More Labor Problems in Macedonia

The Macedonian government has decided to make a serious attempt to deal with companies deeply in the red. In only one week it made moves that were several years overdue, raising suspicion over the nature of its intentions and provoking the anger of the 7,000 people it left without jobs. Now their right to work and make a living, or their inclusion in social programs depends on the mercy of international providers of financial aid.

AIM Skopje, February 7, 2002

Unprofitable companies have for years been undermining the Macedonian economy. Since hardly anyone in Macedonia has anything to produce nowadays, the number of such companies is steadily growing. It is believed that this year 18 such firms will reach the critical point. The complete list of these money guzzlers presently consists of 40 companies, employing about 37,000 people. Since Macedonia gained independence not a single cabinet has mustered the strength to deal with them in the way required by a market economy. All of them tried to do this or that, but got nowhere, because apart from strength, money and vision were also necessary. And this, unfortunately, is still in short supply. This is why, according to independent economic analysts, the steps taken by Ljubco Georgijevski's cabinet in this election year are perceived more as campaigning than an actual effort aimed at eliminating this serious problem.

Everything was done in haste: the three biggest loss-makers – the Jugohrom chemical and metallurgical complex, the 11 Oktomvri bus factory and the Godel butchery and leather industry -- were liquidated in a single week. In addition, a tender was announced for finding a strategic investor for the Sasa and Zletovo lead mines, and two once very profitable factories -- Porcelanka and the Zletovo battery factory -- were sold for pittances.

The model chosen by the government after several unsuccessful bailout attempts and bankruptcies -- quick liquidation, followed by sale either as a technological whole or in parts, together with giving priority purchase right to friends, relatives, or whoever offers a higher commission, and as a rule pricing at below the actual value -- is certainly not the best one possible, experts believe and warn that widespread social unrest can come as a response.

Many workers will be declared redundant and will lose their jobs. The banks and companies that cannot collect what is owed to them are deeply indebted. The debts of the three liquidated factories after they were closed amount to US$200 million and will be an enormous burden on the national treasury, that is taxpayers. This is why not only the workers but other citizens are fiercely against the government's efforts. Last week about 10,000 impoverished workers who cannot remember when they last received a paycheck launched a strike. By loudly protesting and blocking busy intersections they called attention to their quest for justice and tried to force the government to do something about their predicament. They want their salaries as well as pension and health care deductions paid, and demand that the government do something to reopen their factories, and restore their dignity by giving them the chance to earn a living. If that is not possible, they said, they should at least be granted decent welfare. They insisted that legislation according to which people who have been employed for 25 years are entitled to retire early be reinstalled, after being withdrawn two years ago on orders from international financial organizations. They are aware that money is short. The latest assessments say that EUR54 million is needed by the end of the year to deal with the top 18 loss-making companies. At least US$15 million is required for salaries and deduction arrears alone, and for severance pay of up to 12 monthly salaries to workers from the first group of seven companies, to ensure that the second installment of the FESAL arrangement is sent.

The workers suspended their strike after negotiations began between their union leaders and government representatives. They agreed to be patient and wait for the outcome of negotiations in Washington and New York between President Boris Trajkovski, Deputy Prime Minister Zoran Krstevski and Economy Ministers Nikola Gruevski and Besnik Fetai. Preliminary reports on the talks have brought a sliver of hope.

Namely, World Bank and International Monetary Fund officials clearly said they have nothing against providing redundant workers with social benefits. They allow for the salary arrears and deductions to be paid, as well as severance pay. They also have nothing against workers receiving a modest bonus of EUR50 per month for 18 months, while waiting for a new job (up to EUR1,000 per person). But they specifically stressed that the government has to procure the funds itself, by conserving at all levels, and not by borrowing or creating a deficit in the budget. They said they were strongly against using the payment of arrears for election promotion and reinstating the provisions on early retirement. They have threatened to end cooperation in case these rules are not followed.

Finance Minister Gruevski said in an interview on the private Sitel TV that he was pleased with the outcome of the negotiations with the World Bank and the IMF. He particularly stressed his satisfaction with the fact that Macedonia would soon receive the second installment of the FESAL loan, amounting to US$20 million. It was agreed that the money will arrive as soon as the Jugohrom complex is closed, which is about to happen. Changes to bankruptcy laws have been adopted, providing for speedier procedure, Gruevski stressed. The Agency for Blocked Current Accounts will be able to automatically initiate bankruptcy procedures for every "ailing" company whose account has been blocked for over 45 days and which has been declared unsalvageable after a thorough analysis by foreigners. The minister was also delighted that the Washington negotiations had secured the sum of US$15 million annually over the next three years for reforming the state administration.

To console workers, the Macedonian president's office said that Trajkovski, at the end of his Washington visit, obtained a promise from the head of the World Bank, James Wolfenson, that Macedonia's request for a loan for "a social, reform-salvaging package" will be debated this spring. Before that an expert team will arrive in Skopje to determine whether a loan is indeed needed. It costs international politicians nothing to give promises. Macedonia's leading politicians will known if they have achieved anything once they return home.

Is Macedonia looking at more strikes and everyday blockades of roads and mass protests? The answer to this question depends on whether workers will be content with international financiers have given them.

Branka Nanevska

(AIM)