Trade unions oppose government strategy for mining sector

Trade unions in the mining sector have accused the government of being overly ambitious in its drive to reduce costs. The unions argue that the proposed divestment or shutting down of Polish coal pits, the reduction of coal production activities and the inevitable lay-offs arising from such efforts should be reconsidered. Employer bodies have also criticised the government proposals.

The conflict between the Polish Ministry of Economy (Ministerstwo Gospodarki, MG), represented in this instance by Deputy Minister Pawel Poncyliusz, and the mining unions began in early September 2006, as the government prepared to unveil its new Strategy for hard coal mining operations in Poland for 2007–2015. In a letter addressed to the Prime Minister, Jaroslaw Kaczynski, representatives of the Independent and Self-governing Trade Union Solidarity (Niezalezny Samorzadny Zwiazek Zawodowy ‘Solidarnosc’, NSZZ Solidarnosc) criticised the strategy document. They argued that trade unions in the mining sector had not been consulted in advance and accused the authors of the strategy of incompetence and of wanting to manage ‘one of the key sectors of the economy … in the style of the people’s commissars of the bygone era’.

Activists of NSZZ Solidarnosc also called for the immediate appointment of duly qualified individuals on behalf of the MG, to draw up an appropriate programme for the mining industry.

Main provisions of new strategy

The authors of the new strategy explicitly declare it to be a continuation of the multiannual programme concluded in 2006, which is aimed at overhauling the Polish mining industry and making it more competitive in a market economy. As the strategy outlines, the long-term goal of government policy for the sector is the ‘rational and effective management of the coal deposits within Polish territory, so that they may serve successive generations of Poles’; at the same time, the strategy aims to ensure that the ‘energy policy of the state will have a direct influence on the situation and on policies followed with regard to the sector’.

In its strategy, the government states its intention to regulate – through the Mining Act – the terms of its financing of the mining industry as the industry implements government decisions from previous years. In relation to the future of the mining sector in Poland, the strategy stipulates that coal companies will have to begin operating under the same general terms that apply to any business enterprise. In practice, this would involve tying remuneration to productivity results, reducing the level of coal extraction in order to align it with demand, investing in the implementation of ‘clean technologies’ and reducing the size of the labour force in the sector.

Further restructuring of sector

The Strategy for hard coal mining operations in Poland for 2007–2015 outlines some proposed organisational changes for the mining industry, most importantly the further restructuring of Kompania Weglowa S.A.; this could potentially involve the company’s privatisation through the floatation of a minority block of its shares on the stock exchange. Other issues raised include:

  • concluding the establishment of Grupa Weglowo-Koksowa, based on the present Jastrzebska Spólka Weglowa S.A.;
  • subsuming Kompania Wegla Kamiennego Budryk S.A. within the Jastrzebska Spólka Weglowa S.A. corporate structure;
  • divesting some of the coal pits now owned by Kompania Weglowa S.A.;
  • entrusting the present responsibilities of Spólka Restrukturyzacji Kopaln S.A. and Bytomska Spólka Restrukturyzacji Kopaln Sp z o.o. to a single entity;
  • turning Spólka Restrukturyzacji Kopaln S.A. into a dedicated entity specialising in water drainage from mines.

Employment policy recommendations

A separate part of the strategy is devoted to employment policy in the Polish mining sector. The strategy points out that, over the past eight years, total employment in the Polish mining sector has been reduced by almost 120,000 workers, with a corresponding reduction in recruitment. This has led to a shift in the age profile of the workforce: at present, some 43% of the sector’s employees will be eligible to retire by 2015, implying a considerable future labour shortage in the mines. As a result, it is estimated that approximately 40,000 workers will be needed by 2015 to make up for this labour shortage. The strategy’s authors emphasise the need for cooperation between mining companies and universities, in order to facilitate training graduates and equipping them with the necessary qualifications. In light of the potential problems likely to arise in the future, the strategy recommends the following employment policy provisions for the mining sector:

  • company directors to define minimum employment levels for the next four years by the end of 2006;
  • a freeze on hiring ‘above-ground’ workers, other than specialists or university graduates from key disciplines;
  • the implementation of social security packages to ease the redundancies of above-ground workers;
  • the implementation of social security schemes for underground workers, to be extended during the shutting down of mines.

The costs of these benefits would be covered by the employer’s own funds, or with the aid of other resources not specified by the strategy; recourse to public aid for these purposes would not be permitted.

