UNISON the public service union

Europe

TRADE UNIONS IN SERBIA AND MONTENEGRO

The economic and political situation in Serbia-Montenegro

Introduction

Serbia-Montenegro is a state union created in 2003 by the republics of Serbia and Montenegro as a successor state to the Federal Republic of Yugoslavia. Social, economic and monetary policy are a competence of the republics and trade union organisations, therefore, organise at a republic level rather than at state or federal level. A federal organisation has existed in the past but collapsed due to differences between the republican confederations. None of the confederations, in either Serbia or Montenegro, expressed an interest in reviving a formal federal organisation, although there was a certain degree of co-operation between some of the Serbian confederations and the Montenegrin confederation.

Economic transition in Eastern Europe

Serbia and Montenegro are now going through the same process experienced by countries such as Poland and Hungary in the early nineties, the transition from a centrally planned economy with state ownership to a market economy with a majority of businesses operating in the private sector. The former Yugoslavia never had such a rigid centrally planned economy as the Soviet bloc - there were a greater number of small private companies (small shops and restaurants for example), and major enterprises were socially owned by the workforces rather than state owned and operated within a limited market. Nevertheless, the overwhelming majority of workers in Yugoslavia worked for state or socially owned companies. The legacy of social ownership and self-management means that many people resent the de-nationalisation (especially in the case of mass voucher schemes) of companies they feel they already own. Many of the larger enterprises have been effectively bankrupt at least since the collapse of the former Yugoslavia, dependent as they were on the internal Yugoslav market, and in some cases even before. However, they were kept open, often with a largely passive workforce, as a means of maintaining social peace and, during the Milosevic era, of ensuring a degree of support for the regime. Yugoslavia also operated an extensive system of subsidies for housing, public utilities and basic foods, all of which have been or are in the process of being ended.

Privatisation is mentioned frequently in this report. The major privatisation process currently going on relates to companies in the manufacturing and services sectors such as car manufacturing and light engineering and banking and insurance, hotels and restaurants. In these sectors the process is advancing slowly, either because the companies are in fact bankrupt and have not been financially viable for many years or because the necessary legislation protecting foreign investors is not in place. The major utilities, however, such as electricity and telecommunications have already been privatised, mainly to international companies.

There is no planned privatisation process for the public services such as health, education or public transport in either Serbia or Montenegro.

Alignment with European economic and legal models

Each republic has its own social and economic legislation - there is no state-wide labour law for example. Each republic is pursuing different policies in the process of economic transition although both declare that the final aim of transition is the integration of both republics into the European economic area and eventually membership of the European Union (EU). Both republics claim, therefore, to be aligning their legislation with that of the EU and are undergoing major processes of privatisation of enterprises.

The European Union is currently assessing Serbia-Montenegro's eligibility to join the Stabilisation and Association Process which seeks to align the countries of the Western Balkans with the EU. The European Commission has begun an examination of the country's capacity to sign a Stabilisation and Association Agreement, however, we were informed that due to the political instability in Serbia, as well as problems in Montenegro, this assessment has effectively been frozen with the Commission waiting to see whether a stable government can be put into place in Serbia. It should be noted that there is not even a full customs union between the two republics which operate differing tariff regimes with third countries. Montenegro has significantly lower tariffs for EU goods than Serbia which maintains high agricultural tariffs to protect its own agricultural industry for example. There are, therefore, barriers to trade and economic co-operation between the two republics. Finally, the Euro is the legal tender in Montenegro whilst Serbia uses the Dinar, each republic having its own central bank.

Whilst average salaries have increased since 2000 to roughly €200 (£140) a month basic living costs have risen faster following the abolition of subsidies for food and utilities. Whilst unemployment in Serbia is officially 30%, the Serbian Statistical Office survey puts only 45% of the population as being economically active. (It should be noted that the Montenegrin Statistical Office has not produced new statistical data for over eighteen months - an important issue for the unions as pensions and social benefits are index linked). However, independent economists estimate that 50% of the Montenegrin population live below the poverty line and that whilst the average monthly salary is €200, the basic income to live above the poverty line is €170.

