SERBIA: DIFFICULT FALL APPROACHING AS LABOR PROTESTS GROW

UNCLAS BELGRADE 000006

SENSITIVE

SIPDIS

USDOC FOR 4232/ITA/MAC/EUR/OEERIS/SSAVICH

E.O. 12958: N/A
TAGS: ECON ELAB EFIN SR
SUBJECT: SERBIA: DIFFICULT FALL APPROACHING AS LABOR PROTESTS GROW

REF: BELGRADE 433

Summary
--------------


1. (SBU) The worsening economic situation in Serbia has resulted in a growi
ng ns
in an effort to have their claims addressed by the government. At the hea
rt o.

Growing Discontent
--------------


2. (U) Serbia has experienced an upswing in labor unrest and strikes over t
he pt
that approximately 20,000-30,000 workers were on strike throughout Serbia.
The.


3. (SBU) Some of these strikes have adopted increasingly extreme tactics in
ordD



IpN-ZThe third and most recent protest began June 22-23 and occurred again
Julys
between the cities of Belgrade and Nis and international connections to Bul
gari.

Privatizations Gone Bad
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4. (SBU) Many protesting workers are responding to failed privatizations o
f stn
good faith failed due to the new owners' inability to pay wages, pensions,
insu7
meeting, Nezavisnost trade union President Branislav Canak alleged that the
Priu











dgoetH.ts

Trade Unions Not Helping Workers
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5. (SBU) The increasingly disruptive protests also reflect the decreasing
influence and credibility of Serbian trade unions. With little faith in tr
ade unions' ability to effect change, desperate workers have opted to organ
ize themselves and deal directly with employers and the government. On Jul
y 13, Jovan Protic, Serbia's Coordinator for the International Labor Office
(ILO),told us trade unions had not done their job to hold companies respo
nsible for unfulfilled contractual agreements and had not promoted workers'
interests. Protic said that even when privatizations were successful and
new owners fulfilled contracts and restructured firms, unions failed to org
anize and advise workers on how to invest their severance pay or to obtain
new training. Protic accused the unions of being racked with corruption
and consumed with the self-interested priorities of their bloated bureaucra
cies.


6. (SBU) Despite criticism from the ILO, government, and even other unions,
Serbia's largest union, Confederation of Autonomous Trade Unions of Serbia
(CATUS) refused to admit any responsibility for the current labor unrest.
CATUS President Ljubislav Orbovic told us on June 30 that CATUS found it i
ncreasingly hard to control protests despite its best efforts to maintain c
ommunication with the government, assist in negotiations, and file lawsuits
on workers' behalf. He attributed the increasing difficulty to the growin
g number of strikes, and not to the unions' loss of credibility among worke
rs. In late June, Orbovic announced his organization's support for anyone
who was compelled to strike.

Government's Response Could Be Too Little Too Late C
--l-D--g- S --------------


7. (SBU) The government has been slow to respond to labor disputes, fuelin
g further protests. While officials publicly express optimism that the sit
uation will not worsen this autumn, some, including Bukumiric-Katic, are ce
rtain the situation will deteriorate because, "people are fed up and poor,
especially in Southern Serbia." Only recently Labor and Social Policy Mini
ster Rasim Ljajic drafted a comprehensive government plan designed to preve
nt the further radicalization of protests and to help the most vulnerable p
opulations affected by the economic crisis. Although it has not been offic
ially approved, the government has started implementing some measures from
the plan. On July 23 the government approved the establishment of a workin
g group to deal with labor problems; however, the group has not yet met. T
he following week the government approved a
one time lump sum payment of $76 to help those employees most at risk who h
ave
not been paid and are the sole providers for their families.

Calls for Increased Police Action
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8. (SBU) In addition, the plan calls for police to take measures to ensure
public peace and order. According to the proposal, the police would allow
workers to strike only in places prescribed by law, with consideration for
the free flow of public transport, as well as the protection of people and
property. Note: By law, public demonstrations require police notification
, and the police may refuse permission for events if public safety would be
threatened. End Note.

International Firms Feeling the Pain
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9. (SBU) International and domestic companies havRe been ftorced to cut jobs in
order to adapt to market conditions. U.S. Steel recently cut 206 jobs in S
erbia; while British American Tobacco (BAT) cut 166 and Philip Morris cut 3
30 positions. In July the parliament approved changes to the current labor
law that would enable employers to send employees on limitless forced or p
aid vacation instead of the current 45-day limit during tough economic time
s. Bukumiric-Katic
told us that many foreign companies asked for this measure in order to reta
in skilled workers through the crisis. Note: U.S. Steel was a leading prop
onent of liberalizing the leave provisions. End Note. On the other hand,
Canak told us that this practice was the government's way to ensure that an
gry workers stayed home and out of the streets where they might organize ma
ssive protests.

COMMENT
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10. (SBU) Serbia will likely face increased protests in September when peo
ple
return from vacation, the weather cools, and the effects of the economic cr
isis cut even deeper. Since union advocacy and conventional strikes have f
ailed to produce results, workers will continue to find more dramatic means
of voicing
their demands. The degree to which the protests and their extreme tactics
will increase will depend on the government's willingness and ability to im
plement
actions to assuage the protesters and to mitigate unemployment. This will
be difficult to accomplish without further adding to the growing public def
icit. Continuing labor unrest in Serbia would further jeopardize an alread
y tenuous coalition government and could deter future foreign investment.
End Comment.
BRUSH