermediaries, such as temporary work agencies and posting undertakings, emerged in this context and positioned themselves strategically as actors of the new economy, capable both of expanding the primary labour market and contracting the informal ‘grey’ economy by offering mobility to disadvantaged workers, and maintaining and enhancing the structures of large companies’ internal labour markets (Danaj et al., 2021; Meszmann, 2016). With the opening of EU borders, intermediaries could now also provide services transnationally. The consecutive crises of 2008 and the COVID-19 pandemic increased the role and political recognition of intermediaries in Central and Eastern Europe, as both welfare cutting stabilisers and new co-governors of transnational labour markets (Meszmann et al., 2022). In contrast to posting, which is provided mainly by existing companies, temporary work agencies emerged as an entirely new sector in Central and Eastern Europe just a few years before EU accession, shaping their own sectoral business regulations. Temp agencies grew quickly, forming their own federations and increasing membership. These agencies are also actively shaping and co-creating (transnational) labour markets, which poses a challenge for traditional industrial relations (Coe et al., 2008).

Industrial relations also developed unevenly across sectors in Central and Eastern Europe. Large employers in foreign direct investment (FDI)-driven sectors set relatively high labour standards, which contrasted starkly with informal or semi-informal practices in wage-sensitive sectors, especially those dominated by small enterprises, and the limited role of collective bargaining (Aguilera and Dabu, 2005). Compared with their western European counterparts, CEE employer organisations had modest and deteriorating density and remained weak, in terms of both self-regulatory capacities and coordination and engagement in collective bargaining (Glassner, 2013). There were substantial reasons for this, including the loss of markets of many large domestic employers, FDI-driven transformation of entire sectors, and decentralisation. Trade union strength and regulatory power across Central and Eastern Europe was rather modest at the outset of EU accession measured in terms of union density, mobilisation power and collective bargaining coverage (Crowley and Ost, 2001). Nevertheless, trade unions maintained strongholds in some sectors and companies (Meardi, 2007). Although playing a predominantly consultative role, social partners used social dialogue forums to influence regulation, but governments remained the main regulating actors in most countries, especially in crisis periods (Bernaciak, 2015b; Kahancová and Martišková, 2023). Under financial constraints, interest representation via lobbying, rather than social dialogue gained momentum in many CEE countries. But how did social partners react in the face of increasing pressures from the proliferation and transformative effects of transnationalised and intermediated labour mobility on sectoral industrial relations?

Labour mobility and temporary agencies in Hungarian metal manufacturing

The establishment of temporary agency work as a (transnational) mobility industry

Temporary agency work (TAW) was introduced in 2001 as an amendment to the Hungarian Labour Code of 1992 as an equivalent alternative to standard employment, although without provisions on justification or duration, and lacking equal treatment requirements. User companies could employ an unlimited number of workers from staffing agencies for any job position for an indefinite period. Only with the transposition of the Temporary Agency Work Directive in the new Labour Code of 2012 did the quality of temporary agency work legislation improve. It was now legally limited to five years, and an equal treatment requirement was introduced. Despite these improvements, compared with other Member States the Hungarian regulations remain among the most flexible in the EU (Horváth, 2020).

In the early 2000s, the Hungarian labour market was highly segmented, sectorally and territorially. FDI-driven development in metal manufacturing secured more jobs in larger, more stable enterprises in north-west Hungary, while in south-east Hungary poorer job prospects, sectors with insecure employment, and higher unemployment prevailed. A large cohort of non-local workers were hired by manufacturing companies offering better wages with the mediation of temporary work agencies (Czirfusz, 2012; Meszmann, 2018). Temporary work agencies thus found a niche supplying blue-collar labour to expanding multinationals with no skill requirements. They attracted workers from increasingly distant places, up to the poorer regions in the south-east, and later also across borders. The 2011 census data revealed that especially the automotive and electronics industries employed predominantly non-locals, but still within commuting radius (Kiss and Szalkay, 2018). Later, with the permanent opening up of EU labour markets for CEE nationals, circular migration of workers from Hungary to western EU countries also intensified (Hárs, 2012). After 2015, under conditions of acute shortages, non-EU workers appeared in Hungarian metal manufacturing companies, adding a new dimension to this dynamic (Meszmann, 2018). Temporary work agencies offered ‘try and hire’ services to user companies, in practice a prolonged probational six-month period with lower labour costs. Many user companies relied constantly on temporary work agencies, and not only during peak production periods, thus the proportion of temporary agency workers transferred to the permanent staff of the user companies was low. To attract and retain workers, temporary work agencies provided housing for non-local workers in dormitories, flats or houses, alongside other administrative services (Fedyuk and Meszmann, in press).

