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 -------------- ¶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 -------------- ¶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 -------------- ¶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 -------------- ¶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 -------------- ¶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