AIM: start

TUE, 06 NOV 2001 00:50:43 GMT

Critical Phase of Reforms in Serbia

Strikes Like Forest Fires

Notwithstanding numerous protests and the accumulated impatience of the citizens who were hoping for the promised better life to come about sooner, the prevailing impression is that the government is not imperiled at the moment. Prime Minister Djindjic’s cabinet need not concern itself with resigning yet, particularly since the prevalent view is that this would not change the state of things in Serbia in any substantial manner

AIM Belgrade, October 19, 2001

Waves of mass strikes are spreading through Serbia like forest fires with the republican government taking on the role of a firefighter since the protests in question have broken out in big state and public economic systems under its jurisdiction. No sooner had the deals with the coal workers been struck than the Oil Industry of Serbia (NIS) announced a strike of its own, one likely to assume a political dimension, due to the fact that it bears relation to some unsettled issues concerning Belgrade-Novi SAD relations. The main source of the employee discontent is the governmental regulation freezing salaries in all public institutions and enterprises such as the Electric Power Industry of Serbia (EPS), the Oil Industry, telecommunication sector, health services and education.

To pour oil on fire, there came the Draft Law on Labour. The Independent Trade Union of Serbia, a protegee of the Milosevic regime, called for a general strike and the resignation of the Labour and Employment Minister Dragan Milovanovic. The principal cause of concern of its membership being that, as opposed to the collective work contracts currently in effect, individual contracts between employer and employee envisioned by the draft law are apt to make way for grand-scale layoffs... The strikers gained immediate support of the ousted Socialists and Radicals, the two major parliamentary opposition parties, as well as the backing of the Social Democratic League of Voivodina (LSV), just for the record, a member of the ruling DOS coalition. The leader of the LSV, Nenad Canak, also Speaker of the Voivodina Assembly, offered the strikers "technical services", i.e. vowed that the regional assembly would back the proposed amendments to the draft law and make sure they were presented to the state parliament. At the moment, the government has hardly budged an inch, still insisting on the proposed law, while PM Zoran Djindjic is pointing out that the bulk of the strikers come from firms on the verge of bankruptcy.

The fact that the strike of Kolubara coal workers coincided with the anniversary of the overthrow of Milosevic’s regime led Prime Minister Djindjic to conclude the protest had a political background to it, most probably inspired by the Democratic Party of Serbia (DSS), lately a major opponent of the state government, despite the fact that it is its leading coalition partner and a member of the ruling DOS (Democratic Opposition of Serbia).

Further developments proved right claims that the shock-wave of strikes lately in effect in Serbia is to be ascribed chiefly to economic motives. But, no less evident was the attempt of dissenting political forces to make use of the situation so as to score political points with the electorate. What the coal miners from Kolubara, Kostolac and Bor and, before them, Telecom employees, were trying to achieve was the repeal of the new law on labour proposed by Djindjic’s government just a short time upon being sworn in. Interestingly enough, the controversial strikes broke out within the best paid sectors of the economy (with salaries significantly above the state average of DM 200), thus proving right the old truth that the less hungry labor is, the more prone it is to social action and protest. Those on strike in Serbia recently for the most part belong to the privileged sectors of the economy, blessed by their vital importance to the functioning of an otherwise near-to-extinct economy.

Ongoing strikes and announcements of new ones in the making have put the Serbian government in a tight spot. Obstruction in vital service companies is compelling the cabinet to react promptly, since there is a constant threat of communal life in Serbia coming to a standstill. On the other hand, there is hardly any maneuvering space left due to the tightly set budget and lack of any additional inflow of funds since none are to be found, meaning that giving anything to anyone would mean taking it from somebody else in return. That is a risk the government has no intention of taking since it would put it in jeopardy. The state budget is based on actual proceeds solely and - on reaching a stand-by arrangement with the IMF- it has taken on itself the obligation to stick to the last letter of the agreement if it is to count on further periodical transfers of funds granted and the vital understanding of foreign creditors other than the IMF.

