Labour strikes in Serbia: the Pit of Foreign Investment

July 31, 2017

22 January by Aleksandar Matković

Photo: Samostalni sindikat FAS / Facebook

A number of strikes in recent months points to wrong policies for subsidizing private investment and curtailing labor rights.

The entire economic politics of the Serbian Government is based on two assumptions, both of which are false. Firstly, that the existing labour market problems cannot be solved by domestic investment, and secondly, that the best way to attract foreign investment is to diminish the labour price and attack labour rights. The first turns a blind eye to the structure of unemployment, which, according to domestic research, holds a sufficient supply of all educational levels and professional skills needed to answer to the current demands of the labour market; the second ignores the fact that foreign capital, which actually returns to its countries of origin, presents no miraculous salvation for the staggering Serbian economy. In short, investments are not chasing after cheap labour, but high profitability : low cost of labour is worthless without state subventions, as they are worthless without an increase in state revenues. The recent wave of mass strikes shakes the core of such economic policies – and what connects them is the fact that they broke out in foreign-owned companies.


The topography of labour strikes

Fiat Chrysler Automobiles

The city of Kragujevac, February 24. The strike of the workers in Kragujevac did not start in June in the production halls of Fiat Chrysler itself. It actually started in February in a factory called Magneti Marelli, which produces bumpers, exhausts, and interior automobile plastics as a part of the Fiat production system. Sixty out of a hundred workers involved in bumper assembly protested against low wages. Although the workers’ management was discharged and relocated to production, the strike continued until the demands for salary increases in that part of the factory were fulfilled. This event preceded the June-July wave of workers’ strikes both in form and the structure of demands.

On June 27, 2000 of Fiat Chrysler workers organised into two shifts and initiated a strike that was also triggered by unbearably low wages. Their demands were “combative”: they insisted on an increase of gross base salary from 38 000 Serbian dinars (RSD, approx. 300€ ) to 50 000 (approx. 400€), demanded bonuses for efficiency, the improvement of working conditions and night transport to be organised for those employees who are working overtime. Although the article 82 of the collective bargaining agreement obliged the employer to enter negotiations with the workers in case of a labour strike, the employer remained adamantly silent up until July 19. The chief operating officer (COO) of the FCA, Alfredo Altavilla, addressed the Serbian government on the 12th, stating that the company policy is to refrain from entering in any kind of negotiations with the workers while they are in strike, and announced a willingness to open negotiations in case the strike was stopped. The illegal stall and media pressure influenced the organisers of the strike, divided into two shifts. While the “first” shift opted to call the strike off, the “second” won over the majority of the workers in strike with its decidedness not to back down, after which the production remained in halt for a week more, until July 19. Differences in the trade unions’ approaches to the problem were also revealed: while the Confederation of the Autonomous Trade Unions of Serbia (CATUS) was in favour of the discontinuing of the strike, TUC “Independence” was against it.

Before the news reached Italy, causing the Italian trade unions CGIL and FIOM, who were engaged in years-long confrontation with the Fiat CEO’s, to issue letters of support to the Kragujevac workers, the ministers in the government of Serbia have continuously attacked the strikers. Prime Minister Ana Brnabić kept repeating how Serbia’s GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
and its exports suffer great loses (which was a false statement, given that the profits from Fiat automobile production do not fill the domestic budget but go to Fiat anyway), claimed the existence of hidden political forces assumingly driving the strikes, and warned, along with the Minister of Economy Goran Knežević, that the production might move to Poland. The Minister of Labour Zoran Đorđević gained a bit of notoriety himself with his very sincere and heartfelt plea to the workers to “show some love for Serbia in their demands”.

Although the Serbian Government as a minority shareholder (holding 33% of the company shares) was obliged to participate in “social dialogue” from the very beginning, it was only the repeated threats of the FCA directors that caused a change in tactics, and the Government started negotiations only on the tenth day of the strike. Following this, both trade unions accepted to stop the strike and enter negotiations with the Government on July 19, against the will of two thirds of the workers on strike, despite a protest being scheduled to take place on the same day in front of the City Assembly of Kragujevac. The president of the CATUS of FCA, at the same time president of the board of workers on strike, Zoran Marković, admitted this to be a strange solution: ”For a strike to end without an agreement is clearly a precedent in unionised struggle; however, we won a possibility to negotiate for all that we fought for these past 16 days”.

On Tuesday, July 25, Marković, acting as a representative of CATUS, signed an agreement with general manager of FCA – Serbia, Silvia Vernetti, with the verification of Minister of Economy Goran Knežević. Afterwards, however, two different press releases wereissued: according to Marković, the agreed upon wage raise was 9,54%, which would be further adjusted to the inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. rate (as should have been done either way). On the other hand, according to the government, the agreed upon wage increase was just 6.7%. None of the sides cared to explain the reason behind this difference in numbers. Apart from that, compensation for night transportation was to be doubled in the future, and a technical measurement committee formed to facilitate the optimisation of working processes. A possibility of negotiations about the implementation of bonuses for efficiency starting in 2018 has been “won” over. The price for this, however, was an unconstitutional agreement by the trade union representatives that the workers will refrain from striking during the next three years.

