The restructuring of Hunosa and the coal sector

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In early 2002, a further restructuring of Hunosa, Spain's largest coal-mining company, is under negotiation, within the framework of the 1998-2005 national plan for the future of coal mining, against a background of EU plans to cut coal production. The restructuring will involve a reduction of some 2,600 in Hunosa's 6,200-strong workforce, and trade unions dispute some aspects of the proposals.

In 1997, a 1998-2005 'Plan for the future of coal mining' was negotiated and signed by the government, the Trade Union Confederation of Workers' Commissions (Comisiones Obreras, CC.OO) and the General Workers' Confederation (Unión General de Trabajadores, UGT) (ES9707119N). The plan provided for: the progressive reduction of public aid to the industry; a 30% reduction in production, to be introduced gradually; a plan for the regeneration of mining areas; and a 30% reduction in employment (from 25,000 to 18,000 jobs) from 1997 to 2005 through 'non-traumatic' measures, with 11,000 workers made redundant and 3,500 relocated (four workers were to be relocated for every 11 made redundant).

Under the plan, production would fall from 18 million tonnes nationwide in 1997 to 13 million tonnes in 2005. It was planned to offer the workers who were made redundant pre-retirement from the age of 52, so with the application of the 'reduction coefficient' arising from the sector's health and accident risks, many workers would actually go into pre-retirement at the age of 48 or earlier. By September 2001, 10,842 workers had gone into pre-retirement.

The plan provided for a sum of EUR 301 million to be allocated for expenditure on infrastructures every year, coming to an investment of around EUR 2.4 billion over eight years. Furthermore a sum of EUR 60 million per year was allocated for aid to business projects set up in mining areas, coming to an investment of EUR 481 million over eight years (since 1998, aid worth a total of EUR 316 million has been given to 387 projects, and 6,087 jobs have been created). Finally EUR 30 million per year was provided for scholarships for children of miners and vocational training courses for young people in the areas affected, coming to a total of EUR 240 million over eight years. This represents a grand total of EUR 3.1 billion over eight years.

New negotiations

In early 2002, half-way through the duration of the 'Plan for the future of coal mining', new talks are underway to renegotiate the plan for the period up until 2005. This particularly affects Hunosa, the Spanish coal-mining company with the largest workforce, at just under 6,200. During the first half of the plan, 1998-2001, 3.46 workers were relocated for every 11 workers made redundant in the coal-mining industry and production was reduced slightly more than was expected. The European Union has insisted repeatedly that production and employment in coal mining must be reduced more drastically.

The government wishes to deal with the problems of the mining sector during the Spanish Presidency of the EU of the first half of 2002, which ends shortly before the European Coal and Steel Community (ECSC) Treaty is due to expire on 23 July 2002 (though the latter will be extended to avoid problems). The European Commission, at the initiative of the Transport and Energy Commissioner Loyola de Palacío (of Spanish nationality), has proposed a Regulation on the coal industry, as yet not adopted by the Council of Ministers, as a consequence of the Green Paper on energy supply security, which was issued in 2000. The Green Paper regards it as a strategic necessity to preserve coal production, even though it may not be competitive (though some non-producer countries do not share this view), because of the role that it can play as a source of energy helping to promote the independence of the European economy over a time-scale of 30 or 40 years. However, the current process of restructuring mines with no future should still be continued. The new Regulation proposed by the Commission (and approved by the European Parliament) affects particularly Germany and Spain, setting annual German coal production at 36.9 million tonnes and Spanish production at 10.8 million tonnes in 2007. Today, Spanish production is 13.5 million tonnes. However, it should not be forgotten that responsibility for energy policy remains with the Member States.

The government considers that this reduction in coal production is difficult because it would affect mainly Hunosa, and have major repercussions on the population and economy of the central Asturian basin, Spain's main coal-producing area.. The government supports the proposal of the trade unions to delay the closure of unprofitable pits until 2010.

Against this backdrop, the new negotiations at Hunosa relate to proposals from the State Holding Company (Sociedad Estatal de Participaciones Industriales, SEPI) to place workers over the age of 52 in pre-retirement in the period up until 2005, which would result in a workforce reduction of 2,662 workers, leaving Hunosa with 3,500 workers. Furthermore, 700 workers would be relocated outside the mining sector. SEPI also proposes the closure of four production units and will provide sufficient money to cancel the debts of the company, which have built up over 34 years.

The trade unions are generally in agreement with the proposed model. To avoid traumatic restructuring, they are in favour of pre-retirement as the way to sustain sufficient income to maintain demand and economic activity in the mining areas. Furthermore, the pension contributions of the workers concerned will continue to be paid, allowing them to receive their full pension at retirement age. The measures proposed will thus not involve a great erosion in income for the workers' families. Nevertheless, the unions feel that alternative economic activities should be fostered, such as services, in order to make the economy of the mining areas feasible and provide for future possibilities.

However, the unions are not satisfied with the fulfilment of the current agreement by the employers, because commitment on relocation have not been met. Therefore, a further 842 workers should be relocated in the coming period, plus an overspill of 322 workers from the previous period. Furthermore, the unions do not agree with the number of mines to be closed.

The unions state that there are two major structural problems affecting Spanish coal mining. First, the severe nature of the current restructuring is due to the fact that Spain was a late arrival to the EU. Many countries began to restructure in the 1970s, whereas Spain did so in the 1990s. Second, the restructuring may have a destabilising effect on the mining regions, which is aggravated by the fact that Spain is a peripheral country of Europe with a mountainous landscape that requires major investments in infrastructures in order to regenerate the economies of these areas.

Commentary

Coal is a major source of electrical energy in Spain. Some 38% of electricity is generated from nuclear energy, 35% from coal, and the rest from hydro-electric schemes, renewable energies, fuel oil etc. Of the coal used, 25% is imported and 75% is domestic. Reducing domestic production would lead to an increase in imports and dependence on other countries.

Behind this process is the future of energy strategy in Europe. It seems that the restructuring of Hunosa forms part of a strategic transformation of the mining sector, not only in Spain but all over Europe, following a model that is largely supported by the SEPI holding company and the trade unions. It is a strategic question that must be approached at a European level in order to achieve a common orientation. The EU's 2000 energy Green Paper suggests that it would be advisable to maintain a minimum coal production in Europe, at the cost of subsidising it, to avoid dependency in the event of a future energy crisis This could help to guarantee a core of domestic production that favours stability in the sector from 2010. (CIREM Foundation)