In a way, the predicament the government is in presently is of its own doing. At the time, it failed to inform the public of the exact content of the stand-by arrangement, leaving room for the employees to wrongly assume that the rise in the prices of electricity, telephone and other services would automatically lead to a rise in their salaries. Thus all the misunderstandings: how do you now go about convincing people that higher prices do not necessarily mean higher earnings? Serbian Finance Minister, Bozidar Djelic, is adamant: there is to be no revoking of the regulation freezing the salaries in the state and public sectors! As for Prime Minister Djindjic, he does not entirely rule out salary rises but - under the condition they arise from an internal restructuring of the firms involved which, at the end of the day, may well correspond to layoffs within the surplus labour force. As a number of ministers will tell you, a considerable surplus work force with hardly anything for them to do in firms they are nominally employed by are a characteristic of most Serbian state and public companies. In this respect, the Prime Minister is in an exceptionally awkward position: if judged by the commitments taken on by his government under the IMF arrangement, he is to be the Serbian (male) version of the British "Iron Lady", Mrs. Thatcher. On the other hand, he also happens to be the leader of the Democratic Party and is thus bound by guidelines set at the recent party congress calling for social justice and equal opportunity in the current process of transition.

This slightly schizophrenic position has led the Prime Minster to advise foreign investors, i.e. the international community, not to take on themselves promises of ample financial help as was the one promised in case of the overthrow of Milosevic’s regime, if unprepared to go through with them afterwards. Those well informed on all the nuances of the state of things in Serbia liken Djindjic’s position with the position of the last Prime Minister of ex-Yugoslavia, Ante Markovic, who was denied promised international financial aid of US 3 billion at the critical point of the reforms he was trying to implement. Many believe that, had Markovic been given what he was promised, SFRY would have been well and thriving to this very day instead of having fallen apart in a series of bloody conflicts as it did.

At the moment, the Serbian government is short of around $ US 2 billion needed to give the weary economy a strong enough push which would pull it out of its current stagnation. Due to the belated financial support, the government is compelled to rush the privatization process by sale of state and public property in order to get hold of funds necessary for the restarting of production. Privatization Minister Aleksandar Vlahovic leaves no room for doubt: each and every firm with no product to sell on the market is to go bankrupt, or even undergo liquidation. That is exactly what many firms fear most since, in most cases, the equipment at their disposal is so hopelessly outdated that the great majority of them cannot produce goods which would sell on the market. Even the question of many workers not being qualified anymore for work on up-to-date machines is to be taken into consideration since - due to a ten-year pause - many have lost touch with recent developments in their respective professions and would have to be trained all over again if they were to cope with the novel technology.

The effort of the government to redirect the attention of the workers from requests for higher salaries to the need of acquiring the necessary qualifications for posts at their disposal in the future as the only way of keeping their jobs in present circumstances - as opposed to the customary citing of the constitutional right to work, guaranteed in the socialist era - is evident. That is the crucial point of dissent between the government and the Independent Trade Union of Serbia which believes the Draft Law on Labour leaves the fate of labour to the mercy of the employers.

At present, the Serbian state government is at the turn-point of the reform process. This was to be expected in view of the fact that all similar reform efforts failed precisely because of social unrest. The most critical point in time in all previous instances proved to be the six-to-eight-months time period after the outset of all such attempts. This happens to be the exact phase of the current transition process in Serbia, the outcome of which, as can be deduced from a series of strikes and general social unrest, is hard to predict, notwithstanding the fact that the government has somehow managed to extinguish the forest-fire-like wave of strikes rather successfully and with no major concessions worth mention.

In spite of the strikes, protests among university students and the growing impatience of the general public which feels cheated as to the swiftness of desired changes and the coming of the promised better days, the general impression remains that Prime Minister Djindjic’s cabinet is not in dire straits as of yet. For now, the Serbian government need not worry itself with resigning, primarily because no one believes that would change things significantly. For now, the government itself as well as its ministers are fully aware of the fact and determined to meet all obligations they have taken on themselves when committing to the implementation of the necessary reforms.