ECONOMY-RUSSIA: Coal Miners Push For State Aid

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Sergei Blagov

MOSCOW, Feb 3 1999 (IPS) - Rising unrest in Russia’s ailing coal industry has put the government between the rock and a hard place. The industry desperately needs state funding to survive but the coffers are bare.

The government, with an eye toward Romania where 200,000 angry miners marched on Bucharest last month before being stopped by riot police and army units, has promised to boost subsidies to the coal industry to about 520 million dollars.

Prime Minister Yevgeny Primakov announced plans to restore aid only after Ivan Mocknachuk, the leader of miners’ union exploded at a miners’ congress in Moscow earlier this week. “No money? You are lying.” he shouted.

The coal industry has struggled to survive since the fall of the Soviet Union in 1991. With government subsidies being slashed eight-fold since 1993, an increasing number of mines cannot make ends meet.

Only 50 out of the 126 coal companies in Russia manage to make a marginal profit, while the rest hemorrhage red ink, according to government statistics. The companies operate some 200 mines which produced roughly 240 million tons of coal last year but, of this total, the least efficient 100 pits produced only 30 million tons.

The industry’s problems are compounded by the regular occurrence of deadly accidents – due to obsolete equipment and declining safety standards.

Aman Tuleyev, governor of Kemerovo – Russia’s major coal producing area in Siberia, some 4,000 kilometers east of Moscow – declared that “We need to raise miners’ wages up to at least 250 dollars.” At present the average miner’s pay is 150 dollars a month.

On the other hand, miners got too many privileges in early 1990s, Tuleyev said. “They work 30 hours a week and 180 days a year, and the government simply cannot pay the bill to subsidize the industry.”

During the Soviet era, the government kept old mines operating long after their ability to make a profit was exhausted. Since 1991 the Russian government also has been reluctant to close spent pits to avoid social unrest. The main union, the Russian Union of Coal Industry Workers (Rosugleprof), has 780,000 members and is one of the best organized – and the most militant – of Russia’s unions.

The government plans to aid the coal sector centre on loans from the World Bank and Japan’s Eximbank amounting to some 800 million dollars, Sergei Generalov, Minister of Fuel and Energy, told the miners’ congress this week.

The World Bank already has extended several loans for Russia’s coal sector meant to be used to close close down unprofitable mines and provide re-training in other work areas for the laid-off miners. Since June 1992, the World Bank has committed a total of about 7.5 billion dollars to Russia, which is already the bank’s third-biggest borrower.

The latest loans mentioned by Generalov, however, are still in limbo as the World Bank is yet to make a decision.

“We need social partnership,” said Primakov promising to do his best to tackle the crisis of non-payment of miners’ wages. He added that the total of 552 criminal proceedings – including 145 in Kemerovo region alone – against managers implicated in embezzlement or fraudulent mediating firms. In many cases coal executives reportedly set up obscure colnsulting firms in the name of their relatives to siphon money out of coal companies, causing wage delays.

Primakov conceded that the miners were owed more than 200 million dollars back pay. Delays in paying the miners average five months and reach even 10 and 12 months at some pits.

The unpaid miners struggle to survive by relying on part-time jobs, raising vegetables in suburban garden plots, and borrowing from relatives. Most mines are in the North of the country and lack of money and failure to pay bills could imply power cuts – with freezing temperatures plummeting to minus 40-50 in early February

Despite the government efforts to help, the miners appeared to be losing patience. In the immediate aftermath of the Congress, miners at the Berezovskaya pit in the Kemerovo region staged a “sit-in” at the mine to protest against 6-month wage delay.

Miners from Southern Russia, along with their brethren in the North, could act as did the miners in Romania, warned Vladimir Kotelnikov, the Russian miners’ regional union leader.

The Romanians ended their march in January declaring victory after winning concessions on pay and pit closures from Prime Minister Radu Vasile. The agreement has not yet been made public and the action by the miners cost the country tens of million of dollars, according to Romanian officials.

Some analysts argue that the Russian miners, whose strikes were instrumental in the collapse of the last Soviet government and brought President Boris Yeltsin to power, now lack the resolve to stage any decisive action.

Still, miners picketed the White House, the Russian government building in Moscow, last summer for nearly four months in a protest over pay arrears. The protesters gathered daily near the government building to yell insults at Yeltsin.

At the time Russian trade unions threatened to launch an indefinite nation-wide strike in protest at unpaid wages and a government austerity program. But the “all-Russia day of protest” on October 7 resulted only in a series of peaceful marches. Both incidents failed to bring any concrete results – and now observers believed the Romanian scenario wass unlikely to be repeated in Russia – partly because Russia’s coal regions were too far away from Moscow to be reached by marchers.

Nonetheless, the coal industry today remained a cornerstone of Russia’s energy sector. Roughly one half of Russia’s electricity is produced in coal-fired power stations. Total coal reserves are estimated at three trillion tones with some four fifths of coal deposits located in Siberia.

In the long term, the government faced the issue that most of the loss-making mines were in isolated towns where no other employment was available. Miners faced the prospect of having to move to other regions, but the current economic turmoil throughout Russia made alternative employment difficult.

The World Bank has estimated that roughly half of Russia’s miners would be forced to leave the industry over the next decade which would have unpredictable repercussions against the background of the current crisis.