Industrial action in chemical and petrochemical sector

With the support of three nationally representative trade unions, employee representatives in the chemical and petrochemical industries have engaged in protest action in response to the persistent rise in the price of natural gas. The higher price has put cost pressures on companies operating in the sector, forcing many to downsize.

Rising price of natural gas

In Romania, the price of natural gas rose more than threefold from US$30 per 1,000 cubic metres in 2003 to US$95 per 1,000 cubic metres in 2005. On 1 January 2006, the price of gas increased by 17% followed by a further 4% on 1 April.

The National Regulatory Authority in the Natural Gas Sector (Autoritatea Nationala de Reglementare în Domeniul Gazelor Naturale, ANRGN) has announced another 30% price increase by the end of 2006, which will bring the price up to US$145 per 1,000 cubic metres – almost five times the rate of 2003. The increase is attributed to the need to align Romanian prices with those in the EU market by 1 January 2007.

Another reason for the price hike in Romania is the high cost of gas imported from neighbouring Russia, currently around US$280 per 1,000 cubic metres. At present, Romania covers 60% of its natural gas consumption from internal production and imports the remainder from Russia. From December 2005 to January 2006, the Russian-Ukrainian gas dispute resulted in a pressure drop in the gas transportation pipes; to safeguard supply to the general public, the Romanian government decided to halt gas supply to several industries.

These adverse dynamics have brought seven of the nine Romanian manufacturers of chemical fertilisers to the brink of bankruptcy.

Reaction from the social partners

Trade union members reacted quickly to the threat of job losses. Leaders of the Free Trade Union Federation from the chemical and petrochemical industry (Federatiei Sindicatelor Libere din Chimie si Petrochimie, FSLCP) announced and staged protests outside companies in six cities during the second week of March 2006.

Trade unions in the chemical and petrochemical industry are affiliated to two nationally representative confederations: the National Trade Union Confederation ‘Cartel ALFA’ (Confederatia Nationala Sindicala, Cartel ALFA) and the National Confederation of Free Trade Unions of Romania Fratia (Confederatia Nationala a Sindicatelor Libere din România Fratia, CNSLR Fratia). Cartel ALFA and CNSLR Fratia expressed their disapproval of the oil and gas price policy, and their concern that this may affect thousands of employees in the chemical and petrochemical industry. They decided to stage protests outside all county and government buildings in Bucharest on 20, 21 and 22 March.

The President of Cartel ALFA, Bogdan Hossu, stated: ‘Our indignation is all the more justified as, according to statistics, energy tariffs have consistently been above the European average, despite the fact that Romania has the lowest wages in Europe.’

The trade unions demanded subsidies for the general public and for large industrial consumers in order to sustain their bills for natural gas and energy. Marius Petcu, leader of CNSLR Fratia, declared: ‘We do not want to have to resort to extreme measures, such as a general strike, but if needs be, we will.’ On 23 March, the members of the National Trade Union Bloc (Blocul National Sindical, BNS) announced their solidarity with the protest actions.

The unions requested that Prime Minister Calin Popescu Tariceanu take part in the meeting on energy price policies held by the Economic and Social Council (Consiliul Economic si Social, CES). Under the circumstances, the Romanian government requested that the European Commission extend the timeframe to the end of 2008 for Romania’s alignment with natural gas prices in the EU. At the meeting with the CES, on 30 March, the prime minister announced the Commission’s agreement to postpone the deadline.

In addition, on the same day, the Ministry of Economy and Commerce (Ministerul Economiei si Comertului, MEC) began consulting with all major players in the natural gas sector. According to trade union evaluations, the agreements between the Romanian government and the EU also involve 10,000 redundancies.

During the meeting at MEC, the prime minister announced important measures to help counteract the negative effects generated by the new wave of price increases. However, the trade unions decided to continue with the planned protest action until they receive written confirmation of the postponement of the price increase deadline, and detailed information on the measures suggested by the prime minister.

Future protest action

The trade unions have scheduled a series of protest actions to take place over the next few weeks. At time of writing, these included a picket in front of government buildings in Bucharest (5 April), a protest meeting in all counties with natural gas manufacturing plants (12 April) and a protest meeting in Bucharest (early May).

Luminita Chivu, Institute of National Economy, Bucharest