Social aspects of restructuring hard coal mining in Poland

Social aspects of restructuring hard coal mining in Poland

Resources Policy 1994 20 (3) 19%201 Social aspects of restructuring hard coal mining in Poland Andrzej Karbownik and Jan Stachowicz Polish Foundation...

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Resources Policy 1994 20 (3) 19%201

Social aspects of restructuring hard coal mining in Poland Andrzej Karbownik and Jan Stachowicz Polish Foundation,for Management Promotion, ul. Wroclawska 62, 41-902 Bytom, Poland This paper presents an assessment of the changes in employment in the hard coal mining sector in Poland and a forecast of future employment changes, both against a backdrop of the radical restructuring of this industry. The character and complexity of employment restructuring in this sector, unprecedented in Europe, represent the legacy of central planning. The paper also discusses measures to limit the adverse social consequences of restructuring.

Hard coal mining in Poland was centrally managed for over 40 years. It now is undergoing a very difficult time because of the need to adapt to the conditions of a market economy. Unfavourable economic and financial conditions over the last several years have made the process of adaptation even more difficult. The bankruptcy of hard coal mining is unimaginable given the energy needs of Poland, the direct employment of more than 300 000 people in this sector, and the dependency of more than one million people in the state of Upper Silesia on coal production (direct employment, as well as indirect employment in industries serving the hard coal sector). Restructuring in the hard coal sector thus must take place together with finding solutions to the social problems of restructuring. Programmes for restructuring the hard coal sector thus have needed to consider the social outcomes of the process: (1) how significant the reduction in employment would be; (2) what measures should be taken to limit the adverse social consequences of large-scale dismissals, including a social welfare system for displaced underground miners, creation of new jobs, retraining programmes and social security guarantees. The accompanying paper by Morawski outlines the overall restructuring programmes (this issue of Resources Policy). Of particular importance when considering social consequences of restructuring are plans to close mines deemed permanently uneconomic or those with depleted reserves. The potential advantages such closures are: 198

(1) avoiding eventual bankruptcy of these mines;

(2) (3) (4)

(5) (6)

reducing financial losses on production from mines being closed; reducing unit production costs for the industry as a whole; achieving the same levels of overall hard coal production at much lower costs by increasing output from the low cost mines that remain in production; limiting the environmental damages from mining; liquidation of the most burdensome and dangerous workplaces underground.

Table I presents the current schedule for mine closures. In addition, during 1994 and 1995 partial liquidation of four other large coal mines is anticipated. The cost of closing the permanently uneconomic and depleted mines is estimated at 2660.2 billion zloty (approximately US$l20 million), out of which 587 billion zloty are devoted to alleviating the social problems of closure.

Reductions in employment In 1993 a number of actions were taken and decisions made, the most important of which were:

(1) the signing of the Additional Protocol Number 5 to

(2)

the General Labour Agreement, 6 October 1993, regarding social protection; acceptance at the General Meeting of Coal Companies of resolutions: forbidding the hiring at mines of newcomers from beyond the coal sector; permitting employment of part-time workers who are eligible 0301-4207/94/030198-04

0 1994 Butterworth-Heinemann

Ltd

Social aspects of restructuring Polish coal mining: A Karbownik and JStachowicz Table 1 Timetable of production termination and closure of mines following the decisions currently in force Mine

Production termination

Walbrzych mines Nowa Ruda Saturn Sosnowiec ZorY Barbara-Chrozow Paryz Siemianowice Pstrowski

31 December

Table 2 Employment

reduction during 1993 in hard coal mines

Specification

Active mines Liquidated or closed mines

Mine closure final date

1994

31 December 1995 3 1 December 1995 3 1 December 1994 31 October 1993 I July 1994 3 I December 1994 I July 1994

3 1 December 2001 3 1 December 3 I December 3 I December 3 1 December 3 1 December 3 1 December 3 I December

December I992 Total Underground workers Surface workers December 1993 Total Underground workers Surface workers Total employment reduction

1995 1996 1996 1995 I995 I995 I996 1996

Total

299716 211625 88091

30434 21767 8667

330 150 233 392 96758

280995 205 322 75673 18721

24213 17489 6 724 6221

305 208 222811 82397 24 942

for old-age pensions only when they would be indispensable for mining operations; and making wage increases dependent on productivity increases measured by the volume of coal sold per employee. (3) establishment of a regional headquarters and regional offices of employment restructuring.

