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Poverty Social Impact Analysis Case study

This case study analyzes the social impacts of restructuring the RTB Bor Copper Mine in Serbia, focusing on redundancies and unemployment. The study explores welfare effects, policy implications, and stakeholder involvement.

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Poverty Social Impact Analysis Case study

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  1. Poverty Social Impact Analysis Case study Serbia Industrial Restructuring of RTB Bor Copper Mine

  2. Bor/Majdanpek region - indicators • Population: 79,000 (2002) • Employed: 22,000 • Mine employees: 8,345 • Unemployment: 26% • Mono-industrial, economically depressed region

  3. RTB Bor– reform context • Mine operation a major drain on budget • Loss making, RTB Bor dependant on $30-$45 million per year in direct and indirect subsidies • Second largest recipient of direct state subsidies (2002 – 2004) • Clear need to restructure – through market test (privatization, sale to a strategic investor) • Social reactions to government proposal: Protest blocking highway to Athens (during August 2004 Olympics) • Good timing: price of copper has doubled in the last 2 years.

  4. Expected impacts: Redundancies • Estimated that only 25% of current (8,350) employees were needed to operate effectively. • In 2002 over 3,500 (out of 12,000) employees took voluntary severance (equivalent to €100 per year employed) • No support measures (such as active labor market measures) accompanied 2002 redundancy program. • Trade unions strongly opposed to redundancies

  5. Expected impacts: Unemployment • In short-term, restructuring might increase region's poverty and unemployment levels • Therefore, WB proposed program for social support and stimulation of new investments

  6. PSIA objectives • In-depth labor impact and welfare survey of RTB Bor in order to better understand the potential welfare effects • Enable GoS to address them in a socially acceptable and fiscally responsible manner, • Survey results - help defining the intersection of desirable, affordable and implementable policies

  7. Analytic approach Hypothesis: • Former mine employees are worse off because of low employment opportunities in a depressed local economy, and they and trade unions will be unwilling to accept further layoffs.

  8. Mixed methods Quantitative: • With/without analysis of 800 current and 400 redundant employees, to assess socio-economic wellbeing, impacts of redundancy, coping strategies, employment prospects. Qualitative • Focus groups and in-depth interviews to compare perceptions with data, enrich the analysis, uncover issues which the quantitative survey overlooked

  9. Mixed methods Stakeholder analysis: • Helped to identify interests and influence of different stakeholder groups which indicated power relations and the need for their involvement Stakeholder participation: • Continuous involvement of key stakeholders (through roundtables, meetings, etc.) to assess whether they agreed/disagreed with the study findings, take their concerns into account, and frame the problems

  10. Process Objective: • Engage in constructive dialogue with opposing parties • Identify common ground Activities: • Stakeholder meetings to present GoS/WB position, describe PSIA objectives, receive feedback • Roundtables with GoS, Trade Union, local NGOs to forward policy dialogue • Media training sessions to provide GoS/WB perspective

  11. Findings • Perceptions that former employees are worse off not supported by data; • Households of former employees not materially worse off, even when unemployed; • High reluctance among current employees to leave company, even with a reasonable severance package.

  12. Findings

  13. Findings

  14. Analysis • Many registered unemployed working in grey market economy • Grey market acts as a cushion for redundant employees and their families • However, employees who left three years prior a self-selected group of most capable individuals

  15. Analysis • Negative perceptions partly due to ‘squeaky wheel’ effect – represent vocal minority that is struggling, not the average former employee • Almost no one in region is doing ‘well’ and unrealistic to expect positive responses

  16. Policy Dialogue • Findings: • assisted in moderating public perceptions, which created political space to negotiate for support of reform • provided guidance on how to design mitigating measures • Led to ecommendations to address employee concerns through establishment of transition center

  17. Conclusions • Hypothesis rejected. Becoming redundant does not have significant economic impact, although uncertainties of being out of state sector exact a non-financial cost. • Support programs, which were always planned, will still be necessary to assist next wave of redundant employees, but PSIA findings should make redundancy process politically easier.

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