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Cablegate: Romanian Railway Strike Fails in Face of New

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

SIPDIS

DEPT FOR EUR/NCE - BSILKWORTH, TERATH

SENSITIVE

E.O. 12958: N/A
TAGS: ELAB PGOV ECON RO
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.

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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.

COMMENT
--------
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.

Delare

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