Trade unions challenge government privatisation plans

Government policy in the area of privatisation is causing increasing discontent among trade unions, who believe that the government has decided to accelerate privatisation at the cost of social dialogue. The lack of consultation and negotiation often leads to disputes in companies that undergo privatisation processes. Furthermore, the trade unions argue that it does not make economic sense to sell state-owned companies during the current recession.

When the ruling coalition of the Civic Platform (Platforma Obywatelska, PO) and the Polish People’s Party (Polskie Stronnictwo Ludowe, PSL) took power in 2007, promises were made to conclude privatisation processes. However, the actions taken in the first year of the government’s term did not suggest that the promise would be kept, as the privatisation income turned out to be meagre.

In the meantime, the global economic recession affected the state finances. One element of the rescue plan for the budget was to reactivate large-scale privatisation measures. The government is now planning to obtain more than €9 billion in privatisation revenue by the end of 2010, selling the State Treasury stakes in the copper and silver industry conglomerate KGHM Polska Miedź S.A., as well as its shares in selected power suppliers, one petrol group and a number of other companies. The State Treasury declared that it planned to retain control over the majority of these companies until 2011. Prime Minister Donald Tusk stated that ‘in the years 2009–2010 the State Budget would need resources to satisfy the basic needs of the citizens, such as the payment of old age and disability pensions, which required a fresh injection of funds.’

However, the President, Lech Kaczynski, and the opposition parties are against these plans, arguing that there is no need to sell profitable companies whose income is capable of compensating the deficient budget resources without resorting to privatisation. It seems though that this opposition is the smallest obstacle on the way to privatisation. The government may face far more trouble persuading the trade unions of the benefits of the idea.

Bad experiences

The experience of the trade unions so far, based on the privatisation enforced by the incumbent government, prompts them to be rather apprehensive about the ambitious plans envisaged by the Minister of Treasury, Aleksander Grad.

One such unfortunate experience was the case of Cefarm Białystok – the biggest regional chain of pharmacies in Poland, employing almost 490 people. Some 11 bidders applied for the privatisation, the terms of which were to acquire the entire chain and ensure a social package to the staff. The social package usually entails the guarantee of employment, pay and social benefits for a fixed term. In the course of the privatisation, the investor is bound by law to sign a social package agreement with staff representatives.

However, the representatives of the Cefarm Białystok Trade Union (Samorządny Niezależny Związek Zawodowy Pracowników Cefarm Białystok S.A.) declare that the law was breached, because they believe that the Ministry of State Treasury (Ministerstwo Skarbu Państwa) made an under-the-table deal with one of the investors about the social guarantees. Moreover, the press and media report that this was not the only irregularity that may have occurred in the course of the privatisation of Cefarm Białystok. The workers at the company intend to file their complaints with members of parliament.

Another instance of a privatisation opposed by the trade unions is the sale of the ‘Bukowa Gora’ Mine and Quartzite Enrichment Plant (Kopalnia i Zakład Wzbogacania Kwarcytu „Bukowa Góra’ S.A.). The privatisation of the Bukowa Góra plant had become part of the government’s large-scale privatisation project. The company was supposed to be auctioned, but the trade unions objected to this method of privatisation.

Trade union leaders considered that privatisation at the present time was not a good idea. For a long period, Bukowa Góra had been struggling with serious economic difficulties. However, due to substantial restructuring, involving measures such as pay freezes and restricted social benefits, the company had reported a profit for the first time in 2009. The plans for privatisation were then decided and – to make matters worse – it was to be privatised by way of an auction, which does not guarantee a social package for the workers. In the words of a representative of the miners’ trade union, the Independent and Self-Governing Trade Union Solidarność (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność), this would mean that ‘in case of an auction sale the workers have no right to a social package, nor guarantee of pay – nor anything. The new owner could fire everyone and rehire them on much worse terms’. The trade unions consequently announced that they would start a strike if the Ministry of State Treasury did not stop its privatisation plans.

Preventive protests

The bad experiences of the trade unions with previous privatisation policies of the government have led to a situation where any mention of privatisation is instantly met with strongly negative reactions on the part of the workers.