In this context, temporary agency workers penetrated the Hungarian labour market, their number more than quadrupling between 2002 and 2008. In the wake of the global economic recession and COVID-19, however, the number of temporary agency workers decreased significantly, only to rebound immediately. Temporary agency workers were still leased predominantly to manufacturers. In 2021 the proportion was 69.6 per cent and temporary agency workers exceeded 10 per cent of all workers employed in metal manufacturing. In 2022 the share (24 per cent) and absolute number (43,185) of non-Hungarian citizens among temporary agency workers radically increased (NFSZ, 2023). The number of temporary agency workers mushroomed until 2014, with a higher concentration after restrictions were imposed, such as increasing the value of the asset guarantee. In the early 2000s, the staffing sector was dominated by western temporary agency work multinationals, but MNCs gradually lost market share to local or regional temporary work agencies (Karácsony, 2022; Staffingindustry, 2023).

The Hungarian Association of Private Employment Agencies (SZTMSZ – Személyzeti Tanácsadók Magyarországi Szövetsége), established in 2004, represented mainly multinational temporary work agencies, while the National Association of Hungarian Temporary Work Agencies (MMOSZ – Magyar Munkaerő-kölcsönzők Országos Szövetsége), established in mid-2010, brought together mostly local agencies. In 2008, SZTMSZ took the minimalist view that ‘equal treatment is a vital issue, and it is essential it covers only basic pay’ (Neumann, 2008). During transposition, both staffing associations influenced the preparation of amendments to the Labour Code of 2012. They lobbied for flexible labour legislation and took a stand against the informal labour market (Meszmann, 2016). Nevertheless, self-regulation of the sector was weak, because of both the high number of unaffiliated temporary work agencies and the conflicting views of the two associations. Self-regulation of the sector was further weakened by two major developments. First, in 2020 SZTMSZ was fined heavily by the national competition authority for limiting competition among its members (GVH, 2020). Second, during the COVID-19 pandemic, the government unilaterally introduced the category of qualified temporary work agencies, which enjoyed extended rights to employ third-country nationals. In 2021 a government decree allowed ‘qualified temporary work agencies’ to bring workers to Hungary from 11 non-EU countries on a two-year fixed-term contract with a simplified procedure. To qualify, temporary work agencies had to prove that they had employed a minimum of 500 employees in the year prior to the application, provide a security deposit of HUF 50 m, and pass an inspection by the Constitutional Protection Authority. As of 5 September 2023, there were only 27 qualified temporary work agencies out of the 446 companies registered at the end of 2022 (Government of Hungary, 2023).

Despite the proliferation of temporary work agencies after transposition of the Temporary Agency Work Directive, regulation of temporary agency work has not been raised at national social dialogue bodies. Economic shocks and later labour shortages resulted in high labour turnover, which added fuel to temporary work agency-mediated mobility. Collective bargaining coverage has been decreasing, as have employer capacities. Union density in the sector decreased from around 20 to 7 per cent between 2002 and 2020. Temporary agency work regulation is done centrally by government decrees, over which social partners have no influence. How can this detrimental outcome be explained from the social partners’ perspective?

Hungarian social partners and TAW: entrenched consenters and conceding consenters

In this analysis we focus on the national confederation of employers in manufacturing and the sectoral trade union in metal manufacturing as the most relevant and active organisations involved in both social dialogue and collective bargaining related to temporary agency work. The Hungarian employers’ position on this has changed from one of antagonism to that of entrenched consenter, whereas the unions’ position has evolved from that of protagonist to conceding consenter. The shift in their positions, in Korpi’s terms, stems from the lack or diminishing power of both employer organisations and trade unions, and the increasing dominance of temporary work agencies and unilateral governments over time. The evolution of positions towards that of consenter mirrors an acceptance of second-best options or compromises.