Serbia

The first post-Milosevic democratic (DOS) government of Serbia collapsed at the end of 2003. Parliamentary elections in December 2003 produced an inconclusive result with no obvious government majority. Intense negotiations on government formation were taking place during our visit which produced a degree of uncertainty to how the economic transition process in Serbia would continue. Since our visit a minority government of conservative nationalists and neo-liberal economic reformers has been agreed, which will be supported in Parliament by the Socialist Party of former President Milosevic. There is much scepticism as to how long this government itself will last and its capacity to take forward the economic reform programme, reliant as it is on the votes of the former regime party and with doubts within the governing parties as well. It is generally felt that the first year of the post-Milosevic government had seen rapid progress in social and economic reform. However, after the withdrawal of the party of President Kostunica from the government and the assassination of Prime Minister Djindjic in early 2003, the reform process ground to a halt. The Labour Minister, Mr Milovanovic, was able to quote a whole series of draft bills that his ministry had prepared, none of which had actually been submitted to Parliament for adoption due to the political situation. Crucially, this also applies to the law relating to protecting the rights of foreign direct investors. Until this legislation is in place major pieces of the privatisation process will remain on hold as foreign investors will not purchase or invest in companies in an uncertain legal environment.

Montenegro

Montenegro has had a stable governing coalition throughout the 1990s continuing up to today, led by Prime Minister (and former President) Djukanovic. However, although this coalition has consistently won parliamentary majorities the political situation in Montenegro has been destabilised by the government's desire to seek independence from Yugoslavia/Serbia-Montenegro. The country is effectively split down the middle between those supporting the government and independence and those opposing the government and supporting union with Serbia. The state union with Serbia was agreed between the two republics following external mediation, primarily from the European Union, and concerns about continued political instability in the Western Balkans. However, both sides can vote after three years to dissolve the union and it is the stated policy of the Montenegrin government to do so. The government has also been weakened by continuous allegations of corruption and involvement in organised trafficking in cigarettes into the European Union. Montenegro has a population of only 600,000 (compared to over seven million in Serbia) and its economy is dominated by the aluminium plant on the outskirts of the capital, Podgorica. This plant accounts for 50% of the republic's GDP and electricity consumption and has been on the market for a foreign buyer for some time without success due to its current debts of €70 million. The only other major source of legal economic activity is tourism although this has been hit since the adoption of the Euro as the legal currency and subsequent price rises. The only major privatisations have been the brewery in Niksic and the petrochemical company Yugopetrol. Whilst we were in Montenegro there were 43 on-going strikes by workers employed in state-run enterprises, many of whom had not actually worked for years and who had not received pay for several months. Although the companies were effectively bankrupt they were being kept open by the state as a cheaper option than formal bankruptcy and the costs involved in making the workforce redundant. These companies employed 40,000 people and had a cumulated debt of €40 million between them.

Trade Union structures in Serbia-Montenegro

Trade unions in Serbia are primarily organised through three confederations or trade union centres. These are the Federation of Autonomous Unions of Serbia (SSSS), the Branch Union Confederation 'Independence' (UGS Nezavisnost) and the Association of Free and Independent Trade Unions (ASNS). There are also a number of company-specific unions, mainly organised in state-run enterprises, which are independent of the confederations. UNISON, as a public sector union and member of the British TUC should have direct relations with public sector unions within each federation. However, mainly due to the internal organisation of the Serbian confederations we actually met with the leadership of each confederation (this also applies to Montenegro). The confederation centres, and especially their Presidents, are the locus of power, rather than the individual sectoral unions. Only in the case of the Federation of Autonomous Unions of Serbia (SSSS) did we also meet with the Presidents of public sector trade unions as well.

Federation of Autonomous Unions of Serbia (SSSS)

The SSSS is oldest trade union confederation dating its foundation back to the early twentieth century. The confederation is organised on a geographical and sectoral level with 32 sectoral or branch unions. However, for much of this time it was part of the Communist structure, distributing food parcels and providing welfare services rather than functioning as a free and independent trade union. Although it recreated itself in the early 1990s with the collapse of the Socialist Alliance (a broader umbrella organisation that not only included the League of Communists but youth, women's, worker's and other organisations) it was for much of the 1990s closely associated with Milosevic and the Socialist Party of Serbia. The other union confederations still refer to it as a 'flour, sugar and oil' union, a reference to its role in distributing food parcels from the regime to its members at times of economic shortages. However, following the October 2000 revolution and the collapse of the Milosevic regime the union underwent a leadership change and has sought to rebuild itself, mainly through leading the opposition to economic reform. The new President of the SSSS, Mr Smijanic, was keen to stress his organisation's independence from all political parties, but especially from the DOS government. This for him, along with its strong campaign against economic reform, was the main reason why the SSSS remained the largest union confederation. Interestingly, the SSSS is a member of the World Confederation of Labour (WCL), the international organisation of Christian trade unions. However, some branch unions such as Health and Public Utilities, are members of PSI and we got the distinct impression that SSSS would prefer to be inside the ICFTU.

