Privatisation and Workers

From Self-Managers to Hired Labour

AIM Sarajevo, January 29, 2001

"We are warning all those who want to invest in "Vranica" without the consent of its workers, that the employees will not let them do it without prior agreement with persons in charge" is the essence of an advertisement published several days ago in a Sarajevo daily and signed by the trade unions of Vranica's workers, state enterprise which was put up for sale in the privatisation process.

In this whole story least important is this specific enterprise because the advertisement illustrates so well the reasoning of workers in the majority of former large enterprises in B&H. Finally faced with capitalism which is knocking on the doors of state firms, workers cannot accept the fact that this is the last stage in their transformation from "self-managers" into hired labour.

Their warning to all potential investors is not based on law - the basic premise of privatisation is that the offered state "goods" are available to all interested buyers under the same conditions, whether domestic or foreign physical, i.e. legal persons.

At the same time, or finally, workers have realised that the assurances of post-war authorities that thanks to privatisation certificates which had been distributed to all citizens, "under the laws of the nature" factories will be transferred into the hands of their workers, were just another gimcrack. Trade union leaders also gave their contribution to these false hopes. Although the law on privatisation in B&H Federation has been adopted over three years ago and it clearly specified that the employees could participate in the privatisation process only under the same conditions as all other interested parties, trade unions led their members to hope that workers would have pre-emption rights in the purchase of shares.

As a gesture of desperation this workers' warning, in the case of "Vranica" addressed to all those who were considering buying the shares of this enterprise, testifies of their total ignorance when it comes to principles of market economy which is called capitalism in countries in transition, i.e. about their unwillingness to face the painful transition reality.

The wish of workers to redeem their own enterprise in the privatisation process, is quite legitimate and understandable. True, in the past decades factories were partly built with workers' money which was channeled to new investments instead of being paid as wages and it would be only fair to compensate the workers for this (voluntary of forced) self-sacrifice. Unfortunately, no privatisation process is, or can be, absolutely fair.

Rules of market competition are ruthless and the key for success is the amount of offered money irrespective whether it is real money or "papers" in the form of privatisation certificates. Here, morals, justice and honesty do not count which workers in state enterprises seem to have refused to understand, hoping that it will not be so, at least when "their" enterprise is in question.

Basically, workers' wish to become co-owners of their own factories at all costs is based on another wrong assumption - that they will keep their jobs by becoming shareholders of their own firm. This is the real reason for strong resistance to new potential owners. Justly fearing that the new owner will significantly reduce the number of currently employed workers, being aware that objectively a surplus of workers exists, they naively believe that such a possibility might be avoided by means of shareholding.

The reduction of the existing number of employees, most often drastic, is also another consequence of the rehabilitation of domestic firms, because in their present state these enterprises can never be successful on the market. Since the objective of every owner is to turn a profit at the end of the year, and, as a rule, as large as possible, surplus labour is an important item on the list of unnecessary costs.

Profit, as the highest imperative, is the moving force of the market economy. Owners, shareholders want dividends and their value is the only measure of success of an enterprise and its management. Social justice, fair redistribution of social wealth, "welfare for all" and similar things come only later. Only when profit is made, it is partially redistributed through taxes. Without profit, there is no money for "social superstructure".

Judging by the experience to date gained by the very workers in the privatisation process, profit is not the top priority of new shareholders so that they would not reduce the number of workers to the realistically necessary level. This means that their products would still be more expensive than those of the competition, especially the imported ones and would end up in warehouses instead in shops.

After that these enterprises would not be able to cover their expenses, especially wages, and would continue to barely subsist, accumulating debts. And since they would be private, they would have no grounds to demand various forms of financial aid from the state. After longer or shorter agony, they would inevitably become bankrupt when all workers would lose both their work and shares.

What is the alternative? In the meantime the new shareholders should realise that cuts are inevitable and that they should hire managers who would fire the redundant labour. But, without a radical change in the existing way of thinking, this is highly unlikely. Workers have yet to become reconciled with the fact that their work, as well as the firm, is just another commodity on the market. And the price of any commodity is dictated by the supply and demand, as well as its quality.

In this example of "Vranica", interested buyers negotiate with the owner, i.e. state, the price of the enterprise as a commodity. Workers have no say in this. Naturally, with their certificates and money they can appear as an interested buyer. A buyer with the biggest pocketbook will finally become the owner, with all rights and duties. That is why the attempts of workers at driving away other potential buyers by invoking the justice and morals sound quixotic and are doomed in advance.

Drazen SIMIC

(AIM Sarajevo)