35723 7/1/2005 11:51 05BUCHAREST1478 Embassy Bucharest UNCLASSIFIED//FOR OFFICIAL USE ONLY This record is a partial extract of the original cable. The full text of the original cable is not available. UNCLAS SECTION 01 OF 02 BUCHAREST 001478
DEPT FOR EUR/NCE - BSILKWORTH, TERATH
E.O. 12958: N/A TAGS: ELAB, PGOV, ECON, RO, finacial control, Strike SUBJECT: ROMANIAN RAILWAY STRIKE FAILS IN FACE OF NEW GOVERNMENT'S PROMISES OF BUDGET AUSTERITY
THIS CABLE IS SENSITIVE BUT UNCLASSIFIED. NOT FOR DISTRIBUTION OUTSIDE OF USG CHANNELS
1. (SBU) SUMMARY: Following 80 days of negotiations, railway workers went on a general strike on June 8 which lasted for 23 days. The GOR, with IMF-monitored fiscal restraints this year, had little flexibility in meeting the strikers' demands. The strike ended with the unions obtaining only additional funds to improve working conditions, but no salary increase. END SUMMARY.
GOR: No Salary Increase, But How About Free Meals?
2. (U) The collective labor contract with the railway unions expired on March 17. In setting the stage for negotiations, Transportation Minister Gheorghe Dobre insisted to the railway unions that since the Romanian railway companies are on IMF's monitored company list, the unions' demands for salary increases cannot be met without the Fund's consent
3. (U) The Transportation Ministry (MTCT) rejected demands for a salary increase, but proposed increasing the number of meal vouchers from 5 per month to 15, a proposal which only one of the union federations accepted. (The last salary increase paid to railway workers was 12% in March 2004.) The Ministry then opted out of negotiations, leaving the unions to negotiate with the National Railway Administration.
4. (U) The railway unions and the National Railway Administration failed to make any progress after eighty days of negotiations. Following a two-hour warning strike, three railway union federations began a general strike on June 8, demanding a 10.7% salary increase on the an average monthly wage of 7 million lei (about $235), 20 meal vouchers per month (meal vouchers are non-taxable, and can be used to purchase items in food stores) and better working conditions. According to law, one third of the trains must remain in operation during a strike.
Court Declares Strike Legal
5. (U) The railway administration took the unions to court, requesting a 30 day postponement of the strike on the premises that the Romanian infrastructure is affected by floods and the union's actions jeopardizes travelers. On June 8 the Bucharest Court of Appeals rejected the request and, in an unprecedented move on June 13, the Bucharest Court of Justice ruled the strike legal, the first time this has happened in the history of the Romanian labor movement.
6. (U) Encouraged by the court's ruling, railway workers from the infrastructure union joined the strike, announcing that beginning June 20, all railway activity would cease between the hours of 7:00 and 11:00 A.M. Transportation Minister Dobre warned the stoppage risked the strike being declared illegal, given that the mandatory one third of trains would no longer remain operational. He further declared that the Ministry would sue the unions for damages. Nevertheless, on the morning of June 20, all railway employees went on general strike and train traffic ceased between these hours.
7. (U) Railways management and the MTCT appealed the court's decision. On June 22, a Bucharest tribunal affirmed the strike was legal, provided the unions ensured the compulsory one third of trains remained operational. On the same day, the Bucharest Appellate Court suspended the railway infrastructure union's strike for 30 days, which resulted in the resumption of train traffic between 7 and 11 A.M. However, under Romanian law, the union can resume its protest after one month. For the rest of the railway unions, the strike continued.
Unions Request High-Level GOR Intervention
8. (U) Union leaders requested the intervention of the Prime Minister and/or President Basescu. Prime Minister Tariceanu explained that the only way the Government could accept the unions' salary demand was for passengers to accept a tariff increase "without criticizing it." The union responded that using the strike to justify an increase in train fares distorts the truth, as the Government had already decided to raise ticket prices prior to the strike.
Estimated Losses: $1.3 million Per Day
9. (U) On a normal work day, the railroads transport approximately 250,000 passengers. With only one third of trains in circulation, the MTCT estimated nearly 150,000 people daily were affected. The Railway Administration estimated losses of ROL 500 billion ($16 million) due to suspension of operations during the 23 day strike.
10. (U) Besides this announced loss, other economic effects included delays in deliveries of products in general. Thermal power plants awaited deliveries of thousands of tons of coal from the National Brown Coal Company in Petrosani. A Jiu Valley mining union leader informed that before the strike 12-13 trains of coal departed every day, while during the strike, only three trains per day transported coal. Tourism was also affected, as out of the 20 seasonal trains scheduled to operate this summer to the Black Sea Coast, only six were in circulation. Media reported increased road traffic due to businesses shifting freight to trucks and passengers using the ubiquitous long-haul passenger vans know as "Maxi-Taxis." The proprietors of the passenger vans also reportedly increased fares.
Court Action Ends Strike
11. (U) In a final ruling on June 30, the Bucharest Court of Appeals declared the railway strike illegal, as it endangered railway safety and did not observe the legal requirement of insuring one third of trains remain operational. The court's decision ended the strike, and train traffic returned to near normal in the evening. The strikers obtained only some additional funds to improve their working conditions, but no salary increase. Whether or not the unions will receive the ten additional meal vouchers initially offered by the MTCT is uncertain. Transportation Minister Dobre stated he would sue the unions to recover losses incurred from suspension of service, while union leaders responded that no damages could be recovered, as the losses occurred while the strike was declared legal.
12. (SBU) The majority of Romanians were very unhappy with the strike, with many irritated over long train schedule delays and resentful of having their vacation plans disrupted. Nightly news programs showed thousand of commuters waiting for hours in railway stations across the country. The Prime Minister's smart move in advising the public that the only way the Government can agree to the unions' demand for higher salaries is to increase train fares created a new wave of discontent and virtually eroded any popular support the unions may have had.
13. (SBU) Early in the dispute, the GOR recognized that wage increases, if granted in one sector of the economy, could possibly cause a ripple effect and lead to demands for wage increases in other sectors. With the IMF team in town reviewing Romania's standby agreement during most of the strike and adamant that public sector salaries be frozen, the GOR was more or less required to "hold the line," a strategy which proved successful, at least for now.
14. (U) AmEmbassy Bucharest's reporting telegrams are available on the Bucharest SIPRNET website: www.state.sgov/p/eur/bucharest.