aaus-list @ ukrainianstudies.org -- [aaus-list] COAL MINERS - UKRAINE

[Taras Kuzio <t.kuzio@utoronto.ca>]

RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC
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RFE/RL (Un)Civil Societies
Vol. 3, No. 36, 4 September 2002



END NOTE

CAN TRADE UNIONS PROTECT UKRAINIAN MINERS' RIGHTS?

By Boris Dodonov

    Coal has been extracted in Ukraine for about 150 years. The
tragically high number of coal miners' deaths in recent years
means attention to peoples' lives has not improved since the 19th
century. About 3,700 coal miners have been killed since Ukraine
gained its independence in 1991; 190 have died so far this year.
While mining accidents with large numbers of casualties have receded
into history in the developed world, for Ukraine, they are in
today's news. This week, four more were killed in two separate
mine accidents, reported AP on 2 September.
    Not only do miners face abysmal safety conditions, they have
less jobs. Since 1990, coal production has been cut by about 50
percent. On the one hand, there is a shrinking demand for metallurgy
and fossil-fuel power plants, and on the other hand, Ukrainian coal
is difficult to extract and of low quality. It makes Ukrainian coal
noncompetitive, and it also makes it extremely inefficient due to the
very high labor intensity needed for the production. According to the
World Bank, in 1995 production costs of about 40 percent of all
coking coal- and 35 percent of all steam coal-producing mines were
higher than those of comparable imports.
    A major factor working against improvement in the miners'
lives is the price at which coal is sold in Ukraine. It does not
cover the costs of extraction, and therefore the production is
subsidized; the planned state budget subsidies are 5 and 7 percent of
the state budget's total expenditures in 2001 and 2002,
respectively. Are such subsidies in the miners' interests? In
fact, it is a vicious circle. Generally, subsidies do not create any
incentives to improve production efficiency, and in fact have ruined
the finances of the better-performing mines. Production subsidies in
turn result in very high labor intensity, and both coal miners and
managers have found they have a common interest in blocking
restructuring and cutting corners.
    Before the break-up of the Soviet Union, coking coal and coke
were delivered according to state purchasing orders. After 1991, the
situation changed significantly. Today, a few firms acting as
intermediaries control virtually 100 percent of the market.
Intermediaries gave commodity credits in the form of equipment to the
coal mines when the mines were cash-strapped due to nonpayment for
the coal supplied and nonpayment of the government's planned
subsidies from the budget. Now the coal mines must deliver coal to
the intermediaries to pay for the credits.
    There was no transparency in granting these credit, nor any
open tenders in order to obtain the necessary equipment. Unions and
parliamentary opposition were not strong enough to demand such
conditions. As a result, the value of the credits could be
substantially exaggerated. Widespread corruption within this system,
and an exploitative relationship to the mines and the workers become
the most urgent problems.
    The State Oversight and Review Department has revealed that
the state subsidies given to the coal industry are not spent for the
stated purpose. The Audit Commission has accused the government of
misappropriating World Bank loans for coal industry restructuring.
The World Bank's loan of $300 million approved in 1996 was
supposed to go towards implementing mine closures and social and
environmental mitigation. There was one key problem: lack of
transparency, especially regarding the social funds, still being
investigated. Open books are not the only issue. The actual
accounting procedures are questionable: investments in the coal
mine's development are not included in the balance sheet before
profit/loss estimation, and actual social costs are not shown against
profits, but reported separately or under-reported.
    Like other large industrial enterprises inherited from the
Soviet era, coal mines finance wages and pensions, but also day care,
hospitals, schooling, apartments, stadiums, health centers, and so
on. The companies try to shift these costs to local government, but
not always successfully; the life of the whole town depends on the
mines.
    Into this bleak and challenging landscape step the four main
trade unions in the coal-mining industry now: the Trade Union of Coal
Industry Workers (PRVP) which is a member of Federation of Trade
Unions of Ukraine (which inherited the Soviet trade unions); the
Independent Union of Miners of Ukraine (NPHU), a member of the
Confederation of Independent Trade Unions of Ukraine; the Independent
Union of Miners of Donbass (NPHD); and the Trade Union of Technical
Staff and Employees of the Coal Industry. Once powerful enough to
force the dismissal of the president and the parliament in 1994,
these unions can no longer protect workers' interests for several
reasons. 
    The government learned its lessons, too, from the strike era