Workers of FCA claim that wages for July have been reduced only two days after the agreement was signed.


Fridge freezer factory “Gorenje Valjevo”

The city of Valjevo – on July 12, around 600 workers in the second shift from both factory halls of Gorenje-Valjevo (a production of freezers and refrigerators employing 1500 workers) formed a negotiating team of 15 and entered a few hours’ long strike motivated by low wages and poor working conditions. The workers in production, maintenance, storage, and quality control are exposed to heat exceeding 40°C, without air conditioning, while the salaries in production are in the range of 200-300€. Workweeks include Saturday, and the days off can only be used in Decembre; overtime pay is seldom paid regularly, and frequently gets factored into the wage base in order to fit into the legally prescribed minimum wage. For all of this the workers involved in production asked for a monthly wage raise of 41€ as well as for improvement of working conditions for 850 employees. The resident trade union, which at first distanced itself from the labour stoppage, signed an agreement concerning hot meal allowance with the employer on the July 12, upon which 700 workers denied trust their union, re-entering a strike on July 14. On July 18, an agreement was reached, including a monthly wage increase of 33€ for all employees besides foremen and shift managers, and a hot meal allowance of 8€ for all workers, regardless of their work position. The workers employed in production can look forward to a one-off payment of 25€, as a compensation for poor working conditions, and the instalment of air conditioning.


„Goša“ railway car factory

Following the suicide of a fellow worker, Dragan Mladenović, which was ominous for the election campaign, the workers in Goša factory entered a months-long strike protesting the (on average) 5 years long delay in the payment of salaries and the delay in issuing health assurance certificates lasting up to two years. The company owned up to 4960€ per worker. For this reason the workers’ primary demand was an emergent one-off payment of 826€ per worker and a successive payment of all delayed salaries in 16 consecutive transactions, guaranteed regularity for future payments, and guarantees Guarantees Acts that provide a creditor with security in complement to the debtor’s commitment. A distinction is made between real guarantees (lien, pledge, mortgage, prior charge) and personal guarantees (surety, aval, letter of intent, independent guarantee). for establishing continuity in the length of service and payment of contributions for retirement and social insurance. On May 15, after a few months long work stoppage, an agreement covering all of the stated issues was signed with the employer, who obliged to place the first down payment before May 25.

However, already during that period the employer failed to pay the full amount (by paying 578€ out of the promised 826€), causing the workers to re-enter strike. In lack of a reaction from the authorities and the owner, on July 5, the workers decided to radicalise the strike with a three-hours long blockage of a railway passage on an international railway corridor Belgrade-Thessaloniki and a major highway leading to the town of Topola, repeated in the following days. By doing so they de facto blocked the shipment of ordered merchandise to Slovakia, the location of the company headquarters, and conditioned further shipments with salary payment. According to press releases, the company was unable to fulfil its obligations towards the customers due to the strike, causing some of them to press charges, while the court enforcement officers began to claim company property. The company has also been sued by several workers. On the July 17, following the aggravation of the situation, the president of the board of striking workers, Milan Vujičić and three other workers began a hunger strike. Only on July 21, after the negotiations with the government, the workers announced that they would refrain from the future blocking of the railway, but would continue the strike until an agreement is reached. The hunger strike is „paused“, and further negotiations were scheduled for July 26.

According to the latest news, the negotiations failed, causing the workers to announce a radicalisation of strike.


MB Ratko Mitrović – civic construction industry

Belgrade – MB Ratko Mitrović is the only domestically owned company on this list, and the only exception in that respect. The workers of MB Ratko Mitrović perform important public works and joined the July strikes. On July 13, work got stopped in four construction sites: in Ruzveltova street, Mije Kovačevića street, Slavija square (all in the capital of Serbia, Belgrade) and a railway construction site in Vreoci municipality around 100 workers stop work because of unpaid wages for February and May 2017. Their health insurance certificates have not been issued since March, preventing them from using healthcare, and transportation compensation for March, April, May and June are also in delay. In a statement for Beta news agency the president of the resident trade union, Mile Čolić, stated that the employer Branko Mitrović immediately promised to pay the May wages, and to agree about the overdue payments with the workers. The outcome of the matter is so far unknown to the media.

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Photo: Iva Janković


Broken unionism and paper tigers

A few more labour strikes should be mentioned: the protest of the Kragujevac female workers in Fori textile factory where workers where requiered to perform 12 hour shifts for minimal wage, on March 29; the strike of 600 workers of a South Corean company Yura in the city of Niš last April, caused by shamefull working conditions; the strike of the Geox shoe facctory workers in the city of Vranje; and of the workers of Falc East on May 15, in Knjaževac municipality, caused by unpaid overtime. What connects all of these labour strikes is the fact that all of them present a consequence of the current economic policies, which proved to be unsustainable in the long run. Given that the authorities not only stay on this course, but in fact directly obstruct the development and sustainment of domestic production, it shouldn’t come as a surprise to see that the chaotic foreign investments cause a crisis of reproduction of the domestic labour force. By this one means the inability of workers in most industries in Serbia to survive and maintain a bare existence due to low wages, lack of opportunity for long term employment and diminished labour rights. Although the workforce on the labour market is versatile, foreign investment is mainly channelled to production with low degrees of product finalisation which demand mostly manual labour in the assembly of auto-cables, footware, knitting of socks, etc. This not only leads to sub-employment, but also causes a short work life of those employed, , who are replaced after exhaustion, poor health or inability to financially support itself due to low wages.