Employer organisations in metal manufacturing are weak in terms of both density and self-regulation. There is little engagement in sectoral collective bargaining or coordination (Borbély and Neumann, 2018: 295). Sectoral employer organisations traditionally relied on employer confederations to exert influence in national social dialogue. Before temporary agency work regulation in 2001, the general employer umbrella organisation, the Confederation of Hungarian Employers and Industrialists (MGYOSZ), took an antagonistic position to stricter temporary agency work regulation, articulating the needs of large companies (MGYOSZ, 2000). In the early 2000s, the chair of MGYOSZ was also the owner of Videoton, which introduced quasi-temporary agency work in the 1990s, leasing both production facilities and its workers to globally renowned manufacturers. MGYOSZ considered regulation of temporary agency work a constraint, a requirement of EU harmonisation, and treated temporary agency work as an ideal tool to manage user companies’ labour needs. Many user companies in metal manufacturing relied increasingly on mobile labour as a permanent solution. Weak sectoral employer organisations accepted it as a new reality and there are no recorded attempts at coordination and the establishment of minimum standards. After EU accession, MGYOSZ’s position was shaped by the inclusion among its members of staffing federations. Under their influence, the employers’ confederation became an antagonist, and opposed any legal constraints on the use of agency work, arguing that rigidities would lead to less job creation and stricter regulation would lead to illegal employment practices and shady agency work (Neumann, 2008). In early 2011, within MGYOSZ, members from the manufacturing and staffing sectors prepared joint draft legislation related to transposition of the Temporary Agency Work Directive and submitted it to the relevant ministries (MGYOSZ, 2011: 7). In late 2016, in a situation of acute labour shortages MGYOSZ formulated a statement to liberalise transnational labour mobility (MGYOSZ, 2016), recognising the instrumental role of temporary agency work in remedying labour shortages (Meszmann, 2022). MGYOSZ was gradually losing its voice, however, vis-à-vis member temporary agency work federations and the most influential staffing agencies. The latter have increasingly been lobbying government regulators in their own right, thus fostering both concentration as well as high clientelistic competition. Employers eventually became entrenched consenters to temporary agency work regulation. In Korpi’s terms, the consenter position was the result of the reconfiguration of the alliance between the employers’ confederation and the temporary agency work federations.

Trade unions were institutionally and organisationally weak protagonists and supported the Temporary Agency Work Directive, expecting significant improvements related to unlimited use of temporary agency work. The position of the main trade union shifted from that of protagonist of regulation to conditional consenter; that is, they asked for equal pay for temporary agency workers and agreed to maintain flexible regulation. As will be shown below, conditional consent to the 2011 regulation materialised in a set of compromises, as trade unions were included in consultations on improving regulatory change. Acceptance occurred in a less favourable political environment under the right-wing Orbán government, and preparation of the new 2012 Labour Code.

From the outset metalworkers’ union Vasas was arguably the most active union in manufacturing in relation to temporary agency work, even unionising temporary agency workers at user companies. As it was not directly involved in national social dialogue on legislative changes, it exerted influence via the left-wing national union confederation. Up until the Temporary Agency Work Directive transposition, Vasas submitted its remarks and observations on the employment of temporary agency workers to the authorities via the confederation. This traditional way of exerting pressure via social dialogue was used efficiently only between 2002 and 2011. As union organisation in the staffing sector was not regulated, in 2008 the liberal-left government could consult on the new EU Directive only with the social partner confederations in the national social dialogue forum. Labour representatives wanted to strengthen equal treatment regulations by shortening the transitory period and enforcement through labour inspection, and also to limit the use of temporary agency workers to cases of extraordinary peaks in labour demand and constrain long-term usage of agency work (Neumann, 2008). Temporary Agency Work Directive transposition coincided with discussions around and concessions related to the introduction of a new labour code in Hungary in late 2011. The union welcomed improvements in temporary work agency regulation, but its focus was now on the general deterioration of employment rights in the new legislation. The importance of establishing employee representatives in temporary work agencies was voiced, but as an objective to be presented to legislators (Tarsolyné, 2012).

After 2011, social dialogue channels were gone. Proposals for regulatory amendments concerning the world of work and employment relations sometimes even circumvented formally required social consultation, as in the case with the controversial 2018 amendment to the Labour Code known colloquially as the ‘slave law’. ¹ This harmed trade unions in particular. The main strategy of Vasas and its member company-level unions was to exert soft influence, attempting to convince user companies to limit temporary agency work or not use it at all (Meszmann, 2016). This strategy could succeed only in unionised companies. Unions realised that the employment of non-locals led indirectly to wage depression and kept employment low, undermining established working conditions and negatively affecting worker representation (Meszmann, 2022). Nonetheless, unions did not target migrant workers with specialised services or develop agendas to protect or represent special needs and interests (Meszmann and Fedyuk, 2020). The upshot is that unions’ domain of action and representation has been shrinking. In larger, unionised companies, unions’ collective bargaining strategy has concentrated on protecting the interests of ‘insider’ groups of local employees. Unable to exert influence over the labour use strategies of most metal companies, but also unable to organise temporary agency workers sectoral unions have remained consenters in practice.