The United Branch Union 'Independence' (UGS Nezavisnost)

The United Branch Union 'Independence' (UGS Nezavisnost) was founded in the early 1990s as an attempt to form a union confederation in opposition to the Milosevic regime. In fact Branislav Canak, the President, told us that opposition to the regime rather than day-to-day union activity was the primary focus of the confederation's activities until the October 2000 revolution. Only since then has Nezavisnost sought to develop the traditional aspects of trade union activity to defend its members' interests in response to economic transition, a point Branislav Canak made to us when he said 'we used to be an alternative to the Milosevic regime, now we need to become a real trade union'. Unlike SSSS, Nezavisnost advocates the transition to a social market economy as part of its platform. However it has sought to protect workers' rights during the transition process through, initially, its close association with the DOS government, and in the run-up to the December 2003 elections, the conclusion of agreements with several political parties (including the DSS and G17+ parties who will form the backbone of the new minority government) on a social pact and social dialogue as part of the programme of the next government. It hopes that this social pact will be implemented during the first 100 days of the new government. As with the SSSS it is organised on both a geographical and sectoral level with 13 sectoral unions. Nezavisnost is a member of both the ICFTU and the ETUC and branch unions are members of PSI, although not EPSU.

The Association of Free and Independent Trade Unions (ASNS)

The Association of Free and Independent Trade Unions (ASNS) is not only the smallest confederation but the newest, formed in 1996. Unlike SSSS and Nezavisnost, who claimed membership roughly in accordance with the figures calculated by the FES (see below), ASNS claimed 300,000 members (FES estimates 50,000). ASNS has chosen to identify itself the closest with party politics, fighting the 2000 elections as part of the DOS coalition after which its then President, Mr Milovanovic, became Minister for Labour and Employment. The ASNS then created its own party, the Labour Party, which not only failed to pass the 5% threshold in 2003 but won under 30,000 votes - only 10% of their supposed membership. Both SSSS and Nezavisnost complained that ASNS had abused the position of the Labour Minister, their former President, to secure a large number of union recognition deals (under Serbian law a union has to seek registration from the Labour Ministry after having been certified as legitimate by the employer). If this is the case it does not seem to be reflected in ASNS membership. The ASNS is not a member of any international trade union bodies but expressed an interest in ICFTU membership.

Membership figures

Reliable figures for membership of the confederations are highly difficult to obtain. Both the Friedrich Ebert Foundation (FES) office in Belgrade as well as the AFL-CIO Solidarity Center warned us that the unions would claim substantially higher memberships than was actually the case. The FES conducted an opinion poll on trade union membership in late 2003. This had found that 41% of respondents claimed to be union members and that of these 23% were members of SSSS, 13% of Nezavisnost and 2% of ASNS, the remaining 5% being members of company unions. In actual membership figures the FES study calculates that the SSSS has 600, 000 members, Nezavisnost has 300,000 and ASNS has 50,000. AFL-CIO Solidarity Center confirmed that they felt these figures were broadly accurate but both organisations stressed that many of these members would be either retired or unemployed members, rather than in active employment. The official unemployment rate in Serbia is 30%, however this does not include workers in state enterprises which are effectively bankrupt nor does it take into account the substantial grey economy. More interestingly the FES survey also revealed that 87% of workers in the private sector are not unionised.

Trade Union assets

Both Nezavisnost and ASNS raised the issue of distribution of trade union assets, something which is clearly a source of conflict between the confederations. SSSS, as the former state confederation, inherited a large amount of property in the early 1990s after the fall of communism. Nezavisnost and ASNS both claim that this should have been divided up between the confederations. The Serbian government had sought to resolve the issue by nationalising the property but allowing the SSSS exclusive use of it, including the right to rent it out and benefit from the income received. This issue clearly needs to be resolved before lasting co-operation between the confederations can be achieved.

