Continued opposition to coal mining reform

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In autumn 2003, protests by workers and trade unions are continuing against the Polish government's plans for the restructuring of the coal mining industry. The programme includes the closure of four mines in the Silesia region. The government has given assurances that there will be no redundancies as a result of the mine closures, but these declarations have met with distrust. Protests reached a head in September with a violent demonstration in Warsaw.

For many years, coal mining was a key element of the Polish economy. Coal extraction (based in the Silesia region) constituted a major component in the country’s overall industrial output. Psychological factors also played their part, with the official propaganda of the socialist-era People’s Polish Republic persistently propagating messages about how 'the black gold' guaranteed material well-being for all. In the process, mining was established in the public consciousness as the mainstay of the Polish economy, and miners came to occupy a highly regarded position in society. Coal output was consistently high, approaching 200 million tonnes per year during the 1980s, with employment levels to match - more than 400,000 people worked in the coal industry.

Working conditions in the mining industry were difficult, and the work inherently dangerous; at the same time, however, miners enjoyed high wages and comprehensive privileges. Brown coal and hard coal remained virtually the only fuel used by the national energy systems. By the 1990s, however, this picture began to change (PL0309101F). The level of coal production proved to be too high in relation to domestic demand, while European export markets began relying heavily on considerably cheaper coal from beyond Europe. The power generation and heating industries, meanwhile, began turning towards other fuels, especially natural gas and oil. Structural reform of Poland’s mining industry became inevitable, but numerous obstacles loomed.

Only in 1998 was a material decrease of coal output achieved, down to 116 million tonnes. In 1990, coal extraction had amounted to 148 million tonnes, and in 1997 to 137,000,000 tonnes. Employment in the industry, standing at 490,000 people in 1989, gradually fell to approximately 250,000 people in 1997 and to 155,000 in the subsequent few years. Employment reductions, however, did not stop there. Work efficiency at Polish mines was quite low in the early 1990s, when it was estimated that the average Polish miner extracted 400 tonnes of coal per year, compared with 1,000 tonnes for the average British miner.

Developments since 1989

The history of Polish hard coal mining since 1989 can be divided into five stages.

1. 1990-3. During this period, there was a hurried and incomplete adaptation to free market mechanisms. Subsidies from the national budget remained high. Given falling demand, extraction was markedly reduced, and efficiency was increased. The subsidies, however, were taking their toll on the finances of the state.

2. 1993-6, At the outset of this period, the government adopted a programme entitled 'Hard coal mining restructuring in Poland', which provided for the closure of a number of unprofitable mines, the adaptation of extraction levels to the ever-falling domestic demand, a strong emphasis on environmental protection, and improved working efficiency. The original 1993 document was closely followed by two more in the same year, one of them adjusting some of the original premises and the other defining in detail the objectives for 1994 and 1995. Rationalisation of the employment structure and concentration of extraction brought a a certain improvement in economic performance. In 1995, however, execution of the programme was halted.

3. 1996-7. This period followed the adoption by the ruling coalition of the Democratic Left Alliance (Sojusz Lewicy Demokratycznej, SLD) and Polish People’s Party (Polskie Stronnictwo Ludowe, PSL) ('post-communist' and farmers' parties, respectively) of a new restructuring programme, entitled 'Hard coal mining. State and sector policy for the years 1996-2000. A programme for adapting hard coal mining to market economy conditions and to international competition'. This programme adopted a rather conservative stance; it provided for a wide gamut of social cover for the sector’s employees (an avoidance of collective redundancies included), technical modernisation (paid for largely by the state), financial restructuring (through debt forgiveness), and export incentives. As implementation of this programme proceeded, extraction fell and employment levels were reduced, but the industry’s debts continued to rise.

4. 1998-2002, The outset of this period was marked by adoption of a document entitled 'Hard coal mining reform in Poland for 1998-2002' by the conservative government of the time of Electoral Action Solidarity (Akcja Wyborcza Solidarność, AWS) and the Freedom Union (Unia Wolności, UW). This new programme envisaged a determined reduction of employment, the liquidation of consistently unprofitable mines, and the privatisation of those which turned a profit or at least presented perspectives of doing so in the future. A generous 'social packet' for miners leaving work in the industry was provided for. The original premises of this programme underwent adjustment in late 1999. Its implementation brought tangible results; almost 100,000 employees left the sector (40% of the total mining workforce at the programme’s outset), and work efficiency improved to an annual average production of 700 tonnes of coal per miner. In the space of three years, this reform programme consumed more than PLN 6 billion (according to 'Górnicze związki zawodowe wobec problemu restrukturyzacji branży', Jacenty Siewierski, in Związki zawodowe a restrukturyzacja. Bariery czy kompromis?, 2003).

