Social Dialogue

Hand in Hand

Social dialogue is a necessary element in all transition countries, as it constitutes a link between government and citizens and a means for overcoming tensions. Recognizing the importance of social dialogue and the experience of countries that began the transition process earlier, the European Movement in Serbia has launched a project aimed at comparing the experience of Serbia and Bulgaria

PARTNERS: A socio-economic council was formed in September of last year by the Serbian Government, three unions and the Serbian Union of Employers. This, however, is not enough.

Aleksandra Vujković

Transition has entered its third year in Serbia. The changes it is bringing are having a very powerful impact on citizens. Moreover, the tensions they create can have highly negative consequences. This is why the experience of countries that have already come through the initial phases of transition are invaluable, said Danijel Pantić, secretary general of the European Movement in Serbia, at the opening of a forum dedicated to analysis of the results of a joint project organized by the Movement and Bulgaria's Center for Economic Research, entitled "Social Dialogue as an Instrument for Overcoming Tensions in Transition Countries".

PARTNERSHIP FOR PEACE: The experience of the countries of Central and Eastern Europe demonstrates that social policies designed to accompany privatization are best developed through social dialogue between government, unions and employers. A socio-economic council with a tripartite basis was formed in September of last year by the Serbian Government, the three relevant unions and the Serbian Union of Employers. However, are these "social partners" legitimate?

The legitimacy of the two largest unions – the Serbian Alliance of Labor Unions and the "Independence" Labor Union – is implicitly clear, whereas the Association of Free and Independent Trade Unions is the weakest, thus casting a shadow over all three groups. As regards the legitimacy of the employers' organizations, Serbia has only a single Employers' Union which, despite the fact that it is currently gaining legitimacy, does not represent employers in those firms where employees' unions are most strongly represented. The best solution would be if the Union represented employers from the biggest social and public enterprises, said Mihail Arandarenko of the G17 Institute.

In any case, conducting social dialogue in Serbia is, and will continue to be, a very difficult process. This is because it is tied up with the heritage of socialism, with remarks even heard to the effect that it represents the "introduction of self-management through the back door". Moreover, there is an evident absence of political will for social reconciliation. Further, it has been seen that social dialogue may be easily manipulated, especially where, as in Serbia, it is not based on the constitution, as in the Netherlands or Italy, nor on legislation, but rather on an agreement among unions, employers and the government, as a result of which it depends upon the good will of all involved.

Misunderstandings are always present in social dialogue. In this regard, one factor that has an especially bad influence on its development is the unequal political and social power of the social partners: the government accumulates all the power, both as the government per se and as an employer (it employs at least two thirds of the labor force), while the other two partners are considerably weaker, and are doing very little to strengthen their position. The fact that the government currently enjoys the confidence of only one quarter of Serbia's inhabitants – whereas, in June 2001, following the political changes of October 2000, it had the support of at least 37 percent of them – is also worth mentioning, as Srećko Mihajlović of the Institute of Social Science remarked.

WHAT CAN BE LEARNED FROM BULGARIA?: After a "transition period" of thirteen years, a period marked by tension and disagreement, people in Bulgaria believe that social dialogue has finally yielded good results in their country, said Ivan Nejkov of the Balkan Institute for Social Policy, a former minister of labor and employment in Bulgaria. Social dialogue in Bulgaria began during the time of financial restrictions, which were particularly evident in education, health care and local administration.

Bulgaria's foreign debt burden had a heavy impact on social tensions, which, following several consecutive phases of economic recession, led to a decline in national output. One particular problem was the slow pace of reform of the pension system. Up to the year 2000, it was very easy to obtain a pension in Bulgaria. Thus any worker, under certain circumstances, could receive a retirement pension even at the age of 38! This, of course, is something no pension system in the world could support. Another distinctive feature of transition in Bulgaria was a drastic fall in the standard of living for a majority of the population, as well as continuing political instability, with a change of government every year up to 1997.

What Serbia should, however, learn from Bulgaria is how to cooperate with world financial institutions. For the influence of the IMF and the World Bank on social dialogue has proved to be quite significant, since it has, among other things, led to the conclusion of several agreements resulting in a significant influx of financial resources. The "price" of support by the IMF and World Bank is the fulfillment of economic obligations, but also – good social policy.

In contrast to Serbia, Bulgaria has been more dynamic in forming unions, such that at one moment there were seven official unions, whereas now there are only two. There are currently four employers' organizations, so it is very difficult to reach consensus. In today's Bulgaria, social justice is more likely to be violated than traffic regulations, and this certainly represents the most common form of the violation of legal norms, Nejkov said.

LESSONS OF PRIVATIZATION: In three years Yugoslavia has privatized ten percent of its total number of enterprises, but for many of them this process has not led to realization of the basic aim – doing effective business. There are very few corresponding laws on the system level – the Constitution dates from the Milošević period, and the judicial system is inefficient, incomplete and incoherent, said Dragan Lakićević of the European Movement in Serbia. Privatization is proceeding too slowly: if it were to continue at its current tempo, another 60-70 years would be needed just to harmonize legislation. The state has retained a high degree of regulatory power, and research has shown that the greatest obstacle to development of the private sector is the extraordinarily high level of corruption connected with granting various permits.

Privatization in Bulgaria can serve as a good example. Seventy percent of what could be privatized already has been, successfully, remarked Rumiana Jeleva of the Balkan Institute for Social Policy. This process began in 1990, and has passed through three phases. The first was characterized by chaotic thinking and reduced functioning, as well as the adoption of the Law on Privatization. In the second phase, which lasted from 1993 to 1994, privatization was practically halted, only to start up again in the third phase, which began in 1995, since which time the greater part of state property has passed into private hands. 4,826 privatization agreements have been signed, of which 2,631 involved the sale of entire enterprises.

Since June of 2002, nearly 80 percent of the total number of unsold enterprises were in the process of being privatized. On a micro level, the majority of enterprises are both quite stable and competitive on the market. The private sector has been allowed to expand, thus reducing the need for the state to finance it. Financial stability has been achieved on the macroeconomic level, the risks of investment are ever smaller, and thus Bulgaria is increasingly attractive for foreign capital. On the other hand, however, little has been done in terms of retraining workers and improving their qualifications.

The down side of privatization is also seen, of course, in numerous illusions that exist regarding it, which will have to be eliminated in Yugoslavia as well. These include, first and foremost, a belief that privatization will lead to sudden economic prosperity and the elimination of unemployment, as well as the mistaken notion that enterprises are, as a rule, sold "cheap", Jeleva observed.