Agreement on the Plan for the future of coal mining (1998-2005)

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The Industry Ministry and the UGT and CC.OO trade unions signed the Plan for the future of coal mining in Spain on 15 July 1997. The plan defines the volume of aid for the mining sector, as well as production targets and labour restructuring, for the period 1998-2005.

The Ministry of Industry and the trade unions UGT (Unión General de Trabajadores) and CC.OO (Comisiones Obreras) signed the Plan for the future of coal mining in Spain on 15 July 1997. The Plan defines the volume of aid to the sector, production targets and the restructuring of the mining sector for the period 1998-2005. It will cost approximately ESP 1 billion.

The negotiation process had gone on for eight months and had been very complex. The Plan is a consequence of the liberalisation of the electricity sector, which has freed the electricity companies from the obligation to buy domestic coal. As of now, these companies will be able to buy coal from any source, while direct public aid to mining will be progressively reduced. This new system forces companies in economic difficulty to undertake a restructuring process.

The first proposals from the Industry Ministry caused great anxiety amongst union circles, which believed they were aimed at running down the sector. However, negotiations between the Ministry and unions led to a basis for agreement. The Plan coincides basically with a preliminary agreement reached in March 1997, though some improvements have been introduced into the provisions for early retirement.

More problematic were the negotiations with the employers. The Plan was not signed by Carbunión, the employers' association for the sector, or by any private companies, because they were unable to reach a unanimous position.

The Plan contains the following points.

• A progressive reduction in public aid. In 1998 aid will be reduced by 4%. In the following years it will be reduced by 5% per year for open-cast mining and between 3% and 4% per year for underground mining. Overall, aid will be cut between 1998 and 2005 by between 20% and 25%.

• A 30% reduction in production. The objective is to produce 13 million tonnes in 2005, compared with the current 18 million tonnes.

• A 30% reduction in employment. The objective is 18,000 jobs by 2005, compared with the present 25,000, which means that 7,000 jobs will be lost. In reality, the Plan envisages that over this period 10,500 workers will lose their jobs, but that jobs will be found in the sector for 3,500 of these in order to ensure a balance of skills and to avoid the drain of qualified professionals. Miners in companies that accept closure will have preference in the allocation of these jobs.

• Redundancies will be"non-traumatic", through the use of incentives to take voluntary and early retirement. The age of early retirement will fall from 55 to 52. This age is calculated by applying to the real age of the workers certain coefficients for length of service and risk that are applicable in the mining sector. This means that miners who have the required length of service will be able to take early retirement at just over 40 years of age. The Plan guarantees 78% of gross pay in the case of early retirement, with an annual review equivalent to the real retail price index (RPI). In previous restructuring processes, provisions for early retirement were 76% of gross pay with an annual increase of 3.25%. These conditions affect only private sector mining, since in public mining the agreement establishes remuneration equivalent to 100% of net pay.

• Support for various measures to boost the prospects for the regions affected. These include: improvements in communications in mining regions; a training plan for the sector; and creation of an employer network of small and medium-sized enterprises for the sector.

The companies will have to decide whether to sign the Plan by 31 December 1997. The companies that do not sign it will have their public aid cut by 10%. Furthermore, those companies whose workers do not figure in the social security system or are behind in their payments to the state will be excluded from the allocation of aid.

The State Coal Aid Agency, an agency within the Industry Ministry, will be entrusted with monitoring and controlling the measures provided for in the Plan. The management committee of this agency will include representatives of the State Industrial Participation Society (a state holding company), the Government, the Autonomous Communities with coal production on their territory, the councils of mining towns and the trade unions. The committee will also be responsible for negotiating the Plan with Carbunión and for studying its proposals.