Budapest, Hungary – The strike at the flagship Hungarian Audi plant underscores the growing wage pressure, fueled by important labor shortages, and intensifying calls to address the wage gap throughout Central European economies.
Located in the western city of Gyor, Audi’s Hungarian factory shut down on Thursday as 4.000 workers started a week-long strike to demand higher wages. Spearheaded by the factory’s main union AHFSZ, consisting of nearly 9.000 members out of the total 13.000 workers of the plant, the strike is a serious blow to the Hungarian economy’s success-story, which has been growing by more than 4% in the last couple of years.
Audi’s Hungarian factory is one of the largest production plants in the Volkswagen group and among the major contributors to the Hungarian economy’s staggering growth and export-driven manufacturing sector. Its strong and booming industry largely relies on car manufacturers that have established plants in the country in the past decades. The car industry represents roughly a third of industrial production and 20% of total exports of the country. According to a study by Peter Novoszath, professor at the National Public Service University, Audi alone directly contributes to nearly 1.5% of Hungary’s total GDP.
Last week, 4.000 workers had already stopped working for two hours as a warning sign. Now, “work has come to a complete stop at the entire plant”, AHFSZ spokesman Tibor Szimacsek said. “We have even increased our support since our warning strike on Friday”. The union also warned that it could prolong the halt and call for further strikes if management didn’t meet their demands. While the Audi management has offered a 20% wage increase for this year and the following (10% each year), the union demands an immediate 18% hike, followed by other increases in the future.
The strike expresses highlights mounting discontent among Hungarian workers and protest against the wage gap with colleagues working in other factories of the Volkswagen group in neighboring Central European countries: Volkswagen employees earn on average 25% more in the Czech Republic, 28% more in Slovakia and 39% more in Poland. Workers in the Czech Republic’s flagship Skoda Auto plants, part of Volkswagen group since 1991, have also threatened to go on strike, as collective negotiations are scheduled to begin later this month.
Audi spokeswoman Judith Mithay-Marko confirmed that the entire Gyor plant was closed down, and said that “we trust that wage talks reach an equilibrium and we won’t have to lose an entire week’s worth of production”.
The government has recently faced a huge backlash for the so-called “slave law”, which allows employers to demand up to 400 hours additional hours to their workers and delay payment to up to 3 years. The bill, which has triggered massive protests in Budapest and other Hungarian cities, was seen as a way to deal with the increasing labor shortages while favoring big companies and businesses to the detriment of workers’ rights.
Nonetheless, the government has attempted to side with the demands of the Audi workers. “There is a wage competition now, which is natural”, Prime Minister’s chief of staff Gergely Gulyas told reporters during a press conference. “We would be glad to see as much of the union’s demands to be met”.
As Bloomberg explains, “the strike at Audi highlights intensifying wage pressures across the eastern wing of the European Union, once a magnet for foreign investment because of its cheap labor. A dire worker shortage fueled by an aging population, emigration and anti-immigration policies have triggered a wage explosion, potentially straining the bottom line of companies like Volkswagen”.