AUTHORITIES AGAINST ALL

Trade Union not Supporting New Law on Privatization in Montenegro

Subtitle: To the Government's Draft Law on Privatization, the Trade Union responded with 15 amendments which were in its name submitted to the Assembly by the Social Democratic Party. All attempts to coordinate stances concerning privatization were futile, so that total confrontation of the authorities with both the opposition and the Trade Union is expected to take place in Montenegro

AIM Podgorica, July 19, 1996

In the shadow of the Assembly discussion on new election law, hidden from the public, a real small war is waged between the Trade Union and the Government because of the new Draft Law on Privatization. This Law is expected to be on the agenda of the current session of the Montenegrin parliament in the course of next week. If the parliament adopts it, it will be the second in a row Montenegrin law on privatization, and the most significant novelty in it is introduction of the institute of "privatization coupons", i.e. vouchers.

The chronology of its publicizing best reflects the (dis)continuity of privatization of social ownership in Montenegro. It all began back in 1989 by the law on state capital elaborated by Ante Markovic's government, based on which 23 enterprises in the republic were transformed. Then the Montenegrin Assembly, in January 1992 adopted the still valid Law on Property and Management Transformation which was amended in 1994, so that apart from preferred purchase of shares, distribution of about ten per cent of the capital of the enterprise to its workers free of charge was made possible. Pursuant this Law so far about 88 per cent of enterprises in Montenegro were transformed. This Law has in fact just eliminated social ownership which was divided between the employees and state funds. Based on this, management transformation was carried out which in fact contributed to new nationalization of the economy, since it was the state funds which nominated most of the representatives in management boards of enterprises. Since state power is concentrated in the hands of a single party, and it is quite clear that the same is happening with the state funds, a general impression was created about the predominant role of the ruling party in management of the entire economy. This was, of course, quite convenient for the Democratic Party of Socialists (DPS), but only until this generated the stance that the ruling party was also to blame for all the failures and errors in management of the economy and individual enterprises. That is why this new phase of privatization arranged by the DPS is almost logical - the funds as nominated owners and dominant managers should be forced out from managing the economy.

Severe and almost general criticism of such a model of privatization, primarily by opposition parties and trade unions has not so far significantly affected the behavior of the authorities. Demands of the Liberals to introduce a model of massive voucher-based privatization into Montenegro, similarly as in the Czech Republic, was regularly rejected, and the last-year's proposal of the Social Democratic Party to amend the Law was rejected by the DPS with a curt explanation that "this is not the time for amendments, but for implementation of the Law".

The most important innovations in relation to the present Law on Ownership and Management Transformation refer to introduction of vouchers - they are called "privatization coupons" in the Draft - and acceleration of the process of privatization of that part of socially-owned capital which was pursuant the former law transferred to funds. This part of the job is, instead to five years as before, now limited to six months, and the market of capital is involved in the game. It will be possible to purchase bonds possessed by the funds with privatization coupons, foreign currency savings, bonds of the state...

The first demand of the trade union is that the limit of workers' shares be raised; they also demand that additional shares be provided for workers whose salaries were lower than those prescribed by law, that the right to free and preferred shares be ensured for employees in non-economic activities, pensioners and the unemployed, that the right to inheritance of shares be made possible, that an adequate compensation through the process of privatization be provided for employees who had contributed to housing funds but remained without apartments, that privatization of everything that was created from resources of collective consumption funds, or funds of voluntary financial contributions, etc. be prevented. Among other, the Trade Union demands urgent adoption of new laws which would more precisely regulate operation of management boards and safeguard the rights of the workers to participation in management of enterprises. And, finally, the Trade Union believes that the initiated process of privatization must not be interrupted, but accelerated and continued, but in such a way as to ensure greater participation of the workers in distribution of the socially-owned capital. Due to that, the Trade Union proposes that further privatization of the existing share-holding companies continues with free distribution of vouchers amounting to 8,000 ecus for each employee, and 2,000 ecus for the unemployed.

The total value of the so far transformed socially-owned capital in Montenegro amounts to three and a half billion German marks. Shareholders, i.e. the employees and the citizens, got about one billion, and 262 million marks were distributed as free shares. This means that on the average, employees in the economy got 4,290 German marks each in the form of shares free of charge and 12,310 DM each in preferred shares.

The funds so far held 2.2 billion DM. Since free shares were distributed on account of the Development Fund, and since privatization coupons will from now on be distributed from the money transferred to this Fund, its capital will drop to only about 600 million German marks.

What is the difference between the Government and the Trade Union proposals? Draft Law on Privatization introduces privatization coupons, i.e. vouchers worth at least 2,280 ecus (most frequently three thousand ecus are mentioned) for the employees of non-economic activities and pensioners, and at least 1,140 (thousand and a half are mostly mentioned here) for the unemployed. All together, it amounts to little over hundred million ecus allocated from the Development Fund. On the other hand, amendments of the Trade Union suggest that the employees get 8,000 ecus' worth of vouchers, and the unemployed 2,500 ecus each. This proposal includes what the workers have been given so far in free shares. The calculus of the Trade Union is not quite precise, since noone knows the exact number of those who, according to the opinion of the Trade Union should get vouchers because their salaries were lower than those determined by the current regulations, the number of those who were not given apartments but had invested into housing funds, as well as the number of inheritors of deceased workers, but, as they say, in this way somewhere between 45 and 55 per cent of socially-owned capital would be transferred into the hands of the population.

The Trade Union for the time being holds two quite powerful trump cards in its hands. The first one is the stance that privatization cannot be successfully completed without a concensus with the workers, i.e. with the Trade Union, and this is more or less certified by all those who are monitoring the course of transformation of social ownership. The other trump card is the assessment that so far, through transformation of social ownership, workers have become the only true private owners. Milutin Lalic, director of the Agency for Restructuring, also admits it by defining transformation as nomination of funds to be owners of social capital, and privatization as that which was sold/given to the workers through preferred and free shares. This brings about the most recent conflict on to the scene - the conflict concerning management rights between workers as shareholders and funds as nominated owners of the untransformed part of the socially-owned capital. The funds, of course, prevail. Contrary to trade-unionists who claim that so far less than 40 per cent of legal claims to workers' capital has been reached, representatives of funds point out that all foreign interlocutors and potential investors of capital complain that participation of workers in the totally transformed capital in Montenegro is too high.

And yet, the series of talks between the Government and the Trade Union, which representatives of the Chamber of the Economy also took part in, ended without agreement. Trade-unionists did not accept interpretations of the Government that their demands had already been incorporated into the text of the Draft Law, and they rejected the "offer" to withdraw amendments from the assembly procedure. After all, it is not possible any more anyway, because the opposition Social Democratic Party had forwarded it to the Assembly as its own. After the most important opposition block - the National Party, the Liberal Alliance and the Social Democrats

• left the session of the parliament because they were dissatisfied with the newly adopted election law, the amendments of the Trade Union will not have the SDP in the Assembly to represent them. Therefore, the Government, in other words the DPS, which will have to explain with great precision why it rejects each individual amendment, will also have to confront the Trade Union publicly. Rejection of workers' demands during the election campaign is not at all a profitable solution, so that it is expected that the DPS will avoid such public disgrace by previously adopting a decision to discontinue television live coverage of assembly sessions.

Dragan DJURIC (AIM Podgorica)