NCPA - National Center for Policy Analysis

European Workers Threaten Privatization

June 28, 2002

The economic health of many European countries depends on the sale of old state enterprises to the private sector. But some workers are kicking up such a ruckus that the process may be in jeopardy, observers warn.

Communist-era bureaucrats still manage many of the companies and they team up with workers of similar mind-set in revolts to sabotage economic modernization efforts.

Some of these workers' revolts employ novel strategies:

  • In Rumania, steelworkers at a newly privatized mill threw chairs at an American manager and locked him in a canteen after he mentioned plans to fire some of them.
  • This spring, Warsaw's plans to sell off its largest power-generation group stalled when workers produced an old agreement guaranteeing $3 million in payments if they lost their jobs.
  • The Czech Republic tried to head off discontent among energy workers by bundling its entire power sector into one unwieldy package -- making a sale impossible.
  • In Slovakia, 5,000 state railway workers stormed the capital last year to stop the railroad's privatization.

Foreign investors pumped more than $40 billion into Eastern European privatizations in the 10 years after the fall of the Berlin Wall in 1989. In many regions economies bloomed and living standards rose dramatically. But the world-wide economic slump which started in 2000 coincided with the expiration of job guarantees initially offered by foreign investors.

The resulting employment uncertainties are now derailing privatizations and economic reform efforts are breaking down, say observers.

Source: Elizabeth Williamson, "In Eastern Europe, Workers Go Sour on Foreign Owners," Wall Street Journal, June 28, 2002.

 

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