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Poverty Social Impact Analysis Case study. Serbia Industrial Restructuring of RTB Bor Copper Mine. Bor/Majdanpek region - indicators. Population: 79,000 (2002) Employed: 22,000 Mine employees: 8,345 Unemployment: 26% Mono-industrial, economically depressed region. RTB Bor – reform context.
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Poverty Social Impact Analysis Case study Serbia Industrial Restructuring of RTB Bor Copper Mine
Bor/Majdanpek region - indicators • Population: 79,000 (2002) • Employed: 22,000 • Mine employees: 8,345 • Unemployment: 26% • Mono-industrial, economically depressed region
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.
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
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
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
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.
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
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
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
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.
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
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
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
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.