Traps of the Montenegrin Privatisation: The Case of "Trebjesa" Brewery

Strike of the Deceived Workers

Instead of being a model of success - privatisation of the Niksic brewery "Trebjesa" has turned into quite the opposite: the firm is officially registering losses, workers are being laid-off, wages are getting lower by the month and the deceived workers are on strike...

AIM Podgorica, 8 May, 2000

Strike of the workers of the Niksic brewery "Trebjesa" started in the middle of last week and is still going on. Just before the weekend, the strikers' committee rejected management's proposals for the lowest wages of DM 300 and the average of DM 500. Instead, the strikers introduced round-the-clock watch and guards in all brewery production facilities and storehouses, and according to Bozidar Perovic, President of the strikers' committee, they are more determined than ever to fight until all their demands are met.

"We think that our demands, which we shall stick to the very end, are neither excessive nor impossible", says Perovic. And the workers demand starting wages of DM 600 (instead of current DM 170), and a proportionate increase of other earnings, more workers in production, payment of earnings in German Marks, higher past labour benefits, better working conditions, etc.

However, this is just the tip of the iceberg of problems which have been accumulating in the Niksic "Trebjesa" brewery for almost three years now - ever since its privatisation. And when in October 1997, Directors of the "Trebjesa" majority owners: the Development Fund, the Employment Fund and pension-Disability Fund - signed a contract on the sale of their shares to he Belgian firm "Interbrew" nothing pointed to the future problems. On the contrary.

The Belgian beer producing company is highly valued and rated in the world. With more than 160 breweries all over the world, "Interbrew" is second largest European and fifth largest world firm in this field. Experiences of the Zagreb Brewery, which became a part of this company a year earlier, were highly promising.

Parts of Contract presented to the public earlier pointed to the same conclusion: in addition to DM 25 million it paid for 60 percent of "Trebjesa" shares, "Interbrew" undertook to invest DM 16.2 million in the brewery development in the first two years; secondly that "Niksic Beer" would constitute at least 80 percent of the total production; that employees would receive at least DM 1 million in dividends by the end of 1997; that no workers would be fired by the year 2001 and that the minimum wages would amount to no less than DM 600...With their signatures Bozo Mihailovic, Dragan Bulatovic and Mihailo Banjevic, Directors of the Montenegrin state funds guaranteed the authenticity of the data. The original of the Contract was proclaimed "business secret".

The Assembly of "Trebjesa" minority shareholders, i.e. brewery workers and pensioners approved the sale. Indeed, no objection could be raised as to the offered terms.

But it was only when the purchasing-sale contract came into being, that the swindle was uncovered. It turned out that many elements of the Contract were fake. The greatest, i.e. the most painful one for the workers of the Niksic brewery was the fact that a hundred-pages-long Contract made no mention of the guaranteed average wages of DM 600. The only obligation of "Interbrew" under that Contract was to "introduce a stimulating model or remuneration and ensure that the workers' wages are not reduced by the end of 1998", but calculated in dinar value.

Instead of assuming responsibility, authors of this swindle offered some vague explanations. Consequently, Bozidar Mihailovic, Director of the Development Fund stated: "We should not forget that, unfortunately, in our country there is a multitude of exchange rates (the official, street, scarcity) and that in all likelihood that is the source of misunderstanding between trade unions and employers". However, it was clear to even complete outsiders that the story on the guaranteed average wages was not the result of a misunderstanding. The sale of "Trebjesa" was carried out between two rounds of elections for Montenegrin President. Perhaps that had nothing to do with "Trebjesa", but the current Montenegrin President won in the second round in Niksic too, where only fifteen days earlier he had suffered a rather embarrassing defeat.

And authors of false Contract articles did not even get "friendly criticism". That could mean that their decision to deceive minority shareholders could not have been made without the approval from the "top".

In any case, misunderstandings between workers and representatives of majority owners of the Niksic brewery had started then. And they are perpetuated without a chance of being resolved in near future. For, if the demands of strikers from "Trebjesa" are met, the minimal wages of a skilled worker would be higher than the present salary of a minister in the Montenegrin Government (around DM 550). Also it would be practically the same as the average wages worker in Montenegro get for three months and a half (average March salary in Montenegro amounted to DM 187).

On the other hand, workers of "Trebjesa" base their demands on official promises (even if they were false), data on the salaries of their colleagues from Slovenia and Croatia and Trebjesa's business results. Because if this enterprise officially recorded losses last year, no one doubts that "Trebjesa" will bring large profits to its owners. Same as it did in the past 104 years of its existence.

"It doesn't take an expert to understand that. It is enough to have in mind the following facts: number of workers was reduced by half, calculated in German Marks wages were reduced by two thirds in comparison to those from the times of privatisation, material costs have been cut and production and sales increased", claims Nebojsa Medojevic, a member of the Group 17 offering a simple explanation for that: "Someone is robbing "Trebjesa" of hidden profits, without the knowledge of minority shareholders".

Brewery Director, Patrick Dirick denies these claims by stating that before privatisation "Trebjesa" made DM 8.5 per "crate" of beer and today barely DM 5.5 "because high prices of raw materials have caused the fall of profit of this brewery". According to Dirick, the comparison is even more unfavourable if we take data from Slovenia and Croatia as parameters. "The profit realised per one crate of beer is DM 12.7 in Croatia and DM 17 in Slovenia. It is therefore inappropriate to compare wages in "Trebjesa" with their earnings", explained the Belgian informing that in the Croatian breweries the average monthly salary is DM 700 and in the Slovenian (which produces "Lasko Beer") the get DM 1,200.

But, strikers do not care for such explanations. And with the support of the local branch of the Alliance of Independent Trade Unions of Montenegro, they are still keeping the factory under blockade. First shortages of domestic beer have already been observed in Montenegrin shops and catering facilities.

And, no matter how will this strike end, one thing is certain: misunderstandings in "Trebjesa" are yet another blow to all advocates of the Montenegrin privatisation model. For, instead of being an example of success - privatisation of "Trebjesa" has turned into its opposite: the firm is officially registering losses for the first time since its foundation in 1896, the number of employees has gone down, wages are getting lower, many previous sponsorships of Montenegrin and Niksic sports clubs have been discontinued and the deceived workers are still on strike...

This is a poor introduction into the announced massive voucher privatisation which should start by the end of this year, according to the promises of the authorities. And that is a process on which the future of Montenegro will greatly depend, as well as that of the ruling coalition. That is why we can expect the originators of the Niksic brewery problems - representatives of both former and present authorities - to join the search for solutions.

Until then the only thing left to Montenegrins is hope. "No pains, no gains" is the proverb one of the trade union activists from Niksic keeps repeating for the last three years, trying to convince both himself and others that things will get better.

Zoran RADULOVIC

(AIM)