The Confederation of Autonomous Unions of Montenegro (SSSCG)

The Confederation of Autonomous Unions of Montenegro (SSSCG) is, like the SSSS, the successor to the communist era state trade union. However, unlike in Serbia, the SSSCG is the only republic-wide confederation representing the overwhelming number of trade union members in Montenegro. We were informed that several independent sectoral unions had been set up but that these remained small and enterprise-specific (the one concrete example we were given was in the Montenegrin telecom company). The SSSCG organises on both a geographical and sectoral level, with 21 regional offices and 19 sectoral unions. Nobody was able to give reliable membership figures for the confederation, however we were informed that workers in state owned companies are automatically members of the SSSCG and their membership fee is deducted at source as a matter of course.. As the former state union the SSSCG has in the past enjoyed close relations with the governing party, the DPS, itself the successor to the League of Communists. Opinions were divided about the current closeness of relations - the President and International Secretary were keen to distance themselves - but everyone stressed that in a small society such as Montenegro where everyone knew each other, personal relations (and especially family relations) remained important. The union leadership stressed both their role in opposing the Milosevic regime and the various Balkan wars in the 1990s and that the union organised and represented all nationalities living in Montenegro - Albanians, Bosniaks, other Muslims and Croats as well as Montenegrins and Serbs. In fact, the leadership were keen to emphasise the priority they put on the union being a factor for stability in a small state which had been surrounded by instability and ethnic tension for over ten years. The SSSCG is a member of both the ICFTU and ETUC and its sectoral unions are members of the Global Union Federations. The confederation said it tried to work with all three Serbian confederations but had the best relations with Nezavisnost. It put an equal emphasis on working with unions from the rest of the former Yugoslavia as well, although the confederation does not have a formal position on the question of independence.

Challenges facing trade unions in Serbia-Montenegro

Privatisation

Clearly the biggest challenge facing the unions is the process of economic transition and especially the move from state or social ownership to privatisation. As the study from the FES shows, union membership in Serbia is overwhelmingly concentrated in the public sector and state-owned companies with only 13% of workers in the private sector being unionised. Despite the economic hardships opinion polls show a majority of the population still support economic transition - and indeed Nezavisnost, ASNS and SSSCG also support moves towards a market economy with only the SSSS being opposed (support for privatisation, certainly in the case of Nezvisnost and SSSCG, only applies to the financial and industrial sector, not the public sector). The legislation governing privatisation adopted in Serbia after 2000 sought to give some protection to workers in effected industries. Salaries and terms and conditions are protected for two years after privatisation and retraining and other labour market measures are meant to be put in place for those workers (over 130,000 according to the Labour Ministry) who have been made redundant.

Social Dialogue

All three Serbian confederations placed a high degree of emphasis on the formal Social Dialogue process that had been implemented after 2000. The tripartite structure seeks to achieve a consensus between government, unions and employers on draft legislation before it is submitted to parliament for adoption. According to the Labour Ministry draft bills had been agreed on Social Security, Trade Union and Employer Association organisation, Industrial Action, Mediation and Reconciliation, Occupational Health and Disability Rights in the workplace. However, whilst they have passed through the Social Dialogue process they have been blocked in Parliament due to the political stalemate in Serbia. The confederations, and especially the SSSS and Nezavisnost, whilst supportive of the principle of Social Dialogue, were critical about the actual practice. Their concerns included the representation of union confederations in the formal social dialogue bodies (chiefly over representation of the ASNS vis-à-vis the other unions) and more importantly the lack of real employers' associations - in either the public or private sector - with which to negotiate.

Legislation versus collective agreements

Both the Serbian and Montenegrin confederations placed a high degree of emphasis on relations and influence with government and political parties. This is a consequence of an industrial relations culture that seeks to regulate employment terms and conditions through national legislation rather than through collective bargaining, which is itself a hangover from the communist era and of centralised confederations rather than strong sectoral or branch unions. In fact we were only given one concrete example of collective bargaining and where it had been successful and that was the case of the recently privatised steel works at Smederevo which had recently been bought by an American steel company. Here the unions had negotiated with the American company during the privatisation process itself rather than after the event. This is in contrast to the example we were given of the privatisation of the Niksic brewery in Montenegro after its purchase by the Belgian-based multinational Interbrew where workers went on strike for a over a year, unsuccessfully in the end, following major changes in their terms and conditions after privatisation.

