PUBLIC SECTOR UNIONS ANNOUNCE STRIKE FOR MAY 13

C O N F I D E N T I A L SECTION 01 OF 02 ZAGREB 000252

SIPDIS

DEPARTMENT FOR EUR/SCE

E.O. 12958: DECL: 05/08/2019
TAGS: ELAB PGOV ECON HR
SUBJECT: PUBLIC SECTOR UNIONS ANNOUNCE STRIKE FOR MAY 13

REF: A. ZAGREB 173

B. 2008 ZAGREB 874


1. (U) SUMMARY: Eight public sector unions will go on strike
May 13 and stage a public demonstration May 16 over the six
percent pay cut that took effect April 1 as part of the GOC's
budget revision. The decision comes after nearly two months
of failed negotiations and a majority vote by union members
in favor of the strike. Union leaders say they would accept
the pay cut only if the GOC would promise a quicker return to
parity pay levels when the economy improves. One union leader
told us the government negotiators have been completely
unresponsive to their proposals. Given that most of the
workers involved provide direct services to the public daily,
announcement of the strike and demonstration may provide
sufficient pressure for the GOC to compromise in the next few
days to avoid facing these events just days before the May 17
local elections. End summary.

Strike Set for May 13, with Majority Support from Union
Members
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2. (U) At a press conference on May 5, leaders of eight
public-sector unions announced their workers would begin a
strike May 12 (on May 6, they moved the start date back to
May 13). They also announced they would organize a
demonstration on the main square in Zagreb for May 16.
Notably, these events will all occur just before the local
elections scheduled for May 17. The strike is in response to
a six percent pay cut that took effect April 1 under the
revised GOC budget (ref A). The unions' announcement came
after nearly two months of negotiations--both formal and
behind closed doors--failed to produce an agreement between
the GOC and the unions. Before deciding to call the strike,
the eight unions polled their members. Union leaders report
that overall, 72 percent of members responded, and 86 percent
of respondents voted to strike. With a 46 percent response
rate, only the doctors' union heard from less than half of
its membership, though 82 percent of doctors who responded
favored the strike. The unions involved in these actions
represent workers at public institutions in the areas of
education (including universities),healthcare, social
services, science, and culture. (Note: These unions do not
represent employees in government ministries and
administration, who agreed to the pay cut and will not join
the strike.) Union leaders told the press they expect
100,000 to 180,000 people to participate in the strike.

Background: GOC Unilaterally Rescinds Pay Raise
--------------


3. (U) The question of salary reductions first arose as an
issue in late 2008 during preparation of the 2009 budget. The
GOC asked all public sector and government employees to agree
to postponement of a six percent pay increase scheduled to
take effect January 1, 2009. The employees held firm, and the
original 2009 budget included the six percent raise (ref B).
The issue resurfaced when the GOC revised the budget in March
in response to the economic crisis. Through negotiations,
government administration employees agreed to cancellation of
the six percent raise, but other public sector employees did
not agree to the cut. The government, however, went ahead and
approved the revised budget with a six percent cut for all
government and public sector employees. In return, the GOC
promised to raise salaries by six percent after two
consecutive quarters of two percent real GDP growth.

Unions Seek Quicker, More Certain Return to Higher Pay
--------------


4. (U) The unions immediately threatened to strike or sue,
but continued negotiations with the GOC. Some of the media
have portrayed the unions as unreasonable and unwilling to
propose any compromise in a time of economic crisis. However,
Vilim Ribic, president of the Independent Union of Research
and Higher Education, told us the unions have proposed a
compromise, but the GOC has refused to consider it or offer a
counterproposal. Ribic said the unions offered to accept the
six percent cut under two main conditions. They want the
government to agree to raise salaries after two consecutive
quarters of positive GDP growth, as long as just one of the
quarters sees at least two percent growth. Ribic said given
the uncertainty of future economic conditions, it could be
hard to achieve two consecutive quarters of two percent
growth any time soon, and workers cannot risk waiting.


5. (SBU) The second condition they seek is salary parity.
When GDP grows and pay levels are raised, the unions want
more than six percent. Ribic said the GOC always targets
state administration and public servant salaries for cost

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savings. He said state enterprise salaries have grown by ten
percent for years, and local government employees have
"always" received twenty to fifty percent higher salaries
than those in the state administration. He said union leaders
have warned the GOC before that it needs a wage policy to
regulate these inequities. He suggested the government is now
restricting information about the issue, as the Ministry of
Finance stopped providing analysis of public enterprise wages
two months ago.

Unions Say Ministers Are Not Competent Negotiators
--------------


6. (C) Ribic was quite critical of the primary ministers
negotiating for the GOC, Minister of Finance Ivan Suker, and
Deputy Prime Minister Jadranka Kosor. He said unlike
ministers from prior governments, Suker and Kosor had no
ideas or solutions to offer. He said Suker became agitated
during the negotiations, pounding the table and yelling.
According to Ribic, rather than offering counterproposals,
Suker's only response to the unions' proposals was to say the
GOC could not offer anything because it has no money and to
accuse the unions of being irresponsible and not
understanding the situation. According to media reports,
Ribic walked out of one of the final negotiating sessions,
saying he would only speak with the prime minister. When we
met with Ribic the following week, on April 28, he said the
PM had designated Bozidar Kalmeta, Minister of Sea, Traffic
and Infrastructure, to negotiate with him "behind closed
doors." They had met several times and planned to meet again,
but Ribic was not hopeful of reaching an agreement and fully
anticipated the strike announcement that came on May 5.

Comment
--------------


7. (SBU) The public has shown little support for the cause of
the public sector employees thus far, perhaps feeling little
sympathy over what amounts to nothing more than a wage freeze
when many in the private sector fear losing their jobs. Many
of the workers who will strike, however, provide necessary
services directly to the public, which will exert pressure to
resolve the issue quickly. The May 17 elections provide
another incentive for the GOC. As the ruling Croatian
Democratic Union (HDZ) seeks to bolster its position in what
has been a difficult year, PM Sanader may yet calculate that
offering the unions a compromise is an acceptable price to
avoid the strike, and to add one last accomplishment the
party's scorecard prior to the elections.
BRADTKE