This section of the strategy ends by stipulating that each mining company, in its capacity as an employer, ought to conclude an in-house collective agreement by the end of 2007.

Financial situation of sector

The provisions proposed by the new strategy are presented as a remedy for the deteriorating financial condition of the mining sector. The strategy acknowledges that the sector recorded an aggregate profit of PLN 9.6 million (about €2.53 million as of 18 December 2006) in the financial year 2003; however, it warns that, only for the significant writing off of debts owed by the mines, the industry’s aggregate result would been a loss of PLN 3.9 million (around €1.03 million). In 2004, a considerable increase in revenue from the sale of coal was recorded, with the net financial profits reaching PLN 2.6 million (approximately €680,000). However, in 2005, the peak in coal prices began to decline, with net profits swiftly dropping to PLN 1.2 million (about €320,000). The MG believes that the unfavourable pricing tendencies will persist for the remainder of 2006 and for several years to come.

Other strategic government actions

The strategy makes some general references to Poland’s energy policy and to other strategic government plans such as:

  • the National Reform Programme for 2005–2008, associated with the implementation of the Lisbon Strategy;
  • the National Development Strategy for 2007–2015;
  • general recommendations for improving innovation in the Polish economy over 2007–2013.

In addition, the strategy highlights how the fostering of a knowledge-based economy in Poland is inseparably linked with the coal mining industry, in that new technologies can be used to boost the competitiveness of such ‘traditional’ sectors.

Reaction of social partners

The national hard coal mining section of NSZZ Solidarity (Sekcja Krajowa Górnictwa Wegla Kamiennego NSZZ ‘Solidarnosc’), along with the Chamber of Industry and Commerce for Mining (Górnicza Izba Przemyslowo-Handlowa, GIPH), have taken the position that the government’s strategy is undermined by a number of internal contradictions. For example, they highlight the stated relationship between employment policy (which provides for continued redundancies) and the need to invest in technological modernisation.

The GIPH decries some of the proposals set out in the strategy as blatantly contradicting the strategic objectives and interests of mining companies. For instance, it points to the following measures:

  • the sale of coal pits by Kompania Weglowa S.A.;
  • the financing of the pits’ closure by the mining companies’ own funds;
  • the fact that coal companies are being prevented from seeking public aid for employment restructuring.

The GIPH feels that these proposals do not fit with the rest of the strategy and that their implementation would inevitably stall the entire restructuring process underway in the Polish mining industry, while undoing the achievements of recent years.

Moreover, the GIPH has taken issue with the suggestion that mining companies ought to implement collective labour agreements, pointing out that the drawing up of such agreements requires intent not only on the part of the employers but also of the employees. Obliging the employers to sign collective agreements, it argues, loses sight of the fact that the employees and trade unions will also need to be included in the discussions.

Meanwhile, the mining section of NSZZ Solidarnosc has criticised what it perceives as the ‘lack of correlation between the document and the draft national budget for 2007’, stating that the latter discredits the entire strategy. According to NSZZ Solidarnosc activists, the strategy represents a ‘set of loose guidelines, the analysis of which leaves one with the impression that the state does not have a concept as to how it should guarantee energy security for the country in reliance on the indigenous energy source presented in hard coal’.

At the same time, NSZZ Solidarnosc believes that the proposals concerning privatisation contradict previous declarations by cabinet parties, which had flatly ruled out the privatisation of Poland’s coal industry. NSZZ Solidarnosc goes on to argue that ‘the social and economic conditions now prevailing do not provide grounds for launching any privatisation process’.

The union recommends that the strategy should be rejected in its entirety and that the tripartite sectoral team should embark on the formulation of a new strategy – one which, unlike the strategy currently being proposed, would be compatible with the programme for the similarly struggling energy sector.

Commentary

The Polish coal mining industry is in need of a new strategic programme which, while taking into account the changes already implemented, would also take into account government policy in other strategic sectors, the challenges of innovation and the implications of EU membership and international markets. It would be unreasonable to expect that anything in the way of a comprehensive programme might be successfully implemented without the support of the social partners. For the time being, both the employer organisations and the trade unions have clearly expressed their opposition to the current proposals. It is unlikely that this impasse will be overcome in the near future, particularly given the political instability that prevails in Poland, which may in turn influence the path of government policies in relation to strategic sectors that are prone to unexpected adjustments.

Jacek Sroka, Institute of Public Affairs (ISP)

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