In the second phase of restructuring the hard coal sector (see the accompanying article by Morawski), further reductions in employment are envisaged (Table 3). These reductions are possible because already in 1994 a system of social protection, financed from the state budget, is functioning.

The number of workers employed in hard coal mines decreased in 1993 by 24 942 people (out of a total workforce of 330 150 workers in December 1992). Of these, 18 72 1 were from active mines and 622 1 from mines in the process of closure (Table 2). Figure I shows that meaningful drops in employment began in April 1993. In the months that followed about 2-3000 workers a month lost their jobs. It is noteworthy that this reduction occurred without any group dismissals, defined here as dismissals of ten percent or more of a workforce once or within three months for companies with more than 1000 employees.

Steps to limit the social problems of restructuring The success of the programme of hard coal restructuring will depend in no small way on the skill with which potential social problems are handled. The programme seeks to limit the adverse social consequences through moderate reductions in employment due to both natural (or normal) attrition and privatization of the surface infrastructure of mines, voluntary acceptance of severance packages, avoiding group dismissals and making the state be responsible for mine closures. The following

335 000

December January

February

March

April

May

June

July

August September October November December

1993 Figure

1

Employment in mines proper (70 mines)

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SociaI aspects of restructuting Polish coal mining: A Karbownik and JStachowicz Table 3 Forecast employment (thousand persons)

All mines Employment reduction total Out of which due to: Natural wastage and mine surface privatization Voluntary taking up of social protection scheme

status in mines 1994 and 1995 Status as of 31 December 1993 1994

1995

305.2 _

273.3 31.9

252.8 20.5

_

24.9

17.7

_

7.0

2.8

paragraphs describe specific tasks aimed at limiting social problems of job losses.

the

that funds to implement the protocol will be secured annually from the state. Table 4 summarizes the types of social protection, the requirements to qualify, and the amounts and procedures of payment. To monitor and control social payments, the State Hard Coal Agency, directly responsible to the Minister of Industry and Trade, designed and operates a data bank with information on payments made to workers in mines being closed, coal companies, coal mines operating as individual joint stock companies, mine development companies and shaft sinking enterprises. The data bank aides in the determination of the eligibility of specific workers for payments, as well the authorization and monitoring of payments.

Wage policy In 1994 the objectives are to

of the restructuring

programme

(1) unify remuneration principles; and (2) link wage increases to productivity increases, while at the same time preserving the level of real wages. Social protection Additional Protocol Number 5 to the General Labour Agreement, noted earlier, created the legal basis for introducing social protection (eg miners leaves, social allowances) for underground workers in hard coal mines dismissed or expected to be dismissed because of mine closure or partial liquidation of a mine. The protocol applied only to those workers who took advantage of its provisions by 3 1 December 1993. As of this date, 1707 workers had taken advantage of the protocol. Of this number, 1643 took advantage of the social allowances scheme, and 64 of the miners leave scheme. As a result of discussions by representatives of the Ministry of Industry and Trade, the Association of Employers and trade unions on 1 March 1994, Additional Protocol Number 6 to the General Labour Agreement was signed, directed at the social problems of those who, because of actions of employers, will leave their workplaces in 1994 and subsequent years. It is assumed

Table 4 Overview of the social protection plan (effective

Creating new workplaces To limit the adverse social consequences of restructuring, both short- and long-term activities are envisaged. The urgent, short-term activities, aimed at maintaining professional activity for displaced workers, include: (1) retraining to allow workers to change professions; (2) employment in the maintenance of the technical infrastructure of towns and communities; and (3) the social protection system discussed above. Activities with benefits only over the longer term should include development of a private sector, investment of public financial resources, and investments with foreign capital. Training personnel The State Hard Coal Agency coordinates training programmes under the restructuring programme, focusing particularly on creating leaders for the small and medium-sized companies established during restructuring and more generally on advancing the knowledge of managers. To reach these objectives, the Agency has organized a large number of training activities involving several hundred senior managers from the hard coal sector. To facilitate cooperative ventures in mining involving both Polish and foreign organizations, specialized train-

from 1 January 1994)

Mining leaves Applicable

when

Maximum length of entitlement Value and manner of payment

200

Social allowances

A worker lacks by three years or less the work experience or age to be eligible for an old age pension 36 months I. 55%of monthly earnings, not less than 3 630 000 zloty in total 2. Value adjusted quarterly on the basis of average wage increase at mines 3. Paid monthly for a period of 36 months 4. A worker may apply to receive the entire payments in one lump sum

