Transport and energy workers protest against restrictive wage policy

In April 2007, the transport and energy trade unions affiliated to the Confederation of Independent Trade Unions in Bulgaria and the Confederation of Labour ‘Podkrepa’ organised a protest in front of the Council of Ministers’ buildings in Bulgaria’s capital city of Sofia. Over 4,500 workers took part in the protest against the wage regulation and the government’s decision to tax compensatory social benefits. The trade unions are threatening to take strike action in the event of a breakdown in negotiations regarding this issue.

On 12 April 2007, over 4,500 workers from the transport and energy sectors took part in a protest rally at the centre of Bulgaria’s capital city of Sofia. The protesters consisted of railway workers, public transport workers from Sofia, Bourgas and Varna, workers from Sofia Airport, miners and workers from the energy sector.

Reasons for protest

The protest arose in relation to the renewal of the ‘wage regulation’, which was adopted in the 1990s. The regulation concerns companies with over 50% state and municipal participation. According to the provisions of the wage regulation, an increase in wages is not possible in companies making a loss. Given these restrictions, wages have remained static in some companies for the past five to six years.

In their speeches, the President of the Confederation of Independent Trade Unions in Bulgaria (CITUB), Jeliazko Hristov, and the President of the Confederation of Labour ‘Podkrepa’ (CL ‘Podkrepa’), Konstantin Trenchev, underlined how such a wage regulation or restrictions on the market principles regarding wage formation do not exist anywhere else in Europe. Moreover, they described the government’s decision to change the Corporate Income Tax Act as ‘antisocial’, highlighting that the changes will transfer the tax burden regarding social benefits from employers to the workers. The protesters warned that they would be prepared to launch a national transport strike and mass protests.

Workers’ demands

In a formal declaration, the protesters outlined the following demands:

• removal of the government wage regulation restricting wage increases in companies with over 50% state or municipal participation;

• a change in the provisions regarding corporate income tax legislation, which govern non-wage benefits to workers such as those concerning food and clothing; among some professions, such as railway workers and locomotive drivers, these amount to one third of the wage;

• development and facilitation of procedures regarding workers’ sick pay, which were introduced at the beginning of the year;

• development and adoption of a long-term programme for state investment and development of the railway and public transport system.

Reactions of social partners

In accordance with a ruling made by the Council of Ministers on 2 February 2007, the government renewed the aforementioned wage regulation. The trade unions were extremely critical of the move, as they have long been urging for the removal of the wage regulation, considering its provisions to be ‘discriminatory, antisocial, restrictive and illogical vis-à-vis the market economy’. The regulation was introduced in 1991 when state ownership prevailed and was imposed under pressure from the International Monetary Fund (IMF) during the transition period. The trade unions had expected that, with the end of the IMF mission in Bulgaria, the regulation would be automatically removed or changed in the direction of decentralisation and the negotiation of wages on the basis of results achieved; in relation to the latter, it was envisaged that a special clause would assign responsibility to the management of individual state or public companies to increase wages on the basis of the financial results achieved by the company.

Employer organisations, on the other hand, have expressed views similar to that of the government on numerous occasions at the National Council for Tripartite Cooperation (NCTC). However, as the provisions of the wage regulation do not directly affect employers’ interests in the private sector, their opinions are purely a matter of principle.

On the government side, only one voice spoke out in favour of removing the regulation. In an informal speech, the Minister of Labour and Social Policy, Emilia Maslarova, expressed her support for the trade unions’ position, declaring that she was in favour of an exemption from the wage regulation in state and public companies. Conversely, the other government ministers expressed their support for the renewal of the regulation. The Minister of Finance, Plamen Oresharski, argued that revoking the wage regulation in public sector companies would pose the biggest threat to macroeconomic stability in Bulgaria in the last 10 years. The Minister of Public Administration and Administrative Reform, Nikolai Vassilev, also outlined how he was against the demands of the protesters, while Prime Minister Sergei Stanishev insisted that the government would not back down under trade union pressure.

Commentary

It is not yet possible to determine to what extent the tensions over the wage regulation will escalate. The outcome will largely depend on whether or not the restrictions imposed by the regulation will be removed.

Meanwhile, following the protest action, Sofia’s primary central heating provider, Toplofikatsia, has negotiated an agreement on wage increases with the trade unions. For the past five to six years, the average wage at the company has remained static at about BGN 347 (around €177 as at 20 May 2007). In accordance with the agreement signed, wages will be increased in several stages, starting with a 20% increase retroactively from 1 January 2007, followed by a second wage increase in the second half of 2007, if the company achieves favourable financial results.

Lyuben Tomev, Institute for Social and Trade Union Research (ISTUR) of CITUB