However, the question remains what to do to overturn such state of affairs: although the strikes revealed the aforementioned social contradictions, what is often glossed over is the complex context of their development, mutual relations and organising.

1) First of all, the strikes got prioritised, leading to competition instead of coordination. Although they stated mutual solidarity, they also opposed their own cooperation. Thus the workers of Goša claimed to be overshadowed by Fiat, the cooperates of Fiat lamented over their dependency to the strikers in the central factory, while the workers of Fiat remained overshadowed by their own trade unions. The government itself contributed to this situation by focusing exclusively on Fiat, but it needs to be mentioned that the strike of Fiat workers fits neatly into a contexts of a wave of strikes in automobile industry across Europe (Audi in Hungary – for increase in salaries, same with Škoda in Czech Republic, not to forget Folkswagen in Slovakia, whose victory represents a precedent in East European context).

2) Not only did the prioritisation of strikes between different companies take place, but it existed also within one and the same company, in this case most of all in the abovementioned Fiat. Formal expressions of solidarity cannot mask this. Contrary to leftist wishful thinking, the trade unions acted in a regressive rather than progressive manner: according to the workers’ statements, the trade union fractions stole the stage from the workers; trade unions in Goša were only there to help with the logistics, but took no formal position in the strikers’ board; in Gorenje they consciously distanced themselves from the strike.

3) All trade unions still believe in the ideologem of social dialogue. This played a major part in even the overall “combative“ strike of the trade unions in Fiat, resulting in a paradoxical solution to triumphantly back down from the strikes with no guarantees that the workers’ conditions would be met. In the outcome the government didn’t persuade Fiat to negotiate with the workers, but it managed to push the workers back to their workplaces.

4) Foreign investments are paired with very mutually differing conditions for workers’ organising, and, frequently, with hard limitations for unionising (whether it aimed at “combative” demands such as wage increases and improvement of working conditions, or “existential” demands such as the payment of overdue salaries and welfare). In such circumstances, instead of praising unionising, we should talk about the need of its transformation in the spirit of the profound changes of the Serbian workforce. Apart from the standardisation of the precarious labour prescribed by the Serbian Law on labour, trade union activities are further limited in the foreign owned companies. Namely, while domestic trade unions do not recognise precarious workers, they have an even harder time functioning within foreign companies with mutually different labour policies (one of the most radical being the Chinese company Hesteel which recently requested adjustments of the Law on labour from the Serbian government). The questions of allying and organising in the context of production internationalization remain unanswered. As Bojana Tamindžija from the Clean Clothes Campaign, researching work conditions in Geox company in Vranje, explains:

  • “On the one hand the trade unions, who lost most of their membership in the previous decades of aggressive deindustrialisation, are forced to enter foreign companies; and on the other they agree to compromise with the management, in order not to leave their members exposed to pressure. There is a broad field of struggle open for the trade unions in Serbia today, but whether they can answer the needs of the workforce depends on their resources and capacities.”

When it comes to struggles in the national and global context. Tamindžija concludes:

  • “Foreign companies frequently threaten to relocate production. Although such threats are usually just paper tigers, they point to the need of international trade union cooperation within certain industries, but also in general.”

The threats that the production will flee the country are indeed essentially empty since the: Serbian workforce is by far the cheapest in Europe, and among the cheapest in the world. Workers in automobile industry in Kragujevac earn 2.25 $/hour, while in China they earn the $6, in Czech Republic $9.85, in Slovakia $12.5, India being the only country with the cheapest workforce in this industry, with 1.09 $/hour. This should end all further discussion: with state subventions exceeding the salaries by far, even while the minimum wages don’t get paid regularly, there should be no doubt about the end result of current investment politics. The European light at the end of the transitional tunnel has shown its dark face at Fiat production lines, and the labour strikes prove that this harsh truth has been acknowledged, before all else, even by the cheapest workforce of today’s Europe.


Translation from Serbian: Iskra Krstić

This article was originally published in Serbian on July 28, 2017.


Source: Masina

Author

Aleksandar Matković

is a Serbian philosopher and activist, currently working as a researcher at the Institute of Philosophy and Social Theory and coordinator of the Regional Scientific Centre of the IPST in Novi Sad. His work deals with theories of fascism, critique of political economy and contemporary Marxism. He is a PhD candidate at the Research Centre of the Slovenian Academy of Sciences and Arts in Ljubljana, writing a dissertation on the political economy of fascism.


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