Amendments to the Law on Ownership Transformation

Postponed Privatisation

When the trade unions threatened with the calling of a general strike in Serbia unless privatisation was stopped, the Government of Serbia decided against further privatisation of social property according the so far applied method. It seems that its attempt to reduce the right of workers to 60 percent of free shares to mere 30 percent in order to attract foreign capital has failed when the self-management succeeded in halting the introduction of capitalism for the time being.

AIM, Belgrade, February 14, 2001

At first glance, there is no difference between 60 percent of nothing and 30 percent of something, but that was the key point over which the swords were crossed and with good reason. This issue was the bone of contention during the latest deputies' debate held in the Serbian Assembly on amendments to the Law on Ownership Transformation. The essence of the proposed amendments was to stop further implementation of this regulation under which in the first round of ownership transformation workers would distribute among themselves (including pensioners who, with their work, helped create the firm's assets) 60 percent of the firm's value free of charge. The second round granted them the right to buy another 20 percent of the factory's value at a discount.

The delegates' debate boiled down to two opposing approaches. The Government's majority tried to prove that it would be better for workers to get 30 percent of property because in that way the funds for the recovery of their firms could be secured, while the opposition did its best to show that the entire redesigned ownership transformation was just another way for the authorities to continue stealing from workers.

Ministry for Privatisation of the recently elected Government of Serbia decided to stop further privatisation of social property according to the mentioned recipe with the intention to stop the giving away of property free of charge. This was done at the moment when the privatisation process was gathering momentum so that such newly aroused interest in social property was interpreted by the new authorities as the intention of the previous regime to swap its lost political power for economic strength, the more so as there were openly voiced doubts that individual property assessments had shown drastically reduced value of social capital.

On the other hand, this created resistance against the intention of the new Privatisation Minister, Aleksandar Vlahovic, to reduce the right of workers to social property from 60 to 30 percent. Most persistent in this were the trade unions, which announced that they would call a general strike if the Minister did not withdraw his proposal. This social trade union organisation, which purports to represent the interests of the greater part of the working class, saw the proposed amendments to the Law as a threat of someone else becoming a majority owner, which would give them the right to get rid of the surplus labour or even wind up operations and establish a new firm dismissing the workers. It was claimed that in that case around one million workers would be left jobless.

Essentially, there is no difference between the 60 percent contained in the present Law, and the 30 percent proposed in the new one, because the social property has mostly been squandered, which is borne out by the data on the losses in the economy that exceed USD 30 billion and by the fact that the majority of enterprises are not operating due to the lack of working capital to jump-start the production. Such an economy needs a transfusion in the form of fresh capital, but there are no volunteers because they do not want someone else (i.e. workers as majority owners) to manage their property.

This conflict essentially boils down to an overall ideological change from self-management to capitalism where, as a rule, the majority owner decides on everything and, naturally, has the right to dispose of the profit made,but, at the same time, runs the risk of having, on his own, to cover all possible losses.

The new authorities, with which Serbia has embarked upon the road leading to capitalism, seek to change the conditions for transforming social into private property. Aware that with employees as the majority owner they would not be able to attract neither domestic nor foreign capitalists to invest their money and remain in the minority in decision-making and running the enterprise, the new authorities have set about changing the business environment by amending the Law on the Transformation of Social Property, i.e. setting the criteria for determining who is the boss.

It seems that Minister Aleksandar Vlahovic, and perhaps the entire Djindjic's Cabinet, became scared of the announced large-scale strike so that they abandoned the idea of offering workers, instead of a 60 percent share of charge-free social property, 30 percent of the firms' value although both gifts are worthless unless someone with a "well-lined pocket" appears and jump-starts the production with his funds.

Without such a shot, the greater part of the Serbian economy is just dead capital. According to statistics, at the end of last year there were 1,694,457 employed in Yugoslavia, out of which 1,262,935 worked in the economic and 431,522 in the non-economic sector. This is a very modest percentage of employed population for a country with some 10 million inhabitants, as attested to by the fact that 28 percent of the labour-active population do not have permanent jobs.

Lacking the courage to launch radical economic changes in a more resolute manner, the Government of Serbia has decided to exercise more caution in addressing the announced ownership reform.

It has given up the idea to give workers free shares amounting to 30 percent of the value of social property, which would apply to all Serbian citizens of age, a solution not envisaged by the Law in force. Namely, the Law denied this right to the workers of firms from the other republics of the former SFRY although the property they had helped develop remained in Serbia.

Instead of making a radical cut in social ownership transformation and its distribution according to a new formula which would not leave the workers empty-handed but would only divest them of management rights as they would become minority owners, the Government of Serbia simply made the first step by suspending the applicable method of placing social property into private hands. According to Minister Vlahovic, as many as six months will have to pass before the next step is made.

Before the new privatisation model is presented to the deputies, it will be necessary to hold consultations with the trade unions and other parties concerned. Only time will tell whether this is a sign of weakness on the part of the Government or just the result of its belief that this will create better conditions for the implementation of its new concept. However, one thing is certain - the postponement is placing the economy in a precarious situation. The question is also whether two billion dollars will be injected for its revitalisation this year, which is the required amount for Serbia to realise the social product similar to that registered in 1998.

Self-management succeeded in halting the first surge of capitalism, but it remains to be seen whether it will find the financial backing to keep it afloat before the second surge comes. If it weakens, the new offer may be much more modest than the present one, so that instead of 30 percent the workers could get 15 percent or even less. That will be the best moment to see the real effect of the current trade union attempt at protecting the workers' acquired rights.

Ratomir Petkovic

(AIM)