Judicial system

The confederations also raised the inefficiencies and slowness of the country's judicial system. This has also been a major concern of international organisations and foreign companies. Unions complained that it was taking an average of three years to resolve legal actions against redundancies or other complaints.

Sense of international isolation

The reception we received, especially from SSSS and the ASNS, indicated the degree of international isolation that trade unions feel, certainly in Serbia. Even though Nezavisnost and the SSSCG are relatively well integrated into the ICFTU and ETUC and have established many international contacts they also feel that Serbia and Montenegro are being isolated as the European Union concentrates on integrating the 10 new member states. The international NGOs also raised this issue with us and stressed the importance of international contacts in breaking down prejudices inside the unions and opening them up to new experiences.

Assistance being provided by foreign trade unions

American unions

The only foreign trade union confederation with a full-time presence on the ground in both Serbia and Montenegro is the AFL-CIO. The AFL-CIO Solidarity Center has offices in Belgrade and Podgorica, led by an American Field Representative with local staff. They have worked in Serbia and Montenegro since the early 1990s, initially only with Nezavisnost, and have had a full-time office since April 2001. They now also provide some support to the SSSS and SSSCG. They run approximately 200 training seminars a year, effectively running the Nezavisnost education programme. They also provide direct financial support to run Nezavisnost's three legal centres around the country and employ 8 lawyers for the union. They have helped establish both women's and youth sections in the SSSS. There is some threat to their funding - which mainly comes from the USAID programme and the US State Department - as the US government is threatening to suspend all assistance to Serbia-Montenegro over non-compliance with The Hague War Crimes Tribunal. It should be noted, as pointed out by the SSSCG, much of the privatisation and economic reform agenda is also being dictated by the US government and funded through USAID programmes.

German unions

German trade unions have also provided assistance individually, through the DGB, and via the Friedrich Ebert Foundation, an NGO linked to the social democratic and labour movement. The FES has a full-time office in Belgrade which works with political parties, NGOs and trade unions, although they have only worked with Nezavisnost. Individual German unions, including Ver.di, have provided material assistance in the form of computers, cars and other equipment. The FES concentrates on training seminars, study visits to Germany and funding research such as the opinion poll on attitudes to trade unions and membership cited above. The FES is also funding a monthly supplement in the daily newspaper 'Danas' which seeks to report on trade union activities in a fair and balanced way.

Italian unions

We met with both the Solidarity Center and the Friedrich Ebert Foundation during our trip. We were also informed that the Italian CGIL confederation supports a network of regional union legal centres and provides training in legal advice but they do not maintain a full-time presence in the country who we could meet.

Future activity by UNISON

The challenges facing trade unions in Serbia and Montenegro are enormous, compounded not only by the challenge of economic transition but the legacy of over 10 years of war and economic sanctions that have led to almost total industrial collapse. Whilst the US, German and Italian unions are providing excellent assistance the four confederations and both the AFL-CIO Solidarity Center and Friedrich Ebert Foundation would clearly welcome any support they can get and were very keen for UNISON and other British unions to become involved. However, because the challenges are so large and UNISON's resources so limited, we have to avoid either creating exaggerated expectations of what support we can provide or over extending the capacities of the union and failing to deliver. We were very conscious of this throughout our study visit and made no commitments whatsoever.

We did however, receive certain specific requests for support, some from the confederations themselves and others from NGOs working on the ground. These included;

Intensifying contacts between UNISON and public sector unions from the various confederations
Advice and assistance in developing relations between unions and political parties/government - specifically in lobbying techniques
Education programmes for members - especially on the role of unions in a democratic society
Assistance in developing trade union communications (both internal and external)
Help in research and developing strategies to fight privatisation, especially in the public sector.

One of the criticisms made by the American and German unions was that the support they were asked to provide was too orientated towards the national leadership and the confederation centres rather than to local branches or sectoral unions. If UNISON were to decide to support some development and training projects they should be aimed at local branch activists and ordinary union members. The trade union confederations are highly centralised and tend to focus their activities in lobbying and influencing government. Whilst this is an important and legitimate union activity, we were concerned at the lack of emphasis on the need for collective bargaining and agreements at any level. This could be a possible area for training and development.

Finally, membership recruitment, retention and participation seem to be a major problem for all the union confederations. With increasing privatisation and the consequent low levels of union membership in private companies this is an issue that needs to be addressed very soon.

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