TURK-IS LABOR UNION PROTESTS CLOSURE OF

UNCLAS SECTION 01 OF 02 ANKARA 001321

SIPDIS

STATE FOR DRL/IL PLEASE PASS TO DOL/IL BILL BRUMFIELD
TREASURY FOR INTERNATIONAL AFFAIRS CPLANTIER AND ASHAH

E.O. 12958: N/A
TAGS: ECON EIND ELAB PGOV SOCI TU
SUBJECT: TURK-IS LABOR UNION PROTESTS CLOSURE OF
STATE-OWNED PAPER FACTORY


(U) Classified by: Political Counselor John Kunstadter,
reasons 1.4 (B) and (D).


1. (U) Summary. Turkish Izmit-based paper factory SEKA has
been in continuous operation since 1934. Although the GOT's
Privatization Administration closed this loss-making factory,
Seluloz-Is, a branch of Turk-Is Labor Union, protested the
closing and discouraged its members from taking advantage of
SEKA's severance package. After a March 3 country-wide
illegal solidarity strike by Turk-Is workers, the
Privatization Administration (PA) concluded an agreement to
transfer the SEKA factory and workers to the Kocaeli (Izmit)
municipality. End summary.


2. (U) Since 1934, SEKA has been a government-owned and
operated paper factory in Izmit in northwestern Turkey.
According to Parliament's PA Vice President Ismail Destan,
the plant is antiquated, expensive to run and employs 724
workers, at least twice the number of highly-paid, unionized
civil servants as needed. The newest machine in the factory
is 45 years old.


3. (U) A Finnish consulting company specializing in
privatizations concluded that the SEKA plant, marked for
privatization since 1997, was inefficient, out-of-date and
should be closed. The factory, located in the middle of the
town, is next to the Sea of Marmara. Even if the factory had
been modernized, it would have been impossible to obtain
environmental easements for the wastes produced in paper
manufacturing. In 2004, the PA decided to sell SEKA's
machinery and designated the property a "green space" for
educational, cultural, artistic, social and scientific
purposes. During a March 3 meeting, Destan told us the area
had the second highest levels of cancer in the country and
speculated the paper factory was a possible reason for the
illnesses.


4. (U) Nevres Yuksel, Turk-Is labor union international
affairs director told us March 2 that the SEKA factory had
closed and the workers' severance pay and bonuses had been
deposited in their bank accounts. He commented that Turk-Is
president Salih Kilic met with Prime Minister Erdogan
regarding SEKA's closure, but did not receive a response
regarding his concerns about its impact on the workers.


5. (U) Yuksel conceded that he had been advised the SEKA
paper factory had long been losing money, most recently,
Turkish lira (TL) 33 trillion ($25 million) in 2004, but
blamed the government for these losses, saying it had not
maintained or renovated the factory properly during its
ownership. He believes the paper factory could have been
made economically efficient with modern machinery.


6. (U) Nevertheless, the PA's Destan presented us with
financial reports showing SEKA has been running at a 50
percent operating loss for some time, losing $400 million
over the past seven years, and cited high labor costs as a
major factor. He noted that one worker cost SEKA TL 3
billion ($2300),including benefits, per month while a
private sector worker cost TL 800,000,000 ($615) in today's
labor market. SEKA found operating with these labor costs
prohibitive.


7. (U) Destan explained that the average public worker
receives at least 50 percent more in wages and benefits than
a private sector employee. It became evident that it would
be more cost-effective to give the workers a severance
package and to close the factory rather than consider
renovation. Production stopped on January 1; out of 724
workers in the factory, only 120 remain to close it down.
Seluloz-Is asked the courts to cancel the closure but the
Ankara Administrative Court ruled against the union.


8. (U) In closing the factory, the PA offered workers the
opportunity to transfer to a Mersin paper factory constructed
in 1980, and offered incentives such as housing and
transportation, even making this offer twice, hoping to
attract around 200 workers to move to the new location.
Seluloz-Is pressured workers not to accept the offer and
today there are 110 empty spacious houses in Mersin.


9. (U) The PA offered workers the following options: (1) to
receive severance pay plus a salary for eight months if they
wanted to establish their own business; or (2) public sector
employment with salaries commensurate with their education
levels, albeit at lower levels than their previous
comfortable SEKA salaries. For example, a university
graduate would earn TL 761 million ($585) per month and a
high school graduate TL 681 million ($524),or one-third of
the SEKA salary. Currently the minimum wage in Turkey is TL
540 million ($415) per month. Since workers did not accept
these offers, the PA deposited severance payments in the
employees's bank accounts and "severed relations."


10. (U) Destan asserted the PA tried to handle the
transition so it would not be overly disruptive for the
worker. Seluloz-Is instructed its members to reject the PA's
offers. Forty-eight people did apply to work in Mersin but
reconsidered when, according to Destan, the union directed
threats at their families and children. Sixteen workers are
currently in Mersin but are being threatened that their
houses will be burned down and their children harmed. These
offers, available twice, expired January 1 and February 18.



11. (U) Yuksel believes that unions are less efficient today
after the 1980 coup and commented that after that event,
solidarity strikes were forbidden in Turkey. However, on
Friday, March 4, Turk-Is members throughout Turkey remained
at their workplaces all night in a demonstration of
solidarity with the workers of the closed paper factory.
Critical of the GOT's privatization program, CHP opposition
leader Deniz Baykal, along with a group of parliamentarians,
visited Turk-Is headquarters on March 4 to express support
for the striking SEKA workers. In addition, according to
Yuksel, the prior week former Prime Minister Bulent Ecevit,
who originally authorized the plant's privatization, came out
in support of the workers. In a rare display of candor from
a labor union official, Yuksel commented that personally he
did not think the solidarity strike would be very effective,
but Turk-Is members wanted to demonstrate in support of the
workers at the closed factory. Speculating the GOT would not
dare to arrest sympathy strikers while Turkey is working to
achieve harmonization with the EU, he was unable to predict
what would happen in the aftermath of the strike.


12. Less than one week later, in response to the illegal
solidarity strike, the GOT is once again offering
alternatives to SEKA's displaced workers. As a result of
Transportation Minister Binali Yildirim's efforts at
mediating the privatization dispute with Turk-Is President
Salih Kilic, Seluloz-Is President Ergin Alsan and Izmit
Metropolitan Municipality Mayor Ibrahim Karaosmanoglu, SEKA's
holdings and workers will be transferred to the Izmit
Municipality. Yuksel believes it highly improbable the
factory will reopen and expects it to be sold and the land
surrounding it will be used as a green space, as originally
planned. The municipality is expected to employ SEKA's
workers at salaries approximating what they previously earned
rather than the significantly lower amount prevailing in the
private sector.


13. Comment: Under the economic reform program the GOT has
worked out with the IFIs, one key objective is to privatize
or otherwise dispose of State-Owned Enterprises (SEEs)
especially those causing a financial burden on the national
budget. Though privatization can come at a cost to the SEE
employees -- it means a lower number of workers employed,
lower worker salaries and fewer guaranteed benefits than in
the past -- the PA has tried to mitigate these effects with
the above-mentioned employment incentives. End comment.
EDELMAN