A worker does not qualify for a mining leave 24 months 1. 55% of monthly earnings, not less than 3 300 000 zloty in total 2. Value adjusted quarterly on the basis of average wage increase at mines 3. Paid monthly for a period of 24 months

Resources Policy Volume 20 Number 3 September I994

Social aspects qf restructuring Polish coal mining: A Karbownik and JStachowicz

ing programmes have been organized on industrial keting, technology transfer, quality management, sonnel management and modern techniques methods of operations management. Social security

guarantees

The following

guidelines

marperand

apply:

(1)

No group dismissals are envisaged for underground work crews at active hard coal mines. (2) Employment reduction at active mines will be accomplished by: natural attrition (workers retiring to collect old age or sickness pension for which they qualify etc) or voluntary redundancy; no recruitment of new mine workers from outside the hard coal mining sector; voluntary acceptance of social protection measures such as so-called mining leaves and social allowances; and transfer of mine employees to newly created economic units not necessarily involved in mining. (3) No additional mine closures are envisaged beyond those identified in the programme. (4) Each mine worker losing his job in a liquidated mine will have the option to either work in another active mine or to take advantage of the social protection scheme. (5) For surface mine workers losing their jobs because of mine closure, training will be provided to permit them to change or enhance their professional qualifications in light of existing professional needs within a given region of the country. Employees of mines under closure will have the (6) opportunity to train to be among the some 650 future businessmen who will run their own businesses. These businesses will be established from the redundant fixed capital of mines. All reasonable measures will be taken for these companies to obtain soft credits from auxiliary resources (eg Struder) and the Labour Fund to use to begin their operations. Struder is a fund established by the EEC for regional development support. (7) The Mining Labour Agency will assist employees of the hard coal mining industry who want to change professions and establish their own small companies by creating so-called entrepreneurship incubators, which will make available to these companies office facilities, as well as administrative, technical, and consulting advice. (8) In 1994 the Polish government will put forward a legal initiative to regulate the system of social protection for underground mine employees, The initiative will propose that the following periods of time be included as work experience for the purpose of calculating old age pensions: periods of obligatory Resources Policy Volume 20 Number 3 September

1994

military service, of so-called mining leave, and times when workers took advantage of social allowance payments. Moreover, the initiative will propose that for each year of work, workers receive either 1.8 years (for old age pensions) or 1.5 years (for sickness pensions) of service for the purpose of calculating benefits. (9) Wage increases will be linked with productivity increases, while at the same time trying to maintain the real value of wages. ._ _ _ (10) It is guaranteed that mine workers will have available to them: social and housing funds; annual and health leave; other rights, privileges and benefits resulting from the resolution of the Council of Ministers of 30 December 1981, on the privileges of coal sector employees, from the Miners’ Charter and from the General Labour Agreement for the employees of mining enterprises of 2 1 December 199 1. (11)All mine employees losing their jobs are entitled to free medical care for six months after leaving their jobs. (12) All mine employees losing their jobs are guaranteed a free medical examination to determine their eligibility for obtaining sickness pensions for profesdisability pensions, and sional illnesses, rehabilitation allowances.

Conclusions An important goal of programmes for restructuring the hard coal mining sector of Poland is to avoid the potentially adverse social consequences of worker displacement. The second phase in the restructuring programme (1994-95) includes financial resources from the state for a variety of social protection measures for redundant miners. To the extent possible, however, reductions in employment will be achieved through natural attrition.

References Additional Protocol Number 5 of 6 October 1993, to the General Labour Agreement for employees of mining enterprises of 21 December 1993. Additional Protocol Number 6 of 1 March 1994, to the General Labour Agreement for employees of mining enterprises of 2 I December 1993. Energy Problems Department, Institute of Basic Technological Problems, Polish Academy of Sciences (1993) Energy Policy of Poland and Drqft Programme. Until 2010, Warsaw Ministry of Industry and Trade (1993a) Restructuring the Hard coal Mining Seclor. Part I: Realisation of the Programme to Stop the Move Toward Bankruptcy, Warsaw Ministry of Industry and Trade (1993b) Restructuring the Hard coal Mining Sector. Part III: Assessment of the Business Plans of Coal Companies and Individual Mines Operating as Join-Stock Companies, Warsaw Ministry of Industry and Trade (1994) Restructuring the Hard coal Mining Sector. Part II: Programme for Realisation During 1994-1995, Warsaw

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