LABOUR: Unions say IMF Pressuring Croatia to Cut Worker Protection

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Feb 4 2003 (IPS) - International labour unions say they will help Croatia resist pressure from the International Monetary Fund (IMF) to liberalise its labour legislation, a move they say would threaten workers’ rights and create social instability in a country still reeling from years of war and civil strife.

"We fully support the Croatian unions in their calls upon the Croatian government to scrap these amendments and play their part in the process of changing labour legislation," said the International Confederation of Free Trade Unions (ICFTU) in a statement Tuesday.

The ICFTU, whose unions represent 157 million workers in 148 countries, said it was concerned that the Croatian government is yielding to IMF demands and the interests of other international financial institutions (IFIs) by proposing a number of changes to its labour laws.

The amendments, due to be debated by parliament this week, would liberalise labour relations without ensuring in return that social support is available to workers who might lose their jobs under the new law, said the Brussels-based federation.

The proposed changes are directly linked to the Stand-By Arrangement that Croatia signed Monday with the IMF.

The Fund’s executive board approved the country’s request for a 14-month stand-by credit for a 146-million-dollar loan to support its economic and financial programmes through April 2004.

The Washington-based organisation commended Croatia for its "increasing labour market flexibility" and for "stepping up progress in privatisation".

IMF Deputy Managing Director Anne Krueger said the structural measures to be adopted under the arrangement are meant to increase competitiveness, employment, and to align product markets in the small Baltic nation with ”best practices in the European Union".

Croatia said on Monday it would apply to join the European Union on Feb. 18. An IMF certification of good economic behaviour could help that bid.

Croatia, a small country of 4.5 million people, is emerging from a decade of internecine war during which the former Yugoslavia disintegrated. In 2000, its new government joined the World Trade Organisation (WTO) and has since promised to open up its economy.

The trade union movement there has blamed pressure from IFIs for threats to workers’ rights and for pushing economic liberalisation programmes that could hurt the poor and destabilise the nation.

But the IMF says that Zagreb’s new economic path to sustained growth and stability is homegrown, and denies "working out the details" of the programme.

The unions are threatening to call a general strike this month if the government refuses to back away from the proposed changes and have created a strike committee comprising the five union confederations in the country.

The "general warning strike" would be followed by several other forms of joint action, says the ICFTU.

Under the proposed law, the government would reduce the money paid to laid-off workers and trim the notice required before sacking a worker from six to three months.

Under current laws, a worker who has worked continuously for the same employer has the right to severance pay equal to 10 months’ net wages. With the new law, the same worker would be eligible for only three months’ gross wages, or nearly 70 percent less, says the Union of Autonomous Trade Unions of Croatia (UATUC).

The groups also protest that the legislation contains no provisions for unemployment benefits. Official unemployment in the country is 16.3 percent, a figure the Bank attributes to ”an uncompetitive private sector”.

Another controversial item in the proposed law is the plan to scrap the rules for ending fixed-term contracts, which means, "that job security in Croatia will soon be a thing of the past", says the ICFTU.

Employers would no longer be obliged to provide the grounds for ending such contracts if the changes are approved.

The ICFTU has repeatedly warned that one government’s success in impinging on workers’ rights in one country could be emulated elsewhere.

Dozens of nations that are embracing similar economic restructuring programmes are reportedly considering comparable changes to their labour laws.

Another proposed amendment would change the definition of a small employer from one that employs 10 workers to a 20-person workplace. The effect would be to have many more workers slip through the net of protective legislation, from which small employers are exempt, the unions say.

The new definition would expose 241,000 workers to additional social insecurity, said UATUC President Davor Juri in an interview with ICFTU.

The government, which says it is striving to increase competitiveness and ensure job creation, cites European standards to support its changes to the labour law.

But the ICFTU charges that leaders conveniently fail to include the protective measures provided in European countries, which are directly associated with such standards.

"As a consequence, such amendments would mainly result in severely disrupted social security," said Juri.

"Social differences will only become more obvious. Older workers will very easily lose their jobs and it will be even harder for them to find new ones."

Labour leaders say pressure to liberalise the labour market started in 2001, when the World Bank demanded changes to the labour law in exchange for credit to go with the structural adjustment programme.

"Trade unions did not know anything about it, nor did the government feel obliged to inform us about any of the agreements signed," said Juri.

"The latest information we have says that the World Bank, apart from amendments to the labour law, also demands a solution for workers’ social protection."

ICFTU (http://www.icftu.org/)

IMF (http://www.imf.org/)

World Bank (http://www.worldbank.org/)