5. 2002-present. After the SLD party returned to power in the wake of a coalition crisis, the programme pursued by the previous cabinet was ended and a new one was unveiled in its stead, 'Reform of hard coal mining in Poland in 2003-6'. This provided for radical organisational changes, with the existing coal companies to be replaced by three extraction holding groups. Other programme premises included: continued employment reductions - with the number of jobs to be shed oscillating between 19,000 and 27,000, depending on the exact scenario ultimately chosen; writing off some of the industry’s massive debt; a freeze on remuneration until the programme’s conclusion; privatisation of the more profitable mines and closure of the loss-making ones; and the introduction of a six-day working week. The key components of this programme met with strong criticism from the trade unions in the mining industry. In September 2002, a referendum was held in a number of employing entities with the purpose of gauging employee opinions about the planned reform measures, in which an overwhelming majority of the respondents opposed the proposed changes. Long and complex negotiations ensued, eventually making it possible to reach a compromise solution, in the form of an agreement concluded between the government, trade union representatives and employers organisations on 11 December 2002. This agreement provided that the government would suspend its execution of the programme until a team of experts completed additional analyses measuring the actual demand for coal, thus providing a basis for deciding how many coal pits should be closed. It was also decided to establish Kompania Węglowa SA, incorporating four mining companies and the five entities grouped within Bytomska Grupa Kapitałowa, and to guarantee to the employees of the liquidated mines indefinite employment in other mining operations.

For and against change

The progress of structural changes in mining is also being influenced by external pressures. One such factor is the general tendencies prevailing in world energy markets, as mentioned above, which have left Polish coal rather uncompetitively priced. Another has to do with the need to adapt to the rules governing the EU internal market. The expiry in 2002, after half a century, of the European Coal and Steel Community Treaty marked the symbolic end of the 'coal era' in the EU (EU0209203N). Coal is now extracted in only four EU countries - Germany, Spain, the UK and France. From Poland’s accession to the EU in 2004, its collieries will no longer benefit from the current protection of the domestic market against imports. Questions relating to imports will now be governed by anti-dumping and anti-subsidy instruments binding within the EU.

The mining industry is characterised by a high level of unionisation, which translates into a strong representation of collective interests. There are 13 unions active within the Polish coal industry, with the largest being the Miners Labour Union, affiliated to the All-Poland Aliance of Trade Unions (Ogólnopolskie Porozumienie Związków Zawodowych, OPZZ) and the hard coal mining section of the Independent and Self-Governing Trade Union Solidarity (Niezależny, Samorządny Zwiazek Zawodowy Solidarność, NSZZ Solidarność). A notable role is also played by smaller, more militant unions. The extensive ties connecting trade union organisations and political groups, a result of Poland’s political history, have provided for effective lobbying in the corridors of power. The authors of all restructuring programmes have had no choice but take into account the opinions of the mining unions.

The relations between employers and employees in the mining sector are also important. It has been the rule that, under conditions of direct threat - ie when faced with the imminent implementation of a new restructuring programme - these two groups have closed ranks, putting up a united front against the government and the changes it would effect. This phenomenon may be explained in terms of common interests prevailing in a region (Silesia) in which coal mining, while on the wane, remains the source of income for thousands of households. The social costs of restructuring of the sector have already been considerable, and the future does not bode better. On the other hand, the directors of coal companies have often found it expedient to work through full-time trade union officials to mobilise union members at the workplace level so as to exercise leverage on the national administration - this mechanism has stood them in good stead, allowing them to pursue their own interests at the same time. In recent years, a debate has arisen about the plethora of business interests and connections springing up around the mines. Dealing in the debts of collieries appears to be particularly lucrative aspect of these activities. The Deputy Prime Minister, Jerzy Hausner, has recently spoken out against this 'debt husbandry' in a speech to the lower chamber of parliament. In his opinion, responsibility for this state of affairs rests with the directors of the coal companies and of individual mines.

Conflict over latest restructuring programme

The December 2002 restructuring agreement brought no long-term solution of the problems plaguing the coal industry; it only bought the parties concerned a little time, postponing some hard decisions and a seemingly inevitable conflict. In keeping with the agreement’s provisions, Kompania Węglowa SA was established in February 2003. The most controversial element in the process was the decision specifying the mines which are to be shut down. With a view to assuring the general public that this choice was informed by objective considerations, all mines were subjected to assessment under a uniform procedure, with points awarded for activity levels, extraction effectiveness (seams of 1.5 metres or more in thickness), safety (natural hazards), working efficiency, environmental impact, and cost per unit for obtaining energy (in relation to the calorie values for coal).

In August 2003, the four mines scoring lowest in these assessment - Centrum, Bytom II, Bolesław Śmiały, and Polska Wirek - were listed for closure (PL0309105N). Between them, these four mines in Silesia employ more than 8,500 people. Most of these employees would be assigned to work in other mines, and the remainder would benefit from pre-retirement benefits (PL0211108F) and from vocational activation measures. During the recent preparation of draft legislation on restructuring of the mining industry, the total number of people expected to lose their jobs in the sector until 2006 was put at 28,000. A range of 'social cover' instruments has been drawn up for their benefit, as set out in the table below.