This was the case regarding the privatisation of Enea, one of Poland’s largest power supply companies. As soon as the government and the Ministry of State Treasury announced their intention to sell Enea, a foreign investor emerged showing interest in the enterprise. In response, the trade unions operating within the company engaged in a collective dispute. The unions are demanding that the privatisation should be postponed until the effects of the global recession cease having a negative impact on the price of the company. They have also called on the government to undertake talks on the social package. The leader of the works committee of NSZZ Solidarność threatened that the workers might go on strike if the talks with the management board of the company and the Ministry of State Treasury on the terms of the privatisation do not yield the expected results.

The government, on the other hand, accuses the trade unions of pursuing personal interests at the cost of the future of the company and its workers. In the meantime, the potential investor has tried to ease tensions, claiming that it is prepared to lead the dialogue with the workers and if the privatisation is accomplished it will provide the appropriate guarantees to the staff.

Another widely publicised privatisation dispute, instigated by the trade unions, has taken place at the copper and silver group KGHM Polska Miedź, which incorporates about 30 companies and employs nearly 19,000 people. The government has emphasised the need to sell part of the stocks in the group. However, the opinion of the trade unions representing employees at KGHM Polska Miedź is that selling its stocks is simply wasteful and detrimental to the treasury. Soon after the government published its decision, the trade unions announced a two-hour warning strike. The leader of NSZZ Solidarność at KGHM told the press:

…we are sorry to inform that nobody wanted to talk to us about the privatisation of the group. Now we must do everything in our power to save it. And since the government does not want to talk, they obviously meant to confront us.

Similar feelings of discontent can be felt in many other enterprises across Poland for which the government has made privatisation plans. Recent problems concerning the privatisation of the shipyards have cast a shadow over the entire process (PL0911019I).

Views of social partners

Paradoxically, both employers and trade unions have similar views on the topic of privatisation, which is that it is inevitable. Differences of opinion emerge only regarding what should be privatised and how.

The trade unions believe that the government policy with regard to privatisation is going in the wrong direction. A statement by the All-Poland Alliance of Trade Unions (Ogólnopolskie Porozumienie Związków Zawodowych, OPZZ) notes for instance that:

Obviously, the government is minimising their effort, giving preference to fast privatisation. They forget that privatisation is not only about selling enterprises to the highest bidder, but selling their employees and their families alongside. We must also remember that State Treasury owned companies generate profits and contribute to the State Budget in the form of dividend and taxes. The government is trying to blame the unsuccessful privatisation processes on trade unions [...] but in reality trade union organisations protest only when the good interest of a workplace is jeopardised or when they need to expose unknown facts that the public opinion was not aware of, and which demonstrate ineffective and detrimental actions taking place in state-owned companies. The discredit in the area of privatisation is on the government, and the government alone.

OPZZ reports cases of using the transfer of ownership to restrict the rights of trade unions and employees.

The position of the National Commission of NSZZ Solidarność is similar. Its statement declares that:

Hasty privatisation in the situation of market recession is more like a garage sale of the state assets and testifies to the government’s having no idea how to bridge the biggest budget gap in years. NSZZ Solidarność believes that in the course of privatisation a greater participation of employees should be given more consideration with respect to the form of privatisation. A sine qua non condition of privatisation should be the guarantee of employment, provision of social packages and obliging the new investor to develop the company and not liquidate it.

The trade unions speak in unison in blaming the government for the lack of dialogue on matters connected to privatisation. At the same time, employer organisations support more intensive privatisation policies. However, the employers admit that it is a bittersweet process. In their opinion, the pace of privatisation is still too slow, the privatisation revenue is too small and the government is too obstinate in defending certain areas – such as healthcare – against the process of privatisation.

Commentary

Since the beginning of the economic transformation in Poland, privatisation has been stirring strong emotions in the world of labour. The divisions run in many dimensions. The biggest frontline runs between the trade unions and the government. Looking at the engagement of the various governments in privatisation, it has always been coupled with trade union discontent. In many instances, the protests were justified; in others, they were not. It is hard to assess the proportion of each. Undoubtedly, privatisation would have been much smoother if there had been dialogue with social partners throughout the process. Unfortunately, one government after another, with few exceptions, treats privatisation as a domain strictly reserved for the Minister of Treasury. Thus, the process itself is associated with a strong involvement in politics. For many, the privatisation of companies is an element of a political game, in which economic aspects do not always play the most important part.

Rafał Towalski, Institute of Public Affairs (ISP)

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