Social partners and posting in Slovenian construction

The establishment of posting as a transnational business model

Posting from Slovenia took off from 2010 onwards, making Slovenia one of the main source countries (De Wispelaere et al., 2022b). Posting continued even during the COVID-19 pandemic, the share of outgoing postings in national employment reaching 6.8 per cent in 2020 (Vah Jevšnik et al., 2022a). Posting is important especially for construction, which was severely hit by the 2008 financial and economic crisis. To manage that crisis, the government introduced policies aimed at liberalising and deregulating the labour market (Stanojević et al., 2023). This changed the sector considerably. The number of medium and large construction companies halved between 2008 and 2017, leading to fragmentation and outsourcing. Between 2010 and 2020, the number of self-employed increased by 14.8 per cent and part-time employment increased by 40.9 per cent. Furthermore, nominal wages remained the same during 2008–2018 (Stat.si) and job vacancy rates increased to 4.8 per cent from 1.1 per cent in 2010 (ECSO, 2021). Affected by the crisis, Slovenian construction companies turned to the wider European market for opportunities, channelling their labour force to provide services abroad on a temporary basis. In addition to the existing companies, new and sometimes dubious enterprises appeared specialising in posting workers abroad.

Nonetheless, labour shortages persisted. Recent migration policy has sought to attract a specific pool of workers to fill these shortages through the signing of bilateral agreements with neighbouring countries, such as Bosnia and Herzegovina (in 2012) and Serbia (in 2019), and through the simplification of work permit procedures for other third-country nationals with a job offer in a listed shortage profession. Hence, in 2021 the share of third-country nationals in total employment reached 10.3 per cent, many in construction (40.4 per cent) (Vah Jevšnik et al., 2022b). The overall number of third-country-national workers posted from Slovenia also increased, from 45.7 per cent in 2018 to 62 per cent in 2021. In construction, they constitute 74.5 per cent of all workers posted from Slovenia, indicating a double-segmented labour market (Danaj et al., 2023a).

Concurrent processes such as EU accession, the economic and financial crisis, government policies, and the subsequent flexibilisation and transnationalisation of the labour market had a direct impact on Slovenian industrial relations (Stanojević et al., 2023). Up to 2004, industrial relations had developed in the direction of a small coordinated market economy, in which dialogue between employer organisations, trade unions, and the government was centralised and institutionalised in the Economic and Social Council, established in 1994. Collective bargaining coverage was almost 100 per cent, with strong sectoral bargaining (Guardiancich, 2012). From 2004, both sides of the social partnership experienced diminishing bargaining and regulatory power. Membership of the Chamber of Commerce (GZS), the main employer organisation, changed from obligatory to voluntary. In the private sector, union density declined from 40 per cent in 2000 to 20 per cent, and collective bargaining coverage dropped to 68 per cent in 2019. Among the seven union confederations, the largest is the Association of Free Trade Unions of Slovenia (ZSSS), which has 22 affiliates covering many public and private sector industries. Bargaining in the private sector shifted to the sectoral level, but many agreements were insecure, leading to greater decentralisation (Eurofound, 2022; Stanojević and Poje, 2019). Consequently, social partners’ power resources have diminished and the level and extent of their influence have weakened considerably. This has made the government the dominant regulatory actor (Guardiancich, 2012; Stanojević et al., 2023).

In the face of the national labour market challenges, the social partners initially considered posting to be a solution. Employers in particular saw it as an opportunity to adapt their members’ economic activities to the enlarged European market. This was particularly pressing after the 2008 crisis and its devastating impact on the construction sector. Therefore, they welcomed national regulatory measures that supported this business model, such as national social security legislation that allowed posting construction companies to pay contributions based mainly on comparable Slovenian (minimum) wages for their posted workers, and bilateral agreements with neighbouring countries addressing labour supply needs (Vah Jevšnik et al., 2022a). The measures contributed to the further flexibilisation and transnationalisation of the Slovenian labour market via posting. As a result of the growth of this business model in recent years, trade unions and researchers have uncovered precarious working conditions and shady social dumping practices in a segment of posting companies, mainly those established with the sole purpose of posting workers, that exploit posted workers from Slovenia, especially third-country nationals (Danaj et al., 2020; Lukič, 2017). After describing the context, we can now discuss Slovenian social partners’ responses to domestic changes to posting and related regulations.