of 1993 and 1996-97 and is striking back itself. First,
state-controlled prosecutors launched criminal cases against the
strike leaders of 1996, pronounced some guilty and conditionally
sentenced them to several years of jail. Second, the government has
also resorted to intimidating workers' leaders before strikes,
and some of their protest actions were stopped through police force
and violence, leading to several miners' hospitalizations. And
third, the state has used the well-tested principle of "divide and
conquer." The government will give financial support to a trade union
to prevent it from joining another's strikes. For example, the
government transferred about $1.1 to the PRVP for buying gifts for
the coal miners killed, and the Ministry of Fuel and Energy issued an
order calling for the transfer of part of the revenue from the sale
of coal to PRVP to finance coal miners' vacations in sanatoria.
As a result, the PRVP is negotiating with the government about wage
arrears and providing political support, in exchange for some
benefits.
    The NPHU is the most active defender of coal miners'
rights among the trade unions. Its leader, Mychaylo Volynetz,
constantly accuses government authorities and the managers of coal
mines of neglecting safety standards in pursuit of profit. Although
he does attract a certain amount of attention to the deplorable state
of the coal industry, the ability of the union to actually affect
change in the industry is rather dubious. First, such union leaders
have little opportunity to inform the public at large about the
troubles in the coal industry because the major mass media, owned or
controlled by state or business groups, are silent about these
issues. Second, the mines' managers are appointed by the Ministry
of Fuel and Energy. Their mission is to exploit the mines, and they
do not feel responsible to their employees, simply ignoring union
requirements about safety conditions, payment of arrears, wage
increases, and so on. It is very difficult for coal miners to find
other jobs in the depressed Donbass region in case of lay-off and
they are forced to work under these poor conditions.
    The NPHU was the first trade union that started linking
political to economic demands, and Volynetz has long defended
coal-miners' rights. Currently, he is a member of the
parliamentary faction of Yuliya Tymoshenko, who is in strong
opposition to President Leonid Kuchma and his government. Tymoshenko
was the deputy prime minister responsible for the energy sector in
the Yushchenko government for a year and had some success in cleaning
up the energy industries but was unable to get at the coal industry,
which she called the most corrupt sector. Ultimately, she faced
prosecution herself, which she battled and now faced again in August
2002 as the government tries to suppress her political challenge.
Another union leader, Yuriy Pivovarov, leader of the Solidarnost
trade union, was accused of stealing money and found guilty. His
lawyer say the charges are based on unlawfully obtained evidence,
because his arrest came within days of his leading of a demonstration
of 10,000 people urging the resignation of the head of the Donetsk
state administration.
    In sum, the depressed economy, the misappropriation of funds,
and the absence of public oversight -- all issues which trade unions
alone cannot battle -- lead to poor safety conditions, which in turn
lead to accidents and large numbers of deaths among miners. The
situation in the coal industry reflects the economy as a whole, as
other sectors are declining as well. Without deep political reform
and an end to repression, it is extremely difficult for trade unions
to protect the labor and human rights of the coal miners. State and
mine managers to do not feel any responsibility for the miners, and
safety rules are neglected in pursuit of profits.
    The newly created trade unions represent workers'
interests in better fashion than the old Soviet unions, but they
constantly struggle against various state agencies and employers, on
the one hand, and against the Confederation of Trade Unions on the
other. The confederation inherited all the property of the old Soviet
unions, and they treat the new unions as competitors, although the
Ukrainian Constitution does establish equal rights for all trade
unions. The legislative framework needs to be improved, however, to
enable them to more effectively protect workers' rights.
    The subsidies to coal industry should be transparent and
follow a schedule as well as be a subject to public control. Trade
unions can play a role, and an end to government harassment of them
and the political forces they rely on in parliament is crucial.
Credits from international financial organizations like World Bank
can mitigate the social consequences of industry restructuring and
closing coal mines. However, as Ukrainian experience has shown, a
portion of them might be spent on other purposes or simply stolen.
Therefore, their distribution must also be subject to government and
public oversight.

Boris Dodonov is a research associate in the Institute for Economic
Research and Policy Consulting Department of Structural Reforms in
Kyiv.