Slovenian social partners’ response to posting and its regulation

The Slovenian social partners looked at posting as an opportunity to address national labour market challenges. They were thus consenters to the transposition of the Posting of Workers Directive into Slovenian legislation. Once issues with social dumping emerged, however, trade unions acted – in Korpi’s terms – as protagonists in national regulatory change aimed at strengthening enforcement and anti-dumping measures. Employer organisations, by contrast, acted as antagonists to these measures, which were seen as limiting their economic opportunities. Unlike the Hungarian social partners, the Slovenian social partners’ position on posting did not shift significantly over time. Unions fought to protect labour standards and employer organisations lobbied to preserve their members’ competitiveness in the larger European market (Stanojević et al., 2023). The Posting of Workers Directive was passed in 1996, long before Slovenia joined the EU, but Slovenian trade unions were active protagonists in the transposition of the Enforcement Directive of 2014 and strongly influenced the content of the 2018 Slovenian Transnational Provision of Services Act, which introduced anti-dumping enforcement measures. Slovenia was also the only CEE Member State that later supported the revision of the Posting of Workers Directive, including the receiving country’s equal pay principle for posted workers, which the unions supported (Kresal, 2020). Meanwhile employer organisations were to some degree antagonistic to the enforcement measures included in national legislation. They raised public awareness of the added bureaucracy and negative effects of the increased administrative burden generated by the new Act on Slovenian companies.

Both employer organisations and trade unions have tried to regain some of their regulatory power in the sector through issue-specific initiatives (Stanojević et al., 2023). In the case of posting, they have been active in two main, interconnected ways: projectification and transnational action. To make up for their limited power resources, social partners have used the available funding, mostly from the EU, to pursue initiatives in various thematic areas on a project basis (Samaluk and Kall, 2023). The main trade unions and employer organisations have been involved in several projects whose focus has been fully or partially on labour mobility and posting, in some of which workers’ and employers’ organisations participated jointly. These posting projects, such as ‘Support of Social Dialogue for an Effective Future Construction’ sector (SudSodCo), funded by the European Commission, have had information and cooperation components, and therefore have been predominantly transnational, involving partners from other EU countries and sometimes EU-level social partners. This has allowed Slovenian sectoral social partners to be more active transnationally, for example, in information sessions, awareness campaigns, training and knowledge exchange activities (ITPIO, 2021). Given the significant number of posted third-country nationals, Slovenian unions’ posting projects have consistently targeted migrant workers, regardless of their union membership status, providing information and counselling in various languages, and even conducting awareness campaigns in home countries such as Bosnia and Herzegovina through different mediums, including distributing flyers in front of the Slovenian embassy in Sarajevo (Danaj et al., 2020). Trade unions also supported the creation of the Workers’ Counselling Office (Delavska Svetovalnica, initially called the Migrant Counselling Office), a non-governmental organisation that provides advocacy, protection, promotion and development of workers’ labour, social and status rights with extensive experience of posted workers, including third-country national workers. Although not proper alliances in Korpi’s sense, these initiatives are commendable in terms of engaging the Slovenian social partners in transnational action and resource expansion.

Apart from projects, pressure has been put on the Slovenian government to revise national legislation. The social security measure that allows Slovenian posting companies to pay posted workers’ social contributions based on the minimum wage has been a point of contention. This practice has been denounced by unions in receiving countries such as Austria and at the EU level by the European Federation of Building and Woodworkers. The latter reported Slovenia to the European Commission for providing state aid, arguing that cost differentials in social contributions unfairly incentivise Slovenian companies to post their workers in higher-income EU countries (EFBWW, 2019; Danaj et al., 2023b). Nationally, employer organisations have argued in favour of keeping comparable minimum wages as the basis for social contribution calculations, whereas trade unions have argued in favour of shifting to contributions on actual wages (Vah Jevšnik et al., 2022a). The Chamber of Commerce opposed the revision of the legislation initiated by the government in 2022, arguing that it undermined Slovenian companies’ competitive advantage in the European market, where other countries had their own incentivising instruments (GZS, 2022). Transnational pressure and that of the Slovenian unions eventually led to revisions in the national social security legislation in early 2023.

Initially a solution to the scarce national market opportunities, posting from Slovenia has been transformed into a business model of transnational service provision. It has also revealed the vulnerabilities of national regulations against social dumping, thus further stressing industrial relations institutions. Despite the declining strength and limited power resources, Slovenian social partners managed to be actively involved in posting regulations: employers as antagonists resisted further regulation; and unions were protagonists in the introduction of anti-dumping measures. In the face of their weakening regulatory power since enlargement, especially after the 2008 economic crisis, they have found alternative ways to regain some degree of influence on national posting regulation and its enforcement, such as projectification and transnationalisation.

Discussion and conclusion

We have shown that since EU accession intermediated temporary labour mobility through specific labour market mechanisms has increased in CEE countries, putting additional pressure on national industrial relations and generating new constraints for social partners. We have focused on regulation, in particular the transposition and implementation of EU regulations as a driver for labour market transnationalisation and flexibilisation. Echoing previous authors (Lillie and Greer, 2007; Streeck, 1998), we note that regulation is a battlefield on which social partners articulate their positions and try to ascertain their influence also against new actors, such as labour market intermediaries. Sectoral regulation battles are particularly important in the CEE context (Bernaciak 2015b; Delteil and Kirov, 2016), where autonomous regulation is limited, and social partners typically have a consultative role in relation to a dominant state actor (Kahancová and Martišková, 2023). Following an actor-centred approach (Afonso, 2012; Korpi, 2006; MacKenzie and Martínez Lucio, 2019), we saw that social partners have had to adjust to new constraints produced by the increasing presence of temporary work agencies in Hungary and posting from Slovenia by adopting traditional and more novel ways of counteracting their weakening position in the past 20 years. While in Hungary the social partners have continued to use traditional strategies, such as the preservation of their consultative role in temporary agency work regulation in formal social dialogue institutions, the novel strategies of Slovenian social partners included transnational action and project-based initiatives.

Our two illustrative and very distinctive sectoral cases – Hungarian temporary agency work in metal manufacturing and posting in Slovenian construction – show similar labour market pressures on sectoral industrial relations in both countries, but very different answers from the social partners, that also indicate very different prospects for national industrial relations. The state maintained a decisive regulatory role in both cases, but in contrast to Hungary, Slovenian social partners still have some regulatory influence. In Hungarian metal manufacturing, social partners’ opposite positions on temporary agency work have changed incrementally to become those of conditional and entrenched consenters. Government unilateral regulation and a further rise in intermediated labour mobility have weakened even highly decentralised company-level regulation and industrial relations. Trade unions were unable to solve the issue of representing labour market outsiders, and were confined to consultative inclusion in regulation. Low self-regulation among temporary work agencies and the weakness of employer associations reinforced high market-driven competition, thus further strengthening intermediated labour mobility. In contrast, the Slovenian social partners were initially consenters to posting as a solution to the challenges of the national labour market induced by the economic crisis. Their positions eventually changed, with trade unions acting as protagonists of regulatory reform aiming to strengthen enforcement and anti-dumping measures, whereas employer organisations acted as antagonists to any limitations on their European market competitiveness. Both social partners, in particular the trade unions, have found alternative ways of regaining some degree of influence on posting regulations and their enforcement, such as projectification and transnationalisation. Project-based initiatives, while commendable in terms of resource expansion, have also confined social partners to project contours that give rise to concerns about sustainability. This is counterbalanced by transferring the issue to the transnational EU level, which has opened up an entirely new playing field that could help them to recover some of their strength.

The overall study of the social partners’ – especially employer organisations’ – role in regulating transformative labour markets and business environments deserves more attention. Our illustrative cases indicate that the social partners’ response depends on their regulatory power and how they adapt to pressures from intermediated temporary labour mobility. They have struggled to remain afloat against new mechanisms of transnationalised labour markets in a CEE context of already weakened industrial relations structures. Metaphorically, social partners in both countries are building an industrial relations ship in an increasingly tumultuous sea. The struggles outlined in this article are similar to those of social partners in wider Central and Eastern Europe (see, for example, Czarzasty, 2024; Meardi, 2013; Glassner, 2013), but they also indicate continuing variation in industrial relations in the region (Bohle and Greskovits, 2012).